Opinion | On its own, the EU-China investment deal has little hope of holding Beijing to account

Name: ‘Major progress’ made on China-EU investment deal negotiations, says Beijing’s foreign ministry
Uploaded: 2021-02-10T06:15:18.000Z
Duration: 42 s
Description: ‘Major progress’ made on China-EU investment deal negotiations, says Beijing’s foreign ministry

Given China’s history of ignoring bilateral agreements, how can the EU’s modest and incremental investment agreement hope to improve Beijing behaviour in problematic areas?

A collective approach, rooted in effective transatlantic cooperation, would at least have a fighting chance

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The Chinese flag flies behind razor wire at a housing compound in Xinjiang on June 4, 2020. The EU, in deciding whether to approve the investment deal, should think long and hard about China’s track record including in violating human rights. Photo: AFP

Wendy Cutler

Published: 2:15pm, 10 Feb 2021Updated: 4:41pm, 10 Feb 2021

Late last month, the European Union and China released new details about the Comprehensive Agreement on Investment that they concluded in December. On paper, EU negotiators made some progress in important areas such as market access, investment liberalisation and sustainable development. But can an incremental bilateral agreement such as this one really govern economic relations with today’s China?

To be sure, the EU has secured market access in important sectors – including electric vehicles, cloud computing, financial services and health care – largely through the relaxation of equity restrictions. But detailed annexes to the agreement have yet to be made public, and it remains to be seen how many of these commitments are entirely new.

It is possible that the deal largely codified steps that China has already taken to boost market access, either through its investment laws and regulations, or on an ad hoc basis.

Furthermore, while equity restrictions form a formidable barrier to market access, they are hardly the only one. Foreign companies often face other regulatory hurdles, which they can clear only by securing approvals from multiple Chinese government agencies – an often time-consuming and frustrating process.

According to the latest US-China Business Council survey, conducted last spring, securing licensing and related approvals is the sixth-biggest challenge that American firms face when operating in China.

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‘Major progress’ made on China-EU investment deal negotiations, says Beijing’s foreign ministry

In any case, the investment agreement’s content is only part of the story: China often disregards its bilateral commitments. Australia is a case in point.

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