Macau Business | March 2021
European legislators are divided over the Sino-European investment deal. Some hail Beijing’s unprecedented concessions and commitments on market access and sustainability, while others raise obstacles related to labour and human rights.
European institutions are bracing for months of heated debate over the merits of the European Union-China Comprehensive Agreement on Investment (CAI), which was agreed to in principle in late December by the European Council. The document has been unveiled and Members of the European Parliament’s (MEPs) Committee on International Trade (INTA) have started discussing the treaty’s content with representatives from the European Commission. Sources anticipate that the process will be dragged out until late 2021/early 2022 by the EP who will deliberate on CAI as per the Treaty of Lisbon’s provisions on the legislature’s role with regards to international agreements covering foreign direct investment.
INTA’s first debate on CAI, held on February 24, highlighted the divisions not only over how much the EU benefits from the deal with China but also regarding the wider relations with Beijing.
Highlighting the achievements
In a written interview with Macau Business, Portuguese MEP Margarida Marques, member of both INTA and the European Parliament’s Delegation for Relations with the People’s Republic of China, underscores that the agreement “will improve market access of European investors to the Chinese market, an access China already has to the European market”. The former Portuguese Secretary of State for European Affairs states: “this way, CAI will provide reciprocity to investors”. Ms Marques makes the case for the importance of what was achieved during the seven-year-long negotiations process, pointing to “new market access opportunities in crucial sectors such as new energy vehicles, cloud services, financial services or health”. The Portuguese MEP from the centre-left EP Group of the Progressive Alliance of Socialists and Democrats notes that CAI is set to promote the Union’s core values and sustainability objectives”. For instance, “China has agreed to solid provisions on sustainable development, including in relation to environment and climate, such as implementation of the Paris Agreement, as well as corporate social responsibility and labour”. At stake here is Beijing’s pledge of making continued and sustained efforts” to pursue the ratification of International Labour Organization fundamental Conventions on forced labour. This is the crux of the question for a number of MEPs. Ms Marques told Macau Business that “the link between investment and labour is undeniable and CAI has a role to play”, and added: “The EP will use all its scrutiny capacity and its role to be sure that we will have a good and fair agreement and follow up on its implementation”.
Other MEPs hold a more sceptical and critical stance over CAI and EU-China relations. That is the case of Reinhard Bütikofer, chairman of the European Parliament’s Delegation for Relations with the People’s Republic of China and substitute member of INTA. At the February 24 meeting, he was among the most outspoken critics of the deal and in a written reply to questions sent by Macau Business, Mr Bütikofer summed up his stance on the agreement. “My assessment of CAI so far is pretty critical. CAI falls short of many expectations. Market access advantages are only of a limited nature. Provisions do not allow the establishment of a really level playing field. Sustainability commitments are weak.”
A leading member of Germany’s Green Party, Reinhard Bütikofer is at odds with the approach of his country’s leader, Angela Merkel to CAI. The German Chancellor’s effort to reach a deal within the EU Rotating presidency’s six-month term, which ended last December 31, was decisive.
Mr Bütikofer, alongside many of his fellow MEPs from the Group of the Greens/European Free Alliance, has expressed strong reservations with regards to Sino-European relations, namely regarding human rights.
He anticipates that “proponents of CAI will face an uphill battle in the EP” in case “China refuses to effectively move on ILO core conventions ratification”.
In addition, he considers that the EP may also demand “like adoption of the International Procurement Instrument, passing of an anti-subsidy regulation, agreement on human rights due diligence legislation” before it votes in favour of the ratification.
Mr Bütikofer and a number of other MEPs and observers also criticized the EU for reaching the deal without waiting for the new Joe Biden Administration to take office in Washington and consulting and coordinating with the US an approach to CAI.
The chairman of INTA, German MEP Bernd Langue, replied to critics by noting that, in many ways, this deal is quite similar to the US-China Phase One Trade Agreement and “the US is also doing political activities without consulting the EU”, he told German broadcaster DW recently. Geopolitically, the key word for Brussels is “Strategic Autonomy”, in foreign relations.