On brink of China-EU investment deal, eleventh-hour pressure comes from US and within Europe

Stuart Lau
·3-min read

The European Union is facing opposition from within – and from US president-elect Joe Biden’s team – just as it tries to push through a controversial investment agreement with China.

While EU negotiators make last-ditch efforts to lobby Chinese counterparts before a self-imposed deadline on December 31, critics say the deal does not adequately protect labour rights and leaves out key investment protection mechanisms until further negotiation.

Poland became the first EU member state to cast doubt on the bloc’s rush to seal a “premature” investment deal with China.

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“Europe should seek a fair, mutually beneficial Comprehensive Agreement on Investment with China. We need more consultations and transparency bringing our transatlantic allies on board,” Polish Foreign Minister Zbigniew Rau tweeted on Tuesday.

China scrambles to shore up support for investment agreement with EU

“A good, balanced deal is better than a premature one.”

Also on Tuesday, representatives from the 27 EU member states in Brussels pulled the China deal off their agenda for discussion.

The doubts came a day after Chinese Foreign Minister Wang Yi told the EU’s ambassadors in Beijing that the deal, which he said was close to completion, would prove that the EU and China shared more consensus than differences.

But Biden’s incoming national security adviser Jake Sullivan weighed in on the EU’s final-stage negotiation with China, amid concerns the bloc would be handing a diplomatic win to Beijing.

“The Biden-Harris administration would welcome early consultations with our European partners on our common concerns about China’s economic practices,” Sullivan tweeted.

Sullivan’s remarks highlighted the possibility of an EU-China deal driving a rift between Washington and Brussels, a high-level EU diplomatic source said.

Earlier on Tuesday, there was speculation that Chinese Vice-Premier Liu He might call Valdis Dombrovskis, the European Commission’s trade chief, to finalise details of the 130-page deal, but the call did not take place.

While Chinese negotiators offered the EU wide market access in areas such as telecommunications and electric vehicles, some member states asked the EU Commission to gain further concessions from Beijing on matters related to forced labour and investment protection.

According to an EU source, the commission has been asked to get a “rendezvous clause” from Beijing stipulating that a dispute resolution mechanism on investment protection should be further negotiated with Beijing.

German Chancellor Angela Merkel, who has warmly welcomed Biden’s incoming presidency and a revived transatlantic relationship, is also one of the staunchest advocates of the deal with China, which she sees as a big boost for German businesses.

However, support from European Parliament lawmakers would be required to ratify the deal, and some of them are unlikely to back it.

“Should we really help Xi Jinping [show] Joe Biden the middle finger?” tweeted Reinhard Bütikofer, a German member of the European Parliament who chairs the China delegation. “The whole idea that EU must hurry to strike a China deal to impress the US is misguided.”

The pace of negotiations for the landmark investment deal picked up in September after President Xi Jinping held a virtual meeting with EU leaders and Merkel. Statements from the EU side noted significant progress towards a level playing field, including around state-owned enterprises, transparency on subsidy policy and rules to address forced technology transfer.

But growing criticism over China’s alleged human rights abuses in Xinjiang, has increasingly weighed on the negotiations. Even if an agreement had been reached, it was expected to be challenged during the ratification stage by the European Parliament, which insists on a strong commitment to human rights.

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