The EU and China are on the verge of reaching a so anticipated a commercial investment agreement because Brussels seeks to level the playing field for European companies operating in the Chinese market.
In a meeting with national ambassadors in Brussels on Monday, the European Commission reported on progress in talks with Beijing, including on the remaining central issue of workers’ rights in China. No objections were raised and a formal announcement by the committee of the conclusion of the deal is expected this week, according to European diplomats.
“The committee reported on recent positive developments in negotiations with China, including on labor standards,” said a European diplomat. “The ambassadors generally welcomed the latest progress in the EU-China talks.”
“The [European] The Presidency of the Council concluded at the end of the meeting that no delegation had lifted a stop sign and that the way for political approval was thus open, ”added the diplomat.
The EU, which has raced to meet the deal’s end-of-year deadline, has seen the negotiations a central part of its strategy to deal with the increasingly strained trade relations with China, which it identified as an “economic competitor” and a “systemic rival”.
The pact aims to remove barriers to investing in China, such as joint venture requirements and caps on foreign stocks in certain sectors. Sectors to be covered include manufacturing, financial services, real estate, environmental services, construction and ancillary services to support maritime and air transport.
For China, the agreement should lock in existing market access rights while providing opportunities for investment in renewable energy.
But the deal is expected to cause friction with the new administration of US President-elect Joe Biden.
The new US administration “would welcome quick consultations with our European partners on our common concerns about China’s economic practices,” Jake Sullivan – who will serve as Biden’s national security adviser – tweeted last week.
The deal would come less than a month after the EU released a transatlantic strategy in which it urged the United States to work with it to come together the “strategic challenge” posed by China.
The Biden team has made it clear that it will seek to build a multilateral alliance with the EU and other partners to pressure Beijing over practices, such as industrial subsidies and forced technology transfer, that have put straining the global rules-based trading system.
EU officials said the deal would level the playing field with the United States, which has achieved some of the same benefits through its “phase 1” trade deal with China.
A deal may also be controversial with rights activists, given claims that China is using Uyghur Muslims detained in large numbers in Xinjiang province as forced labor. Beijing denies these claims.
EU pressure for China to adhere to international standards on worker protection was the main sticking point when the negotiations ended.
Paris has been at the forefront of national governments warning that the EU will not conclude the deal unless Beijing commits to ratifying four core International Labor Organization conventions, two of which relate to forced labor and two freedom of association.
Brussels officials said the deal, once concluded, should be approved by the EU Council and ratified by the European Parliament, a process that may not begin until the second half of 2021. It will not have to be adopted by EU national parliaments, however.
The deal has been under negotiation since 2014 and the two sides agreed last year to conclude it by the end of 2020. Germany, which holds the rotating EU presidency until Thursday and has substantial business interests in China, pressed to meet the deadline.