The EU and China have unveiled a long-awaited investment treaty that aims to open up lucrative new corporate opportunities but which risks antagonising president-elect Joe Biden’s incoming US administration.
The accord was confirmed by China’s president Xi Jinping and EU leaders including European Commission president Ursula von der Leyen on Wednesday, bringing seven years of often difficult negotiations to a close.
Valdis Dombrovskis, the EU’s trade commissioner, told the Financial Times the deal contained the “most ambitious outcomes that China has ever agreed with a third country” in terms of market access, fair competition and sustainable development.
”We expect European businesses will have more certainty and predictability for their operations,” he said, adding that “for a long period, trade and investment relations with China have been unbalanced”.
A backlash began even before the deal was unveiled. Reinhard Bütikofer, chair of the European parliament’s delegation for relations with China, late on Tuesday branded it a “strategic mistake”. He tweeted that it was “ridiculous” for the EU side to try to sell as “a success” commitments that Beijing has made on labour rights in the deal.
The deal will remove some barriers to EU companies’ hopes of investing in China, such as specific joint-venture requirements and caps on foreign equity.
Industries where the EU has secured improved access terms include automotive, private healthcare, cloud computing and ancillary services for air transport, Mr Dombrovskis said. The improved market access arrangements for car manufacturing also cover electric vehicles and hybrids, he added.
On financial services, the deal will secure the same benefits for the EU as the US obtained in its “Phase 1” trade deal with the country, including openings on insurance and asset management.
Other parts of the agreement seek to ensure transparency of subsidies and to set clear rules against forced technology transfer. EU officials said that Brussels also secured guarantees of non-discrimination compared to state-owned enterprises. All of these points have been core EU grievances in its trade relationship with China.
For Beijing, the deal will lock in existing market access rights while securing some openings in the areas of manufacturing and renewable energy.
