European Commission seeks support for its 'good and solid' investment deal with China

The European Commission has called for sceptics to support its “good and solid” investment deal likely to be reached this week with Chinese President Xi Jinping, boasting success in securing what it calls “an important commitment” from China to make efforts to ratify key international conventions against forced labour.

In a memo sent on Tuesday to the European Parliament, seen by the South China Morning Post, the European Commission seeks to galvanise parliament members – many of them sceptical of the deal – and to dismiss speculation over a weakened relationship with the US as a result of the agreement.

“The negotiated result is the most ambitious outcome that China has ever agreed with a third country,” the memo read.

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“Most importantly, the EU has a good and solid deal within its reach. It will not get better the longer we negotiate,” it continued. “There is now a positive momentum, which we want to use, for the benefit of our companies, our economy and our overall China strategy.”

China’s President Xi Jinping and US President Donald Trump shake hands on Nov. 9, 2017 in Beijing. Photo: Tass/Abaca Press/TNS alt=China’s President Xi Jinping and US President Donald Trump shake hands on Nov. 9, 2017 in Beijing. Photo: Tass/Abaca Press/TNS

It added: “In addition to rules against the forced transfer of technologies, [the deal] will also be the first agreement to deliver on obligations for the behaviour of state-owned enterprises and comprehensive transparency rules for subsidies.”

Earlier, the SCMP reported that Xi will finalise details of the deal with several European Union leaders on Wednesday, after none of the 27 member states raised any objection to the deal at a meeting attended by their top envoys to Brussels.

China has pledged new market access opportunities in sectors such as new energy vehicles, cloud services, financial services and health, according to the commission.

The commission – the EU’s executive arm that negotiates trade and investment deals – released the memo after some high-profile European Parliament members cast doubt on the deal.

However, at least two prominent EU lawmakers were vocally opposed to the deal after the memo was issued, saying that the draft deal looked insufficient to stop forced labour practices in China.

“It is already clear that the outcome of the negotiations misses an essential criterion set by the European Parliament,” said Reinhard Butikofer, the top lawmaker on the China delegation. “When it comes to forced labour in China, the EU Commission is satisfied with superficial lip service.”

Raphael Glucksmann, one of the parliament’s harshest critics of China’s policies in Xinjiang, vowed on Twitter to “fight against” the deal, accusing German corporations of directing EU’s China policies.

In the US, Joe Biden’s national security adviser, Jake Sullivan, tweeted last week that the administration “would welcome early consultations with our European partners” on shared concerns over China’s economic practices.

“There have been concerns about the timing in relation to the new US administration and transatlantic cooperation on China,” the commission memo read. “These concerns are understandable but not justified.”

It added that the EU-China deal “will not only help our companies in China but improve the market access and the level playing field and transparency for our partners as well”.

On forced labour, another key concern for EU lawmakers, the commission document said: “China has agreed to ‘make continued and sustained efforts’ to pursue the ratification of ILO [International Labour Organization] fundamental conventions on forced labour.

“This is an important commitment, while it does not take away the need for the EU to develop autonomous instruments to fight against forced labour.”

If the EU fails to seal the agreement now, the commission said it would result in “prolonging competitive disadvantage of the EU companies and investors operating in China”, especially as China was securing a number of agreements with other partners, such as the phase one trade deal with the US.

An EU official speaking on condition of anonymity acknowledged that it failed to get Beijing to commit to two major areas: ILO covenants concerning freedom of labour unions and right to collective bargaining, which Vietnam agreed to, and the setting up of a new mechanism to protect European investors in China.

Referring to the deal’s official name in the EU, the Comprehensive Agreement on Investment, the Commission memo read: “It is important to realise that CAI is an investment agreement and not a panacea to address all the challenges linked to China.

“CAI is not a silver bullet to solve a sum of problems and challenges related to China. Indeed, our China relations are too complex, both economically and geopolitically, to be addressed with one single instrument.”

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.