After seven years of negotiations, the European Union and China intend to reach an investment agreement by the end of this year. But the two sides have clear differences on issues such as forced labor, and the latest U.S. opposition adds uncertainty to the deal’s prospects.
The politically symbolic move by China and the EU comes a month before Biden’s inauguration and deals a blow to U.S. hopes of reviving the transatlantic partnership and jointly countering China’s increasingly assertive posture.
Chinese Foreign Minister Wang Yi met Monday in Beijing with the European Union and the ambassadors of its 27 member states in China. He said China and the EU may soon conclude negotiations on an investment deal. The EU also said in a statement that progress has been made in the ongoing negotiations.
According to the South China Morning Post, the European Commission, the EU’s executive arm in charge of trade negotiations, has secured a breakthrough, with China making rare concessions in sectors such as financial services, manufacturing and real estate. In return, the EU agreed to open up investment in renewable energy to China.
However, politicians and activists across Europe say they have doubts about whether Europe should deepen its economic ties with an aggressive China, especially as it continues to crack down on democracy in Hong Kong and persecute predominantly Muslim minorities.
Thorsten Benner, director of the Institute for Global Public Policy in Berlin, told VOA: “Beijing simply does not offer enough on key issues of concern to the EU, such as fair market access and labor standards, and with its proven track record as a serial violator of human rights and international law, rewarding Beijing with this deal would send the wrong signal: human rights and international law are ultimately of no concern to the EU. signal that human rights and international law ultimately don’t matter to the EU.”
Critics also warn that the deal could make it harder for the new Brussels and U.S. administrations to join forces against China, with both sides planning to tackle Beijing’s challenges on topics ranging from human rights to technical standards.
Germany and France are the main drivers of the deal
As the EU takes steps to more closely monitor Chinese investment in strategically important European industries, China is pushing hard for the agreement hoping to present itself as a trusted partner in Brussels and gain a head start before the U.S.-European alliance is rebuilt, the analysis said.
China’s reputation in Europe has also taken a hit this year, despite the difficulties U.S.-European relations have faced during Trump‘s tenure. This month, 27 EU member states adopted a European version of the Magnitsky Act, which allows for targeted sanctions against Chinese officials for human rights abuses in Xinjiang.
Some analysts fear that Germany, which holds the bloc’s rotating presidency, has deep trade ties with China and that Berlin will put its own interests ahead of geopolitics, especially given that Germany’s vital auto manufacturing industry relies heavily on exports to China.
German Chancellor Angela Merkel and French President Emmanuel Macron are the main drivers of this investment agreement with China, the report said. They agreed on the matter as Beijing proposed some additional preferential regulations on market access for European companies in China.
Last week, the German government said it wanted to allow Chinese tech giant huawei to partially develop the country’s 5G network. At almost the same time, Huawei announced an investment in a new cellular network equipment factory in eastern France.
However, some experts agree with Berlin’s strategy, noting that it is easier to change Beijing’s behavior through diplomatic engagement than direct conflict, and that the EU will not ease up on its pressure on China’s human rights abuses.
“The European approach is to leverage through engagement and interdependence,” Nathalie Tocci, director of the Italian think tank Institute of International Affairs, told Voice of America. “Given that Europe’s influence is generally exercised through soft power tools such as trade. Without engagement, there is no room for meaningful influence on human rights-related issues.”
Human rights issues and the U.S. position become key
But regardless of the views of Merkel and the European Commission negotiators, any deal with China would need to be unanimously approved by EU member states, and the agreement has met with even stronger opposition in the European Parliament.
As part of the deal, the EU wants China to ratify basic International Labor Organization conventions, including abolishing forced labor and allowing independent unions, but China has refused to accept them. The Socialist and Democratic parties in the European Parliament, as well as the Greens, have said the conventions must be ratified before any trade deal can be reached.
Human rights activists say that China’s re-education centers in Xinjiang are in fact detention camps where Beijing uses illegally detained Uighurs as slave labor to pick cotton. The Chinese Foreign Ministry has repeatedly denied such claims.
Bernd Lange, chairman of the European Parliament’s trade committee, tweeted Monday that “how forced labor is addressed in the China-EU Comprehensive Investment Agreement will determine the fate of the agreement.”
Meanwhile, the EU is also under increasing pressure from its ally, the United States, to slow the pace of major investment deals with China.
Biden’s national security adviser, Jake Sullivan, urged in a tweet Monday to “consult early with our European partners on our shared concerns about China’s economic practices.”
Biden previously said the U.S. and Europe should work more closely together to address the challenge from China. The European Union has responded affirmatively to similar calls.
For some Europeans, speculating about the investment deal not only puts pressure on Chinese negotiators eager for a deal to seek further compromise, but also signals to Washington that Brussels will not be a weaker partner in the U.S.-European alliance in a bid to increase its own weight in U.S.-European negotiations.
“This will put the EU and the U.S. on the same level and then discuss together how to deal with China,” an EU diplomat said this week. “The U.S. has a deal with China and we don’t – it’s unbalanced at the moment. We are behind the United States.”
But this line of thinking has also been questioned by many European analysts. Reinhard Bütikofer, chairman of the European Parliament’s China delegation, on Tuesday questioned whether the EU was sending the “right signal” by rushing into a deal. He tweeted, “The whole idea that the EU must hurry to reach an agreement to make the US nervous is just wrong.”
Jacob Kirkegaard, an expert on Europe at the Peterson Institute for International Studies, a think tank, questioned China’s willingness to implement the agreement, saying its main goal may be to undermine the U.S.-European alliance relationship.
He told Voice of America, “If the Chinese government just makes a lot of concessions on paper to undermine any potential U.S.-European deal but never actually fulfills them, it’s a lose-lose for the EU.”
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