After seven years of negotiation, Chinese President Xi Jinping, European Commission president Ursula von der Leyen, and 2021 EU president and German Chancellor Angela Merkel finally completed the negotiations for the Comprehensive Agreement on Investment (CAI), which Valdis Dombrovskis, EU trade commissioner, calls “the most ambitious [trade deal] that China has ever agreed with a third country.”
The investment agreement came to life after 35 rounds of negotiations. As the newest developmental milestone, this China-EU deal is expected to inject vitality into the ravaged global economy by opening more comprehensive investment access and better protection to European and Chinese markets.
It will also create jobs and consumer options for ordinary people, according to European experts and officials.
Partly because of this deal, China has officially become the biggest trade partner of the EU. Consequently, this deal turned the EU into China’s second-largest trade partner and third-largest source and destination of investment.
The CAI also offers greater market access, improved business environments, stronger institutional guarantees, and brighter cooperation between the two major economies.
Terms of the Agreement Between the EU and China Under CAI
Under the agreement, European firms will gain permission to operate in China. This will cover joint ventures in the corporate operation of electric cars, private hospitals, real estate, advertising, telecom cloud services, airline reservation systems, and maritime industry services.
In turn, China will ban any forced transfer of technology from foreign companies. This also means that subsidies and bar state-owned enterprises will be less discriminating of foreign investors.
The deal will also push forward commitments towards climate change and labor rights, giving Europe a higher parity degree than the United States.
EU Member States Show Support to the EU-China CAI
Margit Molnar, head of the China Desk at the Economics Department of the Paris-based Organization for Economic Cooperation and Development, believes that the agreement is “a win-win” situation between the two economies that rely on mutual trade and investment.
Backing up the sentiment is Jan Zahradil, vice-chair of the European Parliament’s international trade committee, who said that the negotiations’ completion marks the newest landmark to bilateral economic cooperation. He thinks it was “a good end to otherwise not (a) very good year.”
Austria’s economic minister, Margaret Schambock, also considered the deal as a newly opened the door to a new market.
Shada Islam, a Brussels-based commentator on EU affairs, said that the two economies’ investment agreement would provide investors stability in Europe and China despite the pandemic-induced economic headwinds.
For James Zhan, editor-in-chief of the annual UN World Investment Report, this agreement represents the European and Chinese joint commitments to sustainable global development.
Completing the agreement negotiations offers a strong and positive signal from both China and the EU to keep their commitments to supporting an open and multilateral global system. It will also deepen the cooperation between the EU and China as both economies move to “reboot” the worldwide market and trade.
British economist and chairperson of the London-based think tank Chatham House Jim O’Neill said that the agreement would inject the economies with confidence towards a positive recovery in 2021.
“It sends out goodwill to the world and is of special importance at a time of global pandemic and economic recession,” says Fu Xiaolan, founding director of the Technology and Management Center for Development of the University of Oxford.