Date: 21 January, 2021 - Blog
EU is China’s largest trading partner, and the same is true vice versa. Finally, China and the European Union have concluded negotiations on an investment agreement that was seven years in the making. This signature occurred just a few days before Joe Biden actually takes over from Trump. The deal must be ratified by the European Parliament and its 27 member states to go into effect; this process could take more than a year.
Source: European Commission, Morgan Stanley Research
China has committed to a greater level of market access for EU investors, including some new important market openings. China is also committing to ensure fair treatment for EU companies so they can compete on a better level playing field in China (i.e. discipline for state owned enterprises, transparency of subsidies, rules against the forced transfer of technologies, etc.).
EU-China resembles in many respects to the former US-China one
It agreement focuses on investment and should not be considered a ¨free trade agreement¨
EU is proving more mercantilist than strategic
Granted, EU has no lack of good excuses. Trump administration did not consult the EU before closing its ¨Trade deal¨ with China in January 2020. As recent history demonstrated, EU would also be well-advised to reduce its reliance on America, who-ever runs it. The power vacuum in Washington and the close end to her mandate were two other reasons why A. Merkel chose to accelerate with the conclusion of the EU/China deal.
But, still, in signing precipitously this deal, Europe neither put in the balance at their correct level the key issues Human Rights and of political sovereignty, nor of climate change. Worse, Germany confirms its mercantilist leanings, namely by trying to primarily protect its industrial and car manufacturing interests.
Europe is – much too – easily sacrificing its main principles / values on the hotel of business
- EU actually increases its dependance on China
- By torpedoing a transatlantic coalition, it also removes a lever from the Biden administration to thwart Beijing
