Erik BrattbergDirector of the Europe Program and Fellow at the Carnegie Endowment for International Peace
The recent negotiations over the EU-China Comprehensive Agreement on Investment (CAI) have been seen by EU officials as a bellwether for future economic relations with China.
Certainly, this was a big-ticket item for Chancellor Angela Merkel during the German EU presidency. After U.S. President Donald Trump’s phase one trade deal with Beijing and the Asian mega trade pact, the Regional Comprehensive Economic Partnership, in 2020, the EU was keen not to be left behind.
The fact that EU trade negotiators pounced upon China’s eleventh-hour offering to agree a deal on December 30, 2020, after slogging for seven years, is hardly surprising.
Still, the optics and timing of the deal right before the new administration of U.S. President-elect Joe Biden assumes office on January 20, 2021, are definitely far from ideal. The EU is also kidding itself if it takes for granted that Beijing will necessarily adhere to the commitments made in the deal and assumes that more “cooperation” and “trust” with the Chinese regime is possible.
The CAI may disappoint some in Washington and complicate prospects for a quick transatlantic reset with the new Biden team, but it should not preclude forging a strong joint transatlantic agenda on China in the coming years. This should include human rights—where the EU’s new Magnitsky-style human rights instrument could be a useful tool given new crackdowns in Hong Kong—investment screening, and technology restrictions.
In fact, Biden’s national security adviser, Jake Sullivan, has already toned down differences with the EU and expressed willingness to develop a common agenda on issues of shared concern about China. Come January 20, the EU should be ready to play ball.
Theresa FallonDirector of the Centre for Russia Europe Asia Studies
For China, the agreement is not a mistake but a great strategic success.
Beijing managed to encourage continued European investment to sustain China’s economic and technological development; boost the legitimacy of the regime despite human rights abuses in Hong Kong, Xinjiang, and elsewhere; and, perhaps most importantly, drive a wedge between the EU and the United States, preventing an EU-U.S. united front against China under the Biden administration.
For the EU, however, the agreement is a mistake.
On the one hand, Beijing’s limited concessions on market access do not redress the huge trade imbalance that currently exists in China’s favor. On the other, the EU managed simultaneously to antagonize the current U.S. administration, the incoming one, and “like-minded partners” such as India.
Now, the agreement is only a political one and has not yet been signed. But even if it is never signed and never ratified—there is vocal opposition to it in the European Parliament—the damage is done.
In the future, the EU should aim for a more consistent China policy across the areas where it considers China as a partner, as a competitor, or as a systemic rival. It needs to take better into account the geopolitical implications of its actions.
Paul HaenleDirector of the Carnegie-Tsinghua Center for Global Policy
Merkel set a target to resolve issues of reciprocal market access with China by the end of 2020, and she met that goal. Moreover, Brussels was pushed to negotiate with Beijing on its own terms due to the Trump administration’s incitement of transatlantic trade tensions and decision to deal with China unilaterally.
Was the deal a mistake? Not necessarily. In a best-case scenario, the CAI and the U.S. phase one deal mark the start—not the end—of a much more difficult and coordinated process between Washington and Brussels to resolve structural issues posed by China’s economic model.
The incoming Biden administration has emphasized the importance of a coordinated approach with the EU, and Brussels has echoed that resolve. This presents an opportunity to defuse the ongoing transatlantic trade dispute and then begin earnest discussions on how to address issues of common concern with China.
Only time will tell, however, if Beijing follows through on the CAI agreement. Many European and American policymakers are pessimistic that the deal will lead to tangible policy shifts in China on sensitive issues like labor and human rights. Real progress will depend on China’s willingness to match rhetoric with action.
Jakub JandaDirector of the European Values Center for Security Policy
The EU-China deal in its current setting is bad in four aspects.
First, the timing. The EU did not consult and coordinate with the incoming Biden administration, which is what a multilateral-focused body should do with its main ally. This is not strategic autonomy. It is strategic idiocy.
Second, this investment deal is the only thing Beijing really wants from Europe, putting the EU in a very strong negotiating position. That is why the EU should include as a mandatory condition that the deal will only enter force after China ends its slave labor and concentration camps; because the EU is the only actor who can force China to behave in a civilized way.
Third, the EU should add a clause that would allow for quick collective defense via sanctions if Beijing were to strategically blackmail one of the EU member states, as it is now doing to Australia.
Fourth, Chinese espionage against European democracies is massive. Therefore, the EU should have a hard clause allowing it to punish China for a specific espionage case right away, so that it really hurts. That would decrease the Chinese government’s will to risk major espionage operations against EU member states.
Philippe Le CorreNonresident Senior Fellow in the Europe and Asia Programs at the Carnegie Endowment for International Peace
“Based on clearly defined interests and principles, the EU should deepen its engagement with China to promote common interests at global level.”
This is what the EU wrote in its March 2019 landmark strategic outlook paper on China. Looking at the just-negotiated CAI, under the German EU presidency, one can ask whether the union is still keen to stand up for its “principles.”
Values-related aspects of the EU-China relationship—including human rights, labor rights, forced technology transfers, and even intellectual property issues—have been put aside by EU negotiators, allowing Merkel to offer Chinese President Xi Jinping the deal he wanted, weeks before the inauguration of the next U.S. president.
There was no better timing for the Chinese leadership to strike an agreement with a U.S. ally. Even if the ratification process faces hurdles from the EU side—members of the European Parliament and some frustrated member states will not comply easily—Beijing is starting the year with an advantage vis-à-vis Washington.
After months of sweet talk toward the EU, there is uneasiness in Biden’s team. With the United States already engulfed in domestic problems, the incoming administration will begin to formulate its China policy from a weaker position than originally planned. The EU has somewhat contributed to this situation, much to Beijing’s satisfaction.
Janka OertelDirector of the Asia Programme at the European Council on Foreign Relations
There are good reasons for Europe to negotiate trade and investment agreements with countries around the world and particularly in the most dynamic growth regions in Asia. This is how Europe operates best: setting rules and standards, finding compromise, and securing the conditions for prosperity in the future.
There are also good reasons for defining an improved framework for trade with China—after all, this is in the interest of many of Europe’s big and smaller companies. But some underlying questions remain.
How dependent does Europe want to be—how dependent can it allow itself to be—on China and its state-capitalist economy in the future? How can core European values be ensured while doing business with a powerful authoritarian state? How can the important leverage that Europe has as one of China’s most important trading partners best be used and even enhanced through effective coalition building?
A premature agreement and the nontransparent way in which it came about in a last-minute rush is not an appropriate answer to these questions.
On the contrary, it hands Beijing diplomatic leverage at a time when its actions would call for condemnation. It complicates transatlantic conversations at a time when conditions for renewed cooperation have greatly improved. And it challenges European cohesion at a time when it is needed most urgently.
Comments(13)
The EU has exactly zero strategic vision. It can't become China's economic partner and expect the working class people of the US to continue to support NATO. For the EU, it has always been economic interests before anything else. But without a geopolitical strategy, Europe will remain dependent on the US for its security needs. How long Biden will put up with the EU's economic shenanigans remains to be seen. But the new president can't heal the nation, and conduct a serious bi-partisan foreign policy, without strenuously disciplining the EU. If he doesn't, the Republicans will make this a high priority issue in the next Congressional campaign. Germany and France must decided on a new way forward. Bringing Moscow closer toward Berlin and Paris will indeed require a new security architecture for the entirety of the continent. Russia holds the key; because NATO, along with, Cold-War China policy and EU economic independence are all in serious contradiction to each other. For a new strategic vision, Europe needs to be made whole -- from the Urals to the Irish Sea. The last thing Brussels needs is a virulent global Cold War. This is especially true for ecological reasons, which in the 21st century must trump all else -- especially old, permanent-growth, fossilized fuel, industrial economic theory altogether. In our time: Peace is paramount! I repeat -- Russia holds the key; for Europe, and then, as an agent for moderation in the Middle East, as well.
My view on opening up trade with China is the biggest mistake the EU could ever make, unless it comes with rigorous human rights clauses and balanced and fair trade China has with other democratic countries. You only have to look at how China treats countries like Australia and Canada should they transgress with them, they start making up claims of dumping and unfair subsidies. Internally China is clamping down on peoples rights in Hong Kong and the Uighur peoples and religion is under threat also. So if the EU strengthens trade ties with China it will be moving away from joint security with NATO and its democratic partners around the world, this some may say doesn't marry trade with security and defence. Well I think everything is linked trade, security, defence and human rights along with foreign policy all are in a basket together and cannot be singled out. The EU must be careful and not fall into a trap China makes for it where they play of the US and others like Canada , Australia, UK, Brazil and most other democrat countries in different ways and do not watch each others backs. Has I have earlier alluded to look whats going on with Australia who spoke up about Covid 19 and also Canada who are holding a Hauwei executive they are turning a screw on them both, other countries like the US, UK, and the EU should not put up with this and pressure China to follow the rules.
"Only time will tell,.." - Time has told, again and again, for decades: ..WTO commitments, FTA with Australia, Hongkong, Uyghurs vs UNHRC seat,..
“This is how Europe operates best: setting rules and standards”, against “slave labor” and hopefully Kovesi will inquire Merkel’s government flagrant rule braking, described by FT: “Inside Germany’s abattoirs: the human cost of cheap meat/Eastern European migrants have long staffed slaughterhouses with poor pay and grueling hours. A new law wants to change that”. In the depth of time, Indo-Europeans came on horseback and obliterated the native European populations. For millennia the killing fields called Europe have arguably occupied the center of human narrative, the rest, just spectators. It almost fell at Tours; the Mongols had China, so they didn’t bother invading beyond the Eastern part; the Ottomans almost took Vienna, after Constantinople; it took over the world, colonizing, sometimes forcefully dealing in China opium forcefully grown in India; Africa, Middle East, defeating the Ottomans. The war started in 1914, a continuation of earlier wars, the consequences have changed the landscape. Kissinger went to China, and his memoirs are those of a supplicant, it was for Cold War geopolitics. NATO/EEC – Kissinger never asked for permission, he just did it. 1989, the West had the option to launch a Marshall Plan in Central/Eastern Europe, or listen to Milton and move everything to China, where huge masses were ready to work for pennies. They worked hard, they learned, and they got from textiles to Ant Group, WeChat (practical AI), quantum tech, Mars exploration, 5G. This is in no way to excuse anything mentioned in the article, not to mention that Taiwan “vaut bien une messe”. Fast forward to 2021, China will need to almost double its GDP/PPP/capita to match that of Romania (some of EU’s labor). These are the brutal numbers, they can lead in quantum tech, practical AI and so on, but it will take years to match the Dominican Republic. AI, 5G, education would have been the easy path for Eastern/Central Europe. SK, the Asian tigers, Taiwan, Honk Kong, Singapore, all did it. It was far easier to become AI powers than toil in an EU slaughterhouse, or pick fruits in Spain (UK, not anymore). Meanwhile, the millennials in the US control just 4.6% of U.S. wealth. Biden has pledged to save the middle class to save America, a return to Smith from Milton. With anti-minimum wage activists like Bill Gates, he will need all the luck. Even fixing the educational system would be a huge leap forward; healthcare, good luck. Sullivan, Blinken, Nuland, just employees, who knows how long?
The main issue with China in the past has been market access. CAI will be multi-phase and will allow both sides to judge if the terms and conditions are met. With Brexit complete and US trade relations uncertain, EU has little to lose by initiating the CAI.
They may lose any goodwill the Biden administration wished to extend to Europe. Just wait for the Germans to next complete Nord Stream II and allow Huawei into their 5G system. I think for better or worse, Germany has prioritized commerce over allies and principals.
Definitely a big mistake by EU what are they thinking?? China is emboldened by this as it splits western democracies notably US, EU, Australia, Canada, and UK. They have to take a strong line on trade and human rights as well as defence and security. I just cannot understand there thinking here they are kneeling down for the money and not taking China's belligerent attitude as wel as human rights inside China. Oh! EU you have lost the UK and sold you're souls for the dollar, thats what you have done never mind castigating the UK for Brexit this deal with the devil is shocking.
"Only time will tell" - time has told, again and again, for decades. China has broken its promises to WTO, China-Australia FTA, Hongkong,..
This trade deal from a European perspective is very important. It gives the EU a seat at the table and signals to the US administration that the EU has its own agenda that must be taken into account if a united front is to be formed. That the deal signing puts China in a positive light is too bad from a human rights perspective, but one should not forget that the US has a similar deal in place and otherwise has made the CCP look incredible competent comparatively in the last 4 years. The positive light is temporary, but gives the EU a diplomatic channel to adress the human rights abuses in China. Overall the deal has little substance so far and gives the EU a way to pressure the Chinese government on human rights in a much more competent fashion than what the US has been able to formulate. The EU is designed to be slow, but it is the best approach one could expect at the moment.
I completely agree with your. What is lost on commentators is the fundamental raisin d’etre of EU are not human rights but using trade to tie former adversaries and force them to talk instead of fight. Consequently that is the field where EU strengths lie and can navigate better than any other global power today. One additional aspect not mentioned here is Chinas concession on climate change targets, which effectively has a solidified Europe’s global leadership on this issue.
Big big mistake
What is most striking to me about this article is that it seems two issues are lost on American analyzers. First in their analysis they imply American strength, influence and global soft power which USA quite frankly no longer has. Tying into that is the timing of the deal which can be read as a “shot across the bow” of incoming Biden administration that if they plan on continuing Trumps policy towards Europe, we won’t play ball and won’t have an issue striking our own path and new ties with other powers in the world. One thing that also wasn’t mentioned is China conceding to Europe on the issues of climate change, which leaves USA an outlier, at the same time as Europe is confirming its leadership in this field. All in all this deal might be good or bad, but for better or worse it clearly shows how isolated America has become and that it has its work cut out in order to regain the trust and cooperation of its allies. I believe Biden understands that. The question is, with a divided country and vengeful republicans, will he be able to do what it takes to regain trust in American leadership.
for decades, western has used some buzzword to deny people's rights of development, which is the 2nd important human right.We saw youth unemployment in EU, working class angrier and angrier. Until now, western politics still use"human rights" to fool people, refuse to reform your corrupted system.We know Japan has lost 30 years due to US sabotage, clearly EU is the next Japan. Besides, what is the most important human right？The right to survive,which we saw perfectly denied in EU&US&GB
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