The text of the investment agreement with China (CAI) was published by the European Commission on 22 January. While the European Parliament is critical of the agreement itself and the course of negotiations with China, the Commission is trying to justify the conclusion of the negotiations by detailing the agreement.
The text, available on the Commission's website, contains five parts: - market liberalisation; - regulatory framework; - sustainable development chapters; - settlement of disputes; - and final institutional arrangements. They detail the obligations for both parties to achieve further market opening, fair competition, transparency and commitments in terms of sustainable development (see EUROPE 12628/7).
Since the announcement of the end of the negotiations, MEPs have repeatedly denounced the process as too fast and a gift to China. Many believe that slowing down the negotiations on this agreement could put pressure on China to make a greater commitment to worker protection, in particular. On transparency and non-discriminatory treatment of European companies in the Chinese market, there are also concerns that China is circumventing its commitments.
Dispute resolution: The Commission is trying to be reassuring in this respect. The agreement provides for an arbitration mechanism similar to other treaties. It also contains possibilities of suspending the obligations of the agreement in the event of non-compliance with the arbitration. Moreover, these unilateral suspension measures are not subject to the World Trade Organization (WTO) agreements of which both parties are members.
However, like free trade agreements, the chapters on sustainable development are not subject to the dispute settlement mechanism. They may be examined by a parallel panel of experts, which is responsible for issuing recommendations. The reports resulting from this review are therefore not binding.
While this exception is not new or unique to this agreement, it is all the more worrying for MEPs in the case of China. Its government is accused of forced labour, repression of certain minorities and is the subject of a resolution adopted by the European Parliament to impose sanctions (see EUROPE 12625/20).
With regard to worker protection, the agreement commits China to “carry on with continuous efforts” to implement the International Labour Organization (ILO) core conventions it has already signed and to ratify the remaining four. For MEP Reinhard Bütikofer (Greens/EFA, Germany), China must first sign these conventions before the EU starts the process of ratification by the European Parliament. Interviewed by EUROPE, the MEP added: “the language on labour protections under ILO conventions is weak as a soup made from the shadow of a pigeon that died of starvation”, in the words of Abraham Lincoln.
For the time being, the Commission is reaffirming its commitment to concluding the agreement with China and rejects criticism of the timetable. “It’s not a negotiation concluded in a rush. The parties agreed to accelerate work on liberalisation. There was a clear will to work on parts of the agreement related to market access, level playing field and sustainable development”, a European diplomat noted.
Aspects of the investment relationship are still missing from the current text and will have to be negotiated over the next 2 years. This is the case, for example, with investment protection. They will be the subject of separate agreements, which will in turn be subject to the co-decision procedure.
See the agreement: https://bit.ly/39Q9uYE (Original version in French by Léa Marchal)