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EU and China set to agree investment deal, but could human rights concerns scupper it being signed?

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By Emma Beswick with AP
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File: European Council President Charles Michel prepares to speak with China's President Xi Jinping during a videoconference summit in Brussels, Sept. 14, 2020.
File: European Council President Charles Michel prepares to speak with China's President Xi Jinping during a videoconference summit in Brussels, Sept. 14, 2020.   -   Copyright  Yves Herman, Pool via AP
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The European Union and China have agreed in principle on a business investment deal after seven years of discussions.

"Today, the EU & China concluded in principle negotiations on an investment agreement," European Commission President Ursula von der Leyen said on Twitter.

The announcement came after leaders from the two sides met via video link on Wednesday, with President of the European Council, Charles Michel, and President of the European Commission, Ursula von der Leyen, representing the bloc and President Xi Jinping speaking on behalf of China.

"This Agreement is of major economic significance and also binds the parties into a values-based investment relationship grounded in sustainable development principles," the European Council and European Commission said in a statement.

"Once in effect, the CAI (Comprehensive Agreement on Investment) will help rebalance the trade and investment relationship between the EU and China," it added.

But concerns about the human rights situation in China could stand in the way of it being signed off at an EU level, where the European Parliament needs to ratify it.

A long-awaited deal, the Comprehensive Agreement on Investment includes provisions for settling disputes and outlines clear rules against the forced transfer of technologies — a practice in which a government requires foreign investors to share their technology in exchange for market access.

The EU previously said the agreement should increase the transparency of Chinese state subsidies and make sustainable development a key element of the relationship between the two trading blocs.

China’s Ministry of Commerce said "both sides had made tremendous efforts" at a press conference following Wednesday's meeting and that they had "overcome difficulties" to conclude talks.

It said the deal focuses on institutional opening up with market access as the key principle of the deal, which will mean more investment opportunities for businesses on both sides and "a better business environment".

The deal is predicted to make the economies of the EU and China more interdependent, with foreign investment in sectors including telecoms, private hospitals and electric vehicles likely to open up to the Asian powerhouse.

After the US, China is currently already ranked as the EU’s second-biggest partner for trade with goods commerce between the two countries representing more than €1 billion per day.

Opposition over China's human rights record

But on Tuesday, the EU expressed concerns about "the restrictions on freedom of expression, on access to information, and intimidation and surveillance of journalists, as well as detentions, trials and sentencing of human rights defenders, lawyers, and intellectuals in China."

The EU’s diplomatic agency, the European External Action Service, has called for the immediate release of Zhang Zhan, a former lawyer who reported on the early stage of the coronavirus outbreak in China and has been sentenced to four years in prison.

“According to credible sources, Ms Zhang has been subject to torture and ill-treatment during her detention, and her health condition has seriously deteriorated,” the EU said. “It is crucial that she receives adequate medical assistance.”

The issue of human rights could prove to be a sticking point for the deal clearing the EU Parliament, with critics drawing attention to reports of forced labour in some regions of China.

“The stories coming out of Xinjiang are pure horror. The story in Brussels is we’re ready to sign an investment treaty with China,” Guy Verhofstadt, a Belgian MEP for Renew Europe, said on Twitter.

“Under these circumstances, any Chinese signature on human rights is not worth the paper it is written on,” he added.

There could also be friction with the new US President-elect Joe Biden and his administration, as just weeks ago the EU proposed a trans-Atlantic dialogue to address “the strategic challenge presented by China’s growing international assertiveness.”

The United States has insisted that the deal should benefit other trading partners by getting China to commit to high standards of conduct.