The European Parliament has overwhelmingly voted to freeze the ratification of the EU-China investment deal due to the sanctions that Beijing has imposed on five members of the hemicycle.
In a strongly-worded resolution passed on Thursday afternoon, the Parliament also deplores what it calls the "crimes against humanity" that are taking place against the Uyghur Muslim minority in the Xinjiang region and the crackdown on the democratic opposition in Hong Kong.
The latest development represents a new blow to the EU-China Comprehensive Agreement on Investment (CAI) that European leaders reached during a video call with Chinese President Xi Jinping less than five months ago.
The Chinese government reacted to the European Parliament's vote by calling on Brussels to "immediately stop interfering in China’s internal affairs (and) abandon its confrontational approach".
“The unreasonable sanctions imposed by the EU have led to difficulties in China-EU relations. That is what China does not want to see, and the responsibility does not lie with the Chinese side," China foreign ministry spokesperson Zhao Lijian said at a daily briefing.
Zhao reiterated China's stance that the agreement is a “balanced and win-win deal that benefits both sides, rather than a gift or favour bestowed by one side to the other."
“China has always been sincere in promoting cooperation between the two sides, and we hope that the European side will move in the same direction as us, with less emotional outburst and more rational thinking, and make the right decision in their own interests," Zhao said.
EU, China sanction each other
The agreement's main goal is to increase market access and ensure fair treatment for EU investors and companies doing business in China. The text wants to create a so-called level playing field and contains provisions on state-owned enterprises and subsidies.
While initially hailed as landmark, the agreement was quickly criticised for what critics say are insufficient commitments made in regards to labour rights, particularly forced labour. This issue has become politically thorny after revelations emerged of forced labour inside the detention camps in Xinjiang, which add to accusations of torture, disappearance, forced sterilisations, sexual violence and mass surveillance.
The ratification of the investment deal by the European Parliament – a necessary step in the EU legislative cycle – was in doubt from the very moment the draft text was published, but tensions escalated rapidly when, in late March, the European Union decide to impose the first sanctions against China in more than 30 years.
The raft of measures, designed in coordination with Western allies, targeted four Chinese officials and one entity believed to be involved in the human rights violations against the Uyghur minority.
China reacted swiftly and furiously: in an almost instantaneous counter-strike, the Chinese Foreign Ministry slapped sanctions on ten European individuals, including five Members of the European Parliament, and four entities, among which was the Parliament's subcommittee on human rights.
Beijing also blacklisted democratically-elected officials from the UK, the US and Canada. In total, more than 30 individuals and entities were sanctioned.
An 'attack' against the EU
The Chinese counter-sanctions have infuriated the European Parliament and soured the mood for ratification.
In the joint resolution approved on Thursday with 599 votes in favour and 30 against, MEPs lambaste Beijing's response, calling it "an attack against the European Union and its Parliament as a whole, the heart of European democracy and values, as well as an attack against freedom of research".
"While the EU’s sanctions target human rights violations and are based on legitimate and proportionate measures embedded in international law, China’s sanctions lack any legal justification, are entirely unsubstantiated and arbitrary and target the criticism of such human rights violations," the parliamentarians wrote.
The MEPs say that any discussion around the investment deal "has justifiably been frozen because of the Chinese sanctions" and refuse to open the debate as long as they remain in place. They argue their ability to scrutinise the agreement has been "significantly hindered" by the restrictions placed on the subcommittee on human rights.
Moreover, the Parliament "considers the sanctions to be part of an effort to police speech about China worldwide and to determine what kind of speech and discussions would be allowed globally, and sees this effort as part of a totalitarian threat".
The lawmakers took the opportunity to push the European Commission, which acts as main negotiator of the deal, to "improve the protection of human rights and support for civil society in China" and underlined that other trade and investment agreements with regional partners, like Taiwan, "should not be held hostage to the suspension of the CAI ratification".
MEPs also urged the Chinese government to ratify and implement several conventions of the International Labour Organization (ILO), including those related to forced labour, freedom of association and the right to organise.
China and the United States are the only big economies that have not ratified the 1930 convention that abolishes forced labour in all its forms. China hasn't ratified either the United Nations' International Covenant on Civil and Political Rights.
Reacting to the move from Brussels, the Chinese Foreign Ministry said the investment deal is a "win-win" for both sides and asked for "positive efforts" towards an early ratification. Spokesperson Zhao Lijian defended the Chinese counter-sanctions as a "necessary, legitimate and just reaction to the EU's moves of imposing sanctions and seeking confrontation".
"China has every sincerity in developing its relations with the EU. That said, we will firmly safeguard its sovereignty, security and development interests. Sanctions and confrontation cannot solve the problems; dialogue and cooperation is the right way forward," he said.
'This agreement is in the freezer'
The European Parliament has no intention of backing down on its demands, at least not for the time being.
Reinhard Bütikofer, one of the MEPs punished by the Chinese Foreign Ministry, believes that, beyond the diplomatic showdown, the whole deal needs to be reviewed and reworked in order to get the Parliament's green light.
"Basically the resolution says this agreement is in the freezer, buried very deep in the freezer. And we demand that China lift its sanctions before the European Parliament could be willing to consider dealing with the matter," Bütikofer, who co-authored the resolution, told Euronews ahead of the vote.
"When you look at the substance, there are issues not really addressing the application of forced labour in China. [The deal] doesn't give a very strong conflict-resolution mechanism. If China fails to implement the provisions of the deal, the instruments that we have to force them to live by [them], the letter that they have signed onto, are extremely weak," said the German MEP, who sits with the Greens and currently chairs the Parliament's Delegation for relations with China.
"There are restrictions with regard to the market access. This is neither providing a level playing field nor is really very beneficial to the European industry, with a few exceptions maybe. And on the other hand, it allows the Chinese side to enjoy national treatment with regard to European media while European media are still excluded from the Chinese market completely."
Bütikofer hopes member states will send a "clear signal of solidarity" with the European Parliament in its standoff with China. The MEP thinks that the growing reluctance of countries like Poland, Italy and the Netherlands, together with the scheduled departure of German Chancellor Angela Merkel, who has been one the deal's main promoters, doesn't bode well for the agreement's future.
Dr Fabian Zuleeg, chief economist at the European Policy Centre (EPC), shares the Green MEP's assessment and warns the new confrontation heralds a challenging chapter in EU-China relations.
"It's not necessarily the actions of the parliament, but clearly the sanctions, the counter-sanctions, the overall international situation are all leading to a situation where member states are considering what the relationship with China is and how to take things forward," Zuleeg told Euronews.
"I think China has its own agenda [in] deciding the relationship with the European Union and with the United States. But it looks like we are in for a difficult period, certainly for the next month, if not years."