EU and China reach agreement in principle on investment

Submitted by Lee Gibson on 04 January 2021

The European Union (EU) and China have concluded in principle the negotiations for a Comprehensive Agreement on Investment (CAI).

The deal followed talks between Chinese President Xi Jinping and European Commission President Ursula von der Leyen, European Council President Charles Michel and German Chancellor Angela Merkel on behalf of the Presidency of the EU Council, as well as French President Emmanuel Macron.

China has committed to a greater level of market access for EU investors than ever before, including some new important market openings.

It is also making commitments to ensure fair treatment for EU companies so they can compete on a better level playing field in China, including in terms of disciplines for state owned enterprises, transparency of subsidies and rules against the forced transfer of technologies. For the first time, China has also agreed to ambitious provisions on sustainable development, including commitments on forced labour.

President von der Leyen said: “This agreement is an important landmark in our relationship with China and for our values-based trade agenda.

"It will provide unprecedented access to the Chinese market for European investors, enabling our businesses to grow and create jobs. It will also commit China to ambitious principles on sustainability, transparency and non-discrimination. The agreement will rebalance our economic relationship with China.” 

Deliberations on the adoption and ratification of the agreement will be the next stage in the process.

“This deal will give European businesses a major boost in one of the world's biggest and fastest growing markets, helping them to operate and compete in China," said Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis.

"We have secured binding commitments on the environment, climate change and combatting forced labour. We will engage closely with China to ensure that all commitments are honoured fully.”

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