China Speeds Up Investment Pact Negotiations in EU to Compete with US
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China has been in negotiations with the European Union for some time regarding an investment pact. However, those negotiations have accelerated of late, and it appears this traces back to the government’s desire to counter American influence in this region, and to block many more favorable investment treaties for the United States. To that end, the once intractable China has now signaled a desire to make compromises to facilitate a final investment pact early next year.
China has been in negotiations with the European Union for some time regarding an investment pact. However, those negotiations have accelerated of late, and it appears this traces back to the government’s desire to counter American influence in this region, and to block many more favorable investment treaties for the United States. To that end, the once intractable China has now signaled a desire to make compromises to facilitate a final investment pact early next year.
China and the EU began negotiating a trade pact in January of last year. The talks followed Beijing’s unveiling of a rather ambitious economic reform plan that includes further opening its own markets to foreign investors. On Saturday, the EU announced that its investment talks with the Chinese delegation had achieved “significant progress.” The two sides plan to pursue more substantive talks next month. Anticipated topics for these talks include investment protection, state-owned enterprises, and China’s status as a market economy, among other subjects.
China appears to have opted to accelerate its negotiations with the EU at least in part due to the U.S.-led efforts to push through the Trans-Pacific Partnership (TPP) agreement, which culminated in its signing by 12 countries in October. The US has also engaged the EU in talks related to the Transatlantic Trade and Investment Partnership (TTIP).
Both China and the EU want to push ahead with the investment talks as expeditiously as possible. Moving forward, the negotiations will likely focus on concessions and compromises for both sides. However, many analysts believe that in the strong likelihood that they can reach an accord sometime next year.
According to a report by the South China Morning Post, China may offer more market access and greater flexibility when it comes to discussing business pertaining to state-owned business. In return, the EU may reduce investment protections.
China’s investments in the EU have surpassed all of Europe’s investments in China combined. Many European firms have complained about the difficulties of investing in China. Thus, a pact between China and the EU could represent a positive step toward smoothing over these areas of concern.
Joerg Wuttke, President of the EU Chamber of Commerce, said of the newly invigorated negotiations with China: “The investment treaty is like a WTO for us; a rare opportunity for EU companies to negotiate for more market access in times where Chinese companies seek a strong investment agreement in the EU. He added “…EU business strongly believes that a conclusion in late 2016 is possible and necessary. Both regions need a boost of good news in economics in 2016, and the investment agreement could provide that in symbol and substance.”
An investment pact such as this could pave the way for a more comprehensive free trade agreement.
