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China’s investment deal with the EU has raised 3 big concerns in Europe

The EU and China’s new investment deal may fail to make it past European lawmakers after they raised three big concerns with the agreement.

After seven years of negotiations, the European Commission, the executive arm of the EU, announced the deal with China on December 30. The actual wording is still being finalized by lawyers and it will then have to be approved by the European Parliament before its implementation.

What’s in the deal?

It’s been a long-term ambition of the EU to make foreign investment fairer for European companies which compete against state-funded firms in China.

The EU’s trade chief Valdis Dombrovskis told CNBC last week that “the main purpose of this agreement is to address the economic imbalance in our relations.”

As a result, the investment agreement states that China “will no longer be able to prohibit access or introduce new discriminatory practices” on manufacturing and some service sectors too.

The deal also makes it easier for European firms to get the right paperwork approved by Chinese authorities.

‘We need to be coherent’

“Parliament strongly condemns the Chinese government-led system of forced labour, in particular the exploitation of Uyghur, ethnic Kazakh and Kyrgyz, and other Muslim minority groups, in factories within and outside internment camps in the Xinjiang Uyghur Autonomous Region,” one of the positions stated.

Though lawmakers have made their position clear over human rights, they have argued the investment deal doesn’t ask China to go further on labor conditions. The Chinese government has repeatedly denied mistreatment of Uighurs.

What about the U.S.?

The deal was announced just weeks before President-elect Biden arrives at the White House.

Some lawmakers are worried the timing is therefore not the best as it could jeopardize the relationship with the new administration.

“I think it is very important to be careful because we have now a new administration in the U.S.,” Vedrenne said, adding that it is “important” that the EU doesn’t become the playground for U.S.-Sino disputes.

Jake Sullivan, Biden’s choice for national security advisor, suggested just days before the deal was announced that there should be “early consultations” with the EU over common concerns about China’s economic policies.

“Nobody has this agreement with China,” Vedrenne said, “it is a demonstration that the EU has the ability to have some agreements with key actors but I think it is very important to have a discussion with all partners.”

Reference: CNBC