Huawei CEO calls for easing of US-China trade tensions

First of all, the signature of the CAI doesn’t mean that the EU opens unconditionally its markets to Chinese investments. As Director General for Trade Sabine Weyand puts it, CAI is an important building block in the EU’s China strategy, but it is not the only element at EU’s disposal. It will not alone resolve all distortions in the EU-China economic relationship; the EU will continue to use trade defense instruments, foreign investments screening, as well as new tools such as the EU’s foreign subsidies legislation, the international procurement instrument and the EU global sanctions regime to cooperate with a country which is simultaneously a partner, a rival and a competitor.

Secondly, the agreement sets high benchmarks in three key areas of consideration for European and Chinese investors: market access, level playing field and investment-related sustainable development.

Let us look at some of the most remarkable achievements in each of these areas.

On market access, we see the confirmation of the current investment liberalization under the framework of the WTO. This is an important validation for Chinese investors in Europe, given the change in mood across Europe vis-à-vis China’s economic practices. It is also an important confirmation for European investors in China, as CAI binds China’s previous liberalizations preventing backsliding. What is most notable for European investors is the opening of a range of sectors previously restricted or precluded. While the detailed schedule is yet to be published, it is interesting to note the emphasis put on services, which today lag greatly behind investments in manufacturing. We particularly welcome the focus given to new energy, electric vehicles and digital services (notably cloud and computer services), which we see in line with the long-term goals of both the EU’s green and digital transition and China’s next five year plan of developing a low-carbon and innovative economy. We expect European online content providers to take advantage of these new liberalizations to partner up with Chinese platforms to offer new online services in China.

On the level playing field, CAI takes important steps to make European investments easier and fairer, getting China to agree on transparency obligations on subsidies on services as well as on rules against forced tech transfer – putting the EU on par with the US Phase 1 deal. The most important achievement is on the non-discrimination against European companies by Chinese SOEs – and it is worth noting how the EU applies a wide concept of SOEs, not only in reference to their ownership but also in relation to the role of the Party and the control it exercises in a given company.

In contrast with bilateral agreements concluded by China with Member States and in line with previous FTAs signed by the EU, CAI binds the parties into a value-based investment relationship. The commitment is not to lower labor and environmental protection in order to attract investment, with China agreeing to work towards the ratification of the ILO fundamental Conventions on forced labor.

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