The European Commission announced on Thursday it was ready to open negotiations with China, one of the EU’s most important trading partners, on an investment protection accord.
The announcement comes in the midst of a series of tit-for-tat trade disputes between Brussels and Beijing and as the EU begins talks with Washington on what could be the largest ever Free Trade Agreement.
China eyes that development, and similar US initiatives in the Asia-Pacific region, with some concern and has asked the EU to open talks on their own FTA, a prospect Brussels has played down, believing an investment accord would be a more suitable first step.
“An EU-China investment agreement will help deepen our ties and sends the signal that we are firmly committed to building a strong partnership,” EU Trade Commissioner Karel De Gucht said in a statement.
“The agreement needs to secure existing openness and deliver new liberalisation of the conditions for accessing each other’s investment market,” De Gucht said in a statement.
“Crucially, it should also improve the treatment of investors and their assets – including key technologies and intellectual property rights,” he said.
The Commission said that an accord would bring together current separate agreements into one text, with the aim of improving “the protection of EU investments in China as well as Chinese investments in Europe, improving legal certainty regarding treatment of EU investors in China, reducing barriers to investing in China and, as a result, increasing bilateral investment flows.”
The Commission added that “it should also, crucially, cover improved access to the Chinese market,” citing a key and longstanding EU concern about trade with China.
The Commission said there was “huge potential” to boost investment ties which are relatively modest considering the size of the overall trade relatsionship, with China counting the EU as its largest export market.
In 2011, European companies invested 17.5 billion euros in China, with flows the other way just 2.8 billion euros.
In comparison, EU exports to China totalled $212 billion last year, with imports $334 billion.
As a first step, the Commission will now ask the 27 EU member states to approve a negotiating mandate with China.
The latest development comes with the two sides at sharp odds over solar panels, steel tubes and telecoms equipment, sparking fears of a trade war.
Analysts said the increase in such tensions could simply reflect the fact that both are feeling the pressure from a sharp economic slowdown and that the underlying relationship is so important that Brussels and Beijing ultimately have every incentive to settle their differences.
EU ready for talks on China investment accord
