HS analysis The EU’s agreement with China was a cold shower for Chinese workers and the United States – Was the EU silly or calculating?

In the EU investment agreement, China emerged as the winner. Germany’s Angela Merkel ran through an agreement in which car factories won and workers ’rights were lost.

On Wednesday On January 6, a thousand police officers flocked to 72 destinations in Hong Kong.

By the time the operation was over, China had arrested 53 activists in the Hong Kong Democracy Movement. The news was buried under the people who had rushed to the Capitol in Washington, as intended.

The arrests in Hong Kong were also a dull message to the EU. Just a week earlier, the President of France Emmanuel Macron and the German Chancellor Angela Merkel announced that they had reached an agreement with China on an investment agreement.

French President Emmanuel Macron attended a remote meeting of the Investment Treaty with Chinese President Xi Jinping, German Chancellor Angela Merkel, European Commission President Ursula von der Leyen and European Council President Charles Michelin on 30 December 2020.­

Again, did the EU release China like a dog from the gate just to watch China do what it amused?

Agreement defines the rules for investment between China and the EU.

It is considered quite unanimously a victory for China. China was rewarded with a spectacular agreement, even though it showed disregard for human rights or international rules of the game.

Last year, China defeated the Hong Kong Democracy Movement. The persecution of minorities in Xinjiang was flooded with more and more detailed information, and China has done nothing to alleviate the situation. And of course the coronavirus spread from China to all over the world.

The cherry on top of the cake was that the deal was completed just before Joe Biden was to take office as president. Bowing to China was a bang for Biden.

Investment agreement it is not particularly turbulent if it is treated as a purely business matter.

It will make it easier for EU companies to enter the Chinese market and “level the playing field”. China treats foreign companies unfairly, and investment has been one-way. The agreement requires transparency from China, which will make it easier to intervene in Chinese subsidies.

“The aim was to deregulate the Chinese market in order to reduce the contrast between it and the transparency of the EU market. It would guarantee a more level playing field for companies, ”says the Head of the Trade Policy Department at the Ministry for Foreign Affairs. Pasi-Heikki Vaaranmaa.

The agreement also hits book and cover practices that already exist. Many things become smoother. At present, a joint venture must be set up in order to operate in China, not in the future.

Negotiations lasted seven years and required 35 rounds of negotiations. The agreement was proposed as early as 2012 by the current president Xi Jinping was just beginning to go through it.

During the Xin era, China has behaved more and more aggressively. Many guessed the deal would be completely buried. Even under Christmas, negotiations seemed to have reached a stalemate.

And good so, many said. Fifteen respected Chinese scholars issued an open letter urging restraint.

“The agreement is about more than just practical concessions on investment issues. It has implications for Europe’s credibility and core values. The point is that the EU would not fall into the same ill-prepared agreement that Europeans rightly blamed Donald Trumpia, ”The signatories insist.

The signatories referred to the Phase One agreement signed by Trump a year ago, which was to begin closing the wounds of the trade war.

What was the EU in a hurry to complete the agreement?

Answer: Germany was in a hurry. The agreement was born right now, because otherwise it would not have been born. China wanted an agreement before the start of Biden’s presidency and Merkel before the end of Germany’s EU presidency.

The window was open for a moment, and under its guise, China made concessions in the agreement. The agreement was finalized on New Year’s Eve, with one day left under the German Presidency.

China is important to Germany because at least one in three German cars is now sold in China. At Volkswagen, the Chinese market already accounts for about 40 percent of sales. The agreement increases the reliability of companies.

Workers assembled cars at Audi’s assembly line at Volkswagen’s Tianjin car plant in China in December 2019.­

The agreement was good for the Chinese Communist Party. But was it good for the EU too?

Depends on who you ask. The German car manufacturer is therefore pleased, as are France and Germany, the largest Member States.

Those who want the EU to promote human rights and workers’ rights have less to celebrate. For the EU as a community of values, the agreement is embarrassing. Information on the blatant exploitation and forced labor of minorities in Xinjiang has accumulated during the year.

On Christmas Eve, the French Deputy Minister for Trade Franck Riester refused to accept the agreement unless China made concessions on the issue of forced labor.

And they came. China agreed to add to the text of the agreement that it would seek to “continuously and relentlessly” ratify agreements prohibiting forced labor.

No one really believes that, even though this concession was difficult for China as well. China would have had time if it had wanted to. China was a founding member of the World Labor Organization (ILO) 102 years ago, and the People’s Republic of China has also had an office for 35 years, but China has still not even signed a treaty banning forced labor.

Question is ultimately about whether the agreement can be seen as a mere business matter.

The realist’s answer is that we need to get along with China. China is now the EU’s largest trading partner, after the United States lagging behind last year. The deal is done anyway, and it’s better to agree than not to agree.

Why would the EU give China a competitive advantage in the Chinese market when no action has made China a democracy?

The critics’ response is that the recipe for EU policy towards China is badly outdated. China has stepped across too many borders to be able to conclude trade agreements on the one hand and make warm statements on human rights on the other.

The agreement is also a testament to the pace of EU policy towards China. In 2019, the EU defined China as a “systemic competitor”, now trade agreements with it are being turned again. Credibility is a test if German car factories always decide in a tight spot.

China is generously taking advantage of this, especially now that the EU has shown that it can step on US keys if necessary.

Agreement has been commented on acidically from the United States. Under President Biden’s administration, which began on Wednesday, the agreement felt like a violation, just as China wanted. The common EU-US policy towards China became more difficult.

Biden’s national security adviser has already served in the transitional administration Jake Sullivan commented on Twitter. After Trump’s furious Twitter communication, the message is hard to describe as a shock: “The Biden and Harris administration would like its European partners to discuss joint action on China’s economic practices in good time,” Sullivan wrote.

The EU defends itself that the United States itself has promoted trade with China, despite imposing sanctions and considering a total ban on imports of Xinjiang products.

Trump signed his own Phase One deal a year ago on January 15th. In many ways, it goes beyond the European Investment Treaty now in place.

Chinese Deputy Prime Minister Liu He (left) and US President Donald Trump presented the Phase One trade agreement documents they signed at the White House on January 15, 2020.­

Agreement the ultimate purpose is to bring reliability to the company. Expanding a company abroad is expensive, and trade agreements reduce risk.

In recent years, China has leapfrogged agreements and practices. Sweden and the Czech Republic, among others, have become acquainted with China’s “wolf warrior diplomacy.”

Is the agreement made by China worth anything anymore?

According to Foreign Ministry Pasi-Heikki Vaaranmaa, China has kept its agreement in the field of trade quite well.

“China has a pretty good executive record if we look at its WTO operations,” Vaaranmaa says. “China, for example, was sued in WTO for export bans on rare earths. When it was found that China had breached the agreements, it lifted the export bans. ”

Many suspect that this is no longer the case as China behaves more and more confidently.

“Foreign companies can prepare for continued, if not greater, uncertainty, regardless of what China promises in the CAI agreement,” wrote a researcher at the German Merics Research Institute in his analysis. Katja Drinhausen.

The most worrying is the example of Australia. Australia signed a free trade agreement with China in 2015. Relations between the two countries were already cooling but not yet in a free fall. The dispute erupted in full flame when Australia in April 2020 demanded an investigation from China on the origin of the coronavirus.

China immediately threw the contracts in the trash. Australian barley was slashed by heavy tariffs, and the trade war has only deepened.

“The example of Australia shows that the agreement does not guarantee that the agreement will always be adhered to. But is that a reason not to seek an agreement? ” Danger country asks.

Agreement has not yet been finally adopted. Its details are being filed and have yet to be approved by the European Parliament. Approval is not a snap, but with Germany, France and the Commission behind it, the agreement is unlikely to collapse completely.

It still takes energy. From 2021 onwards, time is wasted in formulating a common China policy, as in the United States, Biden will have his hands full in calming the domestic situation. And here is another corona pandemic.

EU has been accused of naivety, but the opposite explanation sounds more plausible. Merkel and Macron are not so foolish as to imagine China’s kindly obedient postings.

If anything, the EU can be blamed for the cold calculations and not the rose-colored glasses. The Trump trade war has shown that China does not make a backlash. Rather, the EU calculated that it could win what could be won and deliberately gave China a symbolic victory, in return for concessions to the text of the agreement and some operational certainty for companies.

Was the contract worth it?

The realist replies that it will not know until years after the effects of the agreement can be calculated. Ideally, the answer is that the price of an ineffective human rights policy cannot be lowered even then.

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