China, EU should dismiss cacophony about BIT talks

By Wei Jianguo Source: Global Times Published: 2020/9/16 12:51:42

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During a virtual summit on Monday, the Chinese and EU leaders stated their commitment to speed up the negotiations on the China-EU Bilateral Investment Treaty (BIT) to achieve the goal of concluding the negotiations within this year.

This year marks the 45th anniversary of China-EU diplomatic relations. The negotiations on the Comprehensive Agreement on Investment (CAI) are among the top priorities of the China-EU relationship. If the talks - which have lasted for seven years - could be concluded this year, it would replace the BITs that had been reached between China and the 26 of the 27 EU members, and become the first BIT between China and other economies that includes market access. 

The agreement will set out a timetable and roadmap for the development of China-EU economic and trade relations in the next five to 10 years. For both China and Europe, it is not only of economic significance but also of strategic significance.

The core content of CAI negotiations includes investment protection, market access, investment supervision and sustainable operation and development. Compared with traditional BITs, CAI negotiations include national treatment and negative list management system before access, which take into account state-owned enterprises' competitive neutrality.

China and the EU have expressed their commitment to promote the conclusion of the BIT talks, which has great significance for overcoming the obstacles during the negotiations. Currently, both sides are exchanging ideas and seeking resolutions for issues including the negative lists. Disagreements are shrinking and getting closer to the goals that both sides want to achieve. It's believed that significant progress would be made during the year.

At the same time, both sides are facing some difficulties during the negotiation. For starters, in terms of market access requirements, the EU hopes to expand the areas of mutual investment and openness, requiring companies of both sides to have equal market opening rights in each other's markets. Therefore, the final negative list of the agreement should be as short as possible.

China has been shortening the negative list in recent years. The new 2020 national negative list has cut the number of restrictive measures to 33, and the new 2020 negative list for free trade zones (FTZ) - 18 FTZs and Hainan free trade port - has cut the measures to 30. China will continue shortening the negative list in the future. China is unwavering in its confidence and determination to further open up. I believe that China and the EU can continue to narrow their differences on this issue.

The second issue is reciprocity. The EU believes that European companies in China do not receive the same treatment as Chinese local companies. Therefore, it hopes that China can provide European companies with an open market and a level playing field so that European companies in China can enjoy equal rules in addition to equal opportunities and equal rights. The EU believes that Chinese state-owned enterprises get preferential treatment, so they hope to include "competitive neutrality" in the investment treaty.

However, this view of the EU is inconsistent with the facts. According to the Ease of Doing Business Report released by the World Bank this year, China's rank has jumped 15 places to 31st globally. China is among the 10 economies with the largest improvement in business environment.

China has started implementation of the Foreign Investment Law since the beginning of 2020. In terms of improving the business environment, China will further increase its efforts and continue to promote the establishment of a market economy system based on marketization, internationalization, and rule of law. In particular, China has issued a number of policies for the opening of financial services, attracting a considerable number of European financial institutions to turn their attention to China's capital market opening.

The third issue is the politicization of economic and trade cooperation. Some voices in the EU are biased toward investments from China, saying that the "16+1" cooperation between China and Central and Eastern Europe is an attempt to divide Europe. They view China as rival with different social systems and view China-EU trade relationship through the perspective of protecting EU's value, associating economic and trade issue with Hong Kong and human rights issues. It should be noted that China has repeatedly emphasized that it will not export values and will not impose its own system on others. China respects the right of people of all countries to independently choose the path of development. Some people in the EU regard China as a rival, which is obviously a misjudgment of China-EU relations. China has no intention to export its values to Europe, nor does it intend to split Europe. 

There is no fundamental geopolitical conflict between China and Europe. Instead, there is broad consensus on supporting multilateralism, opposing trade protectionism, and paying attention to climate change.

In the history of the development of China-European relations, there will be some noise at every critical moment, but European people of insight, especially politicians with vision for the future of globalization, should not pay attention to these noises and should not cater to the US' suppression of China and the US' decoupling strategy.

At present, Germany is gradually abandoning this unfair concept, and some other EU countries are also following up. The core of bridging differences between China and Europe is to expand exchanges and enhance mutual trust.

In terms of economics and trade, there are relatively few exchanges between China and the European Chamber of Commerce. There are not many exhibitions and fairs that both parties participate in. In the future, it is especially necessary to enhance the role of the chambers of commerce as intermediary organizations.

Before the COVID-19 pandemic, flights between China and Europe had the largest share of international flights to China. While strictly preventing import COVID-19 cases, China-Europe flights have gradually entered the recovery period.

Since the EU involves 27 economies, the demands of different countries are different, and the internal relations are complicated, which shows that it is not an easy task for China and the EU to reach the CAI. Against the backdrop of the pandemic, US' intensifying decoupling approach against China, and the rising protectionism, the negotiations are facing challenges. The final consensus still requires unremitting efforts from both sides.

There are contradictions and differences between China and Europe, but the sincerity and mutual trust of cooperation between the two sides is greater than these factors that try to undermine and divide the two sides. China-EU cooperation will send a positive signal to the world: strengthening mutual trust, promoting cooperation, and resolving differences through dialogue and negotiation are still the mainstream of international interactions.

The author is a former Chinese vice minister of commerce and executive deputy director of the China Center for International Economic Exchanges.


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