Europe And China Approve Landmark Investment Treaty, Snubbing U.S.

Dec 30, 2020
Originally published on December 30, 2020 3:49 pm

China's president and European leaders met Wednesday to mark their agreement on an investment deal between the European Union and China despite a request for talks on the issue by the incoming administration of President-elect Joe Biden.

Chinese President Xi Jinping, German Chancellor Angela Merkel and French President Emmanuel Macron joined EU leaders Ursula von der Leyen and Charles Michel in a video conference to conclude negotiations over the deal, which removes a number of barriers to European companies' investment in China.

After Wednesday's video meeting, von der Leyen tweeted: "The EU has the largest single market in the world. We are open for business but we are attached to reciprocity, level playing field & values. Today, the EU & China concluded in principle negotiations on an investment agreement."

Before President Biden has even taken the oath of office, the well has been a bit poisoned in transatlantic relations. - Theresa Fallon, director of the Centre for Russia Europe Asia Studies

Negotiations had repeatedly stalled since they began in 2013. But after Biden won the U.S. presidential election, Chinese negotiators went into overdrive, offering various concessions on market access for European companies to help push the deal through before the end of the year. Among other things, the investment agreement promises that China will no longer force European companies to transfer their technology to local joint-venture partner companies.

The deal is a diplomatic victory for Beijing and a domestic one for Xi. In Washington, it will be seen as a snub to the incoming Biden administration, which last week urged the EU to wait.

"Before President Biden has even taken the oath of office, the well has been a bit poisoned in transatlantic relations," said Theresa Fallon, director of the Centre for Russia Europe Asia Studies, a think tank in Brussels.

The deal has also been criticized by politicians in Europe because of concerns over forced labor and other human rights abuses in China, and for preempting any discussions with the Biden administration on a joint approach to Beijing.

Fallon told NPR that the push on the European side to sign the treaty was led by Merkel, who, in her final year as Germany's chancellor, wants to seal her legacy with a historic EU-China treaty, and whose country is Europe's largest trading partner with China.

"After four years of the Trump administration, which characterized the EU as 'worse than China,' there is a growing anti-American sentiment" among EU leadership, Fallon said, "meaning 'we don't want to do what the U.S. says.' "

Chinese Foreign Ministry spokesperson Hua Chunying tweeted that the agreement "demonstrates China's determination and confidence to advance toward a higher level of opening up."

The deal will undergo months of debate and discussion in the European Parliament before it can go into effect, which likely will not be until 2022.

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After years of negotiations, the European Union and China reached an agreement today on a treaty that aims to make it easier for European companies to do business with the world's second-biggest economy. The deal was made despite a request by the incoming Biden administration for the EU to hold off. NPR's Rob Schmitz joins us from Berlin to talk about all of this.

Hey, Rob.


CHANG: Hey. So, I mean, we should point out that this deal has been - what? - seven years in the making. But...


CHANG: ...The Chinese side has been working hard to finish it before the end of this year. Why was Beijing so eager to finalize things this year?

SCHMITZ: Yeah, it's interesting. China had been dragging its feet on this investment treaty with the EU for years. And just a year ago, Chinese Foreign Minister Wang Yi told Brussels that China could not possibly sign the agreement that the EU wanted. So it went from that to this sudden push by Beijing to make enough concessions to please the European side so that they would sign it. And a big reason for this last-minute push on China's part was Joe Biden winning the U.S. presidency.

CHANG: Wait. Help me out with that. Why did a Biden win push Beijing to sign this treaty with the EU?

SCHMITZ: Yeah. As we've reported, Biden has made strong signals that he wants to, A, revive the trans-Atlantic relationship between the U.S. and Europe that's been heavily damaged under a Trump presidency. And B, he wants Europe's help in keeping China's rising economic, political and military power in check. So that was all the signals that Beijing needed to try and close this deal with the EU before Biden was sworn in. And even though the Biden transition team publicly asked the EU to wait until the new president took office before they signed anything, the EU went ahead anyway.

I spoke to Theresa Fallon of the Centre for Russia Europe Asia Studies about this. Here's what she said.

THERESA FALLON: Well, after the four years of the Trump administration, which characterized the EU as worse than China, there is a growing anti-American sentiment. And there's also the strategic autonomy debate in Europe, meaning we don't want to do what the U.S. says. We want to do it, as Frank Sinatra has said, my way.

CHANG: (Laughter).

SCHMITZ: Yeah. And Ailsa, EU diplomats call this new approach with the U.S. the Sinatra doctrine.

CHANG: (Laughter) Oh, nice.

SCHMITZ: And German Chancellor Angela Merkel took the lead in pushing Europe to move ahead with this agreement. This is her last year as chancellor. And we are in the final days of Germany holding the rotating EU presidency. So this treaty with the world's second-largest economy was a priority for her. But there's a lot of concern throughout the EU about China's human rights record and about reports of forced labor in China's northwest region of Xinjiang. And debates over this in the European Parliament could delay ratification of the treaty beyond 2022.

CHANG: Oh. OK, well, if that's hanging, what will all of this mean for President-elect Biden's plans to get European help to manage China?

SCHMITZ: Well, it's not going to make it easier. This investment treaty promises a more equal playing field for EU companies in China. It brings European countries closer to China from an economic standpoint. The thing is, in the past, Beijing has used these cozier business and trade relationships to exert political leverage. And that's what the incoming Biden administration is nervous about. And it means it may be more of an uphill battle for the Biden administration to get Europe's help with China.

CHANG: That is NPR's Rob Schmitz joining us from Berlin.

Thank you so much, Rob.

SCHMITZ: Thank you.

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