EUROPEAN FOREIGN POLICY SCORECARD 2014

Trade liberalisation and overall relationship

2 - Investment and market access in China

Grade: B+
Unity 5/5
Resources 4/5
Outcome 6/10
Total 15/20

The EU and China opened negotiations on a bilateral investment treaty, which the EU used to discuss market access concerns.

The EU wants China to create a level playing field in market access, respect intellectual property rights and meet its WTO obligations. In 2013 the most important event was the decision to open negotiations on a BIT (bilateral investment treaty). After opening negotiations on a free trade agreement with Japan and the TTIP with the US, launching negotiations with China is another important EU initiative to liberalise economic relations with major trade and investment partners. It is the first mandate given to the European Commission to negotiate a standalone investment agreement following the entry into force of the Lisbon Treaty.

Initial discussion about the BIT took place at the EU–China summit in September 2012, and in May the European Commission formally asked the member states for a mandate to open negotiations with China. In Beijing in June, Trade Commissioner Karel De Gucht confirmed that the two main objectives of the negotiations would be the improvement of protection of EU investments in China and Chinese investments in Europe, as well as better access to the Chinese market. In discussion with Chinese officials, he also raised European concerns related to market access in some sectors such as cosmetics and medical devices, as well as licensing and market access issues in the area of financial and telecommunication services.

In October, the Commission received a mandate from member states to negotiate the BIT, and at the EU–China summit in Beijing in November both sides agreed to start negotiations. The BITis in the interest of China, which feels excluded from TTIP and TPP and the EU’s trade deals with its neighbours. By suddenly declaring its preference for an even broader free trade agreement, China may be trying to shift attention away from the requirements it needs to meet for the BIT. Given its overall trade surplus with Europe, China can afford the status quo as long as the EU does not achieve more far-reaching results with other major Asian partners.