EU and China conclude in principle new investment compact

The agreement will improve market access of European investors to the Chinese market across economic sectors

On Wednesday, the President of the European Council, Charles Michel, and the President of the European Commission, Ursula von der Leyen, together with Chinese President Xi Jinping concluded in principle the negotiations on the Comprehensive agreement on investments (CAI). In parallel to the EU-China institutional meeting, German Chancellor Angela Merkel and French President Emmanuel Macron also met with President Xi.

These negotiations were actively supported by the German presidency of the Council.

President Michel tweeted: “EU remains committed to rules based international cooperation. We welcome the political agreement achieved on negotiations on investment.”

Also on twitter EC President von der Leyen wrote that “the post-pandemic world needs a strong relationship between the EU and China”. She underlined as well that the two parties reached an agreement in principle on investments, for more balanced trade and opportunities. We are open for business but committed to reciprocity, fair competition and our values, the EC President stressed.

The negotiations were launched seven years ago, but the talks accelerated last year. In the summits in 2019 and 2020 there was a commitment of the both sides to conclude the negotiations by the end of 2020. The ratification process will take several months.

According to an EU official, the negotiators have achieved substantive outcomes on the three key pillars of the negotiations – market access, the level playing field provisions and sustainable development. The outcome is the most ambitious that China has ever agreed to in an agreement with a third country.

The Comprehensive agreement on investments will improve market access of European investors to the Chinese market across economic sectors. It includes new market access opportunities in crucial sectors such as new energy vehicles, cloud services, financial services and health. It will also help leveling the playing field and enhances the transparency of  subsidies. In the CAI there are clear rules against forced transfer of technology as well.

For the first time ever China has agreed to solid provisions on sustainable development, including in relation to environment and climate, such as the implementation of the Paris Agreement, as well as corporate social responsibility of labour.

China has agreed in particular to pursue the ratification of ILO Fundamental convention (convention 29 and convention 105) on forced labour.


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