EU-China Investment Agreement Nears Completion... Diplomatic Discord with the US over China

After 7 Years of Negotiations, Agreement Expected on the 30th... Economic Ties Likely to Strengthen
Biden, Set to Take Office, Emphasizes 'Alliance Coalition' to Counter China

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin, New York=Correspondent Baek Jongmin] The European Union (EU) and China are expected to finalize an investment agreement that has been in the works for seven years sometime this week. This agreement is anticipated to lower trade barriers between the two sides, further open their markets, and strengthen their economic ties. With Joe Biden, the President-elect of the United States, set to take office in January next year and emphasizing 'cooperation with allies' to increase pressure on China, there are forecasts that the traditional alliance between the US and the EU may show some discord in their China diplomacy.

According to Bloomberg and other sources on the 28th (local time), the European Commission reported the status of investment agreement discussions with China to ambassadors of member states at its headquarters in Brussels. The attending ambassadors raised no objections and expressed satisfaction, reportedly urging for a swift conclusion to the negotiations. One attendee told foreign media, "If things remain as they are, a political agreement between the EU and China will be reached by the 30th."

The EU and China have been discussing an investment agreement since 2013, but the talks had been stalled for years in a deadlock. However, when Donald Trump, who championed 'America First,' took office in 2017 and imposed various trade sanctions against China and Europe, both the EU and China recognized the growing necessity of the investment agreement. Ultimately, in April last year, both sides set a deadline to finalize the agreement by the end of this year and accelerated negotiations.

According to foreign media reports, through this agreement, China will concede market access rights to EU companies in several sectors including manufacturing, construction, aviation, shipping, and telecommunications, while Europe will partially open sectors such as renewable energy to China. The agreement is also said to include prohibitions on forced technology transfers, a demand long made by the EU. Regarding environmental issues, China’s announcement last September to achieve carbon emission 'zero' by 2060 appears to have significantly narrowed the gap in positions. Lastly, foreign media report that final discussions on China’s labor issues are underway.

This development is expected to deepen the economic ties between the EU and China. The EU will gain access to the Chinese market in various fields ranging from automobiles to biotechnology, and will establish a kind of shield against market distortions such as China’s state subsidies, government control over companies, and forced technology transfers, which had been concerns. China, through this, can reduce risks faced by Chinese investors in Europe and create an opportunity to initiate talks on a free trade agreement (FTA) with the EU in the future, Bloomberg reported.

The problem lies with the United States. Since President-elect Biden is emphasizing that allies must unite to respond to China, there is a high possibility that he will express dissatisfaction with the EU for aligning with China. Jake Sullivan, who has been nominated as the next White House National Security Council (NSC) advisor, tweeted on the 22nd regarding the investment agreement, saying, "We would welcome European partners consulting with the US first," applying pressure.

After receiving a briefing from the presidential transition team on national security on the same day, President-elect Biden emphasized in a speech the importance of alliance unity in competing with China. He said, "As we hold China accountable for trade abuses, technology, and human rights, our position will be stronger when we build coalitions with like-minded partners and allies in competition with China." He added, "We account for nearly 25% of the global economy, but with democratic partners, our economic leverage will be more than doubled," emphasizing, "In any matter related to US-China relations, we will be stronger and more effective when surrounded by countries that share our vision for the future of the world."

This content was produced with the assistance of AI translation services.