EU-China investment treaty talks in jeopardy

EU-China investment treaty talks in jeopardy

Progress stymied by slow pace of negotiations and lack of political commitment

The EU’s top trade official has warned that plans to broker an investment treaty with China by the end of next year are in jeopardy, saying talks are moving at a “snail’s pace” and urging more political commitment from Beijing.

The treaty is a priority for EU capitals as they seek greater access to the Chinese market for European investors and businesses — potentially outflanking the US, which recently concluded a “first phase” deal with Beijing on trade.

But Sabine Weyand, the European Commission’s director-general for trade, said on Tuesday that commitments from Beijing earlier this year to intensify talks had yielded little real progress.

The two sides pledged in April to make “decisive progress” in the negotiations during 2019, paving the way for “an ambitious EU-China comprehensive investment agreement” to be concluded next year.

“At the moment we are not yet on a pathway to that,” Ms Weyand told an event organised by the European Policy Centre in Brussels. The talks “need more political commitment on the Chinese side”.

The EU and China are expected to make a new round of offers during negotiations this week, but people familiar with the talks said it was unlikely that Beijing’s would be generous enough to yield a breakthrough.

Brussels has been striving to secure the deal for six years, as it seeks to prove it has the negotiating muscle to broker meaningful agreements with Beijing that can defend European companies from unfair competition. The European Commission and the bloc’s foreign policy chief signalled a tougher approach to China in March in a landmark document that branded it a “systemic rival” in some areas — an allegation Beijing denies.

Ms Weyand, the chief official working for Phil Hogan, the EU’s trade commissioner, said that “we are moving at a snail’s pace on the investment agreement”.

Ms Weyand’s comments were in sharp contrast to the positive assessment given by Wang Yi, China’s foreign minister, at an EPC event the previous day.

“China and the EU should be partners for free trade,” he said. “Apart from a high-quality investment agreement, we should work for an early start of negotiations on a free trade agreement, or at least the launch of feasibility studies on that front.”

Diplomats say the investment treaty negotiations are now part of a broader power struggle ahead of a high-profile EU-China summit provisionally planned in Leipzig in September, when Germany will hold the European bloc’s six-month rotating presidency. Berlin hopes the gathering will be attended by Xi Jinping, China’s president, rather than Li Keqiang, the country’s premier.

China and the EU are grappling with growing tensions in their relationship at a time when both are also under pressure from the US in areas from trade to the Iran nuclear deal.

“Any cool-headed person with an objective view will see that, for China and the EU, co-operation far outweighs competition, and our areas of consensus far exceed differences,” Mr Wang said. “We are partners, not rivals.”

Jim Brunsden, Michael Peel and Alan Beattie