The EU Shouldn’t Rush Into a Comprehensive Trade Deal With China

After more than six years of slow and mostly inconclusive negotiations, the European Union and China seem to be inching to a deal on their Comprehensive Agreement on Investment (CAI). Yet whatever concessions Beijing might have offered to Brussels in an effort to conclude the negotiations before the change of administrations of Washington, it would be a grave mistake for European negotiators to say yes to the Chinese offer. 

China’s goal is not to foster economic integration with Europe but to poison the transatlantic relationship before it has a chance to recover in the aftermath of Donald Trump’s departure from the White House. Not only that, the CAI is bound to drive a wedge between EU member states and between EU institutions—most notably the European Commission and the European Parliament.

To be sure, there was a rationale for the negotiations. Investment and business relations between the two economies are governed by an inconsistent patchwork of 25 bilateral agreements that China negotiated with individual countries, offering little in the way of reciprocity. 

While European legal systems do not treat foreign-owned companies any differently from those in domestic hands, China imposes stringent joint-venture or licensing requirements on foreign businesses that want to enter its markets, while keeping some sectors, prominently online and print publishing, entertainment, and broadcasting, siloed off from foreign competition. The production of Volkswagen and Audi automobiles in China, for example, is made possible only through Volkswagen AG’s joint ventures with Chinese state-owned enterprises FAW and SAIC, in which the German giant holds only minority stakes. It was not wrong to believe that putting Brussels in charge of the negotiations, instead of national capitals, gives Europe leverage that member states, many of them small, do not have. 

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