First friction between Biden and the European Union: the investment agreement with China

First friction between Biden and the European Union: the investment agreement with China

 

BidenNews Now: One of the main advisers to President-elect Joe Biden launches a wake-up call to the EU regarding the possibility of closing an investment agreement with China

 

There are still a few weeks to go before Joe Biden, president-elect of the United States, sits in the Oval Office, but the future American Administration and the European Union have already had their first brush with a demonstration that the reconstruction of the transatlantic bridges is going to require something more than the removal of Donald Trump from the White House. In both commercial and geostrategic matters, two closely linked elements.

 

The European Union and China set at a summit in April 2019 to close an investment agreement before the end of 2020. And now, against the clock, Brussels and Beijing believe that the pact is at hand. Germany has given particular impetus to the efforts, intending to put a finishing touch to its rotating presidency of the Council of the EU, although some Member States have been more cautious, advising not to conclude any agreement by complying with the end of the year deadline.

 

Biden News Now and news of what looks like an imminent deal has crossed the Atlantic. In the early hours of Monday to Tuesday, and as the rumours of white smoke intensified, Jake Sullivan, Biden's National Security adviser, gave a wake-up call to the European Union. "The Biden-Harris Administration would welcome early consultations with our European partners on our common concerns about China's economic practices," Sullivan wrote on Twitter, linking to a story on progress toward the deal. One of the items on the transatlantic agenda that both Biden and the Twenty-Seven know they will have to discuss is the need to better coordinate their positions on the Asian giant. This is something that both Josep Borrell, head of European diplomacy, and the team of Charles Michel, president of the European Council, have requested in recent weeks. Critics of the agreement see that taking this important step would be synonymous with showing a lack of willingness to cooperate with the Biden Administration, which had also been willing to strengthen coordination in the Chinese challenge.

 

But, for some reasons and others, the European Union is urgently pushing for the agreement. Some member states, such as France, continue to support the discourse of greater strategic autonomy from the United States and believe that this agreement is part of that strategy. Other countries, such as Germany, which believe that the rebuilding of ties with Washington must be prioritized before continuing in the search for autonomy, are betting on the pact for economic interest and because it was the compromise reached with the Chinese government.

 

Biden - The investment agreement with China is considered a fundamental point for the economic agenda of the European Union, which aims for the Asian giant to give greater access to the Chinese market for European companies. It is an important piece in the effort to rebalance the relationships between the two blocks. Currently, the Twenty-Seven has 25 bilateral investment agreements, with the Republic of Ireland being the only one that does not have a pact with Beijing. But these agreements, which focus on investment protection, do not cover market liberalization or access, as well as sustainability issues or rules for state-owned enterprises (EPAs) and transparency in matters of subsidies.

 

Single bullet

The point is that the European Union has only one bullet when it comes to the central element of access to the Chinese market, and this is precisely what worries some Member States. As Alicia García-Herrero writes for the economic think tank Bruegel, the investment agreement “will be a treaty and cannot be easily reviewed, so there will not be many other opportunities for the EU to ensure improvements in terms of market access. Chinese".

 

For its part, China wants to strengthen its access to the European market and the protection of the Asian giant's investments in the Old Continent. Some voices are concerned about the possibility that this agreement may end up affecting the mechanisms put in place by the European Union in recent years to analyze and scrutinize the investments of third States to prevent, precisely, foreign powers such as Beijing from reaching acquire parts of the European economy that are critical to the security of the communist bloc. Besides, and it is one of the most controversial points, the European Union wants Beijing to adhere to the conventions of the International Labour Organization, which among other things rules out the forced labour that the communist regime imposes on Uighur Muslims in the region of Xinjiang.

 

But for China, which has made sizable trade-offs in recent trading tranches, this point is a red line and if the Twenty-Seven want to strike a deal, they will likely be forced to give in. This agreement, at this point, is the right answer to the challenge and sends the right signals. Should we give in to forced labour? This possible transfer in the matter of forced labour is one of the concerns of the Biden Administration and also within the European Union. “What is at stake is not whether the EU should pursue a coherent policy with China. Everyone is in favour of that,”wrote Reinhard Bütikofer, German MEP for The Greens and chairman of the European Parliament delegation for relations with China. “The debate is rather whether this agreement at this point is the right answer to the challenge and sends the right signals. Should we give in to forced labour? ”Said the German “Should we help Xi Jinping get Joe Biden a sleeve cut?

 

Biden News Now - The whole idea that the EU should rush to reach a deal with China to impress the United States is wrong. It would contribute more to the sovereignty of the EU if we show that we know when to defend ourselves against China. And align ourselves with our partners”, concluded Bütikofer. The paternity test of this latest push in the negotiations points directly to Berlin, at the same time that German Chancellor Angela Merkel opposes French President Emmanuel Macron's vision of keeping some distance from the White House and continuing for the path of strategic autonomy.

 

Some Member States, uneasy about the possibility of the pact, has started to move and speak publicly. This is the case of Poland, whose Minister of Foreign Affairs has written on Twitter that the EU needs an investment agreement with China, but also to speak with Washington: “We need more consultations and transparency to incorporate our transatlantic allies. A good and balanced treatment is better than a premature one”.

 

And that idea, that it is better to wait and close the pact well, is also defended by García-Herrero in Bruegel. “The arrival in January of a new Administration in the US, the EU's biggest trading partner, could be another argument for going slowly. Biden News Now - The EU may want to remain economically sovereign, but that should not amount to reaching economically and politically important deals at the wrong time. “But, for the moment, neither Berlin nor Brussels has taken their foot off the gas. The goal remains to close an agreement before the end of 2020 to fulfil the agreement that the Twenty-seven reached with Xi Jinping. The risk now is that meeting past commitment is synonymous with entering the future of transatlantic relations on the wrong foot.