China and the European Commission seemed close to announcing this week a historic deal that would make it easier for their companies to invest in each other’s economies. Then he encountered another obstacle: a tweet from an aide to Joseph R. Biden Jr. signaled that the president-elect was not happy with the deal.
The pact, which has been in the works for almost seven years, remains a priority for Chancellor Angela Merkel of Germany because it would give companies like Daimler and Volkswagen better control over their operations in China.
China, which has long feared to allow greater access to foreign companies, appears eager to reach an agreement now, before the new US government can try to muster a united front against Chinese policies and actions, as Biden has promised to do.
Merkel and other leaders have been pushing to complete the deal before the end of the year, while Germany holds the six-month rotating presidency of the European Council. Last week, they even distributed a 126-page draft that was largely completed, except for unresolved writing issues.
His efforts, and an expected announcement on Tuesday, instead, precipitated the growing animosity against China and increasingly vocal opposition in the final rounds of the negotiations.
In the European Parliament, the pact faces significant opposition from members who say it is not enough to open China’s economy or prevent human rights violations in China.
In Washington, members of the new government openly signaled that they expected Europe to wait.
Mr. Biden’s choice as national security adviser, Jake Sullivan, I wrote on Twitter on Monday that the new government “would welcome early consultations with our European partners on our common concerns about China’s economic practices”.
The White House also influenced. A National Security Council spokesman, John Ullyot, warned that any commitment by China “that is not accompanied by strong enforcement and verification mechanisms is merely a propaganda victory” of the Chinese Communist Party.
The Trump administration has been trying, with mixed success, to encourage allies to follow their example in reducing economic and technological ties with China. As negotiations in Europe have gained momentum in recent weeks, President Trump has instead been included in an attempt to overturn the results of the presidential election, while many senior advisers have focused on the new stimulus project or response to the coronavirus.
If an agreement is approved, it will be an unexpected diplomatic victory for China after a year in which its international position plummeted over its obfuscation over the pandemic, its aggressive actions in Hong Kong and the South China Sea and, more recently, a dispute. fierce with Australia.
“The Chinese want to weaken any kind of transatlantic alliance by promoting this,” said Theresa Fallon, director of the Russia Europe Asia Study Center in Brussels.
After four years of dealing with a Trump government that was either hostile to Europe or simply indifferent, the leaders in Brussels they want to show that they can deal with China on their own. At the same time, they hope to rebuild relations with the United States under Biden’s presidency.
Representatives from China and the European Commission, the administrative arm of the European Union, continue to negotiate and hope to reach an agreement by the end of the year.
“Progress has been made in several areas,” said the European Commission in a statement. “There are still some important pending issues and negotiations are continuing this week.”
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According to the draft agreement, a copy of which was analyzed by The New York Times, a number of language differences remained unsolved last week. The two sides have not yet reached an agreement on how to name the pact. Europe prefers “agreement”, while China prefers “treaty”.
In a section on investment and sustainable development, China also asked to insert a phrase that it uses to argue that it should obey rules different from those applied to industrialized countries. He says that “the parties recognize that differences in the respective levels of development of the parties must be taken into account”.
The agreement also faces opposition for what it does not address. Critics have already complained that the deal does not do enough to open China’s markets, to honor previous pledges on trade and the environment, or to deal with human rights abuses, including forced labor and mass internment of Uighurs and other Muslims in the region. west of Xinjiang.
An investment agreement with China would require the approval of the European Parliament, and opponents may have enough votes to block it.
“From the moment the agreement is signed, Europe will lose influence not only on issues critical to future competitiveness, but also on issues of fundamental values, ranging from human rights to the future of coal-fired power plants,” a group of Chinese academics in Europe wrote in an open letter as the agreement approached completion.
European authorities see the investment agreement as a relatively limited effort to facilitate trade relations with China, which has not had major geopolitical implications. The pact has strong support among European companies operating in China because it would remove the requirements for them to operate through joint ventures with Chinese partners and share sensitive technology. The deal would also open up the Chinese banking market to companies in the European Union.
Brussels and Beijing have been discussing investment rules since the beginning of 2014 without making significant progress, in part because of China’s caution in opening its economy to foreign competitors. Efforts faltered again this year, but the negotiations got back on track after the US presidential election in November.
China’s leader, Xi Jinping, intervened directly, speaking with Merkel and France’s President Emmanuel Macron. He told the French leader that relations between China and Europe were “gaining more global and strategic importance under the new circumstances”, according to Xinhua’s official report on the summons.
Officials and analysts in China and Europe said Beijing recently offered some concessions – enough to move the negotiations forward, although not enough to calm everyone down. In China, progress was welcome. A Foreign Ministry spokesman, Wang Wenbin, said on Tuesday that the agreement between China and Europe “would inject more stability into the world”.
Any final agreement could be a significant blow to Biden’s ambitions in trade. He harshly criticized Trump for antagonizing Europe and other allies with his global trade wars and vowed to work more closely with like-minded governments to combat China’s unfair economic practices.
Although Biden did not clarify what the partnership would look like, it could focus on extracting more commitments from the Chinese government, including issues such as intellectual property enforcement, state-owned companies and discrimination against foreign companies in China.
While a short-term deal with China does not preclude further partnerships between Europe and the United States, it would undermine some of Biden’s statements and demonstrate that Western companies are still competing fiercely for access to the lucrative Chinese market.
One of the main controversial points in the negotiations was China’s willingness to comply with international standards for workers. Beijing has so far only agreed to “promote” better working conditions, without explicitly agreeing to observe minimum wage and health and safety standards, according to the draft agreement. European Green Party members and other groups consider such a promise vague and unworkable.
European opinions about China are conflicting. Although China is an important source of investment and a critical market for industrial goods, the acquisition by Chinese companies of assets such as Volvo Cars or Kuka, a German manufacturer of industrial robots, has led the European Union to give its member states more power to block investments.
As Chinese companies became more sophisticated, they also emerged as competitors in sectors such as machine tools, previously dominated by German companies. With government support, Chinese automakers are trying to use the transition to electric vehicles to become participants in the international car market, a challenge for European automakers.
Fallon of the Center for Russia Europe Asia Studies said that China would take the lead even if the European Parliament destroyed the investment agreement, creating a wedge between the commission and Parliament and between Europe and the United States.
“They win anyway,” she said.
Keith Bradsher and Matina Stevis-Gridneff contributed to the report. Claire Fu contributed research.