EU-China summit boosts negotiations towards an investment agreement

The European Union and China agreed to enhance market access and investment and to speed up negotiations over geographical indications during a leaders’ summit in Beijing on Monday (16 July). But EU leaders indicated they wanted to see China’s promises translated into action.

China “will significantly raise its market access and reduce the tariffs rates for goods that are needed for Chinese companies and consumers,” Li Keqiang, the premier of the State Council of China told the press after the one-day EU-China summit.

Europe’s investment in China is going down as investors worry about regulatory and administrative burden for foreign companies in the country. Monday’s EU and China 20th summit aimed to move forward on how to lessen them.

The trade partners exchanged offers in view of a future Comprehensive Investment Agreement, which both saw as “a top priority and a key project towards establishing and maintaining an open, predictable, fair and transparent business environment for their respective investors.”

“Europe wants to do more and to invest more in China on the basis of a level playing field and of agreed rules. But an open investment environment works best when it is two-way,” said the president of the European Commission, Jean-Claude Juncker, in Beijing.

In his statement, Keqiang pointed to a recent investment operation without restrictions of a German company, without naming it. Juncker pointed out that this example “proves that if China wants to open up, it does know how to do so”.

This exchange of offers marked “a new stage” in the negotiation, premier Keqiang told the press. However, for Juncker, this was only a first step.

“What we need is an Agreement that fulfils our common ambition and gives investors on both sides predictable and long-term access to our respective markets,” Juncker clarified.

Intellectual property

In June this year, the EU launched a WTO case against Chinese legislation, as it considered it undermines the intellectual property rights of European companies. Brussels argued that EU companies in China are forced to grant 20% ownership or usage rights of their technology to domestic Chinese entities.

This issue risked making the summit fail and was at the core of today’s discussion.

Although the joint statement barely referred to the dispute, premier Keqiangi said China “will forbid any transfer of intellectual property” and will deal with any intellectual property violation “with all seriousness.”

When China protects foreign companies’ intellectual property Keqiangi said, “we are actually protecting innovation of Chinese companies”.

“As long as you are registered in China, you will be treated the same as a Chinese company,” the Chinese leader highlighted.

How those commitments will be translated still needs to be clarified. “We are making progress,” Juncker said.

The EU and China committed to accelerating the negotiations on the Protection of Geographical Indications too and to “substantially progress” at the next round to be held later in July.

The aim is to close the negotiation by October this year, leaders announced.

However, although they pledged to get “closer” to finding a solution for expanding the market in products such as beef or poultry after last High-level Economic and Trade Dialogue, the EU-China summit did not bring any concrete result on this matter.

“China wants to seek more balanced trade relations with the EU,” said Keqiang.

In a joint statement, the EU “took note of China’s recent commitments” in improving market access, investment environment, and intellectual property rights and said it was looking forward “to their full implementation.”

Steel overcapacity

Another contentious issue is China’s steel overcapacity. Brussels argues this is the reason behind the US trade war against both the Asian country and the EU. Both partners agreed that “steel overcapacity is a global challenge that requires collective responses.”

The EU and China pledged to strengthen their cooperation in the Global Forum on Steel Excess Capacity and develop “a new set of guidelines for government-supported export credits within the International Working Group on Export Credits”.

“The EU is already working on this matter with Japan and the US. China, which has become a major economic actor, has to accept its part of the responsibility,” Juncker said during the EU-China Business Summit, which was held in Bejing on the same day.

EU and China stand for multilateralism

Both the EU and China have been affected by the Trump administration shift to unilateralism. “Given the complicated and fluid international landscape, it is important for China and the EU to uphold multilateralism,” Keqiang said.

Working towards the reform of the World Trade Organisation is a shared objective in this direction. “The EU is committed to working towards the modernisation of the WTO and calls on all partners to contribute positively to this goal,” said the president of the European Council, Donald Tusk.

“We are all aware of the fact that the architecture of the world is changing before our very eyes. And it is our common responsibility to make it a change for the better,” Tusk highlighted.