Taiwan News | 19 January 2021
EU-China investment deal lacks teeth on forced labor but could still be derailed
By Micah McCartney
TAIPEI (Taiwan News) — European Union leadership is hailing the investment deal it reached with China at the end of 2020 as a breakthrough, but critics say the accord — pushed through just three weeks before Joe Biden’s ascension to the White House — hinders transatlantic cooperation against an ever more domineering China and neither guarantees European investors fair treatment nor holds Beijing accountable for its use of forced labor.
Leveling the playing field
The Comprehensive Agreement on Investment (CAI), which was agreed upon in principle but must still be voted on by the European Parliament, would replace 25 bilateral agreements between China and individual EU member states.
In the deal, Europe has secured Chinese assurances on issues that have long been a source of tension between Beijing and the West. The world’s second-largest economy says it will grant European investors more access to its market, operate with more transparency with regard to government subsidies, and roll back discriminatory practices, such as requiring European companies to share intellectual property with Chinese firms.
The European Commission has also struck a rosy tone on China’s stated commitments to address sustainable development issues. A spokeswoman pointed out that the deal marks the first time the Chinese Communist Party (CCP) has said it would "pursue ratification" of the International Labour Organization’s (ILO) convention on forced labor.
Is the CCP being given a pass?
Concerns about slave labor in China are at the forefront of many minds these days in light of mounting evidence that Uyghurs are being transferred en masse from concentration camps in Xinjiang to factories and cotton fields.
The EU Commission spokeswoman told Taiwan News the 27-nation bloc would use every available means to eliminate forced labor. If those prove inadequate, she cited the recently passed EU Global Human Rights Sanctions Regime, which gives Europe the power to impose travel bans and freeze the assets of human rights abusers, as another potential tool in its kit. The EU is also looking at requiring businesses to do more due diligence when rooting out exploitation in their supply chains, she stated.
Many China watchers are more skeptical considering the CCP’s history of going back on promises when they prove inconvenient. After watching China "publicly shred" its commitment to uphold human rights in Hong Kong and elsewhere, Human Rights Watch’s China director Sophie Richardson on Wednesday (Jan. 13) questioned the EU’s decision to move forward on the investment accord.
Reinhard Bütikofer, head of the European Parliament’s delegation on China, said Beijing’s assurances amount to so much "hot air": "It’s a polite way of saying ’Get off my back. I’m not gonna move," he said. He believes the lead negotiators — namely Commission President Ursula von der Leyen, European Council President Charles Michel, German Chancellor Angela Merkel, and French President Emmanuel Macron — gave up too much in exchange for too little in their haste to reach a compromise by the end of 2020:
"Because to say ’we will make continued and sustained efforts to pursue ratification’ is falling far short of what the EU agreed with Vietnam recently, where we had similar problems and we dealt with them in a totally different way."
The EU-Vietnam trade deal, which entered force last July, came with a clear road map for the Southeast Asian nation to adopt the core ILO conventions by 2023. "This is the minimum," Bütikofer told Taiwan News. "If the Commission says in public that they have binding commitments on combatting forced labor, that’s obviously not the truth."
A number of government officials in EU member states are leery of the CAI in its current form but differ on whether to make a stand in the service of European values.
French junior minister for trade Franck Riester previously said China’s failure to ratify these conventions was a "red line" for France. However, he has recently walked back the rhetoric, saying that unlike with Vietnam, Bejing’s ratification would not be a precondition for Europe’s signing.
On the other hand, for André Gattolin, senator for the Parisian suburb of Hauts-de-Seine, the CCP’s word is not enough of a guarantee of any substantive progress toward abolishing forced labor. The relevant ILO conventions are there to "make multilateral labor standards enforceable and countries that violate them accountable," he said.
The legislator pointed out that Europe has for years been under pressure to arrive at a bilateral investment treaty, with the understood possibility it could pave the way for an eventual free trade agreement. He drew a stark contrast between the power dynamic with Beijing today and that of 2013, when talks on an investment accord began:
"The European leadership was entirely different, and [Chinese leader] Xi Jinping had just taken control of the country he has shaped so much in just a few years." "With his emergence as leader — and president for life — China has grown hostile in its outspoken ambition of ruling the world by 2050."
Worth the cost?
Though the actual text of the CAI has yet to be released, the list of promises the EU’s chief dealmakers have secured would be impressive if China follows through on them.
Among the most important of these is the pledge to gradually stop requiring European firms to enter into joint ventures with their Chinese counterparts in several sectors, including automobiles — a major industry in Merkel’s Germany. This has played no small part in her eagerness to hash out a deal before the country’s presidency of the European Commission expired at the end of the year, according to Bütikofer.
The MEP said this "automotive foreign policy," along with the outdated belief that China’s undesirable behavior can be influenced by enhancing trade ties, is not only ineffective but could also result in Berlin subordinating itself to the autocratic state.
Gattolin lamented that the final "watered down" version of the CAI, hammered out behind closed doors, does not appear to have secured enough guarantees from Beijing. Also absent is the "impact assessment" of the human rights situation that European parliamentarians have pushed for since talks began.
"It’s still hard to see how these gains could outweigh the blatant human rights violations that are ongoing in Xinjiang, Hong Kong, Tibet, and against Taiwan and the political cost of condoning such actions," he said.
Seeking to cast his White House as a return to multilateralism after the transatlantic friction seen during the Trump years, President-elect Biden has called for a "united front" of nations when it comes to confronting China on contentious issues.
Just days before the CAI was announced, Biden’s nominee for national security advisor Jake Sullivan said the Biden administration would "welcome early consultations with our European partners on our common concerns about China’s economic practices."
Former Deputy National Security Advisor Matthew Pottinger and others in Washington have said their European partners are jumping the gun, blunting the effectiveness of joint strategic maneuvering before the new president is sworn in.