The European parliament has voted overwhelmingly to “freeze” any consideration of a massive investment deal with China, following recent tit-for-tat sanctions over Beijing’s treatment of its Uyghur population in Xinjiang province.
According to the resolution, the parliament, which must ratify the deal, “demands that China lift the sanctions before parliament can deal with the Comprehensive Agreement on Investment (CAI)”. Some MEPs warned that the lifting of the sanctions would not in itself ensure the deal’s ratification.
The vote on the motion was passed by a landslide, with 599 votes for, 30 votes against and with 58 abstentions.
Thursday’s outcome is yet another sign of the deterioration of the China-EU relations, and is not surprising to observers of the diplomatic ties.
“The European parliament has always been a more critical voice on China in the past. It is now able to wield more power to vote against any trade and investment agreements on the grounds of political conditionality,” said Yu Jie, a senior research fellow on China at London-based thinktank Chatham House.
The massive trade deal was a result of seven years of marathon negotiations. The final talks were wrapped up late last year by the Chinese president Xi Jinping, along with European leaders such as Germany’s Angela Merkel, France’s Emmanuel Macron as well as the European Commission president, Ursula von der Leyen.
If ratified, it could lead to Beijing loosening some of its notoriously stringent rules on foreign companies such as the need to operate through joint ventures with local partners.
Analysts said that economic planners in Beijing had hoped to use this agreement as an opportunity to push for domestic reform, even though the implications of the CAI for the Chinese economy remain unclear.
The deal was controversial from the beginning in Europe. Even before the negotiations were concluded, China sceptics as well as human rights advocates had long urged Brussels to prioritise the issue of human rights in its dealing with Beijing.
Then, in a dramatic turn of events in March, the European Union imposed sanctions on four Chinese officials involved in Beijing’s policy on Xinjiang. In response, China swiftly imposed counter-sanctions that targeted several high-profile members of the European parliament, three members of national parliaments, two EU committees, and a number of China-focused European researchers.
On Wednesday, Chinese foreign ministry spokesperson Zhao Lijian urged the EU to “make in-depth reflections and immediately stop interfering in China’s internal affairs”.
He added: “The CAI is a balanced and win-win deal that benefits both sides, rather than a ‘gift’ or favour bestowed by one side to the other. An early ratification of the agreement is in the interests of both China and the EU.”
Thursday’s move comes after European Commission’s executive vice-president Valdis Dombrovskis, earlier this month, said that political outreach to promote the controversial trade agreement had been ‘suspended’ after recent sanctions.
The conclusion of the initial CAI negotiations last December was said to be helped by German chancellor Angela Merkel. The Chinese market is especially important to German carmakers and manufacturers who have a large presence in the country.
German economy minister Peter Altmaier maintained his defence of the investment deal. He said that China is the EU’s largest trading partner and plays an important role in the global economy. “We want to reach results with China that are in the interest of both sides,” he added.
But Yu Jie of London’s Chatham House said that it will now become “increasingly difficult” to push the deal through after Merkel’s departure in September. In the meantime, the mood in Brussels is changing, too, with the talk of “strategic autonomy” becoming a main part of Brussels’s foreign policy discourse.
“Any chance for salvaging the CAI will now take a major political willingness on both sides, but neither seems to be willing to speak soft at this stage.”
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