EU-China deal skids to a halt over sanctions

Beijing would gain political and economic benefits, as agreement would improve international cooperation, potentially promoting transparency and fairness

EU-China deal skids to a halt over sanctions
The EU sanctioned four Chinese officials in March over suspected human rights violations in China's far western region of Xinjiang. China responded by imposing its own sanctions against leading European figures. File photo by Reuters.

(ATF) The European Union's much-touted investment deal with China is on ice due to plunging diplomatic relations that culminated in tit-for-tat sanctions, officials said on Tuesday.

Chinese and EU officials approved a major investment pact in December 2020, wrapping up seven years of painstaking negotiations thanks to a final push by Germany, in a surprise move that was hailed by analysts.

"Implemented measures likely would also benefit many sectors in the EU and some individual economies in the bloc," Moody's said in a recent statement.

The agreement requires China to open further to EU businesses in an array of sectors – such as automotive, chemicals, high-end manufacturing of machinery and equipment, finance, and biological sciences – and includes commitments on expanding market access, levelling playing fields and addressing sustainability and dispute resolution.

DEAL ON ICE

But deteriorating relations have put the deal on ice.

"We now in a sense have suspended... political outreach activities from the European Commission side," EU Executive Vice President Valdis Dombrovskis told Agence France-Presse.

"It's clear in the current situation with the EU sanctions in place against China and Chinese counter sanctions in place, including against members of European Parliament (that) the environment is not conducive for ratification of the agreement," Dombrovskis said.

Trying to ratify the deal "will depend really on how broader EU-China relations will evolve", he added.

The pact has been defended as a much needed opening to China's long-closed economy for European companies, but was sure to face a difficult ratification among the 27 member states as well as the European Parliament.

IMPROVE COOPERATION

China would gain political and economic benefits, as the agreement would allow it to improve international cooperation with the EU, potentially promoting market transparency and fairness, and driving its long-term productivity growth.

"The positive effects could be larger if the agreement helps accelerate China’s domestic structural reforms," Moody's said.

Dombrovskis, a former Latvian prime minister, is in charge of spearheading that approval process in the EU, which has already met with pushback from key European Parliament members.

The EU sanctioned four Chinese officials in March over suspected human rights violations in China's far western region of Xinjiang. China responded by imposing its own sanctions against leading European figures.

With reporting by Agence France-Presse

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