Chancellor Angela Merkel records the much discussed investment agreement between the EU and China.
German companies want it too.
But failure threatens in the European Parliament.
Munich / Brussels - The much discussed investment agreement between the EU and China is intended to improve market access for European companies when investing in China.
German companies want the agreement.
Chancellor Angela Merkel continues to stand by it.
But the agreement is now threatening to peter out in the European Parliament.
Several MPs made it clear this week that they will not ratify the investment agreement, abbreviated to CAI, as long as China imposes entry bans on five of them in the dispute over Xinjiang. And so the number of doubters is also growing in the Bundestag. The question is whether the much-discussed agreement is still in keeping with the times given the current situation. The debate has long since moved beyond the factual problems of the deal: CAI has got into the mills of geopolitics.
At the German-Chinese government consultations, Merkel made positive comments about the agreement - as if it wasn't hanging by a thread.
"I think that this investment agreement can also be a cornerstone for economic relations, for transparent relationships, for mutual market access and reciprocity," said the Chancellor.
It creates more legal certainty.
Merkel also emphasized, however, that China will have to adhere to international labor standards in the future.
“Sensible working conditions everywhere and for all people in Germany and China are of great importance.” What she discussed specifically with her counterpart Li Keqiang behind closed doors is not known.
CAI: German companies hope for market opening in China - and equality with local companies
In her support for CAI, Angela Merkel speaks in favor of the German economy in China, which has high expectations of the CAI. Even business representatives do not consider CAI the perfect deal - but better than no agreement at all. In China, CAI is improving market access in industries such as telecommunications, health and biotechnology. It also includes the promise that support for state-owned companies in China should be more transparent in the future. Some concessions by China such as opening steps in electromobility or the financial industry as well as the end of the compulsory joint venture for car manufacturers from 2022 are not new at all - just repackaged earlier commitments. Proponents say that CAI opens up market segments for European companies in which, conversely, Chinese companies in Europe can already operate.From this point of view, the agreement makes perfect sense.
In a survey by the German Chamber of Commerce (AHK) in China in February, 40 percent of companies expressed the hope of better market access through CAI;
39 wanted an end to discrimination against Chinese private companies, and 22 percent wanted an end to forced technology transfer.
These are legitimate needs, but the dispute over Xinjiang - and the concern for human rights - could become doomed.
CAI: Sanctions dispute over Xinjiang leaves the agreement in the European Parliament stranded
According to several reports, up to a million people from the Muslim Uighur minority are said to have been interned in camps in China's northwest region of Xinjiang. There are also reports that Uighurs are forced to do forced labor in, for example, cotton fields in Xinjiang. In the spring, the EU therefore imposed sanctions on four regional officials and a state organization. China responded promptly with extensive retaliatory sanctions, including against five members of the European Parliament and several European think tanks.
"The EU didn't really want to escalate," said Reinhard Bütikofer from the European Parliament's China delegation on ZDF on Wednesday with a view to the EU sanctions. One of the politicians affected is even already retired. The reaction from China is to be understood quite differently, according to the German Green Party politician, who is one of the sanctioned: "China has launched a central attack on the European Parliament." It is an attack on the heart of European democracy.
It is hard to imagine that a parliament whose members have been sanctioned by a country will now pass an agreement with that very country.
Conversely, it is not likely that China will withdraw its sanctions under pressure from critics in Europe.
There is not even talk of either side lifting their sanctions right now.
Jörg Wuttke, President of the EU Chamber of Commerce in China, also expects CAI “not to be discussed in parliament for the foreseeable future”.
CAI: There are fundamental concerns about contracts with China in the Bundestag as well
In addition to these acute stress factors, there are also ever more fundamental concerns about CAI. Norbert Röttgen (CDU), Chairman of the Foreign Affairs Committee in the Bundestag, considers China's “disproportionate” counter-sanctions to be a “fundamental communication” to Europe. This is also connected with the message that China no longer accepts if human rights violations are criticized from outside, said Röttgen in a webinar by the Mercator Institute for China Studies (MERICS) in Berlin, which is also sanctioned. This allows a legal opinion to shine through, which generally calls contracts with China into question. "China must know very clearly that such new treaties and also the ratification of this agreement are very, very unlikely," said Röttgen.
According to Nils Schmid, the foreign policy spokesman for the SPD parliamentary group, “something like CAI no longer fits in with the times.” Unlike at the beginning of the negotiations many years ago, today one should no longer be content with “gradual improvements to enforce the opening of the market, ”said Schmid in the webinar.
Today it has to be about strict reciprocity, and "the draft is a long way from this".
Mind you: The critics Schmid and Röttgen belong to the government factions of Merkel's grand coalition.
CAI: EU Foreign Affairs Representative Borrell also sees growing problems with China
Skepticism towards China is also growing in the EU at all levels. The EU Foreign Affairs Representative Josep Borrell condemned China's sanctions in front of the EU Parliament on Wednesday and said: "Relations are getting more and more difficult." Like Merkel, Borrell nevertheless supports maintaining a dialogue with Beijing. At the same time, the EU Commission is currently working on a law to protect European companies from being taken over by state-subsidized foreign companies. Last but not least, it is about Chinese state-owned companies that want to invest in all possible sectors - from railway and shipbuilding to power grids and nuclear power plants. The mood is likely to remain frosty for the time being - no favorable conditions for CAI.
ck
