What Has Just Happened?
China, which was starting to be seen as a rising capitalist power and the land of opportunity by its people, is now uncompromisingly at war with this notion. With its ever-increasing trade sanctions and restrictions on mass media, it comes as a shock that China has agreed a trade deal with Europe.
What Does This Mean?
The Agreement will create a better balance in the EU-China trade relationship. The EU has traditionally been much more open than China to foreign investment yet, with this trade ‘deal China now commits to open up to the EU in a number of sectors’.[1]
This, in essence, will allow Europe to fairly compete in one of the largest and fastest-growing markets. China, which is traditionally restrictive with regard to foreign investment, is allowing Europe to do business with greater transparency and ease. The trade deal is a lucrative opportunity for Europe especially in the manufacturing sector, with this sector making up more than half of Europe’s total investment.[2] For example, Germany is Europe's largest exporter of manufactured goods totaling around €80 billion, 0 % of EU-27 total.[3]
In return, China has also agreed to lofty ambitions on sustainable development. This is following the study demonstrating that China has the ‘world's largest carbon footprint since 2004’.[4]
The details of the trade deal seem like a tall order to achieve, especially concerning the current climate of foreign investment in China. What would this mean for the Chinese people and how will it be implemented to a nation that has thrived without the interference of outside business? The surprising notion here is that the government have made a lot of drastic agreements, so what is this economic powerhouse set to gain from this deal?
The Legal Impact
The strong focus on climate change is an interesting perspective of this agreement and has been a working agenda for the Chinese government for a while. Perhaps the influence of European business models and their recent success could stimulate these goals further within Chinese businesses.
The legal enforcement of the deal will be monitored by a State-to-State dispute resolution mechanism. This will support the agreement and meets the highest standards found in existing EU trade deals. Both sides are now working towards finalizing the text of the agreement, which will need to be translated and legally reviewed before it can be submitted for approval by the EU council and the European parliament.
What are the thoughts of Chinese and European business owners concerning this huge change?... If China has struggled to regulate its large business owners in the past, the agreement implies that stronger force will be used. However, this doesn't discourage fears of legal hypocrisy in the business sector. It has been commented that the trade deal is ‘is not multilateral at all. It is a bilateral deal with an authoritarian power that seems to have a very different understanding of multilateralism’.[5]
Also, the trade deal has looked to imply greater human rights protection in China, however, it is unclear how this will directly affect current issues. The issue of human rights has been a major point in which China has held back on the agreement. After waiting since 2013 for China to show a response on the agreement, why now?
This could possibly mean China is looking to gain favor and alliance for the sake of its image to the UN and possibly rebuild the damage in business relationships concerning South Asia. With Europe’s support and an actual effort to abide by the terms of the agreement, this could see a strong positive change and an auspicious future for China's relations and with that, Europe's economy.
Written by L. Firefly
References:
[1] European Commission, ’International Trade in Cars’ (EuroStats, April 2020) <https://ec.europa.eu/eurostat/statistics-explained/index.php?title=International_trade_in_cars> accessed on 18th December 2020
[2]Ibid.
[3]Ibid.
[4] Francesca Willow, ‘Why China’s Emissions Are So High & How They Actually Compare To Other Countries' (Ethical Unicorn, 19 October 2019) < https://ethicalunicorn.com/2019/10/19/why-chinas-emissions-are-so-high-how-they-actually-compare-to-other-countries/> accessed on 19 December 2020
[5] Amrita Narlikar, ‘The European Union, CAI and the abyss’ (Observer Research Foundation, 2 January 2021) < https://www.orfonline.org/expert-speak/the-european-union-cai-and-abyss/> accessed on 21 January 2021
Disclaimer: This article (and any information accessed through links in this article) is provided for information purposes only and does not constitute legal advice.