On 30 December 2020, the EU and China reached an agreement “in principle” for a new EU-China Comprehensive Agreement on Investment (“CAI“) (see our previous update here). The CAI concludes seven years of investment negotiations, that begun in October 2013, and is expected to come into force later this year. In its press release (see here), the EU stated that the CAI was the “most ambitious agreement that China has ever concluded with a third country”.
The CAI will provide EU investors with greater access to key markets in China including electrical vehicles, telecommunications services, and aviation and maritime transport activities. EU investors will also benefit from the removal of barriers on joint-venture agreements and caps on levels of investment in sectors including automotive, environmental services and private healthcare. The CAI will also put the EU on an equal footing with the US (see here for the US-China “Phase One” trade deal) when it comes to operating in China’s financial services.
For China, the CAI is set to provide it with greater market access rights in the EU’s manufacturing and renewable energy markets.
Along with market access, the CAI will also be underpinned by commitments on (i) an improved level playing field; (ii) sustainable development; and (iii) the effective implementation of a state-to-state dispute settlement mechanism. The CAI also includes a commitment by both sides to try to complete negotiations on investment protection and investment dispute settlement within 2 years of the signing of the CAI.
The text of the agreement is currently being finalised and further information will be provided here once it becomes available.