Leaders emphasise ‘need to improve market access’ for agri-food sector in EU-China talks

EU leaders have emphasised “the need to improve market access for EU traders” in sectors such as agri-food, during talks with China.

The EU and China have concluded, in principle, the negotiations for a Comprehensive Agreement on Investment (CAI).

This deal follows a call between Chinese president Xi Jinping and European Commission president Ursula von der Leyen, European Council president Charles Michel and German Chancellor Angela Merkel, as well as French president Emmanual Macron.

The meeting focused, in particular, on progress achieved on negotiations on investment.

This agreement has been described by the European Commission as a “major economic significance” and also binds the parties into a “values-based investment relationship grounded in sustainable development principles”.

Once in effect, the CAI will help “rebalance the trade and investment relationship between the EU and China”.

China has committed to an “unprecedented” level of market access for EU investors, giving European businesses “certainty and predictability for their operations”.

The agreement also includes important commitments on environment and climate, including to effectively implement the Paris Agreement, and on labour standards.

‘Important landmark in our relationship with China’

Looking beyond the CAI negotiations, the EU reiterated its expectation that China will engage in negotiations on industrial subsidies in the World Trade Organization (WTO).

The leaders also emphasised the need to improve market access for EU traders in sectors such as agri-food along with digital, and to address overcapacity in traditional sectors such as steel and aluminium as well as in high-tech.

President of the European Commission Ursula von der Leyen said that this agreement is an “important landmark in our relationship with China”.

“It will provide unprecedented access to the Chinese market for European investors, enabling our businesses to grow and create jobs,” she said.

“It will also commit China to ambitious principles on sustainability, transparency and non-discrimination. The agreement will rebalance our economic relationship with China.”

‘Anchors our values-based trade agenda’

Executive vice-president and Commissioner for Trade Valdis Dombrovskis added: “This deal will give European businesses a major boost in one of the world’s biggest and fastest growing markets, helping them to operate and compete in China.

“It also anchors our values-based trade agenda with one of our largest trading partners.

We have secured binding commitments on the environment, climate change and combatting forced labour. We will engage closely with China to ensure that all commitments are honoured fully.

In terms of market access for EU businesses, China has made commitments on manufacturing, the most important sector for EU investment in China.

Manufacturing makes up more than half of total EU investment – including 28% for the automotive sector and 22% for basic materials. This includes production of electric cars, chemicals, telecoms equipment and health equipment, among others.

China is also making commitments for EU investments in various services sectors, such as cloud services, financial services, private healthcare, environmental services, international maritime transport and air transport-related services.

Finalising the text of the agreement

Both sides are now working towards finalising the text of the agreement, which will need to be legally reviewed and translated before it can be submitted for approval by the EU Council and the European Parliament.

On the EU side, further work will now be undertaken in accordance with its legal rules and procedure to sign, ratify and conclude the agreement. The two sides will aim to conclude negotiations on investment protection within two years of the signature of CAI.

The EU will take stock of the overall development of EU-China relations, including but not limited to the CAI and its implementation in all its dimensions, during the French Presidency in 2022.