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China | Brussels, 13 February 2020. Last updated 24 November 2020.

EU-China Comprehensive Agreement on Investment

With the EU-China Comprehensive Agreement on Investment (CAI), the EU seeks to create new investment opportunities for European companies by opening China’s market and eliminating discriminatory laws and practices that prevent them from competing in the Chinese market on an equal basis with Chinese companies and companies from other third countries.

The trade and investment links between the EU and China are very important. The EU and China are strategic markets for each other, trading on average over a billion euro a day. China’s growing domestic market and economic weight represent significant business opportunities for European companies. However, China's market is considerably less open than the EU’s. Foreign investors’ access to a number of sectors is restricted or prohibited. European companies operating in China do not benefit from the same levels of transparency and fair competition as those enjoyed by Chinese companies in the EU market. The CAI is a key tool to address this lack of balance.

The EU and China launched negotiations on the CAI in 2014. The European Commission conducted an impact assessment in 2013. A Sustainability Impact Assessment was carried out between 2015 and 2018 to assess the potential economic, social and environmental impacts of the agreement.

In 2016, the two sides agreed on the scope of the future agreement. They agreed that it would go beyond a traditional investment protection agreement to cover market access for investment and a number of important disciplines. It would also include provisions on sustainable development and dispute resolution.

The CAI in brief:

  • The Agreement would improve market access conditions for European companies beyond China’s existing commitments under the World Trade Organization. The EU's key objective is to significantly improve EU investors’ access to the Chinese market, in particular by eliminating quantitative restrictions, equity caps or joint venture requirements.
  • The Agreement should also ensure that our companies compete on an equal footing when operating in China, compared to Chinese and third-country companies. To that end, the EU seeks to achieve non-discriminatory treatment, prohibition of performance requirements – in other words, measures requiring investors to behave in a certain way or to achieve certain outcomes (including those leading to forced technology transfer) – and equal participation in standard-setting work.
  • Transparency, predictability and legal certainty of the investment environment are equally important. The agreement should ensure that European companies in China have proper access to information affecting their businesses and the opportunity to comment on relevant laws and regulations. It is also important to ensure clear, transparent and objective licensing and authorisation procedures and requirements, as well as to guarantee procedural fairness and due process.
  • The EU has also proposed commitments disciplining the behaviour of state-owned enterprises and increasing transparency of subsidies.
  • The agreement should also stress that sustainable development is an overarching objective of EU-China bilateral investment relations – to this end, it should include adequate commitments regarding labour and the environment.
  • Provisions on investment protection should ensure a high level of protection for European companies, while preserving governments’ right to regulate. The agreement should reflect the EU’s reformed approach to investor-to-state dispute settlement (Investment Court System).
  • The agreement will include provisions for dispute settlement (state-to-state) and an institutional framework to monitor its implementation.

More on EU-China Comprehensive Agreement on Investment

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