Third, the standards of “sustainable development” must be respected. China is committed to improving in the areas of labour, for example. B not to lower the standards of protection in order to attract investment, comply with its international obligations and promote responsible business conduct of its companies. China has also pledged to effectively implement the International Labour Organization (ILO) conventions it has ratified and to make additional and sustained efforts to ratify the ILO`s core conventions on forced labour.13 “It is extremely important that a weak mechanism renders the entire agreement worthless,” Chaisse said. “Conversely, an effective and solid settlement of the disputes between China and the EU will be difficult to achieve because, despite seven years of previous negotiations, there is no consensus on what it should look like at the moment. The European Union is very open to foreign direct investment. In comparison, despite significant liberalization over the past two decades, foreign investors continue to face significant restrictions in Chinese markets, particularly in the services sector. Given this imbalance, the EU has long sought to improve the situation of its companies operating or operating in China. On 30 December 2020, EU and Chinese leaders agreed on the content of the ICC after starting negotiations in 2014. The deal gained momentum belatedly after negotiations broke down in June 2020. Politico reported that prominent lawmakers opposed the ratification of the investment pact after China responded with the counter-sanctions.  Reinhard Bütikofer, chairman of the Parliament`s delegation for relations with China affected by Chinese sanctions, said: “The fate of this agreement is very much in question.” The France summoned the Chinese ambassador for “unacceptable” insults and sanctions from Beijing.  On 24 March, EU Trade Commissioner Dombrovskis warned China that “the ratification process cannot be separated from the evolving dynamics of broader EU-China relations”, referring to these counter-sanctions.
 Another option advocated by the European Commission is the transition to an International Investment Court (ICS) system. This feature is contained in the EU-Canada Comprehensive Trade Agreement and the EU-Vietnam Free Trade Agreement. On 30 December 2020, the EU and China announced that they had reached an agreement in principle on investment. The text is the result of lengthy negotiations that began in January 2014. The EU-China CAI has been heavily criticised by political commentators who believe the treaty is a “strategic victory” for China and could potentially damage transatlantic relations. However, as is customary in international affairs, things are not always as simple as they are presented and deserve careful consideration. While China`s position on the ICS is not definitive, it will be important to keep in mind what is happening at the United Nations, where ISDS reform is also underway. The United Nations Commission on International Trade Law (UNCITRAL) has established a working group to consider options. Germany has pushed the CAI forward and its companies appear to have the greatest economic interest in the CAI, but other countries believe the deal was rushed.
Overall, the amount of Chinese direct investment in the European Union remained around $10 billion from 2016 to 2019, with investment volumes almost stagnant. In this context, the importance of caI is obvious. CAI can provide a more unified and clearer legal protection framework for China`s investments in Europe, whether in the investment phase of mergers and acquisitions (M&A)15, in the operational phase after the creation and/or acquisition of a company, or even in dispute resolution16 after the occurrence of investment disputes. The opportunities for Chinese companies lie above all in the fields of activity in which China has assets. One of the first to benefit from CAI is expected to be photovoltaics, as the Chinese PV industry has an absolute advantage throughout the global industrial chain. Another is cross-border e-commerce. The CAI will give Chinese cross-border e-commerce enterprises a huge advantage in terms of access to the purchasing power market in the European Union and give them greater legal protection, although the issue of aligning Chinese cross-border e-commerce practices with EU rules on cross-border e-commerce, including local compliance issues, will remain a major challenge. However, the agreement had to be ratified by the European Parliament before entering into force. Some members of the European Parliament have rejected a deal with China amid alleged allegations of human rights in the country and growing political disputes with the EU and its allies. Under the Foreign Investment Law (which entered into force on January 1, 2020), China introduced a pre-entry national treatment regime, as well as a negative list for the management of foreign investments. Where the international/bilateral treaty/agreement to which China is a party provides for more favourable market access treatment for foreign investors, the provisions of that treaty or agreement may apply. One of the most pressing questions remains how the CAI interacts with the recent European tightening of the foreign investment control system.17 For Germany, the draft amendment to the Foreign Trade Act (AWG) entered into force on 17 July 2020, e.B.
The justification for CAI (facilitation of investment activities) and that of foreign investment control (prohibition of foreign investment in certain sectors) contradict each other with regard to certain sectors. Given these opaquely contradictory justifications, one would have thought that the CAI would explicitly address its interaction with foreign investment control. On 30 December 2020, the EU and China concluded basic negotiations on a Comprehensive Investment Agreement (CAI), the first round of which began in 20141. While discussions on the adoption and ratification of the agreement are still ongoing, the CAI is widely seen as an ambitious step towards creating significant opportunities for European and Chinese investors and strengthening economic ties between the two strategic markets. Once the CAI enters into force, it is expected to provide a single legal framework for EU members to replace the current bilateral treaties between China and 26 EU2 member states. Trade and investment relations between the EU and China are very important. The EU and China are strategic markets for each other, trading on average over a billion euros a day. China`s growing domestic market and economic weight represent important business opportunities for European companies.
However, the Chinese market is significantly less open than that of the EU. Access by foreign investors to a number of sectors is restricted or prohibited. European companies operating in China do not enjoy the same transparency and fair competition as Chinese companies in the EU market. The CICA is an important tool to address this lack of balance. The CAI also represents an important milestone, as it is the first time that China has committed to upholding labour and environmental standards as part of an economic agreement. Conversely, the phase one trade deal reached between the United States and China under the Trump administration does not include a section on sustainable development. In addition, it is important to stress that the agreement incorporates China`s current level of market access into international law. In this context, the CAI should form the basis of an EU-China round table on key issues such as a level playing field (ensuring fair and open competition between companies on both sides), labour and climate change. In the automotive industry, for example, German original equipment manufacturers (OEMs) have had to set up joint ventures with a Chinese partner in the past to enter China. In the near future, these Chinese subsidiaries will be able to be wholly owned by German OEMs and make the profits without having to share them with a Chinese partner.8 Previously, most European investments in China focused on traditional manufacturing, food and agricultural products, and other areas, and investments in high-tech fields such as biomedicine were relatively limited. but these industries have developed the fastest in China in recent years. .