Representatives of the European Union agreed on Friday, October 18, to begin negotiations with China on foreign direct investment (FDI). The decision has come after prolonged disagreement about trade in China’s solar panels and EU’s wine. The official launch of the negotiations is going to take place during the upcoming EU-China Summit on November 21. Both parties hope that the talks will have ended by mid-2016.
The aim of the emerging deal is to support and regulate Chinese trade ties with the European Union as well as its individual members. Some of the 28 EU countries have recently faced problems when doing business in China. Europeans have complained about the fairness and demanded investor guarantee from Beijing that their assets would not be expropriated without compensation.
EU is also seeking a greater access to the Chinese markets, most notably wider opportunities in China’s banking and financial sectors. EU Trade Commissioner Karel De Gucht emphasized the importance of this ‘double-edged’ approach to new trade talks with China. During a conference in Luxembourg he said that investment protection, along with a greater access to China’s market, are both conditions without which a new agreement cannot be fulfilled.
EU-China trade has increased dramatically over the last few years. China is EU’s number one importer with mutual trade reaching 1 billion EUR every day. China supplies the Union mainly with industrial and consumer goods, such as machinery and equipment or footwear and clothing. EU’s exports to China focus mainly on motor vehicles, aircraft, and chemicals but also machinery. Yet, bilateral trade in services accounts only for a tenth of total trade, and the Union’s exports of services contribute to EU’s exports of goods only in 20%. As to FDI, mutual investment flows have soared, yet they still constitute just 2-3% of Europe’s total FDI abroad.
