“Dead in the water” or “temporarily paused”: what is next for the EU-China Comprehensive Agreement on Investment?

Last week, the European Union (EU) Commission stunned many by announcing that it would pause the political process of ratifying the EU-China Comprehensive Agreement on Investment (CAI) following statements from the main political groupings in the European Parliament that they would block ratification unless China’s sanctions on EU parliamentarians, officials, and think tanks were lifted.

This development has led some to speculate that without the European Parliament’s backing the investment treaty is “dead in the water”. However, the Commission has subsequently attempted to clarify its remarks with the EU Ambassador to China saying that the stalling of the talks “is less dramatic than people think”.

This blog answers the question: What do these contradictory messages mean for the passage of CAI and its influence on the human rights crisis in Hong Kong?

CAI and Human Rights

The decision by EU officials and the Chinese Government to fast-track investment treaty negotiations following the introduction of the National Security Law in Hong Kong rightly raised significant concerns amongst human rights NGOs, including Hong Kong Watch.

At a base level, it signalled that the EU was willing to reward Beijing for the dismantling of the city’s autonomy and the violation of its international commitments under the Sino-British Joint Declaration. Some commentators went as far to speculate that the EU’s lacklustre response to Hong Kong was directly linked to the investment treaty, with fears that the adoption of a similar scheme to the UK’s BNO visa or Canada’s Young Talents scheme for Hong Kongers would lead to China cancelling the talks.

In response, Hong Kong Watch has worked privately with prominent Hong Kong pro-democracy activists to ensure that the human rights crisis in Hong Kong is central to deliberations regarding CAI: meeting with EU parliamentarians, officials, and representatives of EU Member State governments.

Publicly, we co-authored a joint appeal with 49 civil society organisations in Brussels calling for a human rights clause and a clear timetable for China to ratify core ILO conventions on forced labour, our team helped coordinate an open letter signed by over 100 China experts, academics, and human rights activists outlining the flaws in the investment agreement and the fact it would entrench EU dependency on China, and we coordinated a letter signed by prominent Hong Kong activists overseas and in exile calling for ratification of CAI to be blocked unless the National Security Law was repealed, all political prisoners are released, and China recommits to the Sino-British Joint Declaration.

Growing opposition in the European Parliament

Since the publication of the draft text of CAI, European parliamentarians have raised criticisms about its content and the way in which it has been negotiated. A growing number of MEPs concerns have coalesced around the growing use of Uyghur slave labour in China and the weak language in the text to guarantee that China will ratify core ILO conventions on forced labour.

The final straw for MEPs has come in the form of the counter-sanctions China introduced against a number of their European colleagues, EU officials, and European thinktanks in response to coordinated sanctions on Chinese officials responsible for the persecution of the Uyghurs. In response, MEPs intend to introduce a joint-resolution in the Parliament which it is anticipated will include strong language linking ratification of CAI to China lifting sanctions against those sanctioned in Europe.

It is this context which has led the EU Commission into a partial retreat where it will no longer ask MEPs and EU leaders to ratify the investment treaty but will continue the legal scrubbing with China. This means that the EU Commission will continue the technical proofing of the final text of the treaty which will allow it to bring the treaty back at a later stage.

Dead in the water or temporarily paused?

But it would be premature for the opponents of CAI to claim victory. There are already murmurings amongst some Members of the European Parliament aligned with the pro-business lobby about when tensions will have been deescalated and they can bring the deal back to the table. Some speculate it could be as soon as six months. Others think the previous timeline of the Parliament voting in April 2022 presents more than enough wiggle-room to get a majority of parliamentarians onboard.

The Chinese Government and the German Chancellor both appear united in their desire to push for ratification. In a recent call between the two, the Chinese leader implored Germany to push forward with an earlier date for ratification of CAI. Merkel this week stated to party members that she remains convinced that the investment treaty is an “important undertaking”.

CAI's opponents cannot afford to rest on their laurels. It is clear that the ratification of CAI remains on a knife-edge. Miriam Lexmann, a Member of the European Parliament and the co-chair of the parliament’s Hong Kong Watch friendship group summed up the state of play with CAI perfectly when she tweeted that ‘Attempts to push CAI through will no doubt continue. But it doesn’t change the reality that the agreement is geopolitically ill-timed, economically weak and morally wrong.’

We need 'clear red lines'

Historically, the EU Commission has a track record of favouring policy fudges where possible and the Chinese Government continue to firmly fix its eye on the prize of severing Europe from the USA with promises of substantial investment post-COVID. It is therefore paramount that European parliaments seize the moment and outline clear red-lines when it comes to the consideration and ratification of CAI.

The first, must be the lifting of China’s unjust and entirely inappropriate sanctions on European parliamentarians, officials, and think tanks.

The second, should be the insertion of a human rights clause which commits China to ratify the core ILO conventions prior to the treaty coming into force.

Finally, China should recommit to the Sino-British Joint Declaration and its international obligations to respect Hong Kong’s autonomy. This includes repealing the National Security Law and releasing all political prisoners. It would be absurd for EU leaders to continue to issue statements of concern and opposition to the Chinese Government’s sustained breaches of international law and human rights abuses in Hong Kong and Xinjiang, while simultaneously asking China to commit to new international treaty obligations under CAI.

In Brussels the debate has shifted from when the European Parliament will ratify CAI to whether it will. For those of us whose principal concern is standing up for the pro-democracy movement and human rights in Hong Kong, we must continue to work to block the investment treaty’s revival unless these conditions are met.

Sam Goodman, Senior Policy Advisor at Hong Kong Watch