The EU’s overtures to Chinese officials shows that the battle to stop CAI is about to start once again

Much of the debate within the European Union last week was focused on calls for the boycott of the 2022 Beijing Olympics, but behind the scenes it was another week in which EU leaders slowly revamped their efforts to smooth the way for the adoption of the EU-China Comprehensive Agreement on Investment (CAI).

Reading the strong wording of the joint-resolution on Hong Kong passed overwhelmingly by the European Parliament, an outside observer could be forgiven for assuming that the investment treaty is dead in the water.

After all, Members of the European Parliament not only condemned the closing of Apple Daily newspaper, called for the sanctioning of Hong Kong and Chinese officials and the adoption of a lifeboat scheme for Hong Kongers, but also reiterated the position that they would not ratify CAI while Chinese sanctions on European officials, parliamentarians, and think tanks remain in place.

But outside of the Parliament, the tone has been substantially different. In a video-call with Xi Jinping on Monday, the German Chancellor Angela Merkel and French President Emmanuel Macron both backed the conclusion and adoption of CAI and stated that they welcomed further Chinese investment into Europe.

This chimes with recent conversations the Spanish Prime Minister and the Foreign Ministers of Ireland, Hungary, and Poland have had with Chinese officials backing the continuation of the investment treaty talks. As the Slovenian Government takes over the six-month EU rotating presidency it has also stated that the conclusion of CAI will be a priority.

The view of the EU Commission is similar. Naturally - it is EU trade officials who have negotiated CAI. The EU Commission President, Charles Michel, has stated that CAI is a step in the right direction and rather misleadingly suggested that it includes commitments from China on social rights. Meanwhile, the EU High Representative for Foreign Affairs, Josep Borrell, in a call on Thursday with Chinese Foreign Minister Wang Yi said that the adoption of CAI was in the interests of both sides.

It would appear that the division over CAI is a straight fight between the Commission and Member States who continue to support the speedy adoption of the treaty, and the Parliament which remains united in its opposition to ratification. However, closer observation of developments points to a parliament that is far more fragmented on the question.

For instance, the Parliament this week had an opportunity to include language in its resolution that would have made the ratification of CAI dependent on China’s recommitment to the Sino-British Joint Declaration and respect for Hong Kong’s autonomy. Members instead opted to reiterate their call for the lifting of Chinese sanctions. Sources close to the negotiations tell us that some of those around the European Parliament negotiating table were pushing for stronger wording on CAI, but they were overruled by one of the other party groupings: a potential sign of things to come.

Despite the strong rhetoric regarding the crackdown of the pro-democracy movement and journalists in Hong Kong, some members of the European Parliament remain reluctant to stand up for human rights at the cost of losing an investment treaty with China.

Rather than opposing a poorly struck treaty on the grounds that it will open up large swathes of Europe’s economy to possible Chinese buyouts including media and publishing, rewards China for its dismantling of Hong Kong’s autonomy, and fails to compel China to ratify core international labour conventions, the Parliament remains infuriated by the imposition of Chinese sanctions.

To some that fury stems quite rightly from the disproportionate targeting of parliamentarians, officials, and thinktank researchers by the Chinese Government whose only crime is raising the persecution of the Uyghurs. To others it is anger at the inconvenient derailing of an investment treaty, which for the most part they support.

The reality is that like the Commission and EU leaders, some parliamentarians will go into the summer holding out hope that the Chinese Government will lift its sanctions and the EU can move quickly to ratify CAI in the fall.

For those of us who stand with Hong Kong, it is clear that the battle to prevent the ratification of CAI is about to start once again.

Sam Goodman, Hong Kong Watch’s Senior Policy Advisor