China: investment agreement struck with EU and commitments to ratify ILO conventions

On 30 December, the European Union struck an investment agreement with China after seven years of negotiations, in an initiative that has been backed by Angela Merkel and the German presidency of the Council of the EU, which came to an end on the following day. The agreement will enable better access to the Chinese market for European investors, allow for an end to forced transfers of technologies, particularly in the case of joint ventures, and will improve the fairness of competition with Chinese companies. When it comes to employment practices, managers and specialists of European investors will not be subject to labour market restrictions in China (such as quotas and hiring that favours Chinese staff) for a period of three years. The agreement also paves the way for China to ratify outstanding International Labour Organisation fundamental conventions. On this point, the text remains non-binding, merely formalising China’s commitment to “continued and sustained efforts” to ratify the eight conventions in question. China also commits not to lower standards in the areas of labour and environment in order to attract investment, and commits not to using its own standards for “protectionist” means. A dispute settlement mechanism will be put in place, as well as a “monitoring mechanism at pre-litigation phase established at political level”, which will allow issues to be raised “including via an urgency procedure”, the European Commission says, without providing any more specific details. The agreement must now go before the European Parliament before ratification by each of the member states, which is expected to take several months. “We are consolidating European unity and sovereignty in order to focus our demands on the rebalancing of economic relations, the environment, development and respect for fundamental rights,” said French president Emmanuel Macron, ahead of the French presidency of the Council of the EU in the first half of 2022, during which China’s compliance with the commitments contained in the agreement will be examined.