China-EU investment deal allows for arbitration to settle disputes, documents show

Comprehensive Agreement on Investment has been hailed as a breakthrough in the China-EU relationship, which has been fraught with trade disputes

Full text of deal also shows introduction of stricter clauses on market access and technology transfers

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The investment deal aims to make it easier for EU firms to access China’s financial services and other markets. Photo: AFP

Published: 8:30pm, 23 Jan 2021Updated: 9:22pm, 23 Jan 2021

The new investment agreement signed between China and the European Union allows for the use of arbitration to settle trade disputes, and introduces stricter clauses on market access and technology transfer, the full text of the deal reveals.

The two sides wrapped up seven years of negotiations on the Comprehensive Agreement on Investment (CAI) in late December, but the document was not released by Brussels until Friday.

The deal has been hailed as a breakthrough in the China-EU relationship, which has been fraught with trade disputes, though critics argue Europe granted China too many concessions, especially with regards to the issue of forced labour.

According to the text, in the event of a trade dispute, either side can request the establishment of an arbitration panel. If China were the complainant, the hearing would be in Brussels, and if the EU had a gripe the hearing would be in Beijing, it said.

The ruling panel is required to deliver a report within 50 days of the hearing, and any remedial action should be taken within 15 months of a ruling, unless both sides agree to an extension.

The CAI was wrapped up last month when Chinese President Xi Jinping (centre) met European leaders via video link. Photo: Xinhua

As well as promising to open up its markets to European companies, China agreed in the deal to regulate its state-owned enterprises (SOEs) and rectify restrictions that are unpopular with EU firms such as forced technology transfers.

On the former, the two sides agreed that SOEs should make decisions based solely on commercial considerations, while on the latter, they said the transfer or licensing of technology must be based on market terms and regulatory regimes should be impartial, according to the documents.