EU, China Leaders Make Investment, Climate Push

2 July 2015

The EU and China are aiming to have a joint text for a sweeping bilateral investment pact by year’s end, leaders from the two sides said on Monday following a summit in Brussels, in a move that could eventually pave the way for future consideration of a potential trade deal.

Climate change also ranked high on the 29 June meeting agenda, with Beijing releasing the following day a highly-awaited document outlining its planned national actions for addressing the issue in the context of a global binding climate deal.

Monday’s meeting, which marked the 40th anniversary of diplomatic relations between the two sides, brought together European Council President Donald Tusk, European Commission President Jean-Claude Juncker, and Chinese Premier Li Keqiang for a wide-ranging discussion on areas for bilateral cooperation, as well as past irritants.

Joint BIT text by end-2015

One of the key issues on the agenda during the high-level meet was the progress of the EU-China bilateral investment treaty, or BIT. Brussels and Beijing began negotiations for such a pact in early 2014, after agreeing in 2012 to start the talks. (See Bridges Weekly, 24 October 2013)

The 28-nation EU is China’s largest source of imports, and vice versa, according to European Commission data. The two sides trade over one billion euros per day. Investment figures are comparatively paltry, with China accounting for just two to three percent of overall European investments abroad.

Proponents say that this planned deal, if achieved, could serve to lower investment barriers, provide a more predictable investment framework, and boost investor confidence.

“The EU and China view the ongoing investment agreement negotiations as one of the most important issues in EU-China bilateral economic and trade relations,” they affirmed in a joint statement.

Negotiating teams should now aim to “seek convergence” on the BIT’s scope, including reaching a joint text, by the end of this year, leaders said on Monday. Furthermore, they said, a final deal should be “ambitious and comprehensive,” including the areas of investment protection, market access, and other elements that could ease investment.

A successful result in the BIT talks has long been suggested as a potential litmus test for whether the two can eventually negotiate a trade pact. Leaders reiterated this possibility at the bilateral summit, noting at reaching an investment agreement would be both a sign of their commitment to deeper cooperation “as well as their willingness to envisage broader ambitions including, once the conditions are right, towards a deep and comprehensive FTA, as a longer term perspective.”

An eventual trade agreement, if ever negotiated, would be a significant economic and geopolitical step for the two sides. The EU and China have long had a tumultuous trade relationship, sparring on issues ranging from domestic support for their respective renewable energy sectors to whether China should be treated as a market economy in trade remedy disagreements.

China unveils climate pledge

The day after the summit, Beijing released its highly-awaited pledge for its contribution to a post-2020 global climate agreement, outlining a series of actions the world’s largest carbon emitter intends to take by 2030.

China’s submission, known as its intended nationally determined contribution (INDC), had been widely expected given its earlier indications that it would submit its pledge during the first half of the year.

These INDCs are meant to be the building blocks of a final global climate deal, which UN negotiators are aiming to reach in Paris, France when they meet at the end of the year. At press time, 16 INDCs had been submitted to the UN Framework Convention on Climate Change (UNFCCC), including China’s.

In its pledge, China affirmed that it would work to achieve a “peak” in carbon dioxide emissions around 2030, as well as “making best efforts to peak early.” China had already affirmed this goal late last year, when it announced a joint plan with the US aimed at curbing emissions. (See Bridges Weekly, 13 November 2014)

Other actions listed in the document include actions aimed at lowering carbon emissions per unit of GDP by 60 to 65 percent from the 2005 level; boosting the share of non-fossil fuels in primary energy consumption “to around 20 percent”; as well as increasing by 4.5 billion cubic metres the forest stock volume, relative to 2005 levels.

Beijing noted that these actions were based on the country’s “national circumstances,” as well as its stage in development, among other factors. The document then goes on to outline various policies and measures to implement such actions, as well as China’s views on the overall process and outcome of the global climate talks.

Following the release of China’s INDC, EU Climate and Energy Commissioner Miguel Arias Cañete publicly welcomed the deal, referring to it as a “positive boost for the climate talks” on the social media site Twitter.

At this week’s summit, EU leaders had already pressed China to agree to targets as ambitious as the bloc’s own. Speaking to reporters on Monday, Juncker noted that the EU has already made strong commitments in this area, with the intention to lower emissions by 40 percent compared with 1990 levels.

“I would strongly welcome China taking on its shoulders commitments having the same ambition, if not in numbers, then at least in targets,” the EU Commission chief said.

Leaders from both sides released a joint statement on climate change during the EU-China summit, where they said they would work together for an “ambitious and legally binding” Paris deal this year, “on the basis of equity and reflecting the principle of common but differentiated responsibilities and respective capabilities, in light of different national circumstances.”

ICTSD reporting; “Li Keqiang pushes for China-Europe investment treaty,” FINANCIAL TIMES, 29 June 2015; “At summit, EU Hopes to deepen ties with China,” REUTERS, 29 June 2015; “EU Leaders Urge China to Adopt Tough Climate-Change Goals,” THE WALL STREET JOURNAL, 29 June 2015; “EU Lawyers Favor Market Economy Status for China Next Year,” THE WALL STREET JOURNAL, 9 June 2015; “Malmstrom: No Automatic Market Economy Status for China in 2016,” THE WALL STREET JOURNAL, 11 December 2014.

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