EU-China – That was the week that…?

May 7, 2021

The EU is suspending plans for a trade deal with China and introducing steps to protect against economic competition from China that it deems unfair, and India is the new flavour in Brussels.

“We now, in a sense, have suspended … political outreach activities from the European Commission side,” on ratification of the EU-China Comprehensive Agreement on Investment (CAI), EU trade commissioner Valdis Dombrovskis told the AFP news agency on Tuesday (4th May).

The Comprehensive Agreement on Investment (CAI) between the EU and China took seven years to negotiate and was only concluded in December last year but has faced resistance in the European Parliament. 

Since the CAI was agreed upon, the EU, UK, Canada and the US imposed sanctions on four Chinese officials in March. China has responded by imposing sanctions against European politicians, scholars and research groups, targeting more than 30 individuals in total. An indication of how relations between Beijing and Brussels have deteriorated in the last few months.

Dombrovskis’s comments do not mean the CAI has been formally suspended, and the deal seems to be politically impossible at the moment.

Meanwhile, the European Commission has unveiled plans to cut the EU’s dependency on Chinese and other foreign suppliers in six strategic areas and to limit the ability of companies supported by foreign subsidies to buy EU businesses or take part in public tenders.

The EU competition chief Margrethe Vestager told a news conference on Wednesday (5th May) there have been rules controlling state aid from European governments for 60 years, but none to stop foreign subsidies being used to buy up firms inside the 27-nation bloc. “Europe is open for business, but come and do it in a fair and transparent manner,” adding “to ensure a level playing field in these challenging times, to support the recovery of the EU economy.”

India, the new partner? A new dialogue is being pursued by EU officials Ursula von der Leyen and Charles Michel and German chancellor Angel Merkel, aimed at reviving talks on a free-trade pact with India at a virtual summit with the Indian prime minister Narendra Modi.

Our take on this: Understanding the politics is essential because when governments sneeze, commerce can catch a cold. The whole office imaging sectors, OEM, Reuse, New Build, all rely, in one form or another, on sourcing to and from China. As far as a free trade deal between the EU and India is concerned, this won’t happen quickly. Previous EU-India talks stalled in 2013 due to disagreements on technical issues, such as tariffs, patents, and data security.

Categories : World Focus

Tags : Business China EU India