Even as countries are reeling under the double whammy of recurrent resurgent cycles of pandemic outbreak and surging economic recession, the EU on December 30th has announced in principle reaching a Comprehensive Investment Agreement (CIA) with China. The European countries are the ones worst hit by the pandemic and the announcement on the CIA coming on the day when Germany registered record number of infections and mortality has raised many eyebrows.
A year after the World was plagued up by the Chinese Wuhan
virus, China seems to have emerged much stronger. After sealing the RCEP
(Regional Comprehensive Economic Partnership), the largest trade agreement in
October 2020, an investment treaty with the EU has not only powered Beijing’s
economic ambitions but also gave wings to the Middle Kingdom’s geopolitical
ambitions. Notwithstanding the mayhem unleashed by the Wuhan pandemic, instead
of seeking retributions for its complicity in handling the virus outbreak, the EU
has handed over a strategic diplomatic victory to Beijing.
Welcoming the agreement, which concluded after seven years of
talks and 35 rounds of negotiations, The Global Times, the mouth piece of CCP
hailed the development with its characteristic cliché- “win-win cooperation”
and termed it as “New Year Gift from China and the EU to the whole World”1.
Throttling the growing chorus of the decoupling trade and
investment from Middle Kingdom known for weaponizing them, the European
Commission President Ursula von der Leyen and President of the European Council,
Charles Michel declared, “this agreement is of major economic significance
and also binds parties into value-based investment relationship grounded in
sustainable development principles”2. Ursula von der tweeted that the agreement
will, “uphold our interests” and “promotes core values”3.
In reality, the agreement undermines the virtues of
value-based investments and barely comprehends with the principles of
sustainable development. It is no secret that foreign companies running
business in China are forced to transfer technology and compete against highly
subsidised Middle Kingdom’s State-Owned Enterprises of (SOE) in global markets.
Disregarding rules of law, disrespecting the intellectual property rights, China
has been practising discriminatory, distortive business disgorgement practices
and dominating the World trade.
Since its accession to the WTO in 2000, China has scuppered
all the agreements of principled economic investments and continued to lunge ahead
by restricting market access to countries. Devoid of transparency and
reciprocity, China’s monopolistic predatory trade practices have become
security threat. As per China’s National
Intelligence Law, Chinese companies are obligated to double up as intelligence
gatherers. In 21st century, data is the new gold and a free access
to Chinese entities will have potential security implications.
Given the burgeoning no-trust factor and the bullying tactics
nations are trying to limit interdependence with China. Beijing is facing
harsher criticism for its impetuous bullying actions against Australia and
Norway, aggressive standoff with India, Vietnam, intimidatory expansionism in
South China Sea and repeated incursions across the Taiwan Straits and Senkaku
islands. EU’s decision of concluding the CIA at this juncture thus raised valid
doubts about its intentions.
The timing of the deal has raised many hackles. In September
2020, Germany unveiled new guidelines of its Indo-Pacific Policy and
underscored the need to protect the seas through the legally binding Code of
Conduct enunciated by ASEAN countries. Even France and the Netherlands evinced
strong interest in making Indo-Pacific, a part of their foreign policy. These
nations heaped criticism on China for serious human rights abuse of Uighur
Muslims in Xinjiang and objected to slave labour.
Amid this scenario, the EU’s sudden turn around and
announcement just a day before expiry of Germany’s six-month tenure as EU
president brought back to focus Angela Merkel’s growing disenchantment with the
US. Merkel no longer considers the US as a reliable ally. Her disastrous encounters
with President Trump at NATO and G-7 summit have only reinforced her views. In
her speeches at Munich Security Conference in 2019 and America Academy 2020,
she spoke at length about the geopolitical vulnerabilities of Germany and said,
“If you look at what we Europeans have on our doorstep, it looks quite
challenging. We have Russia and right after that China. China and Russia are
moving closer”4. Receiving American prize at Berlin she
added, “but I plead for us not to fall into a new bipolarity, but rather
that we try, with the results and experiences we have, to include a country
like China in multilateralism and treat it at least equally”5.
While anxiety about European vulnerabilities is
understandable, Merkel stand on China has been clear. Geopolitics and fear of
bipolar World scenario aside, Merkel’s China pull is inextricably linked to the
economic interests of German automakers whose dependency on China has increased
immensely. Despite the episodes of forced technology transfer and calls for
decoupling the global supplies, German Automakers who have invested heavily in
China are in no mood to pull back. Resisting the pushback from the Trump
administration, a week before conclusion of CIS Germany opened door for China’s
Huawei to build 5G network6.
With no let down in threat of US sanctions over the Airbus-Boeing tiff,
France is also miffed with the US.
Germany’s stand towards China has been clear. Though it
joined other European countries in condemning China’s threats following Czech
delegation visit to Taiwan7 and crackdown on Hongkong
Pro-democracy activists, imposition of National Security Law, Beijing
annexation threats to Taiwan, concerns over China’s acquisition of strategic
industries, Germany’s economic interests has trumped its ideological
positioning.
Representing EU presidency, Merkel gave final push to
negotiations and invited President Macron on board for the videoconference that
announced the conclusion of EU-China investment agreement. For singularly
steering the deal ignoring the consent of the countries, Spain, Poland, Italy
are now publicly voicing their opposition to the agreement. Feeling slighted,
these small European nations are now coming down heavily on Germany for failing
to bring trans-Atlantic partners on board. Terming it premature, countries
lashed out at Franco-German push for ignoring legitimate concerns about the
deal.
EU-China irrevocably ripped apart Europe’s image of Paragon
of human rights and democratic values and drove a wedge between US and Europe. CIA
has unsettled Europe’s ties with the US and opened fissures between EU
countries. The investment deal is a major setback to the incoming Biden administration,
which hasn’t rolled out a concrete China policy as yet. Notorious for weaponing
trade, the aggressive authoritarian regime at the helm in China will inexorably
leverage the deal to realise its geopolitical ambitions. China’s punishing
sanctions on Australia despite the Free Trade Agreement is a case in point.
Unfortunately, Europe’s deepening economic dependence with an
authoritarian China all set to dominant the World, will have consequences for
all democratic countries.
At a time when the new
Wuhan virus variant has forced the European countries into a second lockdown,
EU’s CIA agreement is perceived as a royal snub to US President Elect Biden who
has promised to revive ties with Europe and all its allies. US is EU’s largest
diplomatic partner and this investment agreement is bound to complicate matters
for the US’s incoming administration.
Even as EU’s contends that it could force China to ratify
International Conventions on Labour organisations. Given China’s record of
vituperative violations of treaties, EU must surely be living in a wonderland to
believe that CAI would bestow it a handle to change Beijing’s ways. Believing
China’s integration would lead to its democratization, West welcomed China into
WTO. On the contrary, two decades to its WTO membership, the authoritarian
China has excelled the art of exploiting the democratic systems and
multilateralism to serve its interests.
In the process of asserting its ‘strategic autonomy’, Europe
rushed the investment deal and left incoming Biden administration in lurch.
Though trans-Atlantic rapprochement is on cards, the deal is bound to create a
divide and alter the geopolitical paradigm. In the meanwhile, China will
continue to leverage EU-US disagreements and sabotage the China’s threat
narrative.
It is a crying shame that despite its grandstanding, Europe,
the epicentre of pandemic, failed to hold China accountable for unleashing the
Wuhan virus. Instead, it allowed China to walk away with a diplomatic victory
and economic gains by sealing a comprehensive investment agreement.
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