Towards a win-win BIT for China and the EU

By Jiang Shixue
0 Comment(s)Print E-mail, January 27, 2014
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China is now the EU's second trading partner, right behind the United States, and the EU is China's biggest trading partner. Every day, around US$15 billion worth of goods and services are traded between both sides. In the area of direct investment, however, China accounts for merely 2 to 3 percent of overall European investments abroad, whereas Chinese investments in Europe accumulate to even less.

According to the EU, "an EU-China investment agreement will, among other things, improve the protection of EU investments in China and reduce barriers to investment in China. This will help increase investment flows between the EU and China and improve access to Chinese markets." The BIT is in fact a two-way street, protecting Chinese investment in the EU, the most favored destination of Chinese investors among all developed countries, as well as safeguarding European capital in China. So it turns out a win-win for both sides in terms of the attraction and protection of bilateral investments. Yet the significance of a China-EU BIT stretches beyond that of pure investment. Based on the possibility of a successful BIT, the two can think of a more bold initiative: reaching a free trade agreement.

Any treaty negotiation is by no means an easy task. The China-U.S. BIT has gone through almost 11 rounds in five years and the light at the end of the tunnel remains dim as of yet. It is believed that the China-EU BIT might not be as hard as the one between China and the U.S. For instance, the EU expects that negotiations on the agreement should be completed within 2.5 years. This prediction might come true, but it would be naïve to expect the road ahead to be without bumps and humps, although it is still too early to make any accurate predictions about the exact drafting of the agreement.

The devil appears in the details. It is certain that bargaining over specific issues such as market access, a negative list, national treatment, labor standards, environment, transparency of the state-owned enterprises, etc., will be extremely tough. In any case, the ball is starting to roll.

China's Spring Festival now lies around the corner and along with this traditional feast, the start of the China-EU BIT negotiations represents "double happiness" for Chinese investors. As the old Chinese saying goes, "when horses arrive, success follows;" therefore this round of negotiations will surely triumph in the Year of the Horse.

The author is a columnist with For more information please visit:

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