No shortage of ink has been spilled on the EU’s deals with the UK and China, concluded within a week at the end of last year. Yet little attention has been paid to what the two have in common.
In their different ways, they both mark new milestones on a path Brussels has been treading for some time. The EU’s trade and commercial agreements have slowly but surely broadened their perspective from merely promoting cross-border economic activity to committing trade partners to environmental, social and regulatory goals.
In the case of the UK deal, “there is clearly a step change”, said Iana Dreyer, a trade policy analyst. The agreement clinched on Christmas Eve allows Brussels to withdraw preferential market access should the UK diverge significantly from EU labour, environmental and subsidy standards. That is much stronger than earlier trade deals, which limit reactions to consultations and expert reports, but without commercial sanctions.
The “comprehensive agreement on investment” with China is vastly less ambitious on both commercial and non-commercial issues, though it goes beyond the titular investment issues to cover market access in a range of services. It does, however, include procedural rules and a chapter on sustainable development that are meatier than many had expected.
The deal puts down soft non-regression commitments on environmental and labour standards, and a vague promise to “work towards” China’s ratifying the International Labour Organization’s conventions on forced labour. This is particularly relevant given increasing attention on Beijing’s use of labour camps as a tool for repressing the Uighur minority.
Well-defined requirements are also included on consulting with civil society and on transparently publishing subsidies, licensing rules, and the submissions to, as well as outcomes of, disputes on sustainability and social issues. If pursued to their full extent, these amount to a significant contribution to procedural rule of law.
“I was surprised to what extent [Brussels] could squeeze that sort of language out of the Chinese”, said Jörg Wuttke, president of the EU Chamber of Commerce in China.
Ms Dreyer argued that “symbolically this is a big victory . . . for the EU to put down a few basic rules for China . . . There is nothing on telling state-owned enterprises what to do, nothing on labour, in China’s other free trade and investment agreements”.
The question is “how willing are the Chinese when the rubber meets the road”, said Mr Wuttke. “For them to take over part of the western system is unthinkable.” There are “rights violations shouting at you everywhere, but how much leverage do we have there?”
“China wrote this down and at some point China will have to respond to it, but there won’t be commercial sanctions”, Ms Dreyer said. Instead, the EU is more likely to use unilateral measures, such as new “Magnitsky” human rights-related sanctioning tools.
Yet much in the deal allows pressure to be exerted on China, should Brussels wish to. It can nag Beijing over foot-dragging on ILO ratification. It can include human rights groups in its consultations. It can publish evidence on abuses in the formal consultation processes. All this would raise the price paid by Beijing — in acute embarrassment, at least — for its authoritarianism. Transparency in licensing, meanwhile, could benefit not just EU companies, but Chinese ones that have fallen out of political favour.
Without political will, however, the EU’s new legal tools — whether vis-à-vis Beijing or London — could become a dead letter. But the politics is changing. The EU is “burnt” by the UK’s threat to break international law last year, said Ms Dreyer, and public opinion and pressure from the European Parliament are turning against China. She highlighted how the EU last year created a post of chief trade enforcement officer.
If London and Beijing are banking on the EU’s inability to shift from legal treaty negotiator to political actor, their gamble may be riskier than they think.