Now that the European Union has inked an investment agreement with China it needs to take a big-picture geopolitical approach to the rest of the Asian region and a forward-looking approach to transatlantic relations, argues Reinhard Bütikofer in an interview with Borderlex.
Reinhard Bütikofer is chairman of the Delegation for relations with the People’s Republic of China at the European Parliament and member of the Greens/European Free Alliance political group.
CAI labour commitments “not enough”
Bütikofer is known to be quite sceptical about CAI, the Comprehensive Agreement on Investment inked in principle by the European Commission with Beijing at the end of December last year.
“We don’t have the complete picture yet,” Bütikofer said. The critical annexes to the published text have not yet been released. In the MEP’s understanding, the agreement appears to be offering little in terms of genuine extra market access to the EU and could risk locking large European electrical automakers into the Chinese market and penalising small European industrial firms.
China made commitments to discipline state-owned enterprises’s commercial behaviour and to provide for greater transparency in the area of industrial subsidies – so called ‘level-playing field’ issues. “With regard to the level playing field, everything hinges on the strength of the dispute resolution,” said Bütikofer. “Here I find it’s pretty weak.”
Climate commitments by China in the agreement are “boilerplate”, says Bütikofer. On labour commitments the draft text shows that China committed to “make continued and sustained efforts on its own initiative to pursue ratification the fundamental ILO Conventions No 29 and 105”, which prohibit forced labour.
Bütikofer considers China’s commitment “hot air” and “cynical”. Beijing “denies there is forced labour in Xinjiang, but insists that forced labour has to be in the toolbox that they apply,” the MEP said. He disagrees with the argument made by the European Commission that this is the same language used in other EU trade agreements in the Asian region: “The language is weaker and it is certainly not enough to push back against modern slavery.”
Vietnam, a communist one-party state with which the EU concluded an FTA also needed to be nudged into the ratification of International Labour Organisation conventions, mostly those covering the freedom of association of labour unions. It ratified one convention ahead of a ratification vote in the European Parliament in early 2019 and agreed to a roadmap towards ratification of all ILO core conventions by 2023.
“If we were to live up to the Vietnamese standards, then we would have an implementation plan for ILO conventions,” said Bütikofer. “A similar implementation plan with China might make a difference with the European Parliament.”
Pursue Taiwan and ASEAN deals
The EU now needs to look beyond China in the wider Asia-Pacific region.
First of all it now needs to start fulfilling a promise made to Taiwan to initiate negotiations towards an investment agreement once negotiations with China are concluded. That promise was made in the EU’s 2015 ‘Trade for All’ strategy.
“Taiwan is a WTO member. We should now engage in finalising the scoping exercise” and not postpone the exercise indefinitely, said Bütikofer. “I am not advocating Taiwan independence. But I am very much a fan of helping to show solidarity with the Taiwanese democracy.”
The EU is also facing new trading blocs in the region: the eleven-country CPTPP and RCEP and, the pan Asian agreement that includes China.
“In a world where geopolitics leads geoeconomics, you cannot shape your trade policy under a geoeconomics rationale alone”, said Bütikofer.
The EU should revive its idea of a region-to-region agreement with ASEAN – without giving up on current bilateral negotiations, but also by being realistic with what it can achieve there. The EU’s approach to ASEAN is de facto exclusively focused on wide-ranging bilateral agreements. The stated goal of pursuing a region-to-region agreement is in fact being postponed very far into the future, the MEP thinks.
“The bilateral approach is beyond its sell-by date. It’s not conceivable that countries such as Laos, Cambodia or Myanmar will any time soon sign up to the same types of commitments as Japan or Singapore,” said Bütikofer.
“Why is there more openness among the ASEAN countries towards the European Union today compared to ten years ago? Because all of them increasingly feel they sit between a rock and a hard place,” at a time of rising China-US rivalry.
ASEAN members “want to have friends and allies elsewhere in the world to help strengthening their own agency and their scope of activity and not just become dependent on two elephants that might just trample the grass.”
Bütikofer added: “That would give a higher grade of urgency to pursuing a trade deal with ASEAN as a region for political reasons and not just measure that against the level of thoroughness we have achieved with a partner like Singapore.”
Transatlantic partners need to look into the future
As to relations with the United States, the German MEP hopes that the two sides should avoid that the relationship “be bogged down by the legacy conflicts” such as the Airbus/Boeing dispute, Section 232 metals tariffs and other disagreements over trade. “These have to be resolved one way or another over the initial phase of the Biden presidency”.
But the two sides will need “a future-oriented approach” that focuses on the current commonalities.
A proposed transatlantic Trade and Tech Council should in Bütikofer’s view include standardisation issues. “This is becoming a major battlefield in the trade realm. Traditionally we have had many issues because out standardisation systems are so very different on both sides of the pond, but I think we should ambitiously invest there,” reckons Bütkofer.
Other issues of common concern are climate change, including in relation to trade. “That presupposes that we proactively open ourselves to discussions with the US, for example on border carbon adjustment [because], this is an issue where we can run afoul of the US. We can try to find ways of moving such an agenda in a coordinated – or at least mutually understood – way. The same applies to digital tax.”
Broader coalition on China
How about potential transatlantic cooperation on China? Here Bütikofer thinks that a broader coalition of like-minded partners to tackle systemic issues at the WTO and common concerns over labour rights is in order. The politician sees a potential coalition with countries such as the United States, the United Kingdom and Canada to ban imports of products from forced labour – for example via the EU’s coming human rights due diligence legislation.
On WTO issues, “China plays with historically justified anti-colonial arguments, then goes on to propose that third world countries would be better off under Chinese hegemony than under a rules based international order. We must react to that debate, otherwise we’d lose the partners that we need to keep at the table, to have their own voice and to play an active role.”