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EU-China Comprehensive Agreement on Investment – CAI #1

Highlights of CAI

Part 1 (general information on CAI)

1.27 EU Member States and China have reached an agreement in principle on 30 December 2020 through 35 rounds of negotiations on the Comprehensive Agreement on Investments (“CAI”).

2.Member countries are China and EU member States including, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

3.The CAI’s main objective is an enhanced protection of EU investments in China and vice versa, improved legal certainty regarding the treatment of EU investors in China, reduction of barriers to investing in China, and as a result, increasing bilateral investment flows and improved access to the Chinese market.

4.The CAI would be a key tool to increase investments between EU member states and China, which could speed up the recovery of the global economy.

5.EU and China are now working towards finalizing the text of the agreement, which will need to be legally reviewed and translated. It is expected to be signed in April 2022 – before it can be submitted for approval by the EU Council and the European Parliament.

Part 2 (Impact to Chinese investors in EU market)

6.The EU market is already open to investment with very few restrictions for China but the CAI will improve access to some manufacturing sectors and to the energy sector, including renewables, except investment in nuclear energy. Chinese photovoltaic products were subject to anti-dumping investigation and increased customs duties by EU in early years. After the agreement, Chinese photovoltaic enterprises can have a fair play with other local or foreign enterprises in EU market. High speed rail, 5G and other competitive industries in China can also enter EU market.

7.The direct benefits of the Comprehensive Agreement for Investment for Chinese FDI to the EU are limited, but the advantages of the deal for China and Chinese business may lay in CAI because the deal will preserve and encourage EU investment in China, especially in China’s economy and its technological development and this agreement is strategic to the reputation of China domestically and internationally.

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