By Andrew Hammond
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It is the politics, rather than the economics, of the two agreements that is the more fascinating. The Christmas Eve U.K.-EU trade deal was, of course, widely anticipated and ultimately secured once U.K. Prime Minister Boris Johnson decided that it was too risky ― even for his "high-wire" style of politics ― not to agree a post-Brexit trade deal with the EU-27 in the midst of a once-in-a-century pandemic.
Much more of a surprise was the timing of the agreement, subject to ratification by the European Parliament, Dec. 30, of the EU-China Comprehensive Agreement on Investment (CAI) which will see European and Chinese firms get better access to each market.
That deal, discussed since 2014, suddenly developed new momentum around Christmas, despite the wider chill in bilateral relations, post-pandemic which saw the EU only a few weeks ago urge a joint initiative with the United States to "address the strategic challenge from China's growing international assertiveness."
Late December is a peculiar point in the diplomatic calendar for such an unscheduled breakthrough, with no negotiating deadline to force the issue as there was with Brexit. Much of the sudden urgency to move CAI forward reflects Beijing's desire to get it "over-the-line" before Joe Biden's inauguration as U.S. president.
China's calculus here is at least two fold. Firstly, it is acutely aware that the incoming Biden team has concerns about CAI. One of the president-elect's worries is that of some Chinese companies may now gain a stronger foothold in Europe by using Uighur Muslim forced labor for their products.
The EU is conscious of these U.S. concerns too and Poland suggested delaying action on CAI until after consulting the Biden team in late January. However, most EU states chose instead to take advantage of the political "window of opportunity" that has, unexpectedly, opened up with Beijing.
A second reason for Chinese proactivity on CAI is that Europe is becoming an increasingly important foreign policy theatre for Beijing. The rising power generally enjoys growing influence across much of the continent from Eastern and Central Europe, where it regularly holds "17+1" summits, to key Western European states like Italy which last year became the first G7 country to endorse the Belt and Road Initiative.
The EU-China breakthrough raises the question, going forward, of whether there might now be a significant warming in ties in 2021 after the chilliness of recent months. While CAI will do much to improve the atmospherics in diplomacy between Brussels and Beijing, it is significantly less likely to promote a fundamental (positive) reset in relations in the coming months for at least three reasons.
Firstly, there are multiple issues clouding the bilateral agenda, in the short term at least. These include the opaque way that Beijing is perceived by Europe to have handled the coronavirus outbreak; the new Chinese security law in Hong Kong; Uighur human rights; and growing pressure on European leaders not to allow Huawei technology in their 5G networks.
Secondly, the Biden team will now double down with the EU-27 to try to agree a more aligned transatlantic approach toward China. On Dec. 22, for instance, incoming U.S. National Security Adviser Jake Sullivan tweeted that "the Biden-Harris administration would welcome early consultations with our European partners on our common concerns about China's economic practices."
Thirdly, some Brussels policymakers remain concerned, despite CAI, about whether China's external interventions in Europe represent a "divide and rule" strategy to undermine the continent's collective interests. EU foreign affairs chief Josep Borrell even asserted last year that Beijing is a "systemic rival that seeks to promote an alternative model of governance" to that of Europe.
Rather than seeing a fundamental reset in relations, CAI is most likely to see the EU continue a constructive engagement approach with China. And this will potentially be much more aligned with the United States under Biden's presidency than has been the case under Donald Trump.
This EU strategy will see differences, diplomatically, called out, while emphasizing areas of perceived common interest, from tackling climate change to promoting an open financial and multilateral trading order. Brussels asserts that CAI will help move toward that latter goal of an increasingly transparent economic system.
So, despite post-pandemic tensions, both Brussels and Beijing recognize that they still have much to potentially gain from their partnership. The EU sees CAI as part of this long-term approach, and the decision to push forward with it largely reflects China's calculus that the window for sealing the deal may not remain open indefinitely, especially given the impending Biden presidency which may do much to rejuvenate the Atlantic alliance post-Trump.
Andrew Hammond (andrewkorea@outlook.com) is an associate at LSE IDEAS at the London School of Economics.
