CAI Unlikely to Pass Following China Sanctions, Former EU Trade Minister Says
The Comprehensive Agreement on Investment between China and the European Union will not pass the European Parliament in its current form, predicted former EU trade minister Cecelia Malmstrom at a Peterson Institute for International Economics event on April 21. Due to dueling sanctions over human rights violations in China's Xinjiang province and the agreement's lack of substance on key areas such as sustainable development, Malmstrom opined that, without alterations and a breakthrough on sanctions, the agreement would not pass.
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However, in a broader sense, Malmstrom reflected on the treaty as an important breakthrough on relations with China and held up the agreement as a potential model for solutions for other trading issues with the globe's second-largest economy. Given China's concessions in the CAI, similar language or negotiating tactics could be used to resolve issues in the World Trade Organization, Malmstrom suggested, given the EU's perceived successes in the agreement. “In the agreement, there are several important successes from the EU point of view,” Malmstrom said. “There are agreements on discipline, on state-owned companies, on forced technology transfer, on transparency, on non-discrimination, etc, which are important. And it shows that even if it's only on paper for the moment, China can agree on this. These are issues that the EU, U.S. and tons of countries have brought up vis-a-vis China in the WTO context as well, so if they can agree with the EU, it means they could agree in the WTO.”
Looking beyond the CAI, Malmstrom also ventured into the prediction game, stating that she expects significant progress on WTO negotiations over illegal fishery subsidies and work in the Organization for Economic Cooperation and Development on digital services taxes by the end of the year. Marquee issues for both organizations, digital services taxes and fisheries subsidies represent two areas where multilateral negotiations could achieve mutually beneficial results for all parties involved.
Pressing forward on multilateralism, Malmstrom also aired out her reform wishlist for the WTO and expressed optimism over reform prospects under President Joe Biden. She declared that the WTO had too many committees, that the WTO rules need to be rewritten, including on state-owned enterprises and that the appellate body needs to be strengthened. Underlying her ideas for reform, though, was an understanding that no change could be enacted without the efforts of China.