EU-China Comprehensive Agreement on Investment

POSITION | FOREIGN TRADE | CHINA

EU-China Comprehensive Agreement on Investment What does German industry gain?

3 May 2021 Key points ▪

German industry welcomes the fact that the European Commission and the Chinese government have reached a consensus on the investment agreement. The EU-China Comprehensive Agreement on Investment (CAI) can become a ground-breaking agreement that underlines the political commitment of the European Union and the People's Republic of China. It can contribute to improving the framework conditions for economic relations as well as to solving existing challenges.

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Important goals were achieved and enshrined in the agreement. These include the ban on forced technology transfer, transparency requirements for subsidies in the services sector and the requirement that state-owned enterprises must behave in a market-based manner. Another positive aspect is China's commitment to provide European companies with comprehensive access to Chinese standardisation bodies. A comprehensive sustainability chapter was also anchored in the investment agreement. In this chapter, China states that it will work on ratification of the two fundamental conventions of the International Labour Organization (ILO) against forced labour.

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The BDI attaches importance to the establishment of effective oversight and enforcement mechanisms to achieve tangible improvements in corporate practice. The CAI institutional mediation mechanism plays a key role by establishing communication channels at the policy and working levels to monitor commitments and address ongoing challenges.

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The CAI does not resolve structural imbalances in market access. The Chinese system of negative lists remains in place, as do numerous possibilities for intervention and blocking by the Chinese authorities. Conversely, the EU assures China of the openness of its own market for an indefinite period, which is to be seen as a major negotiating success for Beijing. We therefore call on the EU Commission to maintain pressure on China to make further concessions in the direction of reciprocity and a level playing field.

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Factors that complicate or indirectly hinder investment in China, such as uncertainties in the context of the Cybersecurity Law, the installation of party cells in companies or comprehensive

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EU-China Comprehensive Agreement on Investment

disclosure of business information within the social credit system, are not addressed at all or not sufficiently. Thus, China continues to have a wide range of instruments at its disposal to influence investors and investments.

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The BDI calls on the EU Commission to set up a regular review mechanism that tracks the pace and degree of implementation and continues to identify and address existing problem areas. It must also be precisely defined what happens if there are breaches of agreement.

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Overall, the BDI sees the investment agreement as a constructive building block in a series of policy measures that will benefit both the expansion of the EU's relations with China and the creation of a level playing field in business competition.

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The missing part of the agreement on investment protection must now be moved forward quickly in order to achieve the highest possible level of investment protection. Current developments on issues related to Xinjiang, subsequent sanctions by the EU and countersanctions by China show how vulnerable European companies can be to politically motivated boycott measures by the Chinese government against individual companies.

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EU-China Comprehensive Agreement on Investment

Table of contents Key points ............................................................................................................................................ 1 Introduction.......................................................................................................................................... 4 Market access ...................................................................................................................................... 4 China's market access commitments to the EU .................................................................................... 5 Access to standardisation bodies .......................................................................................................... 7 EU market access commitments to China ............................................................................................ 7 Level Playing Field .............................................................................................................................. 8 State-owned enterprise ......................................................................................................................... 8 Transparency in subsidies ..................................................................................................................... 8 Forced technology transfer.................................................................................................................... 9 Sustainability ....................................................................................................................................... 9 Environment and climate ....................................................................................................................... 9 Corporate Social Responsibility (CSR) ............................................................................................... 10 Labour issues and ILO conventions .................................................................................................... 10 Institutional provisions ..................................................................................................................... 11 Open points........................................................................................................................................ 11 Other EU economic policy instruments ............................................................................................... 11 Pushing ahead with market opening in China ..................................................................................... 11 Protection of intellectual property ........................................................................................................ 11 Investment protection .......................................................................................................................... 12 Imprint ................................................................................................................................................ 13

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EU-China Comprehensive Agreement on Investment

Introduction At the end of December 2020, the European Union (EU) and China reached a political agreement on key points of the Comprehensive Agreement on Investment (CAI) between the two trading partners.

This means that the timetable that the EU and China had set themselves for concluding the agreement in April 2019 was met, at least in one important part. After the meeting of the 27 EU heads of state and government with the Chinese president, originally planned for September 2020, could not take place due to the corona pandemic, the political agreement now reached on the CAI is the most important result of the German Presidency of the Council of the EU with regard to economic relations with China.

On the way to a future comprehensive agreement that includes investor protection and an independent investor-state dispute settlement mechanism, the political agreement on the investment agreement can represent an important step. Important standards are hereby defined and recorded, behind which China may no longer fall under the provisions of the agreement. However, German industry is concerned that the concessions made will significantly limit the scope for negotiation and make it much more difficult to persuade China to make further concessions in the future. The EU is limiting the room for manoeuvre on its side and giving up an important means of exerting pressure.

The CAI must be a building block in the overall context of EU-China policy. The BDI advocates that important instruments currently being developed or to be created to reduce distortions of competition and a lack of reciprocity in the EU be pursued vigorously in the future.

The substantive focus of the agreement can be grouped under three main headings: market access, level playing field and sustainability (with sub-chapters on environment, climate and labour). At this stage, there is no agreement on the issue of investment protection.

Market access Market access for EU manufacturing companies in China is to be significantly improved by the agreement. According to the EU Commission, China has entered more far-reaching market access commitments with the EU than with any other partner. This improved market access is underpinned by a state-to-state dispute settlement mechanism.

This basic idea is fundamentally correct, and the agreement is a first step towards China committing to more reciprocity in market access as well as in the treatment of foreign direct investment and thus towards more transparency.

In fact, commitments made by the Chinese side consolidate a status quo that has already been achieved over the last few years rather than achieving more far-reaching opening steps in critical areas.

The existing structural asymmetry in market access in the form of the Chinese system of negative lists is even explicitly confirmed. In the annex to the commitments on the Chinese side ("Schedules of China"), as is known from the two negative lists for foreign direct investment and general market access and – partly with formulations borrowed from them – access restrictions and maximum shares for European investors are listed. Existing prohibitions are also confirmed and thus solidified (e.g. the prohibition of legal advice and representation by foreign lawyers). Another example are the exceptions for investments in the field of "biological resources" in the negative list of Annex I. Better treatment options for patients in China, which could be provided by solutions from EU companies, cannot be offered in this way.

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EU-China Comprehensive Agreement on Investment

In addition, new restrictions are already envisaged, or new uncertainties are created. For example, China reserves the right to political leeway in deciding whether the senior management of non-profit organisations must be Chinese citizens in the future (Annex II, Entry 9). Among others, the part of the representative offices of the German business community in China that are registered there as non-governmental organisations could fall under this regulation. The BDI calls for clarification here.

New restrictions on the representation of the interests of German and European trade associations in the world's second largest market must be ruled out.

Overall, it must be noted that the demands of the industry, which were raised by BusinessEurope and the BDI in the initial phase of the negotiations, have only been met to a small extent. CAI is not an agreement with far-reaching market opening, the opening of the Chinese market for public contracts has not taken place and comprehensive investment protection could not be achieved between the EU and China. These unfinished tasks must remain a priority on the EU Commission's China agenda.

It can be assumed that possible positive effects in the areas with improved market access will become apparent rather in the medium to long term for the companies that have already invested in China. The importance of China as an investment location remains high, most of the German companies that have already invested in China are planning further investments and assume a positive development of the Chinese market in their industry. However, it is not expected that new investments from Europe in China or, vice versa, Chinese investments in Europe will increase significantly due to the CAI. The commitments for China set out in the agreement concern only a small part of the manufacturing sector. To a much greater extent, access for European companies in the services sector was part of the negotiations for the first part of the agreement, which is now available.

China's market access commitments to the EU Automotive industry: In the automotive manufacturing sector, the abolition or phasing out of the joint venture requirement for all foreign manufacturers announced by China in 2018 is reaffirmed. This will be done in three steps: since 2018, vehicles with novel powertrains; since 2020, commercial vehicles with conventional powertrains; from 2022, passenger cars with conventional powertrains. With the CAI, China confirms increased market access in the area of new energy vehicles (NEVs, primarily e-cars), with the restriction that the investment must be more than USD 1 billion.

The negative list, which has been further reduced in the meantime, has lifted the joint venture requirement for foreign companies in many sectors, 100 percent subsidiaries are increasingly possible, thanks to the 2018 announcement, now also in car manufacturing. However, the amount of investment to be made is high, so investments in this area will be limited to individual large-scale investments. For the automotive suppliers, which are also important from the perspective of German industry, the establishment of a WFOE (Wholly Foreign Owned Enterprise) has always been possible, and there were no restrictions on market access in China.

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EU-China Comprehensive Agreement on Investment

Mechanical engineering: In the area of mechanical engineering, there have been no hurdles to greenfield investments in the past. In the case of takeovers of mechanical engineering companies, there is an approval requirement both in China and in Germany within the framework of the investment review for critical infrastructure. The German Engineering Federation (VDMA) criticises that although the agreement opens up a number of markets for EU companies in China, a true level playing field for European companies in the Chinese market is unlikely to be achieved. In addition, important topics for mechanical and plant engineering are missing, such as public procurement, access to local subsidies and questions of competition and state aid law.

Services Due to the Most Favoured Nation (MFN) clause, the agreed openings in the services sector benefit not only the EU member states, but all WTO members (GATS). This means that the agreement is much more closely oriented to WTO rules or complies with them compared to the Phase One Deal between the USA and China.

Financial services: Joint venture requirements and caps on foreign ownership have already been abolished for banking, insurance and securities trading, and asset management. China has pledged to continue this process of liberalisation and opening. This means that advantages that have applied to US investment funds since the conclusion of the "Phase One Deal" will now also be granted to EU investors and all WTO members.

Healthcare: Joint venture requirements for the operation of private hospitals in eight central Chinese cities (including Beijing, Shanghai and Hainan) are to be lifted entirely, which is generally welcomed. Again, this is a development that has already started in 2019, but still does not allow nationwide access for European companies in this sector. The opening promise is further restricted by the clause that such investments may only be made taking into account "China's needs". The majority of staff in the hospitals must be Chinese.

In order to enable and strengthen a deeper, long-term partnership with China in the health sector, a nationwide, comprehensive exemption from the joint venture obligation would be desirable. To this end, an extension beyond the eight central Chinese cities to all provincial capitals and their immediate surroundings should be sought from the outset. In addition, a timetable and mechanism for the gradual lifting of joint venture requirements in other Tier 1, Tier 2 and Tier 3 cities would be necessary in order to be able to continue to act appropriately in the interests of European companies and Chinese health systems (provincial level) and to continue to support the local health system in the long term.

Telecommunications/cloud services: China has agreed to partially lift the investment ban for foreign investors. A corresponding participation in the area of cloud services is to be limited to a maximum of 50 percent. For other telecommunication services such as communication infrastructure, satellite communication and mobile phones, a maximum share of 49 percent is stipulated. This effectively establishes a new joint venture obligation. In the area of cloud services, Chinese and American companies are clearly leading. The relevance for German industry as a provider of cloud services is currently rather low there. For Industry 4.0 applications, however, they play a major role and companies need data sovereignty here.

Complete liberalisation would have been important here.

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EU-China Comprehensive Agreement on Investment

Services in construction, maritime transport, aviation, IT and the environment in China are enabled or facilitated for European investors.

An assessment of whether the announced opening steps will bring German industry a major benefit in actual business is not possible on the basis of the documents alone. Much will depend on the actual implementation of the agreement in China, also at the provincial level and the local level below, i.e. on how the agreement is politically assessed and promoted in China. The establishment of a politically high-ranking dispute settlement body (Investment Committee) between China and the EU, as provided for in the agreement, can be an important complementary building block.

Access to standardisation bodies The agreement provides for equal access of companies of both contracting parties to the respective standardisation bodies.

BDI takes a positive view of the fact that EU companies in China are now to be given equal access to Chinese standardisation bodies. In recent years, access to standardisation bodies has already been granted in individual sub-areas, e.g. since 2016 in Technical Committee TC 260, which is responsible for standards in the context of the Chinese Cybersecurity Law. It remains questionable whether formal access to the state-controlled Chinese bodies will lead to the industry-driven approach of a cost-benefit consideration in the setting of norms and standards being able to prevail or whether politically-driven approaches will have the upper hand.

A recurring point of criticism is the existing lack of transparency in the Chinese standardisation system, its committees and their decisions. With the regulations now provided for in the agreement, China must guarantee access to all bodies from the highest to the local level. However, this will not prevent agreements from being reached informally and bypassing the official bodies. And it is also unclear whether access is accompanied by corresponding voting rights. It is also problematic that companies shy away from openly demanding their involvement in cases of discrimination, as they fear negative repercussions. Here, China must finally abandon its policy of intimidation. Due to the lack of transparency in the system, it will remain difficult to demand reciprocity in many places, as the Chinese government will refer to the official channels. Moreover, there seems to be a loophole in the so-called Association Standards (standards defined, for example, by chambers of commerce, associations, technology alliances and other non-state actors), which are not mentioned in the agreement and are not subject to the Standardisation Administration of the People's Republic of China (SAC).

State-owned enterprises or provincial governments can make Association Standards, over which European companies have no influence, mandatory in their tenders. According to forecasts from German industry, Association Standards will gain in importance in China in the future.

It is also seen as problematic that the text of the agreement only speaks of a recommendation to local and non-governmental standardisation bodies on both sides to involve companies in the development of standards and related conformity assessment procedures by these bodies, not of an obligation. This means that there is little incentive for Chinese entities to implement this.

EU market access commitments to China In the energy sector, the EU wants to establish a binding market opening for Chinese companies in some limited areas (investments in electricity trading and electricity generation from renewable energies) and depending on further opening steps by China.

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EU-China Comprehensive Agreement on Investment

Level Playing Field It is particularly important for German industry that clear rules for dealing with state-owned enterprises, with subsidies and against forced technology transfer are laid down in international law. If the agreement succeeds in enforcing more transparency in subsidies, for example, this will create more legal certainty and options for action for EU companies in China.

State-owned enterprise The agreement contains a wording that promises that all covered entities, including Chinese state-owned enterprises (SOEs), will be obliged to operate according to market-oriented principles in their business activities and in the purchase and sale of their products. This should guarantee that domestic and foreign-invested enterprises are treated equally (Section II, Article 3bis, Paragraph 3 Non-discriminatory Treatment and Commercial Considerations). The German government and the EU Commission must ensure that the Chinese definition of covered entities includes state-owned enterprises at all levels.

How well this requirement is implemented for companies depends on how good the control, transparency and implementation mechanisms are. It is doubtful that China will refrain from market interventions and subsidy practices that do not conform to market rules, especially since the "Chinese-style socialist market economy" is repeatedly invoked and the role of SOEs is even to be strengthened.

The clause is also much less ambitious than in the EU Economic Partnership Agreement with Japan or the EU Free Trade Agreement with Vietnam, both of which contain their own chapters on state-owned enterprises. These chapters, which contain almost identical wording, do not preclude the parties from establishing and retaining state-owned enterprises or designating monopolies. However, they do require these state-owned enterprises to be treated in a non-discriminatory manner in their commercial considerations for the purchase or sale of goods and services. In the agreement with Japan, SOEs must comply with the provisions of the OECD Guidelines on SOE Corporate Governance.

Both agreements also require regulators to operate independently and without accountability to SOEs and designated monopolies.

Transparency in subsidies According to the EU Commission, it was agreed that transparency obligations would also be extended to service sectors. This would close a gap in the WTO rules. However, China's failure to fully notify or timely report subsidies poses a serious problem for the functioning of the WTO Agreement on Subsidies and Countervailing Measures (the so-called SCM Agreement). At the same time, 17 WTO dispute settlement cases since China's accession to the organisation in 2001 have examined whether China's subsidies are compliant with the SCM Agreement.

A consultation mechanism on distortive effects was therefore implemented in the agreement, in which both sides provide information on subsidies.

With regard to subsidies in China's services sector, the bigger problem does not seem to be notification, but rather the need for reform of the SCM Agreement. The BDI therefore calls for the multilateral

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framework to be revised in order to define market-distorting subsidies more precisely and clearly and thus better prevent them.

Regarding the consultation mechanism on competition-distorting effects, it remains open how compliance can be checked in individual cases and what mechanism will apply if competition-distorting subsidies are confirmed in the consultations. Precisely because no sanction mechanism is envisaged, it is all the more important that the EU Commission makes progress in its own efforts to create a level playing field. One step in this direction is the creation of a new competition law instrument to deal with subsidies from third countries (European Commission White Paper, 2020).

Forced technology transfer It was agreed that the transfer of technology as a precondition for market access is considered inadmissible. Similarly, the use of Chinese technology must not be a precondition for market access.

China is thus continuing to implement the provisions of its own new Foreign Investment Law (FIL), which was introduced last year. However, there is still a grey area here, which the CAI does not seem to cover either. The FIL only states that the government does not require technology transfer. This explicitly does not apply to state-owned enterprises, which have a very large market power, e.g. in the awarding of contracts. Here, technology transfers are spoken of in the context of "market-based business negotiations", although it cannot be ruled out that the Chinese state does intervene in the background in order to achieve the goals it has set itself in the economic and technology plans (e.g. in the Five-Year Plan or Made in China 2025).

Despite the CAI, the prohibition of compulsory technology transfer is not fully guaranteed and does not protect particularly innovative high-tech sectors such as biotechnology. This is because the positive lists of Annex III of the CAI, the listing of which opens up the scope of protection of the CAI, do not mention the pharmaceutical sector or the area of clinical trials. On the contrary, the CAI even formulates exceptions with regard to clinical research, in particular genetic diagnostics, stem cells and other biological resources. The Human Genetic Resources Law also stipulates that foreign companies may only carry out their data collection, storage and evaluation jointly with a Chinese partner; in this respect, a new activity-related joint venture compulsion arises. The foreign company must also share findings from research and clinical trials with both the Chinese partner and the Ministry of Science and Technology (MOST).

Sustainability New for an investment agreement but following the texts of recent EU free trade agreements (Japan, Vietnam), the text on the EU-China Investment Agreement – unlike e.g. the RCEP agreement – contains a chapter on sustainability. The focus is on CSR (Corporate Social Responsibility) and issues relating to the environment, climate and labour, including the question of ratification of the ILO fundamental conventions on forced labour.

Environment and climate In the chapter on environment and climate, the focus is on a general commitment by both sides to abide by existing agreements, such as the Paris Climate Agreement and international standards, and not to lower them in favour of attracting investment. Both parties emphasise the need for future cooperation on investment-related policies.

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EU-China Comprehensive Agreement on Investment

A commitment to international cooperation through the cooperation mechanisms enshrined in Article 6 of the Paris Climate Agreement and thus within the framework of international market mechanisms is regrettably missing. This specific formulation is also missing in the agreements with Japan, South Korea and Vietnam. The agreement to cooperate on investment-related policies should be used by the EU to move closer to a level playing field with China on climate-related CO₂ pricing.

The agreement contains the standard "right to regulate" clause, which states that the parties recognise each other's right to determine their own sustainable development, labour and environmental policies.

However, the EU free trade agreements with Korea and Vietnam go beyond this by stipulating that the parties should try to ensure that their national laws and policies guarantee a "high level" of environmental and labour protection. The BDI regrets that it has not been possible to aim for an equally high level with China.

The commitment in the investment agreement to monitor sustainable development impacts is also noticeably diluted compared to other EU agreements. In the EU's two FTAs with South Korea and Vietnam, the parties commit to review, monitor and assess sustainable development impacts. The CAI merely recognises the importance of such a monitoring process but does not commit the parties to actually do so.

It is positive that this chapter obliges parties to "facilitate and promote" investments in environmental goods and services. However, it would be helpful if this also signalled a further development of the WTO Environmental Goods Agreement (EGA), whose negotiations are currently on hold.

Corporate Social Responsibility (CSR) In the section on CSR, both sides commit to recognising internationally established guidelines and principles.

However, this does not match the level of commitment in the agreements with Vietnam or Japan, which explicitly commit the parties to "promote" CSR, in the Economic Partnership Agreement with Japan even through the exchange of information and best practices.

Labour issues and ILO conventions According to the EU Commission, China has committed itself in the sustainability part of the agreement to a comprehensive implementation of the four fundamental ILO conventions that have been already ratified. In addition, China has stated that it will make "continued and sustained efforts on its own initiative" to ratify the fundamental ILO Conventions prohibiting forced labour (Nos. 29 and 105). The language on ratification of the two ILO conventions on workers' freedom of association (No. 87) and collective bargaining rights (No. 98), by stating that China should "work towards" ratification, gives the Chinese leadership considerable leeway and buys them time on a critical issue.

Compared to other EU agreements, the concept of forced labour and the obligation to abolish it is missing. From the perspective of German industry, this "soft" wording is disappointing. In the FTAs with Vietnam and South Korea and in the Economic Partnership Agreement with Japan, the parties "reaffirm" their commitment under the ILO Declaration on Fundamental Principles and Rights at Work to "respect, promote and effectively implement the principles", including in particular the "elimination of all forms of forced or compulsory labour".

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EU-China Comprehensive Agreement on Investment

Institutional provisions Like other EU-China trade agreements, several committees are to be set up after the agreement enters into force to support the work of the agreement. The politically staffed Investment Committee is the most important of these and is tasked with ensuring the proper functioning of the agreement and monitoring and facilitating its implementation. This committee will meet once a year and may make recommendations to the parties to improve implementation, adopt binding interpretations of the provisions and adopt mutually agreed solutions reached in mediation processes. In addition, two working groups on investment and sustainable development respectively are to be established. The first is to provide general support to the Investment Committee; the second is to monitor the effective implementation of the sustainable development chapter. The institutional provisions chapter also directs the parties to engage in regular dialogue with non-state actors.

Open points Other EU economic policy instruments CAI should be considered by the EU Commission and the governments of the member states as one building block in a series of policy measures. The BDI calls on the decision-makers in the EU to also push ahead with the expansion of unilateral instruments to protect competition in the EU. These include, above all, the revision and finalisation of the proposal for an "International Procurement Instrument" ("IPI"), European coordination with regard to "investment screening" and an improved set of rules to combat unjustified state subsidies in the area of competition and in the award of public contracts ("Foreign Subsidies Instrument"). In these areas, the development of joint instruments with partners such as the USA, Japan or Australia should also be explored.

Pushing ahead with market opening in China The EU must maintain positive pressure on China to make further substantial concessions on market access and economic reforms in the future. Overall, the CAI shows that the bilateral negotiation track is only part of the solution in the systemic competition with China.

Market opening in the area of public procurement in China remains insufficient. While this issue is largely left out of the CAI, it remains essential that China now submit an acceptable offer for accession to the WTO's plurilateral Government Procurement Agreement (GPA) as soon as possible. Although this agreement does not apply to all WTO member states, it does apply to 47 mostly important states, including the 27 member states of the EU, the USA, Canada, the United Kingdom and Japan. The GPA is thus the world's most important agreement to date on market opening in the area of public procurement. After many years of repeatedly presenting accession offers that were unacceptable to other GPA member states, China should now present an acceptable accession offer as soon as possible.

Protection of intellectual property The issue of intellectual property rights (IPR protection) also remains largely unaddressed in the EU-China Investment Agreement. However, an important aspect of strengthening IPR protection has found its way into the text of the CAI through the section on the prohibition of forced technology transfer.

Given that the traditional framework of an investment agreement has already been expanded by adding the chapters on market access and a level playing field, the addition of a separate chapter on IPR

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protection would have been desirable. The issue continues to be of great importance for European companies. There are still considerable deficits in China, both in the enforceability of existing rights and in the award of adequate damages. Strengthening the Chinese judicial system, more effective protection of trade secrets or more effective patent procedures should be on the EU Commission's list of demands.

Investment protection A significant focus of an investment agreement is the area of investment protection, which was put on hold in the CAI and will have to be taken up in future negotiations. On investment protection, in particular the issue of investor-state arbitration, there are apparently currently irreconcilable differences. Both sides have agreed in the CAI that this area should also be concluded within two years of the signing of CAI. The EU should put all its energy into establishing a modern and effective mechanism for resolving investment disputes - this is the central element of all of Germany's existing investment protection agreements. The EU has already developed a forward-looking standard that could become a global standard through inclusion in the agreement. This standard addresses criticism of arbitration under international law, such as that raised by civil society in the course of the discussions on TTIP. For example, unjustified lawsuits should be curbed. At the same time, the regulatory sovereignty of states in matters of sustainable policy is to be protected and, to this end, investment disputes are to be heard before state-appointed permanent arbitration tribunals.

After the EU has already been able to apply this standard, which is also internationally trend-setting, in its investment agreements with Canada and Vietnam, a conclusion with China offers the opportunity to further establish such an investment protection standard at the global level, which enjoys broad acceptance and thus promotes investment.

The BDI therefore welcomes the fact that the bilateral German-Chinese investment treaty, which ensures a high level of investment protection, will remain in force for the time being. Brussels and Beijing should agree on the goal of extending the investment agreement to investment protection in a second step. It is imperative that the high level of protection of the bilateral treaties be achieved.

At the same time, China should also seize the opportunity offered by the EU standard for the development of investment protection under international law in its own interest. This could not only put China and the EU on a more sustainable footing in their mutual investment relations, but also set an important milestone towards a multilateral solution for the protection of cross-border investments, which has been worked on at the UN level for several years (UNCITRAL's work on a "Multilateral Investment Court").

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EU-China Comprehensive Agreement on Investment

Imprint Bundesverband der Deutschen Industrie e.V. (BDI) Breite Straße 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Editorial International Markets Department: Patricia Schetelig, Friedolin Strack BDI Beijing Office: Stefan Gätzner, Wolfgang Krieger Foreign Economic Policy Division: Dr Christoph Sprich, Katherine Tepper Legal Affairs, Competition and Consumer Policy Department: Dr Peter Schäfer

BDI document number: D 1348

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