The EU-China Comprehensive Agreement on Investment (CAI), also known as the DG Trade China Investment Agreement, has been making headlines since it was first announced in December 2020. Negotiated over seven years, the agreement seeks to promote investment between the European Union and China by removing barriers and creating a level playing field for investors from both sides.

So, what does the DG Trade China Investment Agreement entail? Let`s take a closer look.

The agreement covers three main areas: market access, level playing field, and sustainable development.

Market Access: The agreement aims to improve market access for European investors in China by removing restrictions and barriers in various sectors, including automotive, financial services, telecommunications, and healthcare. This will also apply to state-owned enterprises, which will be required to operate on a commercial basis and not receive any preferential treatment.

Level Playing Field: The agreement seeks to ensure a level playing field for investors from both sides. This includes provisions on transparency, non-discrimination, and fair competition. It also addresses forced technology transfers, which have long been a concern for European companies operating in China.

Sustainable Development: The agreement also includes commitments on sustainable development, such as labor and environmental standards. Both sides agreed to implement the Paris Agreement on climate change and to work together to promote sustainable development.

The DG Trade China Investment Agreement has been met with mixed reactions from various stakeholders. The European Commission sees the agreement as a significant step towards promoting investment and creating opportunities for EU businesses in China. However, some MEPs have criticized the deal for failing to address human rights abuses in China.

Moreover, the timing of the agreement has also been questioned, given the ongoing tensions between China and the US, and concerns about China`s role in the global supply chain.

While the agreement has been signed, it is yet to be ratified by both sides and faces significant hurdles in the EU. Given the complex nature of the agreement and the concerns expressed by various stakeholders, it remains to be seen whether the DG Trade China Investment Agreement will be fully implemented. However, the agreement sets an important precedent for future investment agreements between the EU and China, and underscores the importance of sustainable development in international trade.