EU-China Investment Treaty: Possible New Opportunities for Investors?

18 January 2021

Corporate Clients

Following prolonged negotiations, the EU and China are expected to soon sign the EU-China Comprehensive Agreement on Investment (CAI). This treaty will supersede the existing bilateral investment treaties between China and 26 Member States (all Member States except Ireland).

It is expected that the agreement, whose exact provisions are yet confidential, but will be publicly available and discussed, will make European investments in China and Chinese investments in the EU easier and bound by rules.

From a European (including Bulgarian companies’) perspective, China is expected to commit to a “level playing field” for EU investors. This is expected to include as:

  • discipline on state-owned enterprises;
  • greater transparency over Chinese industrial subsidies; and
  • a prohibition of forced technology transfers.

China has also undertaken to remove certain barriers to FDI in the sectors of:

  • electric vehicles; 
  • telecoms;
  • private hospitals; 
  • certain financial services; 
  • real estate; and
  • shipping services.

For its part the EU is likely offering:

  • uniform EU-wide protection for Chinese investments in the EU; 
  • improved legal certainty;
  • more favourable consideration of visa requirements, work permit and intra-corporate personnel transfers.

As regards investor-state dispute resolution, CAI will apparently not contain provisions for it, but China and the EU have committed to try to complete the negotiations on investment protection and investment dispute settlement within the next 2 years. Pending an investor-state dispute resolution mechanism under the aegis of EU-China CAI, the investor-state mechanisms of existing BITs will continue to apply.

It will be also interesting to explore how CAI would apply to third-country investors (eg, a Japanese multinational with operations in Europe and/or China).

NBLO, with its long-standing connections in China is ideally positioned to assist investors from both the EU and China with their business planning. If you are interested in taking advantage of the new opportunities generated through the CAI initiative or any other matter connected to trading between Bulgaria and China, please do not hesitate to contact us by email at [email protected]

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