Sweden keen to push for progress on CAI after assuming key EU role

Nordic nation, which took over European Union Council presidency, seeks consultation on China investment deal

Sweden, which has assumed the rotating presidency of the Council of the European Union for the first half of this year, said it will continue to seek consultations with the European Parliament in pushing forward the ratification of the ChinaEU Comprehensive Agreement on Investment, or CAI.

China and the EU reached an agreement in principle for the CAI in December 2020 after 35 rounds of talks spanning seven years. The European Commission described the CAI as “the most ambitious agreement that China has ever concluded with a third country” and one that “will ensure EU investors achieve better access to a fast-growing 1.4 billion consumer market, and that they compete on a better level playing field in China”.

However, the European Parliament blocked the ratification of the CAI after the EU and China started tit-for-tat sanctions against each other in March 2021.

Lars Danielsson, Sweden’s permanent representative to the EU, said on Jan 9 that the council has been ready to move on the CAI, but it has met a different opinion in the European Parliament on the issue, with the lawmakers not allowing it to proceed.

Danielsson said he met Fu Cong, the new head of the Chinese Mission to the EU, on Jan 6 and briefed him on the situation.

A media release by the Chinese mission about the meeting noted their talks on the China-EU investment agreement. In the meeting, Fu expressed the hope that during its rotating presidency, Sweden would take a constructive and practical approach and maintain the upward momentum of China-EU relations.

Fu told the South China Morning Post in a recent interview that European Council President Charles Michel personally raised the issue of the CAI during his visit to Beijing a month ago.

Fu said that CAI will take the China-EU economic relationship to a much higher level and that it will address many of the concerns that EU businesspeople have about market access and restrictions.

“So I would like to work with all my European colleagues to resuscitate this agreement,” Fu said, adding that the EU’s sanctions on China are unwarranted and China’s sanctions were in response to the ones imposed on China by the EU.

Ding Chun, director of the Center for European Studies at Fudan University, said that he is not too optimistic about the prospects for the CAI due to the changing situation following the Russia-Ukraine conflict and the EU’s definition of China as a cooperation partner, an economic competitor and a systemic rival.

“The CAI is good for bilateral economic and investment relationship, so it’s possible to have some forms of flexibility on issues, but to move forward the agreement as a whole is still a question mark now,” he said.

Ding believes that progress on the agreement depends on “opportunity, political wisdom and public sentiment”.

In an interview published in the latest edition of Internationale Politik Quarterly, Germany’s leading foreign affairs magazine, Sabine Weyand, the European Commission’s director-general for trade, said China remains an important partner for the EU.

On the growing argument over the EU’s supposed overdependence on China, Weyand said that EU analysis suggests that this kind of dependency affects only about 6 percent of trade and that 94 percent is “unproblematic”.

“But I want to be very clear: China is not Russia. We do not equate the two countries,” she said.

“China remains a large economy which cannot be ignored,” said Weyand, who was the EU’s chief negotiator during the CAI talks.