Germany got its way. Well, German business with business interests in China did. The German EU Council Presidency ended with a big bang on December 30, when the EU and China signed their long-awaited bilateral trade and investment agreement, the “Comprehensive Agreement on Investment” (CAI). The agreement had been negotiated since 2014 and its adoption at the very end of last year came as a surprise. A very unpleasant one for that matter for those among European scholars and policymakers who thought and hoped that Europe and the EU would not cave in to (German) pressure to throw its values and beliefs overboard in return for easier access to the Chinese market. 

One cannot be accused of exaggerating when contending that the way Germany (with the “help” of German multinational companies) ended its six-months-long EU Council presidential term stands for moral collapse. Certainly, the EU Chamber of Commerce in Beijing headed by a German did its share to urge the EU Commission to sell its soul and much of what it pretended to believe and officially stands for in terms of human rights, accountability and political capital. A few days before Brussels and Beijing agreed to adopt the agreement, the Financial Times interviewed the head of the EU Chamber of Commerce in Beijing, Jörg Wuttke who asked whether Europe aimed to feel good about itself or rather profit from the CAI. Probably the EU was aiming for both, although it is just not in the cards when expanding trade and business ties with an authoritarian country and an international “bully”. Wuttke calls himself a realist, while others might call him a cynic.

Either way, Berlin and Brussels chose to take Chinese assurances at face value that Beijing will try to abide by international labour rights’ standards – Beijing’s categorical refusal to abide by those standards had been the agreement’s last stumbling block until its signing in December. As argued by the Chair of the EU Parliament’s delegation for relations with China, Reinhold Bütikofer, against better knowledge, Brussels went into full denial and cheered that it was able to commit Beijing actually to do something about labour rights in China. He also called the agreement a “strategic mistake” and said it was “ridiculous for the EU to try and sell as a success the commitments Beijing has made on labour rights in China.” Indeed, it is puzzling that an agreement which stipulates that Beijing will “make continued and sustained efforts” to ratify the labour protection conventions of the International Labour Organization (ILO) means that Beijing will undertake these efforts. The silver lining is that the European Parliament (EP) will have a say in this, as the agreement will have to be ratified by the EP and by the national parliaments of EU member states. Hence, there is still time to protect labour more firmly, even though that does not eventually stop the agreement’s ratification.

When she took office in December 2019, EU Commission President Ursula von der Leyen announced that her Commission would be a “geo-political/geo-strategic” Commission. Still, adopting a trade and investment agreement with China under the German EU Council Presidency, human rights concerns, Hong Kong’s political and judicial issues and Xinjiang’s “re-education camps” notwithstanding, is arguably the very opposite of being a Commission with international politics in mind. Business over business-hampering principles: a confirmation for Beijing that labour provisions, human rights protection and verifiable guarantees that Chinese firms in Xinjiang are not employing forced labour when doing business with Europe have fallen under the table. In other words, another “free pass” for China to do what it always did when Europe asked the country to address issues like human rights, freedom of speech and freedom of expression, or to interrupt the construction of military bases on disputed islands in the South China Sea – that is, failing to ask for firm commitments.

There is more in terms of European short-sightedness and, yes, one might even call it incompetence. Despite all the talk about a fresh start of transatlantic relations, Brussels cut a trade deal with Beijing right before US President Joe Biden took office. The shaky argument that we heard out of Brussels was that Washington did not consult with the EU when adopting the so-called “phase one” trade deal. However, a number of officials from Biden’s transition team made it clear that they are unhappy with the CAI. The EU does not and should not ask for Washington’s permission but there is still a difference between being blunt and self-confident (which is good) and being naïve.

The German decade-old slogan of “Change through Trade”, which accompanied the adoption of the agreement, always sounded hollow to those who identified a China that was not interested in giving in to Europe’s (timid) requests just because of trade. In fact, the opposite was and still is the case: more business and trade ties with the West and more Chinese investments in Europe have confirmed to China that it is on the right policy track with Europeans. Beijing can step up its security framework in Xinjiang, remain vague in terms of the start of the SARS-CoV-2 epidemic outbreak, change the ruling system in Hong Kong and build military bases on contested islands in the South China Sea and still adopt a trade deal with Europe. It could really not go any better for Beijing. Next stop: European German-driven and German-imposed appeasement with Russia?

The opinions expressed are solely those of the authors and do not necessarily reflect the opinions of the Ministry of Foreign Affairs and International Cooperation and ISPI.