EU suspends investment deal with China over sanctions

Diplomatic tensions between the European Union and China have put a years-in-the-making investment deal between the two in jeopardy, officials have claimed.

EU Commission Vice President Valdis Dombrovskis told AFP that the approval process for the deal had been effectively put on ice.

"We now in a sense have suspended political outreach activities from the European Commission side," he said in an interview.

"It's clear in the current situation with the EU sanctions in place against China and Chinese counter-sanctions in place, including against members of European Parliament (that) the environment is not conducive for ratification of the agreement," Dombrovskis added.

Also read: EU mulls first China sanctions in three decades

A European Commission spokesperson told Germany's DW that the process of ratification had yet to begin and was still subject to legal review.

The spokesperson also said that ratification had been effectively suspended because it "cannot be separated from the evolving dynamics of the wider EU-China relationship," describing the Chinese sanctions as "unacceptable and regrettable".

Beijing and Brussels signed a new investment agreement last year, the aim of which was to ensure a stable framework of conditions for trade and investment in one another's markets.

The two sides signed the EU-China Comprehensive Agreement on Investment (CAI)  in December 2020 after seven years of negotiations.

However, before the deal comes into force, it requires ratification by the European Parliament and EU member states but faces massive opposition.

The deal would allow European companies access to Chinese markets and facilitate Chinese investment in the EU. The deal also sets rules for a level playing field, preventing the undercutting of competition through state assistance, as well as provisions for sustainable development.

Also read: EU tells China to open its markets following virtual summit

Tensions between Brussels and Beijing began deteriorating in March following the imposition of sanctions by the EU on China over its treatment of the Uyghur Muslim minority in the Xinjiang region. They were the first human rights-related sanctions against China since the Tiananmen Square massacre in 1989.

Beijing immediately retaliated with a round of counter-sanctions against some European Parliament members, and other officials.

Opposition to the deal has been rising in recent months, with some human rights groups urging the EU to scrap the deal entirely.

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