Weekend Edition Nº56 by eulawlive

Nº56

MAY 1

2021

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SPECIAL ISSUE

JOHANNA JACOBSSON

THE EU-CHINA COMPREHENSIVE AGREEMENT ON INVESTMENT: A DIFFERENT KIND OF INVESTMENT AGREEMENT AND AN ATTEMPT TO ENGAGE CHINA ON KEY ISSUES

THE EU-CHINA COMPREHENSIVE AGREEMENT ON INVESTMENT EDITED BY ISABELLE VAN DAMME

HENRY GAO

THE EU-CHINA COMPREHENSIVE AGREEMENT ON INVESTMENT: VICTOR OR VICTIM IN GEOPOLITICS? MERIJN CHAMON

THE EU-CHINA COMPREHENSIVE AGREEMENT ON INVESTMENT: AN INSTITUTIONAL PERSPECTIVE

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Introduction 1

Isabelle Van Damme

tainability chapters in free trade agreements (FTAs). At the same time, expectations relating to commercial interests advanced by the agreement were dampened a er its dra text was published.

Despite what its name suggests, the EU-China Comprehensive Agreement on Investment (CAI) is neither comprehensive nor focused on investment protection. Instead, the European Union and China accept commitments on primarily market access in manufacturing and service sectors, a level playing eld, and sustainable development. Following an initial state of excitement regarding this agreement, the CAI is now in troubled waters. e fate of the agreement has become uncertain. is is primarily due to China’s decision to impose sanctions, also aﬀecting Members of the European Parliament, in response to EU sanctions in respect of China’s treatment of its Uyghur minority, and ongoing discussions between the EU institutions and the EU Member States on the design and enforcement of commitments in sus-

In this Weekend Edition of EU Law Live, we consider the CAI from three perspectives. Johanna Jacobsson scrutinises the substantive commitments made by both parties, concluding that the CAI should primarily be seen as an a empt to engage China on the most problematic areas of economic cooperation between the two trading partners. Despite the initial intention to conclude an agreement covering investment protection and investorState dispute se lement (ISDS) that could replace

1. Partner in an international law rm in Brussels, Belgium

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tailed assessment of the commitments made shows that, contrary to what has been suggested by the EU, they are not unprecedented and result in limited liberalisation of trade in the sectors covered. Against that background, Henry enquires into the incentives of both the EU and China in negotiating an agreement that ultimately might oﬀer limited benets in terms of trade liberalisation. He nds that the CAI must be seen as part of China’s ‘geopolitical toolbox’ against the United States which, at the time of the inception of the CAI, was venturing into establishing closer trading relations with Asia Paci c countries and the EU. Henry explains that, despite a slow start to the CAI negotiations, President Trump’s trade war served as a catalyst and the election of President Biden further strengthened the EU’s geopolitical and commercial interests in concluding the negotiations and asserting its new policy of ‘strategic autonomy’. Similarly to Merijn Chamon, Henry expresses scepticism about the fate of the CAI, given the role of the European Parliament and its stance towards China.

existing bilateral investment agreements between EU Member States and China, that objective was recalibrated, according to Johanna, to seeking to rebalance asymmetries in terms of market access and investment. In assessing the precise scope of the commitments made, Johanna, similarly to Henry Gao, compares the CAI with the Phase One deal concluded between China and the United States, and also notes that some important commitments (notably in the manufacturing sector) do not in fact go far beyond earlier unilateral liberalisation by China. Of greater interest are the commitments in respect of subsidies and State-owned enterprises (SOEs). Johanna highlights two important developments, against the background of ongoing World Trade Organization (WTO) discussions on strengthening and expanding the scope of subsidies disciplines. First, the CAI requires greater transparency in respect of subsidies in service sectors (though those obligations cannot be enforced through the Stateto-State dispute se lement system under the CAI). Second, the CAI marks the rst agreement in which China agrees to speci c obligations in respect of the operation of SOEs, requiring them to act in accordance with commercial considerations and not to discriminate in their purchases and sales of goods or services. Finally, Johanna underscores the systemic importance of having China agree to provisions on sustainable development, covering labour and environment. She nonetheless questions whether the commitments made, and the transparency and monitoring mechanisms tied to them, will be suﬃcient for the EU to hold China accountable in respect of, in particular, forced labour concerns.

Finally, Merijn Chamon looks at the next steps for concluding the agreement, from an EU institutional perspective. Merijn rst sketches the history of the discussions between the Commission and the Council on whether the negotiations would only cover EU exclusive competences. at discussion of the internal EU discussions at the inception of the agreement must be read together with Henry’s explanation of the broader geopolitical context in which the CAI negotiations started. Applying the principles set out in Opinion 2/15 in respect of the scope of the common commercial policy and the AETR test in Article 3(2) TFEU, Merijn argues that the CAI is a mandatory EU-only agreement because the entire agreement falls within the EU’s exclusive competences. His assessment shows that the European Parliament will need to give its consent and

Henry Gao assesses the geopolitical impact of the CAI and the incentives of both parties in reaching this agreement. He sees the agreement as being largely driven by broad geopolitical considerations rather than narrow commercial interests. Henry’s de-

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current status quo in terms of market access. Second, having China agree to some obligations in respect of transparency, SOEs and subsidies as well as concerning sustainable development must be seen as a step towards progress in the multilateral discussions on those issues. ird, the value of the CAI is primarily (geo)political. e agreement serves the interests of both the EU and China, albeit for distinct reasons. Finally, the obstacles to the rati cation of the CAI are vast and complex, suggesting the agreement is in troubled waters.

that the Council may conclude the agreement by quali ed majority. He notes that the absence of provisional application of the CAI further widens, in practice, the leverage of the European Parliament. Similarly to the other contributors, Merijn considers that the obstacles to rati cation might be diﬃcult to overcome. Four main conclusions result from the contributions to this Weekend Edition on the CAI. First, the nature and extent of the market commitments are not speci cally novel but nonetheless protect the

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The EU-China Comprehensive Agreement on Investment - a diﬀerent kind of investment agreement and an attempt to engage China on key issues Johanna Jacobsson

problematic areas of economic cooperation between the two powers.

Introduction

A er about seven years in the making, the European e agreement could be described as a stand-alone Commission and the Chinese Government aninvestment liberalisation agreement, or an agreenounced on 30 December 2020 that they had nisment sui generis. is contrasts with the EU’s practihed negotiations on a Comprehensive Agreement ce over the past years. Earlier, the EU on Investment (CAI), which the EU negotiated investment protection rupress release called ‘the most ambie EU-China les as part of free trade or association tious agreement that China has ever agreements CETA and that with concluded with a third country’. Comprehensive Mexico) or (like in addition to them (as No ma er the name of the treaty, it is Agreement can with Singapore, Vietnam, and Japan). China was also hoping to conclude a not an investment agreement in the trade agreement with the EU, but the be described traditional sense. e CAI gives cerEU decided to proceed with a more litain guarantees to investors, but it is as sui generis mited agreement. e outcome is a not about traditional postpeculiar mix that goes beyond tradiestablishment protection. Instead, tional investment protection, most importantly as it the agreement focuses on liberalisation commitincludes investment-related market access commitments (commitments providing for market access) ments both for manufacturing and services. No taand disciplines aimed at levelling the playing eld riﬀ reductions are included. for foreign investors. e la er concern in particular rules against forced technology transfer, obligations for the behaviour of State-owned enterprises (SOEs), transparency rules for subsidies and commitments related to sustainable development. For its mixed content, the agreement should primarily be seen as an a empt to engage China on the most

Issues that are traditionally covered by investment agreements, such as protection against expropriation and the obligation of fair and equitable treatment, were originally among the EU’s negotiation objectives. Moreover, the CAI negotiations were ai-

1. Assistant Professor, IE Law School (Madrid).

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e EU is aiming at rebalancing the asymmetry in market access and investment between the EU and China

sed transparency obligations and requires regulatory authorities to remain impartial and independent, but such rules are not easily enforced. Moreover, almost all China’s reservations are described at the level of the central government, which raises the question of whether the local and provincial regulations are indeed that perfectly aligned with the requirements of the CAI.

med at establishing a uniform legal framework for EU-China investment ties by replacing the 25 outdated bilateral investment treaties (BITs) that China and individual EU Member States concluded prior to EU gaining competence over investment issues (through the entry into force of the Lisbon Treaty in 2009). However, as the deal reached in December does not include investment protection disciplines, it does not replace these existing BITs. Instead, the two sides commi ed to try to complete negotiations on investment protection and investment-related dispute se lement within two years of signing the CAI. According to the EU, its objective remains to modernise and replace the existing Member States’ BITs with China. Until then the old BITs will continue to provide for varying levels of protection to European investors.

e CAI includes certain aspects that are similar to the Phase One deal that President Trump negotiated with China. It includes, for instance, China’s pledge to eliminate forced technology transfers and commitments to improve access to the Chinese nancial services market. However, the CAI does not include any purchase commitments (on the part of China) or tariﬀ reductions (on the part of the United States) that were the central element of the Trump deal.

What is the EU aiming to achieve with the CAI? No less than to rebalance the asymmetry in terms of market access and investment between the EU and China. is is a worthy objective considering that Chinese laws and practices routinely diﬀerentiate between domestic and foreign companies, as well as private and State-owned or State-controlled companies. Will the CAI achieve that? First, it needs to enter into force. Second, much remains in the hands of its implementers. e agreement includes increa-

Limited new market access to European investors e key part of the CAI consists of the market access commitments. e CAI contains substantial commitments both in manufacturing and in services sectors. In those sectors where market access

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e key part of the CAI consists of the market access commitments

wed to work for up to three years in Chinese subsidiaries, without restrictions such as labour market tests or quotas. Representatives of EU investors will be allowed to visit freely prior to making an investment.

commitments are undertaken, the parties accept not to adopt or maintain numerical limitations (for example, quotas, monopolies or economic needs tests), limits on the total value of transactions or number of operations or limitations on the number of persons that may be employed by investors. In the commi ed sectors no speci c legal entities or joint ventures may be required.

e reservations to the commitments are described in the annexes. Annex I includes reservations for existing measures (those that the parties wish to maintain) and Annex II reservations for future measures (those that the parties want to be able to introduce). ese lists apply to performance requirements, national treatment, most-favoured treatment and commitments taken in respect of senior management and boards of directors. Annex I and Annex II reservations are described through a negative listing, meaning that only such measures (like laws, regulations or administrative actions) that are speci cally mentioned in the annexes will be allowed. In addition, there is a third annex (Annex III) which sets out the Parties’ speci c commitments and limitations on market access. is list describes the applicable sectors through a positive listing (only the mentioned sectors are covered), whereas the limitations are set out following a negative list.

e elimination of quantitative restrictions, equity caps, and/or joint venture requirements in various sectors will level the playing eld for certain EU companies in China. e sectors that have been impacted include those oﬀering automotive, nancial, healthcare, business, and environmental services. However, the number of covered sectors is modest, and in many cases the market entry remains subject to other reservations. In addition to the speci c market access commitments, the agreement includes a national treatment obligation (2), a most-favoured nation clause (3), as well as a list of prohibited performance requirements (conditions to investment that the parties cannot impose, such as local content requirements, technology transfer-requirements, or R&D targets). It also contains commitments not to impose nationality requirements as regards investors’ senior management and boards of directors. Managers and specialists of EU companies will be allo-

In terms of market access for EU businesses, China has made certain interesting commitments on manufacturing, the most important sector for EU investment in China. Manufacturing makes up more

China has made certain interesting commitments on manufacturing

2. e national treatment clause requires that the parties’ investors receive treatment that is no less favourable than the treatment accorded to their own investors with respect to establishment and operations in the parties’ territory. e requirement applies in ‘like situations’. is slightly diﬀers from the GATS language (which refers to ‘like services and service suppliers’) but corresponds to latest treaty practice by the EU (see for example Art. 8.6 of the Investment Chapter and Art. 9.3 of the Services Chapter of the EU-Canada agreement CETA). 3. e MFN clause provides that EU investors will not be treated by China less favourably than other foreign investors, and vice versa.

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be largely free to buy up news services, broadcasters, cinemas and lm-making ventures in the EU. Most of the EU’s services commitments, however, re ect the block’s GATS/WTO commitments and are already applied to all foreign investors or at least to those from WTO Members. e biggest bene ts for China seem to be actually largely con ned to limited and reciprocal access to the EU market for reBoth parties’ undertakings on services concern the newable energy. Chinese companies receive guaso-called Mode 3 in GATS language (establishment ranteed access to European renewable energy comof commercial presence in the host country), meapanies but their stakes are, however, capped at 5% ning investment with the objective of providing serfor each EU Member State’s marvices. Certain aspects of the moket. A speci c reciprocity mevement of natural people (Mode e biggest bene ts for chanism applies (4). All traditio4) are included; both parties commit to allow access for senior maChina seem to be actually nal EU sensitivities, such as in the eld of energy, agriculture, snagement. e most interesting services commitments from the largely con ned to limited heries, audio-visual, air transport and public services, are preEuropean point of view concern and reciprocal access to served in the CAI. e feeble leChina’s undertakings on cloud vel of new market access underliservices, nancial services, privathe EU market for nes the political importance of te healthcare, environmental serrenewable energy the agreement to China. vices, international maritime transport and air transporte commitments are enforcearelated services. While most of ble through State-to-State arbitration, similarly to the commitments re ect liberalisation that has alEU trade agreements. is brings a certain additioready taken place, the agreement binds the current nal bene t to China as it would be able to use that level of market access and thus prevents backsliding. mechanism instead of WTO dispute se lement. is means that China will no longer be able to e CAI does not include an investor-State dispute prohibit access or introduce new discriminatory se lement (ISDS) mechanism which is understanpractices. However, in terms of new market access, dable as it is not an investment protection treaty. But the impact appears to remain low. the lack of ISDS would in any case not be a big shortcoming considering that so far foreign companies e same applies to the EU side; the impact for Chihave barely used the mechanism in China. So far thenese businesses is low. Some have misunderstood re is only one (known) ISDS case brought by an EU the level of market access gained by China, as reacompany against China. e CAI’s State-to-State ding the EU schedules may make it seem that its undispute se lement is coupled with a political monidertakings would apply to China alone. For instantoring mechanism at pre-litigation phase, intended ce, it was reported that while European investors are to allow the parties to raise problems as they arise. boxed out of Chinese media, Chinese investors will than half of total EU investment – including 28% for the automotive sector and 22% for basic materials. e European automotive producers are among the winners of the agreement but as noted, the commitments on manufacturing do not seem to go much beyond earlier unilateral liberalisation by China.

4. Reservation No. 21 (Mining and Energy related activities) in the dra market access schedule of the European Union, Annex II.

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Sustainable development and forced labour

e transparency rules for subsidies are worth mentioning

e inclusion of a sustainable development chapter is nowadays a prerequisite to conclude a trade agreement with the EU. e EU’s investment protection agreements, on other hand, do not include commitments on sustainable development (5). In this, the CAI follows EU trade agreements. e EU reports that for China, this is the rst time that it has agreed to ambitious provisions on sustainable development as part of an economic agreement. China is undertaking commitments in the areas of labour and environment such as not to lower the standards of protection in order to a ract investment, to respect its international obligations, as well as to promote responsible business conduct by its companies. China also agrees to eﬀectively implement both the Paris Agreement on climate change as well as the International Labour Organisation (ILO) conventions it has rati ed. In addition, China undertakes to make continued and sustained eﬀorts to ratify the ILO conventions on forced labour.

Some progress on subsidies and SOEs Among the other chapters, the transparency rules for subsidies are worth mentioning. e WTO has detailed rules on subsidies, but they cover agricultural and industrial products only. e CAI lls an important gap by imposing transparency obligations on subsidies in the services sectors. e parties have agreed on a speci c consultation procedure requiring either side to engage in consultations in order to provide additional information on any subsidies that could have a negative eﬀect on the investment interests of the other side and to seek to address such negative eﬀects. However, the State-toState dispute se lement is not applicable. Regarding State-owned enterprises (SOEs), the CAI is the rst agreement signed by China to deliver on obligations for the behaviour of SOEs. e CAI requires them to act in accordance with commercial considerations and not to discriminate in their purchases and sales of goods or services. e key problem regarding the Chinese economy is the lack of information regarding the involvement of the State in Chinese enterprises. Importantly, China undertakes to provide, upon request, speci c information to allow for the assessment of whether the behaviour of a speci c enterprise complies with the CAI obligations. Resort to the agreement's binding dispute resolution is available. However, actions by SOEs may be subject to reservations included in China’s annexes. 5.

is last commitment (even if only referring to ‘eﬀorts’) is particularly relevant because of the international a ention received concerning the Uyghur camps in Xinjiang. But even EU Commission oﬃcials have reportedly been sceptical about China ra-

is is the rst time China has agreed to ambitious sustainable development provisions as part of an economic agreement

e EU has so far concluded investment protection agreements with Singapore (2018) and Vietnam (2019), negotiated alongside a free trade agreement.

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tifying the forced labour conventions any time soon, as well as admi ing that the enforcement mechanism is weak. e CAI, like the EU’s trade agreements, excludes its ‘Investment and sustainable development’ chapter from the agreement’s binding arbitration procedure. Any disputes regarding that chapter are to be resolved in State-to-State consultations. Similarly to the EU’s latest trade agreements, there is the possibility to refer the dispute to a panel of experts whose proceedings somewhat remind arbitration. But such a panel may only issue recommendations for the solution of the ma er and there is no possibility for the suspension of obligations. Retaliation is reserved only for the investment part of the agreement. e (low) level of expectations regarding China’s commitments on sustainable development is probably met on the EU side if the transparency and monitoring mechanisms work and EU leaders are able to hold China publicly accountable and shame it into action. However, the most recent events, such as China imposing sanctions on Members of the European Parliament for their criticism of the Uyghur labour camps, make this strategy look extremely questionable as China is not showing signs of making any eﬀorts whatsoever to eliminate forced labour.

Conclusion e CAI is not a free trade agreement, but nor is it a traditional investment agreement. It contains market access commitments for manufacturing and services, but they mainly replicate and lock in WTO commitments and/or autonomous liberalisation. ere are several components that seek to regulate how foreign investors are treated, and in this the agreement does bring some value to businesses. All

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blematic from the European point of view. However, the fact that the agreement only goes that far is also a problem. ere remain vast issues in trade and investment relations with China, not to mention problems relating to respect for human rights and other aspects of sustainable development. e agreement does not address these concerns to a suﬃcient degree. While expecting anything more is unrealistic, politically the agreement will be a hard sell in Europe. e paradox with China is that any outcome is likely to be criticised: either one does not go far enough, or one goes too far. e coming months will show whether the European decisionmakers will manage to balance between the expectations of those wanting a deeper agreement with China and those who consider that China is not worthy of the agreement even as it is.

together the economic value is, however, likely to remain modest according to most analysts. Moreover, the services-trade related aspects of the agreement will not bene t Europeans alone because the WTO’s MFN clause requires that the commitments be extended to other WTO Members. at is because the CAI indeed is not a fully- edged free trade agreement and therefore the EU and China cannot bypass the MFN clause (6). But a simple economic analysis is probably not the most appropriate tool to evaluate the agreement. Already the increased legal certainty that the CAI would bring, if passed, is important for businesses. Moreover, the CAI can be seen as a platform for dialogue. As has been commented on elsewhere, its ultimate value, if passed, is likely to be more political than economic.

e Agreement's value is likely to be more political than economic

Considering that the agreement gives only limited new market access opportunities to Chinese companies, the content of the agreement is not very pro-

6. However, for the commitments relating to manufacturing there is no MFN obligation as the WTO rules do not cover investment in manufacturing. these bene ts accrue to EU companies alone, unless China decides to extend them to others too.

erefore,

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The EU-China Comprehensive Agreement on Investment: Victor or Victim in Geopolitics? Henry Gao

as the examples below illustrate, many of these commitments are either already available as part of China’s own autonomous liberalisation, or have already been commi ed by China in other agreements.

Introduction

On 30 December 2020, the EU and China announced the conclusion in principle of the negotiations on the EU-China Comprehensive Agreement on China’s autonomous liberalisation Investment (CAI). e EU hailed the agreement in a press release as ‘the most ambitious agreement that China has ever concluded with a third country’, Under China’s commitments in Annex I Entry 6 – while China also praised it as a ‘high-level’ agreeManufacture of Transportation Equipment, China ment that matches ‘international high-level econoagrees to li two existing restrictions on foreign inmic and trade rules’. However, as I vestments in the automobile mawill argue in this article, such rhenufacturing sector contained in e EU-China toric is largely unwarranted as the the Special Administrative MeaAgreement does not add much in sures for Market Access of Foreign Comprehensive terms of substance. Instead, the Investment (Negative List) (2019 Agreement does not Edition): limiting foreign investAgreement was largely driven by broad geopolitical considerations ment to no more than 50% shaadd much in terms rather than narrow commercial inres; and restricting each foreign terests. Ambitious outcome? of substance investor to no more than two joint ventures in passenger cars To prove its point that the CAI is within the territory of China. ‘the most ambitious agreement that China has ever According to the entry, both restrictions would be concluded with a third country’, the EU kept empremoved ‘a er 2022’. hasising in its summary on the key elements of the CAI that ‘China has not made such far-reaching marHowever, both restrictions have already been scheket access commitments with any other partner’ (in duled for removal in the Special Administrative the manufacturing sector) and ‘China has not preMeasures for Market Access of Foreign Investment viously commi ed openness to foreign investment’ (Negative List) (2020 Edition), which was issued in (in R&D in biological resources). Yet, closer examiJune 2020, or six months before the CAI was connation reveals that such assertions are at best ducluded. Moreover, according to the Negative List bious as many of the concessions are neither ‘unpre(2020 Edition), both restrictions were supposed to cedented’ nor ‘not previously commi ed’. Instead, be removed ‘in 2022’, which could take eﬀect up to a 1. Associate Professor, Singapore Management University. Email: gaohenry@gmail.com.

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year before the CAI obligations kick in. Indeed, the same commitments were already stated two years earlier in the 2018 edition of the Negative List.

Pre-existing commitments in other agreements Many other commitments in the CAI were already included in other agreements. For example, under Annex III Schedule of speci c commitments and limitations on market access, China commits to remove all restrictions on insurance and insurancerelated services including life insurance, non-life insurance, reinsurance and services auxiliary to insurance. However, such a commitment was already made by China in its Phase One Agreement with the US, which states that China must remove ‘the foreign equity cap in the life, pension, and health insurance sectors and allow wholly U.S.-owned insurance companies to participate in these sectors’ as well as ‘any business scope limitations, discriminatory regulatory processes and requirements, and overly burdensome licensing and operating requirements for all insurance sectors (including insurance intermediation)’ by 1 April 2020, nine months before the conclusion of the CAI (3).

e same entry in China’s commitments in Annex I also notes that ‘the measures listed in this entry does not apply to investments by foreign investors in the manufacture of new energy automobiles and special purpose automobiles’. Again, however, this is nothing new. Both have already been removed in the 2018 edition of the Negative List. Similarly, China’s commitments in Annex I Entry 12 – Telecommunication Services allows EU investors investing in internet data centre services (including content delivery network services), subject to an equity cap of 50%. Again, the same commitment was already made by China in the Hainan Free Trade Port Special Administrative Measures for Market Access of Foreign Investment for (Negative List), (2020 Edition), which was issued a day a er the conclusion of the CAI negotiation. e CAI commitments are arguably broader than the commitments under the Hainan negative list because the la er does not allow such services to be provided to Chinese territories other than the Hainan free trade port. However, it would not be hard for rms wishing to avail themselves of such services to move their data centres to Hainan. Moreover, despite restrictions on paper, entrepreneurial rms like Amazon have been providing cloud services in China through creative legal arrangements since 2013 (2).

Moreover, in some parts, EU insurance companies actually received a worse deal compared to US rms. Under CAI’s Annex I Entry 31 – Insurance, the EU agrees that China will be able to maintain the requirement that the aggregate shareholding percentage of domestic insurance companies in an insurance asset management company shall be no less than 75%, and that such restrictions will only be li ed by China ‘within three years from the date of entry into force of this Agreement’. In contrast, un-

2. Bensinger G, 'Amazon Teams With Companies In China For Cloud Service' (WSJ, 2021) accessed 11 April 2021. 3. Article 4.6: Insurance Services, United States Trade Representative, 'Economic And Trade Agreement Between America And e Government Of e People’s Republic Of China' (Ustr.gov, 2021) accessed 11 April 2021.

e Government Of

e United States Of

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te in the CAI section. Footnote 8 to Article 3bis in Section II explicitly notes that the obligations on non-discriminatory treatment and commercial considerations do ‘not apply to situations of trade in goods and to supply of services other than through establishment of an enterprise and operation of a covered investment’. In other words, these two obligations only apply to sale or purchase transactions between Chinese State-owned Enterprises (SOEs) and EU rms investing in China, but not to EU rms with no commercial presence in China.

der the Phase One Agreement, China explicitly aﬃrmed that ‘there are no restrictions on the ability of US-owned insurance companies established in China to wholly own insurance asset management companies in China’. As the Phase One Agreement was signed in January 2020 and the CAI is unlikely to come into eﬀect before 2022 (see discussions on the rati cation process below), this means that EU rms lag behind their American counterparts for at least ve years in the ability to establish whollyowned insurance asset management companies in China.

On SOEs disciplines, the only new feature seems to be an expansive de nition of SOEs in paragraph 1 of Article 3bis. at denition includes, in addition to rms where the government controls more than 50% ownership or voting rights, also those where the government has the power to appoint a majority of the board, control the decisions of the enterprise, legally direct the actions or otherwise exercise an equivalent level of control. However, even on this issue, one may well argue that, with the recent development of the jurisprudence on ‘public body’ by the Appellate Body in US – Countervailing Measures (China) (Article 21.5 – China) (6), such expansive de nition might no longer be necessary.

On State-owned Enterprises, the only new feature seems to be an expansive de nition of SOEs

Another widely-publicised concession relates to the disciplines governing the behaviour of Chinese SOEs. e CAI requires SOEs to ‘act in accordance with commercial considerations in their purchases or sales of goods or services’ and to accord to EU investors ‘treatment no less favourable’ than they accord to Chinese investors (4). Again this does not add much to China’s commitment in its 20-year-old WTO Accession Working Party Report, which already requires China to ‘ensure that all state-owned and state-invested enterprises would make purchases and sales based solely on commercial considerations, e.g., price, quality, marketability and availability, and that the enterprises of other WTO Members would have an adequate opportunity to compete for sales to and purchases from these enterprises on non-discriminatory terms and conditions’ (5). Moreover, the scope of the covered activities is further reduced by a footno-

e geopolitical dimension China’s commitments on market access and regulatory issues are not as ambitious as the EU has broad-

4. CAI Section II, Article 3bis, Covered Entities. 5. Para. 46 of China’s WTO Accession Working Party Report. 6. Appellate Body Report, United States – Countervailing Duty Measures on Certain Products from China – Recourse to Article 21.5 of the DSU by China, WT/DS437/AB/RW and Add.1, adopted 15 August 2019.

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e Agreement cannot be justi ed as a services-free trade agreement

substantive bene ts? In my view, the deal on the CAI must be understood in the broader geopolitical context, which permeates the whole life cycle of the CAI from its inception and negotiation, to its conclusion and rati cation.

casted. Moreover, as most of China’s concessions in the CAI schedules are made in the services sector, they would have to be made available to all other WTO Members on an MFN basis even if any concession is entirely new. is is because the CAI, by covering only mode 3 – commercial presence, cannot be justi ed as a services-free trade agreement (FTA) under Article V of the GATS.

Inception In terms of international economic relations in the early 21st Century, 2013 has to be a watershed year. e year before, China overtook the US as the world’s biggest trading nation in goods (7). In response, the US stepped up its eﬀorts at ‘organising trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards’ on two fronts. First, in the Asia Paci c region, the US continued to expand the membership of the Trans-Paci c Partnership Agreement (TPP). In April 2013, the US nally brought Japan into the TPP negotiations, the world’s third largest economy and the second largest

On the other hand, the EU’s commitments are even more limited compared to China’s. is has been con rmed by the Commission. In a press release marking the publication of the CAI market access commitments, the Commission noted that ‘[a]ny restrictions the EU or its Member States may have in place remain unaﬀected, as well as the policy space needed, for example, to enable the autonomous measures’. So why then, did the EU and China still choose to forge ahead with the CAI despite the lack of major

7. ‘China Overtakes US to Become Biggest Trading Nation | South China’ accessed April 12, 2021.

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economy among TPP members (8). Second, the US also reached out to the EU across the Atlantic, which led to the launch of the Transatlantic Trade and Investment Partnership ( IP) negotiations in June 2013 (9).

tions made some progress, but the pace remained slow. e negotiations could have languished like the ill-fated US-China BIT negotiations, but Trump’s trade war brought a sense of urgency to both the EU and China.

China responded with its own initiatives. In July 2013, China agreed to drop its blanket restrictions on investment to relaunch the negotiations on the BIT with the US, which has not been making much progress despite being launched in 2008. In September and October 2013, President Xi also announced the land-based Silk Road Economic Belt, which links China with Europe through Central and Western Asia, and the sea-based 21st Century Maritime Silk Road, which connects China with Southeast Asian countries, Africa, and Europe. Later combined as the Belt and Road Initiative (BRI), they would become a key pillar of China’s foreign economic policy. In November 2013, China and the EU also announced at the EU-China Summit the launch negotiations for ‘an ambitious investment agreement’, which later morphed into the CAI. Together with the RCEP which was launched in November 2012, the BRI and CAI became important components in China’s geopolitical toolbox against the US.

On 22 March 2018, President Trump signed a Presidential Memorandum (10) directing the USTR to raise tariffs against Chinese products pursuant to the USTR’s Section 301 Report into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, which was issued on the same day (11). e EU was not spared either, as the US announced additional duties on steel and aluminium imports from the EU in the same month, which nally took effect in June 2018, one month before the imposition of 25% tariffs on Chinese products. United against a common enemy, the EU and China accelerated the negotiations on their investment agreement, which resulted in the exchange of market access offers during the 20th EU-China Summit held in July 2018. As the trade war raged on, the negotiations on the investment agreement also intensi ed. e 21st EU-China Summit in April 2019 set 2020 as the deadline for ‘the conclusion of an ambitious EU-China Comprehensive Investment Agreement’, which sent the talks into a frenzy. Starting from June 2020, 15 rounds of negotiations were held in a short span of one and a half years. is more than doubles the pace of the negotiations in the preceding years, which only averaged four rounds a year.

Negotiations In January 2014, the rst round of the EU-China investment agreement negotiations was held. Initial progress was rather slow. It took two years before the two sides reached an agreement on the scope of the negotiations. For the next two years the negotia-

8. ‘Statement by Acting U.S. Trade Representative Demetrios Marantis Regarding Japan and the Trans-Paci c Partnership’, accessed April 12, 2021. 9. ‘Remarks by President Obama, U.K. Prime Minister Cameron’ accessed April 12, 2021. 10. Presidential Memorandum on the Actions by the United States Related to the Section 301 Investigation, 22 March 2018, (visited 1 June 2020). 11. USTR, ‘Findings of the Investigation into China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974’, 22 March 2018, (visited 1 June 2020).

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na’s unwillingness to accept one-sided deals may be overcome under certain circumstances. is is also demonstrated in the CAI, not only by the uneven concessions between the two sides, but also by the reports that China’s request to access the EU’s nuclear energy market and insertion of a Huawei clause was both rejected by the EU while the EU’s demands on commitments on forced labour were accepted by China. ird, the EU was worried that, had it waited until the new Biden administration assumed oﬃce, it might not be able to conclude the deal with China. Instead, concluding the deal with China independently is regarded as a major step in achieving the EU’s ‘strategic autonomy ’. Moreover, the EU insisted that such autonomous action should not hinder cross-Atlantic cooperation.

Interim Conclusion As the negotiations on the agreement were nearing completion, geopolitical forces started to emerge again. Upon winning the US Presidential election, Joe Biden announced on 25 November 2020 that “America is back - we're at the head of the table again”. e comment sparked anxiety in the EU as many Europeans interpreted this to imply a return to ‘the status quo ante of Brussels expected to play second- ddle to Washington’. As if to make the message even more explicit, on 23 December 2020, Biden’s pick for national security adviser Jake Sullivan retweeted a Reuter’s story dated 18 December on the imminent conclusion of the EU-China investment deal with the comment that the new administration would ‘welcome early consultations with our European partners on our common concerns about China's economic practices’.

For China, signing a deal before the new Biden administration came into office also has at least three advantages. First, it prevents the new administration from being able to sabotage the deal, as they did not have official channels of communication with the EU before assuming office. Second, it also signals to the new Biden administration that China always has the option of turning to the EU, should the relationship with the US deteriorate. Indeed, at least by judging from the harsh comments against China on the campaign trail, it would be naïve for China to assume that the new administration would play nice with China. is is especially true when the reckoning under the Phase One deal is taken into account, as China is quite far behind in meeting the purchase targets under the agreement, meeting only less than 60% of the speci ed targets as of January 2021. ird, a deal with the EU also helps to bolster China’s international reputation, which has suffered major setbacks in 2020 due to the COVID-19 pandemic and China’s aggressive style of diplomacy.

e EU, however, had diﬀerent calculations. First, the EU was not the rst to enter bilateral deals with China. It was simply following in the footsteps of the US, which had already signed the Phase One deal with China at the beginning of 2020. e EU was concerned that the purchase commitments under the Phase One deal would be ful lled at the expense of EU exporters. is is why EU Trade Commissioner Valdis Dombrovskis regarded the CAI as simply ‘levelling up’ with the US which secured market access and level playing eld commitments from China in the Phase One deal. Second, the Phase One deal also taught the EU important lessons about China’s negotiating style. With more than 100 sentences containing ‘China shall’, and only ve sentences containing ‘the United States shall’ (including two sentences with ‘China and the United States shall’), the Phase One deal proves that Chi-

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of the Parliament’s Trade Commi ee reportedly said that ‘[t]here has to be a solution of these sanctions before we come back to ordinary business on this’.

us, on 30 December 2020, the EU and China concluded, in principle, the negotiations for the CAI, ignoring complaints from the US.

Rati cation

us, before China li s its sanctions on the ve parliamentarians, the CAI will not even enter the raSo far, all the stars seem to have perfectly aligned to ti cation process. Even if this hurdle is cleared, the guide the CAI from inception to conclusion. Howea ertaste of such foul play would probably cast a shaver, the successful conclusion of the CAI might well dow over the minds of many Members of the Euromark the end of luck for the CAI. As per EU internal pean Parliament. Trying to persuade 700+ parliaprocedure, the text of the agreement shall rst go mentarians will prove to be a through the necessary legal and much harder task than the dozens technical review, before it is apBefore China li s its of oﬃcials in the Commission’s proved by the Council of the EU DG-Trade, especially because theand translated into all oﬃcial sanctions on the ve se parliamentarians see their role languages. en it will be referred to the European Parliament, parliamentarians, the as much broader than the narrow con nes of trade and investment which will decide with a majointerests. CAI will not even rity vote within a year. Unfortunately, the European Parliament enter the rati cation Conclusion is not really known for being friendly towards China. It has for process In conclusion, the CAI is an years been criticising China over agreement that was born out of allegations ranging from human the play of geopolitical forces, but this is also where rights violations to economic aggression. is is not its weakness lies. When the geopolitical forces shi , really surprising because, as representatives of the as we have seen over the past few months, the fate of people, the Members of the European Parliament rethis major investment deal is also cast in doubt, espegard as their main task voicing the concerns of their cially as it is now entering the most political part of constituencies, rather than clinching major trade the process – rati cation by the European Parliaand investment deals. Such an approach is clearly rement. For rati cation to occur, the parties should be ected in the European Parliament’s December trying to insulate it from geopolitical tensions, rat2020 ‘Resolution on forced labor and the situation her than further entangling it in geopolitics. Howeof the Uyghurs in the Xinjiang Uyghur Autonover, with the latest developments, the CAI might fall mous Region’. To make it worse, on 22 March 2021, victim to geopolitics, the very force which brought China imposed sanctions on ten individuals in the about its existence in the rst place. EU, which included ve Members of the European Parliament. In protest, the European Parliament cancelled a meeting to review the CAI. e Chairman

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The EU-China Comprehensive Agreement on Investment – an Institutional Perspective Merijn Chamon

forging of the Atlantic alliance. is debate will no doubt continue with the prospect of the subsequent phases through which an international agreement comes into being. Anticipating the signature and On 30 December 2020, the European Commission conclusion of the agreement, this contribution will announced that an agreement between negotiators focus on this institutional dimension of the procewas reached on an EU-China Comprehensive dure through which the EU commits itself to the A greement on Investment terms of the CAI. In particular, it (CAI). On 22 January 2021, the will address: the quali cation of Commission then published the e EU-China Compre- the CAI as a mandatory EU-only dra agreement (before legal hensive Agreement was agreement, the lack of provisioscrubbing and possible substantinal application of the agreement, ve amendments that cannot be rualmost immediately and the internal EU procedure led out). Ever since its announcethrough which the EU rati es criticised because of ment, there has been an animated the agreement. debate about the substance, the ti- its alleged meagre human ming and geopolitical repercusrights conditionality A mandatory EU-only sions of the agreement. Substanagreement ce-wise the agreement was almost immediately criticised because of its alleged meagre human rights conditioe CAI has been described as a sui generis agreenality (see for example here and here). In terms of timent because it is a trade agreement that does not ming it was suggested that the agreement has been deal with trade in goods, and an investment agreerushed through so that it could be announced befoment that does not cover investment protection. As re the end of the German Council Presidency of the noted in the introduction by Isabelle Van Damme to EU. Lastly both in terms of timing and geopolitical this Weekend Edition, despite its name, the CAI therami cations, which Henry Gao also looks into in refore is not a comprehensive agreement. As noted this Weekend Edition, it was questioned (see here by Johanna Jacobsson, it will not replace or superseand here) whether announcing the agreement less de existing agreements between the Member States than a month before a new US President would assuand China. Furthermore, it will be concluded as an me oﬃce was a sensible way to signal the strategic EU-only agreement, although that had not been enautonomy of the EU or whether it jeopardised a revisaged as such at the start. Of course, while EU-

Introduction - the CAI, a contested agreement on investment

1. Assistant Professor of EU Law at Maastricht University, Visiting Professor at the College of Europe (Bruges).

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only agreements may well be comprehensive there is a clear correlation between the scope of international agreements and their nature (mixed or EU-only): the broader an agreement’s scope, the higher the chances that it covers issues which come under reserved national competences or shared competences, rather than exclusive EU competence. As will be recalled in the following sections, whenever an agreement covers at least one such issue the agreement becomes mandatory, respectively facultatively, mixed.

e original negotiating directives In October 2013, the Council of the EU and the Member States adopted negotiating directives for the Commission. e fact that this was a joint eﬀort is not without importance: e directives were not merely adopted by the Council under Article 218(2) TFEU but also by the Member States who collectively (but in their individual capacity) authorised the Commission to negotiate the CAI with China on their behalf. is solution was chosen because, in the opinion of the Member States, national competences were also at issue. In the pre-Lisbon era, one solution used for resolving this type of shared competence issues was to have a double-headed delegation consisting of the Commission and the rotating presidency (see for example the directives for the negotiation of the association agreement with Ukraine, see also the chapter by Smyth, p. 305). Here however, the Commission (rather than the rotating presidency) was mandated by the Member States to act on their behalf. Still, at the time the negotiating directives were adopted, the Commission objected to the Council’s decision to have the Member States also grant a collective authorisation to the Commission by noting the areas which the Council thought came under shared competence (portfolio investment, dispute se lement, property and expropriation aspects in fact fell under EU exclusive competence). Obviously, this statement was made before the Court of Justice’s clari cation of the EU’s postLisbon trade and investment competences in Opinion 2/15. In that Opinion, the Court rejected the Commission’s claim that the EU held an exclusive competence over portfolio investment (paragraph 238). It also held that rules on dispute se lement are typically ancillary to the main substantive provisions and thus fall within the same competence

Portfolio investment, dispute se lement, property and expropriation aspects in fact fell under EU exclusive competence

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ral transport legal bases. Unlike the CCP, the EU’s competence in transport is not a priori exclusive in the sense of Article 3(1) TFEU and instead is shared. e EU’s competence then only becomes exclusive when the AETR test in Article 3(2) TFEU is met. In relation to the CAI, it indeed appears that the Commission negotiated the commitments in such a way that they are covered by exclusive competences (pursuant to either Article 3(1) or (2) TFEU). For instance, apart from those limited transport commitments which the Court in Opie Agreement mainly nion 2/15 (paragraph 68) classied as coming under Article contains provisions 207(1) TFEU (that is the CCP) rather than Article 207(5) on market access, a TFEU, air transport is excluded from the scope of the CAI. level playing eld,

of the la er (paragraph 276). As a result, the mechanism to se le disputes between the parties did not come under the EU’s exclusive competence (given that the FTA included rules on portfolio investment). e investor-State dispute se lement (ISDS) mechanism removed disputes from the jurisdiction of national courts and therefore the Court held that it could not even be quali ed as ancillary to begin with (paragraph 292).

Navigating mixity pitfalls

e dra CAI has inadvertently navigated all these obstacles. For political reasons it does not contain rules on investment protection and portfolio investment. Instead, the dra CAI mainly contains provisions on market acand sustainable e rules on sustainable devecess, a level playing eld, and sustainable development. Taking inlopment development to account the Court’s clari cations in Opinion 2/15, the CAI e same applies to the provisquarely falls within the EU’s exsions on sustainable developclusive competence. Indeed, the ment. e institutional provisions in this area are in market access provisions pass the Court’s test of relaline with those approved by the Court in Opinion ting speci cally to trade (in services) because they 2/15: in terms of dispute se lement, the sustainable are essentially intended to promote, facilitate or godevelopment chapter is isolated from the State-tovern trade and have direct and immediate eﬀects on State Dispute Se lement mechanism, as also highsuch trade. e level playing eld provisions also lighted by Johanna Jacobsson, and has its own rather meet that test or are ancillary (for example transpaso mechanism involving a Panel of Experts, just lirency provisions). e annexes to the CAI, which ke the free trade agreement (FTA) with Singapore. were published in March 2021 reveal the exact come substantive provisions on sustainable developmitments in the area of transport. Pursuant to Artiment in the CAI do not seem to go beyond the cle 207(5) TFEU, transport is largely excluded bounds which the Court, again in Opinion 2/15, defrom the common commercial policy. is means ned for non-trade objectives to be subsumed unthat when the EU wants to include the transport secder the CCP through Articles 205 and 207(1) setor in its trade agreements, it cannot rely on the cond sentence TFEU and Article 21 TEU. In that reCCP legal basis and must instead rely on the sectogard, the Court stressed that Singapore and the EU

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stressed however that this is only so when those parts (under shared competence) are not ancillary to the parts coming under EU exclusive competence. Otherwise, pursuant to the absorption doctrine, the agreement will be a mandatory EU-only agreement. To recall, under that absorption doctrine, if an EU measure pursues two purposes or comprises two components and if one of these is identi able as the main or predominant purpose or component, whereas the other is merely incidental, the measure must be founded on a single legal basis, namely that required by the main or predominant purpose or component (see for example the judgment in the Kazakhstan case, paragraph 37). at centre of gravity of the measure then ‘absorbs’ the subsidiary or ancillary elements. In light of this doctrine a caveat may apply in respect of the CLS’ statement that, if an agreement covers one or more areas outside EU competence, mixity is obligatory. Whether that is the case depends on whether the absorption doctrine can be applied to provisions that come under Member States’ reserved competences (Advocate General (AG) Koko strongly rejected this in her Opinion in the AMP Antarctique case (point 82), while AG Wahl seemed more sympathetic in his Opinion on the Marrakesh agreement (point 122), for a discussion, see Chamon, pp. 142-147). ese questions, namely whether facultative mixity is entirely subject to a political choice within the Council and the vertical application of the absorption doctrine, remain to be se led by the Court. As discussed in a recent EU Law Live Op-ed, at least Advocate General Hogan in his Opinion in Avis 1/19 on the Istanbul Convention has endorsed the view that the choice is indeed for the Council to make.

simply recon rmed their ‘compliance with the obligations that stem from the international agreements concerning social protection of workers and environmental protection to which they are party’. Admi edly, the CAI does include references to ILO Conventions which China has not rati ed but it ‘merely’ imposes a best-efforts obligation on China to ‘make continued and sustained efforts on its own initiative to pursue rati cation’ of those Conventions. is is the same rather weak language as may be found in the FTA with Korea on which a dispute panel recently adopted an opinion (see further below). While some might deplore this so language from a political point of view, especially in light of the outcome of the dispute with Korea (see below), it would seem that from a legal perspective, this language ensures that the provisions on sustainable development remain an integral part of the CCP (cf. paragraph 147 of Opinion 2/15). Put differently, the question may be asked whether a strict obligation to ratify the ILO Conventions would result in a requirement in the CAI that cannot be subsumed under the CCP any longer and for which the EU only has a shared competence?

No political choice open for facultative mixity e leaked opinion of the Council Legal Service (CLS) on the Trade and Cooperation Agreement with the UK makes clear what the stakes are in case one provision in an international agreement is covered by shared competence. According to the CLS, if an agreement covers one or several areas where the EU has shared competences which have not yet been exercised, there is a possibility to conclude it as a mixed agreement (paragraph 22). e Council and Member States stress the unfe ered(?) political choice which the Council has in opting (or not) to exercise the EU’s shared competence. It should be

In light of the above, it is therefore important to stress again that the entire CAI appears to come under the EU’s exclusive competence and that, even as-

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ragraph 46). Even if it retains a formal veto power to most international agreements, the threshold for refusing to consent to an international agreement that is already (partially) provisionally applied is much higher than refusing to consent to an international Lack of provisional application – maxiagreement that has only been signed. In addition, mising the European Parliament’s levethe leverage of the EU over the partner with which it rage? has negotiated an agreement diminishes in case of provisional application, as the costs of terminating Since the CAI is arguably entirely covered by EU exprovisional application are higher than the costs of clusive competences it would seem logical that pronot ratifying a signed (but not provisionally apvisional application is not envisaged for the CAI. plied) agreement. at the CAI is not signed or proWhile it is true that provisiovisionally applied has beconal application is a characteme especially notable since ristic feature of mixed agreeChina imposed sanctions in e entire Agreement appears ments, in practice most of late March 2021 against sevethe agreements provisioto fall under the EU's exclusive ral EU citizens, including nally applied by the EU are ve MEPs in retaliation to EU EU-only agreements (see competence and is a mandatory sanctions over China’s treatChamon, p. 889). e Trade EU-only agreement ment of its Uyghur minority, and Cooperation Agreeas also discussed by Henry ment (TCA) with the UK is Gao. Should the Parliament a signi cant case in point. decide to withhold its consent to this agreement, Unlike the TCA, however, there is no pressing reathe political and economic costs of such a decision son why the CAI should be imminently applied. Prowould be lower compared to a situation where the visional application results in inter-institutional tenCAI would already be provisionally applied. sions because the European Parliament is not formally involved in the decision on provisional applie internal rati cation procedure cation (other than being informed thereof) (see Driessen, pp. 759-764; and Passos, pp. 380-393). In light of the Court’s established legal basis test, the e commitment of the Commission to propose substantive legal bases for the Council’s decisions the provisional application of trade agreements on the signature and conclusion of the CAI will proonly a er the European Parliament has given its conbably be Articles 91, 100(2) and 207(4) TFEU. sent (see Ursula Von der Leyen’s political guidelines Considering that Article 218(6)(v) TFEU applies, for the 2019-2024 European Commission, p. 17) of the European Parliament will have to give its concourse bolsters the Parliament’s position but it is mesent. Furthermore, because none of the exceptions rely a gentlemen’s agreement, as the TCA with the prescribing unanimity under Articles 218(8) or UK illustrates, that cannot be enforced in Court. 207(4) TFEU appear to apply, the Council may e Parliament has long made an issue of its limited adopt its decisions through quali ed majority vote. formal role (see its Resolution of 25 March 2009, pasuming that facultative mixity boils down to a purely political choice, the CAI is a mandatory EUonly agreement.

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e European Parliament has been adamant about the integration of sustainable development chapters in the EU’s FTAs obligation on Korea to make ‘continued and sustained efforts’ to ratify a number of ILO Conventions (among which is the same Convention No 29 at issue in the CAI). e enforcement of this obligation has been cumbersome, however. While in January 2021 the panel convened at the request of the EU found that Korea had failed some of its obligations under the FTA, its ‘efforts for the past three years satisfy the legal threshold of the provision’ requiring it to ratify the fundamental ILO Conventions. e CAI now presents an opportunity to the Parliament to proceed differently in terms of procedure, timing and conditionality.

It is at least to be expected that the Commission will put forward its proposals based on this premise. is legal backdrop provides the European Parliament with the most congenial political circumstances: it is faced with neither the fait accompli of potentially having to shoot down an agreement that is already provisionally applied nor (necessarily) a Council unanimously in favour of an agreement. On the CAI, the Parliament has been vocal on the human rights conditions in China. e fact that the CAI will be an EU-only agreement and that it will not be provisionally applied will mean that all eyes will be on whether the Parliament regards the human rights conditionality in the CAI as suﬃcient. In more general terms the European Parliament has been adamant about the integration of sustainable development chapters in the EU’s FTAs (see Cooremans & Van Calster, p. 199). For instance, the Trade Agreement with Columbia and Peru (a mixed agreement) was signed in 2012 and has still not entered into force. Instead it is being provisionally applied. In 2012 the Parliament adopted a critical Resolution but still consented to the conclusion of the agreement with Columbia and Peru. Several years a erwards in 2019 however, it remarked that improvements in the area of sustainable development still had to be made. It seems clear that by already consenting to the agreement and given the provisional application, the Parliament’s leverage was by then diminished. No doubt the Parliament will also be mindful of experiences under other FTAs. e FTA with Korea was the rst to contain a separate chapter dedicated to sustainable development (see Cooremans & Van Calster, p. 192) and also imposed an

Also, at a more fundamental level and from a democratic perspective, the CAI could be a watershed moment. Like the Comprehensive Economic and Trade Agreement (CETA) with Canada, it is a muchmediatised trade agreement which seems a perfect topic for debate in a European public sphere. e political debate and cleavages around the CAI are essentially the same in every Member State. In the case of CETA, however, the European Parliament was denied its role as the most appropriate forum to hold this European debate, because CETA’s mixed character incentivised and resulted in 27 (or 28) national public debates. All this is diﬀerent for the CAI for which the Parliament will have to tread carefully between diﬀerent interests: internally, it must be seen as a credible but reliable partner to the other EU institutions and as a defender of their interests and fundamental rights; externally it must ensure that the EU remains to be seen as a credible economic partner and a proponent of fundamental values and rights.

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News Highlights Week 26 to 30 April 2021

European Data Protection Supervisor wants ban on facial recognition in newly proposed EU Arti cial Intelligence Regulation Monday 26 April

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e European Data Protection Supervisor’s view on the Commission’s legislative proposal for an Arti cial Intelligence Regulation is positive but he considers the use of remote biometric identi cation in public spaces should be banned completely (the proposal is for a partial ban).

European Parliament’s action for failure to act against Commission over noncompliance with visa rules in relation to the US Monday 26 April

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Oﬃcial publication was made of an action for failure to act (C-137/21) pursuant to Article 265 TFEU brought by the European Parliament against the European Commission over its non-compliance with EU visa rules in relation to the United States.

Assistant Professor in European Legal and Economic Governance position at University of Amsterdam Monday 26 April

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e Amsterdam School for Regional, Transnational and European Studies (University of Amsterdam) posted a vacancy for an Assistant Professor in European Legal and Economic Governance. e deadline for applications is 5 May 2021.

Vacancy position for référendaire at the General Court Monday 26 April

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A vacancy announcement was made for a référendaire (legal secretary) to join the Seventh Chamber at the General Court of the Court of Justice of the European Union to provide assistance in particular to Judge Valančius and Judge Sampol Pucurull.

Call for the selection of the standing high-level Chair of the EDES Panel under Financial Regulation

ECtHR: sanctions for displaying ags without obtaining the permission required by domestic law might be in accordance with the freedom of expression

Monday 26 April

Tuesday 27 April

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Oﬃcial publication was made of a call for expression of interest (2021/C 147 A/01) for the selection of the standing high-level Chair of the Panel referred to in Article 143 of the Financial Regulation (2018/1046) and his/her Deputy.

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e European Court of Human Rights ruled in Tőkés v. Romania (applications nos. 15976/16 and 50461/17) that Romanian authorities breached the procedural limb of the freedom of expression in Article 10 ECHR by sanctioning the applicant for displaying a Szekler ag and a ag of the Partium territory in his oﬃce without asking for permission.

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ECB: Vacancy for temporary position of Supervision Analyst Tuesday 27 April

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A vacancy notice for the position of Supervision Analyst in the European Central Bank in Frankfurt, Germany was oﬃcially published.

ECA conducts review of nancial contributions from non-EU countries Wednesday 28 April

AG Richard de la Tour advises Court of Justice to quash General Court judgment annulling SRB’s calculation of ex ante contributions to SRF Tuesday 27 April

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Advocate General Richard de la Tour delivered his Opinion in Grand Chamber case Commission v Landesbank BadenWür emberg and SRB and SRB v Landesbank BadenWür emberg (C-584/20 P and C-621/20 P), advising the Court to quash a General Court judgment annulling a decision on the calculation of the 2017 ex ante contributions to the Single Resolution Fund.

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European Central Bank: Vacancy for temporary position of Lawyer-Linguist with Italian as main language

e European Court of Auditors conducted a review of the nancial contributions from non-EU countries to the EU and its Member States, which allow third States to participate in EU programmes and activities.

Wednesday 28 April

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A vacancy notice for the position of an Italian LawyerLinguist at the European Central Bank was oﬃcially published.

Court of Justice to hear case on loss of nationality provided by law Wednesday 28 April

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In WY (C-85/21), the Court of Justice will hear a case concerning the loss of nationality provided for under national law and the need for a proportionality assessment.

Commission publishes report on protection and enforcement of IP rights in third countries Wednesday 28 April

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e European Commission published its biennial report on the protection and enforcement of intellectual property rights (IPR) in third countries. Its main objective is to identify so-called ‘priority countries’ where IPR protection and enforcement (both online and oﬄine) raises concerns from an EU perspective.

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Pending preliminary ruling on disclosure of evidence in case of suspended proceedings concerning action for damages by breach of competition law Wednesday 28 April

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Oﬃcial publication was made of a request for a preliminary ruling in RegioJet a.s. (C-57/21), lodged by the Supreme Court of the Czech Republic (Nejvyšší soud České republiky) on the interpretation of Article 5 of the Antitrust Damages Directive (2014/104).

Commission nes investment banks for participating in SSA bonds trading cartel Wednesday 28 April

European Parliament approves EU-UK Trade and Cooperation Agreement Wednesday 28 April

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e European Parliament formally gave its consent to the post-Brexit EU-UK Trade and Cooperation Agreement and the connected Security of Information Agreement.

Execution of judgments given in third countries and the ne bis in idem principle: Court of Justice’s judgment in X

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ursday 29 April

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e European Commission ned Bank of America Merrill Lynch, Crédit Agricole, and Credit Suisse more than 28 million euros for participating in a cartel in the secondary trading market of Supra-sovereign Sovereign and Agency (SSA) bonds denominated in US Dollars in the European Economic Area.

e Court of Justice ruled in X (Mandat d’arrêt européen – Ne bis in idem) (C-665/20 PPU), an urgent preliminary ruling, on the interpretation of Article 4(5) of EAW Framework Decision 2002/584 as regards the discretion of judicial authorities faced with a ground for optional non-execution of an EAW and the transnational applicability of the ne bis in idem principle.

Commission’s conditional authorisation of P zer-BioNTech vaccine against COVID-19 challenged before the General Court

Automatic recognition of retroactive reorganisation measures on credit institutions incompatible with EU law if it precludes ongoing legal proceedings, says Court of Justice

ursday 29 April

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Oﬃcial publication was made of an action for annulment (T96/21) brought by an Italian national, Heidi Amort, and 35 other applicants against a Commission Implementing Decision granting a conditional marketing authorisation for ‘Comirnaty — COVID-19 mRNA Vaccine (nucleoside modied)’, the P zer‒BioNTech vaccine.

ursday 29 April

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e Court of Justice has ruled in Banco de Portugal and Others (C-504/19) that automatic and retroactive recognition of a reorganisation measure concerning a credit institution is incompatible with EU law if the client can no longer pursue legal proceedings on the merits against the ‘bridge bank’ to which the liabilities at issue were previously transferred.

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AG Koko ’s Opinion on the meaning of Protocol No. 7 immunities when applied to Governors of central banks of Member States ursday 29 April

AG Pitruzzella: competitive relationship not needed to qualify as ‘interested party’ ursday 29 April

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Advocate General Pitruzzella delivered his Opinion in Ja zum Nürburgring v Commission (C-647/19 P) advising the Court to reject the appeal and partially annul a General Court judgment (T-373/15) concerning the repayment of illegal State aid measures.

Advocate General Koko delivered her Opinion in the Grand Chamber case LR Ģenerālprokuratūra (C-3/20), on whether and how Article 11 and Article 22 of Protocol No. 7 of the TFEU on the privileges and immunities of the EU apply to the post of member of the Governing Council of the European Central Bank, held by the governor of the central bank of a Member State.

Addition of calcium-enriching algabased powder in processing of organic product precluded by EU law

Post-Brexit: Decision adopted by Council on conclusion of EU-UK agreements

Friday 30 April

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In Natumi (C-815/19), the Court of Justice ruled that Regulation 889/2008 precludes the use of a powder obtained from the cleaned, dried and ground sediment of an alga, as a nonorganic ingredient of agricultural origin in processing of organic foodstuﬀs, for the purpose of enrichment with calcium.

A decision on the conclusion of the EU-UK Trade and Cooperation Agreement and the supplementary and connected Security of Information Agreement was adopted by the Council of the EU. e decision signi es completion of the rati cation process by the EU.

Court of Justice rejects Spanish claim that it could not recover illegal aid due to ‘constitutional diﬃculties’

Commission adopts Communication on Be er Regulation to reform EUlegislative processes

Friday 30 April

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e Court of Justice ruled on ursday in Commission v Spain (TNT en Castille-La Manche) (C-704/19) that Spain failed to ful l its obligations by not taking all necessary measures to recover illegal State aid from Telecom Castilla-La Mancha SA, concerning the deployment of digital terrestrial television in the remote and less urbanised areas of Castilla-La Mancha.

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e European Commission, in line with its role to improve existing EU legislation, adopted a Communication on Be er Regulation on ursday, suggesting how the EU’s legislative processes can be reformed.

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Commission takes preliminary view that Apple distorted competition in music streaming market Friday 30 April

Further to an in-depth investigation into Apple's App Store rules on 16 June 2020, the European Commission has informed Apple of its preliminary view that it distorted competition in the music streaming market through a Statement of Objections, considering that it abused its dominant position for the distribution of music streaming apps through its App Store (Article 102 TFEU).

Insights, Analyses & Op-Eds Court of Justice con rms Council’s reliance on decisions of national authorities in order to renew counterterrorism sanctions against the PKK

e French Data Network Judgment : A ‘Securitarian Frexit’ or Classic Conseil d’État Euroscepticism? by Araceli Turmo

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by Celia Challet

Op-Ed on the broader implications of the French Council of State’s follow up ruling to the Court of Justice’s preliminary ruling in La Quadrature du Net (C-511/18, C-512/18 and C520/18), in the context of the dialogue between the constitutional courts of Member States and the Court of Justice.

Op-Ed on the Court of Justice’s judgment in Council v PKK (C-46/19 P), touching upon one of the most fundamental aspects of the EU’s counter-terrorism sanctions practice: the Council of the EU’s ability to rely on national authorities’ decisions designating a person or entity as involved in terrorist activities.

Between Consob and Weiss: the French and Belgian approaches in implementing La Quadrature du Net by Trajan Shipley

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Academy of European Law Conference on Arti cial Intelligence and the Commission’s legislative proposal

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Insight into the diﬀerences between the French Council of State’s and Belgian Constitutional Court’s follow up rulings to the Court of Justice’s judgment in La Quadrature du Net (C511/18, C-512/18 and C-520/18), and the signi cance for constitutional dispute se lement in light of the German Weiss case and Italian Consob case.

by Anjum Shabbir

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Insight into the Academy of European Law E ’s conference on ‘Human Rights and Arti cial Intelligence Systems’ on 2931 March, in light of the European Commission’s legislative proposal for an AI Regulation at the EU level, presented last week.

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Bivolaru and Moldovan v. France: the ECtHR scrutinises the execution of European Arrest Warrants in light of the Bosphorus doctrine

Pro Credit Slovakia reasserts the limits of national procedural autonomy: EU consumer law, the principle of eﬀectiveness and the obligation of interpretation in conformity by Catherine Warin

by Maddalen Martín

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Analysis of the Court of Justice’s clari cation and reassertion of the reach of two key (meta-) principles of EU law and the correlative limits to national procedural autonomy in Pro Credit Slovakia (C-485/19), concerning a consumer credit agreement.

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Analysis of the European Court of Human Rights case Bivolaru and Moldovan v. France (application nos. 40324/16 and 12623/17), on the presumption of equivalent protection in human rights (Bosphorus) in the context of European Arrest Warrant extradition procedures.

Library - Book Review

By Pablo Biscari

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Laura Wissink

Effective Legal Protection in Banking Supervision Review by Pablo Biscari of a book that offers ‘a deep and thorough assessment of the novel legal questions that arise in respect of effective legal protection in banking supervision’, and which provides ‘an excellent basis to undertake the assessment of how and if effective judicial protection is guaranteed’ in the context of the so-called common procedures in the Single Supervisory Mechanisms.