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Nanovic Institute for European Studies EU-CHINA COMPREHENSIVE AGREEMENT ON INVESTMENT (CAI)
A prime example of Europe’s initiative in pursuing economic independence is the EUChina Comprehensive Agreement on Investment (CAI). Disenchanted with Trump’s protectionist economic policies and tariffs, the EU sought to develop “strategic autonomy,” practicing engagement rather than confrontation with China.187 As Germany held the EU presidency in the latter half of 2020, Merkel was able to push the goal of improved investment strategies in the automotive industry which would benefit German companies, including Volkswagen and Daimler.188 The EU-China investment deal was struck at the end of 2020 and has yet to be ratified. Nonetheless, it preemptively denies Biden a chance to form a multilateral front against the economic giant, possibly driving a further wedge between the U.S. and Europe. However, many in the EU remain displeased with China’s questionable human rights record and wonder how much the EU should sacrifice its humanitarian values for an advantageous economic agreement. Accepting such a trade-off would demonstrate the EU’s confidence in working with China without the support of the U.S. The pandemic has forced several countries to pay closer attention to domestic spending and pre-existing economic ties, leading to an acceleration of the China-EU deal aimed at improving investments and mitigating fallout. The implications of the coronavirus pandemic and lockdowns will continue to have negative implications on the global economy, yet most European countries took advantage of low interest rates and EU budget rule suspensions to mitigate damage done to national economies. As the EU is typically averse to protectionism, the economic repercussions of the pandemic have spurred uncommon governmental financial support and the politicization of corporate decisions.189
A More Self-Reliant European Foreign Affairs and Security Agenda As the EU and individual European countries maneuver themselves towards greater economic independence, Europe is also looking to solidify its unique, yet powerful role in the international system. While the EU is known for its regulatory and normative powers, the effectiveness of its foreign and security policies is less clear. Bracing itself against rising University of Notre Dame | Keough School of Global Affairs
