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The new Silk Road: The agreement between the EU and China opens up new geopolitics scenarios

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The year that has just started does not seem destined to be more peaceful than the one that has just ended.

While the world continues to be afflicted by the Covid-19 pandemic, the United States, which can boast to be “the oldest democracy” of the modern era, is not only helplessly suffering from the virus attack but is going through an unprecedented internal crisis that seriously calls into question its coveted role as world superpower.

On January 6 last, the Capitol Hill in Washington was assaulted by a crowd of “Trump supporters” who, inflamed by the subversive words of a President who does not seem to resign himself to electoral defeat, violently stormed the House in a bid to stop Congress from counting electoral votes to certify President-elect Joe Biden’s victory in last November election. The attack brought America back to the dark times of Abraham Lincoln’s first election when, in 1860, eleven Southern States refused to recognize the electoral result and started an attempt to disrupt the Republic that resulted in a bloody civil war.

Donald Trump’s reckless adventurism which, in the coming days, could lead to his ousting, is not only causing a deep crisis in the internal set-up of the American society and its institutions, but also risks seriously undermining America’s credibility globally and leading to a major downsizing of its geopolitical ambitions.

Throughout his four years in office, Donald Trump has attempted to “contain” China economically and politically, by imposing tariffs and duties on Chinese goods imported into the United States and supporting the “democracy movement” in Hong Kong that has been causing unrest in the former British colony for almost two years. By inciting his supporters to challenge and oppose the Presidential handover, he has handed a propaganda weapon on a silver platter to a country like China that, after being the first to be hit by the pandemic, was also the first to emerge successfully from it.

While recalling that when protesters stormed and ravaged Hong Kong’s Capitol Hill in 2019, both Secretary of State Mike Pompeo and the Speaker of the U.S. House of Representatives, Democrat Nancy Pelosi, applauded the protesters’ violent behaviour, it was easy for the Chinese Foreign Ministry’s spokeswoman, Hua Chunying, to accuse the Americans of “double standards” in the moral and political assessment of their own and others’ behaviours.

In a press conference convened to comment on the Washington attack on Capitol Hill, Hua Chunyingsaid: “I believe that this assault is a déjà vu … I see that in the United States there are different reactions to what happens at home compared to what happened in Hong Kong in 2019 …”.

Over and above propaganda skirmishes, in the year in which the centenary of the CPC’s is celebrated, China keeps on scoring points in its favour in the geopolitical and economic competition with the United States.

On December 30, 2020, the news of the historic investment agreement between China and the European Union was reported.

After seven years of negotiations, during a conference call between Chinese President Xi Jinping and the President of the European Commission, Ursula Von Der Leyen, with French President Emmanuel Macron, German Chancellor Angela Merkel and the President of the European Council, Charles Michel, the “Comprehensive Agreement on Investments” (CAI) was adopted.

It is a historic agreement that opens a new “Silk Road” between Europe and the huge Chinese market.

The CAI’s basic principles aim at a substantial rebalancing of trade between Europe and China, as the latter has so far shown little openness towards the former.

With this agreement, China is opening up to Europe in many significant sectors, with particular regard to manufacturing and services.

In these sectors China commits itself to removing rules that have so far strongly discriminated against European companies, by ensuring legal certainty for those who intend to produce in China, as well as aligning European and Chinese companies at regulatory level, and encouraging the establishment of joint ventures and the signing of trade and production agreements.

In the manufacturing field, the “automotive” sector will be boosted, with specific reference to the production of electric cars, but also to the production of chemical products, materials for telecommunications and new generation health devices.

As far as the servicesector is concerned, China will foster European investment in cloud services, financial services, private healthcare and the services related to air and maritime transport.

In all the sectors covered by CAI, European investors and producers will no longer suffer any discrimination with respect to Chinese competitors, including state-owned companies, nor will they be denied access to productive sectors so far forbidden to foreigners.

The agreement also provides for guarantees that will make easier for European companies to deal with the paperwork needed to fulfil all administrative procedures and obtain legal authorizations, thus removing the bureaucratic obstacles that have traditionally made the operation of European companies in China difficult.

It is the first time in its history that China opens up in this way to foreign companies and investment.

In view of attracting them, China is committed to lining up in terms of labour costs and environmental protection, thus progressively aligning its standards with European ones, in terms of fight against pollution and trade union rights.

With a view to making this commitment concrete and visible, China adheres to both the Paris Climate Agreements and the European Convention on Labour Organization.

While commenting on the signing of the agreement, President Von Der Leyen stressed that “this is a fundamental step in our relations with China. The agreement will provide European investors with unprecedented access to the Chinese market, thus enabling our business to grow and create jobs. It also commits China to adhering to the principles of transparency and non-discrimination and fundamentally rebalances our economic relations with China.

The China-Europe agreement is another piece in the mosaic of commercial and political relations on which China wants to build the geopolitical role of a nation which, according to growth estimates, is destined to reach the first place in the world ranking in terms of GDP by the end of the decade.

In fact, CAI follows by just a month the signing of the “Regional Comprehensive Economic Partnership” (RCEP), an agreement of strategic importance signed by China with the ten ASEAN countries and with Japan, South Korea, Australia and New Zealand.

The RCEP has been described as “the world’s largest trade and investment bloc” and essentially creates an area of economic cooperation and free trade involving 2.2 billion people producing 28%of world trade and over 30% of global GDP.

The RCEP countries account for 50% of the world’s manufacturing output, 50% of automobile production and 70% of electronics. The RCEP eliminates 90% of tariffs on trade in the signatories’ region, thus creating a huge Asian free trade area that sees, on the one hand, India’s marginalization and, on the other, the growth of China’s role throughout East Asia.

The CAI agreements with Europe and the RCEP agreements with Asian partners undoubtedly mark a historic turning point in relations between China and the rest of the world. The United States remains excluded from these relations, as it is currently blocked in a process of transition that limits not only its democratic activity, but also its operativity and international credibility.

After the hallmark of U.S. foreign policy in Trump’s era was reduced to imposing tariffs on trade with China, the gradual loss of credibility of the U.S. administration has stultified Secretary of State Mike Pompeo’s attempts to gather a broad international anti-Chinese coalition led by the United States.

The RCEP is there to demonstrate how fragile the U.S. attempts to counter China economically and politically have been, as two once strategic partners of the United States like South Korea and Australia have literally turned a deaf ear to American appeals and have struck a historic and strategic deal with China.

The CAI puts Europe in communication and in ever closer connection with what for centuries was “The Middle Kingdom”, i.e. a China that has chosen to lower its ideological barriers in order to open up new pathways of economic progress and hopefully democratic development.

French and German representatives were present at the CAI signing.

While Europe was opening the “new Silk Road”, the country that gave birth to De Gasperi, one of the founding fathers of the European Union, and to Marco Polo, protagonist of the opening of the first “Silk Road”, was conspicuously absent from the negotiation table.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Deciphering EU’s new investment deal with China

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The perceived economic gains of the Comprehensive Agreement on Investments (CAI), which the 27-nation European Union recently struck with the People’s Republic of China, come at the cost of disregarding human rights, which the Western bloc is known for, amid clear and irreconcilable systemic differences.

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The closing days of 2020 saw the European Union and China striking a deal known as the Comprehensive Agreement on Investments (CAI), thereby concluding seven long years of negotiations, as per the year-end deadline. China is also the EU’s biggest trading partner after the United States, but a strategic and systemic rival too.

The European Commission, Brussels-based executive arm of the EU, primarily led the negotiations on behalf of the bloc. Germany, being the holder the EU Council Presidency and led by Chancellor Angela Merkel’s continued push, combined with Beijing’s last-minute concessions, proved instrumental in expediting the process of finalising the CAI before the end of 2020.

However, the deal will still have to wait for a formal ratification by both sides and an approval by the Strasbourg-based EU Parliament, a tougher task, before finally setting it on course to be effective in a couple of years’ time, if not by early 2022.

Better rules, level-playing field for European businesses

The EU, by this deal, aims to widen the access for European companies to lucrative Chinese markets, with billion-plus consumers, on a wide range of sectors, particularly in services such as healthcare, finance, cloud-computing and air travel, among others, that has always been restrictive to foreign players in the past.

The deal could bring in a level playing field in the conduct of European businesses in China wherein Chinese state-owned enterprises will no longer be given preferential treatment through subsidies, thereby promoting fair competition and ensuring transparency in technology transfers. Newer possibilities for the expansion European businesses in China will be opened.

The CAI also promise better rules, investment protection, and an investment dispute settlement mechanism within two years of signing, which will replace all the separate bilateral investment treaties currently signed between China and EU member states. The EU maintains that the main purpose of this new deal is to address the economic imbalance in its relations with China.

However, the most striking aspect of the CAI is that, for the first time, China commits to follow accepted standards on climate and labour aspects, even though in a vague form. And for the EU, the timing of this deal with China is significant as a way of signalling its reengagement with the world in the aftermath of a post-Brexit scenario.

At the same time, the CAI reaffirmed reciprocal access for Chinese companies into European markets, which they always had. So, the deal matters to Europe, more than it matters to China. So, the real question is the extent of compromises which European negotiators had to make to strike the deal with the Asian superpower.

The issue of forced labour in China

Many EU member countries and the US had been apprehensive about the human rights situation in the northern Xinjiang province of China where there have been evidences and investigations on the use of forced labour from the media and elsewhere, which has not been duly factored in while concluding the investment deal.

It has been alleged that in the past several years, the Chinese government has forced over a million Uighur minorities in Xinjiang to perform seasonal labour against their will and are often underpaid. But, the Chinese government has repeatedly denied such allegations.

Many European lawmakers believe that China is not interested in fully complying with international agreements after signing it and is not a responsible and trustable partner. The presence of mass detention camps in this province, as verified by satellite imagery and other documents, is also a human rights concern which the EU was not supposed to ignore, considering its historical commitments to human rights.

US concerns and strategic rivalry

The incoming Biden administration has also raised concerns about the CAI, stating that it would “welcome early consultations” with its European partners on shared concerns surrounding China’s unfair economic practices, hinting at the issue of forced labour and the deal’s lacking on the question of enforcement of human rights.

Being a security and strategic partner of the US and part of the North Atlantic Treaty Organisation (NATO), any such deal which EU and its member countries sign with its strategic rival, China, could effectively undermine American-led efforts to counter the strategic and geopolitical threat posed by Beijing’s aggressive and expansionist policies around the world.

It also flies in the face of an incoming Biden administration which is openly committed to mend relations with allies in Europe that had been worsened under Donald Trump. Many experts in the US have felt the EU should’ve waited for a few more weeks until the Biden administration takes charge to form a co-ordinated approach, as it related to their common systemic and strategic rival, China.

Moreover, the deal comes at a time when individual EU members such as Germany and the Netherlands have recently released their own outlook on the Indo-Pacific strategy, which is perceivably aimed at containing China’s rise and to ensure balance of power in the region. Meanwhile, France’s outlook is in existence for two years now.

Way ahead for implementation

The deal has now been reached at the technical level, paving way for a final ratification. But, getting the deal through the European Parliament, which attaches far more significance to human rights concerns than the Commission and the Council, is going to be a tough task, as many European legislators are increasingly sceptical of Chinese intentions and commitments to any deal.

The coming months are going to be crucial with regard to how the European legislators will debate and take forward the deal to the next level.

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Hungry for change: An open letter to European governments

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In 2020, the entire world knew what it was to be hungry. Millions of people went without enough to eat, with the most desperate now facing famine. At the same time, isolation took on a new meaning, in which the lonely and most remote were deprived of human contact when they most needed it, while the many victims of Covid-19 were starved of air. For all of us, the human experience fell far short of satisfying even the most basic needs.

The pandemic has provided a taste of a future at the limits of existence, where people are bereft, governments are stymied and economies wither. But it has also fuelled an unprecedented global appetite for change to prevent this from becoming our long-term reality.

For all the obstacles and challenges we face in the weeks and months ahead, I start 2021 with a tremendous sense of optimism and hope that the growling in our stomachs and the yearning in our hearts can become the collective roar of defiance, of determination and of revolution to make this year better than last, and the future brighter than the past.

It starts with food, the most primal form of sustenance. It is food that determines the health and prospects of almost 750 million Europeans and counting. It is food that employs some 10 million in European agriculture alone and offers the promise of economic growth and development. And it is food that we have learned impacts our very ecosystems, down to the air we breathe, the water we drink, and the climate we enjoy, come rain or shine.

Even before the pandemic, 2021 was destined to be a “super-year” for food, a year in which food production, consumption and disposal finally received the requisite global attention as the UN convenes the world’s first Food Systems Summit. But with two years’ worth of progress now compressed into the next 12 months, 2021 takes on a renewed significance.

After a year of global paralysis, caused by the shock of Covid-19, we must channel our anxieties, our fear, our hunger,and most of all our energies into action, and wake up to the fact that by transforming food systems to be healthier, more sustainable and inclusive, we can recover from the pandemic and limit the impact of future crises.

The change we need will require all of us to think and act differently because every one of us has a stake and a role in functioning food systems. But now, more than ever, we must look to our national leaders to chart the path forward by uniting farmers, producers, scientists, hauliers, grocers, and consumers, listening to their difficulties and insights, and pledging to improve each aspect of the food system for the betterment of all.

Policymakers must listen to Europe’s 10 million farmers as custodians of the resources that produce our food, and align their needs and challenges with the perspectives of environmentalists and entrepreneurs, chefs and restaurant owners, doctors and nutritionists to develop national commitments.

We enter 2021 with wind in our sails. More than 50 countries have joined the European Union in engaging with the Food Systems Summit and its five priority pillars, or Action Tracks, which cut across nutrition, poverty, climate change, resilience and sustainability. And more than two dozen countries have appointed a national convenor to host a series of country-level dialogues in the months ahead, a process that will underpin the Summit and set the agenda for the Decade of Action to 2030.

But this is just the beginning. With utmost urgency, I call on all UN Member States to join this global movement for a better, more fulfilling future, starting with the transformation of food systems. I urge governments to provide the platform that opens a conversation and guides countries towards tangible, concrete change. And I encourage everyone with fire in their bellies to get involved with the Food Systems Summit process this year and start the journey of transitioning to more inclusive and sustainable food systems.

The Summit is a “People’s Summit” for everyone, and its success relies on everyone everywhere getting involved through participating in Action Track surveys, joining the online Summit Community, and signing up to become Food Systems Heroes who are committed to improving food systems in their own communities and constituencies.

Too often, we say it is time to act and make a difference, then continue as before. But it would be unforgivable if the world was allowed to forget the lessons of the pandemic in our desperation to return to normal life. All the writing on the wall suggests that our food systems need reform now. Humanity is hungry for this change. It is time to sate our appetite.

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Blank Spot in EU

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The historic exit of the Great Britain from the European Union sparked both opportunities and chaos alike. Whether it comes to sectors within and beyond the orders of Britain, the trade policy with Northern Ireland or the isolated position of the bloc as the pandemic continues to perforate the continent with each passing day. It took a span of 4 years and a combination of referendums, disagreements in the House of Commons, displacement of public office and relentless efforts of the diplomats to bargain and negotiate an exit deal. Despite of the celebrated trade deal in action, much of the uncertainty still looms across Europe. The economic bloc now faces an empty spot of a 28th member post UK-exit and with rilling economic desperation and the Coronavirus spiralling alike, EU seeks a promising role to displace some of the pressure buildup.

The United Kingdom, mainly London, serves as the only unarguable financial rival to the metropolis of New York. Although the financial epicentre casted no qualms over trade post Brexit and even the EU financial markets reported no apparent glitches in trade across borders now subject to custom rules and regulations, the sheer volume of the trade denominated in LIBOR projects a sinister possibility of financial turmoil in the near future. Moreover, the trade deal negotiated, hailed by either parties as a victorious bargain, does little to placate uncertainty in the financial markets which further encourages the need of a solid alliance or partnership to fill the gap and subsequent irregularities faced by the European Union.

Turkey stands as one of the aspirants seeking EU membership. Every European state enjoys the privilege to seek EU membership which is subject to yearly review. Turkey has been a lurking party to seek EU approval since 1987. The opportunities opened up in 2016 after decades of tensions over Turkey’s shady democracy and violent role in dealing with their Kurdish minority, residing on the south-eastern borders of Turkey shared with a war-torn Syria. A refugee deal was signed in 2016 between Turkey and EU to facilitate Syrian refugees amidst the greatest refugee crisis since World War II. The deal served as a defining chapter in improving bilateral relations. Despite of Turkey’s conditions in the refugee deal: demanding a $60 billion grant from EU to pivot the refugee crisis, EU subliminally promised an expedited track for Turkey’s ascension to EU membership. 

However, Angela Merkel, the Chancellor of Germany, and arguably the most powerful political figure in the circles of Europe, always stood against and awry to Turkey’s membership in EU. The talks of Turkish membership were even stalled back in 2019 in the EU parliament and the prospects looked murky. However, as Merkel inches closer to departure from Germany’s political benches after decades of systematic control, Turkey cites the opportunity as a blessing in disguise. Coupled with Germany being at the verge of a severe recession synonymous in scale to the financial crisis of 2009, Germany’s position could actually shift in favour of Turkey ever since UK-exit baffled even the most sage minds of the continent.

The opportunities, however, are not the only blocks paving way for Turkey towards EU. Turkey shares a brutal conflict with Greece, another EU member state that has muddled the chances of Turkey in the EU for decades. Turkey has the longest continental coastline in the East Mediterranean which has been long contested with Greece over the gas reserves found profoundly in the waters of the East Mediterranean. Both countries have overlapping areas and have time and time again rejected each others claims over respective maritime borders and continental shelves. The icy relations between the duo have been hazy due to multitude of other reasons as well. Ranging from disputes over Turkish migrants crossing Greek borders to ships anchoring in the disputed regions without prior alert. The recent turmoil incited when Turkey officially declared Hagia Sophia, a museum in Istanbul and a historic remnant of Greek Orthodox Christian Cathedral, as a mosque which infuriated the Greek patriots.

Turkey’s ascension to membership might be a solution to economic disparity in the region; Turkey serving as a corridor between Europe and Asia and opening channels of economic flourish to EU like Silk Road initiative with China. The ascension could even solve the border disputes with Greece and project a solution to the energy reserves in Mediterranean, solving the divide once and for all. Even with Recab Tayyab Erdogan’s boasting position over improving relations with EU, the extent of ease in bilateral relations is still unclear. As top Turkish Diplomat’s schedule visit to Brussels in a week, and Turkey and Greece are to resume exploratory talks over territorial claims in the Mediterranean on January 25th, glimmers of astounding results are on cards in the arching diplomacy of Europe.

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