Politico, 01 January 2021

Below is an article published by Politico. Photo Tobias Schwarz/AFP

German Chancellor Angela Merkel’s strong push to conclude the EU-China deal in the last days of the year has left a bad aftertaste among a group of EU countries who said they felt ignored.

Officials from Italy, Poland, Belgium and Spain criticized the way Germany pushed through the investment agreement with China in the final days of the German presidency of the Council of the EU, despite their warnings that the timing was tone deaf to slave labor concerns in China and risked alienating incoming U.S. President Joe Biden.

The officials said they felt steamrolled by Merkel and the “German engine” inside the European Commission, in particular Commission President Ursula von der Leyen and trade department director Sabine Weyand, who are both German.

“There’s a lot of frustration among smaller countries about the way the Commission has been used to push through one of Merkel’s pet projects at the end of her term and the end of her legacy,” said one EU diplomat.

“Is this the way the EU will work post-Brexit? The Brits are just out and we’re already missing their open market-oriented approach,” the diplomat said. “If Germany weighs in too much, smaller EU countries have nothing to say.”

The EU on Wednesday sealed a bilateral investment pact with China, allowing investors to acquire companies in a number of sectors, limiting joint venture requirements and allowing foreign employees to work in their respective markets.

But the critics worried that the deal was a political win for Chinese President Xi Jinping and came just as his government cracked down on democracy in Hong Kong, ethnic minorities in Xinjiang and journalists reporting on the origins of the coronavirus pandemic.

“We are giving a positive signal to China at a time of significant human-rights concerns,” Italian Undersecretary for Foreign Affairs Ivan Scalfarotto told the Corriere della Sera on Thursday, citing China’s crackdown in Hong Kong, “the persecution of Uighurs,” and the four-year prison sentence imposed on a journalist this week for reporting on the pandemic in Wuhan.

German officials insist they and the Commission consulted with other capitals and that while some raised objections no one held up a “stop sign” to halt the deal.

Transatlantic snub

One EU official also pointed out that Weyand briefed member countries twice before Brussels sealed the pact with China, even though the Commission already had a legal mandate to negotiate and so was allowed to conclude the deal.

But that mandate was seven years old, as another diplomat from the group of critical countries pointed out, adding he was skeptical whether it was wise for the Commission to conclude the deal based on that mandate, given that relations with China had changed significantly in the meantime.

Diplomats also pointed out that some countries, such as Poland, had publicly voiced their opposition to rushing the deal through. “We need more consultations and transparency bringing our transatlantic allies on board. A good, balanced deal is better than a premature one,” Polish Foreign Minister Zbigniew Rau tweeted last week.

The countries also argued that Brussels should have coordinated its approach with U.S. President-elect Biden, who said he wanted to work with the EU to tackle China. Biden takes office on January 20, so China’s last-minute concessions, which paved the way for this week’s deal, suggested Beijing wanted to lock the EU into an agreement before the transatlantic allies could coordinate a tougher approach.

Brussels should have waited for the new U.S. administration to take office before concluding the deal, Italy’s Scalfarotto said. “This decision at this specific stage creates a problem,” he said. “The incoming administration cannot speak, but it had made it clear that it would have preferred Europe to wait. I want to hope they don’t consider it rude … we must not miss the opportunity to work with Biden.”

Scalfarotto said that, while Europe was entitled to seal its own trade deals, there was no need for “unnecessary rudeness.”

EU tensions

Italy was also unhappy that French President Emmanuel Macron was invited to take part in a videoconference with Chinese President Xi Jinping alongside Merkel, who represented the EU presidency, while other EU leaders were not. 

“I don’t believe that having Macron, the choice of one country over the other 26, was justified. It’s an unusual format which also marks a defeat for us Italians,” Scalfarotto said, adding that Italy had asked to have EU leaders only on the call.

Other EU officials echoed the criticism of France. While France’s junior minister for trade Franck Riester last week publicly criticized the deal over a lack of commitments on slave labor and a lack of investment protection, Paris ended up backing the deal.

Two diplomats said Macron had secured benefits for some particular companies, such as Airbus. Merkel, another official said, reached an understanding with Macron under which she would get to conclude the deal under the German presidency, while the ratification and signing of the deal would be finalized under the French Council presidency in the first half of 2022.

The group of critical countries worried the Franco-German push had led Brussels to ignore some legitimate concerns about the deal. They feared this approach, ignoring other views, did not bode well for the way the EU would handle its relations with America and China in the future.

“This isn’t just another deal with some small country,” one of the diplomats said. “The way we position ourselves in the U.S.-China dynamic will make or break the EU.”