Short notes regarding the Portuguese presidency of the Council of the European Union: the agreement in principle between the EU and China

by Pedro Madeira Froufe (Editor)

Friday, 15 January, marked the first day of the second (relatively general) lockdown in Portugal. At the same time, Lisbon hosted a number of European Commissioners, including the President of the European Commission, Ursula Von der Leyen, for an in-person event with significant political relevance.

The Commissioner’s visit, signaling the beginning of a Member State’s presidency of the Council is, in fact, a tradition. In a manner carrying out some symbolism, this visit to Portugal, by accident coinciding with the second lockdown in the country, can also be seen as a sign of what is expecting the EU in the first semester of 2021. Notwithstanding, the priorities officially set out by the Portuguese presidency, the pandemic narrows down the possible paths. We have to overcome, to remake ourselves, and Europe must keep being Europe, deepening integration (especially now) with pride in the European project.

In other words, the foremost and unavoidable priorities of the Union, at this time, will certainly be the attempt to regain a functioning routine, with an eye in the future and another in fighting the pandemic. Therefore, resiliency and recovery are key parts of the instrument set up by the European Union[i] and for the first time directly designed and built in a coordinated fashion at the European level. The justification for such supranational and European solidarity, in securing and distributing the resources needed to support the program is – it is never too much to repeat it – simultaneously the survival (resiliency) and future revitalization (recovery). 

The delegation was reduced in number, without the presence of the Commission in its entirety. However, the “portfolios” present reveal the European priorities, the orienting lines, under the current conjuncture, of the functioning and politics of the Institutions: building a future while at the same time fighting the pandemic and stopping it from poisoning European integration.

The delegation, in addition to the President of the European Commission, included Frans Timmermans (European Green Deal), Margrethe Verstager (Europe fit for a Digital Age), Valdis Dombrovsky (An Economy that works for People), Margaritis Shinas (Promoting our European way of life, where in some form the defense of the Rule of Law is included, influenced by the political history and European civilizational tradition), Nicolas Schmit (Jobs and Social Rights), Josep Borrel Fontelles (a Stronger Europe in the World) and the Portuguese commissioner, Elisa Ferreira (Cohesion and Reforms).

There are two key aspects of the visit that, between plenty of others possible, we could draw attention to. First, the current position of the EU in the world (a Stronger Europe in the World) seems to be a priority/key and transversal axis and connected to the prosecution of the remaining objectives. In a way, the success of the Institutions and their initiatives will result in European affirmation in the world.  

On the other hand, it was formally announced (with the invitation extended to heads of State and political leaders of the remaining Member States, social partners and all interested parties), the holding of the Social Summit, in Porto, on 7 May. The priority in terms of social politics is, at this time, reinforcing the European Social Pillar in a manner directed and connected to the fight against climate change and the digitization of the economy (and life, in general). In truth, notwithstanding the concrete actions taken regarding protecting children and the older populations, a response to social issues that mitigates the unavoidable challenges due to the digital revolution is critical.

Awareness of the need and the desire to minimize the price that many will pay – such as unemployment, new labour challenges, way of life, consumer habits and increase of the risk to be left behind, mainly for the only generations – due to the fight against climate change using (mainly) digitization is a good start and indicates a certain humanist culture and political sensibility. It is a sign of common European thinking in which a good and efficient economic solution must, integrally, satisfy global cohesion and the citizens’ general well-being. It is not the return of the XVII century idea of individual happiness as the guiding light of political and social actions. Oppositive, it is the affirmation that thinking purely on economic-patrimonial terms will not even manage to achieve economic efficiency. One must not forget that, in fact, the “economic problem” is at first a human problem. The Social Summit in Porto will focus on the Commission’s plan to apply the European Social Pillar – a plan whose details shall be soon made public.

Presidencies post-Treaty of Lisbon have a more pronounced function of promoting, creating and shepherding the legal acts necessary to achieve political priorities and objectives of the Union. In fact, this is the first Presidency of the Council that Portugal is assuming after the changes introduced by the Treaty of Lisbon. With this Treaty, there was the creation of the position of the President of the European Council (currently Charles Michel), responsible for directing and coordinating the summits between heads of state and heads of government (in the European Council which, ultimately ends of defining the main pillars of the Union’s political architecture) and the reinforcement of the powers of the High Representative of the Union for Foreign Affairs and Security Policy. These positions end up limiting the scope of action of the Council and the Member State directing its affairs. However, the EU is built on cooperation and as we have established before, one of the key aspects of the delegation’s visit is the presence of Josep Borrel Fontelles, High Representative of the Union for Foreign Affairs and Security Policy, stressing the importance of external relations for the EU and the Portuguese presidency.

The Portuguese government already pointed out mending transatlantic relationships, now in a post-Trump era, as one of its priorities for political action at the European level. In fact, this is in line with what a number of Institutions and heads of state such as Angela Merkel and Macron expressed in the past. Nevertheless, a point of disagreement may appear regarding this priority which the Portuguese presidency will have to address. 

On 23 December 2020, the European Union and China reached and agreement in principle regarding their investment relationships (Investment Agreement between the EU and China). The abovementioned agreement in principle was only reached after 7 years of negotiations, advances and retreats by both parties.

From the Union’s perspective, the agreement was (and is) desired as a manner to balance the investment relationships and, naturally, the commercial relationship, between the EU and China, since the Union is significantly more open to Chinese investment in Europe than China is to European investment.

According to the European Commission, China promises to open the doors to the EU in key sectors and ensure a fair treatment of European companies, in a manner in which they can compete in a level playing field. Both the European Commission and Chinese media touted the success of the agreement, with Von der Leyen stating that China agreed to commit to high levels of sustainability, transparency and non-discrimination.

The EU has historically been the main business and economic partner of China, even though it was recently overcome by the Association of Southeast Asian Nations. In the third quarter of 2020, China also overcame the US and became the biggest economic and business partner of the EU.

Nevertheless, there are some controversial aspects, points of disagreement within this agreement and the closer alignment it means between the EU and China. Some even believe there are contradictory political signals.

One should not forget that the path now undertaken by the EU, after 7 years of negotiations is, in a manner, similar to the one undertaken by Trump, when concluding an investment agreement between EU and China in the beginning of 2020 (what the parties called, at the time “phase 1 of the commercial agreement”). Interestingly, Trump also called the agreement, achieved after 2 years of negotiations as an important step for fair commerce with China.

It is necessary to note that, without prejudice to the public declarations of European leaders, the agreement in principle and its context – and, in fact, the entire context of the relationship with China – presents, for now, some very problematic points and may be even limitative of Union’s objectives. China maintains a “negative list” of 30 sectors in which foreign investments is not, at all, allowed or is very limited – namely related to mines, energy, press and culture.

In December 2020, China also announced new rules subjecting foreign investors in industries related to defense to strict scrutiny and oversight. On the other hand, investments in agriculture, energy and natural resources, and financial services will be subject to new regulations if the investments in question represent over 50% of the stocks of a company operating in China.

It is also important to take into account that the agreement still has to be finalized and ratified, including by the European Parliament. However, the political signal it represents from the EU – namely the new alignment with China’s interests – may raise some problematic questions. The National Security Advisor-designate for President-elect Biden wrote a message on Twitter defending “early consultation with our European partners on our common concerns about China’s economic practices”. This message was interpreted as a sign of discomfort regarding the agreement and the autonomous (not concerted with its American allies) acting of the EU. This may be problematic if one of the new objectives of the EU is to rebuild the transatlantic partnership.

Bottom line there exists an option (and, in a certain manner, an uncertainty) being debated in the European Union regarding foreign policy. Europe may try to forge its own path, keeping equal distance to all powers and partners (namely commercial) or, alternatively, it may pick a side, strengthening itself in relative terms, in addition to the strength that comes from integrating a block with common interests that align with the EU’s the democratic values. Maybe the Portuguese presidency of the Council can also contribute, namely through its work and diplomatic influence, to the definition of a coherent path to follow, regarding this point, by the European Union.

[i] Namely through the Recovery and Resilience Facility a key part of the NextGenerationEU program.

Picture credits: Johnhain.

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