Drivers and Issues of China–EU Negotiations for a Comprehensive Agreement on Investment

Although the China–EU Comprehensive Agreement on Investment (CAI), currently under negotiation, covers only bilateral investments, it may clear the path for a potential free trade agreement between the parties. Its relevance goes beyond the purely economic and legal impact, owing to the central importance that these two regions have both economically and strategically in their wider neighbourhood and worldwide, often in competition with the interests of other world powers. In particular, the chapter identifies the provisions of fair and equitable treatment (FET), taxation, and transparency as the core issues in the negotiation process, and highlights both their features and relevance. The latter can be inferred from the frequency of alleged breaches in investor–state cases, and therefore it is on these issues that the legal discussion of the greater part of arbitration cases focuses. It is of essence that China and the EU carefully design all the clauses in the CAI, concluding a treaty able to foster investments in both directions and satisfy the parties’ interests, both as home states of investors and as host states. With these features, the CAI has full potential to serve as a role model for the rest of the world.