The discussion of the evolution of investment relations between the European Union (EU) and China hinges on a confluence of factors susceptible to affect and shape the relationship between two of the most important global economic players. As mutual investment inflows from one economy to the other become increasingly significant, the question has been asked whether this is not an opportune moment to set in place a uniform legal framework regulating investment protection in their respective territories through the conclusion of a stand-alone bilateral investment treaty (BIT) between the EU and China.
Considerations of such a treaty were expressly put forward in 2010 by the European Commission’s Communication “Towards a comprehensive European international investment policy” and the creation of the Joint EU-China Investment Task Force. Significantly, the European Commission’s Communication identified China as a potential partner for an investment treaty. According to the Communication, the contemplated agreement would be a BIT – as opposed to an investment chapter in a comprehensive economic cooperation agreement or a free trade agreement (FTA) – which would protect all types of assets, including intellectual property rights. In mid-October 2013, three years later, the EU Member States gave the European Commission a mandate to open official talks with China on the first stand-alone EU BIT since the entry into force of the Treaty of Lisbon.
The conclusion of an EU-China investment agreement has significance for investment policymaking beyond the confines of the two economies. Such an agreement and the provisions agreed upon therein are likely to set the stage for the conclusions of subsequent treaties with or between other partners, although its impact factor will also depend on the outcome of negotiations on the EU-United States (US) Transatlantic Trade and Investment Partnership, the US-China BIT and the Trans-Pacific Partnership (TPP) Agreement.
Concurrently, an EU-China investment agreement, part of the new regional approach in investment policymaking, may have an impact on the face of international investment law as we know it. Marked by repeatedly miscarried efforts to conclude a multilateral treaty (as much in the OECD context as in the World Trade Organization (WTO) context, resulting in today’s fragmented investment universe made up of approximately 3,000 BITs) international investment law may be at the threshold of more uniform approaches.
In this regard, a question that arises is whether bilateral negotiations involving the EU, the US and China, amongst any combination of the three players, are likely to produce similar outcomes. It is the authors' view that it is most likely that the new EU FTA investment chapters will adopt the post-2004 North American model, which the third generation of Chinese investment treaties is also partially converging towards.The resulting similar bilateral treaties may further create the possibility of a trilateral EU-China-US agreement open for accession by third states, which could in turn lead to multilateral solutions, approaching them from plurilateral or regional perspectives. In such a scenario, a new multilateralism in international investment law outside of the WTO would be possible, leading to greater uniformity in international investment law. The EU, China and the US will set the trend with respect to dispute settlement, definition of more exact standards, and the right to regulate. As far as the EU is concerned, pursuing multilateral solutions is also a constitutional duty, by virtue of Article 21 of the Treaty on European Union (TEU).
Although it not possible to dwell on such a prospective agreement with any finality at this stage, it is a potential that it is worth keeping in mind.
This text is based on the forthcoming piece by Marc Bungenberg and Catharine Titi, “The Evolution and Future of EU-China Investment Relations”, in W. Shan (ed.) Collected Courses on International Investment law and Arbitration - Silk Road Collected Courses in International Economic Law (Brill).
 Communication from the Commission to the Council, The European Parliament, The European Economic and Social Committee and the Committee of the Regions, Towards a comprehensive European international investment policy, COM(2010)343 final, 7 July 2010, available at http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147884.pdf