The CAI covers commitments on market access, level playing field and sustainable development. It also provides a State-to-State dispute settlement mechanism. The chapter on investment protection and improvements to the dispute settlement mechanism are to be agreed upon between the Parties within the next two years.
The agreement has been presented by the European Commission as pioneering and very ambitious. Indeed, the text confirmed expectations: it aims to improve the Chinese business environment for European investors, thanks to disciplines that forbid forced transfers of technology, that intend to establish a level playing field granting European companies national treatment, and to promote greater transparency and regulation of subsidies and licences. Several obstacles to establish a company within the Chinese territory will also be removed, such as the obligation to form joint ventures in some sectors, the limitation of the number of companies or of foreign capital in operation.
However, even if these concessions may look like an important win to the EU, most of them have already been granted by China in its recent Foreign Investment Law ("FIL") and in the US-China Phase One Trade Deal, both of which entered into force in 2020. Hence, the benefits to the EU might not be that ground-breaking.
Even if we consider otherwise, another relevant point is how to enforce Chinese compliance with the far-reaching commitments of the CAI. Disputes on subsidies regulations and sustainable development, for instance, are not subject to the dispute settlement mechanism set forth by the agreement, and can only be solved through consultations between the Parties.
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