EU suspends investment deal with China over ‘retaliatory sanctions’

A diplomatic spat between the European Union and China has jeopardized a major investment agreement, officials said on Tuesday. EU Commission Vice President Valdis Dombrovskis told AFP news agency that efforts to win approval for the deal were effectively on ice.

“We now in a sense have suspended … political outreach activities from the European Commission side,” Dombrovskis said in an interview. Brussels and Beijing signed a new investment agreement in 2020 intended to guarantee a stable framework of conditions for trade and investment in each other’s markets.

The EU-China Comprehensive Agreement on Investment (CAI) was signed in December after seven years of negotiation. In March, the EU imposed sanctions against China for its treatment of the Uyghur Muslim minority in the Xinjiang region. These were the first human rights sanctions against China since the 1989 Tiananmen Square massacre.

In response, Beijing immediately announced counter-sanctions against members of the European Parliament, and others. Doubts have been raised about the deal in recent months, with experts and human rights advocates calling on the EU to ditch the deal.