Xi Visits Brussels, may Join WTO TiSA Negotiations

The EU and China agreed on Monday to consider the possibility of a bilateral trade pact, should their current negotiations for an investment deal prove fruitful. The announcement came as part of Chinese President Xi Jinping’s high-profile visit to Brussels, which also saw the EU publicly support Beijing’s bid for joining talks on a plurilateral deal in services trade.

The summit showed a marked change in tone from the bilateral trade tensions seen in recent years, which saw the two sides spar heatedly over topics ranging from support of their renewable energy sectors to trade in wine and telecommunications products.

The trip also marked Xi’s first visit to Brussels since assuming his country’s top leadership position a year ago, and also the first time a leader from the Asian economic powerhouse has visited the EU institutions since diplomatic relations were established in 1975.

EU, China: investment talks could open FTA door

The EU and China made headlines last year when they agreed to negotiate a sweeping bilateral investment pact, and have held two rounds of talks so far, with the latest one occurring the week before the high-level summit.

The level of foreign investment between the two sides is famously low, particularly when compared to their trading relationship. According to European Commission data, China accounts for 2-3 percent of EU investments abroad, while Chinese investments in the 28-country bloc are even lower.

While the investment talks could in themselves yield substantial gains to both economies, trade observers have also noted the potential that such a pact might have in paving the way for a bilateral free trade agreement (FTA) in the long-term.

Trade flows between the two sides already surpass over €1 billion daily, making the EU China’s biggest trading partner. China, meanwhile, is Europe’s second-largest trading partner after the US.

The push by Xi for an EU-China deal - which could have a market of 2 billion consumers - comes at a time when so-called mega-regional trade pacts have become increasingly commonplace. China is not currently involved in either the 12-country Trans-Pacific Partnership talks, nor the US-EU Transatlantic Trade and Investment Partnership, and many analysts have questioned whether such initiatives are an effort by advanced economies to partly counter Beijing’s growing economic weight.

EU backs China entry into TiSA talks

In another victory for China, Brussels also declared on Monday that it will be backing Beijing’s bid to join the Trade in Services Agreement (TiSA), a plurilateral negotiation among a subset of the WTO’s membership that aims to liberalise services trade.

China declared its interest in the services talks late last year, despite having earlier been sceptical of such plurilateral initiatives. However, some current TiSA participants have reportedly questioned whether China indeed shares their level of ambition, particularly given the Asian economy’s role in last year’s breakdown of a separate set of negotiations on expanding the WTO Information Technology Agreement.