Why this ‘other’ EU trade deal is of great significance to the UK, too

Frankly, it wouldn’t have surprised me in the least had the aircraft turned out to be a Spitfire and done a victory roll of over the White Cliff of Dover on its way into England.

But enough of such churlishness and back to that “other” deal, the one done by the EU and China, which at the time of writing was expected to be confirmed by European Commission president Ursula von der Leyen and the Chinese leadership. If you think Brexit was drawn out, then pause and consider that it has taken seven long years of negotiations to tie up this EU-China deal that goes by the proper name of the Comprehensive Agreement on Investments (CAI).

For those unfamiliar with its significance, in a nutshell it creates a bilateral treaty that will replace the 26 existing bilateral investment treaties between 27 individual EU member states and China. Or to put it another way, it’s a move aimed at opening up lucrative new corporate opportunities.

As the Financial Times outlined this week, the deal is also expected to remove some barriers to EU companies’ possibilities for investing in China. For some time no, the EU has been asking for a “level playing field”, hamstrung as EU companies working in China have been when faced with one of the most restrictive foreign direct investment (FDI) regimes in the world.

Now, if all this is ratified, then certain EU industries, such as new energy cars, cloud computing, financial services, healthcare and ancillary services for air transport, will find barriers to foreign investment removed. From Beijing’s perspective, too, there are huge advantages not least investment opportunities in renewable energies on a reciprocal basis.

So much for the upsides but the deal is not without its critics, who feel more assurances need to be solidly in place over China addressing its human rights record, particularly when it comes forced labour among the Uighur Muslim minority.

Meanwhile, the US not very happy. The new administration of president-elect Joe Biden is said to be concerned that the EU has gone ahead with the deal without talking first to the Americans, who say that the US and Europe should work more closely together to tackle challenges from China.

Frankly, Biden’s efforts to re-engage with the EU in a meaningful way is something many will welcome, but it’s a measure of the damage Trump has done that many are wary when Washington extends a hand of renewed friendship these days.

But American exasperation over the deal aside, what about the UK and where does it leave Johnson’s efforts to woo China?

US president-elect Joe Biden

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Well, not to put too fine a point on it, once again Johnson might have dropped the UK right in it. Britain’s departure from the EU of course means that it has to negotiate its own accords with China, it’s third-biggest trading partner.

And with Beijing in “wolf warrior” mood on the trade and diplomatic front, and known for never missing an opportunity to exploit vulnerabilities, Johnson’s negotiators would have their work cut out to say the least.

Frankly, the omens are not good even if, as figures show, China exports a lot more to the UK than it imports. In fact, Britain is not even among the top 15 exporters of goods to the Chinese market clocking up something like $65 billion in 2019.

Which brings us back to that elusive Chinese domestic market which many economies bigger than the UK’s have struggled to get access too.

Speaking to the online magazine Bloomberg Businessweek, Jeff Moon, a former assistant US trade representative for China Affairs, echoed the views of many observers in saying that Beijing is likely to “maximise” the UK’s vulnerability.

“China may just tell the British, ‘We don’t need you’,” was how Moon summed it up. In the same article, Ruan Zongze, a former Chinese diplomat in London who is executive vice president of the China Institute of International Studies, the think tank of China’s Ministry of Foreign Affairs, went even further.

“The wheels of China and the EU are rolling forward. Once the investment treaty is signed, China-EU relations – to use a metaphor- will be entering the era of high-speed rail. But the UK is still looking at the world using old lenses,”

Zongze insisted.

And all this pressure on the UK before we even factor in the thorny issue of Hong Kong and how Johnson’s Government squares China’s role there with Britain’s trade ambitions. The UK has also left itself open to manipulation on other fronts and you can be sure Chinese leader Xi Jinping will not miss his opportunity to use the UK’s weakness to play London off against Washington.

It’s been said in Brussels that the conclusion of the EU-China deal has the “handwriting” of German Chancellor Angela Merkel all over it. As Germany is about to end its Council of the EU presidency, it’s said this was a deal Merkel wanted to seal.

Seen from a EU perspective, this latest agreement with China, when ratified, will only underscored Britain’s increasing isolation and irrelevance, something I’m sure is not lost on Merkel and other European leaders.

As for Boris Johnson, once again there you have it, a less than “masterful” reading of the long-term political implications by a Prime Minister who has made an art form out of squandering opportunity and placing the UK at a disadvantage on just about every level.

This is man who never fails to miss an opportunity to miss an opportunity. How curious it was yesterday to hear Johnson urge MPs to back his post-Brexit trade deal and “open a new chapter in our national story”.

A new chapter there will be, but it’s certainly going to make for very unpleasant reading.