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The China / EU Comprehensive Agreement on Investment (CAI)

The China / EU Comprehensive Agreement on Investment (CAI)

On December 30th, 2020, China and the European Union have agreed in principle on a Comprehensive Agreement on Investment (CAI). The agreement is a result of a long-period discussion for the parties to better attract foreign investments from both sides and give greater access to each other’s market.

On January 22nd, 2021 a first version of the text at the stage of current negotiation of the EU-China Comprehensive Agreement on Investment was published, followed by the release of the schedules of commitments to be implemented by the EU and China, which came out on March 12th, 2021. We would hereby like to give an overview of the future implementation and the expected impacts for foreign investors in China, to allow yourself to be prepared ahead of time.

According to the principles therein stated, foreign investors will enjoy better access to the Chinese market. No more quantitative restrictions, such as limiting the number of licenses, or branches, reserving monopoly rights or imposing economic needs tests, will be imposed in a variety of sectors among automotive, information and communication technology, healthcare, and financial services.

Furthermore, foreign investments in China will be facilitated by the prohibition of several conditions to investment. For instance, set up a Joint-Venture, transfer of technology, or nationality requirement to be appointed as Senior Management or Board of Directors position will not be required anymore to foreign investors.

Besides, it is worth noting that the CAI will allow foreign investors, managers, and specialists of foreign companies to work up to three years in their subsidiaries in China without restrictions such as labor market tests or quotas.

Other significant measures can be underlined as the simplification of domestic regulations or the engagement for more transparency from authorities, especially to prevent unfair competition from State-Owned Enterprises when dealing with foreign entities.

Overall, we believe that the text has the potential to offer significant commercial opportunities for your future investments in China after the ratification scheduled in early 2022.

As usual Orcom C&A will keep you promptly informed on further developments concerning the related topic.  Contact Johannes Lazzaro, manager of the Foreign Investments and Corporate Affairs department for any queries in regards to the opportunities the CAI can offer to your business.