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EU set to freeze China investment deal

The European Parliament has warned China it will not ratify a long-awaited business investment deal as long as sanctions against European Union legislators remain in place.

EU politicians adopted a resolution in which they condemned “the baseless and arbitrary sanctions” imposed by China on European individuals and institutions in March.

The European Parliament’s criticism was echoed by European Commission Vice President Valdis Dombrovskis, who said after a meeting of EU trade ministers that China’s sanctions haven’t created a favourable environment for a deal to be concluded.

“We cannot see this process of ratification outside of the broader context of EU-China relations,” he said.

The European Parliament said China’s sanctions amount “to an attack on fundamental freedoms and urge the Chinese authorities to lift these wholly unjustified restrictive measures”.

The text was approved in a 599-30 vote with 58 abstentions.

Among those targeted were five members of the European Parliament: Reinhard Butikofer, Michael Gahler, Raphael Glucksmann, Ilhan Kyuchyuk and Miriam Lexmann.

China made its sanctions move after the EU, the UK, Canada and the US launched coordinated sanctions against officials in China over human rights abuses in the far western Xinjiang region.

The European Parliament’s hard stance is likely to delay the ratification of the multi-billion investment accord that was agreed in principle in December and needs lawmakers’ approval to take effect.

In addition to the lifting of sanctions, legislators said they will take into account the human rights situation in China when deciding to approve the deal.

The EU hopes the agreement, known as CAI, will help correct an imbalance in market access and create new investment opportunities for European companies in China by ensuring they can compete on an equal footing when operating in the country.

EU companies face competition from state-owned Chinese enterprises that may get government support and easier access to financing.

“We were going to tackle the trade imbalance. But if you see what came out over the past months, we have extreme worry about human rights violations, especially if you look at slave labour,” Dutch Foreign Trade Minister Sigrid Kaag said.

“And there are many companies investing in Xinjiang and it is unclear how the production happens and if slave labour is being used.”

Chinese Foreign Ministry spokesman Zhao Lijian said on Wednesday that the agreement is “a balanced, mutually beneficial and win-win agreement, not a gift from one party to the other.”

“Second, China’s sanctions on the relevant EU institutions and personnel who have long maliciously spread lies and false information on Xinjiang issues and seriously damaged China’s sovereignty and interests are necessary to safeguard its national interests,” Zhao said at a regular news briefing.

“It is also a necessary, legitimate and just response to the European side’s confrontation with sanctions. It is clear cut that who unreasonably provoked troubles first and who was forced to take legitimate response.”

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