Flags of the European Union (left) and China.
Nelson Ching | Bloomberg | Getty Images
China made a “huge strategic mistake” when it retaliated against Europe with sanctions against EU politicians, said former White House top trade negotiator Clete Willems.
Beijing’s actions have undermined a major investment deal between the European Union and China, and the deal is “now off the table,” Willems told CNBC on Monday.
In March, China imposed sanctions on ten European Union politicians and four other institutions. They were an immediate retaliation for the sanctions the EU has imposed on China for “arbitrarily detaining” people from an ethnic minority in China.
Xinjiang, in northwest China, is home to a Muslim group known as the Uyghurs who the United Nations and others have identified as an oppressed ethnic group. Also in March, the United States, the United Kingdom and Canada said China was engaged in “forced labor, mass detention in detention centers, forced sterilization,” and other abuses against Uyghurs.
China has repeatedly dismissed these claims as “lies and disinformation”.
Last month, the European Parliament suspended ratification of a new investment pact with China until Beijing lifts sanctions against the EU.
“It shows that China is overwhelmed and overreacting and not addressing legitimate issues like forced labor,” Willems, a former deputy director of the National Economic Council, told CNBC Street Signs Asia. Today he is a partner at the law firm Akin Gump.
We still have a long way to go. And we have to see that Europe continues to get more muscular.
Partner, Akin Gump
The comprehensive investment agreement between the EU and China had been in the works for seven years and was finally agreed by the negotiators in December. It would have put EU companies on an equal footing in China and cemented Beijing’s status as a trusted trading partner. It would also have given the companies of the two parties better access to the markets of the other.
“The question the US always had about Europe, however, is that it is much more dependent on China as an export market – so the question is how tough they will really be,” Willems said.
The EU Parliament “demands that China lift the sanctions before it does [the investment accord]“, It said in his non-legally binding resolution, which is now the official position of the assembly. “Relations between the EU and China may not continue as usual,” said the EU Parliament.
However, Willems said Europe needs to take a tougher stance on China.
“I think we’ve seen some positive signals, but I think the pressure the allies are putting on China to get them to change their practices… We still have a long way to go. And we have to see Europe is still more muscular, “he said.