What does the EU-China agreement on investment offer rail freight?

The Comprehensive Agreement on Investment (CAI) signed between the EU and China in late December 2020 is branded as the most ambitious agreement ever concluded by China with a third country concerning investment. It touches upon issues related to air and maritime transport, however, it leaves rail transport out of the foreground. How could Eurasian rail freight benefit from the agreement?

The CAI was signed on 30 December 2020. China committed to a greater level of market access for EU investors, including some new important market openings. The deal also ensures fair treatment for EU companies so they can compete on a better level playing field in China, including in terms of disciplines for state owned enterprises, transparency of subsidies and rules against the forced transfer of technologies. “The agreement will provide unprecedented access to the Chinese market for European investors, enabling our businesses to grow and create jobs”, promised President of the European Commission Ursula von der Leyen upon sealing the deal.

What is in it for rail?

Maja Bakran Marcich, Deputy Director-General for Mobility and Transport at the European Commission, explained to RailFreight.com that European rail manufacturers could undoubtedly benefit from the agreement since their access to the Chinese market will improve. “Indeed, China commits to ensuring fair treatment for EU companies so they can compete on a better level playing field in China, in terms of disciplines for state-owned enterprises, transparency of subsidies and rules against the forced transfer of technologies”, she added.

The biggest stake for rail transport lies in possible investments in the EU-China corridor. For instance, as Bakran Marcich mentioned: “There is more space for mutual investments from EU and China companies in freight operators”. For this to happen, the two parties also need to strengthen investor protection by completing negotiations within two years after the CAI signing. DB Cargo mentioned that the situation is still unclear and that operators will have to wait for further details on the agreement’s implementation to assess its benefits. Nevertheless, investments on infrastructure along the Eurasian corridor are always welcome, they commented.

Maja Bakran Marcich, Deputy Director-General for Mobility and Transport at the European Commission

Another field opening in China for EU rail companies is that of standard-setting bodies, either private or public. “Specifically, EU rail companies will be able to contribute to the work of standardisation committees such as China’s Association of Metro (CAMET), the National Railway Administration (NRA) and China’s Academy of Railway Sciences (CARS)”, added Bakran Marcich.

CAI context

As mentioned above, maritime and air transport seem to benefit more compared to rail transportation. Indeed China committed to opening up its economy to the international maritime transport sector and air transport related services. Regarding maritime transport, though, the CAI “does not ensure the acquisition of Chinese private port terminals by European operators”, said Frans-Paul van der Putten, Senior Research Fellow and Coordinator of Clingedael China Centre. In contrast, the CAI is foremost about establishing companies of both parties in the other parties’ respective territories and less about the acquisition of existing companies of the other party, said Barkan Marcich.

Transportation might be among the main bullet point of the EU-China agreement. The CAI provides only vague promises for rail transport without any concrete measures. Nonetheless, the fact that there is more space for investments on freight operators and infrastructure remains a positive development. It seems that it is now in the hands of rail parties to make the most of the agreement, leverage a level playing field for competition, and claim transparency for subsidies.

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Author: Nikos Papatolios

Editor at RailFreight.com

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