Method and approach

In broad lines, the study consists of four dimensions of analysis. Next to the analyses, the study depends critically on stakeholder consultations and the dissemination of the study results to the stakeholders (see section Consultations).

  1. Overall economic analysis

Since a quantitative assessment has already been performed for the EC’s Impact Assessment, our economic analysis will focus on reviewing these results and supplementing them with more qualitative information (although we will use quantitative information to the extent possible, e.g. from IPA world). This will be mainly based on literature review and stakeholder consultations. As several of the key topics mentioned in this section may not have been studied extensively in the literature, we consider the stakeholder consultations as vital. One of the ways to involve business stakeholders is through a survey. Since we have access to contact details of many investors, we can make the survey more targeted (see consultations chapter) to address these issues. We will also specifically aim to involve SMEs, e.g. through co-operation with organisations like the European Enterprise Network.

  1. Social analysis

The social impact analysis will consider in particular the impact of the agreement on key social indicators, notably employment and indicators related to decent work, with reference to ILO sources and information on labour standards. In order to calculate the employment effects (positive and negative) we will combine the results of the Impact Assessment together with the issues stemming from the overall economic analysis (e.g. cross sectoral effects) and findings on other relevant conditions, like labour mobility. In addition we will assess the potential impact of the investment agreement on the informal economy in China and in the EU and come up with an analysis of the interaction between the agreement and the effective implementation of the international Core Labour Standards and Fundamental Conventions of the ILO as well as other strategic objectives of the ILO Decent Work Agenda.

In terms of methodology, the analysis will build on the results of the Impact Assessment and on the experience with the implementation of investment agreements by the EU and its Member States, China and other countries. Also the legal analysis will provide inputs for this analysis (right to regulate). Furthermore, we will draw on literature review, databases, as well as on expert interviews and thorough stakeholder consultations with social partners, including employers’ and workers’ organisation, NGOs and the ILO in China and the EU. For specific issues (e.g. positive experience in other agreements, or specific examples of where problems have been encountered), selected case studies could be undertaken.

3. Human rights analysis

The human rights (HR) analysis will be based on the normative framework of the Charter of Fundamental Rights of the European Union and the relevant UN Conventions. It will explicitly take into account the Guidelines on the analysis of human rights impacts in impact assessments for trade-related policy initiatives, and the section of the Better Regulation Toolbox providing guidance on the analysis of human rights. In addition we will refer to other relevant publications such as Human Rights Indicators: A Guide to Measurement and Implementation. Rather than considering every potential human rights issue, we will expressly identify (in the inception phase) and focus on (in the implementation phase) specific human rights potentially affected by measures included in the proposed agreement.

The analysis of human rights will build on the Impact Assessment findings as regards HR impacts; will include a legal analysis (what type of human rights are affected by investment agreement and how), and will take into account the evidence and lessons learnt from other studies (e.g. recent SIA on an investment protection agreement with Myanmar, while taking account the differences between the agreements). Stakeholder consultations will also play a key role in the analysis, both in China and in the EU.

As part of the overall analysis of sustainability impacts, we will consider the potential interaction between the proposed investment agreement and relevant internationally recognised guidelines and principles on Corporate Social Responsibility (CSR) and responsible business conduct. We will identify existing CSR practices by EU and Chinese authorities and investors and assess how the investment agreement could contribute to further promotion of CSR and responsible business conduct. Information for this assessment will mainly be collected through the survey, discussions at the workshop and stakeholder interviews, particularly among the private sector (representatives). In addition, a number of recent initiatives are interesting in this respect and we will contact these and engage them in the study. These include e.g. the China Responsible Business Forum that aims to build business knowledge, capacity and leadership in relation to the UN Guiding Principles on Business and Human Rights in the Chinese context.

  1. Environmental analysis

As part of the analysis we will examine recent developments in climate and energy policies in China and the EU, creating an inventory of existing multilateral environmental agreements (MEAs). The analysis will focus particularly on impacts on environmental areas covered by existing MEAs, such as impacts on climate change. The analysis provides estimated changes from liberalisation commitments on a number of other relevant environmental indicators, including air pollutants; waste and waste management; GHG emissions; use of energy; water; resource use and land use. Such indirect or direct environmental impacts will be estimated using a structural decomposition analysis (SDA).

In addition to the quantitative estimates the analysis will also discuss qualitatively differentiated impacts compared to the existing BITs as well as impacts on the ability to maintain and amend regulatory provisions in the environmental domain, in both China and in the EU. This qualitative analysis will be based on a literature review, results from the survey carried out in this study, as well as inputs from consultation with stakeholders.

5. Sector analyses

In addition to the overall analysis, the study will also assess the impacts of the EU-China investment agreement at sectorial level. This will provide additional insights to the overall analysis and enables us to focus on those sectors that matter most. The selection of sectors for in-depth study will be done as part of the screening exercise in the inception phase. The sector selection will be based on the following criteria:

  • Size of EU’s outward FDI of the sector;
  • Importance of EU-Chinese investment flows;
  • The economic impact of the investment agreement;
  • Importance of sustainability issues (e.g. in terms of employment, environmental pollution, etc.);
  • Stakeholder inputs, where stakeholders will be invited to put forward their suggestions with arguments.

For any comments, questions or suggestions regarding the SIA on the EU-China investment agreement, please contact us at the following email address: sia-china@ecorys.com