What is so special about CAI?

ABSTRACT This article examines the EU-China Comprehensive Agreement on Investment (CAI) in the light of investment chapters contained in trade agreements that China and the EU have signed (separately obviously) with two countries: the Republic of Korea, like most EU countries, a member of the Organization for Economic Co-operation and Development, and Vietnam, a developing country and a nonmarket economy, where, like in China, state-owned enterprises play a substantial role. We find that the CAI innovates compared to these earlier trade agreements in some important dimensions, especially as far as the commitments accepted by China are concerned. Hence, the bilateral EU-China investment agreement could be useful for a future multilateral agreement in areas where current WTO rules do not provide sufficient discipline for countries like China.