JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL AND THE COUNCIL EU-China – A strategic outlook
Date: 2019-03-12
Institutions: European Commission, Secretariat-General
Subjects: China, EU relations, climate change policy, common foreign and security policy, cooperation policy, human rights, international security, multilateral relations, sustainable development, trade relations

EN 

  EN 

   EUROPEAN COMMISSION HIGH REPRESENTATIVE OF THE UNION FOR FOREIGN AFFAIRS AND SECURITY POLICY Strasbourg, 12.3.2019  JOIN(2019) 5 final  JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL AND THE COUNCIL EU-China – A strategic outlook                            
 
 
I. 

Introduction  

The European Union (EU) and China are linked by an enduring relationship. They are two 
of  the  three  largest  economies  and  traders  in  the  world.  China  is  now  the  EU's  second-
biggest  trading  partner  behind  the  United  States  and  the  EU  is  China's  biggest  trading 
partner1. Both sides are committed to a comprehensive strategic partnership, as expressed 
in the EU-China 2020 Strategic Agenda for Cooperation2. 

Yet  there  is  a  growing  appreciation  in  Europe  that  the  balance  of  challenges  and 
opportunities  presented  by  China  has  shifted.  In  the  last  decade,  China's  economic 
power and political influence have grown with unprecedented scale and speed, reflecting 
its ambitions to become a leading global power. 

China  can  no  longer  be  regarded  as  a  developing  country.  It  is  a  key  global  actor  and 
leading  technological  power.  Its  increasing  presence  in  the  world,  including  in  Europe, 
should  be  accompanied  by  greater  responsibilities  for  upholding  the  rules-based 
international order, as well as greater reciprocity, non-discrimination, and openness of its 
system. China’s publicly stated reform ambitions should translate into policies or actions 
commensurate with its role and responsibility.  

The 2016 Strategy on China3  remains the cornerstone of EU engagement, providing 
the basis for delivering  a further EU policy shift towards a more realistic, assertive, and 
multi-faceted approach4. This will ensure that relations with this strategic partner are set 
on a fair, balanced and mutually beneficial course. 

China is,  simultaneously, in  different  policy  areas,  a cooperation partner  with  whom the 
EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a 
balance  of  interests,  an  economic  competitor  in  the  pursuit  of  technological  leadership, 
and a systemic rival promoting alternative models of governance. This requires a flexible 
and  pragmatic  whole-of-EU  approach  enabling  a  principled  defence  of  interests  and 
values.  The  tools  and  modalities  of  EU  engagement  with  China  should  also  be 
differentiated depending on the issues and policies at stake. The EU should use linkages 
across different  policy areas and sectors in  order to  exert more leverage  in  pursuit  of its 
objectives. 

The EU’s response should be based on three objectives: 

  Based  on  clearly  defined  interests  and  principles,  the  EU  should  deepen  its 

engagement with China to promote common interests at global level.  

  The EU should robustly  seek more balanced  and  reciprocal  conditions  governing 

the economic relationship.  

1 In 2017, the EU was China’s largest partner with a share of 13% of imports of goods in China (EUR 217 
billion) and a share of 16% of exports of goods from China (EUR 332 billion). In the same year, China had a 
share of 11 % in extra-EU exports of goods (EUR 198 billion) and in extra-EU imports of goods China was 
the largest partner with a share of 20 % (EUR 375 billion). 
2 EU-China 2020 Strategic Agenda for Cooperation, 2013. 
3 Joint Communication to the  European Parliament and the  Council  – Elements  for a  new EU strategy on 
China’, JOIN(2016) 30, 22.06.2016, and Council Conclusions on EU Strategy on China of 18 July 2016. 
4 The EU continues to adhere to its "One China Policy". The EU confirms its commitment to continuing to 
develop  its  relations  with  Taiwan  and  to  supporting  the  shared  values  underpinning  its  system  of 
governance, as set out in the 2016 EU Strategy on China. 

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  Finally, in order to maintain its prosperity, values and social model over the long 
term,  there  are  areas  where  the  EU  itself  needs  to  adapt  to  changing  economic 
realities and strengthen its own domestic policies and industrial base.  

Finding  the  right  balance  of  policy  approaches  is  a  political  judgement,  requiring  the 
attention of the European Council. 

Neither the EU nor any of its Member States can effectively achieve their aims with China 
without  full  unity.  In  cooperating  with  China,  all  Member  States,  individually  and 
within  sub-regional  cooperation  frameworks,  such  as  the  16+1  format5,  have  a 
responsibility to ensure consistency with EU law, rules and policies. 

This  Joint  Communication  assesses  the  multiple  dimensions  of  our  relations,  its 
opportunities  and  its  challenges  and  sets  out  10  concrete  actions  for  discussion  and 
endorsement by the European Council. 

II.  Cooperating with China to support effective multilateralism and fight climate 

change 

The  EU  is  committed  to  engaging  with  China  to  uphold  the  rules-based  international 
order.  China  has  expressed  its  commitment  to  a  fair  and  equitable  global  governance 
model.  At  the  same  time,  China's  engagement  in  favour  of  multilateralism  is  sometimes 
selective  and  based  on  a  different  understanding  of  the  rules-based  international  order. 
While China has often repeated its legitimate request for reforming global governance to 
give  greater  participation  and  decision-making  power  to  emerging  economies,  it  has  not 
always  been  willing  to  accept  new  rules  reflecting  the  responsibility  and  accountability 
that  come  with  its  increased  role.  Selectively  upholding  some  norms  at  the  expense  of 
others weakens the sustainability of the rules-based international order.  

The EU is committed to supporting effective multilateralism with the United Nations at 
its core. As a permanent member of the United Nations Security Council and a beneficiary 
of the multilateral  system,  China has the responsibility to support all three pillars of the 
United Nations, namely Human Rights, Peace and Security, and Development.  

The ability of EU and China to engage effectively on human rights will be an important 
measure of the quality of the bilateral relationship. The EU acknowledges China's progress 
in  economic  and  social  rights.  However,  in  other  respects,  the  human  rights  situation  in 
China  is  deteriorating,  notably  in  Xinjiang  and  regarding  civil  and  political  rights,  as 
witnessed  by  the  continuing  crackdown  on  human  rights  lawyers  and  defenders.  The 
human  rights  of  EU  and  other  foreign  citizens  in  China  must  be  protected.  The  high 
degree of autonomy enshrined in the Hong Kong Basic Law needs to be respected. 

The  EU's  and  China's  shared  commitments  and  interest  in  global  sustainable 
development  and  the  2030  Agenda  present  opportunities  for  closer  cooperation, 
including in third countries. There is a real need to partner up and deliver the significant 
resources  needed  to  achieve  the  Sustainable  Development  Goals.  Given  China’s 
significant investment in partner countries, it should increase its engagement as an Official 
Development  Assistance  donor  and  a  partner  in  multilateral  fora.  In  this  respect,  we 
should establish a dialogue, seek synergies and engage further to maintain momentum on 
the implementation of the Sustainable Development Goals in third countries. 

5 Also called “Cooperation between China and Central and Eastern European Countries”. 

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With EU Member States collectively being the largest  contributor to  the United Nations 
peacekeeping  budget6,  and  China  the  next  largest  after  the  US,  opportunities  should  be 
identified to share operational experience in this area.   

Action 1: The EU will strengthen cooperation with China to meet common responsibilities 
across  all  three  pillars  of  the  United  Nations  -  Human  Rights,  Peace  and  Security,  and 
Development. 

On climate change, China is at the same time the world’s largest carbon emitter and the 
largest  investor  in  renewable  energy.  The  EU  welcomes  the  role  of  China  as  one  of  the 
main brokers of the Paris Agreement. At the same time, China is constructing coal-fired 
power  stations  in  many  countries;  this  undermines  the  global  goals  of  the  Paris 
Agreement. China is a strategic partner on climate change and the clean energy transition, 
with whom we need to continue developing a strong relationship, given the sheer size of 
its emissions (around 27 % of the global amount), which continue to rise. Our partnership 
is  essential  for  the  success  of  global  climate  action,  clean  energy  transition  efforts  and 
ocean governance. A commitment by China to peak its emissions before 2030 would give 
new  impetus  to  fighting  climate  change  in  line  with  the  Paris  Agreement  and  inspire 
action  globally.  In  addition,  the  EU  and  China  should  strengthen  their  cooperation  on 
sustainable  finance,  to  channel  private  capital  flows  towards  a  more  sustainable  and 
climate-neutral economy.  

Action 2: In order to fight climate change more effectively, the EU calls on China to peak 
its emissions before 2030, in line with the goals of the Paris Agreement.  

III.  Commitment to international peace, security, and sustainable economic 

development 

China is a strategic partner of the EU in addressing global and international challenges. At 
the  same  time,  security  concerns  and  differences  exist  as  regards  the  application  of 
international law, the respect of good governance and sustainable economic development.  

China  has  the  capacity  and  the  responsibility  to  play  an  important  role  in  addressing 
regional  security  challenges.  For  example,  China's  participation  in  and  support  for  the 
Joint  Comprehensive  Plan  of  Action  for  Iran  was  a  major  factor  in  first  securing  the 
agreement  and  now  in  ensuring  its  full  and  effective  implementation7.  EU  and  Chinese 
coordinated approaches to counter-piracy operations in the Gulf of Aden and off the Horn 
of Africa have increased security of shipping in those areas.  

Further  cooperation  remains  important  in  reinforcing  political  trust.  China  will  play  an 
important  role  in  ensuring  the  denuclearisation  of  the  Democratic  People’s  Republic  of 
Korea.  The  EU  also  wishes  to  work  together  with  China  to  support  the  future  peace 
process in Afghanistan and on tackling the Rohingya crisis in Myanmar. 

China's  maritime  claims  in  the  South  China  Sea  and  the  refusal  to  accept  the  binding 
arbitration  rulings  issued  under  the  United  Nations  Convention  on  the  Law  of  the  Sea 
affect  the  international  legal  order  and  make  it  harder  to  resolve  tensions  affecting  sea-

6 For the period 2016-2018, the collective share of EU 28 Member States was 31.96% for the peacekeeping 
budget. China’s share accounted for 10.24%. 
7 This includes through the co-chairmanship of the Working Group on the Arak Modernisation Project and 
efforts to preserve the dividends of sanctions lifting. 

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lanes of communication vital to the EU's economic interests8. They also stand in contrast 
to China's demands for representation on Arctic issues.  

China's  increasing  military  capabilities  coupled  with  its  comprehensive  vision  and 
ambition to have the technologically most advanced armed forces by 2050 present security 
issues for the EU, already in a short to mid-term perspective. Cross-sectoral hybrid threats 
including  information  operations,  and  large  military  exercises  not  only  undermine  trust, 
but also challenge the EU’s security and must be addressed in the context of our mutual 
relationship. 

Action 3: The EU will deepen engagement with China on peace and security, building on 
the positive cooperation on the Joint Comprehensive Plan of Action for Iran. 

China's  business  and  investment  activity  in  third  countries,  including  in  the  Western 
Balkans,  the  EU’s  neighbourhood  and  Africa  has  become  widespread.  Chinese 
investments have contributed to the growth of many receiving economies. At the same 
time,  these  investments  frequently  neglect  socioeconomic  and  financial  sustainability 
and may result in high-level indebtedness and transfer of control over strategic assets and 
resources.  This  compromises  efforts  to  promote  good  social  and  economic  governance 
and, most fundamentally, the rule of law and human rights.  

Furthermore,  European  companies  face  a  lack  of  level  playing  field  when  competing  in 
third  countries’  markets  with  Chinese  companies  enjoying  access  to  state  backed  loans 
and  export  credits  at  preferential  terms  and  applying  different  corporate  and  labour 
standards. 

In  this  light,  the  EU  should  continue  to  promote  stability,  sustainable  economic 
development, and respect for good governance, in partnership with third countries and 
with  even  greater  vigour.  China’s  increased  international  presence  can  offer  major 
opportunities for trilateral cooperation and positive engagement, when demand-driven and 
based on mutual interests and understanding, in regions of priority importance for the EU, 
such  as  Africa.  The  EU  will  encourage  China  to  improve  debt  transparency  and 
sustainability  by  implementing  the  G20  operational  guidelines  on  sustainable  financing 
and  support  the  continued  efforts  of  the  Paris  Club  towards  the  inclusion  of  emerging 
market creditors. 

In the Western Balkans and the EU’s neighbourhood, the EU has a key interest in more 
effectively  pursuing  its  enlargement  and  neighbourhood  policies,  precisely  in  order  to 
strengthen the resilience of its partners and to secure full adherence to EU values, norms 
and standards, notably in key areas such as rule of law, public procurement, environment, 
energy, infrastructure and competition.  This  involves fully implementing  legally binding 
international  agreements9  and  prioritising  the  relevant  negotiation  chapters  of  the 
enlargement process in order to guide reforms more robustly.  

In order to financially support the EU’s objectives and promote private sector investment, 
swift agreement is needed on the external action instruments of the next Multiannual 
Financial  Framework.  This  includes  the  Instrument  for  Pre-Accession10  and  the 

8 See Declaration by the High Representative on behalf of the EU on the Award rendered in the Arbitration 
between the Republic of the Philippines and the People's Republic of China of 15 July 2016. 
9  Such  as  Stabilisation  Agreements,  and  Association  Agreements  /  Deep  and  Comprehensive  Free  Trade 
Areas. 
10 Proposal for a Regulation of the European Parliament and of the Council establishing the Instrument for 
Pre-accession Assistance (IPA III), COM (2018) 465 final, 14.06.2018. 

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Neighbourhood, Development and International Cooperation Instrument with its European 
Fund for Sustainable Development+, and in particular the foreseen investment guarantee 
(EUR 60 billion)11. 

The  EU’s  Strategy  on  Connecting  Europe  and  Asia12  provides  a  clear  framework  for 
confident engagement with our partners, enabling the Union to seek synergies between the 
EU and third countries, including China, in transport, energy and digital connectivity, on 
the basis of international norms and standards. The key principles of EU’s engagement on 
connectivity  are  financial,  environmental  and  social  sustainability,  transparency,  open 
procurement and level playing field.  

The  EU-China  Connectivity  Platform  represents  an  initial  opportunity  to  strengthen 
cooperation and work in reciprocal and transparent ways, and should be expanded. It aims 
at promoting sustainable transport corridors based on the principles of the Trans-European 
Transport networks policy. The imminent launch of a study on railway corridors, between 
the  EU  and  China,  exemplifies  the  possibility  of  creating  synergies  with  the  Trans-
European Transport network policy13.  

Action 4: To preserve its interest in stability, sustainable economic development and good 
governance  in  partner  countries,  the  EU  will  apply  more  robustly  the  existing  bilateral 
agreements and financial instruments, and work with China to follow the same principles 
through the implementation of the EU Strategy on Connecting Europe and Asia. 

IV.  Achieving a more balanced and reciprocal trade and investment relationship 

The  EU  and  China  are  strategic  markets  for  each  other,  trading  on  average  over  EUR  1 
billion  a  day.  China’s  growing  domestic  market  and  economic  weight  create  important 
opportunities. China has also increasingly become a strategic competitor for the EU while 
failing  to  reciprocate  market  access  and  maintain  a  level  playing  field.  China’s  growing 
economic  weight  increases  the  risk  for  the  global  economy  of  negative  spill-overs  from 
distortions in China’s economic system and from possible sudden economic downturn. The 
EU’s approach to China should therefore take account of the evolving nature of the Chinese 
economy. 

China’s proactive and state-driven industrial and economic policies such as "Made in China 
2025"14 aim at developing domestic champions and helping them to become global leaders 
in  strategic  high-tech  sectors.  China  preserves  its  domestic  markets  for  its  champions, 
shielding  them  from  competition  through  selective  market  opening,  licensing  and  other 
investment restrictions; heavy subsidies to both state-owned and private sector companies; 

11 Proposal for a Regulation of the European Parliament and of the Council establishing the Neighbourhood, 
Development and International Cooperation Instrument, COM (2018) 460 final, 14.06.2018. 
12  Joint  Communication  to  the  European  Parliament,  the  Council,  the  European  Economic  and  Social 
Committee,  the  Committee  of  the  Regions  and  the  European  Investment  bank  on  Connecting  Europe  and 
Asia – Building blocks for an EU Strategy, JOIN(2018) 31, 19.09.2018. 
13 Regulation (EU) 1315/2013 on Union Guidelines for the  development of  the Trans-European Transport 
Network, OJ L 348, 20.12.2013, p. 1. 
14  Promoting  sectors  such  as  advanced  information  technology  industry,  machinery  and  robotics,  aerospace 
and  aeronautic  equipment,  marine  engineering  equipment  and  high  tech  ships,  advanced  rail  transport 
equipment,  energy  saving  vehicles  and  renewable  energy,  agricultural  machinery  and  equipment,  new 
materials, biopharma and high performance medical products. See: 中国制造2025 (Made in China 2025), State 
Council, May 8, 2015. 

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closure  of  its  procurement  market;  localisation  requirements,  including  for  data;  the 
favouring of domestic operators in the protection  and enforcement of intellectual property 
rights and other domestic laws; and limiting access to government-funded programmes for 
foreign companies. EU operators have to submit to onerous requirements as a precondition 
to  access  the  Chinese  market,  such  as  creating  joint  ventures  with  local  companies  or 
transfer of key technologies to Chinese counterparts. One of the sectors where the lack of 
reciprocal market access is particularly acute is financial services. While Chinese fintech 
and  online  payment  companies,  credit  cards  providers,  banks  and  insurers  are  expanding 
their presence in the EU, European operators are denied access to the Chinese market. 

Given the magnitude of our trade and investment links, it is important to develop a more 
balanced and reciprocal economic relationship.  

This  can  be  achieved  through  various  means:  by  working  together  with  China  in 
international  fora  to  upgrade  the  rules  and  by  making  decisive  progress  in  bilateral 
negotiations,  but  also  by  making  use  of  tools  such  as  the  recently  modernised  and 
strengthened trade defence instruments.  

The World Trade Organisation is the cornerstone of the multilateral trading system but 
its  rules  need  to  be  modernised  and  some  gaps  must  be  filled  to  ensure  a  level  playing 
field  and  eliminate  unfair  practices  deployed  by  China.  China  should  engage 
constructively in these efforts, including through the joint working group on World Trade 
Organisation  reform,  established  at  the  occasion  of  the  2018  EU-China  Summit.  A  top 
priority in this regard – and an indicator of China’s commitment – is to start negotiations  
on  stronger  disciplines  on  industrial  subsidies.  Making  progress  towards  elimination  of  
forced technology transfers will also be  of critical importance.  

Negotiations for a Comprehensive Agreement on Investment have been ongoing since 
2013.  This  would  be  a  key  tool  in  rebalancing  investment  relations  and  in  securing  fair 
and  equal  treatment  for  EU  companies  operating  in  China  as  well  as  ensuring  legal 
certainty for Chinese companies across the Single Market. The two sides should achieve 
substantial progress in the negotiations in the course of 2019 with a view to  concluding an 
ambitious agreement in 2020.  

The  signature  of  the  EU-China  Bilateral  Aviation  Safety  Agreement  in  the  coming 
weeks will boost trade in aircraft and related products and ensure the highest level of air 
safety.  

Swift conclusion of the negotiations on the Agreement on Geographical Indications will 
be  key  in  ensuring  the  mutual  recognition  of  geographical  indications  in  each  other’s 
market. 

Exports  of  EU  agriculture  and  food  products  to  China  are  subject  to  discriminatory, 
unpredictable  and  burdensome  procedures,  excessive  delays  and  decisions  not  based  on 
science.  In  addition  to  ongoing  negotiations,  the  Commission  will  discuss  with  Member 
States current procedures aiming at negotiating with one single voice. China should treat 
the  EU  as  a  single  entity  for  agriculture  and  food  exports,  while  applying  the 
regionalisation principle.  

All of the above will demonstrate China’s commitment to a mutually beneficial economic 
relationship. 

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Action 5: In order to achieve a more balanced and reciprocal economic relationship, the 
EU  calls  on  China  to  deliver  on  existing  joint  EU-China  commitments.  This  includes  
reforming  the  World  Trade  Organisation,  in  particular  on  subsidies  and  forced 
technology  transfers,  and  concluding  bilateral  agreements  on  investment  by  2020,  on 
geographical indications swiftly and on aviation safety in the coming weeks. 

The EU has an open procurement market, which is the largest in the world. At the same 
time, EU companies often encounter difficulties to gain access to procurement opportunities 
in the Chinese as well as other foreign markets, in particular in sectors where EU companies 
are  highly  competitive  (e.g.  transport  equipment,  telecommunications,  power  generation, 
medical equipment and construction services). This protectionist trend is rising. 

The revised Commission proposal for an international procurement instrument (IPI)15 was 
submitted  to  the  European  Parliament  and  the  Council  in  January  2016.  This  Regulation 
would  increase  EU  leverage  to  negotiate  reciprocity  and  market  opening,  creating  new 
opportunities for EU businesses. 

Action  6:  To  promote  reciprocity  and  open  up  procurement  opportunities  in  China,  the 
European  Parliament  and  the  Council  should  adopt  the  International  Procurement 
Instrument before the end of 2019. 

V. 

 Strengthening the Union’s competitiveness and ensuring a level playing field 

The  EU  needs  a  proactive  approach  to  strengthening  its  economic  competitiveness  and 
ensuring a level playing field.  It will continue to take concrete measures to strengthen the 
Single Market, including its capacity to channel investments where strategic EU interests are 
at stake.  
The  establishment  of  a  single  market  for  public  procurement  is  one  of  the  key 
achievements of the internal market. EU-wide publication of tenders ensures transparency 
and creates opportunities for companies across the EU. Better implementation of the rules 
will  ensure  quality  and  security  at  all  stages  of  the  process,  value-for-money,  and  the 
sustainability  of  projects.  Considering  that  a  substantial  part  of  public  investment  in  the 
EU economy is spent through public procurement (EUR 2 trillion yearly representing 14% 
of EU GDP) a more strategic approach can have a major impact.   

Therefore,  while  reflecting  the  increasingly  global  nature  of  public  procurement 
markets,  a  more  strategic  approach  to  the  EU's  procurement  framework  could  help  to 
identify and address obstacles and loopholes that impede a level playing field in practice. 
For instance, the rules could be revised or their application strengthened in order to ensure 
that  procurement  procedures  conducted  in  the  EU  on  the  basis  of  international 
agreements16  comply  with  the  Treaty  principles  of  transparency  and  equal  treatment. 
Further, public procurement for projects benefitting from EU funding should guarantee a 
high standard of quality, security, sustainability and social responsibility.  

15 Amended proposal for a Regulation of the European Parliament and of the Council on the access of third-
country goods and services to the Union’s internal market in public procurement and procedures supporting 
negotiations  on  access  of  Union  goods  and  services  to  the  public  procurement  markets  of  third  countries, 
COM (2016) 034 final, 29.01.2019. 
16 Under the current rules, projects with third countries are implemented through international agreements. 
Under  such  agreements,  the  parties  can  agree  on  specific  procurement  rules.  In  this  case,  the  EU 
procurement instruments are not applicable, but such specific procurement rules have to comply with basic 
treaty principles of transparency and equal treatment. 

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In  addition,  the  Commission  will  publish  guidance  on  the  legal  framework  on 
participation of foreign bidders and goods in the EU market  taking into  account  EU 
and  international  rules  on  procurement,  including  on  abnormally  low  tenders,  as  well  as 
respect of security, labour and environmental standards, and state aid rules. 

Action 7: To ensure that not only price but also high levels of labour and environmental 
standards are taken into account, the Commission will publish guidance by mid-2019 on 
the  participation  of  foreign  bidders  and  goods  in  the  EU  procurement  market.  The 
the 
Commission, 
implementation of the current framework to identify shortcomings before the end of 2019.  

together  with  Member  States,  will  conduct  an  overview  of 

EU policy tools do not fully address the effects within the EU internal market of subsidies 
granted  by  foreign  governments.  EU  competition  policy  instruments  apply  without 
discrimination  to  all  economic  operators,  irrespective  of  their  origin.  EU  state  aid  rules 
only cover aid granted by Member States. Further, EU merger control does not allow the 
Commission  to  intervene  against  the  acquisition  of  a  European  company  solely  on  the 
grounds  that  the  buyer  benefitted  from  foreign  subsidies.  Trade  defence  instruments 
address  subsidies that affect  the price of products imported into the EU. However, these 
instruments  do  not  cover  all  potential  effects  of  unfair  subsidies  or  support  by  third 
countries. 

To close this gap, it is necessary to identify how the EU could appropriately deal with 
the  distortive  effects  of  foreign  state  ownership  and  state  financing  of  foreign 
companies on the EU internal market.  

Action  8:    To  fully  address  the  distortive  effects  of  foreign  state  ownership  and  state 
financing in the internal market, the Commission will identify before the end of 2019 how 
to fill existing gaps in EU law.  

In the context of the renewed industrial policy strategy17, the EU should foster industrial 
cross  border  cooperation,  with  strong  European  players,  around  strategic  value 
chains that are key to EU industrial competitiveness and strategic autonomy. The work of 
the Strategic Forum for Important Projects of Common European Interest has an important 
role  to  play,  as  does  executing  collectively  initiatives  such  as  the  recently  agreed  EU 
Coordinated  Action  Plan  on  Artificial  Intelligence18  and  the  European  battery  alliance 
project19.  

17 Communication from the Commission to the European Parliament, the European Council, the Council, the 
European  Economic  and  Social  Committee,  the  Committee  of  the  Regions  and  the  European  Investment 
Bank - Investing in a smart, innovative and sustainable Industry - A renewed EU Industrial Policy Strategy, 
COM (2017) 0479 final, 13.09.2017. 
18 Communication from the Commission to the European Parliament, the European Council, the European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  Coordinated  Plan  on  Artificial 
Intelligence, COM (2018) 795 final, 7.12.2018. 
19 Communication from the Commission to the European Parliament, the Council, the European Economic 
and Social  Committee and the Committee  of the  Regions  – Europe on the Move Sustainable Mobility for 
Europe:  safe,  connected  and  clean,  Annex  2  Strategic  Action  Plan  on  Batteries,  COM  (2018)  293  final, 
17.05.2018. 

8 

 
 
                                                 
Building on the European Strategy for Artificial Intelligence20, the Coordinated Plan 
sets out a number of operational measures aiming to maximise the impact of investments 
and  to  help  Europe  become  the  world-leading  region  for  developing  and  deploying 
cutting-edge,  ethical  and  secure  Artificial  Intelligence.  These  joint  actions  focus  in 
particular  on  increasing  investment,  making  more  data  available,  fostering  talent  and 
ensuring  trust.  Such  closer  and  more  efficient  cooperation  is  essential  for  implementing 
the EU’s values-based approach of human-centric and trustworthy Artificial Intelligence, a 
key condition for wide acceptance. 

The  Strategic  Action  Plan  on  batteries  adopted  in  May  2018  aims  at  creating  a 
competitive, sustainable and innovative battery ‘ecosystem’ in Europe, covering the entire 
value  chain.  Batteries  are  key  for  energy  storage  and  clean  mobility,  and  will  be  of 
strategic importance to the modernisation of EU industry. Particular attention is being paid 
to ensuring a reliable supply of raw materials and access to rare earths. 

To  ensure  the  long-term  competitiveness  of  EU  operators,  including  in  fields  where  EU 
enterprises  do  not  enjoy  reciprocal  market  access,  the  EU  needs  an  ambitious  Horizon 
Europe21 programme open to third countries and international organisations to stay 
at the forefront of global research and innovation. It should also include clear rules on 
exploitation  of  results  and  allow  for  effective  reciprocal  access  to  research  and 
development funding. 

The Commission calls on the European Parliament and the Council to swiftly agree on the 
Horizon Europe programme. 

VI. 

Strengthening the security of critical infrastructure and the technological base  

Foreign  investment  in  strategic  sectors,  acquisitions  of  critical  assets,  technologies  and 
infrastructure  in  the  EU,  involvement  in  EU  standard-setting  and  supply  of  critical 
equipment  can  pose  risks  to  the  EU’s  security.  This  is  particularly  relevant  for  critical 
infrastructure, such as 5G networks that will be essential for our future and need to be fully 
secure.  

5G  networks  will  provide  the  future  backbone  of  our  societies  and  economies, 
connecting  billions  of  objects  and  systems,  including  sensitive  information  and 
communication technology systems  in  critical  sectors. Any vulnerability  in  5G networks 
could  be  exploited  in  order  to  compromise  such  systems  and  digital  infrastructure  – 
potentially  causing  very  serious  damage.  A  range  of  EU  instruments,  including  the 
Network and Information Security Directive22, the recently approved Cybersecurity Act23, 

20 Communication  from the Commission to the European Parliament,  the European  Council, the European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  Artificial  Intelligence  for  Europe, 
COM (2018) 237 final, 25.4.2018. 
21 Proposal for a Regulation of the European Parliament and of the Council establishing Horizon Europe  – 
the  Framework  Programme  for  Research  and  Innovation,  laying  down  its  rules  for  participation  and 
dissemination, COM (2018) 435 final, 07.06.2018. 
22  Directive  (EU)  2016/1148  of  the  European  Parliament  and  of  the  Council  of  6  July  2016  concerning 
measures for a high common level of security of network and information systems across the Union, OJ L 
194, 19.7.2016, p. 1. 
23  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  ENISA,  the  "EU 
Cybersecurity Agency", and repealing Regulation (EU) 526/2013, and on Information and Communication 
Technology cybersecurity certification (''Cybersecurity Act''), COM (2017) 0477 final, 13.09.2017. 

9 

 
                                                 
and  the  European  Electronic  Communications  Code24  will  allow  reinforcing  cooperation 
in addressing cyber-attacks and enable the EU to act collectively in protecting its economy 
and society. 

The  Commission  will  adopt  a  recommendation  following  the  European  Council  for  a 
common EU approach to security risks to 5G networks, building on a coordinated EU risk 
assessment  and  risk-management  measures,  an  effective  cooperation  and  exchange  of 
information 
joint  EU  situational  awareness  covering  critical 
communication networks. 

framework,  and 

Moreover, on 8 March 2019, the Commission and the High Representative proposed the 
establishment of a horizontal sanctions regime to counter cyber-attacks. The proposed 
regime has worldwide coverage and will enable a flexible EU response irrespective of the 
location from which cyber-attacks are launched and regardless of whether they are carried 
out  by  state  or  non-state  actors.  This  sanctions  regime,  when  adopted,  would  enable  the 
Union to respond to cyber-attacks with a ‘significant effect’, which threaten the integrity 
and security of the EU, its Member States and their citizens. 

The EU will support multilateral efforts, notably in the G20 context, to promote free and 
secure data flows based on strong privacy protections for personal data. 

Action 9: To safeguard against potential serious security implications for critical digital 
infrastructure,  a  common  EU  approach  to  the  security  of  5G  networks  is  needed.  To 
kickstart  this,  the  European  Commission  will  issue  a  Recommendation  following  the 
European Council.   

The new Regulation establishing a framework for screening foreign direct investment 
will enter into force in April 2019 and fully apply from November 202025. It will provide a 
powerful instrument to detect and raise awareness of foreign investment in critical assets, 
technologies  and  infrastructure.  It  will  further  allow  identifying  collectively  and 
addressing security and public order threats posed by acquisitions in sensitive sectors.  

Member States should use the period between entry into force and the start of application 
of the Regulation to make the necessary changes to their national domestic practices and 
legislation and put in place the administrative structures to ensure effective cooperation at 
EU level with the Commission in accordance with the established mechanisms. 

Action 10: To detect and raise awareness of security risks posed by foreign investment in 
critical  assets,  technologies  and  infrastructure,  Member  States  should  ensure  the  swift, 
full  and  effective  implementation  of  the  Regulation  on  screening  of  foreign  direct 
investment. 

The EU rules on export control of dual use goods allow the Union to monitor exports in 
key  technologies  and  check  them  for  security  concerns.  The  Commission’s  proposal  on 
modernising  the  export  control  Regulation26  includes  cyber-security  and  surveillance 

24  Directive  (EU)  2018/1972  of  the  European  Parliament  and  of  the  Council  of  11  December  2018 
establishing the European Electronic Communications Code, OJ L 321, 17.12.2018, p. 36 
25 Regulation of the European Parliament and of the Council establishing a framework for the screening of 
foreign direct investments into the Union (not yet published in the Official Journal). 
26 Proposal for a Regulation of the European Parliament and of the Council, setting up a Union regime for 
the  control  of  exports,  transfer,  brokering,  technical  assistance  and  transit  of  dual-use  items  (recast), 
COM(2016) 616 final, 28.09.2016. 

10 

 
                                                 
technology.  The  Regulation  would  strengthen  the  EU’s  ability  to  adjust  to  and  mitigate 
evolving security risks and rapid technological developments.  

The  Commission  calls  on  the  European  Parliament  and  the  Council  to  adopt  modernised 
EU rules on export control as quickly as possible. 

VII.  Conclusion  

The Commission and the High Representative  invite the European Council to  endorse 
the following actions.  

Action  1:  The  EU  will  strengthen  the  EU’s  cooperation  with  China  to  meet  common 
responsibilities across  all  three pillars of  the United Nations,  Human Rights,  Peace and 
Security, and Development. 

Action 2: In order to fight climate change more effectively, the EU calls on China to peak 
its emissions before 2030, in line with the goals of the Paris Agreement.  

Action 3: The EU will deepen engagement with China on peace and security, building on 
the positive cooperation on the Joint Comprehensive Plan of Action for Iran.  

Action 4: To preserve its interest in stability, sustainable economic development and good 
governance  in  partner  countries,  the  EU  will  apply  more  robustly  the  existing  bilateral 
agreements and financial instruments, and work with China to follow the same principles 
through the implementation of the EU Strategy on Connecting Europe and Asia. 

Action 5: In order to achieve a more balanced and reciprocal economic relationship, the 
EU  calls  on  China  to  deliver  on  existing  joint  EU-China  commitments.  This  includes 
reforming  the  World  Trade  Organisation,  in  particular  on  subsidies  and  forced 
technology  transfers,  and  concluding  bilateral  agreements  on  investment  by  2020,  on 
geographical indications swiftly, and on aviation safety in the coming weeks. 

Action  6:  To  promote  reciprocity  and  open  up  procurement  opportunities  in  China,  the 
European  Parliament  and  the  Council  should  adopt  the  International  Procurement 
Instrument before the end of 2019. 

Action 7: To ensure that not only price but also high levels of labour and environmental 
standards are taken into account, the Commission will publish guidance by mid-2019 on 
the  participation  of  foreign  bidders  and  goods  in  the  EU  procurement  market.  The 
Commission, 
the 
implementation of the current framework to identify gaps before the end of 2019. 

together  with  Member  States,  will  conduct  an  overview  of 

Action  8:  To  fully  address  the  distortive  effects  of  foreign  state  ownership  and  state 
financing in the internal market, the Commission will identify before the end of 2019 how 
to fill existing gaps in EU law. 

Action 9: To safeguard against potential serious security implications for critical digital 
infrastructure,  a  common  EU  approach  to  the  security  of  5G  networks  is  needed.  To 
kickstart  this,  the  European  Commission  will  issue  a  Recommendation  following  the 
European Council.   

Action 10: To detect and raise awareness of security risks posed by foreign investment in 
critical  assets,  technologies  and  infrastructure,  Member  States  should  ensure  the  swift, 
full  and  effective  implementation  of  the  Regulation  on  screening  of  foreign  direct 
investment. 

11