Talks on EU treaty expected to be held next year

China and the European Union may start talks on an investment treaty next year, Chinese officials said.

Both sides are "enthusiastic" and the only delay is from the EU which has to go through a technical process to mandate an institution to conduct negotiations, an official from the Department of European Affairs at the Ministry of Commerce, who requested anonymity, told China Daily.

A Chinese diplomat in Brussels, who also requested anonymity, said both Beijing and Brussels are "seriously committed" to enhancing two-way investment and boosting trade ties.

"We hope the treaty talks start next year and we are looking forward to it," the diplomat said.

Beijing has also requested a comprehensive cooperation plan with Brussels.

Both sides pledged to become each other's largest trade partner by 2015.

The official from the Ministry of Commerce said an investment agreement between Beijing and Brussels will be "of great significance" as it will offer "a stable, convenient and predictable" environment for Chinese and European investors.

Under investment treaties, investors are given equal treatment and their investments are protected.

China has signed such agreements with more than 100 countries and regions, with many from Europe such as Germany and France, according to the Ministry of Commerce.

China has traditionally attracted investment from European companies by offering preferential terms, such as low land prices and tax breaks.

Europe has invested $80 billion in China since Beijing adopted the opening-up policy in 1978.

But Brussels said that this accounts for just 2 percent of all EU investment overseas. "So we need to work on the investment pact to further tap the full potential in China," European Commission President Jose Manuel Barroso said recently.

China is also keen to boost overseas investment amid efforts to restructure its economy.

The country's investment in the EU rose from just $100 million in 2003 to $4.3 billion in 2011.

Premier Wen Jiabao said in September in Brussels that China is a "responsible long-term investor" in Europe and he urged both sides to find ways to boost investment.

At the summit of European leaders in October, Beijing-Brussels relations were on the agenda. Barroso said then that they were working closely on an investment agreement.

European Council President Herman van Rompuy said that "we will come back to this issue early next spring to best prepare the next summit, which should take place in China in the autumn of 2013". Talks on an investment agreement are expected to be under way by then.

Without giving a timetable, EU Trade Spokesman John Clancy said on Wednesday that talks can start once formal procedures are put in place.

"Both the EU and China are now working on their respective preparatory procedures prior to a launching of the negotiations," Clancy said.

Observers recognized that Beijing and Brussels want to expand their relationship.

"Both sides are committed to these negotiations, so they can start fairly quickly," said Jonathan Holslag, research director with the Brussels Institute of Contemporary China Studies.

But he said negotiations will be tough.

"As the EU aims to tie investment protection to market access, this is not going to be an easy ride."

Holslag said that for the Chinese it remains unclear whether there will be a mandate to make concessions on various issues, ranging from the liberalization of sectors to reform of the services sector.

He pointed out that the EU is made up of 27 states and this can cause problems in negotiations.

China's requests concerning market economy status and the arms embargo could not be resolved because of differences among member states on the issues.

Even under the EU umbrella, Chinese investors have to deal with various kinds of obstacles such as visa applications, work permits, different languages, investment laws and taxation codes in different countries.

France and Germany opened a joint visa application center in Beijing on Tuesday amid complaints of difficulties in applying for business visas to EU states.