| For over fifty years, the European Union (EU) was not an actor of foreign investment policy. Member States had the authority to negotiate Bilateral Investment Treaties (BITs) with third countries and did so with gusto, concluding more than 1,400 BITs with over 150 countries in the world. After the entry into force of the Lisbon Treaty, the EU gained formal and legal competence over Foreign Direct Investment (FDI), thus becoming in theory a unified actor with respect to both outbound and inbound FDI. However, many political and legal ambiguities surround the true extent of the EU’s authority and autonomy over FDI. In particular, this’cacophony’of the EU legal framework was highlighted by the surge of Chinese OFDI into the EU after the EU crisis, the potential of exerting centrifugal pressures on the EU and its attempts to find a common approach. The result is that the EU is now at a very unfavorable position when it comes to bilateral investment relations with China. The decision to start the EU-China Bilateral Investment Treaty (BIT) negotiations in January 2014 might thus be seen as an attempt form the EU to overcome this problem. Despite being in a disadvantaged position, however, the EU has also some bargaining chips which are very attractive to China, and this is clear from the fact that, as of February 2016, nine rounds of talks have already taken place. Will both parties reach a comprehensive agreement? This work tries to answer this question using a game theory-based approach. In particular, this work will see the EU-China BIT as a game, will explore both players’positions and requests, their weaknesses and strengths in the negotiations, will highlight what are the characteristics and the elements that affect the structure of the interaction, will explore whether among the two players there exist the basic conditions for cooperation, will define both players’strategies, will analyze what elements or factors might potentially inhibit cooperation, will provide three different game models adaptable to the EU-China BIT case which result in four different scenarios for the negotiations outcome. By using a game theory approach, the main objective of this work is not to generate rules for actual behavior, rather it should be seen as a basis for systematic analysis:it focuses the attention on what are the main elements of the EU-China strategic interactions, what are the elements that might severely affect the negotiating process, and under what kind of circumstances there might be a more cooperative negotiation rather than a more conflictual one. |
