TAIPEI (Taiwan News) — The landmark EU-China investment deal is on hold, with momentum to ratify the agreement unlikely to resume while relations between the bloc and its second-largest trade partner remain in their frosty state, according to the European Commission.

The Comprehensive Agreement on Investment (CAI) was negotiated last December between Chinese leader Xi Jinping (習近平), European Commission President Ursula von der Leyen, EU Council President Charles Michel, and German Chancellor Angela Merkel, who reportedly provided much of the political impetus to finalize the agreement. While agreed upon, it has not yet been ratified in the EU Parliament, a process that could have taken months.

Among China's major pledges in the deal is to gradually stop requiring European firms to enter into joint ventures with Chinese companies in certain sectors, including automobiles, a boon for Merkel's Germany. China also agreed to "pursue ratification" of the International Labour Organization's convention on forced labor amid reports it is pressing Muslim Uyghurs into labor in factories as well as the production of "blood cotton" in Xinjiang.

However, in March, the European Union joined the U.S., U.K., and Canada in sanctioning key Chinese officials in Xinjiang for their alleged involvement in the persecution of Muslim minorities in that region, which the Biden administration and British and Canadian parliaments have labeled a "genocide." China quickly hit back, announcing entry bans on several European members of Parliament, national legislators, and think tank scholars.

With the tit-for-tat actions as a backdrop, EU Commission Executive Vice President Valdis Dombrovskis told AFP that "We now in a sense have suspended political outreach activities from the European Commission side. It's clear in the current situation with the EU sanctions in place against China and Chinese counter sanctions in place, including against members of the European Parliament [that] the environment is not conducive for ratification of the agreement."

While the deal has not been officially suspended, it is now effectively dead in the water, with Dombroviskis adding that ratification will "depend really on how broader EU-China relations will evolve."

One of the EU parliamentarians targeted by China's countersanctions in March, Reinhard Bütikofer of Germany, told Taiwan News in January that "It's still hard to see how these gains could outweigh the blatant human rights violations that are ongoing in Xinjiang, Hong Kong, Tibet, and against Taiwan and the political cost of condoning such actions."