The EU has published a number of parts of the text of the EU-China Comprehensive Agreement on Investment (CAI) here. The "Investment and Sustainable Development" section is here. This is the substantive language on labor rights:
Sub-Section 3 – Investment and Labour
Article 1: Right to regulate
The Parties recognise the right of each Party to determine its sustainable development policies and priorities, to establish its own levels of domestic labour and environmental protection, and to adopt or modify its relevant laws and policies accordingly, consistently with its multilateral commitments in the fields of labour1 and environment.
Article 2: Levels of protection
1. Each Party shall strive to ensure that its laws and policies provide for and encourage high levels of labour protection and shall strive to continue to improve those laws and policies and their underlying levels of protection.
2. The Parties recognise that it is inappropriate to encourage investment by weakening or reducing the levels of protection afforded in domestic labour laws.
3. A Party shall not waive or derogate from, or offer to waive or derogate from, its labour laws as an encouragement for the establishment, acquisition, expansion or retention of an investment or an investor in its territory.
4. A Party shall not, through a sustained or recurring course of action or inaction, fail to effectively enforce its labour laws, as an encouragement for investment.
5. The Parties recognize that with respect to the enforcement of labour laws, a Party is in compliance with paragraph 4 if a course of action or inaction results from a good faith decision regarding the allocation of resources in accordance with its priorities for enforcement of its labour laws.
6. The Parties recognise that the violation of fundamental principles and rights at work cannot be invoked or otherwise used as a legitimate comparative advantage and that labour standards cannot be used for protectionist purposes. A Party shall not apply domestic labour laws in a manner that would constitute a disguised restriction of investment or an unjustified discrimination between investors and investments of the Parties.Article 3: Dialogue and cooperation on investment-related labour issues
The Parties agree to dialogue and cooperate as appropriate on investment-related labour issues of mutual interest arising under this Section in a manner complementary to the efforts under existing bilateral and multilateral mechanisms.
Article 4 […]
1. Each Party, in accordance with its obligations assumed as a member of the International Labor Organization (“ILO”), and its commitments under the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, shall respect, promote and realize, in good faith and in accordance with the ILO Constitution, the principles concerning the fundamental rights which are the subject of the fundamental ILO Conventions.
2. Each Party is, in accordance with the commitments of the members of the ILO and the 2019 ILO Centenary Declaration for the Future of Work, committed to effectively implement the ILO Conventions it has ratified and work towards the ratification of the ILO fundamental Conventions. In particular, in this regard, each Party shall make continued and sustained efforts on its own initiative to pursue ratification of the fundamental ILO Conventions No 29 and 105, if it has not yet ratified them. The Parties will also consider the ratification of the other Conventions that are classified as "up to date" by the ILO.Article 5: Investment favouring decent work
In accordance with their commitment to enhance the contribution of investment to the goal of sustainable development, including its labour aspects, the Parties agree to promote investment policies which further the objectives of the Decent Work Agenda, in accordance with the 2008 ILO Declaration on Social Justice for a Fair Globalisation, and the 2019 ILO Centenary Declaration for the Future of Work, including a human-centred approach to the future of work, adequate minimum wages, social protection and safety and health at work.
At first glance, it seems to me that Article 4 is the most important provision here, as it applies international law principles directly to each parties' domestic labor rights policies and practices. I'm not an expert on the ILO rules or China's labor practices, but as I read this, it seems to provide a broad avenue for the EU to raise the issue of the consistency of China's actions with international rules. But I am eager to hear more from labor experts on this part.
The Article 2 provisions seem weaker to me, although I can see how they could also be the basis of some interesting claims.
Importantly, there is a dispute settlement mechanism that applies to all this. Sub-section 4 has a "Mechanism to Address Differences," with consultations and a panel process that looks pretty similar to what we see in the normal FTA state-state dispute settlement context. (I'll be interested to see how the process for establishing lists of potential panelists goes, as that was a problem under the NAFTA.)
Not surprisingly, there is no possibility for trade sanctions to enforce compliance with panel reports. Instead, Article 4.7 states: "The Parties shall consult within 30 days after the issuance of the final report of the Panel of Experts, and discuss measures to address the matter, based on the report. The agreed outcome shall be made publicly available, unless otherwise mutually decided. The Parties may receive views on the implementation of the measures through the mechanism referred to under [Article 3, Sub-section 1, Section IV]."
My initial take on these provisions is that I'm very surprised that China agreed to them, given what we hear about labor practices in China. It looks like there are real substantive labor obligations here and they can be applied by a neutral international panel, with a good deal of transparency. I would not have thought China would be willing to have its labor practices scrutinized in this way, even without the possibility of trade sanctions. The fact-finding alone could be enough to seriously embarrass China.
The CAI's political prospects look shaky right now in terms of approval by the European Parliament, but if it does go into effect, EU complaints about Chinese labor practices are going to be interesting to watch. And even if it doesn't go into effect, I can imagine that some other countries who negotiate trade or investment deals with China will now demand something similar. To take an obvious example, as the Biden administration tries to sort out what to do with the Phase 1 deal, it may draw inspiration from these provisions.