The 5th Round of the U.S.-China Strategic & Economic Dialogue (S&ED) concluded this week in Washington, D.C. with a promising announcement from China that they intend to begin formal talks on a high-standard bilateral investment treaty (BIT) with the United States.
In final statements, Treasury Secretary Jacob Lew said that his Chinese counterparts in the S&ED, Chinese State Councilor Yang Jiechi and Chinese Vice Premier Wang Yang, are ready to include all stages of investment and all sectors in the BIT negotiation.
This high-level agreement on basic terms of reference for negotiation of a high-standard U.S.-China BIT is quite encouraging. “If in fact China agreed to negotiations on all elements of an investment treaty, they would be opening up their economy considerably,” said USCIB Vice President Shaun Donnelly in an interview with Marketwatch. Donnelly said that all types of U.S. companies would benefit, especially oil and gas firms and financial-services entities.
Actual negotiation of such a BIT – including broad protections for investors, comprehensive definitions and coverage, strong investor-state dispute settlement provisions, and U.S.-style “pre-establishment” provisions for market-opening investment opportunities in both directions – will likely be quite challenging and will certainly take some time. But this high-level commitment to a negotiation of U.S.-style “gold standard” BIT is a very encouraging development.
Some other key developments from the S&ED include:
- Acknowledgement of the cyber-theft issue and willingness to address the issue head-on
- China’s announcement that it plans to submit a revised offer to join the WTO Government Procurement Agreement (GPA) by the end of 2013
- China’s commitment to further open up to foreign investment – announcing a pilot free-trade zone in Shanghai for services
- China’s commitment to further exchange-rate reform and enhanced foreign-exchange reserve transparency
- China’s promise to provide requested audit work papers to U.S. market regulators, a step toward resolving issues on enforcement cooperation related to companies listed in the United States
- Commitments from China to take important steps toward significant reform to the exchange-rate system, financial system, state-owned enterprises and taxes on businesses.
Please see final remarks from the S&ED here: http://www.state.gov/s/d/2013/211850.htm.
US-China Joint “Economic Track”S&ED Fact Sheet: http://www.treasury.gov/press-center/press-releases/Pages/jl2010.aspx.