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5 White Paper on the Business Environment in China
At the time of writing, the United States and China are in
the middle stages of negotiating the BIT. When the BIT text
is nal and ready for government consideration, the treaty will
be submitted to the Senate and referred to the Committee
on Foreign Relations. Once considered, the Committee may
report the treaty to the full Senate favorably, unfavorably, give China’s investment regime what the WTO did for trade”. He
no recommendation, or choose not to act it at all. When a
treaty has been reported to the Senate, it will be added to
the Executive Calendar and considered in executive session.
Two-thirds of the Senate must vote in favor of the BIT, via a
resolution of rati cation, in order for it to pass.1
e importance of the US-China BIT was brought to the
attention of US President Barack Obama in October 2014,
when more than 50 business leaders called on the President
to “make the completion of a bilateral investment treaty the
focus of meetings next month in China.” According to top
political website e Hill, the 51 U.S. chief executives of
rms which included Fortune 500 companies such as Walt
Disney and Coca Cola, sent a letter of support for the BIT
to the White House and “asking the president to make such
discussions a high priority” with China’s President Xi Jinping
in November 2014.2
According to the contents of the letter, the American busi-
ness leaders wrote the following to President Obama: “ e
commercial relationship between the United States and China
is enormously important to our companies and the health of
the American economy. Getting this commercial relationship
right — by expanding the opportunities and e ectively ad-
dressing the challenges — will help maintain American eco-
nomic strength and leadership in the decades ahead. If China
can signi cantly reduce its negative list and open markets to
American manufacturers, agriculture producers, and service
providers, you will nd the business community fully engaged
and supportive of your leadership to gain Senate approval of
the treaty.”2
Leading the group’s e orts was US-China Business Coun-
cil head John Frisbie, who said the letter “represents a strong
message” and adding that “completing a high-standard U.S.-
China BIT will have a signi cant and lasting impact on the
trajectory of the U.S.-China commercial relationship and a
more equitable commercial framework to guide the relation-
ship forward.”2
A few months earlier, the importance of the treaty between
the two countries was emphasized by US Ambassador to China
Max Baucus, who, in his rst Beijing public engagement in
June 2014 since taking up the post in March, stated to the
Wall Street Journal that “ ere’s a lot of work to do on the
[treaty], but moving forward on that will be a top priority for
me.” According to the same media report, the Ambassador has
a proven track record in negotiating trade deals with China.
e Wall Street Journal recalls that in the 1990s, Mr. Baucus,
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then a senator, worked with then-Premier Zhu Rongji to
promote China’s entry into the World Trade Organization,
which proved to be China’s “catalyst for internal reform and
the beginning of a decade of breakneck economic expansion”.
Mr. Baucus stated: “I believe that the [treaty] could do for
recalled that when working on the WTO deal, Mr. Zhu told
him, “I need you to push from the outside so I can push from
the inside.” 3
Similar sentiments were echoed a few months later in No-
vember 2014, when during President Obama’s visit to Beijing
for APEC, senior leaders from both countries had expressed a
desire to conclude treaty talks in 2015. US Trade Representa-
tive Michael Froman remarked: “Our focus with China right
now is on the Bilateral Investment Treaty, which is one key set
of issues on investment that are part of an overall high-stan-
dard approach.” e chief US trade negotiator said “a short
negative list discussed under the BIT would mean everything
is open in China except for a few things that are specially
listed.” He described it as a “good test case for a high-standard
agreement with China.” 4
e week before APEC, in early November 2014, China
and the US concluded talks on the tari -cutting Information
Technology Agreement (ITA), hailed by Mr. Froman as “a
major breakthrough”.4 A month earlier, according to various
media reports, Vice-Finance Minister Zhu Guangyao had
stated that the US-led Trans-Paci c Partnership (TPP) “is
incomplete without China’s participation.” .4,5,6 Speaking in
Washington DC, Mr. Zhu said: “...our position is clear. As
China becomes more open, it’s very important for us to be
integrated into the global trade system with high standard.”6
According to China Daily, Mr. Zhu’s comments are “widely
regarded as a major turning point in China’s attitude towards
TPP. China has evolved from having a deep suspicion of TPP
as part of a US containment strategy of China to showing
an interest in the regional free trade agreement.”4 According
to the same report, Ely Ratner, a senior fellow and deputy
director of the Asia-Paci c Security Program at the Center for
a New American Security, wrote in Politico magazine that “the
growing consensus in Beijing that China should try to be part
of the TPP re ects not only the potential economic bene ts
it could accrue by joining the grouping, but also the fact that
the changes necessary for China to qualify for membership
could advance President Xi Jinping’s e orts to make domestic
economic reforms in areas such as market access, government
procurement, intellectual property rights, labor standards and
environmental protection.” 4
American business interests in China are keenly watching
the proceedings. In September 2014, the American Chamber
of Commerce in China formulated a new initiative – the BIT
Task Force – to act as a committee specializing in advocating