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6 White Paper on the Business Environment in China
is final 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 re-
port the treaty to the full Senate favorably, unfavorably, give 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 Execu-
tive Calendar and considered in executive session. Two-thirds
of the Senate must vote in favor of the BIT, via a resolution of
ratification, in order for it to pass.1
The 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 The Hill, the 51 U.S. chief executives of firms 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: “The
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 effectively address-
ing the challenges — will help maintain American economic
strength and leadership in the decades ahead. If China can sig-
nificantly reduce its negative list and open markets to American
manufacturers, agriculture producers, and service providers, you
will find the business community fully engaged and supportive
of your leadership to gain Senate approval of the treaty.”2
Leading the group’s efforts was US-China Business Council
head John Frisbie, who said the letter “represents a strong mes-
sage” and adding that “completing a high-standard U.S.-China
BIT will have a significant and lasting impact on the trajectory
of the U.S.-China commercial relationship and a more equita-
ble commercial framework to guide the relationship 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 first Beijing public engagement in
June 2014 since taking up the post in March, stated to the Wall
Street Journal that “There’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. The
Wall Street Journal recalls that in the 1990s, Mr. Baucus, 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 China’s investment
80
regime what the WTO did for trade”. He 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-standard
approach.” The 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
The week before APEC, in early November 2014, China
and the US concluded talks on the tariff-cutting Information
Technology Agreement (ITA), hailed by Mr. Froman as “a ma-
jor breakthrough”.4 A month earlier, according to various me-
dia reports, Vice-Finance Minister Zhu Guangyao had stated
that the US-led Trans-Pacific 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.”4According to the
same report, Ely Ratner, a senior fellow and deputy director
of the Asia-Pacific Security Program at the Center for a New
American Security, wrote in Politico magazine that “the grow-
ing consensus in Beijing that China should try to be part of the
TPP reflects not only the potential economic benefits it could
accrue by joining the grouping, but also the fact that the chang-
es necessary for China to qualify for membership could advance
President Xi Jinping’s efforts to make domestic economic re-
forms 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
American business interests in US-China BIT negotiations.7
Key points included the following:
U.S. negotiations are spearheaded by the Office of the US
Trade Representative and the Department of the State, both of
which focus on six core areas: