Page 104 - 2017 White Paper
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7 White Paper on the Business Environment in China
deficit attributable to China. It would, however, create a like ownership caps, to prevent American companies
new set of rules to give U.S. investors greater ability to from investing in their markets (Henry 2014).
access a market with enormous potential and provide
a certain set of remedies if they are not accorded fair This is particularly important in China, which currently
treatment. In light of global economic and geopolitical restricts investment in more than 100 industry sectors,
realities as well as our own best interest, our posture ranging from manufacturing to services to agriculture. By
toward China should be one of thoughtful, strategic contrast, the United States restricts foreign investment
engagement rather than one of adversarial retreat. A outright in only five sectors, and maintains 24 mostly
high standard, carefully negotiated BIT presents one minor conditions or restrictions that would be removed
opportunity for such engagement” (Singh 2015). if the United States is given reciprocity in China’s market.
Since foreign investors already enjoy access to the United
Still, if a balanced BIT can be concluded, both nations States’ market, a BIT would primarily serve to better
stand to gain. In a conclusion reached by The Diplomat, protect American investors in China (Henry 2014).
the U.S. would encounter more profit opportunities in
China, while China would further its agenda to “Go Out” A BIT would ensure US companies would not have to
and promote maturation of its economy (Hsu 2015). We meet unfair investment requirements, such as licensing
respectfully concur. requirements, which are not required of Chinese
companies. The US-China Business Council states that
BIT: Background currently, US investors often face difficulties—and at
times discrimination—when applying for business
During the 2013 Strategic and Economic Dialogue, licenses in China (Henry 2014).
the United States and China—the world’s two largest
economies— agreed to restart negotiations on a bilateral BITs also protect investors in several other ways.
investment treaty (BIT). The United States currently has BITs limit a foreign government’s ability to require
BITs with 42 countries (Henry 2014). that American investors meet burdensome conditions
to operate in their markets. Finally, BITs ensure that
A BIT is an agreement between two countries that American investors can move capital freely in and out of
outlines a road map for foreign investment in each other’s the country in which they have invested (Henry 2014).
countries. When countries enter into a BIT, both countries
agree to provide protections for the other country’s BITs give American investors access to a neutral, third-
foreign investments. A BIT provides major benefits for party arbitrator when a problem arises with another
American investors in another country, including national investor or the host government. This provision can be
treatment, fair and equitable treatment, protection extremely helpful for investors in countries where the
from expropriation and performance requirements for legal system is not mature or well-established. Notably,
investments, and access to neutral dispute settlement. A the dispute settlement provisions do not give foreign
BIT ensures that foreign governments will treat American investors more rights than those already established
investors the same as domestic companies, a practice in US law, thanks to America’s mature legal system, but
known as “national treatment”. BITs also guarantee the benefits for American investors in China would be
that American investors are given the same types of significant (Henry 2014).
preferences that other foreign investors are given in a
market, also called “most-favored nation” treatment. BITs are tools to break down market access barriers and
Under a strong US-China BIT, the Chinese government give American companies greater protections overseas,
would treat US companies the same as Chinese but they can’t address every problem that companies
companies (Henry 2014). face abroad. For example, American companies in
China face challenges in protecting and enforcing their
The promise of equal treatment applies to investments intellectual property rights (IPR). A BIT would not fix those
made prior to the time the BIT enters into force and to problems directly. Indirectly, however, a BIT would help
new investments in the market. That means that BITs bar US companies protect their IPR in China. The BIT would
foreign governments from using investment restrictions, remove ownership restrictions that force US companies
in some sectors to partner with Chinese firms in order
104
deficit attributable to China. It would, however, create a like ownership caps, to prevent American companies
new set of rules to give U.S. investors greater ability to from investing in their markets (Henry 2014).
access a market with enormous potential and provide
a certain set of remedies if they are not accorded fair This is particularly important in China, which currently
treatment. In light of global economic and geopolitical restricts investment in more than 100 industry sectors,
realities as well as our own best interest, our posture ranging from manufacturing to services to agriculture. By
toward China should be one of thoughtful, strategic contrast, the United States restricts foreign investment
engagement rather than one of adversarial retreat. A outright in only five sectors, and maintains 24 mostly
high standard, carefully negotiated BIT presents one minor conditions or restrictions that would be removed
opportunity for such engagement” (Singh 2015). if the United States is given reciprocity in China’s market.
Since foreign investors already enjoy access to the United
Still, if a balanced BIT can be concluded, both nations States’ market, a BIT would primarily serve to better
stand to gain. In a conclusion reached by The Diplomat, protect American investors in China (Henry 2014).
the U.S. would encounter more profit opportunities in
China, while China would further its agenda to “Go Out” A BIT would ensure US companies would not have to
and promote maturation of its economy (Hsu 2015). We meet unfair investment requirements, such as licensing
respectfully concur. requirements, which are not required of Chinese
companies. The US-China Business Council states that
BIT: Background currently, US investors often face difficulties—and at
times discrimination—when applying for business
During the 2013 Strategic and Economic Dialogue, licenses in China (Henry 2014).
the United States and China—the world’s two largest
economies— agreed to restart negotiations on a bilateral BITs also protect investors in several other ways.
investment treaty (BIT). The United States currently has BITs limit a foreign government’s ability to require
BITs with 42 countries (Henry 2014). that American investors meet burdensome conditions
to operate in their markets. Finally, BITs ensure that
A BIT is an agreement between two countries that American investors can move capital freely in and out of
outlines a road map for foreign investment in each other’s the country in which they have invested (Henry 2014).
countries. When countries enter into a BIT, both countries
agree to provide protections for the other country’s BITs give American investors access to a neutral, third-
foreign investments. A BIT provides major benefits for party arbitrator when a problem arises with another
American investors in another country, including national investor or the host government. This provision can be
treatment, fair and equitable treatment, protection extremely helpful for investors in countries where the
from expropriation and performance requirements for legal system is not mature or well-established. Notably,
investments, and access to neutral dispute settlement. A the dispute settlement provisions do not give foreign
BIT ensures that foreign governments will treat American investors more rights than those already established
investors the same as domestic companies, a practice in US law, thanks to America’s mature legal system, but
known as “national treatment”. BITs also guarantee the benefits for American investors in China would be
that American investors are given the same types of significant (Henry 2014).
preferences that other foreign investors are given in a
market, also called “most-favored nation” treatment. BITs are tools to break down market access barriers and
Under a strong US-China BIT, the Chinese government give American companies greater protections overseas,
would treat US companies the same as Chinese but they can’t address every problem that companies
companies (Henry 2014). face abroad. For example, American companies in
China face challenges in protecting and enforcing their
The promise of equal treatment applies to investments intellectual property rights (IPR). A BIT would not fix those
made prior to the time the BIT enters into force and to problems directly. Indirectly, however, a BIT would help
new investments in the market. That means that BITs bar US companies protect their IPR in China. The BIT would
foreign governments from using investment restrictions, remove ownership restrictions that force US companies
in some sectors to partner with Chinese firms in order
104
