Page 106 - 2017 White Paper
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7 White Paper on the Business Environment in China
to invest. Without these restrictions, companies are in a China”. According to top political website The Hill, the
better position to protect their IPR because they can own 51 U.S. chief executives of firms which included Fortune
100 percent of their operations instead of sharing their 500 companies such as Walt Disney and Coca Cola, sent
IPR with a partner (Henry 2014). a letter of support for the BIT to the White House and
“asking the president to make such discussions a high
A BIT does not address government subsidies to priority” with China’s President Xi Jinping in November
Chinese companies or give equal access to government 2014 (Needham 2014).
procurement markets. Those issues must be addressed
under separate initiatives, either bilaterally or by getting According to the contents of the letter, the American
China to join the World Trade Organization’s (WTO) business leaders wrote the following to President Obama:
Government Procurement Agreement (Henry 2014). “The commercial relationship between the United States
and China is enormously important to our companies
A BIT would, however, bar the Chinese government and the health of the American economy. Getting this
from granting preferential treatment to state-owned commercial relationship right — by expanding the
enterprises (SOEs) and private Chinese companies. In opportunities and effectively addressing the challenges
addition, a BIT would obligate SOEs to treat US investors — will help maintain American economic strength
fairly. This requirement would help protect US companies and leadership in the decades ahead. If China can
in China from unfair treatment. Some SOEs are given significantly reduce its negative list and open markets
authority to regulate aspects of an industry even though to American manufacturers, agriculture producers, and
they act as a commercial competitor in that industry. In service providers, you will find the business community
these situations, the BIT would ensure that US companies’ fully engaged and supportive of your leadership to gain
competitors do not have the ability to regulate in their Senate approval of the treaty” (Needham 2014).
own favor.
Leading the group’s efforts was US-China Business
Even if a BIT cannot address all SOE-related issues, even Council head John Frisbie, who said the letter “represents
if issues are currently outside of the BIT’s scope – a BIT is a strong message” and adding that “completing a high-
still good for Americans operating businesses in China. standard U.S.-China BIT will have a significant and lasting
The Obama administration spent three years revising the impact on the trajectory of the U.S.-China commercial
US“Model BIT”, which is used as a basis from which the US relationship and a more equitable commercial framework
negotiates its BIT agreements. In that process, the United to guide the relationship forward” (Needham 2014).
States made important modifications that effectively
address concerns about SOEs (Henry 2014). A few months earlier, the importance of the treaty
between the two countries was emphasized by US
At the time of writing, the United States and China Ambassador to China Max Baucus, who, in his first
are in the middle stages of negotiating the BIT. When the Beijing public engagement in June 2014 since taking up
BIT text is final and ready for government consideration, the post in March, stated to the Wall Street Journal that
the treaty will be submitted to the Senate and referred “There’s a lot of work to do on the [treaty], but moving
to the Committee on Foreign Relations. Once considered, forward on that will be a top priority for me”. According
the Committee may report the treaty to the full Senate to the same media report, the Ambassador has a proven
favorably, unfavorably, give no recommendation, or track record in negotiating trade deals with China. The
choose not to act it at all. When a treaty has been reported Wall Street Journal recalls that in the 1990s, Mr. Baucus,
to the Senate, it will be added to the Executive Calendar then a senator, worked with then-Premier Zhu Rongji to
and considered in executive session. Two-thirds of the promote China’s entry into the World Trade Organization,
Senate must vote in favor of the BIT, via a resolution of which proved to be China’s “catalyst for internal reform
ratification, in order for it to pass (Henry 2014). and the beginning of a decade of breakneck economic
expansion”. Mr. Baucus stated: “I believe that the [treaty]
The importance of the US-China BIT was brought to could do for China’s investment regime what the WTO
the attention of US President Barack Obama in October did for trade”. He recalled that when working on the
2014, when more than 50 business leaders called on WTO deal, Mr. Zhu told him, “I need you to push from the
the President to “make the completion of a bilateral outside so I can push from the inside” (Silk 2014).
investment treaty the focus of meetings next month in
106
to invest. Without these restrictions, companies are in a China”. According to top political website The Hill, the
better position to protect their IPR because they can own 51 U.S. chief executives of firms which included Fortune
100 percent of their operations instead of sharing their 500 companies such as Walt Disney and Coca Cola, sent
IPR with a partner (Henry 2014). a letter of support for the BIT to the White House and
“asking the president to make such discussions a high
A BIT does not address government subsidies to priority” with China’s President Xi Jinping in November
Chinese companies or give equal access to government 2014 (Needham 2014).
procurement markets. Those issues must be addressed
under separate initiatives, either bilaterally or by getting According to the contents of the letter, the American
China to join the World Trade Organization’s (WTO) business leaders wrote the following to President Obama:
Government Procurement Agreement (Henry 2014). “The commercial relationship between the United States
and China is enormously important to our companies
A BIT would, however, bar the Chinese government and the health of the American economy. Getting this
from granting preferential treatment to state-owned commercial relationship right — by expanding the
enterprises (SOEs) and private Chinese companies. In opportunities and effectively addressing the challenges
addition, a BIT would obligate SOEs to treat US investors — will help maintain American economic strength
fairly. This requirement would help protect US companies and leadership in the decades ahead. If China can
in China from unfair treatment. Some SOEs are given significantly reduce its negative list and open markets
authority to regulate aspects of an industry even though to American manufacturers, agriculture producers, and
they act as a commercial competitor in that industry. In service providers, you will find the business community
these situations, the BIT would ensure that US companies’ fully engaged and supportive of your leadership to gain
competitors do not have the ability to regulate in their Senate approval of the treaty” (Needham 2014).
own favor.
Leading the group’s efforts was US-China Business
Even if a BIT cannot address all SOE-related issues, even Council head John Frisbie, who said the letter “represents
if issues are currently outside of the BIT’s scope – a BIT is a strong message” and adding that “completing a high-
still good for Americans operating businesses in China. standard U.S.-China BIT will have a significant and lasting
The Obama administration spent three years revising the impact on the trajectory of the U.S.-China commercial
US“Model BIT”, which is used as a basis from which the US relationship and a more equitable commercial framework
negotiates its BIT agreements. In that process, the United to guide the relationship forward” (Needham 2014).
States made important modifications that effectively
address concerns about SOEs (Henry 2014). A few months earlier, the importance of the treaty
between the two countries was emphasized by US
At the time of writing, the United States and China Ambassador to China Max Baucus, who, in his first
are in the middle stages of negotiating the BIT. When the Beijing public engagement in June 2014 since taking up
BIT text is final and ready for government consideration, the post in March, stated to the Wall Street Journal that
the treaty will be submitted to the Senate and referred “There’s a lot of work to do on the [treaty], but moving
to the Committee on Foreign Relations. Once considered, forward on that will be a top priority for me”. According
the Committee may report the treaty to the full Senate to the same media report, the Ambassador has a proven
favorably, unfavorably, give no recommendation, or track record in negotiating trade deals with China. The
choose not to act it at all. When a treaty has been reported Wall Street Journal recalls that in the 1990s, Mr. Baucus,
to the Senate, it will be added to the Executive Calendar then a senator, worked with then-Premier Zhu Rongji to
and considered in executive session. Two-thirds of the promote China’s entry into the World Trade Organization,
Senate must vote in favor of the BIT, via a resolution of which proved to be China’s “catalyst for internal reform
ratification, in order for it to pass (Henry 2014). and the beginning of a decade of breakneck economic
expansion”. Mr. Baucus stated: “I believe that the [treaty]
The importance of the US-China BIT was brought to could do for China’s investment regime what the WTO
the attention of US President Barack Obama in October did for trade”. He recalled that when working on the
2014, when more than 50 business leaders called on WTO deal, Mr. Zhu told him, “I need you to push from the
the President to “make the completion of a bilateral outside so I can push from the inside” (Silk 2014).
investment treaty the focus of meetings next month in
106
