US-China Meetings Build Ground for Investment Treaty

Top government officials from the US and China met in Beijing late last week for a series of high-level discussions, addressing topics such as currency reform, a planned investment treaty, and a prolonged row over a tech trade deal. While officials reported constructive talks in these and other areas, analysts note that more work will be needed to translate this progress into concrete results.

The US-China Strategic & Economic Dialogue has become a regular feature on the international calendar, serving as an opportunity for the two sides to advance dialogue and potentially find solutions in what has traditionally been a complicated relationship, one of both cooperation and competition.

China became the world’s largest trader earlier this year, surpassing the US, a long-time holder of that title. The rise of the Asian nation on the world economic stage has not been without controversy, however, and the two sides have sparred repeatedly over topics ranging from renewable energy support policies to the use of trade remedies.

The efforts of the US to close a trade deal with 11 other Pacific Rim countries in the near-term – an initiative known as the Trans-Pacific Partnership– has prompted many analysts to suggest that the pact is meant to counter the growing influence of China. To date, Beijing is not a member of the group negotiating the trade deal, and has not formally requested entry, though it has asked for information regarding TPP developments.

Investment treaty timetable

A potential timetable for the negotiation of a bilateral investment treaty (BIT) between the two sides was another key focus of the meeting. The renewal of these plans was a key outcome of last year’s bilateral talks, though the process had originally begun under previous US President George W. Bush.

The recent move to ease investment restrictions in the Shanghai Free Trade Zone – a Chinese pilot project that aims to serve as a testing ground for reforms – has been raised as a potential model for how Beijing may approach its BIT negotiations with Washington.

According to Froman, the US has received assurances from its Asian trading partner about a “timetable for moving forward” on the “negative list” component of the pact. Under a negative list approach, all sectors are open to investment except for those specifically deemed closed.

Chinese Vice Premier Wang Yang confirmed additional details in his statement to reporters last week, noting that the two sides are aiming to reach a deal this year on the BIT text’s core issues and main articles, and would launch negative list negotiations in early 2015.