Bilateral talks bring investment boost closer
Progress in China-US negotiations hailed as breakthrough on path to a key trade deal
The biggest Chinese takeover of a US company - Shuanghui International's US$4.7 billion bid for top pork producer Smithfield Foods - encountered another hurdle last week, but progress in bilateral talks last month offers hope that such problems could one day be a thing of the past.
An all-encompassing bilateral investment treaty (BIT) between China and the United States appears a step closer after advances in negotiations at the China-US strategic and economic dialogue in Washington on July 10-11.
Both countries announced "a significant breakthrough" towards reaching a BIT that would include all industries and all stages of investment - opening up 100 sectors for investment, including ones largely closed to foreign investors on the mainland such as financial services.
The two countries also agreed for the first time to carry forward negotiations on the basis of pre-establishment national treatment and a negative list. National treatment means that foreign investors are guaranteed the same treatment by a state as its own nationals and pre-establishment national treatment guarantees it before foreign investors have even entered the country, helping to minimise risk.
"It is a promise about the future: from now on you are not going to be discriminated against, ever," said Julien Chaisse, a law professor at Chinese University.
A negative list, contrary to a positive list that specifies what foreign investors can do, makes clear what they cannot do, meaning everything else is possible.
The mainland currently treats foreign firms on the basis of a positive list and case-by-case approval, with no reliable channel for legal disputes, so pre-establishment treatment and a negative list would be ground-breaking and give US investors significant advantage over others.
