Toward a US-China Investment Treaty

PIIE Briefing
15-1
February 2015
The United States and China are among the world's largest trading nations. They serve as the destination and source of the world's largest flows of foreign direct investment, and they participate in regional economic arrangements on trade and investment in the Asia-Pacific region and other parts of the world. Yet when it comes to direct investment in each other's economies, China and the United States are among the world's underperformers. The successful conclusion of the negotiation of a US-China bilateral investment treaty (BIT) could change this situation.

In this PIIE Briefing, experts examine prospects for a US-China BIT now that negotiations have revived after a hiatus following the 2008 election of President Barack Obama, whose economic team had other economic priorities upon taking office. After spending its first years holding internal debates about trade deals, the administration completed an internal US government review of investment issues in 2012 and resumed talks with China in 2013. The essays in this study focus on recent developments that could inform and possibly set precedents for the investment pact. They also examine issues that pose challenges to a successful negotiation.

Jeffrey J. Schott and Cathleen Cimino analyze the recent China-Japan-Korea investment pact and compare it with investment provisions that the United States has developed in its model BIT. Sean Miner and Gary Clyde Hufbauer discuss how a US-China BIT should address US concerns in China regarding subsidies, unfair advantages for state-owned enterprises, and uneven application of competition policy. J. Bradford Jensen analyzes the potential for increased trade in business services. Hufbauer, Miner, and Theodore H. Moran analyze review procedures of the Committee on Foreign Investment in the United States (CFIUS). In a concluding overview, C. Fred Bergsten assesses the broader context of US-China economic relations.

 

Contents

1 The China-Japan-Korea Trilateral Investment Agreement: Implications for US Policy and the US-China Bilateral Investment Treaty
Jeffrey J. Schott and Cathleen Cimino

2 State-Owned Enterprises and Competition Policy: The US Perspective
Sean Miner and Gary Clyde Hufbauer

3 Role of a Bilateral Investment Treaty in Increasing Trade in Services between China and the United States
J. Bradford Jensen
Data disclosure: The data underlying this analysis are available here [zip].

4 Committee on Foreign Investment in the United States and the US-China Bilateral Investment Treaty: Challenges in Meeting China's Demands
Gary Clyde Hufbauer, Sean Miner, and Theodore H. Moran
Data disclosure: The data underlying this analysis are available here [xlsx].

5 A Bilateral Investment Treaty and Economic Relations between China and the United States
C. Fred Bergsten