US, China aim for launch of investment treaty talks at bilateral meeting
Thomson Financial News | 06.17.08
US, China aim for launch of investment treaty talks at bilateral meeting
ANNAPOLIS, Maryland (Thomson Financial) — Senior US and Chinese officials today launched a two-day series of talks that could result in the launch of negotiations for a new investment treaty that the US hopes would help expand US investment in China and protect existing investment.
US Treasury Secretary Henry Paulson, who leads the talks for the US side, said trade and investment would play a big role in this week’ meeting of the so-called US-China Strategic Economic Dialogue.
’We will discuss the steps needed to ensure that our countries and the world economy remain open to trade,’ Paulson said in his opening remarks in today’s meeting. ’We will discuss the best way to promote and protect bilateral investment and to counter protectionist pressures.’
Specifically, the two sides are hoping to launch negotiations for a Bilateral Investment Treaty (BIT), although sources close to the effort say the two countries are still split over how to structure such an agreement.
For example, the US wants to start from the position of having open investment except for a limited list of exceptions, while China wants to assume no liberalization of investment except in areas it specifies. The US approach is widely seen as creating a much broader agreement, while some fear China’s approach would limit the effectiveness of an agreement.
Industry groups are hopeful that the talks can be launched, since the resulting agreement could help companies that are already in China.
’The US-China Business Council supports a strong BIT, especially if it gives us traction on our members’ investment-related issues in China,’ said Erin Ennis, vice president of the US-China Business Council.
Issues that a BIT might resolve for the US include an easing of rules related to business licensing and a means to settle disputes between investors and the Chinese government.
Paulson today said this week’s meetings would also build upon the food safety agreements that both countries agreed to at the December SED meeting near Beijing. And he said energy cooperation — a topic that has come up more frequently as energy prices surge — would also be discussed.
’As the two largest net importers of oil, China and the United States face similar challenges as demand for energy increases, and the global production capacity has remained relatively flat for the past ten years,’ he said.
The US has also used the SED meetings to press China for a more flexible currency regime. Since July 2005, when China agreed to lift its strict peg to the dollar, the yuan has increased in value nearly 20 pct against the dollar, but last week, Paulson said this is not yet enough, and the pace of appreciation needs to increase.
The two countries today said they hope to be in a position later this year to allow US food inspectors to be stationed in China, although a Chinese official said this is conditioned on the US allowing Chinese food inspectors to be stationed in the US.
But otherwise, the results of today’s meetings are expected to be revealed Wednesday.
