China, US 'pragmatic about pact'

An MIIX2 tablet made by China's Lenovo Group is shown at the Las Vegas International Consumer Electronic Show. China is revising its laws on foreign investment to build a more transparent environment. Yang Lei / Xinhua

Real challenges still loom for negotiations over concessions

China and the United States are bracing for mounting challenges before completing their bilateral investment treaty, although the two sides reportedly took a pragmatic view toward the pact during their recent two-day closed-door meeting.

The 11th Sino-US Round of Negotiations for the bilateral investment treaty ended Wednesday in Shanghai to figure out procedures for the future talks.

"This round of negotiation is aimed at setting down the modalities, or the procedures and methods, for advancing the negotiations," said Wang Xinkui, president of the Shanghai WTO Affairs Consultation Center.

But he warned that the real difficulties of the negotiations have yet to come, and the biggest challenge will lie in the schedules of concessions, or each side's specific commitments.

"The next round of negotiations will not go very quickly or easily because the talks must proceed in accordance with China's reforms at home," he added.

Li Chenggang, director-general of the Department of Treaty and Law of the Ministry of Commerce, and also head of the Chinese negotiation delegation, said the closed-door negotiations on Tuesday "went smoothly, but that doesn't mean that no disagreements exist between the two sides".

Wednesday's talks, he said, focused on the details of the modalities. Li noted that both sides have agreed to adopt an active, pragmatic and collaborative attitude toward the negotiations.

"We will balance the protection of investors' rights with governmental supervision to reach a high-level pact facilitating investment in both countries and benefiting each country's economic development," Li said.

Commerce Minister Gao Hucheng said negotiating the investment pact "will happen every two months in China and the US by turns, and the pact, once established, will mark a milestone in China's reform of investment mechanisms", State broadcaster China Central Television reported on Wednesday.

China and the US began discussion of a bilateral investment treaty in 2008, but the talks did not progress far, with China's insistence on a long list of protections for some domestic sectors.

The discussions restarted in July 2013, when China made an important concession on the negotiation basis. Every sector will come up for discussion unless restricted by a "negative list", and foreign enterprises will be given "pre-establishment national treatment", or treated the same as domestic companies.

The 10th round of negotiations, held in Washington, DC, in October, showed the discussions entering a substantive stage.

China is revising its laws on foreign direct investment to build a stable, transparent and predictable environment and to raise foreign investors' confidence in the world's second-largest economy, Wang Shouwen, China's assistant minister of commerce, said on Tuesday.

The government set up the China (Shanghai) Pilot Free Trade Zone last year to streamline administrative procedures for foreign direct investment and to try out the approach of a negative list and equal treatment for foreign enterprises.

It will unify laws and regulations on local and foreign investments and let the market play a decisive role in the allocation of resources.

It also will step up the establishment of investment pacts with other countries and reform the approval mechanism for foreign investment, according to a report from the Third Plenary Session of the 18th Central Committee of the Communist Party.

"The China-US bilateral investment pact carries more significance than China's accession into the World Trade Organization," said Wang Xinkui of the Shanghai WTO Center.

"China is now the world's biggest goods trader and second-largest economy. The bilateral pact between the world's top two economies represents the orientation of global investment rules and covers issues such as intellectual property rights, labor and environmental protection. It will also shed light on the future investment pacts with other economies."

China's direct investment in the US has increased rapidly in recent years, surging 232.2 percent year-on-year in the January-November period of 2013, said the ministry.