Challenges and Solutions for the China-US BIT Negotiations: Insights from the Recent Development of FTZs in China

Abstract

Before conducting profound reforms of the trade and investment legal framework, China often implements the reforms on a small scale, generally in specified geographic zones, as testing grounds. From 2013 to 2015, China established four free trade zones (FTZ) as pilot projects to test how to update Chinese trade and investment law, boost China’s economy, and prepare China for high-standard BITs/FTAs negotiations. This paper analyzes the interactions between China’s FTZs and the China-US BIT negotiations, and explores what insights gathered from China’s FTZs can provide a better approach to challenges in the China-US BIT negotiations. It concentrates on three issues of the BIT negotiations: non-conforming measures, pre-establishment national treatment, and transparency. For each issue, this paper compares other BITs concluded by China and the US and analyzes their differences, then it explores the reasons for the differences and how they can be reconciled by experiments in China’s FTZs, and finally it proposes solutions for the China-US BIT negotiations.

Keywords: FTZ, China-US BIT Negotiations, Non-Conforming Measures, Pre-Establishment National Treatment, Transparency