Is China following the global trend towards comprehensive trade and investment agreements?

There has been much talk recently about so-called “high-standard” trade and investment agreements such as the Trans-Pacific Partnership or the Transatlantic Trade and Investment Agreement and their impact on global rule-making. The investment chapters of these agreements will most likely combine traditional “BIT-like” (BIT – Bilateral Investment Treaty) provisions that apply to the post-establishment phase with market access provisions (i.e. national treatment in the pre-establishment phase) and investor-state dispute settlement clauses.

Importantly, these two negotiations processes do not include China. I have argued (with Clara Brandi) that one purpose of such “Mega Regionals” – at least from an US or EU perspective – is to put pressure on China and other emerging countries to commit to further liberalisation of trade and investment policies.

However, what are the chances that China will adopt such far-reaching rules on the treatment of investors? In other words, to what extent can we observe a “NAFTA-isation” of China’s preferential trade and investment agreements (PTIAs)?

My new paper “Investment rules in Chinese preferential trade and investment agreements“ suggests that the chances are low that China will follow the global trend towards comprehensive agreements.

To this date, China concluded 11 preferential trade agreements of which only six include comprehensive rules on investment (Pakistan (2006), New Zealand (2008), Singapore (2008), Peru (2009), ASEAN (2009), Costa Rica (2010)). In my paper I argue that for China PTIAs are not the tool to introduce new and innovative treaty language (for example market access provisions) beyond what China is willing to include in its BITs. In fact, for China, BITs and PTIAs are two sides of the same coin.

Given China’s treaty-making history – not to mention its relative inexperience to negotiate “high-standard” PTIAs with other major economies – it is not very likely that China will readily follow the example of the US and the EU. The slow-moving negotiations between China and the US on a BIT and the EU’s rejection of China’s PTIA proposal are a case in point.

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