The Chamber and the U
To: / Asia Task Force, China AmChams
I) Chamber Co-Hosts BIT Discussion; Welcomes Corporate Feedback
II) Bush Raises Opposition to China Legislation, Highlights Benefits of Trade
III) China’s Trade Surplus Increases 23%
IV) Dates Set for JCCT, Tentatively Set for SED
I) Chamber Co-Hosts BIT Discussion; Welcomes Corporate Feedback
Given ongoing investment discussions in both the JCCT and SED, the Chamber and the U.S.-China Business Council co-hosted a meeting earlier this week to discuss the prospects for and the advantages and disadvantages of a bilateral investment treaty (BIT) with China. Former USTR General Counsel Jim Mendenhall delivered a 30 minute power point presentation (attached to this email) on the potential benefits and challenges of negotiating a BIT with China. The Chamber is currently working with AmCham to organize a similar forum for Mendenhall the first week of December in Beijing.
Key points from the discussion were as follows:
- There was general agreement that the U.S. Government (USG) should continue to move forward in its efforts to gauge P.R.C. Government (PRCG) interest in a U.S.-style BIT.
- Corporate participants strongly agreed that the USG should pursue a high-quality BIT which closely mirrors the model US BIT, and specifically includes pre-establishment issues like equity caps and capitalization requirements.
- There appeared to be general consensus among participants that it would be unwise to move forward with a BIT with China in the absence of simultaneous action on BITs with Brazil, Russia, and India. A recent letter from key business associations, to which the Chamber is a signatory, reflects this point. Please find the letter attached.
- Despite strong agreement that signing a model BIT with China would yield significant benefits for American firms, concerns were expressed regarding the potential for BIT negotiations to detract from the Administration’s efforts to secure meaningful commitments in the JCCT and SED processes.
- There was significant discussion about the self-regulating national security component of BITs, and how the Chinese might utilize such an exemption to protect industries that are alleged to be important to economic security.
- Finally, there was discussion about how to convince the Chinese that a U.S.-style BIT is in its interest.
- Development of an investment roadmap for the USG and PRCG that would detail investment barriers by sector and highlight needed changes to China’s investment regime;
- Honing arguments as to why a U.S.-style BIT is in China’s interest.
II) Bush Raises Opposition to China Legislation, Highlights Benefits of Trade
In an interview with the Wall Street Journal yesterday, President Bush provided a preview of a speech that he delivered today in Miami on his Administration’s trade agenda. In response to what he described as growing “isolationism and protectionism in both parties”, Bush highlighted the benefits of trade and free trade agreements.
In his comments, Bush:
- Expressed his strong support for trade adjustment assistance;
- Called on Congress to pass pending free trade agreements with Colombia, Panama, and South Korea; and
- Stated his commitment to continue work on Doha.
III) China’s Trade Surplus Increases 23%
China reported a larger-than-expected trade surplus and an acceleration of money-supply growth for September, trends that will likely lead to continued scrutiny of China’s exchange rate policies prior to the meeting of the Group of Seven in Washington next week.
Exports of goods in September totaled $112.48 billion, up 23% from the same month last year. Europe replaced the U.S. as China’s biggest export market this year, as Chinese exports to the EU in the first nine months of the year expanded 31%, outpacing the 16% growth in exports to the U.S.
In addition, while the yuan has risen 3.9% against the U.S. dollar so far this year, it has dropped 2.9% against the euro. In light of this, European finance ministers this week called on China to untether the yuan to help rebalance global exchange rates. Europe is likely to continue to pressure China in coming meetings of international policymakers.
Aside from the G-7 meeting in Washington, the International Monetary Fund and World Bank are meeting October 20-22.
IV) Dates Set for JCCT, Tentatively Set for SED
In comments to the press (attached) following negotiations in Beijing, Deputy U.S. Trade Representative Karan Bhatia and Acting Undersecretary of Commerce Chris Padilla announced that the next session of the Joint Commission on Commerce and Trade (JCCT) will take place in Beijing December 11. They also noted that the next meeting of the Strategic Economic Dialogue (SED) is tentatively set to follow the JCCT in Beijing December 12-13.
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