U.S. urged to amend
national security proviso in China investment treaty
talks
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[October 23, 2015] By
Michael Martina
BEIJING (Reuters) - The United States must
amend a standard national security provision in investment treaties when
negotiating with China, a U.S. business lobby said on Friday, or risk
giving Beijing the green light to limit U.S. market access.
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China, which has more barriers on foreign investment than the United
States, is in talks with Washington to narrow the "negative list" of
sectors closed to the other side's investors as part of a bilateral
investment treaty (BIT).
Keeping a standard exemption in the treaty for sensitive sectors
could allow China to apply the proviso to its own national security,
which it defines more broadly, to cover anything from the military
to ecological, societal and cultural security.
Washington should make adjustments to the model treaty it has used
since 2012 in order to tackle "Chinese circumstances", Tim
Stratford, the chairman of the BIT task force of the American
Chamber of Commerce in China, told reporters.
"While it's a very strong starting point for negotiations, it might
be appropriate to make a few adjustments in it that would make it
more directly applicable," Stratford told reporters at a briefing on
a Chamber report on the talks.
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"If you have the same carve-out on the Chinese side but they have a
definition that is this broad, then you can see why that could raise
some concerns," added Stratford, a former assistant U.S. Trade
Representative.
U.S. investors hope that a treaty will widen their access to many
industries tightly controlled in China, from financial services to
healthcare.
Beijing and Washington have agreed to hasten work on the investment
treaty, but business groups fear new national security guidelines in
China could stall progress.
Foreign companies say the rules are a rollback of China's vows to
usher in market reforms, as they require use of "secure and
controllable" technology, with data operations to be based on the
mainland.
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China says the new policies will bolster networks and better
regulate information in the face of growing security threats.
The "protracted rollout of market openings" will not only hurt the
Chinese economy, but could have a "cooling effect" on talks, the
Chamber said, adding that Chinese officials had told numerous
companies that further market opening would be delayed until the
investment treaty was complete.
"What is needed is true market access without underhanded and
unwritten barriers that could potentially render the BIT
meaningless," Chamber Chairman James Zimmerman said in the report.
(Reporting by Michael Martina; Editing by Clarence Fernandez)
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