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European Yearbook of International Economic Law 2017 pp 475–490Cite as

The China-EU BIT as a Stepping Stone Towards a China-EU FTA: A Policy Analysis

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Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 8))

Abstract

China and EU are negotiating a BIT while envisaging an FTA as a long term goal for deepening bilateral economic relations. The two parties are determined to negotiate a comprehensive BIT that will provide a high level of investment protection and feature broad market access and deep investment liberalisation commitments. Although China has not developed a clear FTA-making strategy, a brief empirical study of the relationship between China’s BITs and its existing FTA investment chapters suggests that China has adopted the “from BIT to FTA” approach. In recent years, China has also sped up its FTA-making and tried to engage in making high level and multilateral FTAs. The negotiation and conclusion of the China-EU BIT may, when considered from various different perspectives, serve as a “stepping stone” for a China-EU FTA. It is helpful in terms of providing a methodological reference, in furnishing an important source of substantive content as well as in building a favourable political and legal environment for the negotiation of the FTA. Further, the making of a China-EU FTA can be a sensible strategic option in order for China to enhance its engagement in global trade governance.

The author sincerely thanks Prof. Andrea K. Bjorklund, Faculty of Law, McGill University, for her insightful comments on the previous draft, and Prof. Marc Bungenberg, Europa-Institut, Saarland University, for his kind invitation and unfailing support. The author is solely responsible for the opinions and errors of the article.

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Notes

  1. 1.

    Pelkmans et al. (2016), p. 35.

  2. 2.

    European External Action Service, EU-China Relations: Chronology, http://www.eeas.europa.eu/china/docs/chronology_2012_en.pdf (last accessed 1 March 2017).

  3. 3.

    European Commission, EU and China Begin Investment Talks, Press release IP-14-33, 20 January 2014.

  4. 4.

    European Commission, EU-China 2020 Strategic Agenda for Cooperation, 2013, http://eeas.europa.eu/china/docs/eu-china_2020_strategic_agenda_en.pdf (last accessed 1 March 2017).

  5. 5.

    Kong (2012), p. 1205.

  6. 6.

    Henckels (2008), p. 571.

  7. 7.

    Article XXIV GATT 1994.

  8. 8.

    The full text of TPP is available at https://www.tpp.mfat.govt.nz/text (last accessed 1 March 2017).

  9. 9.

    See Williams B, Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis, Congressional Research Service R42344, 2013.

  10. 10.

    Chapter 17 of the TPP.

  11. 11.

    Chapter 19 of the TPP.

  12. 12.

    Chapter 20 of the TPP.

  13. 13.

    Chapter 25 of the TPP.

  14. 14.

    Chapter 26 of the TPP.

  15. 15.

    Freytag et al. (2014), p. 19.

  16. 16.

    See Gao H, China’s Strategy for Free Trade Agreements: Political Battle in the Name of Trade, Asian Regional Workshop on Free Trade Agreements: Towards Inclusive Trade Policies in Post-crisis Asia, 8–9 December 2009, pp. 3–6; Wang (2005).

  17. 17.

    Khor (2008).

  18. 18.

    See Kong (2012), p. 1199 et seq.

  19. 19.

    See Malli (2015), p. 509; UNCTAD, Lessons from the MAI, UNCTAD Series on Issues of International Investment Agreements, UNCTAD/ITE/IIT/MISC.22, 1999.

  20. 20.

    See http://www.mofcom.gov.cn/article/i/ck/201307/20130700205811.shtml (last accessed 1 March 2017).

  21. 21.

    International Business Daily, China-Australia FTA Coming into Effect, 31 December 2015, http://fta.mofcom.gov.cn/article/chinaaustralia/chinaaustraliagfguandian/201512/30077_1.html (last accessed 1 March 2017).

  22. 22.

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  23. 23.

    Du (2015), p. 424.

  24. 24.

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  25. 25.

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  26. 26.

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  27. 27.

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  30. 30.

    Li et al. (2014), p. 15.

  31. 31.

    Lo (2008), p. 153 et seq.

  32. 32.

    Lo (2008), p. 165.

  33. 33.

    See China FTA Network, http://fta.mofcom.gov.cn/english/ (last accessed 1 March 2017).

  34. 34.

    Poulsen L, Bilateral Investment Treaties and Preferential Trade Agreements: Is a BIT really better than a lot?, Investment Treaty News, 23 September 2010.

  35. 35.

    For instance, in China, MOFCOM is in charge of the negotiations of BITs and FTAs, and European Commission Directorate-General is the authorised organ for BIT and FTA negotiations.

  36. 36.

    Poulsen L, Bilateral Investment Treaties and Preferential Trade Agreements: Is a BIT really better than a lot?, Investment Treaty News, 23 September 2010.

  37. 37.

    Article 1 Annex 4 of the Supplementary Agreement on Investments of the China-Chile FTA.

  38. 38.

    Article 3 Annex 4 of the Supplementary Agreement on Investments of the China-Chile FTA.

  39. 39.

    See Article 30 VCLT; see also Orakhelashvili (2016).

  40. 40.

    Article 84 China-Singapore FTA.

  41. 41.

    Article 89 China-Costa Rica FTA.

  42. 42.

    Article 92 China-Iceland FTA.

  43. 43.

    Article 9.9 China-Australia FTA.

  44. 44.

    Article 9.9 China-Australia FTA.

  45. 45.

    Despite the occurrence of Brexit, this article deems UK as an EU member state, since legally speaking UK’s membership will not cease until the legal procedures are duly completed.

  46. 46.

    European Commission, Commission Proposes to Open Negotiations for an Investment Agreement with China, Press release IP-13-458, 23 May 2013.

  47. 47.

    European Commission, Trade for all – Towards a More Responsible Trade and Investment Policy, 2015, p. 31.

  48. 48.

    MOFCOM, The Negotiations of China-US BIT and China-EU BIT, 2015, http://history.mofcom.gov.cn/?newchina=%E4%B8%AD%E7%BE%8E%E3%80%81%E4%B8%AD%E6%AC%A7bit%E8%B0%88%E5%88%A4-2 (last accessed 1 March 2017).

  49. 49.

    See Ewert (2016).

  50. 50.

    European Commission, EU-China 2020 Strategic Agenda for Cooperation, 2013, http://eeas.europa.eu/china/docs/eu-china_2020_strategic_agenda_en.pdf (last accessed 1 March 2017).

  51. 51.

    Chi (2015a), pp. 378–381.

  52. 52.

    Krishna (2009), p. 26.

  53. 53.

    MOFCOM, The Negotiations of China-US BIT and China-EU BIT, 2015, http://history.mofcom.gov.cn/?newchina=%E4%B8%AD%E7%BE%8E%E3%80%81%E4%B8%AD%E6%AC%A7bit%E8%B0%88%E5%88%A4-2 (last accessed 1 March 2017); European Commission, EU and China Begin Investment Talks, Press release IP-14-33, 20 January 2014; Shan and Wang (2015), pp. 261–263.

  54. 54.

    European Commission, EU and China Agree on Scope of the Future Investment Deal, 15 January 2016.

  55. 55.

    See, e.g., European Union Chamber of Commerce in China, Chinese Outbound Investment in the European Union, January 2013, https://www.kpmg.de/docs/Chinese_Outbound_Investment_European_Union.pdf (last accessed 1 March 2017).

  56. 56.

    See, e.g., UNCTAD, Reform of Investor-State Dispute Settlement: In Search of a Roadmap, No. 2, June 2013.

  57. 57.

    European Commission, Why the new EU proposal for an Investment Court System in TTIP is beneficial to both States and investors, MEMO-15-6060, 12 November 2015.

  58. 58.

    Li (2014), pp. 177–179.

  59. 59.

    See European Commission, Sustainable Development, http://ec.europa.eu/trade/policy/policy-making/sustainable-development/ (last accessed 1 March 2017).

  60. 60.

    See Chi (2015b), p. 514.

  61. 61.

    See Salidjanova N, China’s Trade Ambitions: Strategy and Objectives behind China’s Pursuit of Free Trade Agreements, US-China Economic Security Review Commission Staff Research Report, 28 May 2015, pp. 23–35.

  62. 62.

    European Commission, EU-China 2020 Strategic Agenda for Cooperation, 2013, http://eeas.europa.eu/china/docs/eu-china_2020_strategic_agenda_en.pdf (last accessed 1 March 2017), p. 5.

  63. 63.

    China Institute for Reform and Development, China-EU FTA – Decisive Option for Deepening China-EU Cooperation by 2020, 2016, p. 22 et seq.

  64. 64.

    Pelkmans et al. (2016), p. 224 et seq.

  65. 65.

    Pelkmans et al. (2016), pp. 209–224.

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Authors and Affiliations

  1. Law School, Xiamen University, Xiamen, China

    Manjiao Chi

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  1. Manjiao Chi
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Editors and Affiliations

  1. Faculty of Law, Saarland University, Saarbrücken, Germany

    Marc Bungenberg

  2. Faculty of Law, University of Erlangen-Nürnberg, Erlangen, Germany

    Markus Krajewski

  3. School of Law, University of Glasgow, Glasgow, United Kingdom

    Christian Tams

  4. Competition and Regulation Institute, Leuphana University of Lüneburg, Lüneburg, Germany

    Jörg Philipp Terhechte

  5. Faculty of Law and Criminal Sciences, University of Lausanne, Lausanne, Switzerland

    Andreas R. Ziegler

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Chi, M. (2017). The China-EU BIT as a Stepping Stone Towards a China-EU FTA: A Policy Analysis. In: Bungenberg, M., Krajewski, M., Tams, C., Terhechte, J., Ziegler, A. (eds) European Yearbook of International Economic Law 2017. European Yearbook of International Economic Law, vol 8. Springer, Cham. https://doi.org/10.1007/978-3-319-58832-2_16

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