Expansion of Trade and FDI in Asia: Strategic and Policy Challenges by Julien Chaisse & Philippe Gugler

Author:Julien Chaisse & Philippe Gugler [Chaisse, Julien & Gugler, Philippe]
Language: eng
Format: epub
Tags: Political Science, General, Social Science, Ethnic Studies, Regional Studies
ISBN: 9781134008438
Google: em94AgAAQBAJ
Goodreads: 17474089
Publisher: Routledge
Published: 2009-05-22T00:00:00+00:00

The developing countries acting as host countries for foreign investment are generally concerned that providing national treatment could prevent them from pursuing development objectives.20 With the restriction of ‘without prejudice to its laws and regulations’, the contracting parties may to a certain degree reserve the right to grant preferential treatment to national investment. The practical significance of the related national treatment clauses would then be reduced by such a restriction, because the host country could enact ‘laws and regulations’ and thus refuse to grant the national treatment thereby.

Although some of the Chinese BITs concluded before 2000 do provide national treatment, they are only a fraction of Chinese BITs concluded at that time. Therefore, it is a remarkable change in China’s BIT practice that most of the Chinese BITs concluded in the twenty-first century grant national treatment.

This change is consistent with the gradual acceptance of national treatment in China.21 The initial reluctance to accept national treatment had historical and political roots.22 Moreover, granting national treatment is difficult in an economic system where state-owned enterprises dominate and subsidies have been granted exclusively to such enterprises (UNCTAD 1999: 16). The economic reform in China, which is aimed at establishing a market economy including privatization, and the related legal reform form the present political background for the progressive acceptance of national treatment.23 Last but not least, China’s entry into the WTO is also a contributory factor (Zhou 2000: 146–47).

Notwithstanding the limitations in favour of the existing non-conforming measures of China, the national treatment obligation in the new China–Germany BIT is stricter than that in the Chinese BITs with other developing countries which are conditioned by ‘without prejudice to its laws and regulations’. This restriction makes the related national treatment clauses little different from the few provisions of this kind in the old Chinese BITs conducted before 2000. Nevertheless, the investor–state dispute settlement provisions in the new agreements differentiate them from their old counterparts and have an impact on the practical significance of similar national treatment clauses.

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