[Excerpt] This paper, prepared by the Economist Intelligence Unit for the US-China Economic and Security Council, summarises the context, current discussions and implications of a potential US-China bilateral investment treaty (BIT). The paper is organised in six sections:
I. Existing US BITs
II. China’s current BITs with other countries
III. The potential US-China BIT
IV. Major regulatory and transparency issues
V. Implications for the US economy
Simply defined, a BIT is a treaty between two countries designed to promote and protect investments between the two signatory states. A BIT provides investors with a safer and more transparent investment environment by guarding against the risk of expropriation by the host state. Many countries, especially the larger economies, sign BITs with their main trading partners, both to ensure that companies from their country receive proper protection when they make investments abroad and to ensure that their rights can be protected and enforced through binding international arbitration.