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A shot in the arm for Sino-US ties

By Harvey Dzodin | China Daily | Updated: 2013-07-22 08:23

At the time of the historic meeting between Chinese President Xi Jinping and his US counterpart Barack Obama in Sunnylands, California, many wondered if the pronouncements of personal bonhomie and mutual bilateral cooperation were mere diplomatic niceties papering over irreconcilable differences, or truly the start of a new, more positive, relationship between the dominant power, the US, and the rising power, China.

Now with the conclusion of the fifth Strategic and Economic Dialogue, the first fruits of that tie-less encounter are appearing, and the harvest looks promising.

While some cynical observers claim that the only major flowering of the new Sino-American relationship at the S&ED was the fast-tracking of a Chinese garden in Washington's National Botanical Garden, I wholeheartedly disagree.

During the confidence building stage of this new relationship, attitude is as important as substance. China could have easily torpedoed this S&ED to express its pique over former National Security Agency agent Edward Snowden's expos of the US surveillance program. The US could have done so over Hong Kong's refusal to hand Snowden over to it to face the American justice system. Instead, positions were strongly expressed and duly noted, and the dialogue was able to take place.

In addition to progress on issues such as improved military-to-military cooperation, the environment and a host of other matters, China's new stance after nine previous inconclusive sessions on a "Bilateral Investment Treaty" is big news, although the hardest work is yet to come, and because of ongoing congressional paralysis, US approval requiring a two-thirds majority in the Senate should a mutually acceptable treaty be negotiated, is, at best, probably years away. However, this treaty could be a game-changer.

Most BITs are generally limited to adjudicating routine investor disputes. But China has gone on record to negotiate the BIT with "high standards", indicating that it will include all stages of investment and all sectors.

This is the first time China has agreed to do so with any country. The US would benefit from increased access to the Chinese market, particularly in the service sector where it maintains a competitive advantage. China could benefit from more consistent treatment of its investors in the US in addition to benefiting from access to US workplace productivity tools and technologies inside China to improve its productivity and economic efficiency.

According to US Treasury Secretary Jack Lew, the agreement could, for the first time, include all phases of investment, including market access, and sectors of the Chinese economy (except for limited negotiated exceptions).

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