It’s the most important international trade deal no one is talking about.
Largely lost amid the furor over the recent Asia-Pacific trade deal, a separate bilateral economic treaty with Beijing that could have huge implications for U.S. businesses wanting to invest in China is moving toward completion.
If completed and approved by Congress, the deal would roll back technical barriers and investment restrictions that are limiting access to lucrative markets in both countries, similar to an investment chapter of a free-trade deal.
Given China’s stature as the world’s second-largest economy, the deal would have a massive impact on U.S. businesses, but it has largely been overshadowed by the massive Trans--Pacific Partnership (TPP).
“If TPP wasn’t happening, this would be the biggest news for the U.S. trade agenda,” said Christopher Swift, a former official with the Treasury Department Office of Foreign Assets Control and current national security professor at Georgetown University.
Still, companies, industry groups and unions have been clamoring to make their mark on the deal, which has been in the works since 2008.
Corporate giants including the U.S. Chamber of Commerce, the National Association of Manufacturers and the Financial Services Forum, which represents the chief executives of the 18 largest financial institutions operating in the United States, have reported lobbying on the BIT in disclosure forms.
U.S. investment in China last year topped $60 billion, according to the Commerce Department. Trade between the two global powers has also skyrocketed in recent decades — from $2 billion in 1979 to nearly $600 billion last year — only increasing the implications for corporate interests.
“It might surpass the opportunities tied to a high-standard, comprehensive TPP, but only if the [BIT] agreement is in fact high standard and comprehensive,” said Jeremie Waterman, the executive director for Greater China at the Chamber of Commerce.
In meetings with negotiators, the corporate world has been communicating three main concerns: being able to have market access in a country that often favors its state-run enterprises, the ability to compete fairly with others in the country, and ensuring that China has a transparent regulatory process.
Fortune 500 companies such as UPS, MasterCard, Prudential Financial and IBM have also been in contact with the federal officials, including those at the Office of the U.S. Trade Representative and the State Department, which have been leading the talks.
Industry officials who spoke with The Hill on the condition of anonymity emphasized that the outreach process is similar to comprehensive trade agreements.
“Basically, our government should know what they need to be pounding the table for,” said one in-house lobbyist at a Fortune 50 company.
The AFL-CIO has been the most active opponent, according to lobbying disclosures. The powerful labor federation did not return a request for comment.
Other issues linger for American firms, such as accusations by industry groups that China sponsored a massive cyber campaign to steal America’s corporate secrets and its invasive intellectual property laws.
They point to American corporations locked out of lucrative Chinese tech markets, with companies including Twitter and Facebook banned in the country.
Lobbying on the deal approached a crescendo last month, during Chinese President Xi Jinping’s stateside visit. He attended events that included high-powered CEOs from various sectors of the economy, attempting to assuage distrust and promising progress on the coveted BIT deal.
“China will never close its open door to the outside world,” Xi told business leaders during a welcome dinner in Seattle. “We will address legitimate concerns of foreign investors in a timely fashion,” he added.
Xi repeated the message during a high-profile tech forum with major industry leaders including Apple’s Tim Cook, Facebook’s Mark Zuckerberg and -Microsoft’s Satya Nadella.
When Xi arrived in Washington, he had lunch with Secretary of State John KerryJohn KerryCongress, Trump need a united front to face down Iran One year ago today we declared ISIS atrocities as genocide Trump’s realism toward Iran is stabilizing force for Middle East MORE, Vice President Biden and business leaders before attending the state dinner at the White House.
“The most important currency in this effort is trust. We need the Chinese government to trust that we are seeking to deliver services that will benefit their people, and we need the U.S. government to view us as a trusted expert and resource,” an industry lobbyist who spoke anonymously told The Hill.
“Being a part of those type of events is a valuable reminder to both sides that we are committed to being a trusted partner to government leaders,” he added.
A total of 94 CEOs signed a letter to Xi and President Obama, urging them to complete the BIT.
In addition to the agreement, K Street is also watching the moves being made by China’s legislative and executive bodies. There are a slew of proposed and recently passed laws that could either support or undermine the BIT negotiations.
Spurred by its slowing domestic economy, China has signaled a willingness to ease some market restrictions. For instance, in June Beijing permitted foreign investors to own 100 percent of e-commerce companies in China for the first time.
In the coming months, officials removed mandates that foreigners buying real estate pay their capital in full before borrowing money in China. Officials have also removed similar barriers in manufacturing.
For example, China’s Ministry of Commerce has released a draft law that experts view as a positive overhaul of its current laws on foreign investment.
“There’s definitely concrete examples of the government reducing formal market barriers,” said Samm Sacks, a China analyst at the political-risk consulting firm Eurasia Group.
However, even as it advances reforms, China has also passed a broad national security law giving officials vague authority to guarantee that various technology is “secure and controllable,” which would make American companies hand over valuable and sensitive source code.
Even though leaders in China have given assurances that the reforms will continue — and potentially carry over into the agreement — the expert and business communities remain skeptical.
Robert Atkinson, an economist and president of the Information Technology & Innovation Foundation, a public policy think tank, described the recent commitments as “a little bit like Lucy and Charlie Brown and the football,” he said.
China is saying, “Go ahead kick it one more time, we really are serious this time,” he added. “They have never been serious yet.”