While fast track trade negotiating authority and the Trans-Pacific Partnership Free Trade Agreement are capturing headlines, another trade initiative is advancing:   The U.S.-China Bilateral Investment Treaty (BIT).   China is expected to take a key step in accelerating those negotiations shortly by supplying a list of industries it wants to exclude from coverage.   The BIT may have as great a long-term impact on U.S. trade posture and our country’s economy as the TPP.  The BIT should be halted.

Chinese investment in the United States now outpaces U.S. investment in China. On the surface, this might seem like good news.  But, it’s far too early to know.  Without more information and true transparency a BIT could have devastating consequences.  China shouldn’t be rewarded with a BIT while it continues to so blatantly flaunt the rules of international trade.

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Chinese firms are on the march to acquire and invest in U.S. assets, all-too-often with their government’s financial support.  The limited policy responses by China’s trading partners have given them the resources to engage in this shopping and investing spree.   Indeed, the United States’ failure to address China’s currency manipulation has helped stock that country currency stores which are being used to scoop up U.S. assets and expand China’s reach and influence.

Sure, in theory, Chinese investment in the U.S. might restore some of the jobs that America still needs.  But fists-full of renminbi are being invested without any real understanding of the nature of these investments and their long-term impact on the U.S. economy, domestic production and employment.

The administration’s answer is a BIT.  Indeed, at the most recent Strategic & Economic Dialogue, the U.S. and China agreed to quickly reach a deal.  Before we accelerate this trend, we need to understand why China is buying up America and its implications.

A treaty to spur bilateral investment that follows the pattern of China buying up America’s existing companies and U.S. companies moving more production facilities and jobs abroad is not in the interests of American workers.  Easing the way for greater investments in China will only help fuel America’s unacceptably high trade deficit with China.  In fact, more than 55 percent of China’s exports already come from foreign-invested enterprises; more investments will only yield more imports into the U.S. and increase our historically high trade deficit with China.

The so-called “promise” of greater access to China and its 1.3 billion consumers hasn’t panned out.  Another agreement with China, when it refuses to abide by many of the commitments it’s already made, is akin to hoping that Lucy won’t again yank the football away from a naïve Charlie Brown.   Just look at China’s enforcement of its anti-monopoly and other laws against U.S. and foreign companies and you’ll see that China is far from willing to level the playing field

Here are a few more things to consider:

No comprehensive independent business case studies exist evaluating the methods and operations of Chinese firms operating here.  Do they operate based on Western profit-making principles, or are they simply advancing the goals of the People’s Republic’s 12th Five Year Plan and China’s leadership goals?

Every major investment by a Chinese entity here has to undergo at least one, and often several, Chinese governmental reviews.   Some of those rules have been updated on paper but the actual implementation is far from certain.  Why do those investments need approval, unless it’s to ensure they advance the interests of the Chinese Communist Party?

How can a U.S. firm compete against subsidies from the Chinese government, which has at its disposal $3.5 trillion in foreign currency reserves?  Chinese state-owned entities, and many others, receive preferential financing and other benefits.  We shouldn’t have to compete against the Chinese government. 

What are the long-term implications to capitalism if the profit-motive is diminished or eliminated from the equation?  A new Chinese facility created here that isn’t as concerned with profits as existing U.S. firms could squeeze them, and all of their suppliers, out of the market.   Importing non-market economy principles to the U.S. will have serious implications.

The jury is still out on whether Chinese investments in the U.S., overall, are a good or a bad thing.  There is no real information to support moving forward with a BIT.  And, the picture isn’t reassuring.   We shouldn’t rush to conclude another agreement that will tie America’s hands, while providing enormous new advantages to a competitor who has failed to show a similar respect for the agreements it signs. 

Negotiations on a Bilateral Investment Treaty with China should simply be halted until we have the data and experience necessary to make an informed decision.   American workers can’t afford to have their government make another mistake in U.S.-China trade policy.

Wessel is a commissioner on the U.S.-China Economic & Security Review Commission. The views expressed are his own, and are not intended to represent those of the Commission or other commissioners.