China signs FTAs with South Korea and Australia, conducts new round of BIT negotiation with United States

On June 1, 2015, China and South Korea signed a free trade agreement (FTA), after three years of negotiations. Chapter 12 (Investment) of the FTA updates the 2007 China–Korea BIT with key provisions, including pre- and post-establishment national treatment, minimum standard of treatment, denial of benefits, and dispute settlement.

It also establishes a Committee on Investment as a bilateral communication channel for matters arising under the FTA. Each party will also designate a national contact point to receive complaints from investors of the other party regarding administrative measures and to assist in resolving difficulties of investors of the other party.

Later, on June 17, China entered into another landmark FTA with Australia, concluding decade-long negotiations. The national treatment provision in Chapter 9 (Investment) contains asymmetrical commitments rarely seen in recently concluded treaties: Australia commits to extend national treatment for Chinese investors to pre-establishment market access, while China only agrees to post-establishment national treatment.

Traditional provisions were left out, such as standard of treatment, expropriation and transfers, leaving related commitments under the 1988 Australia–China BIT intact. However, the FTA significantly updates the dispute settlement mechanism of the 1988 BIT. The parties also agree to establish a work program to consolidate the FTA’s Investment Chapter and the BIT into a Comprehensive Investment Chapter, which will likely include provisions on minimum standard of treatment, expropriation, transfers, performance requirement, senior management and board of directors, and dispute settlement.

Meanwhile, from June 8 to 12, China and the United States conducted the 19th round of BIT negotiations in Beijing. During the negotiations, the parties discussed core issues on substantive obligations and exchanged their preliminary negative lists. Both parties agree that the BIT negotiations are still in early stages.