The US and China agreed on Wednesday to launch negotiations to forge a bilateral investment treaty and inked a 10-year accord to achieve energy security, officials said.
The agreements were announced at the end of two days of high level talks, described as “productive” by US Treasury Secretary Henry Paulson and Chinese Vice Premier Wang Qishan (王岐山), who led their Cabinet teams to the meeting.
Paulson and Wang signed an energy and environment cooperation framework, in which both governments will engage businesses, academics and leading research facilities to participate in joint projects, including commercialization of new technology.
“We seek energy security, which is so vital to our economic security,” Paulson said at a ceremony in Washington marking the end of the US-China Strategic Economic Dialogue in Annapolis, Maryland.
Wang said further discussions were needed to reach “common ground” on specific details of the energy accord, indicating that the world’s two largest polluters and importers of oil had still not ironed out differences despite six months of talks to reach a wholesome agreement.
Negotiations for the bilateral investment treaty are to begin soon, aimed at promoting open markets, fair treatment for businesses, transparency and the rule of law, officials said.
“The conclusion of a bilateral investment treaty [BIT] would send a strong signal that our two nations welcome investment and will treat each other’s investors in a fair and transparent manner,” Paulson said.
He said the US would push for a “comprehensive” investment treaty, providing legal protection for all economic sectors.
Several rounds of negotiations are expected to be convened before the next twice-yearly dialogue is convened in December.
The US negotiates such investment treaties on the basis of a model text “which contain very high standards of investor protection and we are going to take the same approach in this case,” a US administration official said.
US officials acknowledged that the negotiations were going to be difficult and might not be completed before US President George W. Bush leaves office in January.
“It will be remarkable to conclude one of these negotiations in less than a year but in terms of our experience, a lot depends on the degree of progress that we are making in the negotiations,” said another US official.
“This is not going to be something that is driven by the political calendar but by substance ... We would anticipate that if it were to go into the next administration, we would continue just as hard and the momentum will continue into 2009,” the official said.
Democratic presidential candidate Barack Obama has pledged to review the country’s free trade policies if he wins the presidential elections in November.
Free-trade agreements that have been signed with Panama, Colombia and South Korea are still languishing in Congress.
Bilateral investment treaties are typically less controversial than free trade agreements and easier to pass since they only need US Senate approval, business leaders said.
US business groups welcomed the move to pursue an investment treaty but Congressional leaders, many of whom are not happy with the pace of reforms in China, were not impressed by the results of the twice-yearly dialogue.
“If this were the Olympics, the talks would have a few bronze medals — but unfortunately, no silvers or golds,” said US Senate finance committee chairman Max Baucus, a Democrat from farm-rich Montana.
Wang and other Chinese Cabinet ministers, who met Bush on Wednesday, were to hold talks with leaders from the US Congress yesterday.
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