Identifier
Created
Classification
Origin
08BEIJING4612
2008-12-19 10:00:00
CONFIDENTIAL
Embassy Beijing
Cable title:  

Canada-China BIT Talks Slowed by U.S.-China Negotiations

Tags:  ECON EFIN EINV EAID ETRD WTRO PREL CH 
pdf how-to read a cable
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C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 004612 

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STATE FOR EAP/CM -- PARK AND FLATT
STATE FOR EEB/OIA -- SCHOLZ, TRACTON, AND HICKS
STATE FOR E - YON
STATE FOR L - CAPLAN
STATE PASS USTR FOR STRATFORD, WINTER, BAHAR
NSC FOR SMART AND LOI
TREASURY FOR RESNICK AND SAMPLINER
COMMERCE FOR BRZYTWA AND ARONOFF
PARIS PASS OECD

E.O. 12958: DECL: 12/18/2018
TAGS: ECON EFIN EINV EAID ETRD WTRO PREL CH

SUBJECT: Canada-China BIT Talks Slowed by U.S.-China Negotiations

Classified By: Economic Minister-Counselor Robert Luke for Reasons
1.4 (b) and (d).

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 004612

SIPDIS

STATE FOR EAP/CM -- PARK AND FLATT
STATE FOR EEB/OIA -- SCHOLZ, TRACTON, AND HICKS
STATE FOR E - YON
STATE FOR L - CAPLAN
STATE PASS USTR FOR STRATFORD, WINTER, BAHAR
NSC FOR SMART AND LOI
TREASURY FOR RESNICK AND SAMPLINER
COMMERCE FOR BRZYTWA AND ARONOFF
PARIS PASS OECD

E.O. 12958: DECL: 12/18/2018
TAGS: ECON EFIN EINV EAID ETRD WTRO PREL CH

SUBJECT: Canada-China BIT Talks Slowed by U.S.-China Negotiations

Classified By: Economic Minister-Counselor Robert Luke for Reasons
1.4 (b) and (d).


1. (C) Summary: Twice this week, separate Canadian Embassy officials
approached Embassy to express Canada's concern that China is holding
off on making concessions in long-running bilateral investment treaty
(BIT) negotiations with Canada on topics that China expects to
surface in the U.S.-China BIT talks. One official said Canada would
like to share ideas with the United States more often on our mutual
investment treaty discussions with China. End Summary.

Canadian Negotiations Down to Arbitration and Negative Lists
-------------- --------------


2. (C) Canadian Embassy in Beijing Trade Commissioner Service
official Colleen Calvert approached Post's Economic Officer who
supports U.S.-China BIT negotiations about Canada's ongoing BIT
negotiation with China. She said that after years of negotiations,
Canada and China are now down to just two main issues --
consolidation of arbitration claims and a negative list of sectors
excepted from BIT obligations. Calvert noted that Canada does not
seek to cover the pre-establishment phase of investment. Canada's
negative list covers only post-establishment protections. She said
Canada is obliged by its law to take a few targeted exceptions,
including, for example, protection of industries tied to its
indigenous population.


3. (C) While Canada is required to take these limited, specific
exceptions, China is resisting specifying any exceptions, she said.
Instead, China wants to grandfather all non-conforming measures
without specifying what they are, a view it has foreshadowed in the
U.S.-China negotiations as well.

Pace of Canada-China BIT Talks Slows Down
--------------


4. (C) Calvert also asked about the pace of the U.S.-China
negotiations. She was especially curious about U.S. impressions of
Director General (DG) Li Ling, suggesting that Canada feels its
negotiations have slowed down since Li replaced China's former lead
BIT negotiator, Guo Jingyi, who was detained (and subsequently
arrested) for alleged corruption in the foreign investment approval
process. Econoff acknowledged that Guo's replacement initially had
slowed the pace of negotiations.


5. (C) Calvert said Canada feels that it is close to a deal with
China and that the two sides should move quickly to wrap up.
However, China's Ministry of Commerce (MOFCOM) has relayed to Canada
that because China expects these same issues to come up in the
U.S.-China BIT negotiations, China wants to defer negotiating the
issues with Canada until they are resolved with the United States.

Canada Seeks Coordination with United States on China BIT Talks
-------------- --------------


6. (C) In a separate conversation, another Canadian Embassy official
said that Chinese BIT negotiators' pre-occupation with the U.S.-China
talks has slowed progress in Canada's BIT negotiations with China
just as they were reaching a key stage. He said that Canada values
its conversations with U.S. BIT negotiators in the North American
Free Trade Agreement (NAFTA) Investment Experts Group, and would like
to meet more frequently with U.S. BIT negotiators to share
experiences on China.

Canada's Experience Suggests China is Focused on United States
-------------- --------------


7. (C) Comment: When Econoff mentioned to Calvert the large number
of Chinese agencies participating in the U.S.-China negotiations as
one possible explanation of the deliberate pace of the talks, Calvert
replied that Canada's negotiations had not attracted such a large

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cast. This supports our view that China is taking its negotiations
with us seriously, as well as Canada's sense that China is more
focused on negotiations with the United States than on Canada.

RANDT