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Dynamics of investment negotiations between China and Japan : the China-Japan-Korea trilateral investment treaty and beyond

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  • Hamanaka, Shintaro

Abstract

The investment agreement relationship between China and Japan is complex. The many intersecting and overlapping agreements can rightly be described as a "noodle bowl of agreements." The 1989 bilateral investment treaty (BIT) between China and Japan still stands. Japan can also free-ride on the negotiation outcome of China's BITs and free trade agreements (FTAs) with other countries by using the most-favored-nation (MFN) provision in the 1989 China-Japan BIT, which does not contain regional economic integration organization (REIO) exception rules. However, because the China-Japan BIT does not have investor-state dispute settlement (ISDS), it may face implementation problems. The China-Japan-Korea trilateral investment treaty (CJK TIT), in force since 2014, made improvements upon the 1989 BIT, but Japan is not entirely satisfied with the outcome. For Japan, pre-establishment national treatment (NT) and prohibition of various types of performance requirements are the most important negotiation items, but the CJK TIT insufficiently addressed those problems. Moreover, because the CJK TIT has MFN provisions with an REIO exception rule, better access to investment markets brought about by future FTAs such as the China-Korea FTA and the EU-China FTA cannot be imported into CJK TIT. Hence, in the long run, Japan needs to pursue an FTA investment chapter with China that covers both MFN and ISDS.

Suggested Citation

  • Hamanaka, Shintaro, 2016. "Dynamics of investment negotiations between China and Japan : the China-Japan-Korea trilateral investment treaty and beyond," IDE Discussion Papers 613, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper613
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    References listed on IDEAS

    as
    1. Hamanaka, Shintaro, 2014. "TPP versus RCEP: Control of Membership and Agenda Setting," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 18(2), pages 163-186, June.
    2. Chaisse, Julien & Hamanaka, Shintaro, 2014. "The Investment Version of the Asian Noodle Bowl: The Proliferation of International Investment Agreements," Working Papers on Regional Economic Integration 128, Asian Development Bank.
    3. C. Fred Bergsten & Cathleen Cimino & Gary Clyde Hufbauer & J. Bradford Jensen & Sean Miner & Theodore H. Moran & Jeffrey J. Schott, . "Toward a US-China Investment Treaty," PIIE Briefings, Peterson Institute for International Economics, number PIIEB15-1, October.
    4. Berger, Axel, 2013. "Investment rules in Chinese preferential trade and investment agreements: is China following the global trend towards comprehensive agreements?," IDOS Discussion Papers 7/2013, German Institute of Development and Sustainability (IDOS).
    5. Berger, Axel, 2008. "China and the global governance of foreign direct investment," IDOS Discussion Papers 10/2008, German Institute of Development and Sustainability (IDOS).
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    More about this item

    Keywords

    International agreements; Foreign investments; Bilateral investment treaty (BIT); China-Japan-Korea Trilateral Investment Treaty (CJK TIT); US-China BIT; Most-favored nation (MFN);
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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