US CEOs want trade treaty to be top of Obama-Xi meeting

Leaders of top United States-based companies have urged President Barack Obama to make the China-US Bilateral Investment Treaty a top priority when he meets with President Xi Jinping next month.

The US-China Business Council on Wednesday released a letter signed by 51 corporate heads that was sent to Obama. The two presidents will meet informally after Obama attends the APEC Economic Leaders' Meeting in Beijing on Nov 10-11.

USCBC President John Frisbie said the letter is "a strong message" to the White House from America's business leaders in support of the investment treaty.

"Completing a high-standard US-China Bilateral Investment Treaty will have a significant and lasting impact on the trajectory of the US-China commercial relationship and a more equitable commercial framework to guide the relationship forward," Frisbie said a statement.

The letter was signed by 51 CEOs, including Doug Oberhelman, chairman and CEO of Caterpillar Inc, Mark Fields, president and CEO of Ford Motor Co, and James P Gorman, chairman and CEO of Morgan Stanley.

At least one observer said that an investment treaty with China can be a top priority for Obama and Xi.

"When the president of China and the president of the US meet they will certainly discuss national security and economic matters," David Dollar, a senior fellow at the John L. Thornton China Center at the Brookings Institution, told China Daily.

"This is a really important issue. China remains closed to a lot of foreign investment. Having a treaty would give US companies an opportunity to expand their products and services in China."

However, Christian T. Lundblad, finance professor at the Kenan-Flagler Business School at the University of North Carolina, believes that other world events will take precedence.

"While I share the business community's desire for greater transparency and predictability with regard to the investment environment in China, it just seems like right now (as important as this is) Washington may feel like we have bigger fish to fry," he said.

Dollar said an investment treaty is important for the US because it will open up sectors of the American economy that have not been able to gain a foothold in China.

"China is the second-biggest market in the world and yet its energy, mining and services sectors remain largely closed to foreign and US investment," he said.

"These sectors are extremely important to the US economy and allowing American firms to compete for business in China will hand them an enormous expansion opportunity."

"This is actually really important for US firms. BITs can help foster access and promote predictability to the cross-border investment environment, as well as provide potential avenues for recourse in case a party feels that it has unfairly been taken advantage of," said Lundblad.

China would benefit from this as high-quality investments would move there as opposed to other emerging markets, Lundblad said.

"Right now China's investments in the US are increasing rapidly. Without a treaty I doubt that it could keep increasing at this pace."

According to the Rhodium Group, a New York consulting firm, Chinese investment in the US doubled in 2013 to nearly $14 billion, driven by large-scale acquisitions in food, energy and real estate.

"I'm not sure this is a first order effect in such a BIT－it does, of course, cut both ways, so to the extent that this promotes access or recourse for a Chinese investment here, that's a help," Lundblad said.