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11 J. Int'l Trade L. & Pol'y 6 (2012)

handle is hein.journals/jitlp11 and id is 1 raw text is: The current issue and full text archive of this journal is available at



Journal of International Trade Law
and Policy
Vol 11 No. 1, 2012
pp. 6-26
© Emerald Group Publishing Limited
DOI 10.1108/14770021211210669

Transfer of funds in China-US
BIT negotiations: comparing the
Articles of Agreement of the IMF
Qiao Liu
T.C. Beirne School of Law, University of Queensland, Brisbane, Australia and
School of Law, Xi'an Jiaotong University, Xi'an, China, and
Xiang Ren
School of Law, Xi'an Jiaotong University, Xi'an, China
Purpose - The purpose of this paper is to explore discrepancies between transfer provisions in the
US model BIT, employed as a working text in the ongoing China-USA BIT negotiations, and relevant
Articles of the Agreement of the IMF, to which both China and the USA are signatories, with a view to
advising on China's possible strategies for negotiation.
Design/methodology/approach - The approach taken is doctrinal and comparative analysis and
treaty interpretation of the US model BIT, the Articles of the Agreement of the IMF, the Chinese model
BIT and some earlier versions of these instruments.
Findings - A detailed analysis of several major discrepancies between these instruments finds that a
differentiated treatment of capital transfers and current transfers is desirable and, in respect of current
transfers, a properly formulated temporary derogation exception should be adopted.
Originality/value - The paper conducts a unique substantial comparison of two most influential
instruments governing transfer of funds in international investments. It reveals the common rationale
shared by the transfer provisions under both instruments.
Keywords China, United States of America, International investments, Capital markets,
International Monetary Fund, China-US BIT negotiation, Free transfer, Transfer of fund,
Capital transactions, Current transactions, Capital transfers, Current transfers
Paper type Research paper
I. Introduction
Following almost 20 years' cessation, the China-US bilateral investment treaty (BIT)
negotiations resumed on June 2008 during the two countries' fourth Strategic Economic
Dialogue meeting. The USA has made it clear that it will negotiate on the basis of its own
model treaty, the current version being the 2004 US model BIT[1], which reflects high
standards of investor protection[2]. Meanwhile, China is expected to use its current
working text for BIT negotiations, the 1997 Chinese model BIT Version III[3], which has
been the result of a great liberalization of its BIT practices over the past 30 years. In view
of significant differences in these two model BITs and the two nations' conflicting
interests and positions, the China-US BIT negotiation may prove to be a difficult and
prolonged one (Kong, 2010; Berger, 2008). Further, voices have been uttered that a
China-US BIT may not be in China's urgent need as its particular effectiveness lies in
protecting foreign direct investment (FDI), which accounts for only a relatively low
proportion of total investments flowing in either direction between China and the USA
(Tian, 2008). Nevertheless, given that the Chinese Government is committed to

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