The rcep and Its Investment Rules: Learning from Past Chinese ftas

Abstract

China’s free trade agreements ( fta s) reveal malleability as the most striking feature. The paper analyzes the following questions: what is the trend of China’s fta approach to investment concerning malleability? Is China a rule follower, shaker or maker? How may China approach the Regional Comprehensive Economic Partnership ( rcep ) regarding investment? It argues first that the malleability will probably expand from investment protection to investment liberalization. China converges with deep fta s regarding investment protection and may incrementally move to investment liberalization. Second, increased malleability of China’s fta s exists in regulatory autonomy and investor-state dispute settlement. Third, China is likely to be a rule shaker in the short to medium term, and become a rule maker later if challenges are addressed. Its approach may evolve from selective adaption to selective innovation. Finally, the rcep may adopt low-level investment rules and an early harvest approach due to, inter alia, existing agreements and the nature of mega fta .