Protectionism is again taking hold of the United States Treasury Department. This causes concern to China before its fourth Strategic Economic Dialogue (SED) with the US.
Delivering a speech at Carnegie Endorsement for International Peace last Tuesday, US Treasury Secretary Henry Paulson said "America's policy of open investment is one of our predominant economic strengths. Foreign direct investment stimulates competitiveness, growth, jobs and productivity."
At the fourth round of SED, the two countries will discuss the best way to promote and protect bilateral investment and counter protectionist pressures.
However, Paulson's Treasury Department is planning to have several foreign investment bills revised by the Committee on Foreign Investment in the United States (CFIUS), which represents 12 US departments and agencies.
The move signals a resurrection of US protectionist policies. If the revised bills were put into effect, grey zones in the existent legislations would be made clear.
The revisions stipulate that the CFIUS would be entitled to conduct national security reviews over foreign investments if they cause change of control over shares of sensitive US assets.
The revisions would be an enforcement of regulations to last year's foreign investment bill that tightened national security reviews of proposed foreign investment in the US.
In a letter to the US Treasury Department, China Securities Regulatory Commission protested that this would leave the CFIUS with too much power.
This step would make it possible to politicize economic issues – several cases of Chinese investments in the US fell victims to it in the past few years.
The move is sending a signal: the US is not sincere when it talks about opening to foreign investment.
China's Envoy to the World Trade Organization Sun Zhenyu warned that economic recession in the US has allowed protectionism to gain ground. Unchecked, it would pose a threat to world trade and to the global multilateral trade system.
Vice-Premier Wang Qishan and Paulson will deliberate on the benefits of trade and open markets, along with issues on developing human capital, enhancing investment, advancing joint opportunities for cooperation in energy and the environment, and managing financial and macroeconomic cycles.
China's concern over the US leaning toward protectionism deserves a clear explanation from the US negotiators.
(China Daily June 17, 2008)
