China-Africa investment treaties and dispute settlement: a piece of the multipolar puzzle.

Author:Kidane, Won
Position:International Law in a Multipolar World

This panel was convened at 10:45 am, Friday, April 5, by its moderator, Wenhua Shan of Xi'an Jiaotong University, who introduced the panelists: Chen Fuli of the Ministry of Commerce, Embassy of China; Chen Huiping of the School of Law, Xiamen University; Mark Feldman of Peking University School of Transnational Law; and Won Kidane of Seattle University School of Law. *

* Chen Fuli did not submit remarks for the Proceedings.

REFLECTIONS ON CHINA-AFRICA BITS

By Won Kidane ([dagger])

BACKGROUND

The rise in the last decade of Chinese investment in Africa (1) continues to be a subject of curiosity. (2) Traditionally, the bulk of foreign investment flew North-South but rarely SouthSouth. (3) This is changing as China becomes an important player as a sender of foreign direct investment (FDI).

In the 21st century, international investment agreements (IIAs), particularly bilateral investment treaties (BITs), have become the principal means of protection of foreign investment. (4) These investment treaties themselves lie along a spectrum representing the balance of power of their own era. Much like U.S. BITs, China's BITs are said to have gone through at least three generational modifications. (5) China has employed all three generations to protect its investment in Africa. Do China's BITs tell a story of a nation's rapid transformation from a recipient of FDI to a sender of FDI? Or do they paint a more complicated picture?

China's approach to investment in Africa appears to be different from the approaches that Africa's traditional partners from Europe and North America have taken over the years. A 2010 UNCTAD report describes such difference in the following terms:

[I]n contrast to Africa's relationship with traditional partners, the new partnerships ... often have established forums and dialogue platforms and are generally supported by frequent high-level official visits. Furthermore, they are based on the principle of noninterference in the internal affairs of partner countries. Consequently, they are not associated with policy conditionality as has been the case in relations with traditional partners. (6) The report states further that "[the] big Southern partners [mainly China] generally use official flows to promote trade and investment activities in Africa. Furthermore, Southern partners do not consider their financial contributions to other developing countries as aid. Rather they describe them as 'expressions of solidarity and cooperation borne out of shared experiences and sympathies.'" (7)

Although the role of China's involvement in Africa remains a subject of great controversy and heated debate, (8) it is clear that Africa's recent and unprecedented growth is not entirely unrelated to Chinese investment and trade. (9) Be that as it may, China's economic interest in Africa is not all that different from Africa's traditional partners. Its means of pursuing the economic goals are also similar--although as Ambassador David Shinn puts it--China employs different tactics that might make it more acceptable to Africa. In his own words:

[T]he United States and China use essentially the same political economic, military and cultural tools for implementing their relations with Africa. The emphasis the two sides place on these tactics, however, and the way they implement policy varies considerably. China presents itself more humbly in its interaction with Africa. Having served as the leader of the Western world since the end of the Second World War and the only superpower since the end of the Cold War, the United States often comes across in Africa as insensitive ... (10) The current China-Africa economic engagement is undoubtedly full of benefits and risks (11) arguably to both sides. The legal infrastructure for the management of such risks is in a state of development. The principal legal instalments designed for this purpose are the BITs that China has already entered into with 33 African states. (12)

THE NATURE OF CHINA-AFRICA BITS AND SHORTCOMINGS

Most China-Africa BITs are outdated. Moreover, because of China's fundamental and enduring doctrinal dilemma on the role of ownership of the means of production and the level of its protection, China-Africa BITs lack uniformity. A pattern can hardly be discerned. That said, China's latest BIT with Madagascar appears to contain the hallmarks of North-South in many areas, including the definition of "investment," "treatment," and "dispute settlement." (13)

The shortcomings are many. The existing China-Africa BITs lack meaningful provisions in the areas of labor, environment, corruption and transparency, and general corporate social responsibility. Given the nature and extent of Chinese investment in Africa, these subjects need to be addressed in the existing and future BITs. Some of the most contemporary BIT drafts, including the latest U.S. BIT Model and the USD BIT Model, could provide some guidance.

CONCLUSION

Although South-South BITs have mushroomed in recent years, (14) their doctrinal foundations are by no means organic to those relations. Hence the adaptation is not without serious difficulty. This problem is particularly acute in the China-Africa context because of China's ambiguous position as theoretically South but with all the hallmarks of the North in its stature and pursuit. (15) Hence, for the ambitious investment relations to endure and grow, the substantive contents and the structure of dispute settlement need to be revisited in light of their own cultural backgrounds and contemporary developments.

([dagger]) Associate Professor of Law, Seattle University School of Law.

(1) Detailed information on China-Africa economic relations is available on the official website of the Forum on China-Africa Cooperation (FOCAC) at http://www.focac.org/eng/.

(2) See, e.g., David Smith, Hillary Clinton Launches African Tour with Veiled Attack on China, Guardian, Aug. 1, 2012...

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