Further Opening-Up to Foreign Investment: The New Negative Lists

• Author: Lian Ruihua
• Pages: 144-157

6 CLU_INVESTMENT.DOC (DO NOT DELETE) 2019-12-20 12:01 PM

144 TSINGHUA CHINA LAW REVIEW [Vol. 12:143

FURTHER OPENING-UP TO FOREIGN INVESTMENT:

THE NEW NEGATIVE LISTS

Lian Ruihua

I. INTRODUCTION

On June 30th 2019, the National Development and Reform

Commission and the Ministry of Commerce jointly released the Spe-

cial Administrative Measures for Foreign Investment Market Access

(2019 Version) (Negative List), the Special Administrative Measures

for Foreign Investment Market Access in Pilot Free Trade Zones

(2019 Version) (FTZ Negative List). The new Negative Lists indi-

cate China’s determination to further liberalize foreign investment by

adopting the negative list approach and the pre-establishment nation-

al treatment. This note addresses the changes in the new Negative

Lists. Part II reviews the development of the negative list approach in

both international and domestic contexts. Part III assesses the trans-

parency and predictability of the new Negative Lists from a com-

parative perspective. Part IV analyses the structural change brought

by the new Foreign Investment Law (FIL). Part V discusses the po-

tential dispute settlement mechanism under the current legal frame-

work.

II. A BRIEF REVIEW OF THE NEGATIVE LIST

A. Negative List in International Context

The negative list approach under international investment agree-

ments (IIAs) and Bilateral Investment Treaties (BITs) is generally

referred to as the adoption of an exhaustive reservation inventory of

all non-conforming measures contracting parties maintain.1 Based

on the United States’ adoption of the negative list under the BITs

since the 1980s, the North American Free Trade Agreement

(NAFTA) concluded in 1994 enumerates the country-specific excep-

tions to, inter alia, the national treatment obligations in the corre-

sponding Annex.2 The NAFTA mode of negative list, featuring a

1 U.N. Conference on Trade and Development, Preserving Flexibility in IIAs: The Use of Reserva-

tions Scope and Definition, 18, UNCTAD/ITE/IIT/2005/8 (Octo. 20, 2006).

2 North American Free Trade Agreement, Can.-Mex.-U.S., Dec. 17, 1992, 32 I.L.M.