Regional agreements such as the BRI could embrace greater trade liberalisation goals
At the recent Paris Peace Forum commemorating the end of World War I, the heads of the International Monetary Fund and the World Bank made the case for a more inclusive multilateralism. Drawing comparisons between 1914 and today’s situations in terms of inequalities, they warned against the temptation of a divisive globalisation which could only benefit the wealthiest.
China’s discourse on a new “connected” multilateralism, through the Belt and Road Initiative (BRI), is building upon the same inclusive project now led by a non-Western and non-democratic superpower. There is indeed an ambition to influence the world — if not directly control it — by making the rules on which it functions. This normative determination to achieve a far greater objective has hardly been addressed when analysing China’s BRI and its impact.
There is more to the BRI than the six economic corridors spanning Asia, Europe and Africa, of which the $50 billion China-Pakistan Economic Corridor (CPEC) is perhaps the most controversial. The BRI is included in the Constitution of an officially socialist China. The BRI “shared interest” and “shared growth” hence coexist with Marxism-Leninism and “capitalism with Chinese characteristics” in a country now said to be more trade-friendly than its protectionist American rival, the U.S. Beijing has never been afraid of contradictions in terms and this capacity to ‘Sinicise’ concepts is a signature trait. The BRI is a political project and a Chinese one no matter the number of other partners joining the effort and participating to its funding.
Normative yet not legal
In this regard, the normative framework put in place by Beijing plays an interesting role. These norms manifest themselves in the form of guiding principles, declarations, general agreements and other communication tools including the hardly studied “Digital Silk Road” envisaging “innovation action plans for e-commerce, digital economy, smart cities and science and technology parks”. They constitute a normative discourse, a form of behaviour, a standard to abide by, but are not legally binding yet. The BRI indeed develops without any dedicated law, nor is it a comprehensive trade or economic partnership. It is different from conventional trade agreements that seek to eliminate market access barriers, harmonise regulations and impose preconditions for entry. The only legal texts one could refer to are to be found in the network of foreign trade agreements, bilateral investment treaties and other international investment agreements China is a party to. However, these networks of agreements have no special link with the BRI, although they could be brought in to resolve issues emanating from the BRI. China is a party to numerous state-sponsored business contracts between Chinese firms, including state-owned companies, and foreign business partners, public or private.
This non-legal yet rather domineering proposal is not a surprise. The fluid, if not vague, nature of the BRI is nothing but a manifestation of a pragmatism with Chinese characteristics that has the capacity to constantly adjust to a fast-changing environment. The absence of law is actually partial and temporary. China is preparing for the domestic resolution of BRI disputes with the creation by the Supreme People’s Court of two dedicated branches of the China International Commercial Court, one in Shenzhen to tackle the Maritime Road disputes, and one in Xi’an to settle overland Belt issues. In addition, the Hong Kong International Arbitration Centre has specific BRI arbitration clauses and administered arbitration rules. Naturally, investor-state disputes could also be settled on the basis of China’s investment agreements, nationally or internationally, in a given arbitration forum — for example, the World Bank-sponsored International Centre for Settlement of Investment Dispute (ICSID).
The institutional setting of the BRI is also rather light. Joint committees are put in place and the existing institutions mobilised from the Shanghai Cooperation Organisation to the Asian Infrastructure Investment Bank (AIIB), which is contributing to the BRI despite the rather distant position of some of its members and India in particular, which is the largest recipient of AIIB funding. In this context, China is not challenging the existing institutional set-up or proposing something different than what exists in the Bretton Woods Institutions. From the functioning of the banks to their advisory committees, the same structure and often the same people are found.
The BRI as it stands is not conceived as a tool for economic integration. The Regional Comprehensive Economic Partnership (RCEP) negotiations between the Association of Southeast Asian Nations and six countries is better equipped to deal with market access and integration goals within the Asia-Pacific region. Again, the BRI’s dispute resolution will be predominantly on commercial disputes, involving either projects or contractual obligations. However, with the world trading system passing through a turmoil, the possibility of regional trade agreements or amorphous legal devices such as the BRI embracing greater trade liberalisation goals cannot be entirely ruled out. A failure to resolve the WTO Appellate Body crisis or any consequent weakening of the multilateral dispute resolution process could present an opportunity for purely nationalistic initiatives to transmute and assume larger objectives.
Leïla Choukroune is Professor of International Law and Director of the University of Portsmouth Research and Innovation Theme in Democratic Citizenship. James J. Nedumpara is Head and Professor of Centre for Trade and Investment Law, Indian Institute of Foreign Trade. They co-Chair the South Asia International Economic Law Network (SAIELN). The views expressed are personal
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