Bilateral Investment Treaty AFFIRMATIVE

Bilateral Investment Treaty AFFIRMATIVE

Vocabulary

Trans-Pacific Partnership (TPP): Major trade deal which expands investment, economic cooperation, and reduces taxes. It’s signed, but it has not been ratified by the US so all the good things about it are not happening. It includes 12 countries in the Pacific Rim area, but does not include China.

Bilateral Investment Treaty (BIT): A BIT is an agreement between two countries that sets up “rules of the road” for foreign investment in each other’s countries. BITs give US investors better access to foreign markets—and on fairer terms. The United States currently has BITs with 42 countries. A high-quality US-China BIT would give American companies better access to China’s market, and equal rights as Chinese firms.

South China Seas (SCS): Part of the Pacific Ocean just southeast of China. It is near Taiwan, the Philippines, Cambodia, and Vietnam. A great deal of goods are moved through the area and there’s supposedly a lot of oil in the sea bed. There are serious disputes about who actually owns it and thus many countries are fighting over it.

Senkaku Islands: Islands in the East China sea that have no one living on them. The US gave them to Japan, but China disagrees. These islands, like the South China Sea, are areas where fighting might erupt.

Xi Jinping (She jin-PING): General Secretary of the Communist Party of China, the President of the People's Republic of China, and the Chairman of China's Central Military Commission. He’s like Obama, but even more powerful since China does not have the same political structure as the US. Essentially, he’s the president of China.

Gross Domestic Product (GDP): value of all goods and services made in a particular country, usually counted yearly. This is a good indicator of how well an economy is doing—the higher the GDP the better.

Foreign Direct Investment: When a foreign company owns a business in another country. It also includes general investment from one country to another. For example, US companies invest and own companies in China.

State Owned Enterprise (SOE): a business that is partially or entirely owned by the “state” or the government. The US is worried about these in China because they are worried that the Chinese government will give better treatment to their companies than US ones.

People’s Liberation Army (PLA): The Chinese armed forces. Basically the accumulation of all the Chinese military. It is the largest military in the world.

Communist Party of China (CCP): Main political party of China. They have large control over the entire country and believe in a strong government with control over the people and economy. Xi Jinping is the leader of the party.

AT=Answers To

Bilateral Investment Treaty 1AC

First, our PLAN: The United States federal government should ratify the bilateral investment treaty with the People’s Republic of China.

Contention One: Harms (The Global Economy)

1. China’s economic slowdown causes social unrest and collapse of the country

Council on Foreign Relations, February 2016 [International bipartisan organization, “Xi Jinping on the Global Stage Chinese Foreign Policy Under a Powerful but Exposed Leader", February]
Aside from the perceptual costs posed by such economic downturns, Xi faces the considerable risk that a prolonged slowdown will directly affect the welfare of the average Chinese citizen. The possibility of a hard landing looms, and an economic wreck or a serious financial crisis could produce years of prolonged stagnation and slow growth that could shake the party to its core. Even absent such a disaster, if growth continues to slow, it will worsen a number of internal trends. The labor market already struggles to absorb the eight million college graduates China’s universities produce each year. Blue-collar wages that had risen for a decade have been stagnant for well over a year as layoffs continue in coastal factories, with labor disputes doubling in 2014 and again in 2015.25 Chinese companies also face challenges, as corporate debt grows to 160 percent of China’s GDP, up from 98 percent in 2008 and more than twice the current U.S. level of 70 percent. The fragile recovery in the country’s property market could face a reversal that would under- cut what is the biggest store of household wealth for Chinese families. These problems could intertwine with the psychic impact of another stock market swing or economic crisis, which could further erode consumer confidence and jeopardize China’s economic reorientation.26 Business and investor trust have similarly been hit, largely because the government’s panicked attempts to control the market signaled the hesitancy of its commitment to reform. If the government’s reputation is diminished and economic growth remains stagnant, then the leadership will grow increasingly worried about social unrest. Past economic crises contributed to outbreaks of mass protests, including those in 1986 and 1989 that brought down two Chinese leaders, Hu Yaobang and Zhao Ziyang, and led to the violence in Tiananmen Square. Although the party weathered the stock market slumps reasonably well, there is no guarantee it will be so fortunate in a future crisis. The reputational challenges and economic obstacles Xi faces will not abate in the next few years. Removing them will require implementing a number of costly reforms to inefficient SOEs, providing affordable capital to the private sector, allowing workers greater geographic mobility, reducing inefficient forms of infrastructure investment, and building the commercial rule of law. These inherently disruptive moves would break China’s old growth model but could risk increased social instability, leaving Xi struggling to choose between high-quality growth tomorrow and societal order today. If Xi largely abandons reforms and doubles down on the current model, he will only delay the day of reckoning; if he pursues reforms, it could take years before he sees results. Regardless of which course he chooses, or if he tries to square the circle, China’s economy will likely slow for the next few years and the reputational risks to Xi will continue to rise as domestic frustrations mount.

2. The global economy is headed for a recession

Whitefoot, April 2016 [John, editor at Lombardi Financial, specializing in low-priced investment opportunities. He contributes to Lombardi’s Profit Confidential newsletter. John has been a financial writer since the late 1990s. “Economic Collapse: Janet Yellen Terrified of Coming Financial Crisis?” April 29, http://www.profitconfidential.com/economy/economic-collapse-janet-yellen-terrified-of-coming-financial-crisis/]
Weakest GDP Growth in Two Years In the Federal Open Market Committee (FOMC) statement, Yellen observed that U.S. economic activity had slowed and reduced levels of consumer spending. That’s not good news for an economy that gets the vast majority of its GDP from consumer spending. Still, the eerily uninformed analysts on Wall Street continue to wax eloquence about the strengths of the U.S. economy. One wonders why when U.S. GDP has been declining for the last four quarters and most recently, we learned that the U.S. economy lurched ahead at a 0.5% pace in the first quarter as consumers put the brakes on spending and businesses cut back on investments. (Source: “Gross Domestic Product: First Quarter 2016 (Advance Estimate),” Bureau of Economic Analysis, April 28, 2016.) Expecting first-quarter GDP to advance a princely 0.7%, analysts seem surprised that the economy remains weak. After all, the global economy doesn’t seem all that bad, employers are hiring, and the stock market has recovered from the mid-February lows. That’s all a little rich. China’s first-quarter GDP growth decreased to its slowest pace since the first quarter of 2009, expanding 6.7%. China’s economy expanded at a seasonally adjusted rate of 1.1% in the first quarter from the fourth quarter of 2015. That’s the lowest quarterly expansion since 2010. China, the world’s second-biggest economy, reported 2015 GDP growth of 6.9%, its weakest growth rate in a quarter-century. (Source: “China first quarter GDP growth slowest since 2009,” International Business Times, April 15, 2016.) As for U.S. jobs, employment did rebound in March, adding 215,000 jobs. Most of the employment gains (48,000) came from low-paying retail and food services (25,000), while job losses came from the higher-paying manufacturing (-29,000) and mining (-12,000) areas. The official unemployment rate is five percent, but the underemployment rate has only fallen by about one percent since last March and stands at 9.9%. (Source: “Employment Situation Summary,” Bureau of Labor Statistics, April 1, 2016.) Stocks Rise Along Despite Declining Earnings The stock market has made a remarkable recovery from its February lows. But those gains aren’t a result of stunning first-quarter earnings and revenue growth. The markets are rebounding because investors are ignoring the earnings recession we are in and, being impatient, are hanging their investing cap on artificially low interest rates and the well-intentioned notion that the U.S. economy is going to rebound—soon. They’re going to have to wait a while longer. The U.S. is in an earnings recession. It’s difficult to see how weak earnings point to higher stock valuations and are a reflection of an improving U.S. economy. I enter as evidence, on December 31, 2015, the estimated earnings growth rate for the first quarter of 2016, which was 0.3%. Fast-forward to March 18 and the estimated earnings decline was -8.4%. At the end of the quarter, the estimated earnings decline for the first quarter increased to -8.7%. (Source: “Earnings Insight,” FactSet, April 15, 2016.) Welcome first-quarter earnings season. By April 15, the first-quarter blended earnings decline was -9.3%. By April 22, with 26% of companies in the S&P 500 reporting first- quarter earnings, the blended earnings decline improved to just -8.9%. (Source: “Earnings Insight,” FactSet, April 22, 2016.) Keep in mind that 74% of S&P 500 companies need to report first-quarter earnings. That number will invariably change. Any improvements to blended earnings will be marginal at best. If the S&P 500 reports a decline in earnings for the first quarter, it will mark the first time the index has seen four consecutive quarters of year-over-year declines in earnings since the fourth quarter of 2008 through the third quarter of 2009. At a time when corporate America is warning that earnings will be down significantly, stock valuations have been rising. Since the markets bottomed in the middle of February, the S&P 500 has soared more than 13%.

3. Economic decline causes nuclear war

Mead, 2009 [Walter Russell Mead, Henry A. Kissinger senior fellow for U.S. foreign policy at the Council on Foreign Relations, 2/4/2009, The New Republic, “Only Makes You Stronger,” http://www.tnr.com/politics/story.html?id=571cbbb9-2887-4d81-8542-92e83915f5f8&p=2]
So far, such half-hearted experiments not only have failed to work; they have left the societies that have tried them in a progressively worse position, farther behind the front-runners as time goes by. Argentina has lost ground to Chile; Russian development has fallen farther behind that of the Baltic states and Central Europe. Frequently, the crisis has weakened the power of the merchants, industrialists, financiers, and professionals who want to develop a liberal capitalist society integrated into the world. Crisis can also strengthen the hand of religious extremists, populist radicals, or authoritarian traditionalists who are determined to resist liberal capitalist society for a variety of reasons. Meanwhile, the companies and banks based in these societies are often less established and more vulnerable to the consequences of a financial crisis than more established firms in wealthier societies. As a result, developing countries and countries where capitalism has relatively recent and shallow roots tend to suffer greater economic and political damage when crisis strikes--as, inevitably, it does. And, consequently, financial crises often reinforce rather than challenge the global distribution of power and wealth. This may be happening yet again. None of which means that we can just sit back and enjoy the recession. History may suggest that financial crises actually help capitalist great powers maintain their leads--but it has other, less reassuring messages as well. If financial crises have been a normal part of life during the 300-year rise of the liberal capitalist system under the Anglophone powers, so has war. The wars of the League of Augsburg and the Spanish Succession; the Seven Years War; the American Revolution; the Napoleonic Wars; the two World Wars; the cold war: The list of wars is almost as long as the list of financial crises. Bad economic times can breed wars. Europe was a pretty peaceful place in 1928, but the poisoned German public opinion and helped bring Adolf Hitler to power. If the current crisis turns into a depression, what rough beasts might start slouching toward Moscow, Karachi, Beijing, or New Delhi to be born? The United States may not, yet, decline, but, if we can't get the world economy back on track, we may still have to fight.

Contention Two: Harms (US-China War)

1. China is building up its military in the South China Sea—This guarantees miscalculation and war

TIME, February 2016 [Mark Thompson, “U.S.-China Showdown Keeps Inching Closer”, http://time.com/4236409/united-states-china-south-china-sea/, Feb 24]
China is playing a game of chicken with the United States in the South China Sea. All signs suggest that Beijing is betting the U.S. will blink and swerve away before it comes to war. China is brazenly challenging the hegemony that the U.S. has enjoyed on East Asian seas since World War II, as the top U.S. admiral in the Pacific warns that a shrinking U.S. military is leaving him without sufficient forces to counter the rising superpower. While the U.S. has repeatedly called for diplomacy to settle multiple disputes over islands sprinkled across the South China Sea, China is unilaterally staking its claims by moving military gear to a growing number of them. It has been dredging the sea bottom to enlarge islets, and has built a 10,000-foot runway on one of them. Its goal is clear: to lay claim to 90% of the South China Sea, a vital commercial waterway that carries $5 trillion in annual trade. Regional powers—including Brunei, the Philippines, Taiwan and Vietnam—are nervously, and so far vainly—waiting for the U.S. to do something to thwart the Chinese advance. Marine General Joseph Dunford, left, meets last week in Hawaii with Admiral Harry Harris, chief of the U.S. Pacific Command. China’s latest moves echo its pattern of asserting itself even as it appears to be currying favor with Washington. Five years ago, Beijing flew its top-secret J-20 stealth fighter while then-Defense Secretary Robert Gates was in Beijing. In 2013, the U.S. says a U.S. Navy cruiser almost collided with a Chinese warship that cut across its bow in the South China Sea while Vice President Joe Biden was in the Chinese capital. Last summer, a flotilla of five Chinese ships made an unprecedented trip into the Bering Sea off the coast of Alaska, while Obama was visiting the state. Last week, the U.S. confirmed that China has deployed HQ-9 anti-aircraft missile batteries to Woody Island in the South China Sea as Obama was meeting with Southeast Asian leaders in Palm Springs, Calif. And on Tuesday, the Pentagon said the Chinese air force had dispatched J-11 and JH-7 warplanes to the same island, as Chinese Foreign Minister Wang Yi was in the middle of a visit to Washington. “The fact is there have been steps by China, by Vietnam, by others that have unfortunately created an escalatory cycle,” Secretary of State John Kerry said during a press conference with Wang on Tuesday. “What we’re trying to do is break that.” Wang said nations in the region could settle their own differences. “There have not been any problems with freedom of navigation in the South China Sea,” he said. This is happening as much of Washington’s national-security apparatus is focused on the war against ISIS and the increasing momentum of an anti-U.S. alliance among Syrian dictator Bashar Assad and his Iranian and Russian partners. But U.S. Navy officials, who have ruled the seas off China’s coast for more than 70 years, are increasingly sounding the alarm. “China’s intent to militarize the South China Sea is as certain as a traffic jam in D.C.,” Admiral Harry Harris, chief of U.S. Pacific Command, told the House Armed Services Committee on Wednesday. “I need weapon systems of increase lethality that go faster, go further and are more survivable.,” he added. “I’m comfortable where we are today, but today we’re not at war, and I think an important point.” On Tuesday, before the Senate Armed Services Committee, Harris said that the Navy is providing him with only about 62% of the attack-submarine patrols he says he need. He acknowledged the U.S. is stretched in the region, saying he has encouraged U.S. allies in the region to conduct regular freedom-of-navigation operations near the islands claimed by China to make clear they don’t accept Beijing’s territorial claims. Unsurprisingly, all this is likely to increase tensions. “A significant increase in Chinese forces and capabilities will lead to more frequent run-ins with its neighbors” in the South China Sea, warns Gregory Poling, director of the Asia Maritime Transparency Initiative at the Center for Strategic and International Studies, a Washington think tank. This year, he adds, “promises to be a much tenser year in the South China Sea.”

2. South China Sea conflict causes nuclear war

Tikhonova, 2015 [Polina, writer, journalist and a certified translator. Over the past 7 years, she has worked for a wide variety of top European, American, Russian, and Ukrainian media outlets. Polina holds a Master's Degree in English Philology from the University of Oxford and a Bachelor's Degree in Journalism from the Saint Petersburg State University, “US Faces Nuclear War Threat Over South China Sea – Chinese Professor”, November 28, http://www.valuewalk.com/2015/11/us-nuclear-war-south-china-sea/]
Beijing’s rhetoric after an incident with a U.S. warship sailed to the South China Sea suggests that Chinese decision-makers could resort to more “concrete and forceful measures” to counter the U.S. Navy, according to Zhang Baohui, Professor of Political Science and Director of the Centre for Asian Pacific Studies at Lingnan University in Hong Kong. “If so, a face-off between the two navies becomes inevitable. Even worse, the face-off may trigger an escalation towards military conflicts,” the professor wrote in a piece for RSIS Commentary. But, according to Baohui, the U.S. military is “oblivious” to this scenario, since Washington decision-makers think America’s conventional military superiority discourages China from responding to such “provocations” in the South China Sea militarily. However, this “U.S. expectation is flawed, as China is a major nuclear power,” the professor wrote. “When cornered, nuclear-armed states can threaten asymmetric escalation to deter an adversary from harming its key interests,” he added. Baohui then refers to the military parade in Beijing that took place on Sept. 3 and revealed that China’s new generation of tactical missiles – such as the DF-26 – are capable of being armed with nuclear warheads. Moreover, according to the latest reports, China’s air-launched long-range cruise missiles can also carry tactical nuclear warheads. U.S. could provoke nuclear war with China And while the U.S. does not have its core interests in the South China Sea, the disputed islands present China’s strategic interests, which is why this kind of asymmetry in stakes would certainly give Beijing an advantage in “the balance of resolve” over Washington, according to the professor. And if the South China Sea situation escalates and starts spiraling into a nuclear confrontation between the U.S. and China, Washington will face a choice of either backing down first or fighting a nuclear-armed power and the world’s largest military force with a strength of approximately 2.285 million personnel. “Neither option is attractive and both exact high costs, either in reputation or human lives, for the U.S.,” Baohui wrote. So it would be unwise for the U.S. to further provoke China in the disputed area, since China’s willingness to defend its interests, reputation and deterrence credibility could easily escalate the conflict into a military confrontation that would ultimately harm U.S. interests, according to the professor.

Contention Three: Solvency

1. A US-China BIT will not pass now. However, the plan passes BIT and opens up investment and reduces trade barriers

The Diplomat, March 2016 [Shannon Tiezzi, premier international current-affairs magazine for the Asia-Pacific region, “Are China and the US Close to Sealing an Investment Treaty?” March 24, http://thediplomat.com/2016/03/are-china-and-the-us-close-to-sealing-an-investment-treaty/]
Chen’s announcement came as something of a surprise, because the BIT has largely faded from the spotlight when it comes to the U.S.-China relationship. Overshadowed by the South China Sea and cyber issues, the BIT didn’t even make it into the White House’s main fact sheet on outcomes of President Xi Jinping’s visit to the United States in September. A separate fact sheet specifically on economic relations saw Presidents Obama and Xi “reaffirm as a top economic priority the negotiation of a high standard BIT.” But there were no targets set for completing the agreement, only a promise to “intensify the negotiations and to work expeditiously to conclude the negotiation of a mutually beneficial treaty.” That was a disappointment to optimists who had theorized the treaty could be finalized in time for Xi’s big visit. According to the U.S.-China Business Council, U.S. foreign direct investment in China has remained fairly steady, at between $2.7 and $4.1 billion per year, since 2008. Chinese investment in the United States, however, has skyrocketed in the same period – going from less than $1 billion in 2008 to $11.9 billion in 2014 (down from a high of $14 billion in 2013). As these numbers indicate, the objectives of both sides are different. U.S. firms hope that a successful BIT could open up what has become a stagnant investment environment in China. Chinese firms – which are in the midst of drastically expanding their investments in America — seek a streamlined investment process that would eliminate fears of bias and excess scrutiny from the Committee on Foreign Investment in the U.S. (CFIUS). Currently, United States (and other foreign firms) are blocked from investing in a laundry list of industries in China, from genetically-modified agricultural products and domestic parcel delivery services to news outlets, publishing houses, and television stations. Other sectors are “restricted” and may require foreign investment to come as part of a Chinese majority-owned joint venture. Even the Shanghai Free Trade Zone, which is supposed to be an experimental zone with fewer restrictions than the country at large, comes with a lengthy “negative list” of off-limits industries, including automobile manufacturing, telecommunications, and banks. And to many business leaders, it seems China is getting less – not more – receptive to foreign investment; witness, for example, a new rule that bans any company with foreign investment from publishing content online. According to the U.S.-China Business Council’s 2015 China Business Environment Survey, China has made little progress on the issue over the past few years, despite repeated commitments to opening its markets. Even in sectors where foreign investment is allowed, USCBC also found that 80 percent of American companies believe their Chinese competitors receive preferential treatment — and that’s just for private enterprises. When it comes to China’s state-owned firms, 97 percent of respondents said SOEs are receiving a competitive boost from the government.

2. China can either be a partner or an adversary—economic cooperation is the only way to solve global economic decline and war

Mendis and Wang, May 2016 [Joey and Patrick, Mendis is senior fellow of Kennedy School of Government’s Ash Center for Democratic Governance and Innovation at Harvard and Wang is a defense analyst and graduate of Naval War College, National Defense University, and Kennedy School, “Who Can Contain China When U.S. Policy Fails?”, May 1, http://www.theglobalist.com/who-can-contain-china-when-united-states-policy-fails/]
Throughout these intervening 20th century years, the meager trading relationship went through fits and starts. Nonetheless, when Deng Xiaoping took China’s helm and embarked on a path toward trade liberalization and modernization, China’s significance to the world economy began to emerge. Eventually this led to its accession to the WTO in 2001. With U.S. assistance, via trade policy, China has crossed the economic Rubicon where there is no return. According to a September 2015 Congressional Research Service report, total U.S. trade has risen from $2 million in 1979 to $591 billion in 2014: “China is currently the United States’ second-largest trading partner, its third largest export market, and its biggest source of imports.” China’s fixation with security in the South China Sea, Indian Ocean and other sea lines of communication (SLOCs) is not without cause. Seven of the world’s top ten container ports are in China. China’s export economy survives by these trade routes. Any disruption to these routes would be a significant impact not only to its economy but also to the American and global economies. The latter has been demonstrated by the ripple effects of recent stock exchange plunges in Shanghai and Shenzhen. Autonomous but Interdependent. Indeed, China’s rise could easily be viewed as an existential threat. Beijing’s ability to project power today has never been greater, both economically and militarily. And the signs of aspiring hegemony are underscored by that ability. Yet, China’s rising power could also be welcomed as another global force capable of burden-sharing. One that can contribute to fighting a myriad of threats, such as participating with multinational forces in maintaining the security of SLOCs, counterpiracy, humanitarian assistance, disaster relief, and a variety of other global missions. These are the threats that China and the rest of the world really face. In other words, with great power comes great responsibility. Recognizing that any disruption to China’s economy would mean a disruption to the U.S. economy, the United States should support China in maintaining a healthy trade relationship. It should also continue to focus on building a much needed trust, promoting fair competition and engaging China to join rule-based institutions and paving the road toward a MAP doctrine.

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