The Negative List In Foreign Investment Access

The establishment of Shanghai Pilot Free Trade Zone in2013is drawing a lotof attention of the public. Compared with other former special economic zone oreconomic development zone, this pilot free trade zone is far more epoch-making,because China initially applies negative list and provides national treatment beforeadmission, and investments outside the negative list are free from the governmentapproval procedure, which means foreign investors enjoy more freedom here and theinvestment environment here is more open.This paper will discuss the negative list in foreign investment access from fourmajor parts, based on the national treatment before admission. The first part willcompare negative list with positive list and illustrate the setup of negative list withexamples. The second part will introduce the application of negative list in the U.S.and some international organizations. The third part will sort out Chinese laws andregulations relating to negative list. The fourth part will discuss the prospect ofapplication of negative list in future bilateral investment treaty in China.Developing countries always maintain a cautious stance towards investmentaccess and national treatment. The application of national treatment in China alsotook some time. Even nowadays, China only accepts national treatment afteradmission in existing international treaties. While developed counties start toencourage national treatment before admission long ago, especially the U.S., who persistently advocating this practice, which in return promoted the use of negative listinternationally.The matter of investment access has all along been a matter within thejurisdiction of one country’s sovereignty. While with the development of economicglobalization and capital liberalization, the need for capital free flow is intensified.The negative list-based foreign investment administration model exactly fits for thiscapital liberalization tendency. Host country lists out the restrictive and prohibitivemeasures regarding to national treatment in the negative list, which leaves lawfulinvestment activities falling outside the list all unrestricted. The application ofnegative list has a positive effect on the free flow of capital, activation of market,promotion of administrative efficiency and transparency, and improvement ofinvestment environment. However, the application of negative list calls for certainrequirements for the host country’s market and economy as well as correspondingadministrative and legal systems. Otherwise, the improper pursuance of marketopenness will do harm to the national market and economy development.The relaxation of market access should be conducted in a proper order and theapplication of negative list should adequately respect the recent situation of nation andsociety. The open-up should combine with appropriate supervision; only in this waycan the national benefit be well protected. The national industry should be carefullyobserved in making the negative list to protect pivotal and fragile industries.The application of negative list will undoubtedly bring about many unknownsituations and challenges to the investment area. This time taking Shanghai Pilot FreeTrade Zone as a breakthrough, studies and practice concerning the scientific andrational setup of the negative list as well as the reform and update of theadministration model keep going on. The researches of negative list should keep pacewith the progress of the economy and society, in order to solve new conditions andproblems happening in the future.