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Power of discourse in free trade agreement negotiation

Published online by Cambridge University Press:  28 May 2019

Yan Wang
Guangdong University of Foreign Studies, 2 Baiyun Avenue North, Guangzhou, Guangdong, P.R.China, 510420 Email:
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This article illustrates the power of discourse in free trade agreement (FTA) negotiation, elucidating the concept from the perspective of a country’s abilities of rule control, rule assimilation and rule contestation. To enhance rule control, the G2 (the US and EU) have chosen their FTA partners, designed the FTA rules, and offered offensive-defensive exchange strategically. They have approached weak or trade-dependent parties first in FTA negotiation, innovated new rules to accelerate FTA negotiation, skillfully constructed intentional ambiguity and exemptions to remove rule discrepancies and made offensive-defensive exchange with their negotiating parties. Some of these strategies have been copied by China although in a different way. Further, a template approach for negotiating an FTA and exporting domestic laws and normative values to others contributes to the G2’s rule assimilation. A de facto FTA template has also been established by China recently, but its legal culture and political stance have led it to sign incomplete contracts and tolerate rule differences with its negotiating parties instead of transposition of domestic law. In facing the rival rules adopted by their competitors, the G2 have incorporated counteractive rules in their FTAs with their competitors’ close trading nations. China has also contested rules treating China as a non-market economy in its FTAs, but its stance toward state-owned enterprises (SOE) disciplines and rules forbidding forced technology transfer is milder due to its lack of experience in dealing with unfavourable rules.

© Foundation of the Leiden Journal of International Law 2019 

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The article is funded by the National Social Science Fund of China (Grant no. 18FFX062) and Characteristic Innovative Project of Guangdong Provincial Department of Education (Grant no. 2017WTSCX030). Much gratitude is extended to the reviewers and editors of Leiden Journal of International Law.


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67 China is now negotiating an RCEP, a China-Japan-Korea FTA, and also FTAs with the Gulf Cooperation Council, Norway, Sri Lanka, Mauritius, Moldova, Papua New Guinea, Israel, and Pakistan. China is updating its FTAs with Singapore, Korea, New Zealand, and Pakistan.

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137 See Polouektov, supra note 135, at 4.

138 Memorandum of Understanding Between the Department of Foreign Affairs and Trade of Australia and the Ministry of Commerce of the People’s Republic of China on the Recognition of China’s Full Market Economy Status and the Commencement of Negotiation of a Free Trade Agreement Between Australia and the People’s Republic of China, para. 2 (18 April 2005), available at (accessed 5 July 2018).

139 China-Korea FTA, Art. 7.1; China-Georgia FTA, Art. 3.

140 The dropping of the special safeguard clause was recorded in the negotiation process of the China-Korea FTA, available at (accessed 5 July 2018).

141 See China-Canada FIPA, Arts. 6, 7.

142 The asset transfer of an SOE needs to be approved by the State-Owned Assets Supervision and Administration Commission (SOASAC) in China. If the enterprise loses its SOE identity after the transaction, the transaction needs to be approved by the government. The directors and supervisors of SOEs should be appointed by the SOASAC. See State-Owned Assets Administration Act, Arts. 22, 53, available at (accessed 10 July 2017).

143 See China-Canada Investment Facilitation and Protection Agreement, Art. 8, available at (accessed 10 July 2017).

144 USMCA, Art. 22.6.

145 2012 U.S. Model BIT, Art. 8, P 1(f), (h). CETA, Art. 8.5.

146 Sino-Japan-Kora Investment Promotion, Facilitation and Protection Agreement, Art. 7.2.

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