Legal services can provide strong base for B&R

By Zhang Wei Source:Global Times Published: 2017/8/1 22:38:39

Illustration: Peter C. Espina/GT

During the four years since it was proposed, China's "Belt and Road" (B&R) initiative has borne fruit and made significant contributions to international development, prosperity and stability. At a time when the initiative has been moving toward a new stage, legal services are becoming a more important task to guarantee and accelerate related projects. There are several reasons for this development.

First, legal advice can reduce political risk. The B&R initiative aims to promote open cooperation and peaceful development. But doing so requires establishing bilateral and multilateral cooperation mechanisms. The countries and regions involved have responded positively to this need, but the initiative is a complex and long-term program. It will be influenced by changes in international politics and economics, as well as  superpower competition, regional conflicts and regime changes in  some countries. High-level dialogue alone won't completely eliminate these risks.

The political consensus among B&R participants must be transformed into a strong legal system, so that ideological shifts or changes in governments will not harm the project.

All participants should support legal documents on trade, investment, tax conventions and judicial assistance to legalize the development plans, technological standards, financing models, tax arrangements, facilitation measures, intellectual property protection, and dispute settlement. This will help to establish a transparent, rational international economic and trade regulation system and create a favorable international legal foundation for the initiative. 

Second, legal advice and services will reduce legal risk. Economies along the route are highly complementary so there is boundless cooperation potential among the countries. The initiative aims for enhanced regional cooperation and an inclusive, balanced and tolerant regional economic cooperation structure.

However, because of the huge political, economic, cultural and historical differences among the countries along the route of the initiative, the legal systems vary widely. Market players involved in the initiative face a variety of legal risks involving direct investment, market access, intellectual property, labor environmental protection, financial transactions and others.

We should promote outbound and inbound investment in the legal service industry to shore up cooperation and form new alliances between Chinese and foreign law firms. We need to build a special legal information database, and strengthen the research of legal environments in different countries along the route. Convenient legal consulting service should be provided for cross-border investment, international trade, labor exports and other fields.

It's also important to speed up the improvement of dispute settlement mechanisms and employ flexibility in using international judicial practices to maximize legal protections for B&R initiative participants.

Third, legal services will reduce market risks. B&R initiative construction will accelerate the orderly and free flow of economic elements among the participants. It will also promote the efficient allocation of resources and deeper market integration. The market is both flexible and fragile. Economic and market differences among B&R economies are huge, while trade cooperation is mostly on expensive infrastructure projects that have long investment cycles and require difficult operation and maintenance.

The projects are affected not only by the world economic cycle, but also by the regional and national environments. Added to this are religious complications, ethnic contradictions, terrorism, separatism and extremism. Market participants involved in the construction of the B&R face many risks.

Expediting the rationalization of foreign-related management systems, the improvement of the financing, insurance, credit and other systems and complete rights protection, the investment promotion and risk warning mechanisms are of great significance. We should promote the establishment of professional services such as think tanks, business associations and intermediaries to provide planning, consulting and advisory services, as well as tracking and supervision services for the main market players.

Thorough due diligence and risk prevention consultations should be conducted to provide greater security and ease the uncertainty of market players under a relatively sound legal environment.

The author is vice president of the Chinese Academy of International Trade and Economic Cooperation.


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