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Term Sheet for Proposed Presidents' of China and U.S. New Grand Strategy Agreement


                   New U.S.-P.R.C. Grand Strategy Agreement
 Prepared by John Milligan-Whyte, Dai Min and Thomas P.M. Barnett
                                    9 December 2010 draft
                U.S.-P.R.C. Presidential Executive Agreement 
         Peaceful Coexistence & Economically Balanced Relationship 
Presidents of U.S. and P.R.C. sign this “executive agreement” containing each nation’s pledge that:
1. U.S. and P.R.C will never go to war with the other;
2. Each will respect the other’s sovereignty and distinct political and economic systems;
3. U.S. pledge to eschew regime change in P.R.C. and pledge non-interference in the P.R.C.’s internal affairs;
4. P.R.C pledges to continue its economic, social, and political reforms.
Pledged demilitarization of Taiwan situation, to include:
i.Informal U.S. moratorium on arms transfers to Taiwan; 
ii.U.S. President’s adherence to defense requirements of Taiwan Relations Act of 1979 is achieved through the following alternative means;
iii.P.R.C. reduction of strike forces arrayed against Island;
iv.U.S. reduction of strike forces arrayed against P.R.C. Mainland; and
v.Negotiation and promulgation of confidence-building measures between U.S. and P.R.C. militaries.
North Korea
Pledged de-escalation of strategic uncertainty surrounding North Korea nuclear program, to include:
i.U.S. eschews regime change in North Korea;
ii.P.R.C. encourages North Korea to adopt Deng Xiaoping policies-style economic reform policies to be implemented on terms appropriate to North Korea’s own situation;
iii.North Korea agrees to terminate nuclear program and resume economic cooperation with South Ko-rea; and
iv.U.S. and P.R.C. support peaceful reunification of North and South Korea on terms and timetable de-termined by North and South Korea.
Pledged management of relations with Iran to include:
i.U.S. eschews regime change in Iran;
ii.P.R.C to support Iran’s peaceful development of its nuclear energy program; 
iii.Iran to willingly submit to regular international inspections of its nuclear energy program; and
iv.U.S. to eliminate trade restrictions and promote trade with Iran.
South China Sea & East China Sea 
Pledged management of sovereignty disputes to be solved peacefully and bilaterally, to include:
i.P.R.C. sets up multilateral South China Sea Regional Development Corporation with neighboring claimant states; and 
ii.P.R.C. pledges to negotiate resolution of all such disputes on the basis of the P.R.C.-ASEAN agree-ment entitled, “The 2002 Declaration on the Conduct of Parties in the South China Sea.”
ASEAN Economic and Peacekeeping Collaboration 
U.S. and P.R.C pledge:
i.Harmonization and coordination of their respective roles in regional economic and security forums; 
ii.Pursuit of peaceful coexistence in their bilateral relations with other Asian nations; and
iii.Promotion of economic stability and growth of ASEAN nations in their multilateral relations within ASEAN, APEC, etc.
Military-to-military ties
U.S and P.R.C. pledge to cooperate on international and non-traditional security issues, to include:
i.Lifting of U.S. embargo on military sales to China;
ii.Regular scheduling of joint naval exercises in Asian waters, with standing invitations to other regional navies;
iii.Permanent expansion of officer-exchange program;
iv.Creation of joint peacekeeping force/command in conjunction with other countries within the UN Security Council framework; 
v.Expansion of U.S.-P.R.C Maritime and Military Security Agreement to include frequency of U.S. close-in reconnaissance; and
vi.Establishment of joint commission collaborating annually on U.S. and P.R.C. technology sharing and transparency of budget expenditures.
Existing and Future International Institutions and Issues
U.S. and P.R.C. pledge to support continued reform of existing institutions (e.g., UN, IMF, World Bank, WTO, G20) to better reflect the evolving global economy and international issues, to include climate change, Doha Agreement, etc.
Strategic and Economic Dialogue (NYSEMKT:SED)
To implement the new collaborations listed above:
i.SED becomes permanently sitting commission for continuous senior-level communications and col-laboration on economic and security issues; and
ii.SED reviews all existing tariffs, WTO complaints, and other trade and economic disputes and issues.
P.R.C. Investment into U.S. Economy
P.R.C. pledges to invest up to 1 trillion USD directly into U.S. companies at direction of U.S. President in exchange for:
i.U.S. removes trade restrictions and high-technology export bans with P.R.C.; 
ii.P.R.C. commits to purchase sufficient amount of U.S. goods/services to balance bilateral trade on annual basis; 
iii.P.R.C. companies’ access to U.S. market made equal to that of U.S. companies access to P.R.C. mar-ket;
iv.Ownership limit for new P.R.C. investments in U.S.-owned or controlled corporations limited to 45 percent of shares, with additional 10 percent reserved for preferred equity/pension funds on a case-by-case basis and final 45 percent remaining with non-P.R.C. ownership;
v.Ownership limit for new U.S. companies investments in P.R.C. limited to 45 percent with additional 10 percent reserved for preferred equity/pension funds on a case-by-case basis and final 45 percent remaining with P.R.C. ownership;
vi.U.S. and P.R.C. to facilitate global joint ventures between U.S. and P.R.C. companies, with initial example to involve major U.S. firm; and
vii.U.S. and P.R.C. to collaborate in SED on goal of full employment throughout each economy, target-ing in particular areas suffering inordinate unemployment or needing special economic growth ar-rangements.
Other Areas of Bilateral and Multilateral Cooperation
P.R.C. and U.S. to collaborate:
i.Implementing principles in the Preamble, Article 1 of the UN Charter;
ii.Rehabilitation of failing and failed states seeking assistance;
iii.Combining U.S. and P.R.C. markets, technology and financing to ensure affordable costs for all na-tions of effective pollution remediation and sustainable energy and financing of globally needed technology; and
iv.Joint space exploration with other UN member states.
No Creation or Operation of “G2” Arrangement
Nothing in this Executive Agreement constitutes, is intended to, nor permits the creation or operation of a “G2”, and instead this Agreement:
i.Establishes an improved framework of collaboration among the U.S., P.R.C. and other UN 
member states;
ii.Neither seeks nor infers any formal alliance between the U.S. and P.R.C.; and
iii. Creates a new U.S. and P.R.C. commitment to the Principles of Peaceful Coexistence in the UN Charter.
Mutually agreed on the ____ day of ____________ 2011.
U.S. President Barack Obama          P.R.C. President Hu Jintao