Signed November 14, 1991; Entered into Force October 20, 1994
103rd Congress 1st Session 103-2
SENATE Treaty Doc.
TREATY WITH ARGENTINA CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF INVESTMENT
MESSAGE FROM THE PRESIDENT OF THE UNITED STATES
THE TREATY BETWEEN THE UNITED STATES OF AMERICA AND THE ARGENTINE REPUBLIC CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF INVESTMENT, WITH PROTOCOL, SIGNED AT WASHINGTON ON NOVEMBER 14, 1991; AND AN AMENDMENT TO THE PROTOCOL EFFECTED BY EXCHANGE OF NOTES AT BUENOS AIRES ON AUGUST 24 AND NOVEMBER 6, 1992
JANUARY- 21, 1993 -Treaty was read the first time and, together with the accompanying papers, referred to the Committee on Foreign Relations and ordered to be printed for the use of the Senate
U.S. GOVERNMENT PRINTING OFFICE
69-118 WASHINGTON: 1993
LETTER OF TRANSMITTAL
The White House , January 19,1995.
To the Senate of the United States:
With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith the Treaty Between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment, with Protocol, signed at Washington on November 14, 1991; and an amendment to the Protocol effected exchange of notes at Buenos Aires on August 24 and November 6, 1992. I transmit also, for the information of the Senate, the report of the Department of State with respect this treaty.
This is the first bilateral investment treaty with a Latin American country to be transmitted to the Senate since the announcement of my Enterprise for the Americas Initiative in June 1990. The treaty is designed to protect U.S. investment and encourage private sector development in Argentina and to support the economic reforms taking place there. The treaty's standstill and rollback of Argentina's trade-distorting performance requirements are precedent setting steps in opening markets for U.S. exports. In this regard, as well as in its approach to dispute settlement, the treaty will serve as a model for our negotiations with other South America countries.
The treaty is fully consistent with U.S. policy toward international investment. A specific tenet, reflected in this treaty, is that U.S. investment abroad and foreign investment in the United States should receive fair, equitable, and nondiscriminatory treatment. Under this treaty, the Parties agree to international law standards for expropriation and expropriation compensation; free transfers of funds associated with investment; and the option of the investor to resolve disputes with the host government through international arbitration.
I recommend that the Senate consider this treaty as soon as possible and give its advice and consent to ratification of the treaty, with protocol, as amended, at an early date.
LETTER OF SUBMITTAL
Department of State,
Washington, January 13, 1993
The White House.
The President : I have the honor to submit to you the Treaty between the United States of America and the Argentine Republic concerning the Reciprocal Encouragement and Protection of Investment, with Protocol, signed at Washington on November 14, 1991; and an amendment to the Protocol effected by exchange of notes at Buenos Aires on August 24 and November 6, 1992. I recommend that this treaty, with protocol, as amended, be transmitted to the Senate for its advise and consent to ratification.
The bilateral investment treaty (BIT) with Argentina represents an important milestone in the BIT program. It is the first BIT concluded with a Latin American country since the announcement of your Enterprise for the Americas Initiative in June 1990. Argentina, like many Latin American countries, has long subscribed to the Calvo Doctrine, which requires that aliens submit disputes arising in a country to that country's local courts. The conclusion of this treaty, which contains an absolute right to international arbitration of investment disputes, removes U.S. investors from the restrictions of the Calvo Doctrine and should help pave the way for similar agreements with other Latin American states.
By providing important protections to investors and creating more stable and predictable legal framework for investment, the BIT helps to encourage U.S. investment in the economies of its treaty partners. It is U.S. policy to advise potential treaty partners that conclusion of a BIT with the United States is an important and favorable factor for U.S. investors, but does not in and of itself result in immediate increases in private U.S. investment flows.
Argentina has signed BITs with several European countries, including France, as well as with Canada and Chile. The U.S. treaty, however, is more comprehensive than these other BITs.
The Office of the United States Trade Representative and the Department of State jointly lead BIT negotiations, with assistance from the Department of Commerce and Treasury. The United States has signed nineteen other BITs -- with Armenia, Bangladesh, Bulgaria, Cameroon, the Congo, the Czech and Slovak Federal Republic, Egypt, Grenada, Haiti, Kazakhstan, Morocco, Panama, Romania, the Russian Federation, Senegal, Sri Lanka, Tunisia, Turkey, and Zaire -- and a business and economic relations treaty with Poland, which contains the BIT elements.
THE UNITED STATES-ARGENTINA TREATY
The Argentina treaty satisfies the main BIT objectives, which are:
Investment or nationals and companies of one Party is the territory of the other Party (investments) receive the better of the treatment accorded to domestic investments in like circumstances (national treatment), or the treatment accorded to third country investments in like circumstances (most-favored nation (MFN) treatment), both on establishment and thereafter, subject to certain specified exceptions; Investments are guaranteed freedom from performance requirements, such as obligations to use local products or to export goods; Companies which are investments may hire top managers of their choice, regardless of nationality; Expropriation can occur only in accordance with international law standards: in a non-discriminatory manner, for a public purpose; and upon payment of prompt, adequate, and effective compensation; Investment-related funds are guaranteed unrestricted transfer in a freely usable currency; and; Nationals and companies of either Party, and their investments have access to binding international arbitration in investment disputes with the host government, without first resorting to domestic courts.
As does the model BIT, the Argentina treaty allows sectoral exceptions to national and MFN treatment, as set forth in protocol to the treaty. The U.S. exceptions are designed to protect governmental regulatory interests and to accommodate the derogations from national treatment and, in some cases, MFN treatment in existing state or federal law.
Sectors and matters which the U.S. excepts from national treatment are air transportation; ocean and coastal shipping; banking; insurance; energy and power production; custom house brokers; ownership and operation of broadcast or common carrier radio and television stations; ownership of real property; ownership of shares in the Communications Satellite Corporation; the provision of common carrier telephone and telegraph services; the provision of submarine cable services; and use of land and natural resources. The United States also reserves the right to make or maintain limited exceptions to national treatment with respect to certain programs involving government grants, loans and insurance.
U.S. exceptions from both national and MFN treatment which are based on reciprocity and mining on the public domain; maritime services and maritime-related services; and primary dealership in United States government securities.
The Argentine exceptions to national treatment are real estate in the Border Areas; air transportation; shipbuilding; nuclear energy centers; uranium mining; insurance; and fishing. "Mining" was included in Argentina's list of national treatment exceptions at the time the treaty was signed but was deleted by an amendment effected by exchange of notes August 24 and November 6, 1992. This will ensure that treaty protections will be extended to an additional sector of significant commercial interest of U.S. investors. In no sectors of the Argentine economy are these restrictions on MFN treatment to be accorded to U.S. investments.
Regarding the obligation not to impose performance requirements, the Argentine treaty contains a protocol provision which recognizes that Argentina currently maintains performance requirements in the automotive industry. These performance requirements may not be intensified, and Argentina undertakes to exert its best efforts to eliminate them within the shortest possible period, and will ensure their elimination no later than eight years from the entry into force of the treaty. Pending such elimination, Argentina undertakes that these performance requirements shall not be applied in a manner that places existing investments at a competitive disadvantage to any new entrants in this industry.
Achieving such a roll-back of existing performance requirements is a landmark accomplishment and should serve as a model for agreements with other countries which maintain analogous requirements.The treaty with Argentina addresses, for the first time in the U.S. BIT program, debt-equity conversion programs, under which an investor purchases debt of a country at a discount and receives local currency in an amount equivalent to the debt's face value. These programs normally require that the investor postpone repatriating the local currency obtained in the conversion. Investors may choose to enter into such programs because they obtain more local