The U.S. Bilateral Investment Treaty (BIT) program supports several
key U.S. Government economic policy objectives, from protection
of U.S. interests overseas to promotion of market-oriented policies
in other countries to promotion of U.S. exports.
The BIT program's basic aims are to:
-
Protect U.S. investment abroad in those countries where U.S.
investors' rights are not protected through existing agreements
such as our treaties of Friendship, Commerce and Navigation;
- Encourage adoption in foreign countries of market-oriented
domestic policies that treat private investment fairly; and
- support the development of international law standards consistent
with these objectives.
The U.S. Government also believes that adequate and effective
protection for intellectual property rights is an essential element of an attractive investment climate. Consequently, prospective
BIT partners are generally expected, at the time the BIT is signed,
to make a commitment to implement all World Trade Organization
(WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS)
agreement obligations within a reasonable period of time.
The U.S. Government has placed a priority on negotiating BITs
with countries undergoing economic reform and where we believe
we can have a significant impact on the adoption of liberal policies on the treatment of foreign direct investment. BITs also complement and support our regional initiatives on investment liberalization in the Asia Pacific Economic Cooperation Forum (APEC) and the Free Trade Area of the Americas. In addition, BITs lay the policy
groundwork for broader multilateral initiatives in the Organization for Economic Cooperation and Development (OECD) and eventually, the WTO.
U.S. Bilateral Investment Treaties provide U.S. investors with
six basic benefits:
-
First, our BITs ensure that U.S. companies are entitled to be
treated as favorably as their competitors. U.S. investors are entitled to the better of national treatment or most favored nation (MFN) treatment when they seek to initiate
investment and throughout the life of that investment, subject
to certain limited and specifically described exceptions listed
in annexes or protocols to the treaties.
- Second, BITs establish clear limits on the expropriation
of investments and entitle U.S. investors to be fairly compensated. Expropriation can occur only in accordance with international law standards, that is, for a public purpose, in a nondiscriminatory manner, under due process of law, and accompanied by payment of prompt, adequate, and effective compensation.
- Third, BITs provide U.S. investors the right to transfer funds into and out of the host country without delay using a market rate of exchange. This covers all transfers related to an investment, including interest, proceeds from liquidation, repatriated profitsand infusions of additional financial resources after the initial investment has been made. Ensuring the right to transfer funds creates a predictable environment guided by market forces.
- Fourth, BITs limit the ability of host governments to require
U.S. investors to adopt inefficient and trade distorting practices. For example, performance requirements, such as local content or export quotas, are prohibited. This provision may also open up new markets for U.S. producers and increase U.S. exports. U.S. investors protected by BITs can purchase competitive U.S.-produced components without undue restriction on inputs in their production of various products.
U.S. investors protected by BITs can also import other U.S.-produced products for distribution and sale in the local market. They cannot be forced, as a condition of establishment or operation, to export locally produced goods back to the U.S. market or to third-country markets.
- Fifth, BITs give U.S. investors the right to submit an investment
dispute with the treaty partner's government to international
arbitration. There is no requirement to use that country's domestic courts.
-
Sixth, BITs give U.S. investors the right to engage the
top managerial personnel of their choice, regardless of nationality.
List of U.S. Bilateral Investment Treaties
[end of document]
International Finance and Development |
Economic and Business Affairs | Department of State
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