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The U.S. Bilateral Investment Treaty (BIT) program provides several key economic benefits, from protection of investment interests overseas, to promotion of market-oriented policies and exports.

The BIT program’s basic aims are to:

  • Protect investment abroad;
  • Encourage the adoption of market-oriented domestic policies that treat private investment in an open, transparent, and non-discriminatory way; and
  • Support the development of international law standards consistent with these objectives.

 

U.S. Bilateral Investment Treaties provide investments with six basic benefits, which we refer to as the “core” BIT principles.

1. National Treatment and Most-Favored-Nation Treatment

Our BITs provide that investors and their “covered investments” (that is, investments of a national or company of a Party in the territory of the other Party) are entitled to be treated as favorably as the host Party treats its own investors and their investments or investors and investments from any third country. The BIT generally affords the better of national treatment (NT) or most favored nation (MFN) treatment for the full life cycle of investment, i.e., from its establishment or acquisition, through its management, operation and expansion, to its disposition.

2. Expropriation and Compensation

BITs establish clear limits on the expropriation of investments and provide for payment of prompt, adequate and effective compensation when expropriation takes place.

3. Transfers

BITs provide for the transferability of funds into and out of the host country without delay using a market rate of exchange. This obligation covers all transfers related to a covered investment and creates a predictable environment guided by market forces.

4. Performance Requirements

The circumstances in which performance requirements can be imposed are limited. The performance requirement disciplines apply to specific circumstances that would require covered investments to adopt inefficient and trade distorting practices (e.g., local content requirements or export quotas) as a condition for establishment, acquisition, expansion, management, conduct, or operation.

5. Dispute Settlement

BITs give investors from both Parties 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.

6. Senior Management and Boards of Directors

BITs give covered investments the right to engage the top managerial personnel of their choice, regardless of nationality.

Related:

U.S. Department of State

The Lessons of 1989: Freedom and Our Future