[Senate Treaty Document 108-13]
[From the U.S. Government Publishing Office]
108th Congress Treaty Doc.
SENATE
1st Session 108-13
_______________________________________________________________________
ADDITIONAL PROTOCOL TO INVESTMENT TREATY WITH ROMANIA
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
ADDITIONAL PROTOCOL BETWEEN THE GOVERNMENT OF THE UNITED STATES OF
AMERICA AND THE GOVERNMENT OF ROMANIA CONCERNING THE RECIPROCAL
ENCOURAGEMENT AND PROTECTION OF INVESTMENT OF MAY 28, 1992, SIGNED AT
BRUSSELS ON SEPTEMBER 22, 2003
December 9, 2003.--Protocol 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
LETTER OF TRANSMITTAL
----------
The White House, December 9, 2003.
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 Additional
Protocol between the Government of the United States of America
and the Government of Romania Concerning the Reciprocal
Encouragement and Protection of Investment of May 28, 1992,
signed at Brussels on September 22, 2003. I transmit also, for
the information of the Senate, the report of the Department of
State with respect to this Additional Protocol.
My Administration expects to forward to the Senate shortly
analogous Additional Protocols for Bulgaria, the Czech
Republic, Estonia, Latvia, Lithuania, Poland, and the Slovak
Republic. Each of these Additional Protocols is the result of
an understanding the United States reached with the European
Commission and six countries that will join the European Union
(EU) on May 1, 2004 (the Czech Republic, Estonia, Latvia,
Lithuania, Poland, and the Slovak Republic), as well as with
Bulgaria and Romania, which are expected to join the EU in
2007.
The understanding is designed to preserve U.S. bilateral
investment treaties (BITs) with each of these countries after
their accession to the EU by establishing a framework
acceptable to the European Commission for avoiding or remedying
present and possible future incompatibilities between their BIT
obligations and their future obligations of EU membership. It
expresses the U.S. intent to amend the U.S. BITs, including the
BIT with Romania, in order to eliminate incompatibilities
between certain BIT obligations and EU law. It also establishes
a framework for addressing any future incompatibilities that
may arise as European Union authority in the area of investment
expands in the future, and endorses the principle of protecting
existing U.S. investments from any future EU measures that may
restrict foreign investment in the EU.
The United States has long championed the benefits of an
open investment climate, both at home and abroad. It is the
policy of the United States to welcome market-driven foreign
investment and to permit capital to flow freely to seek its
highest return. This Additional Protocol preserves the U.S. BIT
with Romania, with which the United States has an expanding
relationship, and the protections it affords U.S. investors
even after Romania joins the EU. Without it, the European
Commission would likely require Romania to terminate its U.S.
BIT upon accession because of existing and possible future
incompatibilities between our current BIT and EU law.
I recommend that the Senate consider this Additional
Protocol as soon as possible, and give its advice and consent
to ratification at an early date.
George W. Bush.
LETTER OF SUBMITTAL
----------
Department of State,
Washington, October 31, 2003.
The President,
The White House.
The President: I have the honor to submit to you the
Additional Protocol Between the Government of the United States
of America and the Government of Romania amending the Treaty
Between the Government of the United States of America and the
Government of Romania Concerning the Reciprocal Encouragement
and Protection of Investment of May 28, 1992, signed at
Brussels on September 22, 2003. I recommend that this protocol
be transmitted to the Senate for its advice and consent to
ratification.
This protocol is the result of an understanding that the
United States reached with the European Commission and six
countries that will join the European Union (``EU'') on May 1,
2004 (the Czech Republic, Estonia, Latvia, Lithuania, Poland
and the Slovak Republic), as well as with Bulgaria and Romania,
which are expected to join the EU in 2007.
The understanding is designed to preserve our bilateral
investment treaties (``BITs'') with these countries after their
accession to the EU by establishing a framework for avoiding or
remedying present and possible future incompatibilities between
our BITs with these eight countries and their future
obligations of EU membership. In this regard, the understanding
expresses the U.S. intent to conclude substantively identical
amendments and formal interpretations of the BITs with each of
these eight countries.
In addition, the understanding establishes a framework for
addressing any future incompatibilities that may arise as
European Union authority in the area of investment expands and
evolves in the future. It endorses the principle of protecting
existing U.S. investments in these countries from any future EU
measures that may restrict foreign investment in the EU, and
also clarifies certain protections afforded to U.S. investments
in individual member states of the EU under the Treaty
Establishing the European Community (``EC Treaty'').
Finally, the understanding calls for the United States and
each BIT partner to interpret, through an exchange of notes,
two BIT provisions: (1) the right of each BIT Party to take
measures necessary for the protection of its own essential
security interests, and (2) the BIT prohibition on performance
requirements.
Both interpretations were undertaken at the request of the
European Commission to confirm the mutual understanding of the
United States and Romania in the context of EU enlargement. For
example, the interpretation of the BIT provision on essential
security interests confirms that, for Romania, these interests
may include interests deriving from Romania's membership in the
EU. As concerns the BIT prohibition on performance
requirements, many U.S. BITs include a provision explicitly
stating that the prohibition on performance requirements does
not extend to conditions for the receipt or continued receipt
of an advantage. The interpretation relating to performance
requirements makes this explicit with respect to the U.S.-
Romania BIT. The two interpretations are enclosed for the
information of the Senate.
Investment by the United States has played an important
role in the economic transformation of these eight countries,
and the U.S. BITs have afforded important protections to U.S.
investors. Prior to acceding to the EU, however, the European
Commission has required that these countries terminate any
international treaty containing incompatibilities with EU law.
Without the understanding and the steps contemplated therein,
including the specific amendments in this protocol, these
countries would be required to terminate their U.S. BITs and
the great majority of protections these treaties afford U.S.
investors. Therefore, the understanding, together with the
interpretations and specific amendments in the protocol, will
preserve the benefits of these treaties and provide important
additional protections for U.S. investors as the EU continues
to evolve.
the u.s.-romania additional protocol
The United States champions EU enlargement and, at the same
time, intends that this BIT will continue to mutually benefit
U.S. and Romanian investors. By undertaking these amendments of
the BIT with Romania, which would be brought into force just
prior to its accession, incompatibilities between BIT
protections and EU law are eliminated, and any future problems
in this respect are addressed through a framework for
consultations. This action preserves our BIT with Romania after
its accession to the EU, and is consistent with the policy of
the United States to welcome market-driven foreign investment
and to permit capital to flow freely to seek its highest
return. Romania is one of the newly democratized countries in
Europe transitioning to a market economy, and foreign direct
investment into Romania is very much in both our countries'
interests. Protection for investors facilitates investment
activity, and thus directly supports U.S. policy objectives.
The principal substantive articles of the protocol provide
as follows.
Article I: that the article of the BIT prohibiting
performance requirements does not limit Romania's ability to
impose, as necessary under EU law, certain kinds of performance
requirements in the agricultural and audiovisual sectors;
Article II: that the terms of the free trade area/customs
union exception of the BIT shall apply, without limitation, to
all of a Party's obligations stemming from its membership in an
economic integration agreement that includes a free trade area
or customs union, such as the EU;
Article III: that the BIT Parties will consult promptly
whenever either Party believes that steps are necessary to
assure compatibility between the BIT and the EC Treaty;
Article IV: that, in certain specified sectors or matters,
Romania may take a reservation against the national treatment
and most-favored-nation treatment obligations of the BIT,
provided such reservation is necessary to meet Romania's
obligations under EU law, and subject to the following
exception; that, notwithstanding any such new reservation,
existing U.S. investments in Romania shall remain protected
under the national treatment and most-favored-nation treatment
obligations of the BIT for at least 10 years from the date of
the relevant EU law necessitating the reservation; and finally,
that the United States reserves the right to make or maintain
limited exceptions to the national treatment obligation in two
new sectors or matters, fisheries and subsidies, and to the
most-favored-nation treatment obligation in one new sector,
fisheries.
With respect to future developments in EU law, the United
States recognizes that the possibility exists that these
amendments may not suffice to ensure compatibility, and that
consultations would be necessary to avoid or eliminate any
incompatibilities that may arise. As noted above, the United
States and Romania expressly agree to such consultations in the
protocol.
I support this protocol to the U.S. BIT with Romania, and I
favor its transmission to the Senate at an early date.
Respectfully submitted,
Colin L. Powell.
Enclosures: As stated.