[Senate Treaty Document 108-15]
[From the U.S. Government Publishing Office]



108th Congress 
 2d Session                      SENATE                     Treaty Doc.
                                                                 108-15
_______________________________________________________________________
 
 PROTOCOL AMENDING ADDITIONAL PROTOCOL AMENDING INVESTMENT TREATY WITH 
                                BULGARIA

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

   ADDITIONAL PROTOCOL BETWEEN THE UNITED STATES OF AMERICA AND THE 
 REPUBLIC OF BULGARIA AMENDING THE TREATY BETWEEN THE UNITED STATES OF 
 AMERICA AND THE REPUBLIC OF BULGARIA CONCERNING THE ENCOURAGEMENT AND 
 RECIPROCAL PROTECTION OF INVESTMENT OF SEPTEMBER 23, 1992, SIGNED AT 
                     BRUSSELS ON SEPTEMBER 22, 2003




 January 21, 2004.--The 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, January 21, 2004.
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 United States of America and the Republic 
of Bulgaria amending the Treaty Between the United States of 
America and the Republic of Bulgaria Concerning the 
Encouragement and Reciprocal Protection of Investment of 
September 23, 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 has already forwarded to the Senate a 
similar Additional Protocol for Romania and expects to forward 
to the Senate shortly Additional Protocols for 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 Bulgaria, 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 Bulgaria, with which the United States has an expanding 
relationship, and the protections it affords U.S. investors 
even after Bulgaria joins the EU. Without it, the European 
Commission would likely require Bulgaria 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, DC, December 11, 2003.
The President,
The White House.
    The President: I have the honor to submit to you the 
Additional Protocol Between the United States of America and 
the Republic of Bulgaria amending the Treaty Between the United 
States of America and the Republic of Bulgaria Concerning the 
Encouragement and Reciprocal Protection of Investment of 
September 23, 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 ownessential 
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 Bulgaria in the context of EU enlargement. 
For example, the interpretation of the BIT provision on 
essential security interests confirms that, for Bulgaria, these 
interests may include interests deriving from Bulgaria'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.-Bulgaria 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 right 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.-bulgaria protocol


    The United States champions EU enlargement and, at the same 
time, intends that this BIT will continue to mutually benefit 
U.S. and Bulgarian investors. By undertaking these amendments 
of the BIT with Bulgaria, 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 Bulgaria 
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. Bulgaria is one of the newly democratized 
countries in Europe transitioning to a market economy, and 
foreign direct investment intoBulgaria is very much in both our 
countries' interests. Protection for investors facilitates investment 
activity, and thus directly supports U.S. policy objectives.
    The principal substantives articles of the protocol provide 
as follows.
    Article I: that the article of the BIT prohibiting 
performance requirements does not limit Bulgaria's ability to 
impose, as necessary under EU law, certain kinds of performance 
requirements in the agricultural and audio-visual 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, 
Bulgaria may take a reservation against the national treatment 
and most-favored-nation treatment obligations of the BIT, 
provided such reservation is necessary to meet Bulgaria's 
obligations under EU law, and subject to the following 
exception; that, notwithstanding any such new reservation, 
existing U.S. investments in Bulgaria shall remain protected 
under the national treatment and most-favored-nation treatment 
obligations of the Bulgaria 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 nay 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 Bulgaria expressly agree to such consultations in 
the protocol.
    I support this protocol to the U.S. BIT with Bulgaria, and 
I favor its transmission to the Senate at an early date.
    Respectfully submitted.
                                                   Colin L. Powell.
    Enclosures: As stated.
    
    
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