[Senate Treaty Document 108-19]
[From the U.S. Government Publishing Office]
108th Congress Treaty Doc.
SENATE
2d Session 108-19
_______________________________________________________________________
ADDITIONAL INVESTMENT PROTOCOL WITH THE SLOVAK REPUBLIC
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
TRANSMITTING
ADDITIONAL PROTOCOL BETWEEN THE UNITED STATES OF AMERICA AND THE SLOVAK
REPUBLIC TO THE TREATY BETWEEN THE UNITED STATES OF AMERICA AND THE
CZECH AND SLOVAK FEDERAL REPUBLIC CONCERNING THE RECIPROCAL
ENCOURAGEMENT AND PROTECTION OF INVESTMENT OF OCTOBER 22, 1991, SIGNED
AT BRUSSELS ON SEPTEMBER 22, 2003
March 12, 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, March 12, 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 Slovak
Republic to the Treaty Between the United States of America and
The Czech and Slovak Federal Republic Concerning the Reciprocal
Encouragement and Protection of Investment of October 22, 1991,
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 Protocol.
I have already forwarded to the Senate similar Protocols
for Romania and Bulgaria and now forward simultaneously to the
Senate Protocols for the Czech Republic, Estonia, Latvia,
Lithuania, Poland, and the Slovak Republic. Each of these
Protocols is the result of an understanding the United States
reached with the European Commission and these six countries
that will join the European Union (EU) on May 1, 2004, as well
as with Bulgaria and Romania, which are expected to join the EU
in 2007.
Ths 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 the Slovak Republic, 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 EU 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 Protocol preserves the U.S. BIT with the
Slovak Republic, with which the United States has an expanding
relationship, and the protections it affords U.S. investors
even after the Slovak Republic joins the EU. Without it, the
European Commission would likely require the Slovak Republic 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 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,
December 31, 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 Slovak Republic amending the Treaty Between the United
States of America and the Czech and Slovak Federal Republic
Concerning the Reciprocal Encouragement and Protection of
Investment of October 22, 1991, 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 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 the Slovak Republic in the context of EU
enlargement. For example, the interpretation of the BIT
provision on essential security interests confirms that, for
the Slovak Republic, these interests may include interests
deriving from the Slovak Republic'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.-
Slovak 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 majorityof 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.-SLOVAK PROTOCOL
The United States champions EU enlargement and, at the same
time, intends that this BIT will continue to mutually benefit
U.S. and Slovak investors. By undertaking these amendments of
the BIT with the Slovak Republic, 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 the Slovak
Republic after its accession to the EU, and is consistent with
the policy of the United States to welcome-driven foreign
investment and to permit capital to flow freely to seek its
highest return. The Slovak Republic is one of the newly
democratized countries in Europe transitioning to a market
economy, and foreign direct investment into the Slovak Republic
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 articles of the BIT prohibiting
Slovak Republic'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, the Slovak Republic may take a reservation
against the national treatment and most-favored-nation
treatment obligations of the BIT, provided such
reservation is necessary to meet the Slovak Republic's
obligations under EU law, and subject to the following
exception;
that, notwithstanding any such new
reservation, existing U.S. investments in the
Slovak Republic 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 subsides, and
to the most-favored-nation treatment obligation
on 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 the Slovak Republic expressly agree to such
consultations in the protocol.
I support this protocol to the U.S. BIT with the Slovak
Republic, and I favor its transmission to the Senate at an
early date.
Respectfully submitted.
Colin L. Powell.
Enclosures: As stated.