[Senate Treaty Document 108-21]
[From the U.S. Government Publishing Office]
108th Congress Treaty Doc.
SENATE
2d Session 108-21
_______________________________________________________________________
ADDITIONAL INVESTMENT PROTOCOL WITH LITHUANIA
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
ADDITIONAL PROTOCOL BETWEEN THE GOVERNMENT OF THE UNITED STATES OF
AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA TO THE TREATY
FOR THE ENCOURAGEMENT AND RECIPROCAL PROTECTION OF INVESTMENT OF
JANUARY 14, 1998, 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 Government of the United States of America
and the Government of the Republic of Lithuania to the Treaty
for the Encouragement and Reciprocal Protection of Investment
of January 14, 1998, 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.
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 Lithuania, 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
Lithuania, with which the United States has an expanding
relationship, and the protections it affords U.S. investors
even after Lithuania joins the EU. Without it, the European
Commission would likely require Lituania 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,
January 3, 2004.
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 the Republic of Lithuania
amending the Treaty Between the Government of the United States
of America and the Government of the Republic of Lithuania for
the Encouragement and Reciprocal Protection of Investment of
January 14, 1998, 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
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 Lithuania in the context of EU enlargement.
For example, the interpretation of the BIT provision on
essential security interests confirms that, for Lithuania,
these interests may include interests deriving from Lithuania'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.-Lithuania BIT. The two interpretations are enclosed
for the information of the Senate.
Investment by the Untied 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 specificamendments 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.-LITHUANIA PROTOCOL
The United States champions EU enlargement and, at the same
time, intends that this BIT will continue to mutually benefit
U.S. and Lithuanian investors. By undertaking these amendments
of the BIT with Lithuania, 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 Lithuania
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. Lithuania is one of the newly democratized
countries in Europe transitioning to a market economy, and
foreign direct investment into Lithuania 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 Lithuania'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, Lithuania may take a reservation against the
national treatment and most-favored-nation treatment
obligations of the BIT, provided such reservation is
necessary to meet Lithuania's obligations under EU law,
and subject to the following exception;
that, notwithstanding any such new
reservation, existing U.S. investments in
Lithuania 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 Lithuania expressly agree to such consultations in
the protocol.
I support this protocol to the U.S. BIT with Lithuania, and
I favor its transmission to the Senate at an early date.
Respectfully submitted.
Colin L. Powell.
Enclosures: As stated.