[Senate Hearing 106-660]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 106-660

                    CONSIDERATION OF PENDING TREATIES

=======================================================================

                                HEARINGS

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                        SEPTEMBER 12 AND 13, 2000

                               __________

       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate



                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
66-882                     WASHINGTON : 2000


                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska                PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon              CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming                PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri              BARBARA BOXER, California
BILL FRIST, Tennessee                ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
                   Stephen E. Biegun, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                  (ii)

  


                            C O N T E N T S

                              ----------                              

                           September 12, 2000
                   Consideration of Pending Treaties

                                                                   Page

Swartz, Bruce C., Deputy Assistant Attorney General, Criminal 
  Division, Department of Justice, Washington, DC................     3
    Prepared statement...........................................     5
    Responses of Bruce C. Swartz and Samuel M. Witten to 
      additional questions for the record from Senator Jesse 
      Helms......................................................    30
    Responses of Bruce C. Swartz and Samuel M. Witten to 
      additional questions for the record from Senator Joseph R. 
      Biden, Jr..................................................    32
Witten, Samuel M., Assistant Legal Adviser for Law Enforcement 
  and Intelligence, Department of State, Washington, DC..........    11
    Prepared statement...........................................    13
    Responses of Samuel M. Witten and Bruce C. Swartz to 
      additional questions for the record from Senator Jesse 
      Helms......................................................    30
    Responses of Samuel M. Witten and Bruce C. Swartz to 
      additional questions for the record from Senator Joseph R. 
      Biden, Jr..................................................    32

                           September 13, 2000
                   Consideration of Pending Treaties

Bay, Janice F., Deputy Assistant Secretary of State for 
  International Finance and Development, Bureau of Economic and 
  Business Affairs, Department of State, Washington, DC..........    46
    Prepared statement...........................................    49
    Responses to additional questions for the record from Senator 
      Jesse Helms................................................    62
    Responses to additional questions for the record from Senator 
      Joseph R. Biden, Jr........................................    64
West, Hon. Mary Beth, Deputy Assistant Secretary of State for 
  Oceans and Fisheries, Department of State, Washington, DC......    41
    Prepared statement...........................................    44
    Responses to additional questions for the record from Senator 
      Joseph R. Biden, Jr........................................    44

                  Additional Statements for the Record

American Petroleum Institute.....................................    67
International Trademark Association..............................    69
Kraft Foods--Philip Morris Companies, Inc........................    70
Landrieu, Hon. Mary L., U.S. Senator from Louisiana..............    71
Papovich, Joseph, Assistant U.S. Trade Representative............    71
PepsiCo, Inc.....................................................    75
Shell Exploration & Production Company...........................    75
VF Corporation...................................................    76

                                 (iii)

  

 
                   CONSIDERATION OF PENDING TREATIES

                              ----------                              


                      TUESDAY, SEPTEMBER 12, 2000

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:35 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Rod Grams 
presiding.
    Present: Senators Grams and Sarbanes.
    Senator Grams. Good morning. I would like to bring this 
hearing to order.
    I would like to welcome our witnesses this morning, Mr. 
Swartz from the Justice Department, and also Mr. Witten from 
the State Department, to this hearing on law enforcement and 
other treaties, and I look forward to your answers to our 
questions and also to your statements this morning.
    I think we have a vote coming up at about 10, so we will 
try to get as much done as we can before then. If we cannot 
finish, we will take a brief recess and then come back to 
finish.
    But this morning, we are going to consider four extradition 
treaties, ten mutual legal assistance treaties, five treaties 
for the return of stolen vehicles, one prisoner transfer 
treaty, and a treaty with Ireland on taxation of diplomatic and 
consular personnel.
    All of these treaties are designed to further the United 
States' interest and to help our citizens. In general, I 
understand that all of the treaties enjoy bipartisan support.
    Now the United States is party to more than 100 bilateral 
extradition treaties. And of the four extradition treaties 
before us today, we note that the treaties with Belize and Sri 
Lanka replace U.S./U.K. treaties which have been honored by the 
two states since their independence from Britain. On the other 
hand, the treaties from Paraguay and South Africa modernize 
existing treaties there.
    Now, the committee notes with pleasure that in all four of 
the extradition treaties before us today, the nationality of 
the fugitive has been eliminated as a basis to deny U.S. 
extradition requests. In other words, if these treaties are 
approved, citizens of these countries who commit criminal 
offenses in the U.S. will not be able to flee to their 
homelands with the expectation of escaping American justice by 
virtue of their nationality.
    We recognize and fully support the principle that justice 
is far better served by trial of a fugitive in the jurisdiction 
where the extradition offense was committed rather than in the 
homeland where they may have traveled to escape justice. We 
encourage the executive branch to make extradition of nationals 
a bedrock principal of all future extradition treaties.
    Now our last major round of work on extradition treaties 
was in September 1998. Since then, many fugitives have been 
returned to the United States for prosecution, and the United 
States has extradited many fugitives to other countries for 
prosecution. The committee expects the important avenue of 
international extradition to remain open and accessible in the 
coming years as well.
    Today, the committee also plans to review ten mutual legal 
assistance treaties, the MLATs, with countries in Europe, 
Africa, the Middle East, and with the Organization of American 
States. In each of these regions, organized crime, drug 
trafficking, and money laundering pose high priority challenges 
for the United States.
    MLATs help us meet those challenges. And in the end, they 
help ordinary Americans by enabling us to obtain from abroad 
information and evidence related to criminal investigations and 
prosecutions. More and more the cooperation of foreign 
authorities can make or break a Federal or state prosecution in 
the United States.
    So MLATs help our Federal and state prosecutors obtain 
material and statements from the jurisdiction of foreign treaty 
partners in a form that helps ensure its admissibility into 
evidence into our Federal and state courtrooms.
    The committee understands the importance of MLATs to 
Federal and state prosecutors and their superiority to letters 
rogatory and other judicial assistance measures which are 
unsuited to the challenges of sophisticated modern criminality.
    Today we also have before us five important treaties which 
are intended to ease the return of recovered stolen vehicles to 
and from U.S. owners. We have only one such treaty in force at 
present. That is with Mexico.
    The experience with the serious and apparently growing 
problem of international auto and aircraft theft over the years 
has underlined the need for new agreements in this field. So 
today, the committee will also examine a Multilateral Prisoner 
Transfer Convention produced by the Organization of American 
States.
    The convention is the first multilateral treaty of its 
kind, signed by the United States since the Reagan 
administration signed the Council of Europe Prisoner Transfer 
Convention back in 1983. Upon entry into force for the United 
States, the convention is expected to open new opportunities 
for cooperation with Latin American countries. And I was 
pleased to hear that the convention follows the format of 
bilateral United States Prisoner Transfer Agreements with 
Mexico, Canada, and also the Council of Europe.
    And finally, the committee will review and hear testimony 
on a recently concluded protocol to our 1950 Consular 
Convention with Ireland. Now the protocol deals with taxation 
of diplomatic and consular property and personnel in each 
country.
    These are all important treaties. It appears that none of 
them would require implementing legislation. In particular, the 
extradition treaties and MLATs do provide a framework to allow 
the United States to share information and transfer criminals 
worldwide.
    Precisely because of the broad international scope of these 
treaties, it is essential to clarify the relationships between 
U.S. bilateral relations under MLATs, and extradition treaties, 
and an eventual international criminal court which may come 
into being if the July 1998 Rome Treaty enters into force.
    As you know, I authored a provision which is now law 
requiring that before we extradite a U.S. citizen to a foreign 
nation, we have an agreement with that nation that it will not 
extradite U.S. citizens to the International Criminal Court. To 
that end, Senate approval of these MLATs and extradition 
treaties must be contingent on an understanding that in the 
context of our treaty relationship, no fugitive who has been 
returned to a treaty partner by the United States may be re-
extradited to the International Criminal Court, and no legal 
assistance provided by the United States to a treaty party 
pursuant to an MLAT request may be shared in any way with that 
court.
    Today the committee will hear from Deputy Assistant 
Attorney General Bruce Swartz of the Department of Justice, and 
then from Samuel Witten, Assistant Legal Adviser for Law 
Enforcement and Intelligence at the Department of State.
    So I want to welcome you both this morning.
    And Mr. Swartz, we will begin with your testimony first. 
Thank you very much.

    STATEMENT OF BRUCE C. SWARTZ, DEPUTY ASSISTANT ATTORNEY 
GENERAL, CRIMINAL DIVISION, DEPARTMENT OF JUSTICE, WASHINGTON, DC

    Mr. Swartz. Thank you, Mr. Chairman. I am pleased to appear 
before you today to present the views of the Department of 
Justice on these law enforcement treaties. As was suggested, 
Mr. Chairman, these treaties will advance the law enforcement 
interests of the United States. They will also help protect our 
citizens.
    With the chairman's permission, I would like to submit my 
full statement for the record and just briefly summarize it.
    Senator Grams. It will be so submitted. Thank you.
    Mr. Swartz. Thank you. In my testimony today I will 
concentrate on why these extradition and mutual legal 
assistance treaties are important instruments for United States 
law enforcement agencies engaged in investigating and 
prosecuting serious offenses. I will also briefly describe the 
advantages of the OAS prisoner transfer treaty and the benefits 
of the stolen vehicle treaties.
    Extradition treaties remain the most effective means of 
obtaining the return of international fugitives. Modernizing 
our extradition treaties is one of the primary goals of the 
Department of Justice in the international area. The four 
extradition treaties being considered by the committee today 
all update existing treaties.
    Each of the new treaties contains the core elements we seek 
in a modern, effective extradition instrument, including 
provisions regarding dual criminality, provisional arrests, and 
temporary surrender. In addition, each treaty explicitly 
provides that extradition may not be denied, as the chair has 
pointed out, on the basis of the fugitive's nationality.
    Extradition treaties are important, but also of course, the 
mutual legal assistance treaties before the committee today 
provide an invaluable aid to our prosecution of cases in this 
country and an aid to prosecution of serious offenses in other 
countries as well.
    The 9 bilateral MLATs before the committee will join 36 
other MLATs signed and brought into force by the United States 
since 1977. These new MLATs, when ratified, will strengthen our 
ability to obtain evidence and assistance in criminal cases. 
More than 20 years of experience has proven the importance of 
these tools, particularly as we face the globalization of 
serious crime.
    Mutual legal assistance treaties provide, as the chair has 
suggested, a formal framework in the context of obligations 
under international law, for cooperation between states in 
investigating and prosecuting crime. On a practical level, they 
are much more useful and efficient than letters rogatory.
    The more streamlined handling of requests, however, is just 
one of several reasons why the MLATs are so important to our 
multinational and international law enforcement efforts.
    First, the MLAT makes assistance obligatory as a matter of 
law.
    Second, each of the MLATs before the committee today will 
allow us to penetrate bank secrecy and business confidentiality 
laws of foreign countries.
    Third, the MLAT provides an opportunity to devise 
procedures to obtain foreign evidence in a manner that is 
admissible in our court proceedings. In our bilateral MLATs, we 
are able to establish procedures that will meet the special 
requirements of our statutes, our constitutional protections, 
such as the right to confrontation, and our evidentiary rules, 
such as hearsay.
    Fourth, each of the MLATs provides a framework for 
cooperation in the tracing, seizure, and forfeiture of criminal 
assets.
    While these MLATs are useful tools, the Department of 
Justice recognizes they are not panaceas, that will, without 
more, resolve the problem of international crime. We are well 
aware that an MLAT's effectiveness depends as much on the 
commitment and competence of the parties as on the specific 
language of the instrument.
    However, our experience shows us that MLATs themselves 
provide a useful framework for us to establish and maintain 
frank and productive working relationships with our treaty 
partners. Indeed, we have found the process of consultation to 
be so important to the effectiveness of the treaties that 
specific consultation provisions have been included in each of 
the MLATs before the committee today.
    In addition to the bilateral MLATs I have discussed, the 
committee also has before it an OAS multilateral convention on 
mutual legal assistance, and its related optional protocol. The 
United States took an active role in the negotiation of this 
convention. Indeed, it was largely modeled on U.S. bilateral 
MLATs and contains the key benefits of an MLAT that I have 
already described.
    Joining the OAS MLAT will provide a means for the United 
States to extend its mutual assistance treaty relationships in 
the hemisphere to countries as to which there might not be a 
sufficient basis to justify the resources needed to conclude 
separate bilateral treaties. The convention, in addition, is 
supplemented by a related optional protocol requiring mutual 
legal assistance in investigations and prosecutions involving 
tax offenses. This protocol was initiated at the behest of the 
United States.
    Turning to the Inter-American Convention on Serving 
Criminal Sentences Abroad, better known as the OAS Prisoner 
Transfer Treaty: This treaty offers an opportunity for the 
United States to establish, via a single instrument, a treaty 
relationship with several countries in the hemisphere for the 
transfer of sentenced persons.
    As in the case of the OAS MLAT, the United States was an 
important participant in the negotiation of this treaty and 
helped shape the text based on our experience with the prisoner 
transfer treaty of the Council of Europe.
    Finally, let me turn to the stolen vehicle treaties. 
According to insurance industry estimates, approximately 
200,000 motor vehicles stolen in the United States are 
illegally exported. Frequently, organized criminal groups are 
involved in these thefts. The vehicle treaties before the 
committee are useful tools for addressing international 
trafficking in stolen vehicles, and are part of an overall 
program being pursued by law enforcement to combat domestic and 
international vehicle theft.
    In conclusion, Mr. Chairman, we appreciate the committee's 
support for our efforts to strengthen and enlarge the framework 
of treaties that assist us in combating international crime.
    For the Department of Justice, modern extradition and 
mutual assistance treaties are particularly critical law 
enforcement tools. The prisoner transfer treaty and stolen 
vehicle treaties will also serve extremely important interests 
of the United States.
    Accordingly, we join the State Department in urging the 
prompt and favorable consideration of these law enforcement 
treaties.
    I would be pleased to respond to any questions the 
committee may have. Thank you.
    Senator Grams. Thank you very much, Mr. Swartz.
    [The prepared statement of Mr. Swartz follows:]

                 Prepared Statement of Bruce C. Swartz

    Mr. Chairman and members of the Committee, I am pleased to appear 
before you today to present the views of the Department of Justice on 
twenty-one law enforcement treaties that have been referred to the 
Committee. Each of these treaties will directly advance the law 
enforcement interests of the United States.
    Four of these treaties--with Belize, Paraguay, South Africa, and 
Sri Lanka--replace, and thereby update, old extradition treaties. 
Another nine treaties are bilateral mutual legal assistance treaties 
(or ``MLATs'')--with Cyprus, Egypt, France, Greece, Nigeria, Romania, 
the Russian Federation, South Africa, and Ukraine. There are three 
treaties negotiated under the auspices of the Organization of American 
States: an MLAT, its related optional protocol, and a prisoner transfer 
treaty. Finally, there are five treaties addressing the problem of 
stolen vehicles, with Belize, the Dominican Republic, Guatemala, Costa 
Rica and Panama.
    The decision to proceed with the negotiation of law enforcement 
treaties such as these is made jointly by the Departments of State and 
Justice, and reflects our international law enforcement priorities. The 
Department of Justice participated in the negotiation of the 
extradition and mutual legal assistance treaties, and consulted closely 
regarding the prisoner transfer and stolen vehicle treaties. We join 
the Department of State today in urging the Committee to report 
favorably to the Senate and recommend its advice and consent to the 
ratification.
    The Departments of Justice and State have prepared and submitted to 
the Committee detailed technical analyses of the mutual legal 
assistance and extradition treaties. In my testimony today, I will 
concentrate on why these extradition and mutual legal assistance 
treaties are important instruments for United States law enforcement 
agencies engaged in investigating and prosecuting serious offenses. I 
also will describe briefly the advantages of the OAS prisoner transfer 
treaty and the benefits of the stolen vehicle treaties.

                        THE EXTRADITION TREATIES

    Extradition treaties remain the most effective means of obtaining 
the return of international fugitives. Modernizing our extradition 
treaties--and where appropriate establishing new extradition 
relationships--is one of the most important of the Justice Department's 
international efforts.
    The four extradition treaties being considered by the Committee all 
update existing treaties: the 1972 treaty that currently governs our 
extradition relations with Belize, the 1973 treaty with Paraguay, the 
1947 treaty with South Africa and the 1931 U.S.-U.K. treaty that 
currently governs our extradition relations with Sri Lanka. Each of the 
new treaties contains the core elements we seek in a modern, effective 
extradition instrument.
    First, each is a ``dual criminality'' treaty. This means that the 
obligation to extradite applies to all offenses that are punishable in 
both countries by imprisonment for a specified minimum period, 
generally more than one year. This is a significant improvement over 
the outmoded ``list'' approach of our older treaties, including our 
current treaties with Paraguay, South Africa and Sri Lanka. Under a 
``list treaty'' extradition is limited only to those crimes enumerated 
in the treaty itself.
    There are strong advantages to ``dual criminality'' treaties. First 
they reach the broadest possible range of offenses, with the sole 
limitations being those of a felony threshold and the dual criminality 
requirement itself. Second, they obviate the need to repeatedly update 
treaties as new forms of criminality are recognized. This second 
benefit is particularly important because of the United States' strong 
interest in investigating and prosecuting newly emerging criminal 
activities, such as money laundering, computer crime and environmental 
offenses.
    The four extradition treaties also incorporate a variety of 
procedural improvements. For example, all clarify the procedures for 
``provisional arrest,'' the process by which a fugitive can be 
immediately detained while the documents in support of extradition are 
prepared, translated and submitted through the diplomatic channel.
    All four treaties contain ``temporary surrender'' provisions, which 
allow a person found extraditable but already in custody abroad on 
another charge, to be temporarily surrendered for purposes of trial. 
Absent temporary surrender provisions, we face the problem that 
extradition of a fugitive may be delayed for years while he serves out 
a sentence in another country, during which time the case against him 
becomes stale, and his victims await vindication for the crimes against 
them.
    All four treaties also allow the fugitive to waive extradition or 
otherwise agree to immediate surrender, thereby substantially speeding 
up the extradition process in uncontested cases. In addition, the 
treaties all contemplate extradition for extraterritorial offenses, 
with the Sri Lankan and Paraguayan provisions being particularly broad. 
For the U.S., extraterritorial jurisdiction is important in two areas 
of particular concern: drug trafficking and terrorism. Finally, all 
four treaties are explicitly retroactive, so that their terms will 
apply also to crimes committed before the treaty entered into force. 
These procedural improvements allow the legal framework for extradition 
to operate more efficiently and with respect to the broadest possible 
range of offenses.
    For the Department of Justice, it is particularly important that 
all four treaties explicitly provide that extradition may not be denied 
on the basis of the fugitive's nationality. In our experience, non-
extradition of nationals is one of the most serious obstacles to 
bringing fugitives to justice. Thus, we seek, whenever possible, to 
include explicit obligations regarding extradition of nationals in our 
treaties.
    While nations generally agree on the importance of extradition, 
there have been striking differences on the question of extraditing 
citizens. Most countries with a common law tradition, like the United 
States, do extradite their citizens, provided there is a treaty in 
force and evidence to support the charges. Many countries with a civil 
law tradition, however, have historically refused to extradite their 
nationals.
    We see this pattern changing for the better, however, particularly 
in Latin America. For example, our new treaties with Argentina and 
Bolivia (both civil law countries) expressly provide that nationality 
shall not be a bar to extradition, and the Dominican Republic, Colombia 
and El Salvador have recently changed their internal law to permit 
extradition of nationals. Thus, the extradition treaty with Paraguay is 
especially important in that it will reinforce the trend in Latin 
America of abandoning the bar on extradition of nationals and embracing 
a modern commitment to deny fugitives safe haven.

                  THE MUTUAL LEGAL ASSISTANCE TREATIES

    The nine bilateral MLATs before this Committee will join 36 other 
MLATs signed and brought into force by the United States since 1977. 
These new MLATs, when ratified, will strengthen our ability to obtain 
evidence and other assistance in criminal cases. More than twenty years 
of experience has proven the importance of these law enforcement tools, 
particularly as we face increasing globalization of serious crime.

The benefits of MLATs
    Mutual legal assistance treaties provide a formal framework, in the 
context of obligations under international law, for cooperation between 
states in investigating and prosecuting crime. On a practical level, 
they are a much more efficient way of seeking and providing assistance 
on an international scale than the traditional system of letters 
rogatory.
    One reason for this enhanced efficiency of MLATs is their system of 
direct communications between Central Authorities. The Attorney General 
is the Central Authority for the United States, and the Attorney 
General has delegated this authority to the Criminal Division's Office 
of International Affairs. In 1999, the Office of International Affairs 
made close to five hundred requests for international assistance on 
behalf of state and federal prosecutors and received over one thousand 
requests for assistance from abroad. These figures reflect not only the 
increasing problem of transnational crime, but also the greater 
familiarity and confidence among law enforcement officials regarding 
our various mechanisms to obtain foreign cooperation. Of these 
mechanisms, MLATs such as those before the Committee are of critical 
importance.
    The more streamlined handling of requests is just one of several 
reasons why MLATs are so important to our international law enforcement 
efforts. First, an MLAT makes assistance obligatory as a matter of 
international law. (Letters rogatory are executed solely on the basis 
of comity.) A request for assistance cannot be refused unless 
specifically permitted by the terms of the treaty, and the grounds for 
refusal of assistance under MLATs are quite limited.
    Second, an MLAT, either by itself or together with implementing 
legislation, provides a means to overcome foreign bank secrecy and 
business confidentiality laws that otherwise can frustrate our 
investigations. Indeed, in some instances, we may feel it is 
appropriate that an MLAT may contain specific provisions negating bank 
secrecy as a barrier to mutual assistance. Such provisions are 
included, for example, in the pending treaties with Romania and Russia.
    Third, an MLAT provides an opportunity to devise procedures to 
obtain foreign evidence in a form admissible in our courts. For 
example, our complex and stringent evidentiary rules, including our 
hearsay rules, are largely unheard of in civil law countries. 
Similarly, our requirements regarding the right to confrontation of 
witnesses may not have a close analogue in countries that have an 
inquisitorial system, rather than an adversarial system such as ours. 
In our bilateral MLATs, we are able to establish procedures that will 
meet these special requirements of our own laws.
    Fourth, each of these MLATs provides a framework for cooperation in 
the tracing, seizure and forfeiture of criminal assets. In our 
experience, use of MLATs, such as our MLAT with Switzerland, has been 
extremely effective in blocking and ultimately forfeiting millions of 
dollars of drug monies and other proceeds of crime. Similarly, our 
ability to use MLATs to trace crime profits through layers of bank 
accounts and shell corporations has proven an extremely effective tool 
in identifying those at the top levels of criminal organizations.
    While these MLATs can be extremely useful tools, the Department of 
Justice recognizes that they are not panaceas, which will, without 
more, resolve the problem of international crime. We are well aware 
that an MLAT's effectiveness depends as much on the commitment and 
competence of the parties as on the specific language of the 
instrument. However, our experience shows us that MLATs themselves 
provide a framework for us to establish and maintain frank and 
productive working relationships with our treaty partners. Indeed, we 
have found the process of consultation to be so important to the 
effectiveness of the treaties that specific consultation provisions 
have been included in each MLAT.
    In sum, bilateral MLATs can provide a predictable and effective 
regime for obtaining evidence in criminal cases, and the bilateral 
MLATs before the Committee will augment the capacity of the Department 
of Justice and our state and local prosecutors to pursue international 
cases in nine foreign countries--countries in Africa, the Middle East, 
Europe, and the former Soviet Union--which are significant from a law 
enforcement perspective.

The bilateral MLATs before the Committee
    While each of the MLATs now before the Committee shares certain 
fundamental characteristics, the specific provisions of each treaty 
vary to some extent. In the MLATs, as in the extradition treaties, some 
of the variances are minor or semantic; others are more substantive. 
The technical analyses explain these variances. The variances are the 
inevitable result of negotiations over a period of years with different 
countries, each of which has a different legal system and domestic 
interests, and as to each of which the United States' law enforcement 
relations and priorities differ.
    I would like to highlight how each of the MLATs before the 
Committee reflects our international law enforcement priorities:

     We expect that the MLAT with Cyprus will assist in 
fighting organized and financial crime. Cyprus has become a major 
center for the laundering of criminal proceeds by drug traffickers, 
some terrorist organizations, violators of U.S. export control laws, 
and, most recently, by Russian organized crime. The MLAT would 
complement the new extradition treaty with Cyprus, which entered into 
force last year, and reflects the overall modernization of our law 
enforcement relations in the region.

     The MLAT with Egypt provides a means of close cooperation 
with Egyptian authorities in various criminal matters in a region of 
critical law enforcement interest to the United States. Most important, 
an MLAT with Egypt would enhance the ability of U.S. law enforcement to 
assist in investigating and prosecuting narcotics and terrorism-related 
offenses, particularly those targeted against American interests.

     France is, of course, a major law enforcement partner of 
the United States, and the new MLAT will help ensure the most efficient 
assistance possible. French law enforcement has provided significant 
cooperation in several recent major cases, and the number of legal 
assistance matters with France continues to grow.

     The MLAT with Greece will enhance the ability of U.S. law 
enforcement to assist Greece in investigating and prosecuting 
narcotics, money-laundering, and terrorism-related offenses. Similarly, 
it will provide a modern, more effective tool for U.S. law enforcement 
to obtain evidence and other information from Greece to support U.S. 
efforts to identify, apprehend and prosecute terrorists, drug 
traffickers and others who commit crimes within the jurisdiction of the 
United States.

     The MLAT with Nigeria provides a practical mechanism for 
cooperation with an African nation of key importance. We expect the 
treaty to be an effective tool in the investigation and prosecution of 
a wide variety of modern crimes of concern to the U.S. and Nigeria, 
including drug trafficking, money laundering, and fraud.

     The MLAT with Romania is a part of our overall 
modernization of law enforcement relations in the region, where we have 
recently signed or negotiated a number of other MLATs. Moreover, 
Romania has become an effective leader in anti-crime efforts in its 
region, with Bucharest serving as headquarters for the Southeast 
European Cooperative Initiative (SECI), a major U.S.-supported effort 
to coordinate regional crime prevention efforts.

     The MLAT with Russia reflects the importance to the United 
States of increased cooperation with Russia in combating organized 
crime, financial crime, and corruption. Over the last decade, Russian 
criminal groups have emerged as a serious threat within Russia and in 
other countries, including the United States. U.S. law enforcement 
authorities have been investigating and prosecuting increasing numbers 
of Russian organized criminals who have committed a variety of crimes, 
and there has been a significant increase in the number of requests for 
cooperation between Russia and the United States. As a result of these 
experiences, our organized crime prosecutors and the FBI have strongly 
supported our entering into an MLAT with Russia because of its 
importance to the success of our own investigations.
    The MLAT with Russia will be a significant improvement over the 
executive agreement--the mutual legal assistance agreement (MLAA)--
which now governs our cooperation with Russia in criminal law matters. 
For example, the MLAT requires assistance for all crimes which are 
punishable under both U.S. and Russian law, while the MLAA applies only 
to specified categories of crimes. As a result, under the MLAT, we will 
be able to reach offenses such as computer crime and trafficking in 
women--significant offenses outside the scope of the current executive 
agreement.
    Moreover, because the MLAT will carry a greater force of law--and 
we understand this distinction has been of particular importance to 
Russian prosecutorial and police authorities--we expect that 
cooperation will improve under the MLAT.
    It also contains safeguards of the type found in all our MLATs that 
enable the United States to deny a request, or to condition the 
providing of information in appropriate circumstances. Thus, we will be 
able to review incoming requests and either impose conditions to ensure 
that information is not used improperly, or deny a request if we 
believe its primary purpose is intelligence-rather than law 
enforcement-related or would otherwise compromise our security or other 
essential interests.

     The MLAT with South Africa, in conjunction with the 
extradition treaty also before this Committee, reflects the importance 
we place on modernizing our law enforcement relationship with this key 
nation in Africa. We are already working closely with South Africa in 
the areas of terrorism, arms trafficking, organized crime and major 
frauds, and the MLAT will strengthen our ability to cooperate.

     The MLAT with Ukraine complements our efforts to enhance 
our network of law enforcement treaties in Eastern and Central Europe. 
It also reflects our particular concerns about organized crime groups 
working, or having their roots, in Ukraine, as well as our concerns 
about corruption, drug trafficking and other forms of criminality. 
Indeed, because of the need to seek formal cooperation from Ukraine in 
connection with U.S. investigations, we obtained Ukraine's agreement to 
provisional application of the MLAT. Under this arrangement, Ukraine 
provided assistance to the United States in our money-laundering case 
against former Ukrainian Prime Minister Pavlo Lazarenko that led to his 
indictment. For the Department of Justice, this case well illustrated 
the practical utility of the sort of formal cooperation with Ukraine 
which will be afforded under the MLAT.

 THE INTER-AMERICAN CONVENTION ON MUTUAL ASSISTANCE IN CRIMINAL MATTERS

    In addition to the bilateral MLATs I have discussed, the Committee 
also has before it an OAS multilateral convention on mutual legal 
assistance, and its related optional protocol. The United States took 
an active role in the negotiation of this Convention. Indeed, it was 
largely modeled on U.S. bilateral MLATs and contains the key benefits 
of an MLAT that I have already described.
    Joining the OAS MLAT will provide a means for the United States to 
extend its mutual assistance treaty relationships in the hemisphere to 
countries as to which there might not be a sufficient basis to justify 
the resources needed to conclude separate bilateral treaties. For 
example, upon ratification, the OAS MLAT would create an immediate 
treaty relationship between the U.S. and with Peru (with which we do 
not have a bilateral MLAT). Similar MLAT relationships would be created 
as five additional signatories to the Convention complete the steps 
necessary for ratification, and as new countries join.
    The Convention is supplemented by a related optional protocol 
requiring mutual legal assistance in investigations and prosecutions 
involving tax offenses. The Protocol was initiated at the behest of the 
United States because of our concern that the Convention itself allowed 
assistance to be denied in certain cases in which the underlying 
offense was considered a ``fiscal'' offense. For the Department of 
Justice, ratification of the Protocol is important to improve 
cooperation in a wide range of criminal tax cases.
    We are aware that, to date, the OAS Convention has been ratified by 
only three countries. However, with U.S. ratification, we will be in a 
position to urge other countries in the hemisphere to join the 
Convention, and in that manner enhance its potential as a means of law 
enforcement cooperation among OAS members.
    As reflected in the President's transmittal of these instruments to 
the Senate, we recommend that two Understandings be included in the 
United States instrument of ratification for the OAS Convention, and 
that one Understanding be included in the instrument of ratification 
for the related optional protocol. Mr. Witten has described these 
Understandings in greater detail in his testimony.

                INTER-AMERICAN PRISONER TRANSFER TREATY

    The Inter-American Convention on Serving Criminal Sentences Abroad, 
better known as the OAS Prisoner Transfer Treaty, offers an opportunity 
for the United States to establish, via a single instrument, a treaty 
relationship with several countries in the hemisphere for the transfer 
of sentenced persons. As in the case of the OAS MLAT, the U.S. was an 
important participant in the negotiation of this treaty and helped 
shape the text based on our extensive experience under bilateral 
treaties and the Council of Europe's prisoner transfer treaty. 
Ratification of the OAS prisoner transfer treaty will expand a 
successful program that the Department of Justice has administered for 
more than twenty years, and through which several thousand U.S. 
citizens incarcerated abroad--often under poor conditions--have been 
able to return to the U.S. to serve out the balance of their sentences.
    The benefits of a multilateral treaty on prisoner transfer have 
been well illustrated by our experience with the Council of Europe 
treaty. Through the COE treaty, we have established a prisoner transfer 
relationship with more than 40 countries. While some OAS members also 
have signed the COE treaty, it is our impression that many Latin 
American countries will be more inclined to join the OAS treaty than 
the COE treaty. Thus, the OAS prisoner transfer treaty may provide us 
with opportunities for transfer that might not otherwise exist. Upon 
ratification, we would immediately have a new treaty relationship with 
Venezuela. Once Brazil, Ecuador and Paraguay complete their 
ratification process, we would similarly be in a position to send or 
receive prisoners to and from those countries. Also, there are several 
other countries that have not yet signed the treaty, but might be 
encouraged to do so in the future.
    The provisions of the OAS treaty are similar to those of existing 
prisoner transfer treaties to which we are a party, including the 
multilateral Council of Europe prisoner transfer treaty. First, 
transfer is consensual. Not only must the prisoner agree, but both the 
sentencing state and the state of nationality to which transfer is 
sought must agree. As a result, the U.S. has complete discretion to 
transfer a prisoner, or to accept a prisoner from abroad, based on any 
number of factors, ranging from those bearing on the prisoner's 
potential for rehabilitation to law enforcement concerns that may 
advise against transfer. Second, the treaty is in accord with important 
procedural aspects of our own prisoner transfer law. For example, we 
are able to verify that the prisoner's consent to transfer is voluntary 
and informed; all appeals must have been resolved; and challenges to 
the validity of the sentence are matters reserved to the courts of the 
original sentencing State.
    In two key respects, the OAS treaty incorporates important 
provisions not always present in prior instruments. First, it 
explicitly acknowledges the rights of states under the U.S. federal 
system to decline to transfer a prisoner sentenced under state law. 
Second, it reserves to the sentencing State all power to pardon or 
grant amnesty.
    As reflected in the President's transmittal of these instruments to 
the Senate, we recommend that one Understanding and one Reservation be 
included in the United States instrument of ratification of the OAS 
prisoner transfer treaty. Mr. Witten has described these in greater 
detail in his testimony.

                        STOLEN VEHICLE TREATIES

    According to insurance industry estimates, approximately 200,000 
motor vehicles stolen in the United States are illegally exported. 
Frequently, organized criminal groups are involved. The vehicle 
repatriation treaties before the Committee are useful tools for 
addressing international trafficking in stolen vehicles and are part of 
an overall program being pursued by law enforcement to combat domestic 
and international vehicle theft.
    The five treaties establish procedural and documentary requirements 
for the return of stolen motor vehicles and, in the case of the 
treaties with Guatemala, Costa Rica and Panama, for the return of 
stolen aircraft. Indeed, we understand that, absent a treaty, the 
domestic laws and procedures of some countries do not create a 
sufficient formal framework to facilitate the return of these types of 
stolen property to their rightful owners in the United States. The 
treaties also provide a means by which insurers can work with law 
enforcement to more promptly resolve claims involving stolen vehicles 
and thus better serve their customers.
    The treaties also facilitate international cooperation of law 
enforcement agencies and the sharing of information about stolen 
vehicles. This cooperation and exchange of information in turn allows 
the FBI and Customs Service, often working with local law enforcement, 
to identify and target the criminal enterprises engaged in 
international trafficking in stolen vehicles.
    The treaties before this Committee are modeled on the treaty 
between the United States and Mexico, which entered into force in 1983. 
According to insurance industry data, the Mexico treaty has led to the 
return of approximately 2,000 stolen vehicles every year since 1994. 
More recently, we have begun to see a reliance on the Mexico treaty to 
facilitate the return of vehicles stolen in Mexico and recovered in the 
United States.
    We know the problem of vehicles stolen from the United States 
extends also into Central America and the Carribean. Therefore, 
entering into treaty relations with Belize, Costa Rica, the Dominican 
Republic, Guatemala and Panama will further assist our efforts to 
combat international trafficking in stolen vehicles.

                               CONCLUSION

    In conclusion, Mr. Chairman, we appreciate the Committee's support 
in our efforts to strengthen and enlarge the framework of treaties that 
assist us in combating international crime. For the Department of 
Justice, modern extradition and mutual assistance treaties are 
particularly critical law enforcement tools. The prisoner transfer 
treaty and stolen vehicle treaties will also serve extremely important 
interests of the United States. Accordingly, we join the State 
Department in urging the prompt and favorable consideration of these 
law enforcement treaties. I would be pleased to respond to any 
questions the Committee may have.

    Senator Grams. Mr. Witten, your opening statement.

STATEMENT OF SAMUEL M. WITTEN, ASSISTANT LEGAL ADVISER FOR LAW 
ENFORCEMENT AND INTELLIGENCE, DEPARTMENT OF STATE, WASHINGTON, 
                               DC

    Mr. Witten. Thank you, Mr. Chairman. With your permission I 
would like to submit my full statement for the record and 
merely summarize it at this time.
    Senator Grams. Without objection.
    Mr. Witten. Thank you.
    I am pleased to appear before you today to testify in 
support of 21 treaties for international law enforcement 
cooperation, as well as a protocol to the 1950 U.S./Ireland 
Consular Convention.
    The Department of State greatly appreciates the opportunity 
to move toward ratification of these important treaties. The 
law enforcement treaties before the committee will make 
important contributions to the U.S. Government's ability to 
receive and provide international cooperation in criminal 
investigations and prosecutions.
    The four extradition treaties update older extradition 
treaties now in force, and are a part of the administration's 
ongoing program to review and revise these older relationships, 
many of which are extremely outdated and do not include many 
modern crimes or modern procedures.
    The new treaties have modern features such as extradition 
based on dual criminality, rather than a list of offenses, 
retroactive application and modern provisions for the 
provisional arrests of fugitives.
    Significantly, as you noted, Mr. Chairman, all four 
treaties provide for the unrestricted extradition of nationals. 
As a matter of longstanding policy, the U.S. Government 
extradites U.S. nationals and strongly encourages other 
countries to extradite their nationals.
    The treaty with Paraguay is in this respect particularly 
significant because of the commitment in that treaty that 
``extradition shall not be refused on the ground that the 
person sought is a national of the Requested State.''
    This treaty and our treaties with Bolivia and Argentina, to 
which the Senate gave advice and consent in 1996 and 1998 
respectively, represent an important breakthrough in our 
efforts to convince civil law countries in the Western 
Hemisphere to obligate themselves to extradite their nationals 
to the United States.
    Turning to the MLATs: The committee has before it a mix of 
bilateral and multilateral instruments. The bilateral treaties 
are with countries that have been identified by the U.S. law 
enforcement community as important law enforcement partners for 
which this kind of formal law enforcement cooperation 
relationship is necessary.
    The United States has 36 MLATs in force at this time, with 
most of them having been brought into force in the last 5 
years. These nine additional relationships will facilitate 
cooperation and assistance in U.S. investigations and 
prosecutions.
    Also before the committee is the Inter-American Convention 
on Mutual Assistance in Criminal Matters with a related 
optional protocol. This convention is largely similar to our 
bilateral MLATs, as Mr. Swartz has explained, and is shaped 
with the guidance of the United States in negotiations at the 
OAS.
    The convention will enable the United States to readily 
establish legal assistance relations with countries in the 
hemisphere with which we have not yet decided to negotiate 
bilateral MLATs.
    We also recommend Senate advice and consent to the optional 
protocol on tax matters related to the Inter-American 
Convention. As between parties to the protocol, it removes the 
discretion to refuse assistance on the grounds that a tax 
offense is involved, and clarifies that the limited dual 
criminality provision in article 5 of the convention should be 
interpreted liberally in cases involving tax offenses.
    The pursuit of tax crimes is an important part of our law 
enforcement effort. We believe this protocol will lead to 
increased cooperation in this area.
    The administration recommends that the United States 
include two Understandings in its instrument of ratification 
for the convention, and one Understanding in its instrument of 
ratification for the protocol. The proposed texts of these 
Understandings were included in the administration's 
transmittal of the convention and the protocol to the Senate, 
and are discussed more fully in my prepared statement.
    Just briefly, Mr. Chairman, one relates to article 25 of 
the convention and clarifies that the disclosure and use 
limitations of the convention no longer apply if such 
information or evidence is made public consistent with the 
article.
    And the other Understanding, which is identical for both 
convention and protocol, makes clear that the assistance and 
procedures set forth in these instruments do not prevent the 
contracting parties from granting assistance to another party 
through the provisions of other international agreements, or 
treaties, or national laws.
    The third category of treaties before the committee are 
stolen vehicle treaties, with Belize, Costa Rica, the Dominican 
Republic, Guatemala, and Panama.
    The United States currently has one such treaty in force 
which, according to insurance industry estimates, prompts the 
return to the United States of approximately 2,000 vehicles 
annually. The five treaties before the committee build on the 
Mexico precedent and will create a legal basis for the return 
of stolen vehicles, and in several cases, stolen aircraft, from 
several other nearby countries. The U.S. insurance industry 
strongly supports these treaties since U.S. insurers are 
typically subrogated to the ownership interests of Americans 
whose vehicles or aircraft have been stolen and taken overseas.
    Next, the committee has before it the Inter-American 
Convention on Serving Criminal Sentences Abroad, commonly 
called the OAS Prisoner Transfer Treaty. This instrument will 
facilitate the transfer of persons sentenced in the United 
States and other state parties to their own nations to serve 
their sentences.
    The convention establishes procedures that can be initiated 
by sentenced persons who want to serve their sentences in their 
own countries. Procedures employed to achieve this purpose are 
similar to those embodied in ten existing prisoner transfer 
treaties to which the United States is a party, including the 
Council of Europe Convention, which itself now has over 40 
parties.
    Immediately upon U.S. ratification, the convention will 
establish a new prisoner transfer relationship between the 
United States and Venezuela, which has already ratified the 
convention. And as other OAS members join the convention, the 
number of countries with which we have prisoner transfer 
relationships will further expand.
    As reflected in the transmittal of the convention to the 
Senate, we recommend the submission of one Understanding and 
one Reservation with the U.S. instrument of ratification to the 
Prisoner of Transfer Convention. The Understanding would 
clarify that the consent of all the parties--the prisoner, the 
sentencing state, the receiving state, and, where applicable, 
the sub-Federal state or province--is required prior to the 
transfer.
    Although this requirement is implied by the convention 
text, consent by all parties is such a fundamental feature of 
the U.S. Government's prisoner of transfer regime that we 
believe it appropriate to clarify the text in this manner.
    The proposed Reservation sets forth the requirement that 
before a U.S. national may be returned, the sentencing state 
must provide English language versions of a certified copy of 
the sentence and other key documents in addition to the 
language of the sentencing state. The United States will do an 
analogous translation for the benefit of requesting state in 
similar circumstances. This Reservation will greatly facilitate 
U.S. implementation of the convention.
    And finally, Mr. Chairman, also before the committee is a 
protocol to amend the 1950 U.S./Ireland Consular Convention. 
The protocol will expand the scope of tax exemption under the 
consular convention to provide for reciprocal exemption from 
all taxes, including value added taxes, or VAT, on goods and 
services for the official use of the mission or for the 
personal use of mission members and families.
    It will provide financial benefit to the United States both 
through direct savings on embassy purchases of goods and 
services as well as through lowering the cost of living for 
U.S. Government employees assigned to the U.S. Embassy in 
Dublin.
    Thank you, Mr. Chairman. I will be happy to answer any 
questions the committee may have.
    Senator Grams. Thank you very much, Mr. Witten.
    [The prepared statement of Mr. Witten follows:]

                 Prepared Statement of Samuel M. Witten

    Mr. Chairman and members of the Committee:
    I am pleased to appear before you today to testify in support of 21 
treaties for international law enforcement cooperation, as well as a 
protocol to the 1950 Consular Convention between the United States and 
Ireland. The treaties, which have been transmitted to the Senate for 
advice and consent to ratification, fall into five categories:

   Extradition treaties with Belize, Paraguay, South Africa, 
        and Sri Lanka.

   Bilateral mutual legal assistance treaties--or ``MLATs''--
        with Cyprus, Egypt, France, Greece, Nigeria, Romania, the 
        Russian Federation, South Africa, Ukraine, and a multilateral 
        Inter-American MLAT and related protocol negotiated under the 
        auspices of the Organization of American States.

   Treaties for the return of stolen vehicles with Belize, 
        Costa Rica, Dominican Republic, Guatemala and Panama. The 
        treaties with Costa Rica, Guatemala and Panama also cover the 
        return of stolen aircraft.

   A multilateral Inter-American prisoner transfer treaty 
        negotiated under the auspices of the Organization of American 
        States.

   A Protocol amending the 1950 Consular Convention Between the 
        United States and Ireland to provide exemption from all taxes 
        on purchases by diplomatic and consular missions, members of 
        such missions and their families.

    The Department of State greatly appreciates this opportunity to 
move toward ratification of these important treaties. I will address 
the extradition and mutual legal assistance treaties first, followed by 
the treaties covering stolen vehicles, the transfer of prisoners, and 
the consular convention.
    The growth in transborder criminal activity, especially violent 
crime, terrorism, drug trafficking, arms trafficking, trafficking in 
persons, the laundering of proceeds of criminal activity, including 
organized crime and corruption, generally has confirmed the need for 
increased international law enforcement cooperation. Extradition 
treaties and MLATs are essential tools in that effort.
    The negotiation of new extradition and mutual legal assistance 
treaties is an important part of the Administration's many efforts to 
address international crime, as reflected in the International Crime 
Control Strategy, which was promulgated in May of 1998. That Strategy 
recognizes the increasing threat of international crime to our national 
security. One important measure to better address this threat is to 
enhance the ability of U.S. law enforcement officials to cooperate 
effectively with their overseas counterparts in investigating and 
prosecuting international criminal cases. Replacing outdated 
extradition treaties with modern ones and negotiating extradition 
treaties with new treaty partners is necessary to create a seamless web 
of mutual obligations to facilitate the prompt location, arrest and 
extradition of international fugitives. Similarly, mutual legal 
assistance treaties are vitally needed to provide witness testimony, 
records and other evidence in a form admissible in criminal 
prosecutions. The instruments before you today will be important tools 
in achieving this goal.

                          EXTRADITION TREATIES

    I will first address the extradition treaties currently before the 
Committee. As you know, under U.S. law, fugitives can only be 
extradited from the United States pursuant to authorization granted by 
statute or treaty. The treaties pending before the Committee will 
update our existing treaty relationships with four important law 
enforcement partners. These updated treaties are part of the 
Administration's ongoing program to review and revise older extradition 
treaty relationships, many of which are extremely outdated and do not 
include many modern crimes or modern procedures.
    Two of these treaties, with Belize and Sri Lanka, will replace 
existing treaty relationships between the United States and these 
former British territories. The U.S. extradition relationship with 
Belize is currently governed by a 1972 treaty between the United States 
and United Kingdom and the relationship with Sri Lanka is governed by a 
1931 U.S.-U.K. treaty. The other two treaties will also replace 
existing relationships--the South Africa treaty updates a treaty from 
1947 and the Paraguay treaty modernizes a relationship from 1973. With 
the passage of time, these older treaties are not as effective as the 
modern treaties before the Committee today in ensuring that all 
fugitives may be brought to justice.
    All four extradition treaties contain several noteworthy provisions 
that will substantially serve our law enforcement objectives.
    First, these treaties define extraditable offenses to include 
conduct that is punishable by imprisonment or deprivation of liberty 
for a specified minimum period, typically more than one year, in both 
states. This is the so-called ``dual criminality'' approach. Our older 
treaties, including those in force with Paraguay, South Africa, and Sri 
Lanka, provide for extradition only for offenses appearing on a list 
contained in the instrument. As time passes, these lists have grown 
increasingly out of date. The dual criminality approach obviates the 
need to renegotiate treaties to cover new offenses in instances in 
which both states pass laws to address new types of criminal activity.
    Second, these four treaties expressly permit extraditions whether 
the extraditable offense is committed before or after their entry into 
force. This provision is particularly useful and important, since it 
will ensure that persons who have already committed crimes can be 
extradited under the new treaties from each of the new treaty partners 
after the treaty enters into force.
    Third, these treaties all contain a provision not contained in the 
current treaty relationships that permits the temporary surrender of a 
fugitive to the Requesting State when that person is facing prosecution 
for, or serving a sentence on, charges within the Requested State. This 
provision can be important to the Requesting State so that, for 
example: (1) charges pending against the person can be resolved earlier 
while the evidence is fresh; or (2) where the person sought is part of 
a criminal enterprise, he can be made available for assistance in the 
investigation and prosecution of other participants in the enterprise.
    These treaties also address two of the most difficult issues in our 
extradition treaty negotiations--extradition of nationals of the 
Requested State and extraditions where the fugitives may be subject to 
the death penalty in the Requesting State.
    As a matter of longstanding policy, the U.S. Government extradites 
United States nationals and strongly encourages other countries to 
extradite their nationals. All four of the treaties before the 
Committee contemplate the unrestricted extradition of nationals by 
providing that nationality is not a basis for denying extradition.
    The treaty with Paraguay is in this respect particularly 
significant. Article III of the Paraguay extradition treaty provides 
that ``[e]xtradition shall not be refused on the ground that the person 
sought is a national of the Requested State.'' This provision is 
especially useful since it is likely that a relatively large percentage 
of fugitives wanted by the United States in that country would be of 
Paraguayan nationality. This treaty, and our treaties with Bolivia and 
Argentina, which also permit extradition of nationals, and to which the 
Senate gave advice and consent in 1996 and 1998, represent an important 
breakthrough in our efforts to convince civil law countries in the 
Western Hemisphere to oblige themselves to extradite their nationals to 
the United States. We are already using these treaties as precedents in 
our efforts with other nations in Latin America and elsewhere. In 
practical terms, these treaties should help the United States to bring 
to justice narcotics traffickers, regardless of nationality, who reside 
or are found in these countries.
    A second issue that often arises in modern extradition treaties 
involves extraditions in cases in which the fugitive may be subject to 
the death penalty in the Requesting State; A number of countries that 
have prohibited capital punishment domestically, also, as a matter of 
law or policy, prohibit the extradition of persons to face the death 
penalty. To deal with this situation, or to address the possibility 
that in some cases the United States might want to seek such 
assurances, a number of recent U.S. extradition treaties have contained 
provisions under which a Requested State may request an assurance from 
the Requesting State that the fugitive will not face the death penalty. 
Provisions of this sort appear in the extradition treaties with 
Paraguay, South Africa and Sri Lanka. In our negotiations with Belize, 
it was agreed that the possibility of the death penalty would not serve 
as a basis for the denial of extradition.

                    MUTUAL LEGAL ASSISTANCE TREATIES

Overview
    I will now comment briefly on the mutual legal assistance treaties 
with Cyprus, Egypt, France, Greece, Nigeria, Romania, the Russian 
Federation, South Africa, and Ukraine, as well as the Inter-American 
Convention on Mutual Assistance in Criminal Matters with Related 
Optional Protocol. The Department of Justice will speak on these 
treaties at greater length.
    These mutual legal assistance treaties before the Committee are 
similar to thirty-six bilateral MLATs that have entered into force with 
countries throughout the world. The U.S. Government's mutual legal 
assistance treaty program is relatively new when compared with 
extradition, but has fast become a central aspect of our international 
law enforcement cooperation program. As a general matter, MLATs 
obligate the Requested State to provide the Requesting State with 
certain kinds of evidence, such as documents, records, and testimony, 
provided that treaty requirements are met. Ratification of the MLATs 
under consideration today will enhance our ability to investigate and 
prosecute a variety of crimes, including violent crime, drug 
trafficking, terrorism, and money laundering and other financial 
crimes.
    All of the bilateral MLATs require the Contracting Parties to 
assist each other in proceedings related to the forfeiture of the 
proceeds and instrumentalities of criminal activity, to the extent such 
assistance is permitted by their respective laws. Such assistance may 
prove invaluable insofar as it is used to deprive criminals, including 
international drug traffickers and members of organized crime, of the 
benefits of their criminal activity. The bilateral MLATs also provide 
that forfeited and seized assets or the proceeds of their sale may be 
transferred to the other Party.
    As is the case with all MLATs currently in force, there are 
exceptions in all of these instruments to the obligation to provide 
assistance. Although the language varies to a certain extent among the 
treaties, all of the pending MLATs provide that requests for assistance 
may be denied if their execution would prejudice the essential 
interests of the Requested State. All of them also contain a useful 
provision that ensures that our obligations under the treaty do not 
interfere with our own domestic law enforcement efforts by providing 
that the Requested State may postpone assistance if it determines that 
execution of a request would interfere with an ongoing criminal 
investigation or proceeding. For all of the treaties, the provisions 
relating to procedures to be followed in making requests and the type 
of assistance to be provided are similar tothe other MLATs currently in 
force.

INTER-AMERICAN CONVENTION AND RELATED OPTIONAL PROTOCOL

    The Inter-American Convention on Mutual Assistance in Criminal 
Matters will serve as a legal basis for mutual assistance in criminal 
matters between the United States and any state that also becomes a 
party. This Convention was negotiated at the Organization of American 
States beginning in the mid-1980's, and was adopted and opened for 
signature by the OAS General Assembly on May 23, 1992. It was signed on 
behalf of the United States on January 10, 1995. The Convention was 
shaped largely with the assistance of the United States, and is 
therefore in essential ways similar to the U.S. Government's typical 
modern bilateral MLATs. For example, it requires each party to identify 
a Central Authority for issuing and receiving requests of assistance; 
details a broad range of assistance that may be provided between the 
law enforcement authorities of parties, such as taking testimony and 
serving legal documents; and provides a list of bases for denial of 
assistance, such as where the public policy or basic public interests 
of the requested state would be prejudiced by granting the assistance. 
Unlike our typical modern mutual legal assistance treaties, however, it 
will not serve as the legal basis for asset sharing, such as the 
sharing of forfeited assets, which the negotiators determined was best 
left for bilateral agreements.
    We also recommend Senate advice and consent to the Optional 
Protocol related to the Inter-American Convention on Mutual Assistance 
in Criminal Matters. This Protocol was negotiated at the Organization 
of American States in the early 1990's, was adopted and opened for 
signature by the OAS General Assembly on June 11, 1923, and was signed 
by the United States on January 10, 1995. While the OAS Convention will 
be a valuable tool for obtaining assistance in a wide variety of 
criminal matters, it contains certain limitations regarding assistance 
in cases involving tax offenses. Most significantly, under Article 9(f) 
of the Convention, a party may decline assistance in investigations and 
proceedings involving certain tax offenses. While the United States 
delegation consistently opposed this provision during the negotiation 
of the Convention, it ultimately joined consensus on the Article as a 
whole, but at the same time proposed an additional protocol to enable 
assistance in tax matters. The United States considers criminal tax 
investigations to be an important aspect of a State's overall strategy 
for combating crime, and believes that such investigations are also an 
increasingly important weapon in the battle against offenses such as 
drug trafficking and organized crime. The first article of the Protocol 
removes the discretion of Protocol signatories to refuse assistance on 
the grounds that a tax offense is involved. The second article 
clarifies that the limited dual criminality provision in Article 5 of 
the Convention should be interpreted liberally in cases involving tax 
offenses.

Recommended Understandings Related to Inter-American Convention and 
        Related Optional Protocol

    The Administration recommends that the United States include two 
Understandings in its instrument of ratification for the Convention, 
and one Understanding in its instrument of ratification for the Related 
Optional Protocol. These Understandings, the proposed texts of which 
were included in the Administration's transmittal of the Convention and 
Related Optional Protocol to the Senate, would clarify the views of the 
United States about certain provisions of the Convention and Protocol.
    First, regarding Article 25 of the Convention (on limitations on 
the use of information or evidence), we recommend an Understanding be 
included in the United States instrument of ratification that the 
disclosure and use limitations stated in Article 25 shall no longer 
apply if such information or evidence is made public in a manner 
consistent with the Article. When evidence obtained under the 
Convention has been revealed publicly, in court records or otherwise, 
that information effectively becomes part of the public domain and can 
be obtained by anyone. This principle is explicit in most of our 
bilateral MLATs, and implicit in the operation of the Convention, but 
since it was not addressed in the text of the Convention we have 
determined it would be advisable to include an Understanding to this 
effect in the U.S. instrument of ratification.
    Second, we recommend an Understanding be included in the United 
States instrument of ratification for the Convention and the Protocol, 
regarding Article 36 of the Convention and Article 3(5) of the 
Protocol. These provisions make clear that the assistance and 
procedures set forth in these instruments shall not prevent any of the 
Contracting Parties from granting assistance to another Party through 
the provisions of other international agreements, or bilateral 
treaties, or through the provisions of national laws. The Parties also 
may provide assistance pursuant to any bilateral arrangement, 
agreement, or practice that may be applicable. The Understanding that 
would be included in each instrument of ratification reaffirms these 
points.
    A key provision of all MLATs is the creation of ``Central 
Authorities'' to coordinate requests for assistance. For the United 
States, the Attorney General or her designee is the Central Authority. 
Since the Department of Justice implements these treaties, I will defer 
to Deputy Assistant Attorney General Swartz in describing the other 
specific provisions of these instruments and issues related to their 
implementation.

                        STOLEN VEHICLE TREATIES

    Also before the Committee are stolen vehicle treaties with Belize, 
Costa Rica, the Dominican Republic, Guatemala and Panama.
    The U.S. stolen vehicle treaty program seeks to eliminate the 
difficulties faced by owners of vehicles that have been stolen and 
transported across international borders. Generally speaking, these 
treaties establish procedures for the recovery and return of vehicles 
that are documented in the territory of one party, stolen within its 
territory or from one of its nationals, and found in the territory of 
the other party. Many countries lack a sufficient institutional and 
procedural framework for the repatriation of vehicles that were stolen 
in other countries, and the stolen vehicle treaties remedy this 
deficiency.
    The United States currently has one such treaty in force, the 
Convention between the United States of America and the United Mexican 
States for the Recovery and Return of Stolen or Embezzled Vehicles and 
Aircraft of 1981. That treaty entered into force between the United 
States and Mexico in 1983 and according to insurance industry estimates 
prompts the return to the United States of approximately two thousand 
vehicles annually. The five treaties currently before the Committee 
build on the precedent with Mexico, and will create a legal basis for 
the return of stolen vehicles from several other nearby countries. Like 
the 1981 treaty with Mexico, the treaties with Costa Rica, Guatemala, 
and Panama also provide for the return of stolen aircraft.
    We relied heavily on our experience under the 1981 Mexico treaty in 
developing these new treaties with neighboring countries. Thus, all of 
the new treaties contain provisions similar to those in the Mexico 
treaty by providing procedures for the country that finds a vehicle 
covered by the treaty to notify the other country that the vehicle has 
been located and to provide an opportunity for the vehicle to be 
returned once the owner has made a request. The treaties set deadlines 
for action by the party receiving a request for the return of a vehicle 
and give owners more time to claim vehicles than is provided for under 
the U.S.-Mexico treaty. The treaties also provide that if the U.S. 
government learns that the other party may have seized or impounded a 
stolen vehicle but has failed to provide notification, the U.S. 
government may seek official confirmation of the seizure or 
impoundment, and request formal notification under the treaty. The 
other party is then required to submit such notification or explain why 
notification is not necessary.
    The United States insurance industry strongly supports these 
treaties, since it is typically subrogated to the ownership interests 
of U.S. citizens or businesses whose vehicles have been stolen and 
taken overseas. In fact, insurance industry representatives have 
informed us that the mere negotiation and signature of several of the 
treaties now .before the Senate has already brought discernible 
improvements in the cooperation of the foreign authorities abroad. 
Ratification and full implementation of the treaties should 
significantly improve the return of U.S. vehicles from the countries 
concerned.

     INTER-AMERICAN CONVENTION ON SERVING CRIMINAL SENTENCES ABROAD

    The Committee also has before it the Inter-American Convention on 
Serving Criminal Sentences Abroad. The purpose of this instrument is to 
facilitate the transfer of persons sentenced in the United States and 
in other states parties to their own nations to serve their sentences. 
The Convention achieves this purpose by establishing procedures that 
can be initiated by sentenced persons who prefer to serve their 
sentences in their own countries. The means employed to achieve this 
purpose are similar to those embodied in existing bilateral prisoner 
transfer treaties in force between the United States and eight other 
countries and Hong Kong, and the Council of Europe Convention, which 
now has over 40 parties.
    The major advantages of concluding a multilateral convention with 
the OAS member States are the establishment of uniform procedures and 
the saving of resources that would be required to negotiate and bring 
into force bilateral treaties with a large number of countries in the 
hemisphere. Immediately upon U.S. ratification, this Convention would 
establish a prisoner transfer relationship between the United States 
and Venezuela, which has already ratified the Convention. Brazil, 
Ecuador and Paraguay have all signed the Convention but have not 
ratified. Once each of them completes its domestic ratification 
processes. and becomes a party, we would have new prisoner transfer 
relationships with them as well. This would further enhance our ability 
to seek the return of American citizen prisoners who want to serve 
their sentences in more familiar surroundings and to return foreign 
prisoners who are in the custody of U.S. prisons to other countries to 
serve their sentences, subject to the consent of both parties and the 
prisoner. As other OAS member States join the Convention, the number of 
countries with whom we have prisoner transfer relationships will 
further expand and could include countries such as Colombia, the 
Dominican Republic, Jamaica, Haiti, El Salvador, and Guatemala.
    The United States can become a party to the Convention without any 
additional legislation. However, to clarify our interpretation of 
certain provisions of the Convention, and to ensure that documents for 
the United States are provided in English, we recommend that the U.S. 
instrument of ratification include one Understanding and one 
Reservation. The proposed texts of the Understanding and Reservation 
were included in the Administration's transmittal of the Convention to 
the Senate.
    The proposed Understanding, which relates to Articles III, IV, V 
and VI, would ensure that the Convention may be implemented consistent 
with existing legislation pertaining to prisoner transfer, by 
clarifying that the consent of all parties--the prisoner, the 
sentencing state, the receiving state, and, where applicable, the sub-
federal state or province--is required prior to the transfer. Although 
this requirement is implied by the Convention text, consent by all 
parties is such a fundamental feature of our prisoner transfer regime 
that we believe it is appropriate to clarify the text in this manner.
    The proposed Reservation relates to Article V(7) and sets forth a 
requirement that before a U.S. national may bereturned, the sentencing 
state must provide English language versions of a certified copy of the 
sentence, including information on the amount of time already served 
and the time off that could be credited, and any other information the 
receiving state deems necessary. These documents must also be provided 
in the language of the sentencing state. The Reservation further 
provides that the United States would do the same for the benefit of 
the requesting state in like circumstances. This Reservation will 
greatly facilitate U.S. implementation of the Convention.

           PROTOCOL TO 1950 U.S.-IRELAND CONSULAR CONVENTION

    Finally, also before the Committee is a Protocol to amend the 1950 
Consular Convention Between the United States of America and Ireland. 
The Protocol will expand the scope of tax exemption under the Consular 
Convention to provide for reciprocal exemption from all taxes, 
including Value Added Taxes (VAT) on goods and services for the 
official use of the mission or for the personal use of mission members 
and families. It will provide financial benefit to the United States, 
both through direct savings on embassy purchases of goods and services 
as well as through lowering the cost of living for United States 
Government employees assigned to the U.S. Embassy in Dublin.
    Mr. Chairman, we very much appreciate the Committee's decision to 
consider these important treaties.
    I will be happy to answer any questions the Committee may have.

    Senator Grams. Gentlemen, thank you for your opening 
statements.
    I have a series of general questions dealing with all areas 
of the treaties that we're talking about, so I am not going to 
specifically direct them to either of you, but if either or 
both of you would like to comment, you would be welcome to do 
so.
    First, my questions dealing with extradition: There is 
currently a debate as to whether the United States should waive 
visas or agree to debt relief for countries that never 
extradite their citizens to the United States to face justice 
for crimes committed here. What would your position be on those 
issues?
    Mr. Witten, we will start with you.
    Mr. Witten. Thank you. We have addressed the issue of tying 
extradition issues with other aspects of foreign affairs in a 
couple of contexts, including in the visa waiver context. Our 
position has been that extradition treaties present issues that 
are one part of our overall relationship with other countries.
    We strive, as the committee is aware, to see that our 
extradition treaties are enforced to the greatest possible 
extent. And we are updating treaties to see that their 
implementation is improved even further. We are reluctant, 
though, to tie the performance of countries under extradition 
treaties to other issues that are being addressed separately.
    Mr. Swartz. Mr. Chairman, if I may add the Department of 
Justice's viewpoint in that regard. We agree with the 
Department of State that there should be no tie between those 
issues. Extradition is denied by countries for a variety of 
reasons and in a variety of circumstances. And we do have 
remedies available to address those denials when we believe 
that they are improper.
    Those include intervention at the diplomatic levels. They 
include working at the law enforcement levels. And from a 
practical law enforcement point of view, we believe that the 
denial of extradition in a particular case should not be seen 
as possibly jeopardizing our relationship with the country, 
particularly because it may affect other law enforcement 
matters in which we are working with that country.
    Senator Grams. But this says for those that never extradite 
their citizens. So they are not working cooperatively with us 
at least in this area. So you are saying there should be no 
hammer or retribution in any way, especially dealing with other 
areas of debt relief or visas.
    Mr. Swartz. Mr. Chairman, to the extent that a country 
refuses to extradite its citizens under any circumstances due 
to constitutional or statutory bars, as we have pointed out and 
the committee is aware, we have tried to work with such 
countries to encourage them to change their laws, to permit the 
extradition of their nationals.
    We believe that we have had some success, particularly in 
Latin America in that regard, and we continue to press that as 
an important Department of Justice objective, but we do not 
believe that it would be appropriate to tie visa waiver or 
other conditions to the failure of a state to extradite 
nationals.
    Senator Grams. All right. Has a foreign state ever declined 
to surrender a fugitive to the United States on the grounds 
that the fugitive did not receive consular warnings in the 
United States at the time of his/her arrest here? Is that a 
concern as well?
    Mr. Witten. Mr. Chairman, I am not aware that this has ever 
come up.
    Mr. Swartz. I am not aware of such an incident as well.
    Senator Grams. OK. Has the United States ever declined to 
surrender a fugitive to a foreign state for reasons related to 
the Torture Convention? And I guess, what happens when a 
fugitive tries to defeat extradition and/or surrender by 
relying on the Torture Convention?
    Mr. Witten. I can address that, Mr. Chairman. The Torture 
Convention has been in force for the United States for 6 years. 
And in those 6 years, from time to time, fugitives, or their 
families, or their attorneys, have occasionally raised the 
issue with us of the possibility of mistreatment, including 
torture.
    And as of, I believe, 2 years ago, the State Department 
promulgated regulations that I believe are codified at 22 CFR 
95, in which are set forth the procedures for notifying the 
State Department of allegations of torture. The way we have 
handled that, as noted in our procedures and in our general 
practice, is after we receive information, or allegations, we 
research them, we contact our embassies, we work with the 
regional bureaus and others, we consult with the Department of 
Justice about what information it might have, and with our 
counterparts overseas.
    And from time to time, we have engaged in a dialog with 
foreign governments that are at issue where an individual, or 
their representatives, have made claims. Thus far, we have not 
needed to invoke the rights under the Torture Convention to 
deny extradition. However, the State Department takes the 
responsibilities very seriously as reflected in our promulgated 
regulations.
    Senator Grams. So to date no decline has been made because 
of this.
    Mr. Witten. That is correct, sir.
    Senator Grams. OK. But it has been raised on issues or 
instances.
    Mr. Witten. From time to time, and especially since the 
regulations were promulgated and word is out more than it was 2 
years ago.
    Senator Grams. Have there been any significant extradition 
developments recently in the European Union at all, any 
conflicts, or questions, or concerns?
    Mr. Witten. Mr. Chairman, within the European Union our 
extradition relations are bilaterally with the individual 
states, and we are in a continuing dialog with those states to 
try to improve the extradition relations.
    Senator Grams. OK. And in another area, why is Paraguay, or 
the Paraguay Extradition Treaty, silent on what we call the 
expiration of the statute of limitations? I think I would like 
you to explain the U.S. position that the expiration of the 
statute of limitations will not preclude extradition to or from 
Paraguay.
    Mr. Witten. Mr. Chairman, the issue of statute of 
limitations I am aware was discussed in the negotiations in the 
Paraguay treaty. And with your permission, I would like to 
submit something for the record after I get enough information 
to give you an authoritative answer.
    Senator Grams. All right. I will look forward to the 
response. Thank you.
    Mr. Swartz, anything?
    Mr. Swartz. We, too, will join with the Department of State 
in submitting the answer on that.
    [The following response was subsequently supplied:]

                  Response to Senator Grams' Question

    Question. Why is the Paraguay extradition treaty silent on what we 
call the expiration of the statute of limitations? I think I would like 
you to explain the U.S. position that the expiration of the statute of 
limitations will not preclude extradition to and from Paraguay.

    Answer. Most recent U.S. extradition treaties contain a provision 
addressing the relevance of the statute of limitations in extradition 
proceedings. The preferred U.S. Government formulation, used in many 
recent treaties, is that the decision whether to extradite shall be 
made without regard to the statute of limitations of either the 
Requesting or Requested States.
    The 1973 extradition treaty with Paraguay currently in force bars 
extradition if the statute of limitations of either the Requested or 
Requesting State has expired. In the negotiations for the new treaty, 
because of particular provisions in its domestic law, the Paraguay 
delegation indicated that it could not agree to include any provision 
on statute of limitations that did not prohibit extradition on the 
basis of the expiration of the Requested State's statute of 
limitations. Accordingly, the U.S. delegation determined, and the 
Paraguayan delegation agreed, that the best solution under those 
circumstances would be for the Treaty to remain silent on the issue.
    By omitting any reference to lapse of time, the U.S. delegation 
intended that, at least in the context of extradition proceedings in 
the United States, the decision whether to extradite would be made 
without regard to the statute of limitations of either the Requesting 
or Requested State. While current extradition practice in Paraguay is 
to deny extradition in cases where Paraguay's statute of limitations 
would have expired if the crime had been committed there, the 
Paraguayan delegation confirmed that absence of language to this effect 
in the Treaty leaves open the possibility of greater flexibility on a 
case-by-case basis. In any event, the omission is an improvement over 
the 1973 Treaty, which, as noted, expressly provides that extradition 
shall be refused if the statute of limitations of either the Requesting 
or Requested State has expired.

    Senator Grams. OK. And I guess I would ask: What is next on 
the U.S. agenda for extradition treaty negotiations? Any in the 
works planned, updates, modernizations, new?
    Mr. Witten. We have--just a minute, Mr. Chairman.
    [Pause.]
    Mr. Witten. Mr. Chairman, we have several negotiations that 
have had rounds of discussion, none that have yet matured into 
a signed instrument. These include the Czech Republic, to 
update the existing relationship, Lithuania, and we have had 
discussions with Israel to update the 1962 U.S./Israel treaty.
    Senator Grams. All right. Thank you. We will address those 
then maybe next Congress, hopefully.
    Mr. Witten. Yes, sir.
    Senator Grams. In another area, the International Criminal 
Court that I talked about in my opening statement: Assuming 
that the International Court manages to come into being, how 
will we be able to prevent or control the re-extradition to the 
International Criminal Court of fugitives who we surrender to 
other countries?
    Mr. Witten. Mr. Chairman, this issue arose, as you know, in 
1998, and it was discussed again at our Korea hearing in 1999. 
We understand that it is likely that the Senate, and your 
opening statement reflected, that the Senate will likely impose 
an understanding to be included in the instruments of 
ratification.
    We would include that Understanding related to the 
operation of the rule of specialty, which is the rule that 
countries receiving fugitives from the United States cannot re-
extradite to third countries or bring additional charges 
without our consent. When we exchange the instruments of 
ratification, that in our view puts the other country on notice 
of our authoritative and joint interpretation of the rule of 
specialty. And we would anticipate that through the operation 
of the treaty and through individual cases, we would ensure 
that re-extradition would not happen under those circumstances 
contemplated by the committee.
    Senator Grams. Is this a make or break in any kind of talks 
or negotiations with other countries? Have they raised this 
concern? I mean, we would want to make sure that they lived up 
to that portion, but has it been a problem at all?
    Mr. Witten. The International Criminal Court is not up and 
running, of course, so it has not been tested. As we have had 
our dialogs in the wake of a 1998 treaties with a number of 
countries, they have asked us to explain our position, explain 
the Understanding because it is not a typical issue that arises 
in bilateral extradition negotiations.
    Normally, in our talks we are talking about procedures, and 
what crimes are covered, and so forth. And the Understandings 
have led occasionally to lengthy discussions about the U.S. 
position. But so far, for each of the 16 complete treaties that 
were approved by the Senate in 1998, plus the Korea treaty, all 
of our partners that have completed their process have accepted 
the Understanding in the context of receiving and accepting our 
instrument of ratification.
    Senator Grams. Assuming that the court ever does come into 
being, is there any possible way for the United States to 
prevent an MLAT treaty partner from passing onto the 
International Criminal Court information or material that we 
provide our partner under MLAT, not the extradition of a 
person, but this evidence or information?
    Mr. Swartz.
    Mr. Swartz. Mr. Chairman, if an understanding was to be 
included in the Senate's resolution, of course, that would be 
included in the instrument of ratification. And there would 
then be a question of how this would be implemented with regard 
to the treaties.
    With regard to the OAS MLAT that is now before the 
committee, the evidence can only be used for the criminal 
investigation or prosecution for which it was provided. In the 
other MLATs now before the committee, the state providing the 
evidence must expressly invoke the use limitation. And we are 
considering how to best implement the Understanding once it is 
in an instrument of ratification.
    That could include the possibility of general notice, or 
through a note, and it may make it appropriate in particular 
cases to actually make a reservation at the time that the 
evidence is provided. But, we believe that with those 
possibilities there are protections available with regard to 
this issue.
    Senator Grams. Does the Department of Justice now routinely 
include in all MLAT transmittal letters language which forbids 
MLAT treaty partners from passing U.S. provided information to 
the International Criminal Court?
    Mr. Swartz. No, we do not. We rely on the decisions that we 
have made with regard to particular cases, if we feel there is 
a need. Or as I have suggested before, the possibility exists, 
if there is a need, to send a diplomatic note on that basis.
    Senator Grams. So you do it on a targeted basis, not on a--
--
    Mr. Swartz. And since the Court is not in operation, we 
have never had to take those steps, but we would proceed on a 
targeted basis if that seemed appropriate.
    Senator Grams. Any concern that some of these cases could 
linger over in case this court ever comes into being?
    Mr. Swartz. I am not aware of any case where we have that 
concern.
    Senator Grams. All right. Thank you.
    The Mutual Legal Assistance Treaties, what confidence do 
you have that signing an MLAT with the Government of Russia 
would yield cooperation from Russian law enforcement agencies 
that will be more forthcoming, reliable, or honest?
    Mr. Swartz. From the Department of Justice's point of view, 
we believe that the decision to go forward and ratify the MLAT 
with Russia first of all, would help make cooperation more 
reliable in the sense that it will increase the formal nature 
of the cooperation beyond that we now have under the Mutual 
Legal Assistance Agreement.
    For a variety of reasons, we have been informed that the 
Russian Government looks upon the treaty obligation that would 
be imposed by an MLAT as being binding on more government 
agencies than the MLAA that is currently in place.
    In a more general sense, it has been the Department of 
Justice's experience that the establishment of an MLAT 
relationship itself provides a basis for the development of 
ongoing trust and cooperation between law enforcement agencies. 
We have encountered in a number of countries where we have 
established MLAT relationships, initial difficulties. That is 
not an unusual experience for us.
    But the process of working through the MLAT, of having 
central authorities dealing with each other itself provides the 
kind of framework that makes law enforcement cooperation 
increasingly effective, increasingly a matter of routine, and 
serves our interest in ensuring that our law enforcement 
investigations and prosecutions obtain the evidence that they 
need.
    Senator Grams. So in other words, you do have more 
confidence.
    Mr. Swartz. We do have more confidence. That is correct.
    Senator Grams. Ever since Vladimir Putin became President, 
the Kremlin has used the state's police powers in an 
increasingly arbitrary and undemocratic manner. And just to 
note a few examples of that: The arrest and mistreatment of 
Edmond Pope; continuing harassment and intimidation of Russian 
NGO's and journalists who criticize the Kremlin including Andre 
Babitsky by Russian law enforcement agencies; Putin's arbitrary 
use of law enforcement agencies to help Russian oligarches; the 
Russian Government's refusal to be fully forthcoming in 
international corruption and investigations; and also endemic 
corruption in law enforcement agencies.
    So does signing an MLAT with the Government of Russia in 
any way signify that the United States regards the Government 
of Russia to be a partner that uses its power in a genuinely 
fully legitimate way?
    Mr. Witten. Mr. Chairman, I will address that issue. First 
of all, the MLAT, in our view, does not imply a blanket 
endorsement of all institutions in Russia. It is a reflection 
of a commitment that has evolved particularly since the MLAA, 
the Mutual Legal Assistance Agreement, entered into force in 
February 1996, that the two governments are willing to commit 
themselves to work together on law enforcement matters and that 
they have a common agenda to fight crime.
    As Mr. Swartz has indicated, the signing and hopefully soon 
the ratification and entry into force of this agreement is a 
step. It is not a panacea, it will not address all issues, many 
of which are being addressed in other forums in other ways, but 
it is an important tool to bridge and strengthen the 
relationship between the two law enforcement communities. And 
the State Department endorses it fully.
    Senator Grams. As you know, since April 3, 2000, U.S. 
citizen Edmond Pope has been imprisoned in Moscow's notorious 
prison on an unsubstantiated charge of espionage.
    Pope has bone cancer that currently is in remission, and 
there is a genuine fear that his incarceration could exacerbate 
the condition, and is dangerously today jeopardizing his 
health. Pope has not received appropriate medical treatment. 
The Russian Government refuses U.S. Governmental request that 
Pope be examined by an American doctor. Another American 
citizen imprisoned in a Russian jail recently died from 
inadequate medical attention.
    Can we, or how can we possibly, proceed with an MLAT with 
the Russian Government when it uses its police power in this 
arbitrary, and what we would consider cruel, manner, against an 
American citizen?
    Mr. Witten. Senator, I would like to speak about the Pope 
case and then address your question. We have engaged in a broad 
diplomatic effort to bring Mr. Pope home. We have raised this 
case in every high level meeting with the Russians in the past 
weeks and months.
    The President, the Secretary of State, and the National 
Security Advisor have all raised this issue on several 
occasions. It is our view that the Russian Government should 
release Mr. Pope and allow him to come home. We have no 
evidence that Mr. Pope violated any Russian laws. We are 
disturbed and concerned that he remains in custody.
    Every indication is that Mr. Pope's work in Russia was 
transparent and fully known to Russian authorities. Mr. Pope, 
as you have indicated, Mr. Chairman, has been denied access to 
satisfactory medical care during his period of detention. And 
our Embassy's repeated request for the Embassy doctor to visit 
him have been denied and his medical records, and test results 
have not been made available to us.
    This is a matter obviously, Mr. Chairman, of tremendous 
importance, not merely as a consular matter, but it has become 
a major diplomatic matter raised for example by the President, 
Secretary of State, and National Security Adviser. And we will 
continue the effort to see that Mr. Pope is released and 
receives satisfactory medical treatment.
    That said, Mr. Chairman, the fact that we have issues like 
the Pope case or other cases with the Government of Russia 
doesn't undermine the basic message that Mr. Swartz gave, and 
hopefully I have been able to give, about the importance of 
creating bridges on issues like law enforcement cooperation.
    It can only help the relationship between the U.S. and 
Russia to have a fabric of relations that will enable our 
investigators and prosecutors and others to work closely on 
fundamentally important issues like organized crime, 
corruption, and so forth. So I believe that the issues can be 
reconciled and should be reconciled in a way that we pursue 
these kinds of issues and we enter into this new stronger 
relationship on law enforcement matters.
    Senator Grams. Do you see the Russians cooperating in that 
way? I mean, outside of the Pope case, or is the Pope case one 
of these kind of insurmountable road blocks in negotiations on 
other areas?
    Mr. Swartz. We do see law enforcement cooperation in other 
contexts. Our experience under the MLAA, admittedly, has been 
difficult in large part because of the inability, due to the 
less formal structure of the MLAA, to establish a counterpart 
central authority in the Procuracy.
    On the other hand, we do have regular ongoing and important 
law enforcement links in cases that we are working on involving 
Russia. The FBI, for instance, is engaged in a number of highly 
important investigations involving Russian organized crime, 
money laundering and corruption, all of which would be 
facilitated by the ratification of an MLAT. The FBI strongly 
supports this. Law enforcement agencies generally see this as 
an important next step in the relationships that have been 
developed under the MLAA.
    Senator Grams. So you both feel that we should proceed or 
that proceeding with an MLAT with the Russian Government is 
beneficial and can maybe help overcome some of these other 
problems.
    Mr. Swartz. We strongly believe it is in the law 
enforcement interests of the United States to do so.
    Mr. Witten. Yes, we fully endorse it, Mr. Chairman.
    Senator Grams. Moving onto the OAS Agreement: Why did the 
OAS member states negotiate an optional protocol governing tax 
assistance instead of incorporating provisions for this kind of 
assistance into the main agreement? Is the optional protocol 
basically now in force, and if not, what are its prospects?
    Mr. Witten. Mr. Chairman, as I understand the history of 
the OAS MLAT, article 9, which includes all the bases for 
denial, was the subject of a tremendous amount of negotiation.
    In our bilateral MLATs we have something of a formula of 
``security and other essential interests'' or similar phrasings 
to discuss the bases for denial. In a multilateral context with 
so many different legal systems, article 9 on the bases of 
denial became much more complicated and included a wider 
variety of bases to deny assistance.
    And from the perspective of some OAS countries during this 
consensus exercise, they wanted language in article 9 that 
would create the possibility of denial in certain kinds of tax 
cases. The U.S. resisted this during negotiations, but overall 
joined consensus on article 9 as a whole.
    But a part of the dynamic of that negotiation was that we 
also insisted that there be a second instrument developed so 
that the United States could encourage that as between parties 
to the second instrument, that is the tax protocol that you 
have mentioned, that the bases for denial in article 9 on tax 
matters would be greatly restricted and eliminated. And 
therefore there are two instruments before the committee.
    Your question about whether the protocol is in force, the 
answer is no. The United States was a leader in the negotiation 
of these two instruments. Our view is that once we become a 
party to the two instruments, we will be in a far better 
position to advocate that other countries become a party.
    And we hope that after we become a party, these will be an 
acorn out of which an oak will grow in terms of a lot of MLAT 
relations within the hemisphere. And we would advocate both the 
MLAT and the optional protocol.
    Mr. Swartz. The Department of Justice fully agrees with 
that position. We would add only that Brazil, Chile, Ecuador, 
and Paraguay have signed the optional protocol. So if we did 
enter into and ratify it, we would enter into treaty 
relationships as soon as they ratify.
    Senator Grams. OK. Thank you, gentlemen.
    On the stolen vehicle treaties, were the views of the U.S. 
insurance industry taken into account during negotiations with 
these treaties? And if so, why or how?
    Mr. Witten. The insurance industry advocated these 
treaties. As I mentioned, Mr. Chairman, in my prepared 
testimony, typically what happens in the stolen vehicle context 
is that the insurers are subrogated to the rights of U.S. 
citizens and businesses that have vehicles stolen or embezzled 
and taken overseas.
    The Mexico relationship has been a tremendous benefit with 
2,000 or more cars returned to the United States each year. The 
insurance industry brought to the Federal Government's 
attention that Mexico was the single biggest matter, but in 
other countries in the hemisphere, particularly Mexico's 
neighbors and some countries in the Carribean, there were also 
problems of vehicles being stolen from the United States and 
brought to those countries. So they strongly encouraged this, 
and we have been in close consultation with the U.S. insurance 
industry throughout the process.
    Senator Grams. Just a couple of quick followup questions 
and then I will recognize the Senator that just entered.
    Why do only three of the five treaties explicitly cover 
aircraft? And if recovered vehicles must be returned to their 
owners quickly, how can prosecutors here go forward with them 
in relation to criminal proceedings?
    Mr. Witten. I will address that, Mr. Chairman. Our focus in 
the negotiation was primarily on stolen vehicles, and the 
initial negotiations that we had were to expand the Mexico 
relationship so that vehicles that were taken in containers, or 
shipped over-land through Mexico, were returned.
    During negotiations, we also discussed with these five 
treaty parties the possibility of including stolen aircraft. 
For three of them, it was decided to be mutually advantageous 
to include treaty provisions on aircraft.
    The fact that two of the treaties, Belize and Dominican 
Republic, do not have aircraft, does not mean that we could not 
request the return at aircraft from them, and does not imply 
that in the other three treaties there was a particular 
problem. It was the function of individual negotiations, and 
therefore, while all five cover vehicles, three are explicit on 
aircraft. But we could, of course, ask the other two outside 
the treaty framework.
    Senator Grams. So there has been success with these 
vehicles being returned in due time so the process of any 
criminal investigation or proceedings would go forward. So you 
think this is----
    Mr. Witten. I am sorry, Mr. Chairman. You asked also about 
being able to hold back vehicles that are the subject of 
criminal proceedings. All of these treaties provide that for 
example, if U.S. authorities had a vehicle that was the subject 
of a forfeiture action or was relevant to a criminal 
investigation, we would not have to disrupt our process and 
return it because the owner was identified in another country.
    The treaties, I believe, typically in article 8 or 9, have 
a provision that indicates that if the vehicle is the subject 
of a pending law enforcement action, that action can continue 
and the vehicles do not have to be returned and disrupt that 
action.
    Mr. Swartz. And I would add that the treaties actually 
facilitate law enforcement cooperation by encouraging the 
sharing of information, and allow our law enforcement agencies, 
working with foreign law enforcement agencies, to penetrate 
where oftentimes organized crime rings engage in car theft.
    Senator Grams. In the Inter-American Convention on Serving 
the Sentences Abroad, if the Senate approves this convention, 
will it open the door to immediate cooperation with any 
countries where there are no existing treaties? And if not, 
then what would the point be?
    Mr. Witten. Mr. Chairman, the day we submit our instrument 
of ratification, we will have for the first time prisoner 
transfer relations with Venezuela. Three other countries in 
South America--Brazil, Ecuador, and Paraguay--have signed and 
not yet ratified. I believe that is accurate. I will correct it 
for the record if need be. It is correct.
    Mr. Swartz. That is correct.
    Mr. Witten. And once those countries deposit their 
instruments, that would be four new relations in South America. 
And over time, we would expand the reach of the convention. We 
would expect to have even more relations within the hemisphere 
based on the OAS instrument.
    Senator Grams. What about prisoner consent, is that part of 
the negotiations?
    Mr. Swartz. Yes, that is a condition that the prisoner has 
to consent to the transfer. That is correct.
    Senator Grams. What about state governments' willingness to 
transfer foreign-born prisoners under their penal system? Have 
the states agreed to this as well?
    Mr. Witten. The treaty expressly provides, and the 
Understanding that the administration has proposed, echoes 
this, that for the United States, when we have a sub-Federal 
prosecution where someone is in a state or local jail, four 
consents would be required instead of three: The receiving 
state, the sending state, the state or local jurisdiction in 
the United States, and the prisoner.
    Senator Grams. And all four of those have to be met before 
any transfer could be made.
    Mr. Witten. Yes.
    Senator Grams. So anybody holds a veto on this.
    Mr. Witten. In any non-Federal case, that is correct. The 
state authority that holds the prisoner would need to agree.
    Senator Grams. All right. I only have one other question, 
but I would like to break here for a moment if Senator Sarbanes 
is prepared and would like to be recognized now or in a moment.
    Senator Sarbanes. Well, why not ask further questions?
    Senator Grams. OK. I only have two quick questions on an 
area here dealing with the protocol to the U.S./Ireland 
Consular Convention.
    And just wrapping this up, since both the United States and 
Ireland are parties to the Vienna conventions which govern 
diplomatic and consular relations, why do we even need this 
kind of protocol?
    Mr. Witten. This protocol resulted from a diplomatic dialog 
that the United States and Ireland had leading up to 
negotiations in the spring of 1998.
    There was a disagreement about whether the existing legal 
instruments, the Vienna Convention on Diplomatic Relations, the 
1950 U.S. Irish Consular Convention, were adequate under Irish 
law to grant exemptions from value added taxes.
    After consultations between the United States and Ireland, 
we decided that the best way to address this and ensure that 
our diplomatic missions and personnel would not be subject to 
value added tax in Ireland would be an amendment of the 
existing instrument, the consular convention, which has some 
language on taxation issues.
    And basically, the protocol before the committee provides 
an authoritative interpretation and gloss on the underlying 
1950 convention. The Irish Government informed us that from 
their perspective it needed to be a formal treaty agreement and 
that less formal arrangements that might have been considered 
were not sufficient under their domestic law.
    Senator Grams. So this was to help put definition to 
taxation, and if so, who is helped by this?
    Mr. Witten. The United States is helped by it, because 
Ireland has value added taxes, I understand between 18 and 21 
percent is added to the cost. And under the pre-protocol 
interpretation, that value added tax would not be a category of 
tax that would be exempt from taxation under Irish domestic 
law. And with this instrument, the Irish Government does have 
the legal basis to grant us exemption from value added tax.
    Senator Grams. All right. Thank you very much, gentlemen.
    I would now like to recognize Senator Paul Sarbanes for any 
opening comments or questions he may have.
    Senator Sarbanes. Well, Mr. Chairman, I do not have any 
questions, and the only comment I want to make is that I hope, 
unless there is some good reason of which I am not aware right 
now, but in fact, who knows, there may be some problem that has 
been identified with one or another of these treaties, I hope 
that we would be able to put them on a business agenda and move 
them through the Senate before we adjourn this year.
    We are only here for 4 weeks now, and unless we do that, 
all of these things are simply going to hang out there. The 
United States makes a strong point of the need for cooperation, 
the effort to carry through on a whole range of international 
law enforcement problems. And it seems to me that an important 
step in laying the basis for this cooperation is to get these 
various treaties approved.
    Where do they stand in terms of the approval of the other 
treaty party, do you know, just as a general proposition?
    Mr. Swartz. We can address that, Senator.
    Senator Sarbanes. I do not need each one specifically, but 
have most of them been through the ratification process within 
their own country, or are they awaiting us to do it first, or 
where do we stand?
    Mr. Witten. Senator, it does vary. Within the extradition 
treaties, our understanding is that three of the four other 
countries have already completed their process, Belize, 
Paraguay, and Sri Lanka.
    The MLATs, our information--we are still checking on one, 
but at least two of the nine bilateral partners have already 
completed their process. Stolen vehicle treaties, three of the 
five have completed their process. So we are about halfway 
there, I think.
    Senator Grams. And, Senator, just to answer your question, 
too, talking with staff that the intention is to make sure this 
is on the business calendar as early as the 27th of this month, 
and hopefully will be passed out then and ready for approval. 
And also according to staff, many countries do await our action 
before they finish theirs. So we do hope to get this done 
before the end of this Congress.
    Senator Sarbanes. I am, in a sense, relieved to hear that 
because I think as a matter of expeditiously doing our own 
business, and since once we adjourn we will not be back until--
presumably will not be back until next January. And then there 
is a whole gearing up process that accompanies any new 
Congress. You will be talking about a number of months into the 
new year before we would be in a position to address these 
matters again.
    So I am pleased to hear that it is the intention to move 
them forward out of the committee and hopefully through the 
Senate so we can get them into place.
    Thank you, Mr. Chairman, that is all.
    Senator Grams. Well, thank you very much, Mr. Swartz, Mr. 
Witten. I appreciate your time, your answers, your testimony 
this morning. I would like to leave the record of this 
committee open for at least three business days to allow any of 
the other Senators who may want to submit a question in writing 
to you. And then, if you would, quickly respond.
    But again, thank you very much for your time this morning 
and your answers.
    Mr. Swartz. Thank you, Mr. Chairman.
    Mr. Witten. Thank you, Mr. Chairman.
    [Whereupon, at 10:30 a.m., the hearing was adjourned.]
                              ----------                              


             Additional Questions Submitted for the Record


    Responses of Bruce C. Swartz and Samuel M. Witten to Additional 
               Questions Submitted by Senator Jesse Helms

                              russian mlat
    Question 1. What confidence do you have that signing an MLAT with 
the Government of Russia will yield cooperation from Russian law 
enforcement agencies that will be more forthcoming, reliable, and 
honest?

    Answer. We believe an MLAT with Russia will increase and enhance 
the cooperation that has been gradually developing under the legal 
framework of the mutual legal assistance agreement (MLAA), which has 
been in force since February 1996.
    We negotiated the MLAT because of U.S. law enforcement's urgent 
need for greater and more effective legal assistance and cooperation 
between our countries, particularly on matters involving organized 
crime, corruption, money laundering and large scale fraud. The urgency 
results from the increase in crime, including Russian organized crime, 
and the opening of borders following the breakup of the Soviet Union.
    The U.S.-Russia MLAT will provide a broader legal framework for 
assistance than currently exists. It will facilitate assistance on a 
broader range of criminal issues of importance to the United States, 
including in the area of computer crime and trafficking in women. In 
the long term, it will further the rule of law in Russia and help that 
country regularize its law enforcement cooperation efforts overall. In 
this connection, we would seek under the MLAT to make the Russian 
Central Authority a more consistent and effective interlocutor than it 
has often been under the MLAA. We believe that the formality of a 
treaty, in addition to its broader coverage, will assist us toward that 
end, because it has greater force of law in Russia and would be 
recognized by all Russian law enforcement agencies.

    Question 2. Ever since Vladimir Putin became President, the Kremlin 
has used the state's police powers in an increasingly arbitrary and 
undemocratic manner. To note but a few examples:
   the arrest and mistreatment of Edmond Pope;
   continuing harassment and intimidation of Russian NGO's and 
        journalists who criticize the Kremlin, including Andry 
        Babitsky, by Russian law enforcement agencies;
   Putin's arbitrary use of law enforcement agencies to help 
        Russia's oligarchs;
   the Russian government's refusal to be fully forthcoming in 
        international corruption investigations, and endemic corruption 
        in Russian law enforcement agencies.
    Does signing an MLAT with the Government of Russia in any way 
signify that the United States regards the Government of Russia to be a 
partner that uses its power in a genuinely fully legitimate way?

    Answer. We do not believe that entering into an MLAT with Russia 
implies a blanket endorsement of Russia's law enforcement institutions, 
or diminishes the concerns or differences that the U.S. Government may 
have with aspects of those institutions. To the contrary, we believe 
that the MLAT should be entered into for pragmatic, law enforcement 
reasons: it will help us gain evidence that will allow us to obtain 
convictions in our courts. It will therefore assist our own criminal 
investigations and prosecutions. Moreover, the dialogue and cooperation 
that will result from the MLAT can only advance the regularization and 
improvement of law enforcement efforts in Russia, which in turn will 
allow Russia to confront organized crime and other criminal activity 
before it is exported.
    Failure to enter into the MLAT does not necessarily mean that we 
will simply return to the status quo. Instead, that failure may 
undercut the progress we have made in law enforcement cooperation we 
have made to date.

    Question 3. As you well know, since April 3, 2000, U.S. citizen 
Edmund Pope has been imprisoned in Moscow's notorious Lefortovo Prison 
on unsubstantiated charges of espionage. Pope has bone cancer that is 
in remission, and there is genuine fear that his incarceration could 
exacerbate this condition and is dangerously jeopardizing his health. 
Pope has not received appropriate medical attention. The Russian 
Government refuses U.S. government requests that Pope be examined by an 
American doctor. Another American citizen imprisoned in a Russian jail 
recently died due to inadequate medical attention. How can we possibly 
proceed with an MLAT with the Russian government when it uses its 
police powers in this arbitrary and cruel way against American 
citizens?

    Answer. We have engaged in a broad diplomatic effort to bring Mr. 
Pope home. We have raised his case in every high level meeting with the 
Russians in the past weeks and months. The President, the Secretary of 
State, and the National Security Adviser have all raised this issue on 
several occasions. We have repeatedly said that the Russian Government 
should release Mr. Pope and allow him to return home. We have no 
evidence that Mr. Pope violated any Russian laws. We are disturbed and 
concerned that he remains in custody. Every indication is that Mr. 
Pope's work in Russia was transparent and fully known to Russian 
authorities. Mr. Pope has been denied access to satisfactory medical 
care during his period of detention. Our Embassy's repeated requests 
for the Embassy doctor to see Mr. Pope have been denied and his medical 
records and test results have not been made available to us.
    However, the fact that we have disagreements with Russia over the 
Pope case and some other cases involving Americans in Russia does not 
mean that we should not enter into a new and stronger agreement with 
Russia for law enforcement cooperation. Indeed, it is important in this 
kind of developing relationship to ensure that channels of 
communication between the two governments are as strong as possible, to 
develop increased mutual trust and create more and better opportunities 
to improve relevant law enforcement institutions.

                              EXTRADITION

    Question 1. Under the U.S. Spain judicial assistance treaty, the 
Clinton Administration provided hundreds of declassified U.S. documents 
and other assistance to the Spanish judge trying to prove that 
President Augusto Pinochet did not enjoy head of state immunity from 
prosecution. In light of its efforts to help Spain extradite Pinochet, 
is it the President's view that President Fidel Castro enjoys head of 
state immunity for the murder of American citizens whose aircraft was 
shot down by the Cuban Air Force in 1996?

    Answer. The U.S. Department of Justice has assisted Spain in 
connection with a pending Spanish criminal law investigation as 
contemplated by the U.S.-Spain Mutual Legal Assistance Treaty. The 
United States did not provide this cooperation to help Spain extradite 
Pinochet or to help decide any immunity issue, and we took no position 
on the merits of the Spanish case. We would expect reciprocal 
assistance from Spain in connection with U.S. criminal cases and 
proceedings.
    The United States believes that the Cuban Government's shootdown of 
civil aircraft operated by Brothers to the Rescue in February 1996 was 
a flagrant violation of international law and international civil 
aviation standards. As a sitting head of state, however, Fidel Castro 
has personal inviolability and immunity from the jurisdiction of U.S. 
courts under the doctrine of Head of State immunity.

    Question 2. Why didn't the U.S. government arrest Fidel Castro for 
these murders while he was in New York last week for the United Nations 
General Assembly? Do our obligations as host country of the United 
Nations really mean that foreign officials who murder or abet the 
murder of American citizens can enter or leave our country as they 
please?

    Answer. Fidel Castro has not been charged in connection with the 
shootdown. As noted in the previous answer, as a sitting head of state, 
he has personal inviolability and immunity from the jurisdiction of 
U.S. courts both under the doctrine of Head of State immunity and, 
while in New York for the recent U.N. Conference, also under the 
General Convention on Privileges and Immunities of the United Nations.

    Question 3. Mexican President-elect Vicente Fox has spoken at 
length recently on the probable benefits of open borders in North 
America. What are his views on extradition of Mexican citizens to the 
United States?

    Answer. We look forward to working with President-elect Fox's 
Administration on ways to build upon the progress that has been made in 
the U.S.-Mexico extradition relationship during the Zedillo 
Administration, including that Administration's decision to break with 
longstanding practice and begin entering extradition orders for its 
citizens wanted for narcotrafficking and other serious offenses in the 
United States. We will continue to press for the extradition of 
nationals and are encouraged by press reports indicating that 
President-elect Vicente Fox favors the extradition of Mexican nationals 
accused of drug trafficking.

    Question. 4. One of Senator Helms' North Carolina constituents was 
murdered by a Mexican citizen by the name of Emigdio Garcia Ramirez, 
who fled to Mexico after committing this crime. The U.S. requested his 
extradition from Mexico last year, and gave his location information to 
Mexican authorities. Why haven't they sent him back to us? What do we 
have to do to get him back? Is cutting off foreign aid the only 
approach that is going to work?

    Answer. In November 1998, Mexico issued a warrant for the arrest of 
Garcia Ramirez in response to the request by the United States for his 
extradition. Although the United States provided information about what 
was believed to be Garcia Ramirez's location, Mexican law enforcement 
officials have been unable to locate him. Mexican officials have 
committed to work with the U.S. Government to take Garcia and other 
fugitives into custody, and have asked that U.S. law enforcement 
provide them with updated location information, if it becomes 
available. Toward this end, U.S. law enforcement representatives in 
Mexico are continuing in their efforts to locate the fugitive. If 
Garcia Ramirez is located in Mexico, we fully expect Mexican law 
enforcement will take him into custody and we will continue to seek his 
extradition.

                 EXTRADITION FROM FRANCE OF IRA EINHORN

    Question. The Committee understands that France is interested in 
concluding an MLAT with the United States to improve law enforcement 
cooperation. With that in mind, please give the state of play in the 
extradition case of Ira Einhorn. When will the French Government 
surrender this alleged murderer to the United States for trial in 
Pennsylvania?

    Answer. Ira Einhorn has been found extraditable by French courts 
and his extradition has been approved by French Prime Minister Jospin. 
We understand that Mr. Einhorn will continue to challenge his 
extradition under French law. Although we therefore do not know when he 
will be returned for trial, we will continue to work hard in 
conjunction with the law enforcement authorities of Pennsylvania and 
the Government of France to see that Mr. Einhorn is returned to 
Pennsylvania for trial as quickly as possible.

                                 ______
                                 

    Responses of Samuel M. Witten and Bruce C. Swartz to Additional 
          Questions Submitted by Senator Joseph R. Biden, Jr.

              PROTOCOL TO U.S.-IRELAND CONSULAR CONVENTION

    Question. The protocol was signed in June 1998. Given the financial 
benefit of this treaty both to the government and to U.S. Embassy 
employees in Dublin, why has there been a two-year delay in submitting 
this protocol to the Senate?

    Answer. The protocol was signed on June 16, 1998, and was approved 
by the Irish Dail within several months of signature. At that time, 
upon formal approval by its Dail, the Irish Government began providing 
the U.S. Government the tax exemptions contemplated in the treaty 
pending approval of the protocol by the U.S. Senate. Thus, while the 
Administration had intended to submit the treaty more quickly to the 
Senate than actually occurred, the United States has not been deprived 
of the treaty's financial benefits in the interim. The protocol's entry 
into force following U.S. ratification will enable the United States to 
enjoy these benefits permanently.

         GENERAL QUESTIONS ABOUT EXTRADITION TREATIES AND MLATS

    Question 1. What are the Executive Branch's current priorities for 
negotiation of extradition treaties and MLATs? How are decisions made 
within the Executive Branch about such priorities?

    Answer. The Executive Branch is continuing to negotiate new 
extradition treaties, and protocols to existing treaties, to update our 
current extradition treaty relationships and in appropriate cases to 
enter into new extradition relationships. Similarly, we are negotiating 
MLATs and protocols to existing MLATS, to create and enhance formal law 
enforcement cooperation relationships with countries where such 
relationships would benefit U.S. law enforcement interests. Current 
extradition treaty or extradition protocol negotiations include Canada, 
Israel and Lithuania, and current MLAT or MLAT protocol negotiations 
include Ireland, Italy and Japan.
    Decisions on priorities are made jointly by the State and Justice 
Departments. The Justice Department periodically canvasses components 
of the U.S. law enforcement community to assess its needs in 
international law enforcement cooperation, and the results of these 
surveys are incorporated into the interagency dialogue on priorities. 
The decision-making process relies on these law enforcement community 
assessments, together with human rights issues and other considerations 
that might be relevant to particular cases. The opening of treaty 
negotiations are approved by the Assistant Secretary of State for the 
appropriate regional bureau. The signing of treaties is approved by the 
Secretary of State or Acting Secretary of State.

    Question 2. What assessment, if any, is undertaken of a nation's 
judicial system and the human rights situation before decisions are 
made to commence negotiations on extradition treaties?

    Answer. Once a country is identified as a potential candidate for 
extradition treaty negotiations, the State Department assesses its 
judicial system and its human rights situation during the process noted 
above of consideration and approval of negotiations by the Assistant 
Secretary of State for the appropriate State Department regional 
bureau. The process includes coordination with the relevant State 
Department regional bureau and the State Department's Bureau of 
Democracy, Human Rights and Labor (DRL) and other relevant sources, and 
reflects matters such as the independence of the judiciary, due process 
issues and related matters that might be relevant in a particular case. 
Negotiations are commenced only following this review process and the 
policy-level approval by the relevant Assistant Secretary.

                            U.S.-RUSSIA MLAT

    Question 1. Please provide general information on the number of 
requests each party has made in the last two years under the current 
U.S.-Russia Mutual Legal Assistance Agreement.

    Answer. Over the past two years, the United States has received 
hundreds of requests from Russia under the MLAA. Between January 1999 
and April 2000 alone, the United States received over 120 requests for 
assistance from Russia. These requests cover a range of criminal 
offenses, including very large scale money laundering, political 
corruption, organized criminal activity, murder, and fraud. During the 
same time period, we submitted 24 requests to Russia. Typically, 
requests from the United States to Russia have involved money 
laundering, organized crime, and fraud offenses.
    These statistics, however, tell only part of the story, for several 
reasons. First, in addition to formal requests under the MLAA, 
assistance is being provided informally through police-to-police 
channels, such as the FBI-MVD channel. Second, it is not unusual for 
our treaty partners to make many more requests than we do under formal 
law enforcement agreements, particularly in the early implementation of 
the agreement. Foreign countries often use formal mechanisms for 
assistance more often than informal channels, such as cooperation 
between police authorities. Thus, the FBI makes many more informal 
requests to its Russian counterparts than it receives. The United 
States tends to reserve use of the treaties for when formal mechanisms 
are, in fact, needed. Third, a large number of requests to us, 
particularly when we are first implementing a formal agreement, may 
reflect initial lack of effective control on the part of the foreign 
Central Authority, an issue which generally is ironed out with 
increased experience and communications between the Central 
Authorities. Finally, the number of formal MLAA requests by the United 
States is on the rise.

    Question 2. What types of cases are being developed or furthered by 
U.S. law enforcement as a result of such information?

    Answer. While we cannot discuss pending matters in detail, U.S. 
requests to Russia have furthered a variety of criminal cases 
including, in particular, cases involving large scale money laundering, 
organized crime, and fraud. Many of these cases are still ongoing.

                            U.S.-FRANCE MLAT

    Question. How should the Committee regard the explanatory note that 
was submitted along with the Treaty? Are there any other written 
exchanges between the negotiating delegations that, like the note, 
embody the parties' joint understanding about treaty terms?

    Answer. The explanatory note, like a protocol, constitutes an 
authoritative agreement between the governments on certain aspects of 
the treaty that had proven complex to resolve because of differences in 
criminal procedure laws and governmental structures. For example, it 
identifies authorities that are competent to make requests under 
Article 3 of the treaty, thus bridging the gap between functions that 
are regarded as prosecutorial in the U.S. system and judicial in the 
French system. There are no other similar written exchanges in 
connection with this treaty. Given the nature of this explanatory note, 
although originally submitted for the information of the Senate, the 
Administration would concur in a decision by the Senate in this 
instance to give advice and consent to the explanatory note as well as 
the treaty itself.

                            U.S.-GREECE MLAT

    Question. Article 8(3) provides a list of person who may be present 
during testimony. Subparagraph (c) provides that ``attorneys for the 
parties'' may be present. The Technical Analysis submitted to the 
Committee states that ``[s]ince the prosecution is also a party under 
subparagraph 3(b), this provision would allow the participation of 
another prosecution attorney.'' (emphasis added).
   Does this imply that only two government attorneys are 
        permitted (the one provided under subparagraph 3(b) and one 
        under subparagraph 3(c))?
    If so, is there also a limit on the number of attorneys for the 
defendant permitted in this session? If so what it is it? If there is a 
limit, what is the purpose of it?

    Answer. Unlike U.S. law and practice, Greek law and practice 
outside of the context of this treaty limits strictly the number of 
persons who can attend a proceeding to take testimony. General Greek 
procedural law limits the participants in a proceeding to take 
testimony to three individuals, the investigating judge, the witness 
and the clerk recording the testimony.
    This provision was the subject of intensive negotiations, and was 
the last issue settled in the treaty. U.S. concerns focused on ensuring 
the possibility of the presence of the defendant and the prosecutor, so 
as to ensure the effectiveness of the proceeding to law enforcement 
efforts. The resulting text, which achieves both of these concerns, is 
inconsistent with current Greek law but will take effect because the 
Greek Constitution gives primacy to treaty provisions. The United 
States is the first mutual legal assistance treaty partner with Greece 
that will have the benefit of this kind of provision.
    Article 8(3) reconciles the competing desires of Greece to limit 
strictly the number and type of participants in these proceedings, as 
reflected in its current law, with the U.S. need to ensure the presence 
of essential defense and law enforcement personnel. In a typical case 
we expect that under Article 8 one prosecuting attorney and one defense 
attorney would witness testimony in Greece. In unusual and appropriate 
cases where the presence of additional defense or law enforcement 
personnel was justified by the nature of the case and proceeding, the 
United States would be prepared to advocate for their presence. As 
reflected in the technical analysis, because of the way the Article is 
structured, the argument for additional members of the prosecution team 
is stronger than for additional defense attorneys.

                            U.S.-EGYPT MLAT

    Question. The Technical Analysis discussion of Article 1 states, 
for illustrative purposes, that the MLAT might be available for 
``disbarment proceedings.''
   Would this include state bar disbarment proceedings? Or does 
        this refer to disbarment proceedings for federal contracting?
   In general, how frequently are MLATs used for such civil 
        proceedings (it is not necessary to provide precise numbers to 
        respond to this part of the question)?

    Answer. A state bar disbarment proceeding based on a lawyer's 
criminal conduct would be one example of a ``proceeding related to 
criminal matters'' (see Art. 1(1) of the Egypt MLAT) and it is 
conceivable that MLAT assistance could be available for such a 
proceeding. We have no record of ever making or receiving an MLAT 
request in connection with such a matter.

                           U.S.-UKRAINE MLAT

    Question. The United States and Ukraine exchanged diplomatic notes 
in September 1999 in which the two nations agreed to provisionally 
apply this MLAT.
   What was the reason or reasons for the United States 
        proposing this provisional application?
   Did you consult with the Committee on Foreign Relations 
        prior to doing so?
   What is the purported authority for the Executive to 
        undertake such an agreement?

    Answer. The United States exchanged notes with Ukraine on September 
30, 1999 to apply the treaty provisionally, to the extent possible 
under the respective domestic laws of the United States and Ukraine. 
This was done at the request of the U.S. law enforcement community 
because of the urgent need to establish interim formal law enforcement 
relations to help with pending investigations, including investigations 
relating to corruption and fraud. After the notes were exchanged, the 
Justice Department sought and received evidence from Ukraine under this 
interim arrangement to advance its money laundering investigation of 
former Ukrainian Prime Minister Pavlo Lazarenko, leading to Lazarenko's 
indictment in the U.S. District Court for the Northern District of 
California on May 18, 2000.
    In the wake of the dissolution of the Soviet Union and related 
developments, the Executive Branch advised the Committee in 1994 of the 
need to have effective mutual assistance relations and our consequent 
intention to utilize executive agreements and provisional application 
in some cases because of urgent law enforcement needs. This decision 
followed a series of meetings held by FBI Director Freeh in 1994 with 
law enforcement officials in Eastern Europe and the former Soviet 
Union. The United States and Latvia brought the U.S.-Latvia MLAT into 
force provisionally through an exchange of notes on June 13, 1997, and 
the treaty was approved by the Senate on October 21, 1998.
    The provisional application of the Ukraine MLAT is an interim 
executive agreement that will terminate by its own terms when the MLAT 
enters into force. As noted above, the agreement by its express terms 
is limited to that which can be done under existing legal authority. 
Often assistance can be provided through administrative cooperation, 
which the Department of Justice and FBI routinely undertake even in the 
absence of an international agreement. To the extent that measures of 
compulsion are required, however, the primary relevant legal authority 
is Title 28, United States Code, Section 1782, which authorizes U.S. 
authorities to obtain assistance for proceedings in foreign tribunals, 
including criminal investigations conducted before formal accusation. 
The agreement's forfeiture-related provisions could be implemented as 
necessary under the forfeiture provisions of Title 18, 19 and 21. To 
the extent that authority does not exist to implement a particular 
request from Ukraine, assistance would need to be denied on a case-by-
case basis.

                           U.S.-NIGERIA MLAT

    Question. What is the scope of the agreement referenced in the 
preamble? Is the MLAT intended to replace that agreement?

    Answer. The November 2, 1987, Agreement on Procedures for Mutual 
Assistance in Law Enforcement Matters reflects the commitment of the 
U.S. Department of Justice and Nigerian Ministry of Justice to "use 
their best efforts to assist each other in connection with criminal 
proceedings," including criminal prosecutions and grand jury 
investigations. At the time, the parties had in mind serious narcotics 
cases and large-scale fraud investigations involving scams perpetrated 
by Nigerian citizens on Americans. The 1987 Agreement was always 
intended to be replaced by the MLAT. Indeed, the 1987 Agreement 
specifically states: ``The parties view this as an interim agreement 
which shall terminate upon the entry into force of a treaty governing 
mutual assistance in criminal matters, or upon thirty days' written 
notice by one party to the other, whichever occurs first.''

             U.S.-SOUTH AFRICA MLAT AND EXTRADITION TREATY

    Question. The Technical Analyses for the South Africa MLAT and 
Extradition Treaty indicate that under South African law, an 
inconsistent internal law overrides the treaty ``unless the treaty is 
enacted into law in national legislation.''
   Please provide an update on whether South Africa has begun 
        to take such steps to enact these treaties into law, or whether 
        the government is planning to do so.

    Answer. We understand from the South African Government that it has 
prepared the necessary documentation for approval of these two treaties 
by its legislature and that South African authorities are also in the 
process of developing certain changes to South African domestic law on 
extradition to take account of several recent extradition treaties, 
including the treaty with the United States. We do not have information 
at this time on the South African Government's intentions with respect 
to its domestic legal assistance law.

                                OAS MLAT

    Question 1. In the Technical Analysis regarding Article 2, in the 
1st and 3d sentences, there are references to the phrase ``other 
proceedings'' as if that term were used in the treaty. But that phrase 
does not appear in the text of the treaty submitted to the Senate. The 
treaty says that the parties shall provide assistance in 
``investigations, prosecutions, and proceedings that pertain to 
crimes.''
   Please submit a revised Technical Analysis that reflects the 
        text of Article 2.

    Answer. We have corrected this reference and are submitting a 
revised Technical analysis to the Committee.

    Question 2. Please elaborate on the meaning of the last paragraph 
of Article 26.

    Answer. Article 26 describes the information that must be submitted 
in support of a request for assistance under the Convention. The 
penultimate paragraph of Article 26 permits the requested state to ask 
for additional information if such is necessary to execute the request. 
Article 26's final paragraph states: ``When necessary, the requesting 
state shall proceed in accordance with the provisions of the last 
paragraph of Article 24 of this convention''; Article 24's last 
paragraph states: ``[t]he requested state may, at its own discretion, 
deny in whole or in part, any request made under the provisions of this 
paragraph.'' Thus, the final paragraph of Article 26, read together 
with Article 24, would appear to emphasize the fact that when the 
requested state asks the requesting state to supply additional 
information, the requesting state has the discretion to decline to do 
so if it would require the provision of non-public government records.

                   U.S.-SRI LANKA EXTRADITION TREATY

    Question 1. Please provide data on the number of requests and 
extraditions under the existing U.S.-Sri Lanka Extradition Treaty 
during the last five years.

    Answer. In the last five years, the United States has submitted two 
extradition requests to Sri Lanka. Sri Lanka has not submitted any 
requests to the United States. Of the two requests submitted by the 
United States, in one case the fugitive has not been located. In the 
other case, the United States withdrew the extradition request when the 
government and the fugitive agreed to a non-criminal disposition of the 
case.

    Question 2. Please comment on the Executive Branch's views on the 
independence and fairness of the judiciary in Sri Lanka.

    Answer. The Sri Lankan Constitution provides for an independent 
judiciary and the Government respects these provisions in practice. In 
addition, there are no significant concerns about the fairness of the 
Sri Lankan judiciary.

    Question 3. The State Department's human rights report for 1999 
indicates that under Sri Lanka's Emergency Regulations (ER) and its 
Prevention of Terrorism Act (PTA), suspects may be detained for 
``extended periods'' without court approval.
   Are there other provisions of the ER or PTA that similarly 
        depart from due process norms?

    Answer. There are fewer protections for defendants built into the 
PTA and the ER than are present in the regular criminal law. For 
example, there are no jury trials in cases brought under the PTA. In 
addition, confessions, which are inadmissible in regular criminal 
proceedings, are allowed in PTA cases and defendants bear the burden of 
proof to demonstrate that their confessions were obtained by coercion. 
While it is possible the U.S. would receive extradition requests from 
Sri Lanka that implicate the ER and the PTA, we understand that PTA and 
ER cases represent a small fraction of the total number of criminal 
cases in Sri Lanka. The United States would review any such cases very 
carefully under the standards set forth in the treaty and applicable 
U.S. law.

    Question 4. The State Department's human rights report for 1999 
says that ``in criminal cases'' defendants are tried in public by 
juries, but that there are not jury trials in cases under the 
Prevention of Terrorism Act.

   Are cases under the PTA considered ``criminal cases?''

    Answer. Under the PTA, prosecutions may be initiated against 
individuals suspected of terrorist activity. We understand that cases 
brought under the PTA are cases that generally correspond with Sri 
Lankan Penal Code provisions.

                        STOLEN VEHICLE TREATIES

    Question. Article 7(3) of the Treaty with Belize and the Treaty 
with the Dominican Republic, and Article 8(3) of the Treaty with 
Panama, do not contain a provision similar to that in Article 8(3) of 
the Treaty with Guatemala on Stolen Vehicles, namely, that a defective 
request can be remedied and resubmitted.

   Is there some understanding between the parties to any of 
        the three treaties (i.e., the treaties with Belize, Dominican 
        Republic, or Panama) that defective requests can be 
        resubmitted?

    Answer. Although these treaties do not contain an explicit 
provision regarding resubmission of a request, it is our understanding 
that, so long as the time for filing a request has not elapsed, either 
party would be able to supplement a request for return or resubmit a 
request found defective. The provision in the Guatemala treaty 
providing an extension of time to revise and resubmit a request was 
developed in response to the particular negotiations with the 
Government of Guatemala, and it is for this reason that similar 
language does not appear in the other three treaties mentioned. In this 
regard, the absence of this language in the other treaties does not 
preclude the U.S. from asking for an extension of time in appropriate 
cases if initial U.S. requests are defective for some reason. It also 
does not preclude our treaty partner from returning the vehicle after 
granting additional time under its laws for the U.S. to develop further 
documentation.


                   CONSIDERATION OF PENDING TREATIES

                              ----------                              


                     WEDNESDAY, SEPTEMBER 13, 2000

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:25 p.m. in room 
SD-419, Dirksen Senate Office Building, Hon. Charles Hagel 
presiding.
    Present: Senator Hagel.
    Senator Hagel. Good afternoon. I apologize for the late 
start. We were voting on the Thompson amendment to the 
Permanent Normal Trade Relations bill, PNTR, and if there is 
anyone in the audience interested in that vote, it was a motion 
to table the Thompson amendment, and it was tabled by a vote of 
65 to 32. I will take no questions.
    Senator Hagel. And I also appreciate you putting up with me 
as my colleagues up here were rearranging the furniture. I 
don't want you to think this is the Titanic and we are doing 
anything on the deck, but it was noted that I did not draw new 
furniture from the Democratic side, and I said I didn't want to 
do that, because the Republican Party has been doing strange 
things lately and if Senators Biden and Sarbanes showed up and 
fell, they would accuse me of sabotaging their furniture.
    So, with that very poignant and serious conversation out of 
the way, this Committee will now consider the 10 bilateral 
investment treaties, the U.S.-Mexico agreement on the Western 
Gap, and the Madrid Protocol. We have invited two witnesses 
from the Department of State to help the committee understand 
the implications of these treaties to the United States.
    Our first witness today is the Honorable Mary Beth West, 
Deputy Assistant Secretary of State for Oceans and Fisheries. 
Madam Secretary, we are pleased you are here. In October 1988 
Secretary West received Senate confirmation for the rank of 
Ambassador in recognition of her service in treaty 
negotiations. Prior to her current position, Ambassador West 
served at the State Department as Assistant Legal Advisor for 
European and Canadian Affairs, Director of the Small Claims 
Program of the Office of International Claims and Investment 
Disputes, and Assistant Legal Advisor for Legislation and 
General Management. Welcome.
    Ms. West. Thank you.
    Senator Hagel. Our second witness is Janice F. Bay, Deputy 
Assistant Secretary of State for International Finance and 
Development. Since Assistant Secretary Anthony Wayne is out of 
the country, Secretary Bay is currently serving as Acting 
Assistant Secretary of State for Economic and Business Affairs. 
Welcome to you as well.
    In Secretary Bay's previous positions, she has served as 
Economic Minister Counselor at our Embassies in France and 
Germany. We are pleased that you are both here.
    Today we have a large number of important treaties to 
consider. First, we will consider Bilateral Investment Treaties 
with Azerbaijan, Bahrain, Bolivia, Croatia, El Salvador, 
Honduras, Jordan, Lithuania, Mozambique, and Uzbekistan.
    And I understand that we have a document that I must read 
to include in this, that the record should reflect, so unless 
there is an objection at this time, we will add treaty document 
106-46 to this agenda as well. This document is a Protocol of 
Amendment to the existing U.S.-Panama Bilateral Investment 
Treaty. The protocol was concluded in Panama on June 1 but for 
reason unknown to the committee, it reached the Senate 
Executive Clerk only at 5:25 p.m. yesterday. Nonetheless, we 
understand that Deputy Assistant Secretary Bay wishes to refer 
to it in her statement. Without objection, so ordered.
    Foreign direct investment offers positive benefits to both 
the investing and recipient countries, including an increase in 
competition and consumer choice, and gains in productivity and 
efficiency. These treaties guarantee U.S. companies will be on 
a level playing field when investing overseas. By increasing 
protection for investors, we improve the environment for 
investing. Increased U.S. investment to the countries under 
consideration today will lead to increased prosperity in those 
countries and expanded markets for American products abroad. 
That's because American subsidiaries abroad buy products and 
services from their parent companies and other American 
companies located in the United States.
    American companies overseas buy about 63 percent of all 
goods exported by the United States, far more than they export 
back to the United States. Trade and overseas investment 
increase job opportunities in the United States rather than the 
reverse.
    Today we will also consider the Treaty with Mexico on the 
Delimitation of the Continental Shelf in the Western Gulf of 
Mexico Beyond 200 Nautical Miles, otherwise known as the 
Western Gap Agreement. The Western Gap is an area between the 
200-mile exclusive economic zones of each country where oil 
reserves may exist. Mexico has been concerned in particular 
that the United States with its great advantage in deep water 
technology, will exploit transboundary petroleum reserves. This 
agreement, which is related to the U.S.-Mexico Maritime 
Boundary Agreement, which entered into force in 1997, should 
lay those concerns to rest.
    As long as uncertainties have existed, the U.S. has been 
unable to sell leases for oil exploration in this region. We 
are more dependent on OPEC for our oil now than at any time in 
the history of this country. Development of this region will be 
one step forward in maximizing our domestic sources and 
decreasing our dependence on foreign source oil.
    We will also consider the Protocol Relating to the Madrid 
Agreement Concerning the International Registration of Marks, 
otherwise known as the Madrid Protocol. The United States has 
never belonged to an international trademark registration 
system, notably the Madrid Trademark Agreement, because U.S. 
trademark law differs substantially from obligations under this 
treaty.
    The protocol under consideration today establishes a 
separate international trademark registration system and 
significantly modifies the Madrid Agreement, largely to 
accommodate the concerns of the United States. Trademarks are 
among the most valuable assets a business may own, and 
protection of these assets is vital. Today we will explore 
whether the Madrid Protocol accomplishes this.
    On that note, let me now turn to our witnesses and again 
welcome you. It's my understanding that Ambassador West will be 
testifying first on the Western Gap Agreement, followed by 
Secretary Bay's testimony on the Bilateral Investment Treaties 
and the Madrid Protocol. Again, thank you for coming. 
Ambassador West.

STATEMENT OF HON. MARY BETH WEST, DEPUTY ASSISTANT SECRETARY OF 
     STATE FOR OCEANS AND FISHERIES, DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Ms. West. Mr. Chairman, thank you for the opportunity to 
testify today in support of the treaty between the United 
States and Mexico establishing a Continental Shelf boundary in 
the western Gulf of Mexico. This treaty was signed here in 
Washington on June 9, 2000.
    Mr. Chairman, my brief oral remarks will address the nature 
of the treaty, how the boundary was drawn up, and the treaty's 
potential benefits for the United States. I also have a longer 
statement that I would like to submit for the record.
    Senator Hagel. It will be included.
    Ms. West. Thank you.
    This treaty delimits the Continental Shelf jurisdiction of 
the United States and Mexico in an area known as the Western 
Gap. This area is beyond the outer limit of the two countries' 
200 mile exclusive economic zones in the western part of the 
Gulf of Mexico. The treaty does not affect the water column 
above the Continental Shelf, which will remain high seas.
    Mr. Chairman, I had the privilege of testifying before you 
3 years ago on the 1978 treaty establishing maritime boundaries 
between the U.S. and Mexico in the Pacific and the Gulf of 
Mexico. That treaty set the boundary in areas where the United 
States and Mexico's 200-mile zones overlapped. It did not, 
however, cover two areas of Continental Shelf in the Gulf of 
Mexico beyond the 200-mile zones.
    In recommending Senate advice and consent to the 
ratification of the 1978 treaty, this committee urged the 
executive branch to proceed expeditiously to negotiate the 
boundary in one of those areas, the Western Gap. We did so and 
the treaty before you today is the result.
    The location of the boundary in the new treaty employs the 
same method used to delimit the 1978 maritime boundary. United 
States and Mexican experts calculated an equidistant line, a 
line that is midway between the respective coast lines, 
including islands. The boundary is approximately 135 miles 
long. At its end points, it joins two segments of the 1978 
maritime boundary.
    The treaty also contains provisions that address the 
possibility of transboundary oil and gas reservoirs. It creates 
a buffer zone called ``the area,'' which is 1.4 nautical miles 
wide on each side of the boundary. For the United States, this 
represents slightly less than 10 percent of its portion of the 
Western Gap.
    Within the ``area,'' the United States and Mexico agree to 
a 10-year moratorium on commercial oil and gas exploitation. 
Exploration to gather information would be permitted. The 
treaty creates a regime in which the parties will exchange 
information that will help determine the possible existence of 
transboundary reservoirs in the ``area,'' as well as a 
commitment to address the equitable and efficient development 
of such reservoirs.
    The treaty will allow the U.S. Government through the 
Department of the Interior to proceed with leasing in an area 
of the Continental Shelf of great interest for its oil and gas 
potential. In particular, it will provide the needed certainty 
for industry interested in proceeding to develop this oil and 
gas potential.
    From the commencement of the negotiations in early 1998, 
the U.S. negotiating team consulted closely with the U.S. oil 
and gas industry, and we believe that the treaty has the full 
support of this industry.
    Mr. Chairman, given the economic benefits that we believe 
would accrue to the United States, we strongly support 
favorable Senate action on the treaty. Thank you, Mr. Chairman. 
I would be pleased to answer questions.
    Senator Hagel. Ambassador West, thank you. It's always good 
to have you before this committee.
    Let me begin with a question that Chairman Helms asks that 
I relay to you. You note in your testimony that because of 
concerns about the policy environment--oh, I am sorry, this is 
Uzbekistan, it's another treaty. Let me get back to Mexico. 
There is a question he did want to ask there too. We will deal 
with the Uzbekistan question when we deal with Uzbekistan.
    What potential reserves of oil and gas are estimated to 
exist in the Western Gap?
    Ms. West. Mr. Chairman, an assessment of the exact 
potential of hydrocarbon resources that may exist in the 
Western Gap has not been made yet. Recent discoveries in the 
U.S. exclusive economic zone right above the Western Gap 
suggest that hydrocarbon bearing structures extend into the 
U.S. portion of the Western Gap. As there has been no drilling 
or exploration in the gap yet, however, information regarding 
potential reserves would be highly speculative.
    Once U.S. portions are made available for leasing, it is 
expected that industry will be gathering the information 
necessary to develop more reliable projections.
    Senator Hagel. You touched a bit on it, but maybe we could 
go back and you could define it a little clearer if you can. 
What portions lay on either side of that line, the Mexican side 
of the boundary versus the U.S. side?
    Ms. West. The drawing of the equidistant line creates a 
situation in which the United States has about 38 percent of 
the gap and Mexico has about 62 percent of the gap. This of 
course is just an extension of a long boundary that we have 
drawn with Mexico based on the principles of equidistance, 
which are principles that we have used in almost all of our 
maritime boundary treaties because of their clarity and 
certainty, and because overall they serve U.S. interests.
    I think the important thing about the area is that the 
certainty created by the boundary will allow us to now go into 
the area and start leasing and start exploring and exploiting.
    Senator Hagel. Are you referring to potential reserve 
percentages?
    Ms. West. No.
    Senator Hagel. Do you have any idea what potential reserves 
might be on either side of the boundary?
    Ms. West. No, Senator, we do not, because there has not 
been the effort yet to explore in the area. There has been no 
assessment. We do, however, believe that the potential for 
exploration and exploitation in the U.S. portion is excellent, 
based on the discoveries that have been made near the gap.
    Senator Hagel. On the U.S. side?
    Ms. West. On the U.S. side.
    Senator Hagel. What in your opinion is the general feeling 
of our U.S. private sector on this? You obviously talked with 
them and they have had input, I know, and we have dealt with 
that in some detail, but give me if you can your sense of the 
U.S. private sector's view of this.
    Ms. West. Mr. Chairman, I think that the U.S. private 
sector is anxious to have the ability to lease and to begin the 
process of exploration and exploitation in the gap. Because 
these activities cost millions of dollars, they have felt they 
needed the certainty of the boundary and that is why we 
undertook expeditiously to try to achieve the boundary. I think 
that the industry is anxious to begin the process of exploring 
and exploiting the resources in the gap, and they are 
supportive of the treaty for that reason.
    Senator Hagel. Are you aware of any problems with fisheries 
as a result of the delimitation of this boundary?
    Ms. West. Mr. Chairman, the boundary in this case is just a 
Continental Shelf boundary; it does not apply to the water 
column, so it would have no effect on fisheries.
    Senator Hagel. And no other maritime issues are involved?
    Ms. West. No. It will have no effect on any maritime issue 
other than the jurisdiction over the Continental Shelf.
    Senator Hagel. Any outstanding claims, any unresolved 
claims, drilling rights claims, any other kind of unresolved 
claims?
    Ms. West. No, Mr. Chairman, I'm not aware of anything.
    Senator Hagel. Do we take on an obligation to help Mexico 
develop or acquire deep-sea technology with this treaty?
    Ms. West. No, Mr. Chairman, there is no technology transfer 
element to this treaty.
    Senator Hagel. OK. Since we have other treaties and issues 
to get to, I have a few more questions and I suspect my 
colleagues have some as well. So with your agreement, what I 
would do, and you know how it works around here, we would just 
submit the rest of the questions to you and you can respond in 
writing.
    Ms. West. We will be pleased to do that, thank you.
    Senator Hagel. Thank you.
    [Additional questions for the record follow:]

 Responses of Hon. Mary Beth West to Additional Questions from Senator 
                          Joseph R. Biden, Jr.

        treaty with mexico on delimitation of continental shelf
    Question 1. Article IV(3) permits the parties, by mutual agreement 
to modify the 10 year period set forth in Article IV(1) ``through an 
exchange of diplomatic notes.'' If the Senate were to provide advice 
and consent to ratification of this treaty, does the executive branch 
understand Article IV(3) to permit modification of the period of years 
in Article IV(1) without receiving Senate advice and consent to such 
ratification. If so, will the executive branch commit to consulting 
closely with this committee in connection with any negotiations to 
modify the period set forth in Article IV(1)?

    Answer. Yes, the administration understands that Article IV(3) 
permits modification of the period of years in Article IV(1) without 
the need for further Senate advice and consent to such a modification. 
At the same time, given the novel nature of this provision, the 
administration would intend to consult with the committee prior to any 
decision to modify the period set forth in Article IV(1).

    Question 2. Article IV(6) requires one party to notify the other if 
it ``has knowledge of the existence or possible existence of a 
transboundary reservoir.'' Do the parties understand this requirement 
to require notification within a certain time period once ``knowledge'' 
is obtained?

    Answer. Although the treaty does not attempt to specify such a time 
period, normal practice would indicate that a party would be expected 
to provide such a notification within a reasonable amount of time after 
obtaining such knowledge.

    Question 3. Article IV, paragraphs (5) and (6) require that the 
parties, in sharing information or authorizing studies, act ``in 
accordance with its national laws and regulations.'' Does this phrase 
have particular relevance? That is, are there U.S. or Mexican laws or 
regulations that prohibit the kind of studies or information sharing 
contemplated by these paragraphs? If so, please describe these laws or 
regulations.

    Answer. This language was incorporated in the treaty at the request 
of the United States to ensure that the regimes for approving studies 
and sharing information would be subject to United States law. This is 
particularly significant with respect to U.S. laws involving the 
protection of confidential business information. Apart from laws that 
are similar to those in the United States, the administration is not 
aware of other Mexican laws that would prohibit or restrict the kinds 
of activities contemplated in those paragraphs.

    Question 4. Please explain the factors that led to the decision on 
the size of ``the Area'' provided for under Article IV(1).

    Answer. The idea of creating the ``Area'' was to identify an area 
closest to the boundary, in which any existing transboundary reservoirs 
would likely lie. Our Minerals Management Service (MMS) scientists have 
``mapped'' more than 23,000 oil and gas reservoirs in the Gulf of 
Mexico. Our data show that 99.9% of these reservoirs would fit into an 
area that is 1.4 nautical miles wide. Discussion with Mexican technical 
experts confirmed that they too believed that an area of 1.4 miles on 
each side of the boundary would capture virtually all possible 
transboundary resources.

    [The prepared statement of Ms. West follows:]

               Prepared Statement of Hon. Mary Beth West

    Mr. Chairman and Members of the Committee:
    Thank you for the opportunity to testify today in support of the 
treaty between the United States and Mexico establishing a continental 
shelf boundary in, the Western Gulf of Mexico. This treaty was signed 
on June 9, 2000, in Washington DC.
    This treaty delimits the geographical areas within which each party 
may exercise its sovereign rights over the seabed and subsoil of the 
Continental Shelf in an area known as the ``Western Gap.'' This area is 
beyond the outer limits of the two countries' 200 mile exclusive 
economic zones in the western part of the Gulf of Mexico. The treaty 
does not affect the water column above the Continental Shelf, which 
will remain high seas.
    Mr. Chairman, I had the privilege of testifying before this 
committee three years ago on the 1978 treaty establishing Maritime 
Boundaries between the United States and Mexico in the Pacific Ocean 
and the Gulf of Mexico. This treaty, which entered into force November 
13, 1997, established the boundary in areas where the U.S. and Mexico's 
200-mile exclusive economic zones overlapped. It did not, however, 
cover two areas of Continental Shelf in the Gulf of Mexico beyond the 
200-mile zones.
    In recommending Senate advice and consent to the ratification of 
the 1978 treaty, this committee urged the executive branch to proceed 
expeditiously to negotiate the boundary in one of those areas, the 
``western gap.'' It also noted that, ``delimitation of the western gap 
has become increasingly important to U.S. interests as petroleum 
exploration has moved into deeper waters.''
    Turning to the salient features of the treaty, Article I describes 
the location of the boundary as geodetic lines connecting the listed 16 
turning and terminal points. In keeping with the methodology used in 
the 1978 Maritime Boundary, U.S. and Mexican technical experts 
calculated an equidistant line, a line that is equally distant from the 
respective baselines, including islands, of the United States and 
Mexico. The boundary is approximately 135 miles long. The western and 
eastern points of the boundary join two segments of the 1978 maritime 
boundary.
    Article II sets out the technical parameters of the boundary. This 
article is needed to ensure that the treaty can be applied uniformly, 
and accurately, by the United States, Mexico, and other users. Further, 
the article states that, for the purpose of illustration only, a map 
depicting the boundary is attached to the treaty at Annex 1.
    Article III states that north of the boundary, Mexico will not, and 
south of the boundary, the United States will not, claim or exercise 
for any purpose sovereign rights or jurisdiction over the seabed and 
subsoil. A provision of this nature is contained in all modern maritime 
boundary treaties to which the United States is a party.
    Articles IV and V of the treaty contain provisions that address the 
possibility that oil and natural gas reservoirs may extend across the 
Continental Shelf boundary (called ``transboundary reservoirs''). These 
provisions, among other things, create a framework by which the parties 
can exchange information to help determine the possible existence of 
transboundary reservoirs. Should the parties identify a transboundary 
reservoir, they agree to seek to reach agreement for the equitable and 
efficient exploitation of such reservoirs.
    Article IV(1) creates a buffer zone, called the ``Area,'' which is 
1.4 nautical miles wide on each side of the boundary. For the United 
States this represents slightly less than 10 percent of its portion of 
the western gap. (About 5.6% of Mexico's total area in the western gap 
is included within its 1.4 mile buffer zone.)
    Within the area, the United States and Mexico agree to a 10-year 
moratorium on oil and gas drilling or exploitation. Exploration to 
gather information on the Continental Shelf would be permitted. Each 
party's right to authorize petroleum drilling and exploitation outside 
the area within the western gap on its side of the boundary is 
unaffected by this moratorium.
    Article IV(3) states that the parties may modify the 10-year 
moratorium applicable to the area by mutual agreement through an 
exchange of diplomatic notes. This provision will enable the parties to 
shorten or to extend the duration of the moratorium should they both 
agree.
    Article IV(4) provides that each party, on its side of the boundary 
within the area and in accordance with its national laws and 
regulations, shall facilitate requests from the other party to 
authorize geological and geophysical studies for determining the 
possible presence and distribution of transboundary reservoirs.
    Article IV(6) obliges each party, if it has knowledge of the 
existence or possible existence of any transboundary reservoir, to 
notify the other party.
    Article V of the treaty details the mechanism for communication and 
cooperation between the parties with respect to the area and the 
possible existence and location of transboundary reservoirs.
    Article VI requires the parties to consult to discuss any issue 
regarding the interpretation or implementation of the treaty upon the 
written request by a party through diplomatic channels. Finally, 
Article VIII states that any dispute concerning the interpretation or 
application of the treaty must be resolved by negotiation or other 
peaceful means as may be agreed by the parties.
    No new legislation is needed for the United States to meet its 
obligations under the treaty.
    The treaty will allow the United States Government, through the 
Department of the Interior, to proceed with leasing in an area of 
Continental Shelf of great interest for its oil and gas potential. In 
particular, it will provide the needed certainty for industry 
interested in proceeding to develop this oil and gas potential.
    From the commencement of these negotiations, in early 1998, the 
U.S. negotiating team consulted closely with the U.S. oil and gas 
industry. We believe the treaty has the full support of this industry.
    Mr. Chairman, given the economic benefits that we believe would 
accrue to the United States, we strongly support favorable Senate 
action on this treaty.
    Thank you Mr. Chairman. I would be pleased to answer questions you 
and other members of the committee may have.

    Senator Hagel. Now the way we are going to do this, Madam 
Secretary, you are next, is that the way we want to do this? 
Thank you. Secretary Bay.

STATEMENT OF JANICE F. BAY, DEPUTY ASSISTANT SECRETARY OF STATE 
FOR INTERNATIONAL FINANCE AND DEVELOPMENT, DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Ms. Bay. Thank you, Mr. Chairman, and thank you for the 
opportunity to testify before the Foreign Relations Committee 
as the administration seeks the advice and consent of the 
Senate to ratification of Bilateral Investment Treaties [BITs] 
with Azerbaijan, Bahrain, Bolivia, Croatia, El Salvador, 
Honduras, Jordan, Lithuania, Mozambique, Uzbekistan, a protocol 
to the Panama BIT, as well as the Madrid Protocol.
    I will begin with my testimony on the Bilateral Investment 
Treaties and I will also be submitting more detailed written 
testimony on these treaties.
    With respect to the Bilateral Investment Treaties, the 
administration strongly recommends that the Senate give its 
advice and consent to all ten treaties and the protocol. 
Azerbaijan, Bahrain, Bolivia, Lithuania, and Uzbekistan have 
already ratified the treaties. The Senate's advice and consent 
would permit instruments of ratification to be exchanged 
forthwith for the first four countries, with entry into force 
30 days thereafter. However, for reasons explained below, we 
would not expect an early exchange of ratification instruments 
with Uzbekistan.
    Since the inception of the Bilateral Investment Treaty 
program in 1982, the United States has concluded 31 BITs that 
have entered into force. We have active discussions underway 
with Colombia, Korea, Slovenia, Venezuela, and Yemen. Several 
other countries have expressed interest in a BIT with the 
United States.
    Our outward investment policy supports the objectives of 
promoting U.S. exports and enhancing the international 
competiveness of U.S. companies. Our policy has two aims. 
First, we seek greater access for U.S. investors in foreign 
investments, including nondiscriminatory treatment in the 
establishment and operation of investment.
    The BIT program, which has enjoyed bipartisan support 
throughout its existence, is an effective tool for gaining and 
maintaining market access for U.S. investors. The program has 
helped to standardize sound investment policy in developing 
countries, to remove impediments to U.S. exports, and to gain 
wider acceptance of important investment principles that then 
become a more robust part of international law.
    BITs are negotiated on the basis of a prototype document 
and we accept only minor changes in the prototype language. As 
you know, the State Department and the Trade Representatives 
office work together in negotiation of these BITs. The model 
BIT we use is not a static document; the interagency BIT team 
has revised model BIT text on a number of occasions, most 
recently in 1994. However, recent years of negotiation have 
revealed possible improvements in several provisions, and we 
plan to pursue possible changes with the next administration.
    We do not, however, believe that this should hold up 
ratification of these signed treaties, as regular revisions of 
the prototype have been standard practice throughout the BIT 
program, and the fundamental principles have remained 
unchanged.
    U.S. bilateral investment treaties provide American 
investors with six basic protections. They are as follows: 
National and most favored nation treatment; expropriation; 
right of free transfers; performance requirements; key 
personnel; and dispute settlement. Each one of the ten BITs and 
the protocol not only protect U.S. investment in the manner I 
have just described, but can be used to serve broader U.S. 
economic and foreign policy goals.
    I would now like to highlight aspects of the specific BITs 
before you today. The administration has continued to negotiate 
BITs with countries in economic transition. The Senate has 
already given its advice and consent to BITs with 17 such 
countries. Today we are presenting four more with Azerbaijan, 
Croatia, Lithuania, and Uzbekistan.
    The ratification of the BIT with Croatia comes at a 
propitious time following the recent election of a democratic, 
market-oriented government. We anticipate that the BITs with 
Lithuania and Uzbekistan will ultimately play a similar role 
with respect to U.S. investment in these economies.
    Nevertheless, the BIT with Uzbekistan raises some 
particular concerns. It was signed in 1994 and ratified by 
Uzbekistan soon afterwards. The Department transmitted it to 
the Senate for its advice and consent in 1996.
    Unfortunately, Uzbekistan's investment climate has 
deteriorated since that BIT was concluded. In 1996, the 
government issued a series of decrees restricting access to 
foreign currency. This was in direct violation of BIT 
provisions assuring free convertibility and transfer of funds 
related to an investment. Today, Uzbekistan's currency remains 
inconvertible, and foreign investors cite capital controls as 
the single biggest obstacle to investment in Uzbekistan.
    In light of this situation, should the Senate provide its 
advice and consent, the administration intends to withhold the 
exchange of instruments of ratification as leverage to 
encourage policy change in Uzbekistan. The United States could 
bring the treaty quickly into force once Uzbekistan 
demonstrates that it is able and willing to comply with its 
terms. U.S. companies have substantial investment in the 
country, and we want to afford them the right of protection of 
a BIT as soon as conditions warrant.
    The administration is pleased to highlight the BIT with 
Mozambique, the first BIT concluded with an African country in 
about 10 years. Mozambique has proven itself to be a serious 
reformer, despite formidable obstacles. This BIT will give a 
boost to the administration's drive to augment U.S. exports to 
Africa, and provide reassurance to a growing number of 
potential U.S. investors.
    We anticipate similar benefits in the Middle East, as we 
are presenting for your consideration BITs with Jordan and 
Bahrain. In addition to providing reassurance to investors and 
promoting economic development, we hope the BITs demonstrate 
for others in the region the economic benefits of peace.
    Finally, in our own hemisphere, we are presenting BITs with 
Bolivia, El Salvador and Honduras, as well as a protocol to the 
Panama BIT. The protocol restores assured investor access to 
international arbitration.
    In summary, the BIT program is a key element of U.S. 
outward investment policy. Its core principles underlie U.S. 
negotiating objectives in our bilateral, regional and 
multilateral investment discussions worldwide.
    Would you like me to turn now to the Madrid Protocol or 
would you like to take questions?
    Senator Hagel. Yes, Madam Secretary, thank you.
    Ms. Bay. OK. I will now turn to my testimony on the Madrid 
Protocol. I am delighted to present the administration's views 
on the accession of the United States to the Protocol Relating 
to the Madrid Agreement Concerning the International 
Registration of Marks, called the Madrid Protocol.
    The United States has declined to participate in the 
international registration system of the Madrid Agreement due 
to several problematic provisions. However, the Madrid 
Protocol, which entered into force December 1, 1995, creates a 
new international registration system that is parallel to, but 
independent of, the Madrid Agreement. It addresses our problems 
with the Madrid Agreement.
    It has been difficult and costly to obtain and maintain 
registrations of U.S. trademarks in each and every country. As 
a result, many U.S. businesses must focus only on protecting 
their marks in major markets abroad, and hope for the best 
elsewhere. This hope turns to despair when unscrupulous pirates 
register in their countries the marks of these U.S. businesses, 
and it effectively closes that country's markets to the 
products and services of U.S. businesses.
    The Madrid Protocol provides for a trademark registration 
filing system that would permit a U.S. trademark owner to file 
for registration in any number of countries by the filing of a 
single standardized application in English with a single set of 
fees, in the U.S. Patent and Trademark Office.
    Equally important, under the protocol, renewal and 
assignment of a trademark registration in each country could be 
made by the filing of a single request with a single set of 
fees, thus giving U.S. businesses easier and more cost-
effective access to protection.
    The protocol would have no effect on the integrity of the 
trademark registration system in the United States. While the 
protocol would provide an additional basis for a foreign 
national to register a trademark in the United States, such a 
request would be subject to the same substantive requirements 
as exist in the law today for domestic and foreign applicants. 
Once an international registration is extended to the United 
States, the foreign holder of the international registration 
would have the same rights, remedies and obligations as a U.S. 
registrant.
    With regard to a problem that delayed possible U.S. 
accession, I would note that an interagency group worked for 
several years with officials from the European Commission and 
achieved a satisfactory solution addressing U.S. concerns over 
EC voting in the protocol. We believe that in any case, those 
voting provisions will be used rarely if ever. Consensus 
decisionmaking is expected to be the norm under the Madrid 
Protocol, as it has long been under the original Madrid 
Agreement and the World Intellectual Property Organization 
itself. In fact, we understand that members have only needed to 
resort to voting twice in the more than 100-year history of the 
Madrid Agreement.
    The Madrid Protocol comes before this committee today at a 
time when other factors have emerged favoring U.S. accession. 
In March 2000, the Government of Japan acceded to the protocol. 
Japan's entry in the absence of U.S. membership is an adverse 
development for U.S. companies and heightens the desirability 
of U.S. accession as soon as feasible.
    Japan's pendency from application filing to the 
registration of a trademark is several years. However, as a 
party to the Madrid Protocol, it will have to process and 
register the protocol request for extension of protection 
within the strict Madrid Protocol time limits. As a result, 
those filers who cannot use the Madrid Protocol will be in the 
unfortunate position of waiting years for a registration, while 
Madrid Protocol applicants receive consideration and 
registration within an 18-month timeframe. Thus, a U.S. 
trademark owner seeking to protect its mark in Japan will be 
seriously disadvantaged unless the United States becomes a 
party to the Madrid Protocol.
    The same situation may occur in other countries. In light 
of these developments, we understand that most affected U.S. 
companies favor the United States becoming a party.
    In summary, Mr. Chairman, we believe the United States 
should proceed with accession. This will facilitate efficient 
and economic trademark registration for U.S. companies. I thank 
you, Mr. Chairman, for your continued interest in the BIT 
program and the Madrid Protocol, and will be happy to answer 
any questions you may have. Thank you.
    [The prepared statement of Ms. Bay follows:]

                  Prepared Statement of Janice F. Bay

    Mr. Chairman, thank you for the opportunity to testify before the 
Foreign Relations Committee as the Administration seeks the advice and 
consent of the Senate to ratification of Bilateral Investment Treaties 
(BITs) with Azerbaijan, Bahrain, Bolivia, Croatia, El Salvador, 
Honduras, Jordan, Lithuania, Mozambique, Uzbekistan, a Protocol to the 
Panama BIT, as well as the Madrid Protocol. I would like to begin with 
my testimony on the Bilateral Investment Treaties.
    With respect to the bilateral investment treaties, the 
Administration strongly recommends that the Senate give its advice and 
consent to all ten treaties and the Protocol. Azerbaijan, Bahrain, 
Bolivia, Lithuania, and Uzbekistan have already ratified the treaties. 
The Senate's advice and consent would permit instruments of 
ratification to be exchanged forthwith for the first four countries, 
with entry into force 30 days thereafter. However, for reasons 
explained below we would not expect an early exchange of ratification 
instruments with Uzbekistan.
    Since the inception of the Bilateral Investment Treaty (BIT) 
program in 1982, the United States has concluded 31 BITs that have 
entered into force. We have active discussions underway with Colombia, 
Korea, Slovenia, Venezuela, and Yemen. Several other countries have 
expressed interest in a BIT with the United States.
    In my statement, I will cover three topics:

   First, how the Administration's overall policy on outward 
        direct investment advances U.S. interests and how the BIT 
        program fits into this effort;

   Second, the specific protections for U.S. investors provided 
        by our Bilateral Investment Treaties; and

   Third, a brief analysis of how the ten treaties and one 
        Protocol under consideration today advance U.S. interests.
          the place of bits in u.s. outward investment policy
    Our outward investment policy supports the objectives of promoting 
U.S. exports and enhancing the international competitiveness of U.S. 
companies.
    Worldwide, foreign direct investment (FDI) in the international 
economy grew at 15.9 percent annually in nominal terms over the 1990-
1995 period, and even more rapidly in the last three years. In 1998, 
world FDI outflows reached a $694 billion, making it the single most 
important component of private capital flows to developing countries. 
These levels were reached against the backdrop of conditions in the 
world economy, particularly the 1997-98 global financial crisis, which 
could have slowed down FDI in 1998, but did not. As the world's leading 
source and recipient of international investment, the United States has 
a significant stake in this trend.
    In today's highly competitive international business environment, 
successful companies increasingly rely upon global operations. American 
companies often find it necessary to have an on-site presence. Some 
manufacturers need a local presence to export, market, service and 
adapt their products. Others need to establish a local distribution 
outlet or network under their control and import U.S. products and 
services. In some cases, production facilities or joint ventures also 
may be desirable, particularly in sectors evolving into truly global 
industries.
    American firms increasingly use their overseas affiliates' sales 
and distribution networks, R&D expertise and specialized production 
techniques to compete with Asian and Western European companies in 
foreign markets. In many instances the international competitiveness of 
U.S. companies may depend on maintaining an effective worldwide 
presence in each important economic region.
    Foreign direct investment is increasingly understood to be a 
complement to trade. Investment abroad is often a crucial part of a 
successful export strategy. Foreign affiliates of U.S. firms abroad are 
some of America's best export customers; U.S. exports to foreign 
affiliates rose from $56 billion in 1985 to $185.4 billion in 1998, an 
increase of 230 percent. Such exports accounted for 27 percent of total 
U.S. merchandise exports in 1998. These exports, in turn, support jobs 
for Americans here at home.
    For U.S. business interests abroad, it is our policy to establish a 
framework in which our businesses are treated at least as well as 
companies of other countries. To achieve this end, our outward 
investment policy has two aims. First, we seek greater access for U.S. 
investors in foreign markets. Second, we seek high levels of protection 
for U.S. investments, including non-discriminatory treatment in the 
establishment and operation of investment.
    The BIT program, which has enjoyed bi-partisan support throughout 
its existence, is an effective tool for gaining and maintaining market 
access for U.S. investors. The BIT program was initiated to promote and 
protect U.S. investment interests in other countries and to build on 
the principles contained in earlier Treaties of Friendship, Commerce 
and Navigation (FCN), which were concluded with some of the countries 
included in this testimony. The program has helped to standardize sound 
investment policy in a variety of developing nations and in economies 
making the transition from central planning. Many investment-
restrictions also have the effect of restricting trade flows. Thus, our 
BITs not only help remove restrictions on U.S. investments, but also 
remove impediments to U.S. exports. Furthermore, as more nations agree 
to conclude a BIT with the United States, the important investment 
principles they contain gain wider acceptance and become a more robust 
part of international law.
    The BIT program is a relatively efficient means of affording state-
of-the-art protection to U.S. investors in a wide variety of countries. 
BITs are negotiated on the basis of a prototype document and we accept 
only minor changes to the prototype language.
    This is not to say that the model BIT we use is a static document. 
Since this program began, the inter-agency BIT team has revised the 
model BIT text on a number of occasions. The most recent revision of 
the BIT prototype was completed in April 1994, and is the model on 
which the treaties before you, with the exception of Lithuania, are 
based. (Lithuania is based on the 1992 model.) The 1994 prototype 
embodies the same basic principles as its predecessors. As you could 
expect, since the 1994 revision, recent years of negotiation have 
revealed possible additional improvements in several provisions. 
Although we plan to discuss a possible revision of the 1994 prototype 
with the next administration, we do not believe this should hold up 
ratification of these signed treaties, as regular revisions of the 
prototype have been standard practice throughout the BIT program and 
the fundamental principles have remained unchanged.

          BILATERAL INVESTMENT TREATIES PROTECT U.S. INVESTORS

    U.S. Bilateral Investment Treaties provide U.S. investors with six 
basic protections. They also mirror basic protections offered to 
foreign investment under law in this country. They are as follows:
National and Most Favored Nation (MFN) Treatment
    First, our BITs afford U.S. investors parity with investors from 
other countries by granting the United States most favored nation 
treatment. Many of these investors are commercial competitors of the 
United States and concluding a BIT prevents companies from other 
countries from gaining a competitive advantage. Also, U.S. BITs provide 
an opportunity to gain better market access for American companies, 
particularly where countries have heretofore imposed extensive 
restrictions on foreign direct investment. In addition, our treaties 
specify that U.S. investors will be treated as well as domestic 
investors, in other words, national treatment. Any exceptions to 
national or MFN treatment are limited and specifically described in 
annexes or protocols to the treaties.
    U.S. BIT standards in the area of national and MFN treatment are 
the highest in the world. While many countries' BITs afford their 
investors such treatment once an investment has been established, only 
U.S. BITs traditionally have obligated treaty partners to give such 
treatment in both the pre- and post-establishment phases of investment. 
In practical terms, this means countries may not use nationality-based 
screening or approval mechanisms to block U.S. investment.

Expropriation
    Second, these treaties protect U.S. investors by establishing clear 
limits to expropriation of investments and by requiring that U.S. 
investors be properly compensated if their property is expropriated. 
Under U.S. BITs, expropriation can only occur in accordance with 
customary international law standards, that is, for a public purpose, 
in a nondiscriminatory manner, under due process of law, and 
accompanied by payment of prompt, adequate and effective compensation.

Right of Free Transfers
    Third, U.S. investors are afforded the right to transfer funds into 
and out of a country without delay using a market rate of exchange. 
This covers not only repatriation of profits, but transfers of all 
categories of funds related to an investment, including interest, 
proceeds from the liquidation of an investment, and the infusion of 
additional financial resources after the initial investment has been 
made.
    Such a provision can help increase U.S. exports since free 
transfers facilitate the purchase and import of U.S.-produced goods and 
services. Further, because the right of free transfer also covers 
royalties and fees, the transfer provision facilitates increased U.S. 
exports of intellectual property.
    Here again, U.S. BITs provide protection superior to that provided 
by those of other countries. For example, our BITs protect all forms of 
investment-related transfers. By way of contrast, the United Kingdom 
model BIT, perhaps the closest to ours in overall standard of 
protection, covers only transfers of profits and proceeds of the sale 
of an investment. Also, U.S. BITs cover inward as well as outward 
transfers. The BITs of other countries generally cover only outward 
transfers. In certain circumstances, our BITs also cover transfers of 
returns in kind, such as oil exports.

Performance Requirements
    Fourth, our BITs limit the ability of host governments to impose 
certain performance requirements on an investor, such as local content 
or export performance requirements. This limitation helps U.S. 
investors avoid being coerced by host governments into inefficient and 
trade distorting practices.
    This provision also entitles U.S. investors to purchase competitive 
U.S.-produced components without restriction as input in their 
production of various products. And they cannot be forced, as a 
condition of establishment or operation of their investment, to export 
back to the U.S. market or to third-country markets locally produced 
goods.
    U.S. BIT standards are high in this area as well. To our knowledge, 
few if any countries have used their Model BITs to limit other parties' 
performance requirements on their investors.

Key Personnel
    Fifth, our BITs support our firms' need for flexibility in engaging 
the top managerial personnel of their choice, regardless of 
nationality. This provision supports a company's ability to hire the 
best available talent to manage its investment--a key element in being 
competitive in a global market. It is also a protection against any 
arbitrary local hire quotas applied to top management that might 
interfere with a company's ability to manage its investment.

Dispute Settlement
    Sixth, our BITs give investors the option of submitting an 
investment dispute with the treaty party's government to international 
arbitration.
    This provision is one of the most important protections provided by 
a BIT. Most investment disputes are resolved through negotiation 
without resort to formal dispute settlement and investors are not 
required to notify the USG of a dispute. We are aware of only a handful 
of disputes that have gone to arbitration under U.S. BITs. 
Nevertheless, the availability of arbitration procedures provides the 
investor with important leverage to encourage a host government to act 
in a manner consistent with its commitments. The U.S. has never been 
taken to arbitration, under a BIT. To some extent, this reflects the 
fact that our BITs are primarily with capital-importing countries.
    BITs also provide for formal state-to-state consultations and 
binding state-to-state arbitration. For example, if a difference should 
develop over interpretation or application of the treaty, we have 
appropriate avenues for recourse.
    BITs provide U.S. investors and the U.S. government with additional 
means to press for favorable resolution of investment disputes. 
Nevertheless, BITs cannot meet all needs in all situations. They reduce 
the risks of investing abroad, but do not eliminate them. The BITs 
supplement rather than replace other, traditional means of resolving 
investment disputes, including: general consular assistance to U.S. 
business and property owners; active diplomacy; access to other 
investment regimes, including those of the WTO; and formal government 
to government understandings if investment problems are pervasive.
    The BITs are an important element of our efforts to protect our 
investors abroad. By obligating our BIT partners to establish 
transparent and non-discriminatory investment laws and regulations, 
BITs help to prevent investment disputes between U.S. investors and 
host governments. By affording investors access to binding, 
international arbitration, BITs also add to an investor's toolkit of 
dispute resolution options.

          THE TREATIES BEFORE THE SENATE SERVE U.S. INTERESTS

    Each one of the ten BITs and the Protocol not only protect U.S. 
investment in the manner I have just described, but can be used to 
serve broader U.S. economic and foreign policy goals. Let me turn to 
the following specific aspects of the BITs before you for your 
consideration.
    As the Administration indicated to you in previous testimony on the 
BIT program in 1993 and 1995, it has continued to negotiate BITs with 
those countries in economic transition. The Senate has already given 
its advice and consent to BITs with 17 such countries. Today we are 
presenting four more--with Azerbaijan, Croatia, Lithuania, and 
Uzbekistan.
    The ratification of the BIT with Croatia comes at a propitious time 
following the recent election of a democratic, market-oriented 
government. The new administration in Croatia is actively engaged in 
promoting reforms to integrate itself into the global economy,. The BIT 
will protect U.S. investors in this time of growing commercial 
opportunities afforded by the demise of the nationalistic Tudjman 
government. The BITs with Lithuania and Uzbekistan (when it ultimately 
enters into force) will play a similar role with respect to U.S. 
investment in these economies. We recognize that, as economies-in-
transition develop and refine the reforms needed to become market 
economies, problems will arise and setbacks will occur. The BITs, 
however, obligate these countries to afford those protections I 
described earlier, which the Administration believes are essential 
components of a sound investment regime.
    Nevertheless, the BIT with Uzbekistan raises some particular 
concerns. It was signed on December 16, 1994. Uzbekistan ratified the 
treaty soon after its signature. The Department transmitted it to the 
Senate for its advice and consent on February 28, 1996, after the 
Senate last took action on a group of BITs in 1995.
    Unfortunately, Uzbekistan's investment climate has deteriorated 
since the BIT was concluded. In 1996, the government issued a series of 
decrees restricting access to foreign currency in direct violation of 
BIT provisions, assuring free convertibility and transfer of funds 
related to an investment. Today, Uzbekistan's currency remains 
inconvertible, and foreign investors cite capital controls as the 
single biggest obstacle to investment in Uzbekistan.
    In light of this situation, should the Senate provide its advice 
and consent, the Administration intends to withhold the exchange of 
instruments of ratification as leverage to encourage change in Uzbek 
policy. Senate advice and consent now would enable the U.S. to bring 
the treaty quickly into force once Uzbekistan demonstrates that it is 
able and willing to comply with the terms of the treaty. Given that 
U.S. companies already have substantial investment in the country, we 
want to be in a position to afford them the protections of the BIT as 
soon as conditions warrant.
    The Administration is pleased to highlight the BIT with Mozambique, 
the first BIT concluded with an African country in about 10 years. 
Mozambique has proven itself to be a serious reformer, despite 
formidable obstacles. This BIT will give a boost to the 
Administration's drive to augment U.S. exports to Africa and provide 
reassurance to a growing number of potential U.S. investors. Growing 
levels of investment will in turn reinforce the benefits of peace, 
democracy, and economic growth in Mozambique and the rest of sub-
Saharan Africa.
    We anticipate similar, benefits in the Middle East, as we are 
presenting for your consideration BITs with Jordan and Bahrain. In 
addition to providing reassurance to investors and promoting economic 
development, we hope the BITs demonstrate for others in the region the 
economic benefits of peace.
    Finally, in our own hemisphere, we are presenting BITs with 
Bolivia, El Salvador, and Honduras, as well as a Protocol to the Panama 
BIT. The purpose of the Protocol is to correct a technical problem that 
has arisen in the Panama BIT with respect to investor-state dispute 
resolution. The Protocol takes into account the fact that, since the 
Panama BIT's entry into force, Panama has become a party to the 
International Center for Settlement of Investment Disputes (ICSID) 
dispute settlement convention. As amended by the Protocol, the BIT 
would assure U.S. investors in Panama access to an available option for 
investor-state arbitration. Indeed it would enable U.S. investors to 
utilize and select among the same arbitration options now available 
under the current U.S. model BIT.
    The President had submitted the Nicaragua BIT for advice and 
consent in the belief that it serves the interest of protecting present 
and future U.S. investors. We understand that the Committee has 
continuing concerns with Sandinista-era expropriations of U.S. citizens 
property. However, the Administration continues to believe that 
ratification would serve U.S. interests and hopes that our continuing 
efforts to promote further progress on claims resolutions will 
encourage the Committee to take action in the future.
    Overall, the BIT program is making substantial progress toward 
reaching the Administration's goal for increased investment protection 
in the Western Hemisphere. Approving the BITs with Bolivia, El Salvador 
and Honduras would go a long way to help prevent future inequitable 
treatment of U.S. investors in a region of the world with substantial 
U.S. investment.

                               CONCLUSION

    In conclusion, the BIT program is a key element of U.S outward 
investment policy, and its core principles underlie U.S. negotiating 
objectives in our bilateral, regional and multilateral investment 
discussions worldwide. U.S. BITs are high standards agreements that 
cover a broader range of topics than other countries have included. In 
areas such as freedom from discriminatory treatment in establishing an 
investment and freedom from performance requirements, the standards of 
U.S. BITs exceed those of most other industrialized nations.

                            MADRID PROTOCOL

    Let me turn now to the Administration's views on the accession of 
the United States to the Protocol Relating to the Madrid Agreement 
Concerning the International Registration of Marks (the ``Madrid 
Protocol'').
    The United States has declined to participate in the international 
registration system of the Madrid Agreement due to several problematic 
provisions. The Protocol, which entered into force December 1, 1995, 
creates a new international registration system that is parallel to, 
but independent of, the Madrid Agreement. To attract a broader 
membership, the Protocol addresses the problems that exist with the 
Madrid Agreement.
    One major obstacle to obtaining protection internationally for U.S. 
trademarks has been the difficulty and cost of obtaining and 
maintaining a registration in each and every country. As a result, many 
U.S. businesses are forced to concentrate their efforts on protecting 
their trademarks in their major markets abroad and hope for the best in 
their other existing and prospective non-domestic markets. This hope 
turns to despair when unscrupulous pirates register in their countries 
the marks of these U.S. businesses, which effectively closes that 
country's markets to the products and services of the U.S. business.
    If it were to enter into force in the United States, the Protocol 
would provide a trademark registration filing system that would permit 
a United States trademark owner to file for registration in any number 
of member countries by the filing of a single standardized application, 
in English, with a single set of fees, in the U.S. Patent and Trademark 
Office (USPTO) Registration could be obtained without retaining a local 
agent and without filing a separate application in each country.
    Equally important, under the Protocol, renewal and assignment of a 
trademark registration in each country could be made by the filing of a 
single request with a single set of fees. Thus, those businesses that 
are now limited in their ability to obtain broad international 
protection for their trademarks would have easier and more cost-
effective access to that protection through the Protocol's trademark 
registration filing system.
    From the perspective of the owners of trademark rights in the 
United States and of the USPTO, the Protocol would have no effect on 
the integrity of the trademark registration system in the United 
States. While the Protocol would provide an additional basis for a 
foreign national to register a trademark in the United States, such a 
request would be subject to the same substantive requirements as exist 
in the law today for domestic and foreign applicants. Once an 
international registration is extended to the United States, the 
foreign holder of the international registration would have the same 
rights, remedies and obligations as a U.S. registrant. Trademark owners 
with national registrations will be able to merge those registrations 
into the international registration for ease of maintenance worldwide 
without losing any rights that accrued to the earlier national 
registration.
    With respect to foreign holders of international registrations 
seeking extension of protection in the U.S., in addition to 
incorporating the requirements of the Protocol, S. 671, the legislation 
that is now being considered by the Senate, will establish a system 
that provides, within the parameters of the Protocol, that U.S. 
trademark law will be compatible with the Protocol's international 
registration filing system. It will accomplish this while maintaining 
the viability of certain basic principles in our law. These provisions 
primarily accommodate our use requirements and our extensive 
preregistration examination.
    This legislation also provides that an extension of protection of 
an international registration to the United States shall have the same 
effect and validity as a registration on the principal register, 
entitling the holder to the same rights and remedies under the 
trademark law.
    Substantive trademark law issues are not addressed in the Protocol, 
since the Protocol is primarily a filing system. The Protocol specifies 
that the member countries may apply their national law to determine the 
acceptability of an international registration in that country. The 
proposed legislation to implement the Protocol incorporates all of the 
requirements for examination and opposition existing in the trademark 
law and applies them to requests for extension of protection to the 
United States. In practice, the law will require the USPTO to apply the 
same standards in evaluating the acceptability of a mark for protection 
in the U.S. under both the domestic application process and the 
Protocol process.
    Since legislation will be necessary in the United States to 
implement the Protocol, S. 671 and its counterpart H.R. 769 provide, in 
Section 3, that ``This Act and the amendments made by this Act shall 
take effect on the date on which the Madrid Protocol enters into force 
with respect to the United States.''
    Therefore, the President would not deposit the instrument of 
accession by the United States to the Protocol until the Senate has 
given advice and consent to the accession, Congress has enacted all 
legislation necessary to implement the Protocol domestically and the 
U.S. Patent and Trademark Office has had sufficient time to make the 
operational adjustments necessary to receive and process applications 
under the Madrid Protocol.
    The United States has not joined the Madrid Protocol to date 
primarily because of concerns surrounding the fact that the Protocol 
provides that, in addition to states, intergovernmental organizations 
(IGOs) with regional offices that register marks may become Party. 
These IGOs will have one vote in the Assembly, in addition to the 
separate votes of the IGO's member states that are Parties. The purpose 
of the provisions on IGOs was to establish a link between the Madrid 
system and the future regional trademark system of the European 
Community (EC). The EC's regional trademark system will coexist along 
with the national trademark systems within EC Member States.
    Although we generally support efforts of the EC to become a party 
to treaties in which it has exclusive or shared competence in the 
subject matter, we usually insist on a number of safeguards that are 
absent in the Protocol. These include provisions to require a 
declaration by an IGO of its relevant competence and to prevent 
concurrent voting and double counting by an IGO and its Member States.
    Since 1997 an interagency group has worked with officials from the 
European Commission's directorates for external relations and the 
internal market to address U.S. concerns over EC voting in the 
Protocol. Both sides agreed to an informal approach. Although we did 
not achieve a formal modification of the Protocol to do away with its 
voting provisions, we believe that those voting provisions will be used 
rarely, if ever. Consensus decision making is expected to be the norm 
under the Madrid Protocol as it long has been under the original Madrid 
Agreement and in the World Intellectual Property Organization (WIPO) 
itself. In fact, we understand that members have only needed to resort 
to voting twice in the more than 100-year history of the Madrid 
Agreement.
    On January 24, 2000, the European Union's Council of Ministers 
approved a Statement of Intent to address U.S. objections to the voting 
provisions. The statement indicated the commitment of the EC and it 
Member States to a consensus-based decision process. If a consensus 
position among the United States, the EC and its Member States could 
not be achieved, the statement indicated that the EC and its Member 
States would use their voting rights to ensure that the number of votes 
cast by the EC and its Member States does not exceed the number of the 
EC's Member States. That statement was subsequently communicated to the 
Under Secretary of State for Economic, Business and Agricultural 
Affairs in a letter from the Council of the European Union. Although 
this action by the Council cannot legally bind the EC from casting an 
additional vote if it were to so choose, we believe the political 
commitment that it reflects, is very significant. The President 
attached a copy of the Statement of Intent to the report to the Senate.
    The Statement of Intent not only addressees U.S. concerns about an 
additional EC vote but also comes at a time when other factors have 
emerged favoring U.S. accession. In March 2000, the Government of Japan 
acceded to the Protocol. Japan's entry, in the absence of U.S. 
membership, is an adverse development for U.S. companies and heightens 
the desirability of U.S. accession as soon as feasible. Japan's 
pendency from application filing to the registration of a trademark is 
several years. However, as a party to the Madrid Protocol, it will have 
to process, and register, the Protocol requests for extension of 
protection within the strict Madrid Protocol time limits. As a result, 
those filers who cannot use the Madrid Protocol will be in the 
unfortunate position of waiting years for a registration, while Madrid 
Protocol applicants receive consideration and registration within the 
18-month time period, (barring the filing of an opposition). Thus a 
U.S. trademark owner seeking to protect its mark in Japan will be 
seriously disadvantaged unless the U.S. becomes a party to the Madrid 
Protocol. This same situation may occur in other countries. In light of 
these developments, we understand that affected U.S. companies favor 
the U.S. becoming a party.
    We have concluded that, with adoption of the Statement of Intent, 
the U.S. has achieved an acceptable solution with respect to the one 
IGO that we expect may someday be in a position to join the Protocol. 
Given (1) the passage of time, (2) the strong position we have staked 
out, in the past decade in opposition to extra votes for IGOs beyond 
the votes of their member states, and (3) the other avenues available 
to us in negotiations to prevent recurrence of the other identified 
concerns regarding an IGO's competencies in future agreements, we 
believe we should proceed with U.S. accession. This will facilitate 
efficient and economical trademark registration for U.S. companies.
    In closing, let me thank you, Mr. Chairman, for your continued 
interest in the BIT program and the Madrid Protocol. I am happy to 
answer any questions.

    Senator Hagel. Secretary Bay, thank you.
    Now the elusive Uzbekistan question. I have been waiting 
and waiting to ask this. As you note in your testimony, because 
of concerns about the policy environment in Uzbekistan, in the 
event that the Senate provides its advice and consent to 
ratification, the President would withhold the exchange of 
instruments of ratification until further improvements are made 
by the Government of Uzbekistan.
    And again, I remind you, this is Chairman Helms' question. 
I share your concerns and am also concerned about the 
investment climate in Uzbekistan. If the situation improves and 
the administration decides to consider bringing the BIT into 
force, we would like you to give us an update on your thinking 
before you make your decision. Will you do this for us?
    Ms. Bay. Yes, we would certainly be quite willing to update 
you on developments as they occur. As I said in my testimony, 
we feel very strongly that by proceeding in the way that we 
proposed, we will have some additional leverage to try to 
really push the Uzbekis to make changes in their domestic 
policies.
    Senator Hagel. I suspect we will be living with this for a 
while to come, and it is going to be important that we have a 
clear understanding of how we would proceed in working this 
issue, so thank you. If there is additional information the 
chairman requests, obviously we will solicit that from you.
    Ms. Bay. Yes, we will certainly keep you updated.
    Senator Hagel. Thank you.
    On some of the general questions concerning the different 
BITs that we're looking at today, what impact will BIT 
arbitration clauses have on judgments rendered in this country 
against U.S. subsidiaries of foreign companies, or on the 
enactment of state and local governments?
    Ms. Bay. I assume that you are referring to provisions 
under NAFTA.
    Senator Hagel. I am sorry, under what?
    Ms. Bay. Under NAFTA.
    Senator Hagel. Yes.
    Ms. Bay. We appreciate the concerns that the cases have had 
that have been raised already. But we also believe that the 
NAFTA commitments serve as an important investment policy 
because they provide a secure, transparent and fair regulatory 
environment for foreign investors. And we are committed to 
insuring that they must not be interpreted or applied in a way 
that undermines the NAFTA party's well-recognized right to 
regulate, to protect the environment, health and safety.
    We are also committed to insuring that theses policy 
objectives are mutually supportive. Accordingly, we established 
an interagency task force to develop a U.S. Government position 
for trilateral discussions that are considering whether 
clarification is warranted for the expropriation provision of 
the NAFTA investment chapter and if so, what kind of 
clarification would be appropriate.
    While we are continuing to formulate our U.S. key 
provisions, one conclusion of the task force is to reaffirm 
that NAFTA was not meant to extend the definition of 
expropriation and create new previously unknown bases for 
finding an expropriation has occurred. The NAFTA cases are 
raising understandable concerns; we must bear in mind that only 
two cases have actually gone to an arbitral tribunal and it is 
too early to judge the potential impact of that decision.
    We must also bear in mind that United States investors have 
been the primary beneficiaries of the mutual benefits contained 
in our BITs.
    Senator Hagel. Which agencies of the Federal Government are 
represented on the interagency task force?
    Ms. Bay. State Department, USTR, Treasury Department, 
Justice, EPA, Labor, and Commerce.
    Senator Hagel. And Commerce.
    It is the committee's understanding that in Croatia and 
other countries with pending BITs, there have been problems 
resolving property confiscation claims, and these claims that 
we're concerned about, involve our citizens, U.S. citizens. 
Will U.S. citizens have adequate protection for their foreign 
investments under the terms of the BITs under consideration? 
That's one part of the question. And the other is, what 
additional guarantees will be in place?
    Ms. Bay. As you know, the issue with Croatia dates actually 
from property claims that come from World War II, and we have 
been pressing the Croatian Government to resolve these 
restitution claims for a long time. In meetings of May 2000 
with officials from the Ministry of Foreign Affairs and the 
Ministry of Justice, the Department impressed upon the 
Croatians the U.S. Government's continued interest in resolving 
property claims of American citizens for property in Croatia. 
We further expressed the hope that the Croatian Congress would 
effect the changes to their law as quickly as possible.
    The Croatians responded favorably, indicating that an 
interagency committee is studying the issue and is preparing 
the necessary changes to the law. We also reminded the Croats 
that the Italians and Austrians are the biggest group of 
claimants who will benefit from the revised law.
    This issue will become highlighted as Croatia seeks to 
accede to the EU. Both Italy and Austria will have enormous 
influence regarding Croatia's accession.
    American property claims will likely be addressed at the 
same time Croatia takes up these issues with the EU. The issue 
of property restitution has been raised by the Department of 
State on a number of occasions, including most recently by the 
Secretary of State during the visit of Prime Minister Racan and 
President Mesic.
    We are aware of 31 American property restitution cases on 
file with the embassy in Sagrev, most of which deal with real 
estate and most of which have been pending since 1997. The 
embassy has notified these claimants of the constitutional 
court decision and its implications. The issue of property 
restitution has been raised again on a number of occasions, 
including by the Secretary of State, and we will continue to 
press the Croatian Government to resolve these issues.
    Senator Hagel. Do you believe these new safeguards are 
adequate to protect our U.S. citizen property rights?
    Ms. Bay. We believe so. The Croats actually had a timetable 
for trying to pass their new legislation this fall, and we are 
hopeful that it will be passed by the end of the year.
    Senator Hagel. Is any part of this contingent on passing 
that legislation in Croatia?
    Ms. Bay. Part of our BIT?
    Senator Hagel. Yes.
    Ms. Bay. I would have to give you a written response to 
that. I believe that it is a standard BIT so it probably 
doesn't have specific provisions about that.
    Senator Hagel. Well, I am a bit concerned with your 
statement because you kind of left it hanging that we're 
hopeful this will happen. And I don't know enough about the 
specifics of whether this would impact the guarantees and 
protection that are pretty important for our citizens' property 
rights there. So if you could get back to me if there is a 
contingency, or what exactly is that legislative issue that you 
are hopeful the Croatian legislature will pass.
    Ms. Bay. OK, I can certainly do that. We really, really 
believe that the Croatians are quite serious about passing 
legislation that will resolve these claims, but until it is 
passed, it isn't passed, and I understand your concern.
    [The following response was subsequently received:]

                  Response to Senator Hagel's Question

    The BIT will have no direct effect on the claims of U.S. citizens 
arising out of WWII property nationalizations, since these are actions 
that have already occurred and the BIT will not cover claims based on 
acts that took place prior to its entry into force. The BIT will, 
however, set the proper policy framework for GOC in dealing with these 
claims, as the BIT commits the government to address takings within 
customary international law standards, that is for a public purpose, in 
a non-discriminatory manner, under due process of law, and accompanied 
by payment of prompt, adequate and effective compensation.
    If a claimant was a U.S. citizen at the time of the 
nationalization, and the nationalization occurred before November 1965, 
his or her claim was covered through separate claims settlement 
agreements between the United States and Yugoslavia from 1948 and 1965. 
If there are claimants who were U.S. citizens at the time of the 
nationalization and the nationalization took place after November 1965, 
their claims would not have been covered by the agreements. Therefore, 
these claimants should be able to pursue their claims under the ``Law 
on Compensation for Property Taken During Yugoslav Communist Rule'' 
once it is properly amended. If a claimant was not a U.S. citizen at 
the time of the taking and has since become a U.S. citizen, he or she 
should be covered by the ``Law on Compensation for Property Taken 
During Yugoslav Communist Rule'' once it is properly amended.
    The law was passed by the Croatian Sabor (parliament) in October 
1996 and entered into force in January 1997. Provisions in Article 9 
and Article 11 of that law have been the basis for the USG claim of 
discrimination by the GOC against U.S. citizens. On April 21, 1999, the 
Croatian Constitutional Court annulled six specific provision of the 
``Law on Compensation for Property Taken During Yugoslav Communist 
Rule.'' Among these were provisions under which such compensation was 
reserved exclusively to Croatian Citizens. According to the April 21, 
1999 ruling, the provisions cited below become null and void only after 
the Sabor passes a revised version of the same law to conform to the 
Constitutional Court's decision. The Sabor has been granted a 9 month 
extension of the deadline for changing the law until the end of 2000. 
Although the discriminatory clauses about which the USG has repeatedly 
protested have been declared unconstitutional and struck down by the 
highest court in Croatia, U.S. and other non-Croatian citizens who seek 
restitution or compensation for property seized during Yugoslav 
Communist rule must wait until new, remedying legislation is enacted.
    In meetings in May 2000 with officials from the Ministry of Foreign 
Affairs and Minister of Justice, the Croatians indicated to USG 
officials that an interagency committee is studying the issue and is 
preparing the necessary changes to the law. The GOC hopes to move 
quickly to approve it before the end of 2000. The issue of property 
restitution has been raised by the Department of State on a number of 
occasions including most recently by the Secretary of State during the 
visit of Prime Minister Racan and President Mesic. State will continue 
to monitor GOC progress on these claims and continue to press the 
importance of this issue with high level GOC officials. This issue will 
become highlighted as Croatia seeks to accede to the EU, as the 
Italians and Austrians are the biggest group of claimants who will 
benefit from the revised law.

    Senator Hagel. Thank you.
    Which of the BIT countries we're talking about today 
represents the most U.S. investment to date?
    Ms. Bay. Altogether, it is a rather large amount of money. 
As you know, many of these are small countries. I can give you 
some----
    Senator Hagel. Give me what you have and then if you could 
break that down, and I don't expect it right now, but give me 
what you have there, and then if you could get back to me on 
the other numbers.
    Ms. Bay. Sure. We would be pleased to provide that for you.
    In the case of Azerbaijan, on a historic cost basis, the 
stock of investment at the end of fiscal year 1999 was $1.6 
billion.
    In the case of Bahrain, I don't have the numbers totaled 
up, but there is a $33 million tissue factory, a large Coca 
Cola investment, a large U.S. pipeline investment. DHL has a 
$12 million dollar regional distribution center. And there are 
a couple of other large U.S. investments.
    In the case of Bolivia, the major sectors where there are 
large amounts of foreign investment are natural gas, mining and 
agriculture, and there is about $204 million stock of 
investment as of the end of 1999.
    In the case of Croatia, Coca Cola is the largest investor, 
with about $12 million, and there's an energy company with 
another $10 million investment.
    In the case of El Salvador, there is a large power 
generating plant that's estimated at over $140 million and 
again, large investments from a number of U.S. investors, which 
include Kimberly Clark, Texaco, Duke, Sarah Lee, Xerox, AIG, 
and several electrical distribution companies.
    In the case of Honduras, there are numerous U.S. companies 
in the apparel industry, a number of service sector companies, 
financial services companies, and also several industrial and 
agricultural companies. We think the stock is about $56 million 
at the end of 1999.
    In the case of Jordan, there are also, again, several 
companies with interest there. The stock of investment is about 
$30 million.
    And in the case of Lithuania, the stock is about $62 
million.
    In the case of Mozambique, where there are about 50 U.S. 
firms, the stock is smaller, it's about a million dollars.
    In the case of Panama, the stock is about $33 billion, a 
rather large U.S. investment in that country.
    And in the case of Uzbekistan, I think as I said earlier, 
there is about $500 million that has gone into Uzbekistan from 
the time of independence in 1991 up to 1999.
    I will provide you a concise list.
    [The following response was subsequently received:]

                  Response to Senator Hagel's Question

         1999--U.S. Direct Investment in BIT Hearing Countries

                     [In millions of U.S. dollars]


------------------------------------------------------------------------
                                                           U.S. Direct
                                                           Investment
                                                          Position on a
                                                          Historic Cost
                                                            Basis \1\
------------------------------------------------------------------------
Azerbaijan............................................            $1,159
Bahrain...............................................           \2\ -92
Bolivia...............................................               204
Croatia...............................................           \3\ 817
El Salvador...........................................               722
Honduras..............................................                56
Jordan................................................                30
Lithuania.............................................                62
Mozambique............................................                 1
Panama (protocol).....................................            33,429
Uzbekistan............................................           \4\ 500
                                                       -----------------
    Grand Total.......................................            36,888
------------------------------------------------------------------------
Source: Bureau of Economic Analysis, USDOC, unless noted otherwise.

\1\ The direct investment position is measured as the year-end value of
  U.S. parents' equity in (including retained earnings), and net
  outstanding loans to, their foreign affiliates. Historical cost
  valuation measures direct investment at its book value, which in most
  cases is the initial acquisition price.
\2\ According to U.S. embassy reports, approximately 105 U.S. companies
  were operating, in one form or another, in Bahrain as of July 2000.
  Many of the U.S. firms are in the services sector and thus do not have
  a large capital investment in Bahrain despite a significant local
  presence. Largest investments include $33 million Kimberly Clark
  tissue plant and $12 million DHL regional distribution center.
\3\ Croatia was not included in the DOC/BEA country-by-country data in
  1999. In 1998 U.S. FDI position was $817 million.
\4\ Data suppressed to avoid disclosure of data of individual companies.
  In 1998 U.S. embassy reports that U.S. FDI totaled $500 million since
  Uzbekistan's independence.


    Senator Hagel. Thank you. Did you work closely with the 
U.S. private sector as you negotiated these agreements?
    Ms. Bay. Over the course of the years, we have had a quite 
extensive dialog with U.S. private sectors. These BITs, as I 
pointed out in my oral testimony and also provided in more 
detail in my written testimony, are mostly following our 
prototype treaties, and so there aren't variations really 
between them. They are standard in form.
    Senator Hagel. If I have additional questions, we discussed 
two or three on the BITs, I will provide those in writing. Let 
me turn to the Madrid Protocol now.
    You have touched upon this in your testimony. Is there any 
additional legislation required to bring the United States into 
compliance with the Madrid Protocol?
    Ms. Bay. No. The implementing legislation.
    Senator Hagel. Yes, of course, but nothing else.
    Ms. Bay. No.
    Senator Hagel. Would you explain the benefits of the Madrid 
Protocol in improving our ability to protect the intellectual 
property rights of Americans?
    Ms. Bay. There isn't exactly a direct benefit. The primary 
benefit is that the Madrid Protocol will simplify the process 
for obtaining and maintaining protection for the trademark of a 
U.S. business in foreign countries. The trademark owner will be 
able to file a single application in English, paid in U.S. 
dollars, and potentially obtain protection in 48 countries that 
are Madrid Protocol members. Without U.S. membership in the 
Madrid Protocol, the trademark owner is forced to file a 
separate application with the trademark office for each 
country. Such an application must be in the local language, 
paid for in local currency, and usually prosecuted by the local 
counsel. So we see that this is really going to be a terrific 
benefit to U.S. filers for trademarks, because they will have a 
very simple process and manage to get in all 48 markets with 
one application.
    Senator Hagel. And this would benefit both small companies 
as well as large ones.
    Ms. Bay. Absolutely.
    Senator Hagel. Does the World Intellectual Property 
Organization [WIPO], have any discretion to decline 
registration of marks for any reason?
    Ms. Bay. I would probably have to give you a written 
response to that. They do have certain procedures that need to 
be followed, but I'm not an expert on the technical merits that 
have to be filed. It's only on procedures, it would not be a 
substantive veto.
    Senator Hagel. Partly why I asked that question is to 
understand the procedures for getting to a judgment by 
bureaucrats as they interpret some of these issues, and 
obviously--and I don't use that in a pejorative way, 
bureaucrats as opposed to someone in my party, but--that's a 
joke, of course.
    If you watch television, you know what I am speaking of. We 
might have done rats a terrible disservice by linking them to 
politicians, so I don't know.
    But that is a real life issue and we do the best we can in 
forming and framing and going through the procedural process 
here, but when we get to the true life dynamic of who makes the 
calls and the judgments and so on, that becomes a little more 
of a question, and I know there is no guarantee to that. But 
anything you could say to help enlighten the committee on that 
part of it would be helpful.
    Ms. Bay. OK. Well, we will agree to provide you with 
information regarding the procedures, but again, I would 
reiterate, these are not substantive procedures, they are 
definitely technical procedures that are required in order to 
place that application.
    Senator Hagel. Let me ask the counsel if the committee has 
any additional questions--we may, again, have questions that we 
will submit in writing. Any additional questions? On the 
Democratic side?
    Senator Helms will have a question or two, for the record. 
He has some prerogatives around here, as you know.
    Now, my understanding is that our next Foreign Relations 
Committee Business Meeting is September 27, and we will make 
every effort to get all this bundled up for that meeting on the 
27th. Obviously I can't guarantee that, but that is what we 
will shoot for. So of course, any questions that we shoot over 
to you, if you would move those around and get them back to us 
in a timely fashion, that will help as well.
    We have one other piece of business here. I'm reminded to 
leave the record officially open until Friday, close of 
business. So you know how it works; if my colleagues or anyone 
has additional questions, or if you have additional comments, 
the record will stay open until close of business on Friday.
    We also have another piece of business, which I don't think 
involves you directly, but you are certainly welcome to stay, 
and that is a confirmation hearing for a distinguished public 
servant, and we always welcome those hearings. But officially, 
thank you, I would say to both of you. Ambassador West, good to 
see you again. Secretary Bay, good luck. Give our regards to 
all our friends over there, and this part of the hearing is 
complete.
    (The hearing concluded at 3:15 p.m.)
                              ----------                              


                  Additional Questions for the Record


 Responses of Janice F. Bay to Additional Question from Senator Jesse 
                                 Helms

                      bits and the madrid protocol
    Question 1. Will enterprises from or controlled by North Korea, 
Cuba, Communist China, or other countries hostile to the United States 
have the same right of access to the Madrid Protocol regime as United 
States enterprises?

    Answer. We very much appreciate this question because it provides 
an opportunity to address what appears to be a fundamental 
misconception about the purpose and impact of the Madrid Protocol. The 
Madrid Protocol is a filing mechanism that allows a trademark owner, 
from a state that is a member of the Protocol, to file its application 
through the International Bureau of the World Intellectual Property 
Organization (WIPO) which, if the United States were to become a party, 
would then forward it to the United States Patent and Trademark Office 
(USPTO) if the applicant designates the United States.
    The Protocol makes no changes in substantive U.S. trademark law. 
Essentially, the Madrid Protocol makes it more efficient for trademark 
filers to do what they are already entitled to do--file trademark 
applications. Thus, even if the United States joins the Madrid 
Protocol, only those who meet the legal requirements for filing a 
trademark application at the USPTO will be able to file through the 
Protocol. The Madrid Protocol will not add any substantive bases for 
filing in the United States and will therefore not expand the universe 
of eligible filers.
    As far as the United States is concerned, because the Madrid 
Protocol is just a filing mechanism, it offers no legal benefit to 
applicants from North Korea (Democratic People's Republic of Korea), 
Cuba, and China (People's Republic of China) that they do not already 
enjoy. All of these countries are parties to the Paris Convention for 
the Protection of Intellectual Property, as is the United States. 
Therefore, citizens and enterprises of these countries already are 
entitled to file trademark applications in the United States. The 
Madrid Protocol would not change that ability.
    Most important, however, is the fact that the Madrid Protocol has 
no effect on substantive U.S. trademark law. In other words, applicants 
from North Korea, Cuba, and China would need to meet the same criteria 
to register their trademarks in the United States that they now must 
meet, and this would be true regardless of whether they were to file 
under the Madrid Protocol or were to use the current filing system.

    Question 2. Are North Korea, Cuba, Communist China, Iran or Iraq 
now parties to the main Madrid Agreement? What about the Protocol?

    Answer. As of August 8, 2000, North Korea (Democratic People's 
Republic of Korea), Cuba, and China (People's Republic of China) were 
each party to both the Madrid Agreement and the Madrid Protocol.
    Iran and Iraq are not currently parties to either the Madrid 
Agreement or the Madrid Protocol.
    China, Cuba, Iran, Iraq, and North Korea are all parties to the 
Paris Convention for the Protection of Intellectual Property, as is the 
United States. Therefore, nationals from each of these countries are 
currently entitled to file trademark applications in the United States.
    The right to file an application is not the same thing as the right 
to use a trademark. There should be no misimpression that, merely 
because a national from one of these countries of concern files a 
trademark application, the applicant somehow will automatically become 
entitled to use the trademark in the United States. Further, because 
the Madrid Protocol is just a filing mechanism, it offers no 
substantive benefits to trademark owners who choose to file through it.
    We note that, with the exception of China, the number of trademark 
applications filed by nationals of China, Cuba, Iran, Iraq, and North 
Korea is best characterized as ``insignificant.''

          China--301 trademark applications filed in FY99.
          Cuba--No trademark applications filed in FY99.
          Iran--No trademark applications filed in FY99.
          Iraq--No statistics (no applications filed in at least the 
        past 5 years).
          North Korea--5 trademark applications filed in FY99.

    Question 3. What if they, their agents, or their licensees seek to 
register trademarks under the Madrid Protocol which are the illegally--
perhaps even violently--confiscated intellectual property of a U.S. 
person or enterprise? May such trademarks be freely registered via the 
Madrid Protocol by these outlaw applicants?

    Answer. The Madrid Protocol is simply a vehicle for filing a 
trademark application. It does not provide a ``back door'' to legal 
protection of trademarks which otherwise would not be available to 
trademark applicants--no matter what their nationality.
    Trademark applicants located in countries that are party to the 
Madrid Protocol may use the Protocol to file their trademark 
applications (called ``requests for an extension of protection'' in the 
language of the Madrid Protocol). The Madrid Protocol makes it easier 
for all applicants, including U.S. citizens wishing to file abroad, to 
get their trademark applications in process.
    The Madrid Protocol does not override substantive national law. It 
should be noted, for example, that neither H.R. 769 or S. 671 (the 
House and Senate versions, respectively, of legislation necessary to 
implement the Madrid Protocol) requires an amendment to 15 U.S.C. 
Sec. 1051(2), the section of the Trademark Act which identifies the 
substantive trademark refusals routinely made by the United States 
Patent and Trademark Office. Applications filed by foreign nationals 
under the Madrid Protocol would be subject to precisely the same 
examination as applications filed by U.S. citizens.
    Even after examination by the United States Patent and Trademark 
Office (USPTO), any party with an interest in the trademark may file an 
opposition proceeding questioning whether the trademark is entitled to 
be granted an extension of protection (registration) under U.S. law and 
may introduce evidence in the proceeding regarding ownership of the 
trademark. An opposition proceeding occurs only if the USPTO has found 
no statutory or regulatory basis for refusal. In fact, substantive 
refusals are not uncommon. Finally, even if a trademark registration 
issues, any party with an interest in the trademark may file a request 
for cancellation of the mark.

    Question 4. Will the true U.S. owners of such marks be hampered by 
the Madrid Protocol, either in their own country or elsewhere, in their 
efforts to recover their intellectual property or defend their rights? 
Will they be helped? Please explain your answers.

    Answer:

Will U.S. Trademark Owners be hampered by the Madrid Protocol?

    The U.S. owners of trademarks would in no way be hampered by the 
Madrid Protocol, in the United States or elsewhere, in their efforts to 
recover their intellectual property or defend their rights. This is 
because the Madrid Protocol does not establish rights or ownership in 
any trademark. The Protocol is simply a mechanism or means for filing 
applications for protection for trademarks in countries that are 
members of the Madrid Protocol.
    Requests for extensions of protection (applications) and grants of 
extension of protection (registrations) are all subject to the laws of 
the member countries. The fact that a trademark is the subject of an 
International Registration under the Madrid Protocol does not change or 
affect the rights that exist under the laws of the member countries.

Will the Madrid Protocol Help U.S. Trademark Owners?

    The Madrid Protocol can be of tremendous assistance to the true 
owners of trademarks. In some countries (typically, civil-law 
countries), the true trademark owner can't even get into court to 
pursue an infringer unless and until the trademark owner obtains a 
trademark registration. (Neither a trademark application nor a 
registration is necessary to establish or assert trademark rights in 
the United States.) Unfortunately, the registration process in many 
countries is lengthy. Years can be lost before the registration issues 
to the true owner and that owner is finally able to pursue an infringer 
in court.
    Under the Madrid Protocol, members will have to notify applicants 
of all refusals within 18 months. As a practical matter, this will not 
affect processing of trademark applications in the United States, where 
refusals are currently issued in an average of 5.7 months from the date 
of filing. However, in countries where the domestic processing queue is 
long, the 18-month time limit for Madrid Protocol processing would be 
of significant benefit to U.S. trademark owners who otherwise would 
have to wait for years before their applications would even be 
reviewed.
    In addition, a U.S. applicant under the Madrid Protocol would be in 
the same position to defend its rights under the laws of the member 
country as is a domestic applicant in the other country. Members of the 
Madrid Protocol must treat these trademark applications in the same 
manner as applications filed through domestic processes, and accord all 
rights to an applicant under the Madrid Protocol as would apply to a 
domestic applicant. Thus, the Madrid Protocol will facilitate access to 
the intellectual property protection regimes in member countries, 
thereby allowing owners of U.S. trademarks to protect their marks in 
those countries.

    Question 5. During a briefing on the Madrid Protocol on Tuesday 
September 12, 2000, Administration briefers reportedly told the 
Committee staff that the Madrid Protocol will assist in the struggle to 
prevent piracy of intellectual property by People's Republic of China. 
However, during her testimony before the Committee on September 13, 
2000, Deputy Assistant Secretary Janice Bay directly contradicted this 
statement, testifying instead that there is no enforcement aspect 
associated with the Madrid Protocol. Please explain this contradiction.

    Answer. Deputy Assistant Secretary Janice Bay correctly stated that 
there is no enforcement aspect associated with the Madrid Protocol.
    When the Administration was briefing Committee staff on September 
12, a similar question was asked. In answering the question, it was 
stated that the Madrid Protocol per se would not provide an enforcement 
mechanism for U.S. trademark owners who are attempting to protect their 
trademarks in China (People's Republic of China) or attempting to stop 
use of their trademark on counterfeit goods. This is absolutely true. 
The Madrid Protocol, as has been noted, is not a substantive law 
treaty. It in no way affects the substantive law applied to 
determinations of infringement or registrability. However, in many 
countries, the first step required in any enforcement action is proof 
by the complainant that it owns a valid and existing trademark 
registration, for the mark it seeks to protect, in that national 
system. While this is not a prerequisite in the United States, in 
countries where it is, the enforcement action cannot even commence 
without such a registration. The Madrid Protocol would make it easier, 
cheaper and faster for the U.S. trademark owner to obtain the necessary 
national registration in order to protect its valuable mark.
    The fact that the Madrid Protocol requires that the request for 
extension of protection be treated the same as a regularly filed 
national application means that domestic applicants cannot be given 
preferential treatment. Any deviation from a policy of ``first in, 
first out'' with respect to review of applications would raise 
immediate questions.
    In addition, since U.S. applicants will be able to file their 
Madrid Protocol application with the USPTO, in English, the practical 
barriers to application, such as translation issues, are eliminated. To 
the degree that substantive trademark rights in a particular country 
are only created by registration of the trademark, the Madrid Protocol 
will significantly speed the process for obtaining such trademark 
rights.
    During the September 12 testimony, it was suggested that another 
benefit of the Madrid Protocol arises in respect to those countries 
with a reputation for less than rigorous enforcement of, or adherence 
to, intellectual property rights. It creates a community of interest 
with other nations and may eventually reinforce an appreciation of the 
need to provide consistent and strong protection to these important 
property rights. Although this will not happen overnight, or as a 
direct result of being a party to the Madrid Protocol, membership in 
the Madrid Protocol does bring these countries to the table and 
establishes an agenda focused on equal protection and enforcement of 
intellectual property rights.
                                 ______
                                 

Responses of Janice F. Bay to Additional Questions from Senator Joseph 
                             R. Biden, Jr.

                          THE MADRID PROTOCOL
    Question 1. The letter of submittal from the Secretary of State to 
the President makes reference to ``Rules'' (e.g., page IX of the Senate 
Treaty Document) and ``Regulations'' (e.g., page XVI of Senate Treaty 
Document)

          Are these references both to the same document, that is, the 
        ``Common Regulations under the Madrid Agreement Concerning the 
        International Registration of Marks and the Protocol Relating 
        to that Agreement?'' If not, please explain the difference 
        between the Rules and Regulations.

    Answer. As the question suggests, references to the ``Rules'' and 
``Regulations'' are references to portions of the same document, the 
``Common Regulations under the Madrid Agreement Concerning the 
International Registration of Marks and the Protocol Relating to that 
Agreement.'' The ``Common Regulations'' document is divided into nine 
chapters. Each chapter contains ``Rules,'' of which there are forty.

          How are these Regulations agreed to among parties to the 
        Protocol?

    Answer. The Common Regulations under the Madrid Agreement and 
Protocol were adopted by the Assembly of the Madrid Union in January 
1996 and became effective on April 1, 1996. As their title indicates, 
the ``Common Regulations'' govern procedures under both the Agreement 
and the Protocol. Their effective date marked the coming into force of 
the Protocol.
    The Common Regulations resulted from discussions in the framework 
of the Working Group on the Application of the Madrid Protocol, which 
met six times between 1990 and 1994. A number of minor amendments to 
the Regulations were adopted by the Assembly in September 1997 and 
became effective on January 1, 1998.
    A Working Group on the Modification of the Common Regulations Under 
the Madrid Agreement Concerning the International Registration of Marks 
and the Protocol Relating to that Agreement is scheduled to meet from 
October 9-13, 2000, to discuss proposed modifications to the Common 
Regulations. Otherwise, there has been no general review of the 
Regulations since they became effective over four years ago.

          Are there any other ``notifications'' (such as the 
        notification that the United States is planning to make under 
        rule 7(2)) that the United States intends to make at the time 
        of accession?

    Answer. The only ``notifications'' that the United States 
anticipates making at the time of accession are those specified in Rule 
7(2), which, in its entirety, reads as follows: ``[Intention to Use the 
Mark] Where a Contracting Party requires, as a Contracting Party 
designated under the Protocol, a declaration of intention to use the 
mark, it shall notify that requirement to the Director General. Where 
that Contracting Party requires the declaration to be signed by the 
applicant himself and to be made on a separate official form annexed to 
the international application, the notification shall contain a 
statement to that effect and shall specify the exact wording of the 
required declaration. Where the Contracting Party further requires the 
declaration to be in English even if the international application is 
in French, or to be in French even if the international application is 
in English, the notification shall specify the required language.'' Of 
course, these ``notifications'' are distinct from the three 
``declarations'' that the United States intends to make at the time of 
its accession and that were described in the Department of State report 
submitted to the Senate with the Madrid Protocol.

    Question 2. The letter of submittal from the Secretary of State 
makes reference to a ``Committee of Experts.'' (p. X of Senate Treaty 
Document)

          What is this committee? What are its terms of reference?

    Answer. The Committee of Experts refers to the ``Working Group on 
the Application of the Madrid Protocol of 1989'' and was the committee 
that negotiated and discussed the implementing regulations for the 
Madrid Protocol. This Committee has been replaced by the ``Working 
Group on the Modification of the Common Regulations under the Madrid 
Agreement Concerning the International Registration of Marks and the 
Protocol Relating to that Agreement.'' The Working Group on the 
Application of the Madrid Protocol consisted of representatives from 
states that were members of the Madrid Agreement, representatives of 
WIPO member states, the European Union, and non-governmental observers. 
This group was charged with negotiating the common regulations for the 
Madrid Agreement and the Madrid Protocol that were eventually adopted 
by the Assembly of the Madrid Union in January of 1996. The United 
States was represented at all of the meetings of the Working Group on 
the Application of the Madrid Protocol of 1989 and presented its views 
on all issues that would relate to U.S. implementation of the Madrid 
Protocol.

          Will the United States be represented on the Committee if the 
        United States becomes a party to the Protocol?

    Answer. Yes.

    Question 3. Please elaborate on Article 5bis.

          What is meant by ``exempt from any legalization as well as 
        from any certification . . .'' Please explain what the terms 
        ``legalization'' and ``certification'' [mean] as used in the 
        Protocol.

    Answer. Article 5bis prohibits parties to the Madrid Protocol from 
requiring any formal certification or authentication of evidence 
provided to support the legitimacy of a trademark applicant's use of 
armorial bearings, escutcheons, portraits, honorary distinctions, 
titles, trade names, names of persons other than the applicant, or like 
inscriptions.
    In some countries, evidence of this type might otherwise have to be 
notarized, or supported by certificates of authenticity and/or 
validity, issued by a government agency or accepted private authority. 
No change in domestic procedure would be required for the United States 
to comply with Article 5bis.
    Article 5bis makes it much easier for applicants to provide 
relevant, credible evidence without the barrier of unhelpful 
formalities.

    Question 4. Would any amendments to the Protocol adopted pursuant 
to Article 13 be subject to Senate advice and consent?

    Answer. As noted in the July 11, 2000, Department of State report 
submitted with the Madrid Protocol, it is a common practice in 
multilateral intellectual property treaties that include provisions for 
an Assembly to facilitate treaty implementation, to permit certain 
provisions of the treaty to be amended by a super-majority of the 
Assembly, without the need for a revision conference. This is true of 
the Madrid Protocol.
    Under the Madrid Protocol, the requisite super-majority is three-
fourths of the votes cast in the case of an amendment to Article 11, 
12, 13(1) or 13(3); it is four-fifths of the votes cast in the case of 
an amendment to Article 10 or 13(2). As described in Article 13(3) of 
the Protocol, an amendment to Articles 10, 11, 12, or 13 that is 
adopted by the requisite super-majority enters into force for all 
parties one month after written notifications of acceptance, effected 
in accordance with their respective constitutional processes, have been 
received by the Director General of WIPO from three-fourths of those 
States and intergovernmental organizations which, at the time the 
amendment was adopted, were members of the Assembly and had the right 
to vote on the amendment. For the United States, Senate advice and 
consent is a part of our constitutional process with respect to 
amendments to the Madrid Protocol.
    While it is possible that an amendment to Article 10, 11, 12, or 13 
could enter into force for all parties in circumstances in which the 
United States is not one of the parties that has notified the Director 
General of its acceptance of the amendment in accordance with its 
constitutional processes, that situation is unlikely to ocdur given the 
longstanding leadership role of the United States in the field of 
intellectual property. Moreover, it bears noting that there is no 
mechanism within the Madrid Protocol to adopt changes to the Protocol 
that would affect substantive national trademark law.

    Question 5. Does the United States intend to make any declarations 
under Article 14(5)?

    Answer. Article 14(5) of the Madrid Protocol notes that States and 
intergovernmental organizations that are eligible to be parties to the 
Protocol may, upon accession to the Protocol, declare that the 
protection resulting from any international registration effected under 
the Protocol before the date of entry into force of the Protocol with 
respect to it cannot be extended to it. The United States does not 
intend to make such a declaration when it deposits its instrument of 
accession to the Protocol.

    Question 6. Does the United States consider the commitment of the 
European Community and its member states to be binding? If not, why did 
we not seek a binding agreement?

    Answer. The United States does not consider the statement of intent 
communicated in the February 2, 2000, letter of Margarida Figueiredo to 
be a legally binding commitment. Rather, it constitutes a political 
commitment, which the United States regards as a serious undertaking in 
the political (as contrasted to legal) context. A legally binding 
agreement was not practical for various reasons, including the fact 
that neither the European Community nor the United States was a party 
to the Madrid Protocol at the time and the fact that any legal 
agreement to modify the Protocol's voting provisions would have 
required an amendment to the Madrid Protocol itself. Moreover, the 
European Community was not willing to proceed in that manner, which 
would have been very time-consuming.
    Ultimately, after several years of discussion and in the context of 
developments described in detail in the documents submitted with the 
Madrid Protocol, the United States accepted the concept of a unilateral 
statement reflecting the intent of the European Community and its 
Member States. This represents a practical means of responding to 
concerns raised by the voting provisions of the Protocol so that the 
United States would be in a position to accede to the Madrid Protocol. 
Accession to the Madrid Protocol has become important to U.S. 
businesses that want a more efficient way to obtain protection for 
their important and valuable trademarks in countries that are parties 
to the Madrid Protocol. This is especially so now that Japan's 
participation in the Protocol will shorten the time frame within which 
Japan will process applications filed thereunder.

                     BILATERAL INVESTMENT TREATIES

    Question 1--El Salvador BIT. Please elaborate on the definition of 
``small commerce, small industry, and small service providers'' under 
the 1970 El Salvador law referenced in paragraph 3 of the Annex.

    Answer. El Salvador provides financial assistance to certain 
``micro-enterprises'' with capitalization under a predetermined level. 
In order to address a Salvadoran law prohibiting the purchase of these 
subsidized entities by non-Salvadorans, El Salvador requested an 
exception from its general obligation to accord national treatment to 
covered investments. To avoid the imprecision of the term ``micro-
enterprises,'' the exception was tied to the definition of ``small 
commerce, small industry, and small service providers,'' set forth in 
the Ley Reguladora del Ejercicio del Comercio e Industria, as published 
in ``Diario Oficial'' No. 23, 4 February 1970. The law defines ``small 
commerce'' for natural persons as an enterprise with a capitalization 
under 100,000 colones (USD 11,467 at current exchange rates); small 
industry for natural persons as an enterprise with a capitalization 
under 50,000 colones (USD 5,733); ``small corporations'' for commerce 
as an enterprise with a capitalization under 200,000 colones (USD 
22,933); and ``small corporations'' for industry as an enterprise with 
a capitalization of under 100,000 colones (USD 11,466).

    Question 2--Azerbaijan BIT. Do the parties have a common 
understanding on the length of the ``transition period to a market 
economy'' described in paragraph 3 (as renumbered by the exchange of 
notes)?

    Answer. The parties understand the transition to a market economy 
as a process rather than a discrete series of steps or milestones with 
a specific ending date. While the process is not yet complete, 
Azerbaijan has made significant progress. Over the past year, for 
example, the Government of Azerbaijan has worked closely with the 
Embassy and the American Chamber of Commerce to improve the investment 
and business climate in Azerbaijan. This included the formulation of a 
new tax code, work on privatization, and the creation of a foreign 
investment agency. National treatment is not yet accorded with respect 
to the ownership of real estate, although foreign investors may own 
buildings but cannot own land. Foreign entities may lease land for 
periods of up to 99 years, with the possibility of extension.
                               __________

             Additional Statements Submitted for the Record

                      American Petroleum Institute,
                                         1220 L Street, NW,
                                Washington, DC, September 12, 2000.

The Honorable Jesse Helms, Chairman,
Senate Committee on Foreign Relations,
SD-450,
Washington, DC.

    Dear Mr. Chairman:

    The American Petroleum Institute, Independent Petroleum Association 
of America, International Association of Drilling Contractors, National 
Ocean Industries Association, and the United States Oil and Gas 
Association appreciate this opportunity to provide the Committee with 
our views on the treaty between the United States and Mexico regarding 
Delimitation of the Continental Shelf in the Western Gulf of Mexico 
beyond 200 nautical miles, also known as the Western Gap Treaty. These 
five trade associations represent virtually the entire offshore oil and 
natural gas exploration and production industry and service industry in 
the Gulf of Mexico.
    The United States State Department and Minerals Management Service 
have consulted on several occasions with the oil and gas industry about 
the treaty, and the oil and gas industry fully supports swift 
ratification of the Western Gap Treaty by the United States Senate.
Background of Maritime Boundary Treaty
    In 1978, the U.S. and Mexico signed a maritime boundary treaty that 
divided the seabed, subsoil, and water column between the U.S. and 
Mexico off the Pacific Coast and in the Gulf of Mexico. The purpose of 
the treaty was to establish a permanent maritime boundary and eliminate 
overlapping jurisdictional claims between the U.S. and Mexico for 
fishing grounds, oil and natural gas, and other natural resources.
    Under the treaty, the maritime boundary was drawn as an equidistant 
line from the coastlines of the two countries giving full effect to 
habitable islands. The treaty divided the areas where Mexican and U.S. 
exclusive economic zones (EEZs) overlapped, but left two areas, 
referred to as the eastern and western ``donut holes,'' or gaps, 
unresolved. These two gaps are beyond the 200-mile EEZ claimed by both 
countries. Mexico ratified the 1978 boundary treaty in 1979, and the 
U.S. ratified it in 1997.
Western Gap Treaty
    Upon ratification of the Boundary Treaty in 1997, the U.S. and 
Mexican governments began negotiations to establish the maritime 
boundary within the Western Gap; a 5,092 square nautical mile area more 
than 200 miles from either country's border. This treaty represents the 
culmination of those negotiations and, as indicated earlier, is fully 
supported by the offshore petroleum industry. Under the treaty, an 
additional 1,913 square nautical miles or about 1.6 million acres of 
the Gulf of Mexico would fall under United States jurisdiction. 
Portions of the Western Gap could be made available for oil and natural 
gas leasing as early as March 2001 if the treaty is ratified this year. 
Approximately 160,000 acres of U.S. controlled acreage located directly 
adjacent to the Gap boundary would be made available 10 years after the 
treaty is ratified by both the United States and Mexico.
    Today, industry has the technology to explore for oil and gas in 
water depths up to 10,000 feet and to produce hydrocarbons in over 
5,000 feet of water. Since oil and gas exploration has moved into the 
deep water Gulf of Mexico in close proximity to the existing maritime 
boundary, negotiators sought to establish a regime to encourage 
information transfer and consultation regarding potential trans-
boundary resources within the Western Gap. To that end, the treaty 
establishes a 2.8 nautical mile buffer zone--1.4 nautical miles on 
either side of the boundary line--where a special regime would be 
established to address potential trans-boundary resources within the 
gap.
    Specifically, within the buffer zone, the treaty establishes a 10-
year moratorium on all exploration and production activities with the 
exception of geological and geophysical (G&G) studies. The 10-year 
period begins upon ratification of the treaty by both governments and 
may be shortened upon mutual agreement. During this period, the treaty 
encourages the two countries to consult and share public data--
consistent with their respective laws and regulations--to determine the 
presence and distribution of trans-boundary resources. At the end of 
the 10-year period, the two governments are obliged to advise each 
other of any decision to offer the acreage on their side of the buffer 
zone for lease, license, auction, etc., or to develop the acreage in 
advance of first production in the buffer zone.

Ratification This Year Important
    Ratification of the treaty by this Congress will clear the way for 
the U.S. Minerals Management Service to begin offering for lease about 
1.5 million additional deep water acres in the Gulf of Mexico as early 
as next year and trigger the clock on the 10-year buffer zone period 
described earlier.
    Ratification of this treaty will be beneficial for U.S. energy 
needs once exploration and production is allowed to commence in the 
Western Gap. If the MMS began offering tracts immediately and industry 
began exploration tomorrow in this area, it could be 10 years before 
the U.S. consumer would see those products in the market place. 
Moreover, leases within the Western Gap could potentially generate 
significant revenues for the U.S. Treasury.
    The petroleum industry has been very concerned over reduced 
domestic production and greater reliance on imports. In recent years, 
domestic areas available for exploration have been significantly 
diminished; ratification of this treaty will be a step towards making 
an additional 1.5 million acres of the Gulf of Mexico available for 
leasing next year. As a result, industry supports the Western Gap 
Treaty and strongly encourages the U.S. Senate to ratify it this year.
    Thank you for the opportunity to comment on this important treaty. 
Since there will be a hearing held on this treaty on Wednesday 
September 13, 2000, we would appreciate if you would please make 
industry's comments part of that hearing record.
            Sincerely,
                      Mark Rubin, Upstream General Manager.
                                 ______
                                 
               International Trademark Association,
                              1990 M Street, NW, Suite 340,
                                Washington, DC, September 13, 2000.
                statement in support of madrid protocol
Chairman Helms and Members of the Committee on Foreign Relations:

    The International Trademark Association (INTA) is pleased to lend 
its strong support for U.S. adherence to the Madrid Protocol. INTA 
respectfully requests that the Senate Foreign Relations Committee 
approve the Madrid Protocol and send it to the floor so that the Senate 
may provide its ``advice and consent'' prior to the conclusion of the 
106th Congress. We are equally pleased to have lent our support to the 
implementing legislation for the Madrid Protocol (H.R. 769 / S. 671), 
which was approved by the House last year, has been approved by the 
Senate Judiciary Committee, and is now awaiting consideration by the 
Senate.
    INTA is a 122-year-old not-for-profit organization comprised of 
over 3,900 members. It is the largest organization in the world 
dedicated solely to the interests of trademark owners. The membership 
of INTA, which crosses all industry lines and includes both 
manufacturers and retailers, values the essential role trademarks play 
in promoting effective commerce, protecting the interests of consumers, 
and encouraging free and fair competition. INTA has worked closely with 
the international business community, the administration and 
congressional staff in the preparation of this treaty instrument.
    The Madrid Protocol is tremendously important to U.S. businesses 
exporting their products overseas. Because the Protocol contains 
improvements sought by the U.S. to the original treaty, the Madrid 
Agreement, it would broaden the participants in the current system for 
the international registration of trademarks. This is a simple concept 
that has existed for over 100 years, yet is even more essential in 
today's global trade environment where competition is fierce. Under the 
Madrid Protocol, a trademark owner based in the U.S. would be able to 
gain protection for its trademark in as many Protocol countries as 
desired by filing a single application at the U.S. Patent and Trademark 
Office (USPTO) in a single language--English--upon payment of a single 
set of fees. Without such a centralized system, a U.S. company can 
protect its mark only by enduring the rigors of hundreds of differing 
registration schemes in each of the countries where the products might 
be sold.
    This ``one-stop'' filing mechanism has particular value for small 
U.S. companies who simply cannot afford to retain counsel around the 
world in order to register their trademark(s) in each country in which 
protection is sought. Registration is important, since unlike the U.S., 
many countries offer no trademark protection at all unless the mark is 
registered with the appropriate national authority. The lack of a 
registration leaves the small company open to attack by counterfeiters 
and others seeking to capitalize on the goodwill and investment 
associated with the mark.
    Large U.S. companies will also benefit from U.S. adherence to the 
Madrid Protocol. With so many products to sell in a variety of 
countries, the ``one-stop'' approach will greatly ease the ability of 
these companies to increase awareness and sales.
    Here are just a few examples as to how adherence to the Madrid 
Protocol would benefit U.S. companies in terms of saving time and money 
when securing protection for their trademarks:

   A U.S. trademark owner wishing to register a mark in 10 
        different countries currently needs to file 10 separate 
        applications. The costs of these 10 applications, which include 
        official and attorney fees, would at a minimum be over $14,000. 
        Under the Madrid Protocol, the fee, depending on the amount 
        that the national office has agreed with World Intellectual 
        Property Organization (WIPO) \1\ to charge, would be preset and 
        would be about $4,700--a savings of more than 67% in total 
        fees.
---------------------------------------------------------------------------
    \1\ WIPO is the entity that administers the Madrid Protocol.

   An even greater economic benefit would be realized after an 
        international registration has been obtained. Let us assume 
        that a U.S. company has 1,000 trademark registrations in 10 
        countries and needs to make an amendment due to a simple change 
        in address. Without the Madrid Protocol, that would require 
        10,000 amendment applications being filed at costs in the 
        thousands of dollars. Under the Protocol, only one amendment 
---------------------------------------------------------------------------
        application needs to be filed at a cost of about $100.

   Under the Madrid Protocol, member countries must examine and 
        act upon the international application for registration within 
        18 months. In many countries, a registration through the 
        national office can take up to 4 years, thus denying trademark 
        protection in this age of global communication and rapidly 
        changing markets. The Madrid Protocol helps to expedite the 
        process.

    Mr. Chairman and Members of the Committee, the Madrid Protocol will 
provide meaningful access to international trademark protection for 
small and medium sized companies, while cutting the costs and providing 
a more streamlined process for U.S. companies of every size. In 
adhering to the Madrid Protocol, the U.S. will join many other leaders 
of the global economy, including China, France, Germany, Italy, Japan, 
Spain, and the United Kingdom. For these and other reasons, INTA 
respectfully requests that the Foreign Relations Committee act without 
delay and report the Madrid Protocol to the floor so that the Senate 
may provide its ``advice and consent.''
    Thank you.
                                 ______
                                 
                                       Kraft Foods,
                              1341 G Street, NW, Suite 900,
                                 Washington, DC, September 8, 2000.

The Honorable Jesse Helms, Chairman,
Committee on Foreign Relations,
United States Senate,
Washington, DC.

    Dear Mr. Chairman:

    We understand that the White House has now sent the Madrid Protocol 
to the Senate for ``advice and consent.'' Kraft Foods is pleased to 
register its strong support for the Madrid Protocol, and we 
respectfully request that you move as expeditiously as possible with 
respect to this treaty.
    The Madrid Protocol is a non-controversial, but important treaty 
that is designed to provide a mechanism for obtaining multi-national 
trademark protection and maintaining international registration rights 
through a centralized system for trademark owners in Protocol member 
nations and intergovernmental organizations having their own trademark 
system. Under the Madrid Protocol, Kraft Foods, which owns thousands of 
famous trademarks (like JELL-O, MAXWELL HOUSE, and OSCAR MAYER, to name 
just a few) would be able to file in the U.S. Patent and Trademark 
Office an application for protection in as many Protocol countries as 
desired through the filing of a single application in English for a 
single fee.
    The benefits of the Madrid System for companies like Kraft are 
tremendous. Of particular significance will be the cost savings of the 
system; we will literally save thousands of dollars each year, and will 
also be able to cost effectively expand our protection to more markets 
around the world. Importantly, the Protocol will also enable us to 
obtain protection in an expedited manner, providing an incentive to 
expand our new product introductions.
    Simply put, in an increasingly diverse and highly competitive 
global marketplace, the Madrid Protocol is a ``one stop shop,'' that 
makes protecting American icons like KRAFT and POST a great deal 
easier. On behalf of Kraft Foods, we ask that the Senate provide its 
``advice and consent'' prior to the conclusion of the 106th Congress.
    Thank you for your assistance. Your continued support of U.S. 
intellectual property owners is greatly appreciated.
            Sincerely,
                         Frances M. Norris, Vice President,
                                          Government Affairs--Food.
                                 ______
                                 
                                      United States Senate,
                                Washington, DC, September 11, 2000.

The Honorable Jesse Helms, Chairman,
Senate Committee on Foreign Relations,
SD-450,
Washington, DC.

    Dear Mr. Chairman:

    I understand the Foreign Relations Committee has scheduled a 
hearing for September 13 on the treaty to establish the boundary 
between the U.S. and Mexico in the ``Western Gap'' of the Gulf of 
Mexico, the Delimitation of the Continental Shelf, Treaty Doc. 106-39 
(Mexico). As you recall, this is one of two areas left undelineated by 
the 1997 U.S./Mexico maritime boundary treaty which was ratified by the 
Senate under your leadership in 1997.
    This treaty will confirm U.S. sovereignty over an additional 6,562 
square kilometers of the Western Gulf of Mexico. The Western Gap is an 
important area in terms of potential oil and gas resources. The 
Minerals Management Service of the Department of the Interior has said 
no leases will be offered in the Western Gap until the treaty is 
ratified. The U.S. needs to start leasing those tracts so that any oil 
and gas resources found in the region may be brought into production as 
soon as possible.
    I know you share my concern for maintaining our nation's energy 
independence. I urge you to move expeditiously to have the treaty 
ratified before the Senate adjourns. Thank you for your careful 
consideration.
    With kindest regards, I am
            Sincerely,
                                          Mary L. Landrieu,
                                             United States Senator.
                                 ______
                                 

       Prepared Statement Joseph Papovich, Assistant U.S. Trade 
    Representative, Office of the United States Trade Representative


                              INTRODUCTION

    I am pleased to provide testimony with respect to the Bilateral 
Investment Treaties (BITs) submitted for the Senate's approval. These 
treaties are an important part of the Administration's efforts to 
create jobs and foster growth here at home, strengthen U.S. 
competitiveness and promote a level playing field in the global 
economy. The Office of the United States Trade Representative strongly 
believes that these treaties are in the national interest, and we ask 
that the Senate approve them without delay.
    Investment is increasingly important in today's world. Foreign 
direct investment in the international economy is growing rapidly: from 
1990 to 1998, foreign direct investment grew 11% annually, versus 6.5 
percent for trade and 2.0 percent for GDP. The United States is the 
recipient of more foreign investment than any other country--to our 
benefit, as some 5.6 million people are employed by U.S. affiliates of 
foreign companies. Because of the economic linkages between U.S. parent 
companies and their overseas affiliates, U.S. outward investment has 
also become a crucial component of our economy, with the investment 
stock totaling over $1.1 trillion in 1999.
    U.S. investors face tough competition from other countries and the 
Administration wants to ensure that they enjoy all possible advantages 
vis-a-vis this competition. These investors assert that the ability to 
manage their operations on an international basis is no longer a 
choice, it is essential if they are to survive in the global 
marketplace. One way to strengthen the position of our companies 
internationally is to provide a framework within which they are 
entitled to the benefits of a level playing field and specific 
protections in countries where they decide to invest. The Bilateral 
Investment Treaties are designed to provide these necessary protections 
and enable U.S. investors to compete in a world of new and changing 
opportunities. As President Clinton has noted, ``We welcome foreign 
investment in our businesses, knowing that with it (come) new ideas as 
well as capital . . . but as we welcome that investment, we insist that 
our investors should be equally welcome in other countries.''

                   UNITED STATES POLICY ON INVESTMENT

    While the protection of United States investment property abroad is 
the central objective of BITs and other United States investment 
agreements, this objective is consistent with and a component of a 
broader belief in the value of open international trade and investment 
regimes. United States foreign trade and investment policy has long 
recognized the benefits that foreign investment brings to host and home 
governments alike. As the world's largest recipient of foreign 
investment and largest exporter of capital, as well as a country with 
one of the world's most open investment regimes, the United States 
stands the most to gain from investment treaties that remove 
restrictions on investment.
    From the vantage point of a capital exporter, U.S. investment 
abroad creates additional export opportunities. The popular notion that 
foreign investment supplants exports is not supported by the facts. 
Instead, foreign investment allows U.S.-owned companies to deliver 
goods and services abroad where direct exports of finished products 
would be prohibited by transportation costs or are blocked by trade 
barriers. Foreign affiliates are better positioned than their parents 
to design, manufacture, distribute, and service products for the 
special requirements of the host-country. Exports from companies in the 
United States to their foreign affiliates totaled $185.4 billion or 27% 
of U.S. exports in 1998.
    Moreover, inward investment stimulates competition in the host 
country, introduces new technologies and management skills, increases 
employment, and provides links to the international marketplace. 
Foreign-owned manufacturing establishments in the United States, on 
average, are larger, pay higher wages, and are more productive than 
U.S.-owned establishments. Nearly 5 million jobs were supported by non-
bank affiliates in the United States in 1996. The compensation per 
employee of these affiliates is about 10% higher, on average, than that 
of U.S.-owned establishments.
    While the competitive pressures of the ``global economy'' are now 
more acute than ever, the origins of the protection of American 
investment property abroad date back at least to the early nineteenth 
century when such protections were embodied in provisions of 
Friendship, Commerce and Navigation Treaties. Elements of those first 
treaties remain in today's investment treaties, but U.S. BITs also 
reflect Congressional and business community concerns that have 
developed over time, the evolution of customary international law, and 
historic circumstances affecting U.S. overseas investment property. For 
example, U.S. investors have seen repeated waves of expropriation: in 
the Soviet Union after 1917; in China in the 1930's and 1940's; in 
Eastern Europe after WWII; in Cuba in 1959; in many developing 
countries (especially in Latin America) in the 60's and 70's; and in 
Iran beginning in 1979. Accordingly, United States investment 
agreements, including the BITs, contain very specific protections with 
respect to expropriation.
    In addition to responding to the confiscation and other 
mistreatment of United States investment property abroad, the treaties 
also respond to the aggressive steps taken by other capital exporting 
countries to gain market access and obtain the best operating 
conditions for their nationals investing overseas. A primary impetus 
for the initiation of the BIT program was an aggressive effort on the 
part of a number of European countries to establish investment 
agreements with developing countries in the 1960's and 1970's. The 
number of bilateral investment treaties continues to grow. There are 
currently between 1,500 and 1,600 bilateral investment agreements 
worldwide.
    Thus, the BITs were not conceived as a tool to promote foreign 
investment, rather they were a response to the vulnerability faced by 
U.S. investments overseas. The BITs are part of our larger investment 
policy to protect American investment abroad. For example, since 1976, 
the United States has been a party to investment instruments containing 
some of the same principles with industrialized countries under the 
auspices of the OECD. For decades, the Overseas Private Investment 
Corporation has provided political risk insurance to U.S. investment 
operating in developing countries. The U.S. Government has been working 
closely with APEC members to lay the groundwork for eventual 
commitments. It has negotiated basic investment commitments with China 
in the China WTO Agreement. The Administration has just begun a 
negotiation to upgrade the commitments in the WTO General Agreement on 
Trade in Services which not only assists United States businesses to 
supply services across borders, but also provides certain basic 
investment protections. An investment presence is crucial to the 
ability to supply many services overseas. The WTO Agreement on Trade-
Related Investment Measures removes restrictions that burden both trade 
and investment. The WTO Agreement on Trade-Related Aspects of 
Intellectual Property requires parties to protect assets that are often 
the core of an investment.
    The BIT program also complements Administration efforts to combat 
corruption, which is a burden for U.S. investors. Specifically, the BIT 
promotes greater legal and regulatory transparency and assures foreign 
investors of access to binding international arbitration. These BIT 
provisions promote good government and reinforce the anti-corruption 
initiatives in the OECD and the international financial institutions.
    This Administration and its predecessors view the BIT investment 
protections not only as ends in themselves, but as standards that 
generally lead to the advancement of customary international law as 
well as the practices of host governments. The high standards of U.S. 
BITs create pressure on other governments to match these protections in 
their investment agreements, thereby solidifying the place of those 
standards that the United States already considers to form a part of 
customary international law, as well as expanding the state practice 
with respect to those standards that have not yet entered customary 
international law. The existence of the BITs prompts non-signatories to 
unilaterally improve their investment conditions in order to remain 
attractive investment locations.

                 THE MODEL BILATERAL INVESTMENT TREATY

    The BIT's objectives to protect U.S. investment abroad, to 
encourage the adoption of market-oriented economic policies and support 
the development of international law standards are achieved through 
several basic principles.
    First, the BITs entitle U.S. companies to operate under the best 
conditions available to other foreign and domestic investors. This 
protection (the better of MFN or national treatment) obligates host 
governments not to take discriminatory acts against our investors on 
the basis of their nationality, and prevents host governments from 
imposing special burdens or restraints on our companies. Subject to 
limited exceptions set forth in annexes or protocols to the treaties, 
this principle applies throughout the life of the investment, including 
initiation of the investment.
    Thus, the treaty not only permits U.S. investors to operate on an 
equal footing with their competitors when they are in like 
circumstances, it provides market access.
    Second, the BITs establish clear limits on the expropriation of 
investments. As is the case under U.S. law and international law, 
investors are entitled to be fairly compensated, and the expropriation 
may only take place for a public purpose, in a nondiscriminatory 
manner, and under due process of law. Compensation must be promptly 
paid, adequate and effective.
    Third, BITs provide U.S. investors the right to transfer funds into 
and out of the host country without delay using a market rate of 
exchange. This covers all types of transfers related to an investment, 
including interest, proceeds from liquidation, repatriated profits and 
infusions of additional capital. The ability to make payments and 
receive funding as required is indispensable to the effective operation 
of an investment.
    Fourth, BITs limit the ability of host governments to require U.S. 
investors to adopt inefficient and trade distorting practices. For 
example, requirements such as local content or export quotas are 
prohibited. This provision can open up new markets for U.S. producers 
and increase U.S. exports. U.S. investors protected by BITs can 
purchase competitive U.S.-produced components and capital equipment 
without uneconomic restrictions on those inputs, and thus renders their 
products more competitive. They cannot be forced, as a condition of 
establishment or operation, to export locally produced goods back to 
the United States or third country markets.
    Fifth, BITs give U.S. investors the right to engage the top 
managerial personnel of their choice regardless of nationality. This 
enables investors to manage their investments as expertly as possible, 
and preserves their control of the investment.
    Finally, BITs give U.S. investors the right to submit disputes with 
the treaty partner's government to international arbitration. Disputes 
with treaty partners may also be raised by the U.S. Government, both 
through consultations and through arbitration. These different means of 
addressing disputes permits flexibility, effectiveness and impartiality 
in their resolution.
    Thus, BITs shield our investors from a variety of arbitrary actions 
of foreign governments and help our investors should trouble arise. 
This can be a significant benefit for U.S. investors who may suddenly 
find themselves confronted with unfriendly host country governments, 
anti-American local authorities or a local judiciary in which the 
investor lacks confidence. There are foreign governments that have 
ordered, for example, that foreign (not domestic) businesses build 
roads as a condition of entry into the market, or have forced foreign 
businesses to purchase low quality, high cost, local products at the 
expense of U.S.-produced inputs. Host governments have used foreign 
business capital as involuntary ``loans'' to Central Banks or campaign 
contributions. All of these BIT provisions supplement existing U.S. 
Government mechanisms and procedures for resolution of business 
disputes, such as dispute settlement at the World Trade Organization, 
ongoing consultations with foreign governments by our trade negotiators 
and other Administration officials, and actions under Section 301 of 
the Trade Act of 1974.
    The BIT has retained its fundamental principles over time, but it 
has been closely reviewed and revised periodically. This is to take 
account of experience with its operation and to make sure it is kept 
current with other agreements, customary international law, and the 
needs of investors. The last review was undertaken in 1994. Another 
review is planned for next year as soon as resources permit.

                            THE BIT PROGRAM

    This Administration, as previous Administrations, has been active 
in negotiating BITs--we now have 45 concluded in countries all over the 
world, of which 31 are in force. We have ongoing negotiations or 
discussions underway with five countries and others have expressed 
interest in such talks. We have 10 BITs and one protocol before you 
today.
    U.S. companies advise the Administration that, while they consider 
the dispute settlement provisions of BITs to be very effective, they 
value the presence of the BIT provisions more for their deterrent 
effect. Our companies have repeatedly stated that, by calling attention 
to BIT obligations, they have been able to persuade host governments 
not to take particular harmful actions. The U.S. government itself has 
also seen benefits through the ability to point to treaty commitments 
to dissuade countries from adopting retrograde economic policies that 
would disadvantage U.S. investors. For example, Poland and Romania were 
considering legislation to limit the transfer of capital to and from 
their countries. The Administration reminded the executive and 
legislative branches of each country of its respective commitment under 
the treaty to permit inward and outward transfers by U.S. investors, 
and the provision was taken out of the legislation or otherwise 
resolved. In the Czech Republic, a law restricting foreign investment 
in the gaming industry was amended so as not to impact foreign 
investors. This was accomplished as a result of our interventions 
reminding the Czech Republic of its BIT obligations. In Cameroon, a law 
adversely affecting U.S. security firms was passed, but by noting 
Cameroon's obligations under the BIT, Cameroon agreed not to apply the 
law to U.S. firms.
    Bahrain, Jordan, Bolivia, El Salvador, Honduras, Lithuania, 
Croatia, Uzbekistan, Azerbaijan, and Mozambique represent our efforts 
to facilitate investment in quite different, but equally important, 
regions of the world. My colleagues from the Department of State have 
provided strong testimony as to the specific issues these agreements 
will address in our investment relationship with each of the 
signatories, as well as the broader foreign policy interests these 
agreements will serve in each country and region.
    From the perspective of the United States Trade Representative, we 
would like to add that these agreements serve an important U.S. general 
economic objective to bring these countries into the world trading 
system as comprehensively as possible. That is, BITs are one element of 
a network of trade and investment obligations we seek with other 
countries. Most important among these relationships is WTO membership. 
The investment and trade regimes of aspiring members are reviewed for 
compatibility with the WTO framework. The BITs pave the way for WTO 
commitments and foreclose opportunities to circumvent WTO rules.
    For example, Jordan joined the WTO in 1999. Croatia has been 
approved for WTO membership. Lithuania is on the verge of concluding 
its accession negotiations, and Azerbaijan and Uzbekistan have 
commenced negotiations. The BITs supplement that broader trade and 
investment framework. Various academics have shown that when investment 
and trade liberalization take place together, the economic benefits of 
trade liberalization are greatly multiplied. Stated another way, the 
absence of investment liberalization can thwart the positive effects of 
trade liberalization.

                               CONCLUSION

    Today's hearings are of critical importance to the BIT program and 
to our larger efforts to promote trade and protect U.S. investment 
overseas. Senate advice and consent to these treaties will provide 
America's investors with the primary protections they need to do 
business in a time of expanding opportunities and changing markets. 
Advice and consent will also send a signal to the countries with which 
we are now negotiating that we are serious about the program and about 
our very high standards in the investment area. Finally, advice and 
consent to these BITs now will expand the web we are creating of open, 
solid investment regimes around the globe, which should lead to a 
gradual raising of standards everywhere.
                                 ______
                                 
                                      PepsiCo, Inc.
                                    700 Anderson Hill Road,
                                  Purchase, NY, September 11, 2000.

The Honorable Jesse Helms
United States Senate,
Dirksen Senate Office Building,
Washington, DC.

RE: Madrid Protocol

    Dear Senator Helms:

    I am writing to express this company's strong support for the 
United States' adoption of the Madrid Protocol, which has been sent to 
the Senate for ratification and will shortly be considered by your 
Foreign Relations Committee. As you may be aware, PepsiCo, Inc. is a 
North Carolina corporation. In addition to selecting North Carolina as 
our corporate domicile, we employ hundreds of people in that State and 
are proud of our North Carolina heritage dating back to 1898 with the 
creation of the Pepsi-Cola soft drink.
    It is our belief that for too long, U.S. companies such as PepsiCo, 
Inc. have been precluded from sharing in the benefits of multi-national 
trademark registration under the Madrid Protocol, which are freely 
available to our competitors abroad. Ratification of this long-standing 
treaty will yield important cost savings and efficiencies not only for 
PepsiCo, but for other U.S. multi-nationals as well in every field of 
endeavor. Removing artificial barriers and improving the 
competitiveness of U.S. companies around the world should be a high 
priority for your Committee and for the Senate as a whole. We have no 
doubt that this important objective will be well served by ratification 
of the Madrid Protocol.
    I respectfully urge you to lend your support to the early and 
decisive ratification of this treaty.
            Very truly yours,
                                        Elizabeth N. Bilus,
                                     Intellectual Property Counsel.
                                 ______
                                 

      Prepared Statement of Shell Exploration & Production Company

    Mr. Chairman and Members of the Committee:
    Shell Exploration & Production Company is a leading producer of 
hydrocarbons and leaseholder in the Gulf of Mexico. Shell has been 
operating in the Gulf of Mexico for five decades. As a major Gulf of 
Mexico stakeholder, Shell is pleased to go on record in support of 
Senate ratification of the treaty between the United States and Mexico 
delimiting the Continental Shelf in the Western Gulf of Mexico.
    Technological advances have opened the deepwater frontier for 
petroleum exploration and production leading to a renaissance in the 
Gulf of Mexico. The deepwater Gulf has developed into one of the 
premier exploration plays in the world today. Shell has been a leader 
in industry's march into deepwater, setting numerous deepwater drilling 
and production records in the process--all in the Gulf of Mexico. 
Industry's increased activity level has resulted in thousands of new 
jobs and billions of investment dollars flowing into the Gulf Coast 
economy and has generated hundreds of millions of dollars in revenue 
for the U.S. treasury.
    Industry has the technology to explore for hydrocarbons within the 
Western Gap, the area covered by this treaty. Since leasing in the gap 
has been delayed until the maritime boundary is established, it is not 
surprising that industry is united in its support for treaty 
ratification. The treaty principles are consistent with both U.S. and 
international law, and an equidistance line has been used to divide the 
area.
    Over 1.6 million Gulf of Mexico acres will become U.S. territory 
upon ratification of this treaty. Ninety percent of that acreage can be 
made available for oil and gas exploration and production in the near 
term with the remainder of the acreage being made available 10 years 
after ratification of the treaty by both the U.S. and Mexico.
    Ratification of the treaty this year will clear the way for the U. 
S. Minerals Management Service to offer for lease about 1.5 million 
additional deep water acres in the Gulf of Mexico as early as next year 
and will trigger the clock on the 10-year buffer zone established under 
the treaty. Expeditious ratification is in the best interest of the 
United States, Mexico, the Gulf Coast economy, and the offshore 
petroleum industry. This is an issue whose time has come, and Shell 
strongly encourages the Senate to ratify the treaty this year.
                                 ______
                                 
                                    VF Corporation,
                          628 Green Valley Road, Suite 500,
                                 Greensboro, NC, September 7, 2000.

The Honorable Jesse Helms
United States Senate,
Dirksen Senate Office Building,
Washington, DC.

    Dear Senator Helms:

    We understand that the White House has now sent the Madrid Protocol 
to the Senate for ``advice and consent.'' V.F. Corporation is pleased 
to register its strong support for the Madrid Protocol, and we 
respectfully request that you and your colleagues on the Senate Foreign 
Relations Committee move as expeditiously as possible to this treaty.
    The Madrid Protocol is a non-controversial, but important treaty 
that is designed to provide a mechanism for obtaining multi-national 
trademark protection and maintaining international registration rights 
through a centralized system for trademark owners in Protocol member 
nations and intergovernmental organizations having their own trademark 
system. Under the Madrid Protocol, a U.S. trademark owner like V.F. 
Corporation would be able to file in the U.S. Patent and Trademark 
Office an application for protection in as many Protocol countries as 
desired through the filing of a single application in English for a 
single fee.
    We cannot overemphasize the importance of the United States joining 
the Madrid Protocol and how this will revolutionize the process for 
protecting trademarks worldwide. The practical benefits of the Madrid 
System for companies such as V.F. Corporation, including ease of 
applying for and renewing trademark registrations internationally, will 
be of tremendous benefit to U.S. companies. Of particular significance 
will be the tremendous cost savings of the system. U.S. adoption of the 
Madrid Protocol will greatly lower costs, thus enabling U.S. companies 
to obtain the protection for their trademarks in key markets in an 
efficient and expedited manner.
    Simply put, in a increasingly diverse and highly competitive global 
marketplace, the Madrid Protocol is a ``one stop shop,'' that makes 
protecting an American trademark in other nations a great deal easier. 
On behalf of V.P. Corporation we request that the Senate Foreign 
Relations Committee approve the Madrid Protocol and ask that the Senate 
provide its ``advice and consent'' prior to the conclusion of the 106th 
Congress.
    Thank you for your assistance. Your continued support of U.S. 
intellectual property owners is greatly appreciated.
            Sincerely,
                                       Candace S. Cummings,
                   Vice President-Administration & General Counsel.


