[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
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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
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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.
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\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.