[Congressional Record Volume 147, Number 144 (Thursday, October 25, 2001)]
[Senate]
[Pages S11097-S11098]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             AMERICAN COMPANIES DOING BUSINESS IN COLOMBIA

  Mr. LEAHY. Mr. President, yesterday, during consideration of the 
fiscal year 2002 foreign operations, export financing, and related 
programs appropriations bill, a colloquy between myself and Senator 
McConnell concerning American companies doing business in Colombia was 
printed in the Record. That colloquy was incomplete, and should not 
have been included in the Record in that form. Among other things, it 
omitted a copy of an amendment that Senator McConnell and I had 
considered offering to the foreign operation bill. Therefore, I ask 
unanimous consent that our complete colloquy, a well as our proposed 
amendment, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


                            amendment no. --

       On page 144, line 3, after the colon insert the following: 
     ``Provided further, That of the funds appropriated under this 
     heading for Colombia, $10,000,000 shall not be obligated or 
     expended until the Government of Colombia resolves 
     outstanding international arbitration decisions which favor 
     United States corporations more than 50 percent owned and 
     controlled by United States citizens:''.

  Mr. LEAHY. Mr. President, we often hear from American companies whose 
investments in developing countries have gone sour. That is the risk of 
doing business, and nobody disputes that. But international arbitration 
was

[[Page S11098]]

created in order to mitigate the risks of overseas investments and to 
avoid depending on shaky legal institutions in those countries. 
Arbitration has been one of the principal building blocks to the 
extraordinary growth in international trade. It has brought investments 
to countries which would have otherwise been considered too risky 
because it gives investors and sovereign nations an agreed-upon 
mechanism to resolve disputes. Key to its success is the agreement by 
all parties that arbitration can only work if it is binding.
  It recently came to my and Senator McConnell's attention that at 
least two American companies, Sithe Energies, Inc., and Nortel 
Networks, have participated in binding arbitration to resolve disputes 
with the Colombian Government. According to information we have 
received, Sithe and Nortel, and, we are told, companies from Mexico and 
Germany, have won clear, unambiguous rulings through binding 
arbitration, only to have the Colombian Government renege on its 
commitment to honor the arbitration decision.
  We have not had an opportunity to discuss these matters with the 
Colombian Government, but if our information is correct, that American 
companies have agreed to binding arbitration and prevailed, only to 
have the Colombian Government refuse to pay, that is unacceptable. We 
want to help Colombia's economy develop in an environment where the 
rule of law is respected. This is crucial to Colombia's future. If 
Colombia flaunts the rules of the private market, it is will have 
increasing difficulty attracting private investment because it cannot 
be trusted.
  Representatives of these companies have urged us to withhold a 
portion of U.S. assistance to Colombia until the Colombian Government 
fulfills its legal obligations to these companies. We considered 
offering such an amendment, because of the importance we give to the 
fair treatment of American companies, respect for the rule of law, and 
the international arbitration process. I ask unanimous consent that a 
copy of our proposed amendment be printed in the Record at the 
conclusion of my remarks.
  We decided no to offer the amendment, because of the precedent it 
could set. But we want to emphasize that respecting binding, 
internationally sanctioned arbitration is essential to the investment 
that will ultimately be the engine for Colombia's economic development. 
No amount of foreign assistance can do that. The pattern of Colombia's 
apparent abuse of the international arbitration process is very 
disturbing, and by conveying our concern about it we mean to strongly 
encourage the Colombian Government to act expeditiously to resolve 
these matters.
  Finally, I would note that the Andean Trade Preferences Act addresses 
this issue directly. Section 203 of that act makes clear that the 
President shall not designate any country a beneficiary under the ATPA, 
if the country fails to act in good faith in recognizing as binding or 
in enforcing arbitral awards in favor of U.S. citizens or a company 
which is 50 percent or more beneficially owned by U.S. citizens. The 
ATPA is up for extension or expansion, and Senator McConnell and I will 
be following this issue closely, as well as discussing it with 
Colombian Ambassador Moreno and U.S. Ambassador Patterson, both of whom 
I have the utmost respect for.
  Mr. McCONNELL. Let me just add a word or two to Senator Leahy's 
comments. Few would disagree that Colombia's long term political and 
economic development resides in its ability to forge a lasting peace, 
establish the rule of law, and attract foreign investment. No service 
is done to the nation or the people of Colombia when the Colombian 
government refuses to recognize the legitimacy of an arbitration award 
to international businesses. The leadership in Bogota should understand 
that such action further erodes confidence in the overall investment 
climate in Colombia within the international business community--and in 
foreign capitals. It is my hope that the Colombian government takes 
note of the amendment Senator Leahy and I contemplated offering and 
initiates corrective action in the very near future.

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