[Senate Executive Report 104-12]
[From the U.S. Government Publishing Office]



104th Congress                                              Exec. Rept.
                                 SENATE

 2d Session                                                      104-12
_______________________________________________________________________


 
TREATY BETWEEN THE UNITED STATES OF AMERICA AND THE REPUBLIC OF BELARUS 
 CONCERNING THE ENCOURAGEMENT AND RECIPROCAL PROTECTION OF INVESTMENT, 
          WITH ANNEX, PROTOCOL AND RELATED EXCHANGE OF LETTERS

                                _______
                                

                 June 20, 1996.--Ordered to be printed

_______________________________________________________________________


   Mr. Helms, from the Committee on Foreign Relations, submitted the 
                               following

                              R E P O R T

                   [To accompany Treaty Doc. 103-36]

    The Committee on Foreign Relations to which was referred 
the Treaty Between the United States of America and the 
Republic of Belarus Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex, Protocol, and Related 
Exchange of Letters, signed at Minsk on January 15, 1994, 
having considered the same, reports favorably thereon with one 
declaration, and recommends that the Senate give its advice and 
consent to ratification thereof subject to the one declaration 
as set forth in this report and the accompanying resolution of 
ratification.

                               I. Purpose

    The principal purposes for entering into a bilateral 
investment treaty (BIT) are to: protect U.S. investment abroad 
where U.S. investors do not have other agreements on which to 
rely for protection, encourage adoption of market-oriented 
domestic policies that treat private investment fairly, and 
support the development of legal standards consistent with the 
objectives of U.S. investors. The BIT, therefore, is intended 
to ensure that United States direct investment abroad and 
foreign investment in the United States receive fair, equitable 
and nondiscriminatory treatment.

                             II. Background

    The proposed treaty together with the proposed annex, 
protocol, and related exchange of letters was signed on January 
15, 1994. No bilateral investment treaty is currently in force 
between the United States and Belarus.
    The proposed treaty and protocol were transmitted to the 
Senate for advice and consent to ratification on September 6, 
1994 (see Treaty Doc. 103-36). The Committee on Foreign 
Relations held a public hearing on the proposed treaty together 
with the proposed annex and protocol on November 30, 1995.

                              III. Summary

                               a. general

    Bilateral investment treaties (BITs) are the result of a 
treaty program begun in 1982 as a successor to the Friendship, 
Commerce, and Navigation Treaties that formerly set the 
framework for U.S. trade and investment with foreign countries. 
The BIT is based on a U.S. model treaty.
    All parties must agree to the basic guarantees of the model 
before the United States will enter into negotiations on a 
treaty. The six basic guarantees contained in the model are:
          investors receive the better of national or most 
        favored nation status;
          expropriation of private property is limited and a 
        remedy exists;
          investors have the right to transfer funds into and 
        out of the country without delay using a market rate of 
        exchange;
          inefficient and trade distorting practices such as 
        performance requirements are prohibited;
          investment disputes may be submitted to international 
        arbitration; and
          top managerial personnel of an investor's choice may 
        be engaged regardless of nationality.
    Since 1982, the United States has signed 37 BITs, and the 
Senate has given its advice and consent to the ratification of 
24 BITs. Twenty-two BITs are currently in force. The Senate has 
ratified two treaties that have not entered into force with 
Russia, where the Duma has failed to ratify, and with Ecuador, 
which was ratified by both countries, but the U.S. is delaying 
the exchange of instruments until Ecuador has fully implemented 
its obligations under the U.S.-Ecuador intellectual property 
rights agreement. There are currently 12 on-going negotiations 
for BITs with other countries.

                       b. comparison to the model

    The Treaty Between the United States of America and the 
Republic of Belarus Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex, Protocol, and Related 
Exchange of Letters (Treaty Doc. 103-36) (BIT), is based on the 
United States 1992 Model Bilateral Investment Treaty (Model). 
The following is an analysis of the major provisions of the 
treaty and a comparison with the 1992 model, which served as 
the foundation for the negotiation of the treaty.
    Preamble.--The Preamble of the BIT establishes the goals of 
the treaty to include: greater economic cooperation, 
stimulation of the flow of private capital and economic 
development, maximization of effective utilization of economic 
resources and the improvement of living standards, promoting 
respect for internationally recognized worker rights, and 
maintenance of health, safety and environmental measures of 
general application. The goals outlined are not legally binding 
but may be used to assist in interpreting the Treaty and in 
defining the scope of Party-to-Party consultation procedures 
pursuant to Article VIII.
    Article I (definitions and general provisions.)--The BIT 
follows the Model with respect to definitions except that the 
BIT adds definitions for ``state enterprise'' and 
``delegation.'' A ``state enterprise'' is defined as ``an 
enterprise owned, or controlled through ownership interests, by 
a Party'' (Art. I:1(f)). A ``delegation'' is defined to include 
``a legislative grant, and a government order, directive, or 
other act transferring to a state enterprise or monopoly, or 
authorizing the exercise by a state enterprise or monopoly of, 
governmental authority (Art. I:1(g)). The Administration 
informs staff these provisions were added in order to clarify 
and extend the requirements of the treaty with respect to state 
enterprises because of the dominant role of state enterprises 
in the Belarusian economy. The negotiating agencies have 
informed staff that they believe this addition gives U.S. 
investors added protection. Similar language is contained in 
the NAFTA.
    Also, the BIT adds ``partnership interests'' to the 
illustrative list of forms of equity participation explicitly 
mentioned in the model (Art. I:1(d)(ii)).
    The BIT follows the Model as to the right to deny treaty 
benefits to companies controlled by nationals or firms of third 
countries and the rule that any alteration of the form in which 
assets are invested or reinvested will not affect their 
character as investments (Arts. I:2, I:3).
    Article II (treatment).--The BIT contains a provision 
identical to that in the Model setting forth each Party's 
obligation to provide the better of national or MFN treatment 
to investment and associated activity of the other Party and 
its right to exempt certain sectors from this obligation (Art. 
II:1). (Most-favored-nation or ``MFN treatment'' for purposes 
of this treaty means treatment no less favorable than that 
which a Party accords, in like situations, to investments in 
its territory of nationals or companies of a third country. 
``National and MFN treatment'' for purposes of the treaty means 
whichever of national treatment or MFN treatment is the most 
favorable.)
    The BIT also contains provisions identical to the Model as 
to the minimum treatment to be accorded investments; 
prohibiting arbitrary or discriminatory impairment of 
investments; and requiring each Party to observe any obligation 
it may have entered into with respect to an investment (Art. 
II:3).
    The BIT also follows the Model as to entry of nationals for 
investment purposes (Art. II:4); engaging top managerial 
personnel of choice (Art. II:5); prohibiting performance 
requirements (Art. II:6); providing effective means of 
asserting claims and enforcing rights (Art. II:7); making 
public all laws, regulations, administrative processes, and 
adjudicatory decisions pertaining to or affecting investments 
(Art. II:8); clarifying the application of the BIT on a 
national treatment basis in states, territories, and 
possessions of the United States (Art. II:9); removing from the 
scope of MFN treatment a Party's binding obligations under free 
trade areas or customs union and under any multilateral 
international agreement entered into under the auspices of the 
GATT subsequent to the signature of the BIT (Art. II:10).
    The BIT adds a paragraph regarding state enterprises, 
stating that the BIT may not be construed to prohibit a Party 
from establishing or maintaining a state enterprise, that any 
such enterprise may not act inconsistently with Treaty 
obligations when exercising governmental authority delegated to 
it; and that the enterprise must accord the better of national 
or MFN treatment in its sale of goods or services in the 
Party's territory (Art. II:2). Administration officials have 
informed staff that the paragraph was added with the intent of 
clarifying and extending the requirements of the treaty with 
respect to state enterprises.
    The BIT adds another paragraph further defining what are to 
be considered ``associated activities'' for purposes of the 
BIT. It lists ten additional activities, including franchises 
and other licenses; access to registrations, licenses, permits, 
and other approvals; access to financial institutions, credit 
markets, and other funds; the import and export of equipment 
and automobiles; dissemination of commercial information; 
conducting market studies; the appointment of commercial 
representatives and the participation of such individuals in 
trade fairs and promotional events; marketing goods and 
services; and access to public utilities, public services, 
commercial rental space, raw materials, inputs, and services of 
all types at nondiscriminatory prices, if the prices are set or 
controlled by the government (Art. II:11). Administration 
officials have informed staff that the paragraph was added to 
the prototype text in order to provide additional concrete 
examples of the types of associated activities for which 
investors should receive the better of national or MFN 
treatment. According to the Administration this language was 
designed to avoid problems that U.S. businesses may face in 
emerging market economies, and its addition is seen as a plus 
for U.S. investors. The same provision can also be found in 
BITs with NIS and Eastern European countries including the 
Czech Republic, Slovakia, Kazakstan, Kyrgyzstan, Moldova, and 
Poland, all of which are currently in force.
    Article III (expropriation).--The BIT is identical to the 
Model's expropriation article (except for one provision as to 
transferability). The Article prohibits expropriations of 
covered investments except if carried out for a public purpose, 
in a non-discriminatory manner, upon payment of prompt, 
adequate and effective compensation, and in accordance with due 
process of law and the minimum treatment standards set forth in 
Article II (generally requiring ``fair and equitable 
treatment'') (Art. III:1); it sets forth specific requirements 
as to compensation (Art. III:2); and it establishes 
compensation based on the currency in which the fair market 
value of the expropriated investment is denominated and 
operates to protect the investor from exchange rate risk (Arts. 
III :3, III:4).
    While the BIT contains Model's obligation that compensation 
be freely transferable, it does not include the additional 
language contained in the Model that compensation be 
transferable ``at the prevailing market rate of exchange on the 
date of expropriation'' (Art. III:1). Addition rights and 
obligations as to the currency to be used in compensations and 
set forth in the Protocol, discussed below.
    Article IV (transfers)--The BIT is identical to the Model 
regarding transfers into and out of the territory of a Party. 
This obligation--which defines transfers to include, among 
other things, compensation paid under Article III--requires in 
part that transfers be made in a freely usable currency at the 
current market rate of exchange on the date of transfer with 
respect to spot transactions in the currency to be transferred. 
In his transmittal documents, the Secretary of State defines 
``freely usable'' as the standard of the International Monetary 
Fund. At present there are five such ``freely usable'' 
currencies: the U.S. dollar, Japanese yen, German mark, French 
franc, and British pound sterling.
    Paragraph three of this article recognizes that 
notwithstanding the guarantees, Parties may maintain certain 
laws or obligations that could affect transfers with respect to 
investments. It provides that the Parties may require reports 
of currency transfers and impose income taxes by such means as 
a withholding tax on dividends. It also recognizes that Parties 
may protect the rights of creditors and ensure the satisfaction 
of judgments in adjudicatory proceedings through their laws, 
even if such measures interfere with transfers. Such laws must 
be applied in an equitable, nondiscriminatory and good faith 
manner.
    Article V (consultations).--The BIT is identical to the 
Model regarding the obligation of Parties to consult with one 
another with respect to disputes and other matters arising 
under the Treaty.
    Article VI (investor/state disputes).--The BIT is identical 
to the Model regarding provisions for consultation and 
arbitration in investor-State disputes. As in the Model, each 
Party consents to the submission of any investment dispute to 
binding international arbitration in the event that the dispute 
cannot be resolved amicably. Belarus is a party to the New York 
Convention on the Recognition and Enforcement of Foreign 
Arbitral Awards. It has entered into the Convention 
reciprocally -- that is, with the declaration that it will 
apply the Convention to the recognition and enforcement of 
awards made only in the territory of another contracting state. 
Belarus is also a party to the Convention on the Settlement of 
Investment Disputes between States and Nationals of Other 
States.
    Unlike the Model, the BIT does not exempt from its 
investor/state dispute procedures those disputes arising under 
the export credit, guarantee, or insurance programs of the 
Export-Import Bank of the United States or under other official 
credit, guarantee or insurance arrangements pursuant to which 
the Parties have agreed to other means of settling disputes 
(see Model, Art. VIII). According to the State Department, 
EXIM, OPIC, and other relevant government agencies indicated 
prior to the negotiation of this Treaty that they saw no need 
to maintain such a provision.
    Article VII (interstate disputes).--The BIT is identical to 
the Model in providing for binding arbitration for interstate 
disputes in the event such a dispute has not been resolved 
through consultations or other diplomatic means.
    Unlike the Model, the BIT does not exempt from its 
interstate dispute procedures those disputes arising under the 
export credit, guarantee, or insurance programs of the Export-
Import Bank of the United States or under other official 
credit, guarantee or insurance arrangements pursuant to which 
the Parties have agreed to other means of settling disputes. 
According to the State Department, EXIM, OPIC, and other 
relevant government agencies indicated prior to the negotiation 
of this Treaty that they saw no need to maintain such a 
provision.
    Article VIII (preservation of rights).--The BIT is 
identical to the Model in allowing each Party to provide 
investments of the other Party treatment that is more favorable 
then that minimally required under the BIT, as a result of 
national laws, regulations, administrative procedures, or 
adjudications, international legal obligations, or other 
obligations assumed by either Party.
    Article IX (exceptions).--The BIT is identical to the Model 
as to exceptions for measures necessary for public order, the 
fulfillment of certain international obligations, and 
protecting essential security interests. Like the Model, the 
BIT also allows Parties to prescribe special formalities for 
investments so long as the substance of treaty rights is not 
impaired. State Department officials have informed Committee 
staff that during negotiation of the BIT Parties agreed that 
this provision is self-judging.
    Article X (taxation).--The BIT is identical to the Model 
with respect to each Party's tax policies as applicable to 
investments of the other Party and the application of the 
treaty to tax matters in limited areas. The Treaty, and the 
dispute settlement provisions, apply to tax matters in three 
areas, to the extent they are not subject to the dispute 
settlement provisions of a tax treaty, or, if so subject have 
been raised under a tax treaty's dispute settlement procedures 
and are not resolved in a reasonable period of time. The Treaty 
could apply to tax matters in three areas: expropriation 
(Article III), transfers (Article IV), and the observance and 
enforcement of terms of an investment agreement or 
authorization (Article VI).
    Article XI (extent of application).--Like the Model, the 
BIT clarifies that it fully applies to all political 
subdivisions. The BIT, however, specifies that it applies to 
administrative as well as political subdivisions.
    Article XII (final provisions).--The BIT is identical to 
the Model as to its entry into force, its application to 
current and future investments, termination, and continued 
temporary application to investments made or acquired prior to 
any termination date. The BIT adds that the Side Letter, as 
well as the Annex and Protocol form an integral part of the 
Treaty.
    Annex (sectoral exemptions).--The BIT is identical to the 
Model as to the sectors and matters in which the United States 
may make or maintain limited exceptions from its national 
treatment and MFN obligations (Annex, paragraphs 1, 2). The 
Annex contains an additional paragraph listing the sectors in 
which Belarus may make or maintain limited exceptions from its 
national treatment obligation (no MFN exceptions are listed). 
Among these are the ownership of land and real property; the 
acquisition of state and municipal property in the course of 
denationalization; and detective and security services. Also 
included are: ownership of insurance companies, electric power 
stations connected to the United Energy System; exploration and 
exploitation of natural resources; dealership in Belarus 
Government securities; provision of common carrier telephone 
and telegraph network services; customhouse brokers; and 
ownership and operation of broadcast or common carrier radio 
and television stations.
    Protocol (expropriation and privatization).--Unlike the 
Model, the BIT contains a protocol addressing expropriation and 
privatization issues. The Protocol provides that in the event 
an investor is to be compensated for an expropriation, payment 
may be made in a freely unsable currency or in the official 
currency of Belarus, depending on the currency in which the 
original investment was made, subject to the obligations in 
Article IV regarding the transfers (paragraph 1).
    The Parties also ``confirm(s) their mutual understanding'' 
as to the meaning of the term ``acquisition of state and 
municipal property in the course of denationalization and 
privatization'' and that the Republic of Belarus may treat its 
nationals and companies more favorably than those of the United 
States in acquiring such property (paragraph 2). Any such 
treatment must be made public promptly, be applied by 
governmental authorities on an MFN basis, and be carried out 
without prejudice to the provisions of the Treaty (paragraph 
2).
    Exchange of letters (investor assistance).--Following the 
protocol is an exchange of letters between the United States 
Ambassador to the Republic of Belarus and the Deputy Chairman 
of the State Committee of the Republic of Belarus for Foreign 
Economic Relations in which the parties confirm that the 
Republic of Belarus has agreed to designate an office to assist 
United States investors in deriving the full benefits of the 
BIT in connection with their investment-related activities. The 
letters set forth the types of assistance that will be provided 
and designate the State Committee of the Republic of Belarus 
for Foreign Economic Relations to perform this function.

                  IV. Entry Into Force and Termination

                          a. entry into force

    The proposed treaty will enter into force 30 days after the 
date of the exchange of instruments of ratification. From the 
date of its entry into force, the BIT applies to existing and 
future investments.

                             b. termination

    The proposed treaty will continue in force for ten years 
after ratification without termination. A Party may terminate 
the proposed treaty ten years after entry into force if the 
Party gives one year's written notice of termination to the 
other Party. If terminated, all existing investments would 
continue to be protected under the BIT for ten years 
thereafter.

                          V. Committee Action

    The Committee on Foreign Relations held a public hearing on 
the proposed treaty, annex, protocol, and related exchange of 
letters with Belarus on November 30, 1995. The hearing was 
chaired by Senator Thompson. The Committee considered the 
proposed treaty, annex and protocol with Belarus on March 27, 
1996, and ordered the proposed treaty, annex and protocol 
favorably reported by voice vote, with the recommendation that 
the Senate give its advice and consent to the ratification of 
the proposed treaty, annex and protocol subject to one 
declaration.

                         VI. Committee Comments

                             a. declaration

    The Committee approved a resolution of ratification for the 
BIT with Belarus that includes a declaration supporting the 
important role of the Belarusian Supreme Soviet in the 
development of democratic government in Belarus. The 
declaration should be interpreted as an expression of concern 
by the Committee with the efforts of the President of Belarus 
to weaken the cause of Belarusian sovereignty. The declaration 
insists that steps taken in such a direction shall not reduce 
the binding commitment of this treaty on Belarus.
    Despite the active efforts of the Belarusian President to 
prevent the election of a working parliament, on December 10, 
1995, the Belarusian people voted in sufficient number to elect 
a new Parliament. The development of the Belarusian Supreme 
Soviet as an independent institution of government has already 
proven to be an important counter-balance to those who would 
have Belarus forfeit its sovereign status. The act of ratifying 
this BIT is in and of itself a proper function of the 
Belarusian parliament. In approving the resolution of 
ratification for the BIT, the Committee on Foreign Relations of 
the United States Senate expresses its approval not only of the 
substance of the BIT, but of the process of parliamentary 
democracy in Belarus.

                    b. current investment statistics

----------------------------------------------------------------------------------------------------------------
                                      Direct investment            Stock                 Exports         Imports
----------------------------------------------------------------------------------------------------------------
1992..............................  no data..............  no data..............  0...................        30
1993..............................  no data..............  no data..............  92..................        39
1994..............................  no data..............  no data..............  46..................        61
1995..............................  no data..............  no data..............  48..................        50
----------------------------------------------------------------------------------------------------------------

United States direct investment flows and stock in Belarus

    The Commerce Department's ``Survey of Current Business'' 
does not include data on investment flows or year-end stocks of 
direct investment in Belarus.

United States Trade with Belarus

    The trade data in the chart above for 1994 and 1995 comes 
from the U.S. Bureau of Census' December 1995 press release. 
Those through 1993 are taken from the International Monetary 
Fund's ``Directions of Trade.'' The IMF received its trade data 
for this report from the Bureau of Census. The import data 
include the cost of the imported goods, shipping insurance and 
freight. Overall imports totaled $534 million and overall 
exports totaled $968 million in 1993.
    According to the 1996 National Trade Estimate Report on 
Foreign Trade Barriers, produced by the Office of the United 
States Trade Representative, in January 1996 the Government of 
Belarus announced a series of export stimulation measures. 
Under the new government plan, exporters will reportedly pay 
ten percent less tax when they operate a barter regime between 
enterprises. A Presidential decree sets different exchange 
rates for local exporters purchasing raw materials abroad and 
for importers of ``non-essential'' goods. In accordance with 
the law on foreign investment, firms with at least 30 percent 
foreign participation are exempted from the requirement. The 
revenue from the higher exchange rate will go into a special 
fund to support exporters.
    In support of this agreement, the Committee recognizes that 
ratification of the BIT is an important step toward 
establishing transparent and predictable procedures for U.S. 
investors in Belarus. Furthermore, the Treaty provides a legal 
basis from which U.S. investors, and the United States 
Government, can challenge capricious or harmful actions by the 
Government of Belarus. In general, U.S. investment in Belarus 
can reinforce broader U.S. policy goals toward Belarus by 
demonstrating the benefits of economic reform and offering an 
opportunity for increased, private U.S.-Belarus contacts.
    At the same time, the Committee is reluctant to provide any 
guarantees to U.S. investors that the protections listed in the 
BIT will ultimately be viewed as binding by the Government of 
Belarus. The political turmoil, slow pace of economic reform, 
and general disregard for rule-of-law in Belarus continue to 
serve as daunting obstacles to successful and profitable 
investment in Belarus. The U.S. business community should fully 
recognize that in approving this Treaty the Senate Foreign 
Relations Committee in no way pronouncing there to be a 
favorable investment climate in Belarus today.

                             c. enforcement

    Following the hearing on the bilateral investment treaties, 
Senator Helms requested information regarding the utility of 
the bilateral investment treaty with Argentina. Specifically, 
Senator Helms requested that the State Department identify 
outstanding investment disputes with U.S. corporations doing 
business in Argentina and actions taken by the U.S. to address 
the BIT violations. Since its entry into force on October 24, 
1994, two disputes have developed in Argentina. The following 
is excerpted from the State Department's response to Senator 
Helms: \1\
---------------------------------------------------------------------------
    \1\ Letter from Assistant Secretary for Legislative Affairs, Wendy 
R. Sherman, to Senator Helms, Committee on Foreign Relations, December 
18, 1995.

    We are aware of two investment disputes that have developed 
in Agrentina recently.
1. CDSI
    CDSI is a Maryland computer firm involved in a contract 
dispute with the Cordoba provincial government in Argentina. 
CDSI believes that Cordoba officials improperly reversed a 
contract award to a firm with which it had a subcontract, 
depriving it of the value of its investment.
    Department officials have discussed the case with CDSI 
representatives in Washington. Embassy officials are in regular 
contact with CDSI representatives in Buenos Aires.
    CDSI has informed us that, if the dispute is not resolved 
through ongoing negotiations, it may avail itself of the right 
to binding arbitration under the BIT. We will continue to work 
with company and officials in Argentina to resolve this case.
    [State Department officials have informed Committee staff 
that CDSI recently reached an agreement with the provincial 
government of Cordoba. According to State Department officials 
the parties are satisfied with the agreement.]
2. Mi-Jack
    Mi-Jack, based in Illinois and Texas, owns about 30% of a 
company that purchased the right to operate one of five 
terminals at the Port of Buenos Aires. (The rest of the equity 
is not owned by Americans.) Mi-Jack is operating the dock in 
accordance with regulations, fees, and labor rules specified by 
the Government of Argentina in the tender.
    At some point after this tender process began, the 
Argentine federal government transferred adjacent dock property 
to the Buenos Aires provincial government. The provincial 
government leased the property to a company which began 
operating a sixth terminal, without the conditions imposed on 
other dock operators by the federal government. Mi-Jack 
maintains that this unequal treatment is a BIT violation, and 
has requested USG assistance.
    Department and other agency officials have discussed the 
case with Mi-Jack. Our Ambassador recently urged the Argentine 
Minister of Economy and the Governor of the Province of Buenos 
Aires to address the issues Mi-Jack has raised and resolve the 
dispute.

    The Committee believes that the value of the proposed 
treaty depends upon the extent to which it is enforced. The 
Committee refers to the two cases in Argentina, cited above, as 
examples of how the proposed treaty can be a useful tool both 
to business and U.S. embassies in protecting the interests of 
U.S. business directly investing in-country. The Committee 
believes that the treaty should serve as more than a diplomatic 
tool. The Committee notes that local remedies and domestic 
enforcement of arbitral awards are essential steps in enforcing 
the guarantees provided in the proposed treaty and believes 
that the President should communicate, at the time of the 
exchange of the instruments of ratification, the importance of 
a domestic enforcement regime to the ultimate success of the 
proposed treaty. Such an indication would add credence to the 
U.S. position that BITs provide genuine protections to 
investors, and are not merely rhetorical endorsements of market 
economies.

             c. protecting u.s. businesses investing aboard

    Although a BIT provides certain legal protections designed 
to give investors recourse in the case of unfair treatment, the 
role of the U.S. State Department and other government agencies 
such as USTR remains essential to the protection of U.S. 
citizens doing business abroad.
    Issues regarding the role of the State Department and U.S. 
posts abroad in assisting U.S. investors were raised during the 
Committee's consideration of the BIT. After the November 30, 
1995 hearing, Senator Helms requested a description of the 
general procedure at U.S. Embassies, and in Washington, for 
assisting U.S. investors when potential BIT violations, or 
investment disputes, including expropriated property claims, in 
countries not a Party to a BIT, are brought to the attention of 
the Embassy by the investors. State Department's response to 
this inquiry, in a letter dated December 18, 1995,\2\ is 
reproduced below:
---------------------------------------------------------------------------
    \2\ Letter from Assistant Secretary for Legislative Affairs, Wendy 
R. Sherman, to Senator Helms, Committee on Foreign Relations, December 
18, 1995.
---------------------------------------------------------------------------
    An important responsibility of all U.S. diplomatic posts 
abroad is to assist U.S. investors and property owners in the 
resolution of disputes with the host government. Where disputes 
arise, U.S. posts and the Department provide a range of 
services to the U.S. claimant.
    These services include:
          (1) advising the U.S. claimant of local legal counsel 
        which may be available to handle similar disputes;
          (2) assisting the U.S claimant in contacting host 
        government officials which may be in a position to 
        facilitate a resolution of his claim;
          (3) directly encouraging host government officials to 
        negotiate a resolution of the claim; (such contacts may 
        be on behalf of a single claimant or multiple claimants 
        where there are a number of outstanding claims);
          (4) occasionally, where the circumstances warrant, 
        the U.S. may decide to directly espouse a claim or 
        claims; and
          (5) in addition, where a BIT is in force, other 
        options (e.g. binding investor-state arbitration) may 
        be brought to the attention of the investor and/or 
        local officials.
    Given the wide variety of circumstances associated with 
investment disputes around the globe, the range of resources 
available at individual diplomatic posts, the variety of 
assistance being requested by individual investors, and the 
diversity of host country investment regimes, a good deal of 
discretion is necessary to tailor individual response to the 
particular circumstances of the case.
    For example, the approach taken in the case of a country 
which has a well functioning judicial system and demonstrated 
effectiveness in adjudicating disputes may be quite different 
from that taken with respect to cases where some or all of 
these conditions do not prevail. The investor's preferences 
also guide our response. The current approach to providing 
assistance to U.S. claimants in investment disputes permits us 
the flexibility needed to tailor a response that reflects both 
the conditions prevalent in the host country and the investor's 
own strategy.
    Action on investment disputes is coordinated through 
constant routine communication among Embassy and Washington 
offices. This is supplemented by periodic formal requests from 
the Department for information on investment disputes and by 
the Post's preparation of the Investment Climate Statements for 
each country. In addition, the Department chairs the 
Interagency Staff Coordinating Group on Expropriations 
(``Expropriation Group''), which is comprised of 
representatives from the Office of the United States Trade 
Representative, the Overseas Private Investment Corporation, 
the Department of Commerce, and the Department of the Treasury. 
This group meets periodically to discuss expropriation and 
related issues.
    In addition to assisting individual U.S. investors when 
they have an investment dispute, we engage in activities that 
could help prevent investment disputes. Officials in Washington 
and in our Embassies also examine investment practices in other 
nations and work to discourage other governments from passing 
legislation that might disadvantage U.S. investors and lead to 
investment disputes. The results of these examinations are 
included in the annual Investment Climate Statement, a report 
which is widely used by both U.S. officials and investors. We 
also engage in negotiations with other governments on BITS and 
multilateral disciplines that help protect the interests of 
U.S. investors.
    In the past year or two, we have reached a point where a 
significant number of BITs have entered into force and, thus, 
apply to U.S. investment. At this time, we are reviewing ways 
to even better inform our posts about the obligations contained 
in these BITs, in order to assist U.S. investors and monitor 
compliance with these obligations by our BIT treaty partners.

    The Committee supports the efforts of the State Department 
and U.S. foreign posts to educate businesses and ensure that 
the investment climate in these countries remains open and fair 
for U.S. businesses. The Committee supports the BIT as a tool 
for both businesses and U.S. diplomats to ensure fair 
investment environments where U.S. companies are doing 
business.
    In addition, Senator Helms requested an assessment of the 
utility of developing procedures at the State Department to 
ensure consistently timely response when investors bring 
foreign investment problems to the attention of U.S. Posts and 
the Department. State Department's response to this inquiry, 
was also included in the dated December 18, 1995 letter, as 
reproduced below:

    It is current State Department policy and practice to 
respond in a timely manner when investors bring investment 
problems to the attention of embassies. Any lapse in such 
practice can and should be brought to the attention of the 
Office of Investment Affairs in Washington, which will ensure 
that a response is forthcoming.
    While a timely response should be a constant, we believe 
that the nature of that response should vary from case to case. 
Investors benefit from the freedom our diplomats enjoy to 
pursue solutions tailored to the investor's problems. In some 
countries, a quiet call from an Embassy officer to a government 
official can help an investor. Elsewhere, if the government has 
not been responsive, we may directly approach senior government 
officials.
    The following examples illustrate the variety and 
complexity of individual circumstances.
    A company informed us of an investment dispute, but 
specifically requested that we not take any action as 
negotiations continued.
    In a country undergoing civil strife, investors are 
pursuing arbitration through an international financial 
institution.
    In one country, we have had to develop specialized 
procedures and increase Embassy staffing to deal with a very 
large number of claims.
    Supplanting our existing flexible process for assisting 
U.S. claimants with a ``one size fits all'' policy would not 
likely work to the benefit of investors. Investors gain when we 
are free to fashion a response that takes into consideration 
the facts unique to that dispute, the investor's strategy for 
obtaining resolution to the dispute, the resources available to 
the USG to promote a quick resolution to the dispute, and the 
broader economic and political context within which we and the 
investor must work to achieve the desired outcome.
    As described in the previous question, American diplomats 
and Department employees use a wide variety of strategies to 
assist U.S. citizens in investment disputes abroad. Required 
procedures could have significant resource implications without 
increasing the effectiveness of these strategies. Furthermore, 
we do not believe that a procedure developed in Washington 
which may not reflect either the unique conditions existing in 
a particular country or the experiences of our diplomats or 
businessmen is in the interests of either U.S. investors or the 
United States.

    The Committee agrees that a ``one size fits all'' approach 
to addressing how best to protect U.S. investors faced with 
disputes with foreign governments would not be useful. However, 
the Committee supports the development by State and USTR of 
flexible procedures that ensure that all U.S. investors, large 
and small, will be given timely assistance when they raise 
investment issues with the U.S. State Department, both at the 
missions and in Washington. The Committee expects that such 
procedures would ensure appropriate coordination between U.S. 
missions and the State Department and the Office of the U.S. 
Trade Representative in Washington.

            VII. Explanation of Proposed Treaty and Protocol

    For a detailed article-by-article explanation of the 
proposed bilateral investment treaty, annex, protocol, and 
related exchange of notes, see the analysis contained in the 
transmittal documents included in Treaty Doc. 103-36.

              VIII. Text of the Resolution of Ratification

    Resolved, (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of The Treaty Between the United States of America 
and the Republic of Belarus Concerning the Encouragement and 
Reciprocal Protection of Investment, with Annex, Protocol, and 
Related Exchange of Letters, signed at Minsk on January 15, 
1994 (Treaty Doc. 103-36). The Senate's advice and consent is 
subject to the following declaration, which the President, 
using existing authority, shall communicate to the Republic of 
Belarus, in connection with the exchange of the instruments of 
ratification of the Treaty:
    It is the Sense of the Senate that the United States:
          (a) supports the Belarusian Parliament and its 
        essential role in the ratification process of this 
        Treaty;
          (b) recognizes the progress made by the Belarusian 
        Parliament toward democracy during the past year;
          (c) fully expects that the Republic of Belarus will 
        remain an independent state committed to democratic and 
        economic reform; and
          (d) believes that, in the event that the Republic of 
        Belarus should unite with any other state, the rights 
        and obligations established under this agreement will 
        remain binding on that part of the Successor State that 
        formed the Republic of Belarus prior to the union.