[Senate Executive Report 104-17]
[From the U.S. Government Publishing Office]



104th Congress                                              Exec. Rept.
                                 SENATE

 2d Session                                                      104-17
_______________________________________________________________________


 
 TREATY BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE 
GOVERNMENT OF THE REPUBLIC OF GEORGIA CONCERNING THE ENCOURAGEMENT AND 
            RECIPROCAL PROTECTION OF INVESTMENT, WITH ANNEX

                                _______
                                

                 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. 104-13]

    The Committee on Foreign Relations to which was referred 
The Treaty Between the Government of the United States of 
America and the Government of the Republic of Georgia 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex, signed at Washington on March 7, 1994, 
having considered the same, reports favorably thereon without 
amendment and recommends that the Senate give its advice and 
consent to ratification thereof 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 annex was signed on 
January 15, 1994. No bilateral investment treaty is currently 
in force between the United States and Georgia.
    The proposed treaty and annex were transmitted to the 
Senate for advice and consent to ratification on July 10, 1995 
(see Treaty Doc. 104-13). The Committee on Foreign Relations 
held a public hearing on the proposed treaty together with the 
proposed annex 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 guaranties 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 Government of the United States of 
America and the Government of the Republic of Georgia 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex (Treaty Doc. 104-13) (BIT), is based on 
the United States 1994 Model Bilateral Investment Treaty 
(Model). The following is an analysis of the major provisions 
of the treaty.
    Preamble.--The Preamble of the BIT establishes the goals of 
the treaty to include: greater economic cooperation, the 
stimulation of the flow of private capital and economic 
development, maximization of effective utilization of economic 
resources and the improvement of living standards, respect for 
internationally recognized worker rights, and the 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.
    The preamble of the BIT is identical to that of the Model. 
The 1994 Model adds to the 1992 Model BIT the caption. 
``Agreeing that these [treaty] objectives can be achieved 
without relaxing health, safety and environmental measures of 
general application.''
    Article I (definitions).--The BIT is identical to the 
Model, containing definitions for the following terms: company, 
company of a party, national, investment, covered investment 
(defined as ``an investment of a national or a company of a 
Party in the territory of the other Party''), state enterprise, 
investment authorization, investment agreement, ICSID 
Convention, Centre (meaning ``International Centre for the 
Settlement of Investment Disputes established by the ICSID 
Convention''), and UNCITRAL Arbitration Rules.
    Article II (treatment).--The BIT is identical to the Model, 
requiring Parties to grant the better of most-favored-nation or 
national treatment to covered investments and to ensure that 
state enterprises to the same (Art. III:1), allowing Parties to 
adopt or maintain exceptions to these obligations for sectors 
enumerated in the BIT Annex and prohibiting Parties from 
requiring divestment of a covered investment at the time an 
exception becomes effective (Art. III:2(a)); exempting from the 
treatment obligation in paragraph 1 the procedures adopted in 
multilateral agreements concluded under the auspices of the 
World Intellectual Property Organization (WIPO (Art. III:2(b)); 
requiring Parties to accord covered investments certain minimum 
treatment and prohibiting Parties from impairing investments 
through unreasonable and discriminatory measures (Art. III:3); 
requiring Parties to provide effective means of asserting 
claims and enforcing rights with respect to covered investments 
(Art. II:4); and requiring that Parties ensure that all laws, 
regulations, administrative processes of general application, 
and adjudicatory decisions pertaining to or affecting 
investments are promptly published or otherwise made publicly 
available (Art. II:5).
    Article III (expropriation).--The BIT is identical to the 
Model: it 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); sets forth specific requirements as to compensation 
(Art. III:2); and 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).
    Separate standards are set for freely usable currency and 
for currency that is not freely usable. The term ``freely 
usable'' is not defined, although the State Department's Letter 
of Submittal indicates that the term refers to the 
International Monetary Fund standard, which currently includes 
the United States dollar, Japanese yen, German mark, French 
franc and British pound sterling.
    Article IV (compensation due to war and other events).--The 
BIT is identical to the Model, requiring protection of 
investments during war or other civil conflicts. Parties must 
accord covered investments national and MFN treatment regarding 
any measures relating to losses that investments suffer due to 
war or other civil conflict or disturbance (Art. IV:2) and must 
accord restitution, or pay compensation in accord with the 
standards set forth in the expropriation article, in the event 
that covered investments suffer losses due to such events, 
where the losses result from requisitioning or unnecessary 
destruction of the investment (Art. IV:2).
    Article V (transfers).--The BIT is identical to the Model, 
requiring Parties to allow all transfers relating to a covered 
investment to be made freely and without delay into and out of 
its territory and containing a non-inclusive list of transfers 
(Art. V:1). Transfers must be permitted in a freely usable 
currency at the market rate of exchange prevailing on the date 
of transfer (Art. V:2). Returns in kind are to be allowed as 
authorized in an investment authorization or written agreement 
between the Party and a covered investment of a national or 
company of the other Party (Art. V:3). In any event, Parties 
may prevent a transfer through the equitable, non-
discriminatory and good faith application of law relating to 
bankruptcy, issuing and trading in securities; criminal 
offenses; or ensuring compliance with judicial orders or 
judgments (Art. V:4).
    Article VI (performance requirements).--The BIT follows the 
Model in prohibiting specified performance requirements from 
being imposed as conditions for the establishment, acquisition, 
expansion, management, conduct or operation of a covered 
investment. Prohibited requirements include any commitment or 
undertaking in connection with the receipt of a governmental 
permission or authorization, but do not include conditions for 
the receipt or continued receipt of an advantage.
    Article VII (entry and employment of aliens).--The BIT is 
identical to the Model as to entry of and sojourn of aliens for 
investment purposes (Art. VII:1) and engaging top managerial 
personnel of choice regardless of nationality (Art. VII:2).
    Article VIII (consultations).--The BIT is identical to the 
Model regarding the obligation of Parties to consult with 
respect to disputes and other matters arising under the Treaty.
    Article IX (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 (Art. IX:4). Georgia is a 
Party to the New York Convention on the Recognition and 
Enforcement of Foreign Arbitral Awards. It does not appear to 
have entered into the Convention reciprocally and would thus 
presumably enforce all foreign arbitral awards subject to the 
Convention, whether or not awarded in the territory of another 
contracting state. Georgia is also a Party to the Convention on 
the Settlement of Investment Disputes between States and 
Nationals of Other States.
    Article X (interstate disputes).--The BIT is identical to 
the Model in providing for binding arbitration for interstate 
disputes in the event such dispute has not been resolved 
through consultations or other diplomatic means. Unlike the 
1992 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, OIC, and other relevant government 
agencies indicated prior to the negotiation of this Treaty that 
they saw no need to maintain such a provision.
    Article XI (preservation of rights).--The BIT is identical 
to the Model in allowing each Party to provide covered 
investments treatment that is more favorable than 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 XII (denial of benefits).--The BIT follows the 
Model as to the right to deny treaty benefits to companies 
controlled by nationals or firms of third countries where (1) 
the denying party does not maintain normal economic relations 
with the third country or (2) the company has no substantial 
business activities in the territory of the Party in which it 
is legally established.
    Article XIII (taxation).--The BIT is identical to the 
Model, stating that no Treaty provision will impose obligations 
with respect to taxation except that investors may institute 
dispute proceedings with respect to tax provisions of an 
investment agreement or authorization or with respect to tax 
matters that result in expropriations. Before requesting 
arbitration claimants must refer the question of whether the 
tax matter involves an expropriation to the competent tax 
authorities of both Parties. Article IX arbitration may not be 
pursued if both Parties determine within nine months of the 
referral that the matter does not involve an expropriation.
    Article XIV (measures not precluded).--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.
    Article XV (extent of application).--Like the Model, the 
BIT clarifies that the treaty applies to the political 
subdivisions of the Parties and also clarifies the national 
treatment obligation on states, territories and possessions of 
the United States--that is, they must provide covered 
investment treatment no less favorable than that accorded 
investments of United States nationals and companies from other 
U.S. states (Art. XV:1). As in the Model, A Party's BIT 
obligations apply to state enterprise in exercising any 
government authority delegated it by the Party (Art. XV:2).
    Article XVI (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. As in the Model, the BIT Annex forms an 
integral part of the Treaty.
    Annex (sectoral exemptions).--Both the United States and 
the Republic of Georgia have exempted listed sectors and 
matters from their MFN and/or national treatment obligations.
    The United States may adopt or maintain national treatment 
exceptions (but must accord MFN treatment) in the following 
sectors and matters: atomic energy, customhouse brokers, 
licenses for broadcast, common carrier, or aeronautical radio 
station; COMSAT; subsidies or grants, including government-
sponsored loans, guarantees and insurance; state and local 
measures exempt from Article 1102 of the NAFTA; and landing of 
submarine cables (Annex, paragraph 1). Both national treatment 
and MFN exceptions may be made with respect to fisheries; air 
and maritime transport and related activities; and banking, 
insurance, securities, and other financial services (Annex, 
paragraph 2).
    The Republic of Georgia may adopt or maintain national 
treatment exceptions (but must accord MFN treatment) to the 
following: fisheries, air and maritime transport, and related 
activities; ownership of broadcast, common carriers, or 
aeronautical radio stations; communications satellites; 
government-supported loans, guarantees, and insurance; landing 
of submarine cables; and for three years from the date the BIT 
enters into force, banking, insurance, securities, and other 
financial services (Annex, paragraph 3). No MFN exceptions are 
listed.
    The Annex also contains a reciprocal national treatment 
obligation with respect to covered investments in the leasing 
of minerals or pipeline rights-of-way on government land 
(Annex, paragraph 4).

                  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 and annex with Georgia on November 30, 
1995. The hearing was chaired by Senator Thompson. The 
Committee considered the proposed treaty and annex with Georgia 
on March 27, 1996, and ordered the proposed treaty and annex 
favorably reported by voice vote, with the recommendation that 
the Senate give its advice and consent to the ratification of 
the proposed treaty and annex.

                         VI. Committee Comments

    The Committee on Foreign Relations recommended favorably 
the proposed treaty and on balance, the Committee believes that 
the proposed treaty is in the interest of the United States and 
urges the Senate to act promptly to give its advice and consent 
to ratification. Several issues did arise in the course of the 
Committee's consideration of the BIT, and the Committee 
believes that the following comments may be useful in Senate 
consideration of the treaty and to the State Department and the 
Office of the United States Trade Representative, which share 
jurisdiction over this treaty.

                    A. CURRENT INVESTMENT STATISTICS

----------------------------------------------------------------------------------------------------------------
                                                                 Direct                                         
                                                               investment     Stock       Exports      Imports  
----------------------------------------------------------------------------------------------------------------
1992........................................................        (\1\)        (\1\)            0            0
1993........................................................        (\1\)        (\1\)           48           22
1994........................................................        (\1\)        (\1\)           78            1
1995........................................................        (\1\)        (\1\)           95           12
----------------------------------------------------------------------------------------------------------------
\1\ No data.                                                                                                    

 United States direct investment flows to Georgia

    No data is published by the Department of Commerce 
regarding U.S. direct investment which flowed from the United 
States to Georgia in the indicated calendar year. The Commerce 
Department has not released its ``Survey of Current Business'' 
for 1995.

 United States year-end stocks of direct investment in Georgia

    No data is published by the Department of Commerce for 
Georgia regarding the total amount of U.S. direct investment 
accumulated over time as of the end of the year. The Commerce 
Department has not released its ``Survey of Current Business'' 
for 1995.

 United States trade with Georgia

    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.
    Since regaining its independence in 1991, Georgia has faced 
the threat of economic collapse, near famine in certain 
regions, civil war, separatist conflict, rampant crime, and 
political infighting. According to the USTR's ``1996 National 
Trade Estimate Report on Foreign Trade Barriers,'' a primary 
objective of U.S. policy has been to create a legal framework 
for productive trade, investment, and protection of 
intellectual property between the U.S. and the Newly 
Independent States, including Georgia. The Committee expects 
that ratification of this investment treaty will provide a 
helpful tool to U.S. businesses investing in Georgia. Finance 
and taxation systems in Georgia remain rudimentary. The 
Committee believes that if Georgia is to develop a free market 
economy, independent from Russian control, it must adopt and 
enforce the protections contained in this treaty.
    Although there was some improvement in the Georgian economy 
during 1995, throughout 1993 and 1994 much of industry was 
functioning at 20 percent capacity, agriculture was heavily 
disrupted, and the tourist industry virtually shut down. The 
Committee supports the development of a democratic free market 
system that will firmly establish Georgia's independence from 
Russia and a stronger trading relationship wit the West. The 
Committee is encouraged by the recent agreement to build one of 
two ``early oil'' pipelines that would transport oil from 
Azerbaijan across Georgia to Georgian Black sea ports. The 
Committee favors this agreement as it should provide some badly 
needed opportunities for economic expansion in Georgia.

                             b. 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 
Argentina 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 Aries 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 enforce. 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 Abroad

    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 responses 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 Posts' 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 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 interest 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 and annex, see the 
analysis contained in the transmittal documents included in 
Treaty Doc. 103-13.

              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 Government of the United 
States of America and the Government of the Republic of Georgia 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex signed at Washington on March 7, 1994 
(Treaty Doc. 104-13).