[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).