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104th Congress                                              Exec. Rept.
                                 SENATE

 2d Session                                                      104-15
_______________________________________________________________________


 
TREATY BETWEEN THE UNITED STATES OF AMERICA AND MONGOLIA CONCERNING THE 
 ENCOURAGEMENT AND RECIPROCAL PROTECTION OF INVESTMENT, WITH ANNEX AND 
                                PROTOCOL

                                _______
                                

                 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. 104-10]

    The Committee on Foreign Relations to which was referred 
the Treaty Between the United States of America and Mongolia 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex and Protocol, signed at Washington on 
October 6, 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 non-discriminatory treatment.

                             II. Background

    The proposed treaty together with the proposed annex and 
protocol, was signed on October 6, 1994. No bilateral 
investment treaty is currently in force between the United 
States and Mongolia.
    The proposed treaty and annex were transmitted to the 
Senate for advise and consent to ratification on July 26, 1995 
(see Treaty Doc. 104-10). 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 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. But 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, 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 following compares the provisions of the Treaty Between 
the United States of America and Mongolia Concerning the 
Encouragement and Reciprocal Protection of Investment, with 
Annex and protocol (Treaty Doc. 104-10) (BIT), with those of 
the United States 1992 Model Bilateral Investment Treaty 
(Model), on which the former is based.
    Preamble.--The preamble of the BIT is identical to that of 
the Model. 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 workers 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.
    Article I (definitions and general provision).--The BIT 
follows the Model with respect to definitions except that the 
BIT adds definitions for the terms ``investment authorization'' 
and ``investment agreement.'' An ``investment authorization'' 
is defined as ``an authorization granted by the foreign 
investment authority of a Party to an investment or a national 
or company of the other Party (Art. I:1(f)). An ``investment 
agreement'' is defined as ``a written agreement between the 
national authorities of a Party and an investment of a national 
or company of the other Party that (i) grants rights with 
respect to natural resources or other assets controlled by the 
national authorities and (ii) the investment, national or 
company relies upon in establishing or acquiring an 
investment'' (Art. I:1(g)). State Department officials have 
informed Committee staff that these definitions were added to 
ensure the coverage of investment in natural resources--the 
sector of greatest interest to U.S. investors--which typically 
involves investment agreements and authorizations.
    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).
    The BIT also contains provisions identical to the Model as 
to the minimum treatment to be accorded investments; 
prohibiting arbitrary and discriminatory impairment of 
investments; and requiring each Party to observe any obligation 
it may have entered into with respect to an investment (Art. 
II:2).
    The BIT also follows the Model as to entry of nationals for 
investment purposes (Art. II:3); engaging top managerial 
personnel of choice (Art. II:4); prohibiting performance 
requirements (Art. II:5); providing effective means of 
asserting claims and enforcing rights (Art. II:6); making 
public all laws, regulations, administrative processes, and 
adjudicatory decisions pertaining to or affecting investments 
(Art. II:7); clarifying the application of the BIT on a 
national treatment basis in states, territories, and 
possessions of the United States (Art. II:8; removing from the 
scope of MFN treatment a Party's binding obligation 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:9).
    Article III (expropriation).--The BIT is identical to the 
Model's expropriation article, except for provisions addressing 
the calculation of compensation and the transferability of 
proceeds. While the Model provides that compensation is to be 
calculated ``in a freely usable currency on the basis of the 
prevailing market rate of exchange'' immediately before the 
expropriatory action was taken or became known, whichever is 
earlier, the BIT deletes the reference to ``freely usable 
currency,'' thus making calculations dependent only on the 
prevailing market of exchange at the time indicated (Art. 
III:1). Further, where the Model requires the compensation be 
``freely transferable at the prevailing market rate of exchange 
on the date of expropriation,'' the BIT deletes the 
qualification as to market exchange rates (Art. III:1).
    Article IV (transfers).--Article IV of the BIT follows the 
Model regarding transfers into and out of the territory of a 
Party, except that it defines the term ``freely usable 
currency'' and adds an obligation regarding returns in kind.
    Article IV, 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. 
The BIT provides that ``freely usable currency'' has the same 
meaning that it has in Article 30 of the Articles of Agreement 
of the International Monetary Fund (Art. IV:2). At this time, 
these currencies include the United States dollar, Japanese 
yen, German mark, French franc, and the British pound sterling. 
The State Department has informed staff that this reference was 
added at the request of Mongolia for the sake of clarity.
    The BIT further provides that Each Party must allow returns 
in kind to be made ``as authorized or specified in an 
investment authorization, investment agreement, or other 
written agreement between the Party and an investment or a 
national or company of the other Party'' (Art. IV:4). The State 
Department has informed staff that this language also was added 
to ensure that U.S. investors in oil, gas, timber and other 
natural resources are clearly covered.
    Article V (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 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. Mongolia 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. It has 
also declared that it will apply the Convention only to 
differences arising out of legal relationships, whether 
contractual or not, which are considered as commercial under 
its national law. Mongolia is also a Party to the Convention on 
the Settlement of Investment Disputes between States and 
Nationals of Other States.
    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.
    Article VIII (exemptions from treaty dispute procedures).--
Like the Model, the BIT exempts from its investor/state and 
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.
    Article IX (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 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 X (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. The State Department officials have informed 
Committee staff that during negotiation of the BIT Parties 
agreed that this provision is self-judging.
    Article XI (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. No treaty provision 
will impose obligations with respect to taxation, except that 
(to the extent not subject to dispute settlement of a bilateral 
tax treaty) investors may institute dispute proceedings with 
respect to expropriations, transfers, or the enforcement of an 
investment agreement or authorization.
    Article XII (extent of application).--Like the Model, the 
BIT clarifies that it fully applies to all political 
subdivisions.
    Article XIII (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 specified in the Model, 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, except for its coverage of 
financial services in the national treatment paragraph (Annex, 
paragraph 1, 2). Where the Model exempts primary dealership in 
United States government securities, the BIT exempts 
``securities and other financial services'' and eliminates the 
Model's separate listing for primary dealership in United 
States government securities (Annex, paragraph 1).
    The Annex contains an additional paragraph listing the 
sectors in which Mongolia may make or maintain limited 
exceptions from its national treatment obligation (no MFN 
exceptions are listed) (Annex, paragraph 3). Only land 
ownership and banking are included in this exception.
    Protocol (MFN and national treatment).--Unlike the Model, 
the BIT contains a Protocol addressing the scope of the 
treatment obligations. The Parties clarify that the national 
and MFN obligations set forth in Article II, paragraph 1 of the 
Treaty ``apply to the establishment and acquisition as well as 
to the expansion, management, conduct, operation and sale or 
other disposition of investments.''

                  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 and protocol with Mongolia on 
November 30, 1995. The hearing was chaired by Senator Thompson. 
The Committee considered the proposed treaty, annex and 
protocol with Mongolia 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.

                         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 to Senate 
consideration of this 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\)               2               7
1993............................................           (\1\)           (\1\)              17              36
1994............................................           (\1\)           (\1\)               6              29
1995............................................           (\1\)           (\1\)              14              25
----------------------------------------------------------------------------------------------------------------
\1\ No data.                                                                                                    

United States direct investment flows to Mongolia

    No data is published by the Department of Commerce 
regarding U.S. direct investment which flowed from the United 
States to Mongolia 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 Mongolia

    No data is published by the Department of Commerce for 
Mongolia 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 Mongolia

    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 the Census. The import data 
include the cost of the imported goods, shipping insurance and 
freight. Overall imports totaled $361 million and overall 
exports totaled $360 million in 1993.
    The Committee is encouraged by Mongolia's enactment of 
domestic laws compatible with the obligations created by the 
proposed treaty and encourages Mongolia to continue to enact 
and to enforce laws that are favorable to foreign investors. 
Recently, Mongolia passed legislation to protect private 
property and foreign investments from government expropriation. 
New laws also provide equal treatment for Mongolian and foreign 
companies. The Committee is encouraged by the limited number of 
exceptions to national treatment taken by Mongolia in the 
proposed treaty and notes that Mongolia has eliminated 
restrictions on currencies and profits in their domestic 
legislation. The Committee believes that this treaty will 
provide the tools to ensure a reduction on the restriction of 
foreign investment in other sectors.
    The Committee recognizes the severe difficulties faced by 
Mongolia in its efforts to transform its economy from a 
centrally planned to a market economy. The Committee notes the 
progress of Mongolia in the areas of privatization and price 
reform--in addition to its passage of market-oriented laws--and 
encourages continued efforts in this area. The Committee 
believes that the proposed treaty will assist Mongolia in its 
work to rebuild its economy on market principles, without 
outside capital no longer available since the collapse of the 
Soviet Union, and to provide basic guarantees that are 
essential to attracting U.S. investors.

                             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 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 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 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, and protocol, see 
the analysis contained in the transmittal documents included in 
Treaty Doc. 104-10.

              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 Mongolia Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex and Protocol, signed at 
Washington on October 6, 1994 (Treaty Doc. 104-10).