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104th Congress                                              Exec. Rept.

 2d Session                                                      104-18



                 June 20, 1996.--Ordered to be printed


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

                              R E P O R T

                   [To accompany Treaty Doc. 104-14]

    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 Trinidad and 
Tobago Concerning the Encouragement and Reciprocal Protection 
of Investment, with Annex and Protocol, signed at Washington on 
September 26, 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 

                               I. Purpose

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

                             II. Background

    The proposed treaty together with the proposed annex and 
protocol, was signed on September 26, 1994. No bilateral 
investment treaty is currently in force between the United 
States and Trinidad and Tobago.
    The proposed treaty, annex and protocol were transmitted to 
the Senate for advice and consent to ratification on July 11, 
1995 (see Treaty Doc. 104-14). 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 
          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 United States is 
delaying the exchange of instruments until Ecuador has fully 
implemented its obligations under the United States-Ecuador 
intellectual property rights agreement. There are currently 12 
on-going negotiations for BITs with other countries.

                       b. comparison to the model

    This memorandum compares the provisions of the Treaty 
Between the Government of the United States of America and the 
Government of the Republic of Trinidad and Tobago Concerning 
the Encouragement and Reciprocal Protection of Investment, with 
Annex (Treaty Doc. 104-14) (BIT), with those of the United 
States 1994 Model Bilateral Investment Treaty (Model), on which 
the former is based. The following is an analysis of the major 
provisions of the treaty to supplement the section-by-section 
analysis contained in Treaty Doc 104-14.
    Preamble.--The preamble of the BIT is identical to that of 
the Model, which 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.'' The Preamble 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.
    Article I (definitions).--The BIT is generally 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. The 
BIT adds a definition for the term ``territory,'' which 
includes the territorial sea established in the international 
law as reflected in the 1982 United Nations Convention on the 
Law of the Sea (Art. I(1)). The definitional section for 
``territory'' further adds that the BIT applies in the seas and 
seabed adjacent to the territorial sea in which either treaty 
partner has sovereign rights or jurisdiction in accordance with 
international law as reflected in the 1982 U.N. Convention. 
State Department negotiators informed Committee staff that this 
change was made at the request of the Government of Trinidad 
and Tobago. Similar language is contained in the BITs with 
Argentina and Romania, both of which are in force.
    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 do 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 one 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 or 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, prohibiting 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); 
setting forth specific requirements as to compensation (Art. 
III:2); and establishing 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 (i.e., currency that is freely usable or not) (Art. 
III:3, Art. III:4). 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 
    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 (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. The BIT deviates slightly from the 
Model, which states that performance requirements ``do not 
include conditions for the receipt or continued receipt of an 
advantage.'' Instead the BIT contains a separate paragraph 
stating that nothing in the prohibition on performance 
requirements ``shall preclude a Party from providing benefits 
and incentives conditioned upon such requirements'' (Art. 
VI:2). This modification does not change the provision's 
    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). The 
Treaty replaces the Model's word with the word ``employment'' 
(Art. VII:1) A similar change was made in the BIT with Jamaica 
in order to reflect domestic law.
    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). Trinidad and 
Tobago 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, it will apply the 
Convention to the recognition and enforcement of awards made 
only in the territory of another contracting state. It has also 
entered into the Convention with a declaration 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. Trinidad and Tobago is 
also a Party to the Convention on the Settlement of Investment 
Disputes between States and Nationals of Other States.
    Article X (interstate disputes).--Except for amplifying a 
provision on expenses, 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. The BIT adds a 
statement that each Party ``shall pay the costs of its 
representation in the arbitral proceedings'' (Art. X:4). This 
modification does not change the prototype's meaning, but 
merely makes explicit what is understood by the Parties. Both 
the Model and the BIT provide that the cost of the arbitrators 
and the proceedings are to be paid for equally by the Parties. 
In lieu of a provision in the Model that notwithstanding this 
provision ``the arbitral panel may, at its discretion, direct 
that a higher proportion of the costs be paid by one of the 
Parties,'' the BIT provides that ``the arbitral tribunal may, 
taking into account the circumstances of the case, at its 
discretion, reapportion such costs between the Parties if it 
determines that reapportionment is reasonable'' (Art. X:4).
    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 constituted or organized.
    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. 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. State Department officials have informed 
Committee staff that during negotiation of the BIT Parties 
agreed that this provision is self-judging.
    Article XV (extent of application).--Like the Model, the 
BIT clarifies that the treaty applies to the political 
subdivision of the Parties and 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 enterprises in exercising any governmental authority 
delegated to 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. The BIT adds a provision stating 
that the treaty may be amended by agreement between the Parties 
(Art. XVI:2). State Department negotiators have informed 
Committee staff that this provision was added merely to 
reiterate the international law rule that treaties may be 
amended by agreement between Parties. Any such amendment would 
have to be transmitted to the Senate for its advice and consent 
to ratification before the amendment could enter into force.
    Annex (sectoral exemptions).--Both the United States and 
the Republic of Trinidad and Tobago have exempted listed 
sectors and matters from their MFN and national treatment 
    United States. 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, and air and maritime transport and 
related activities (Annex, paragraph 2).
    In addition, the United States may adopt or maintain MFN 
and national treatment exceptions with respect to banking, 
insurance, securities and other financial services, provided 
that the exceptions do not result in treatment of covered 
investments that is less favorable than the treatment that the 
United States has agreed to accord to NAFTA parties (Annex, 
paragraph 3).
    Trinidad and Tobago. The Republic of Trinidad and Tobago 
may adopt or maintain national treatment exceptions (but must 
accord MFN treatment) as to the following: civil aviation; real 
property; subsidies or grants, including government-supported 
loans, guarantees, insurance and other similar measures; 
customs brokers and customs clerks; gambling, betting and 
lotteries (Annex, paragraph 4).
    MFN exceptions may also be adopted or maintained, within 
the context of the CARICOM Enterprises Regime, in the following 
sectors: items in the sectors described in the previous 
paragraph; benefits granted under the Scheme for the 
Harmonization of Fiscal Incentives to Industry; and fiscal 
incentives in respect of agriculture, tourism and forestry 
(Annex, paragraph 5).
    Other. 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 6).
    Protocol.--Unlike the Model, the BIT contains a Protocol 
addressing issues related to (1) investments in real property 
in light of current laws and treatment accorded CARICOM states 
and (2) retroactivity of treaty obligations.
    The Protocol provides, at paragraph 1, that with respect to 
Trinidad and Tobago's sectoral national treatment exception for 
real property, the Parties note that in accordance with that 
country's foreign investment legislation: (a) investment in 
land must be directly related to a trade or business activity; 
(b) a foreign investor may acquire land, the area of which does 
not exceed five acres, for residential purposes, without 
obtaining a license; and (c) a foreign investor may acquire 
land, the area of which does not exceed five acres, for the 
purposes of trade or business without obtaining a license. 
State Department negotiators informed Committee staff that this 
paragraph addressing the current legal regime with respect to 
real property in Trinidad and Tobago was added to make this 
sector's inclusion in the national treatment annex (Annex, 
paragraph 4) entry more transparent.
    The Parties further note that these provisions may not 
apply to citizens of CARICOM states and clarify that the MFN 
obligations of the Treaty do not entitle covered investments of 
the United States to the treatment accorded to citizens of 
CARICOM states with respect to exemptions from these 
restrictions (Annex, paragraph 1).
    The Parties further clarify that treaty obligations do not 
bind either Party with respect to any act which took place or 
any situation which ceased to exist before the Treaty enters 
into force (Annex, paragraph 1). This principle is set forth in 
Article 28 of the Vienna Convention on the Law of Treaties, 
which provides that a treaty does not bind a party in such 
cases unless a different intention appears from the treaty or 
is otherwise established. Similar language was used in BITs 
with Argentina and Romania.

                  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 

                          V. Committee Action

    The Committee on Foreign Relations held a public hearing on 
the proposed treaty, annex and protocol with Trinidad and 
Tobago on November 30, 1995. The hearing was chaired by Senator 
Thompson. The Committee considered the proposed treaty, annex 
and protocol with Trinidad and Tobago 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

                                                    investment         Stock          Exports         Imports   
1992............................................              56             565             447             922
1993............................................             123             693             529             873
1994............................................             137             817             540            1203
1995............................................           (\1\)           (\1\)             669            1054
\1\ No data.                                                                                                    

United States direct investment flows to Trinidad and Tobago

    The chart above reflects the amounts of direct investment 
which flowed from the United States to Trinidad and Tobago in 
the indicated calendar year, as published in the Commerce 
Department's ``Survey of Current Business.'' Data for 1995 have 
not yet been released.

United States year-end stocks of direct investment in Trinidad and 

    The chart above reflects the total amount of U.S. direct 
investment accumulated over time as of the end of each year 
cited, as published in the Commerce Department's ``Survey of 
Current Business.'' The data are available only through 1994 
and are valued at historical cost less depreciation and 
scrapping. They do not reflect the current market value of the 
businesses in which U.S. persons have invested.

United States trade with Trinidad and Tobago

    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 
includes the cost of the imported goods, shipping insurance and 
    The most recent data from the Department of Commerce 
regarding U.S. establishments (either wholly or partially-owned 
by U.S. persons with capital investment of at least $3 million 
in 1989 and a value of at least $20 million between 1989 and 
1993) indicates that there are at least 23 establishments. All 
such investments would be protected under the proposed treaty. 
The Committee recognizes the importance of Trinidad and Tobago 
as a United States market and believes that the protections 
contained in this treaty will prove useful to United States 
investors doing business in Trinidad and Tobago. The Committee 
notes that already Trinidad and Tobago imposes few restrictions 
on foreign investment and that private property is safe and the 
judicial system efficient.
    Efforts to diversify experts and liberalize the trade 
regime in Trinidad and Tobago are beginning to pay off. In 1994 
for the first year since the early 1980s, Trinidad and Tobago 
saw substantial growth in its economy. The Committee applauds 
these developments as growth in the economy of Trinidad and 
Tobago impacts the Caribbean region.

                             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 United States corporations 
doing business in Argentina and actions taken by the United 
States 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.
    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 

    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 

             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 
    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 
    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 
          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. 104-14.

              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 
Trinidad and Tobago Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex and Protocol, signed at 
Washington on September 26, 1994 (Treaty Doc. 104-14).