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104th Congress Exec. Rept.
2d Session 104-19
TREATY BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE
GOVERNMENT OF THE REPUBLIC OF ALBANIA 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
R E P O R T
[To accompany Treaty Doc. 104-19]
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 Albania
Concerning the Encouragement and Reciprocal Protection of
Investment, with Annex and Protocol, signed at Washington on
January 11, 1995, 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.
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.
The proposed treaty together with the proposed annex and
protocol was signed on January 11, 1995. No bilateral
investment treaty is currently in force between the United
States and Albania.
The proposed treaty, annex and protocol were transmitted to
the Senate for advice and consent to ratification on September
6, 1995 (see Treaty Doc. 104-19). The Committee on Foreign
Relations held a public hearing on the proposed treaty together
with the proposed annex and protocol on November 30, 1995.
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
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
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
The following is an analysis of the major provisions of the
treaty and a comparison with the 1994 model prototype, which
served as the foundation for the negotiation of the treaty.
Preamble.--The Preamble of the BIT establishes the goals of
the treaty to include: greater economic cooperation, the
stimulation of the flow of private capital and 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
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
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. The State
Department analysis accompanying the treaty states that
definitions are intended to be broad and inclusive in nature.
Article II (treatment of investment).--Article II
establishes the obligations of the Parties with regard to the
treatment of investment covered by the treaty. The Albanian 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). (Most-favored-nation or ``MFN treatment'' for
purposes of this treaty means treatment no less favorable than
that which a Party accords, in like situations, to investments
in its territory of nationals or companies of a third country.
``National and MFN treatment'' for purposes of the treaty means
whichever of national treatment or MFN treatment is the most
The BIT allows Parties to adopt or maintain exceptions to
these obligations for sectors enumerated in the BIT Annex and
prohibits Parties from requiring divestment of a covered
investment at the time an exception becomes effective (Art.
The BIT exempts from the treatment obligation in paragraph
one procedures adopted in multilateral agreements concluded
under the auspices of the World Intellectual Property
Organization (WIPO) (Art. III:2(b)).
The BIT requires Parties to accord covered investments
certain minimum treatment and prohibiting Parties from
impairing investments through unreasonable or discriminatory
measures (Art. III:3).
The BIT requires Parties to provide effective means of
asserting claims and enforcing rights with respect to covered
investments (Art. II:4).
The BIT requires 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).--This article 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 for damages due to war and similar
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
Article V (transfers).--The BIT generally follows 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 listing activities that constitute
transfers (Art. V:1). Where the Model lists ``contributions to
capital,'' the BIT contains the longer formulation, ``initial
and additional contributions to capital relating to the
investment'' (Art. V:1 (a)). U.S. negotiators have informed
staff that this change was made to confirm the Parties'
understanding of the intent of the Treaty.
Investment-related transfers also include: profits,
dividends, capital gains, and proceeds from the sale of all or
any part of the investment or from the partial or complete
liquidation of the investments; interest, royalty payments,
management fees, and technical assistance, and other fees;
payments made under a contract, including a loan agreement; and
compensation pursuant to Articles III and IV and payments
arising out of an investment dispute (Art. V:1).
Transfers must be permitted in a freely usable currency at
the market rate of exchange prevailing on the date of transfer
There is a discrepancy in language between the Model and
the BIT in use of the term ``return in kind'' and ``transfer in
kind.'' Where the Model states that ``returns in kind'' must be
permitted as authorized or specified in an investment
authorization, investment agreement or other written agreement
between the Party and a covered investment or a national or
company of the other Party, the BIT applies this obligation to
``transfers in kind'' (Art. V:3). The State Department Letter
of Transmittal refers to this provision as allowing ``returns
in kind.'' While the 1994 Model does not define ``return,'' the
1992 Model defines the term as ``as amount derived from or
associated with an investment, including profit; dividend;
interest; capital gain; royalty payment; management, technical
assistance or other fee; or returns in kind'' (1992 Model Art.
I:(d)). It would appear, however, that the activities defined
in ``return'' would generally be covered in the list of
transfers set forth in Article V:1.
The BIT is identical to the Model in providing that
notwithstanding the above-described obligations, 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 judgements (Art.
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. Specific requirements prohibited by this article
include the use of local goods, the export of goods or
services, the ``balancing'' of imports and exports, the
transfer of technology, or the conduct of research in the host
country. ``Requirement'' is defined to include any commitment
or undertaking in connection with the receipt of a governmental
permission or authorization. Like the model, requirements that
serve as conditions for the receipt or continued receipt of an
advantage are not prohibited requirements as parties may impose
conditions for benefits and incentives.
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). Each Party may allow, subject
to its laws and regulations, the entry into its territory of
the other Party's nationals for certain purposes related to a
covered investment and involving the commitment of a
``substantial amount of capital.'' The article permits the
engaging of 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). Albania is a
Party to a Convention on the Settlement of Investment Disputes
between States and Nationals of Other States. As of January 1,
1995, Albania had not joined the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards.
Article X (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 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).--Tax matters are excluded from the
coverage of the BIT in order to be dealt with in bilateral tax
treaties. However, the BIT is identical to the Model in 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.
According to transmittal documents, the ``competent tax
authority'' of the United States is the Assistant Secretary of
the Treasury for International Tax Policy, who will make this
determination only after consultation with the Inter-Agency
Staff Coordinating Group on Expropriations.
Article XIV (measures not precluded).--The BIT is identical
to the Model in its provision for exceptions for measures
necessary for public order, the fulfillment of certain
international obligations, and the protection of essential
security interests. According to transmittal documents,
measures to protect a Party's essential security interests are
self-judging in nature, although each Party would expect the
provisions to be applied by the other in good faith.
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. According to transmittal
documents, such formalities could include reporting
requirements for covered investments or for transfers of funds,
or incorporation requirements.
Article XV (extent of application).--Like the Model, the
BIT clarifies that the treaty applies to the political
subdivisions 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). This provision would not affect a
state's ability to treat an out-of-state resident or
corporation differently than an in-state resident or
corporation. As in the Model, a Party's BIT obligations apply
to state enterprises in exercising any governmental 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 and
Protocol form an integral part of the Treaty.
Annex (sectoral exemptions).--Both the United States and
the Republic of Albania have exempted listed sectors and
matters from their MFN and national treatment obligations.
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, air and maritime transport and related
activities; and banking, insurance, securities, and other
financial services (Annex, paragraph 2).
In addition, the United States may adopt or maintain MFN
and national treatment exceptions with respect to insurance,
provided that the exceptions do not result in treatment of
covered investments that is less favorable than the treatment
that it has agreed to accord to NAFTA parties (Annex, paragraph
Albania. The Republic of Albania may adopt or maintain
national treatment exceptions (but must accord MFN treatment)
as to the following: ownership of land; banking; government
subsidies (Annex, paragraph 4).
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 5).
Protocol.--The BIT contains a Protocol to the treaty
addressing treatment of confidential information and
obligations as to taxation. The Parties clarify that in
entering into Article VIII consultations on matters arising
under the Treaty, each is obliged to treat any confidential or
proprietary information exchanged in the course of
consultations on the same basis as the Party providing the
information (Protocol, paragraph 1).
The Parties also confirm that Article XIII does not
obligate Parties to accord national treatment as to tax matters
except as otherwise provided in an investment authorization or
an investment agreement (Protocol, paragraph 2).
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
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 writtennotice 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 Albania on
November 30, 1995. The hearing was chaired by Senator Thompson.
The Committee considered the proposed treaty, annex and
protocol with Albania 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
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........................................................ 0 0 36 6
1993........................................................ 0 0 34 8
1994........................................................ 17 5 16 7
1995........................................................ (\1\) (\1\) 14 10
\1\ No data.
United States direct investment flows to Albania
The chart above reflects the amounts of direct investment
which flowed from the United States to Albania in the indicated
calendar year, as published in the Commerce Department's
``Survey of Current Business.'' Data for 1995 have not yet been
United States year-end stocks of direct investment in Albania
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 date 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 Albania
The trade data in the chart above for 1994 and 1995 comes
from the U.S. Bureau of Census' December 1995 press release.
Those through 1993 are taken from the International Monetary
Fund's ``Directions of Trade.'' The IMF received its trade data
for this report from the Bureau of Census. The import data
include the cost of the imported goods, shipping insurance and
freight. Overall imports totaled $621 million and overall
exports totaled $112 million in 1993.
The Committee recognizes that Albania is an extremely poor
country and that the transition to an open market economy will
be slow and difficult. The Committee encourages the Government
of Albania to make use of the proposed treaty to encourage
United States foreign investment, thereby increasing the small
gains it has made in United States foreign direct investment.
The Committee believes that only through the development of an
open and free market will Albania be able to attract
substantial foreign investment that will both benefit the
Albanian people and support United States exports.
b. unresolved investment disputes
The Committee is pleased that agreement has been reached to
compensate United States citizens whose property was
appropriated by the former communist Government in Albania. The
``Agreement on the Settlement of Certain Outstanding Claims''
provides that the Government of Albania will pay to the United
States Government a lump sum of $2 million in settlement of all
claims ``arising from any nationalization, expropriation,
intervention, and other taking of, or measures affecting,
property of nationals of the United States prior to the date of
this agreement.'' State Department officials have informed
Committee staff that they are in the process of negotiating
payment and have every expectation of receiving the $2 million
from gold reserves garnished during World War II.
The Foreign Claims Settlement Commission of the Department
of Justice is currently conducting a claims solicitation and
adjudication program in order to make awards to eligible U.S.
national claimants. To date, the Commissioners have acted on
132 claims. Once all claims have been adjudicated and awards
determined, those claimants will be paid pro rata from the
settlement amount. As of April 30, 1996, 298 claims had been
filed by U.S. citizens. The Committee understands that because
of the age of some of the claims, which date back to the 1940s,
and the lack of records in Albania, progress may be slow and
some of the claims difficult to resolve. The Committee
supports, however, fair and timely adjudication of these
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 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
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.]
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 United States embassies in protecting the
interests of United States 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.
D. 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
\2\ Letter from Assistant Secretary for Legislative Affairs, Wendy
R. Sherman, to Senator Helms, Committee on Foreign Relations, December
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 contracts
may be on behalf of a single claimant or multiple
claimants where there are a number of outstanding
(4) occasionally, where the circumstances warrant,
the U.S. may decide to directly espouse a claim or
(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
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
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
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
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
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 quite 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
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
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. 104-19.
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 Albania
Concerning the Encouragement and Reciprocal Protection of
Investment, with Annex and Protocol, signed at Washington on
January 11, 1995 (Treaty Doc. 104-19).