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[Senate Treaty Document 108-13]
[From the U.S. Government Printing Office]



108th Congress                                              Treaty Doc.
                                 SENATE                     
 1st Session                                                     108-13
_______________________________________________________________________

                                     

 
         ADDITIONAL PROTOCOL TO INVESTMENT TREATY WITH ROMANIA

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

  ADDITIONAL PROTOCOL BETWEEN THE GOVERNMENT OF THE UNITED STATES OF 
    AMERICA AND THE GOVERNMENT OF ROMANIA CONCERNING THE RECIPROCAL 
 ENCOURAGEMENT AND PROTECTION OF INVESTMENT OF MAY 28, 1992, SIGNED AT 
                     BRUSSELS ON SEPTEMBER 22, 2003




December 9, 2003.--Protocol was read the first time, and together with 
the accompanying papers, referred to the Committee on Foreign Relations 
          and ordered to be printed for the use of the Senate
                         LETTER OF TRANSMITTAL

                              ----------                              

                                 The White House, December 9, 2003.
To the Senate of the United States:
    With a view to receiving the advice and consent of the 
Senate to ratification, I transmit herewith the Additional 
Protocol between the Government of the United States of America 
and the Government of Romania Concerning the Reciprocal 
Encouragement and Protection of Investment of May 28, 1992, 
signed at Brussels on September 22, 2003. I transmit also, for 
the information of the Senate, the report of the Department of 
State with respect to this Additional Protocol.
    My Administration expects to forward to the Senate shortly 
analogous Additional Protocols for Bulgaria, the Czech 
Republic, Estonia, Latvia, Lithuania, Poland, and the Slovak 
Republic. Each of these Additional Protocols is the result of 
an understanding the United States reached with the European 
Commission and six countries that will join the European Union 
(EU) on May 1, 2004 (the Czech Republic, Estonia, Latvia, 
Lithuania, Poland, and the Slovak Republic), as well as with 
Bulgaria and Romania, which are expected to join the EU in 
2007.
    The understanding is designed to preserve U.S. bilateral 
investment treaties (BITs) with each of these countries after 
their accession to the EU by establishing a framework 
acceptable to the European Commission for avoiding or remedying 
present and possible future incompatibilities between their BIT 
obligations and their future obligations of EU membership. It 
expresses the U.S. intent to amend the U.S. BITs, including the 
BIT with Romania, in order to eliminate incompatibilities 
between certain BIT obligations and EU law. It also establishes 
a framework for addressing any future incompatibilities that 
may arise as European Union authority in the area of investment 
expands in the future, and endorses the principle of protecting 
existing U.S. investments from any future EU measures that may 
restrict foreign investment in the EU.
    The United States has long championed the benefits of an 
open investment climate, both at home and abroad. It is the 
policy of the United States to welcome market-driven foreign 
investment and to permit capital to flow freely to seek its 
highest return. This Additional Protocol preserves the U.S. BIT 
with Romania, with which the United States has an expanding 
relationship, and the protections it affords U.S. investors 
even after Romania joins the EU. Without it, the European 
Commission would likely require Romania to terminate its U.S. 
BIT upon accession because of existing and possible future 
incompatibilities between our current BIT and EU law.
    I recommend that the Senate consider this Additional 
Protocol as soon as possible, and give its advice and consent 
to ratification at an early date.

                                                    George W. Bush.
                          LETTER OF SUBMITTAL

                              ----------                              

                                       Department of State,
                                      Washington, October 31, 2003.
The President,
The White House.
    The President: I have the honor to submit to you the 
Additional Protocol Between the Government of the United States 
of America and the Government of Romania amending the Treaty 
Between the Government of the United States of America and the 
Government of Romania Concerning the Reciprocal Encouragement 
and Protection of Investment of May 28, 1992, signed at 
Brussels on September 22, 2003. I recommend that this protocol 
be transmitted to the Senate for its advice and consent to 
ratification.
    This protocol is the result of an understanding that the 
United States reached with the European Commission and six 
countries that will join the European Union (``EU'') on May 1, 
2004 (the Czech Republic, Estonia, Latvia, Lithuania, Poland 
and the Slovak Republic), as well as with Bulgaria and Romania, 
which are expected to join the EU in 2007.
    The understanding is designed to preserve our bilateral 
investment treaties (``BITs'') with these countries after their 
accession to the EU by establishing a framework for avoiding or 
remedying present and possible future incompatibilities between 
our BITs with these eight countries and their future 
obligations of EU membership. In this regard, the understanding 
expresses the U.S. intent to conclude substantively identical 
amendments and formal interpretations of the BITs with each of 
these eight countries.
    In addition, the understanding establishes a framework for 
addressing any future incompatibilities that may arise as 
European Union authority in the area of investment expands and 
evolves in the future. It endorses the principle of protecting 
existing U.S. investments in these countries from any future EU 
measures that may restrict foreign investment in the EU, and 
also clarifies certain protections afforded to U.S. investments 
in individual member states of the EU under the Treaty 
Establishing the European Community (``EC Treaty'').
    Finally, the understanding calls for the United States and 
each BIT partner to interpret, through an exchange of notes, 
two BIT provisions: (1) the right of each BIT Party to take 
measures necessary for the protection of its own essential 
security interests, and (2) the BIT prohibition on performance 
requirements.
    Both interpretations were undertaken at the request of the 
European Commission to confirm the mutual understanding of the 
United States and Romania in the context of EU enlargement. For 
example, the interpretation of the BIT provision on essential 
security interests confirms that, for Romania, these interests 
may include interests deriving from Romania's membership in the 
EU. As concerns the BIT prohibition on performance 
requirements, many U.S. BITs include a provision explicitly 
stating that the prohibition on performance requirements does 
not extend to conditions for the receipt or continued receipt 
of an advantage. The interpretation relating to performance 
requirements makes this explicit with respect to the U.S.-
Romania BIT. The two interpretations are enclosed for the 
information of the Senate.
    Investment by the United States has played an important 
role in the economic transformation of these eight countries, 
and the U.S. BITs have afforded important protections to U.S. 
investors. Prior to acceding to the EU, however, the European 
Commission has required that these countries terminate any 
international treaty containing incompatibilities with EU law. 
Without the understanding and the steps contemplated therein, 
including the specific amendments in this protocol, these 
countries would be required to terminate their U.S. BITs and 
the great majority of protections these treaties afford U.S. 
investors. Therefore, the understanding, together with the 
interpretations and specific amendments in the protocol, will 
preserve the benefits of these treaties and provide important 
additional protections for U.S. investors as the EU continues 
to evolve.


                  the u.s.-romania additional protocol


    The United States champions EU enlargement and, at the same 
time, intends that this BIT will continue to mutually benefit 
U.S. and Romanian investors. By undertaking these amendments of 
the BIT with Romania, which would be brought into force just 
prior to its accession, incompatibilities between BIT 
protections and EU law are eliminated, and any future problems 
in this respect are addressed through a framework for 
consultations. This action preserves our BIT with Romania after 
its accession to the EU, and is consistent with the policy of 
the United States to welcome market-driven foreign investment 
and to permit capital to flow freely to seek its highest 
return. Romania is one of the newly democratized countries in 
Europe transitioning to a market economy, and foreign direct 
investment into Romania is very much in both our countries' 
interests. Protection for investors facilitates investment 
activity, and thus directly supports U.S. policy objectives.
    The principal substantive articles of the protocol provide 
as follows.
    Article I: that the article of the BIT prohibiting 
performance requirements does not limit Romania's ability to 
impose, as necessary under EU law, certain kinds of performance 
requirements in the agricultural and audiovisual sectors;
    Article II: that the terms of the free trade area/customs 
union exception of the BIT shall apply, without limitation, to 
all of a Party's obligations stemming from its membership in an 
economic integration agreement that includes a free trade area 
or customs union, such as the EU;
    Article III: that the BIT Parties will consult promptly 
whenever either Party believes that steps are necessary to 
assure compatibility between the BIT and the EC Treaty;
    Article IV: that, in certain specified sectors or matters, 
Romania may take a reservation against the national treatment 
and most-favored-nation treatment obligations of the BIT, 
provided such reservation is necessary to meet Romania's 
obligations under EU law, and subject to the following 
exception; that, notwithstanding any such new reservation, 
existing U.S. investments in Romania shall remain protected 
under the national treatment and most-favored-nation treatment 
obligations of the BIT for at least 10 years from the date of 
the relevant EU law necessitating the reservation; and finally, 
that the United States reserves the right to make or maintain 
limited exceptions to the national treatment obligation in two 
new sectors or matters, fisheries and subsidies, and to the 
most-favored-nation treatment obligation in one new sector, 
fisheries.
    With respect to future developments in EU law, the United 
States recognizes that the possibility exists that these 
amendments may not suffice to ensure compatibility, and that 
consultations would be necessary to avoid or eliminate any 
incompatibilities that may arise. As noted above, the United 
States and Romania expressly agree to such consultations in the 
protocol.
    I support this protocol to the U.S. BIT with Romania, and I 
favor its transmission to the Senate at an early date.
            Respectfully submitted,
                                                   Colin L. Powell.
    Enclosures: As stated.