USTR - Summary of U.S. Bilateral Investment Treaty (BIT) Program
Office of the United States Trade Representative

 

Summary of U.S. Bilateral Investment Treaty (BIT) Program
02/24/2006

The U.S. bilateral investment treaty (BIT) program helps protect private investment, develop market-oriented policies in partner countries, and promote U.S. exports.

The BIT program's basic aims are to:

  • Protect investment abroad in countries where investor rights are not already protected through existing agreements (such as modern treaties of friendship, commerce, and navigation, or free trade agreements);
  • Encourage the adoption of market-oriented domestic policies that treat private investment in an open, transparent, and non-discriminatory way; and
  • Support the development of international law standards consistent with these objectives.

U.S. BITs provide investments with six core benefits:

  • First, U.S. BITs require that investors and their “covered investments” (that is, investments of a national or company of one BIT party in the territory of the other party) be treated as favorably as the host party treats its own investors and their investments or investors and investments from any third country. The BIT generally affords the better of national treatment or most-favored-nation treatment for the full life-cycle of investment – from establishment or acquisition, through management, operation, and expansion, to disposition.
  • Second, BITs establish clear limits on the expropriation of investments and provide for payment of prompt, adequate, and effective compensation when expropriation takes place.
  • Third, BITs provide for the transferability of investment-related funds into and out of a host country without delay and using a market rate of exchange.
  • Fourth, BITs restrict the imposition of performance requirements, such as local content targets or export quotas, as a condition for the establishment, acquisition, expansion, management, conduct, or operation of an investment.
  • Fifth, BITs give covered investments the right to engage the top managerial personnel of their choice, regardless of nationality.
  • Sixth, BITs give investors from each party the right to submit an investment dispute with the government of the other party to international arbitration. There is no requirement to use that country's domestic courts.

The United States negotiates BITs on the basis of a model text.  For further information on the BIT program, contact the bilateral investment treaty coordinators at 202-736-4906 (Department of State) or 202-395-9679 (Office of the U.S. Trade Representative).

 
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