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1 1 (April 1, 2022)

handle is hein.crs/govegit0001 and id is 1 raw text is: Congr ssional Research Servio informinu thi eisIativ debate sioe1914 Updated April 1, 2022 U.S. International Investment Agreements (IIAs) The United States, a major source and recipient of foreign direct investment (FDI), historically has sought to promote U.S. FDI and protect U.S. investors through the negotiation and enforcement of international investment agreements (IIAs). Taking the form of bilateral investment treaties (BITs) and investment chapters in free trade agreements (FTAs), IIAs aim to reduce FDI restrictions, ensure nondiscriminatory treatment of investors and investment, and balance investment protections and other policy interests through binding, reciprocal obligations. While some World Trade Organization (WTO) agreements address investment issues in a limited manner, IIAs have been key tools to govern bilateral and regional investment ties. The United States has BITs with 40 countries and 14 FTAs with 20 countries (see Figure 1), most with investment chapters. According to the United Nations Committee on Trade and Development (UNCTAD), as of March 2022, 2,805 IIAs were concluded globally, of which 2,242 were in force-forming a complex, overlapping network of investment rules. Congress has a major role in overseeing and approving U.S. IIAs. Figure I. U.S. International Investment Agreements Source: USTR and the Department of State information. Overvi ew U.S. BITs require Senate advice and consent. FTAs that include investment provisions that require changes in U.S. law require implementing legislation approved by both Houses to enter into force. Congress sets U.S. negotiating objectives on investment, most recently in the 2015 Trade Promotion Authority (TPA) (P.L. 114-26), which reaffirmed principal U.S. negotiating objectives to reduce or eliminate foreign investment barriers and to ensure that foreign investors do not receive greater substantive rights for investment protections than U.S. investors in the United States. TPA expired on July 1, 2021. The Department of State and U.S. Trade Representative (USTR) co-lead U.S. investment negotiations using a Model BIT, revised in 2012 (see Box 1). The U.S.- Mexico-Canada Agreement (USMCA), which entered into force in 2020, retains many of the historically core investment provisions, but notably, curtails the degree to which foreign investors can seek enforcement of these provisions under the investor-state dispute settlement (ISDS) provisions, although recourse may be available through USMCA's state-to-state dispute settlement mechanism. USMCA eliminates ISDS with respect to Canada. With respect to Mexico, for government contracts in oil and natural gas, power generation, infrastructure, and telecommunications sectors, USMCA maintains ISDS for any claim for breach of investment chapter obligations. USMCA, however, restricts ISDS in other sectors to claims alleging discrimination or direct expropriation, and requires claimants to exhaust local remedies first-also a significant change compared to the U.S. approach to ISDS historically. Box I. Basic Provisions of U.S. IIAs Market access for investments. Nondiscriminatory treatment of foreign investors and investments compared to domestic investors (national treatment) and those of a third country (most-favored- nation treatment). Minimum standard of treatment (MST) in accordance with customary international law, including fair and equitable treatment and full protection and security. Prompt, adequate, and effective compensation for direct or indirect expropriation, with safeguards allowing for nondiscriminatory regulation in the public interest. Timely transfer of funds into and out of the host country without delay using a market rate of exchange. Limits on performance requirements that, for example, condition investment approval on using local content. Investor-State Dispute Settlement (ISDS) for binding international arbitration of private investor claims against host country governments, along with transparency requirements of ISDS proceedings. Exceptions for national security and prudential interests. Issues for Congress U.S. IIA Negotiations. Protection of investors' rights balanced against other policy goals may resurface as an issue in potential future IIA negotiations. The Biden Administration is reviewing FTA negotiations pursued by its predecessor, such as with the United Kingdom and Kenya. If the Administration pursues these or other trade negotiations, Congress may monitor and shape the Administration's approaches to foreign investment trade barriers and rules, among things, and consider implementing legislation for any final agreement. Congress also may consider whether to modify U.S. trade negotiating objectives on investment in any future TPA renewal debate.

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