The U.S. Bilateral Investment Treaty Program: An Overview (CRS Report for Congress)
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| Release Date |
Revised Nov. 16, 2012 |
| Report Number |
RL33978 |
| Report Type |
Report |
| Authors |
Martin A. Weiss, Analyst in International Trade and Finance ; Shayerah Ilias, Analyst in International Trade and Finance |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
International trade flows are largely governed by multilateral agreements reached at the World Trade Organization, but no comparable rules exist for investment. In its place, the bilateral investment treaty (BIT) has emerged over the past several decades as the primary means for promoting and regulating foreign direct investment flows. A BIT is a treaty of international law, which establishes a contract of mutual protection to private persons or firms in each other's territories. Incentives to sign BITs include the desire to protect overseas capital investment and to increase the opportunities for additional investments. In addition, foreign direct investment (FDI) host countries sign BITs primarily to promote inward FDI and signal to foreign investors that they will respect foreign property rights. Investors sometimes express concerns, however, that developing countries, where the quality of domestic institutions is weak, will make promises of protection to foreign investors prior to investment, only to change various terms (such as raising taxes, introducing various export quotas, or expropriation of assets) following the investment. [â¦] This report provides an overview of the U.S. BIT program and highlights two issues that may be of additional congressional interest: the impact of BITs on U.S. direct investment abroad and whether U.S. BITs promote economic reform in partner countries. It will be updated as events warrant.
