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Letter to USTR, State and Commerce on the threat to bilateral investment treaties posed by EU enlargement

Letter to USTR, State and Commerce on the threat to Bilateral Investment Treaties posed by E.U. Enlargement

June 18, 2002

The Honorable Robert B. Zoellick
United States Trade Representative
Executive Office of the President
Washington, D.C. 20508

Dear Mr. Ambassador:

We are very concerned over reports that the European Commission is requesting countries in Central and Eastern Europe to abrogate their Bilateral Investment Treaties (BITs) with the United States as a condition of EU membership.

Since the first Bilateral Investment Treaty was signed with then Czechoslovakia in 1992, these treaties have been an extremely useful instrument for mitigating risk and providing greater certainty for U.S. investors across Central and Eastern Europe. By incorporating provisions to ensure national treatment and protection against expropriation without compensation, these treaties paved the way for U.S. firms to play a far greater role in the economic transformation of the region than would otherwise have been the case. These countries’ withdrawal from the BITs, which are consistent with the liberal treatment of foreign investment advocated throughout the European Union, will sow doubt among foreign investors about the commitment of these countries to open investment policies and protection of investor rights at precisely the wrong moment. This, in turn, could have a significant impact on future U.S. investment decisions in the years ahead.

As you know, decisions on investment policy are not solely determined in Brussels. We are, therefore, concerned that without these agreements the EU cannot guarantee the full range of protection that they include. The Commission’s unwillingness to identify any specific provisions of these treaties that are in conflict with existing EU legislation is also troubling. The Commission’s actions are at odds with the Council of the European Union’s decision of November, 2001 to reauthorize the right of member states to maintain their long-standing and substantially similar Friendship, Commerce and Navigation Treaties (FCNs) with the United States. Presently, FCNs are in force with 13 of the 15 current EU states.

Lastly, we are concerned that the Commission appears to have singled out only the BITs signed with the United States, and not other non-EU governments. As well, the EU’s own investment protection agreements with these countries appear to be unaffected by the enlargement process. This inconsistent treatment threatens to create unequal levels of protection for foreign investors to the disadvantage of U.S. firms.

We, therefore, encourage the United States government to press the EU Commission to reconsider its opposition to the BITs and recognize their legal status as it currently accepts the fundamental compatibility of the FCNs with EU law. We also urge you to work with the countries concerned to resist pressures to cancel or substantially alter their BITs with the United States. We have sent identical letters to Secretary Powell and Secretary Evans.


Calman J. Cohen
Emergency Committee for American Trade

Jerry J. Jasinowski
National Association of Manufacturers

William A. Reinsch
National Foreign Trade Council

Thomas M. T. Niles
United States Council for International Business