Monday, April 23, 2012

New US Model Bilateral Investment Treaty (BIT)

Last week, the US State Department announced that it has updated its model bilateral investment treaty or BIT. A BIT is an international agreement that provides binding legal rules regarding one country’s treatment of investors from another country. The U.S. negotiates BITs on the basis of a “model” text that provides investors with improved market access; protection from discriminatory, expropriatory, or otherwise harmful government treatment; and a mechanism to pursue binding international arbitration for breaches of the treaty. Beginning in 2009, the US government has solicited comments from various interest groups regarding the model BIT.  Based on the the comments received, the Obama Administration decided to make serveral changes to the model BIT. According to a US State Department Press Release:

"The Administration made several important changes to the BIT text so as to enhance transparency and public participation; sharpen the disciplines that address preferential treatment to state-owned enterprises, including the distortions created by certain indigenous innovation policies; and strengthen protections relating to labor and the environment."

The US currently has 40 BITs in place in addition to regional trade agreements such as NAFTA.  For more information and the new language of the model BIT, click here.


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