By Damon Vis-Dunbar
5 June 2009
The United States has embarked on a review of its model bilateral investment treaty (). Last updated in 2004, the US closely adheres to the model in its BIT negotiations with other countries.
The BIT review follows campaign pledges by President Barack Obama, in which he committed to “ensure that foreign investor rights are strictly limited and will fully exempt any law or regulation written to protect public safety or promote the public interest.”
A subcommittee to the Advisory Committee on International Economic Policy (ACIEP)—a committee of non-government advisers to the US government on matters of international economic policy—has been charged with “taking a fresh look” at the US model BIT.
Co-chaired by Alan Larson, a Senior International Policy Advisor to the law firm Covington and Burling LLP, and Thea Mei Lee, Policy Director for the American Federation of Labor and Congress of Industrial Organizations, the subcommittee will directly counsel the ACIEP. The ACIEP, in turn, advises the US government.
The subcommittee will seek input from interested groups and individuals through a public hearing and invitations for written statements, said a U.S. government official. A date for the public hearing will be announced in the next couple of weeks.was unable to confirm whether the public hearings would be open to groups and individuals based outside of the United States.
The BIT review will also include consultations with a range of government agencies, including the Environmental Protection Agency, Department of the Interior, Justice Department and Department of Labor.
The US model BIT underwent its last transformation in 2004, after an inter-agency review. The 2004 model BIT has received mixed reviews for its efforts to “balance” investor rights with state rights to regulate to protect health, safety, and the environment.
“The 2004 US Model BIT attempts to accommodate the emergence of the regulatory state exercising authority over health, safety and the environment in a normative space already occupied by international economic law,” said Marcos Orellana, an attorney with the Center for International Environmental Law.
“Environmental law is a relatively new field of law, owing to the increasing awareness of the deterioration of the local and global environment, and it is still developing in most countries of the world. Thus, the 2004 US Model BIT is more an effort at rebalancing and accommodation, and not a weakening of investment protection, in order to ensure that the government can effectively exercise its authority for the public good in a vitally important area such as environmental protection,“ said Mr. Orellana.
The current review promises to invigorate the debate over the “balance” struck in US investment agreements.
Indeed, addressing a Congressional trade committee in May, the co-chair of the ACIEP investment subcommittee lamented an imbalance in US investment agreements.
Ms. Lee said her key concerns include: “the investor-state dispute resolution; failure to distinguish between regulatory action on the part of government and ‘indirect expropriation’; an overly broad definition of investment; potential impact on needed future national and global financial regulation efforts; and the need to establish commensurate and enforceable responsibilities for investors with respect to workers ‘ rights and the environment.”
Meanwhile, Mr. Larson stressed the “valuable role” that international investment treaties play in “providing a more stable and predictable environment” to international investment.
Referring to investor-state arbitrations pursuant to BITs, Mr. Larson remarked: “On balance, it is fair to say that the outcome of such cases does not suggest a bias in favor of either the State or the investor”.