United States, Uruguay Sign Bilateral Investment Treaty

The United States and Uruguay signed a Bilateral Investment Treaty (BIT) in Montevideo, Uruguay, on October 25. The United States and Uruguay announced their intention to negotiate a BIT on November 18, 2003, at the conclusion of the Free Trade Area of the Americas Ministerial in Miami, Florida. The decision to negotiate this agreement sprang from the work of the United States-Uruguay Joint Commission on Trade and Investment. Since April 2002, the Commission has pursued an ambitious work plan designed to strengthen the U.S. - Uruguay trade relationship. This BIT was concluded on September 7, 2004 in Washington, DC.

U.S. BITs level the playing field and ensure that U.S. investors are protected when they establish businesses in other countries. By safeguarding foreign subsidiaries of U.S. firms, BITs help promote new U.S. exports to the markets of BIT partners. BITs also protect the interests of average American investors, whose stock and bond portfolios often include stakes in foreign-invested firms.

Key investor protections in U.S. BITs include an obligation by a host country to treat investors from the other BIT party as favorably as the host treats its own investors or those from any other country. BIT parties must also permit the free and timely transfer of funds relating to an investment into or out of their territory. U.S. BITs also include international law standards requiring host countries to provide prompt, adequate, and effective compensation if they expropriate an investment. Finally, U.S. BITs give investors the right to seek binding international arbitration of claims that a host country government has violated a BIT obligation or certain types of contracts.

The United States recently completed a rewrite of the model text it has used in BIT negotiations over the past two decades and the U.S.-Uruguay BIT was the first to be based on this new U.S. model text. The new model text includes provisions developed by the Administration to address the investment negotiating objectives in the Trade Promotion Act of 2002. The new model BIT text is substantively similar to the investment chapters of the free trade agreements the United States has concluded during the past two years.

The United States currently has BITs in force with 39 countries, providing protection for thousands of U.S.-owned businesses and their U.S. investors. As treaties, BITs require the advice and consent of the Senate before they can enter into force. Responsibility for BIT policy and negotiations is shared by the Department of State and the Office of the U.S. Trade Representative.
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