WASHINGTON, DC-U.S. Senator Bob Casey (D-PA), Chairman of the Senate Foreign Relations Subcommittee on Near Eastern and South and Central Asian Affairs, and Senate Foreign Relations Committee Ranking Member Dick Lugar (R-IN) today sent a letter to Commerce Secretary Gary Locke calling for the finalizing of a bilateral investment treaty (BIT) with Russia to encourage U.S. business deals and investments in Russia.
“With a booming energy industry, a vibrant financial services sector, and a growing telecommunications industry, Russia has emerged as an attractive market for American business,” the senators wrote. “Yet, U.S. investors are facing more and more difficulties in Russia. A BIT would have substantial benefits for American businesses investing in Russia.”
A bilateral investment treaty is an important mechanism that helps to protect U.S. commercial interests and private investments abroad. It promotes transparency, the rule of law in commerce and trade, and market-oriented policies in partner countries. A BIT requires that the partner country treat U.S. investors as it would treat its own. Furthermore, U.S. BITs allow investors to submit disputes to an international arbitration court, rather than be subject to the partner country’s domestic judicial system.
The U.S. and Russia signed a BIT in the early 1990s, but after the Senate ratified the treaty in 1993, the Russian Parliament never reciprocated. President George W. Bush and Russian President Dmitry Medvedev agreed to work on concluding a new BIT in April 2008. At the G20 Summit, President Obama and President Medvedev pledged to “give rise to a new dynamic in [U.S.-Russian] economic links.”
A copy of the letter follows.
May 6, 2009
The Honorable Gary Locke
Secretary of Commerce
U.S. Department of Commerce
1401 Constitution Ave., NW
Washington, DC 20230
Dear Mr. Secretary:
Despite our many disagreements, it is imperative that the United States and Russia maintain open channels of dialogue and look for constructive ways to engage each other. One way to build trust and cooperation between our nations is to promote trade, especially at a time when investors are lacking confidence in the global market. We were encouraged by President Obama and President Medvedev’s joint statement, in which they recognized the need to “pursue all opportunities for generating economic activity.” To that end, we encourage you to move forward on finalizing a new U.S.-Russian Bilateral Investment Treaty (BIT).
With a booming energy industry, a vibrant financial services sector, and a growing telecommunications industry, Russia has emerged as an attractive market for American business. Yet, U.S. investors are facing more and more difficulties in Russia. Russia suffers from a judiciary that is beholden to its political masters, and a government that has re-nationalized several private entities, moving the country towards “state capitalism.” The effects on foreign and domestic businesses in Russia have been palpable; the courts provide little protection for businesses that have been targeted unjustly by government entities.
A BIT would have substantial benefits for American businesses investing in Russia. It would provide greater legal protection for U.S. commercial interests by establishing greater transparency, promoting the rule of law, and disentangling the Russian government from legitimate private sector activity. A BIT would help protect U.S. investors against expropriation by the Russian government by giving them the right to arbitrate against the state. It would also signal to Moscow that the United States is less interested in condemning Russia about the state of its democratic institutions, and more interested in helping Russia take tangible steps towards a more responsible system of government.
We appreciate your efforts to tackle the enormous challenges presented by the global economic crisis, and your work with our economic partners to create safe, predictable investment environments for American businesses abroad.
Sincerely,
Robert P. Casey, Jr. Richard G. Lugar
United States Senator United States Senator
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