The primary policy tools through which the United States advances its investment policy interests are bilateral investment treaties (BITs) and BIT-like chapters in free trade agreements (FTAs)—collectively referred to as "international investment agreements." Congress plays an important role in shaping U.S. investment policy through its oversight and legislative responsibilities. As international treaties, U.S. In the absence of an overarching multilateral framework on investment, investment flows largely are governed by bilateral and regional investment treaties agreed upon mutually acceptable terms. Over the past several decades, BITS (along with investment chapters in FTAs) have emerged as the primary source of international investment law and the primary mechanisms for promoting and protecting global direct investment flows. In 2011, the number of known treaty-based investment disputes filed under international arbitration, at 47, was the highest level for a single year ( Figure 2 ). BITs differ slightly among themselves, they broadly provide five basic benefits:
The better of national treatment (i.e., non-discrimination) or most-favored-nation treatment for the full life cycle of investment (from its establishment or acquisition, through its management, operation and expansion, to its disposition); Clear limits on the expropriation of investments and provisions for payment of prompt, adequate, and effective compensation when direct and indirect expropriation takes place; Quick transfer of funds into and out of the host country without delay using a market rate of exchange; Restrictions on trade-distorting performance requirements (such as local content rules or export quotas); and The right of an investor to submit an investment dispute with the treaty partner's government to international arbitration. The 2004 Model BIT

Prior to the 2004 changes, the United States negotiated BITs on a 1994 Model BIT based largely on the investment chapter in the North American Free Trade Agreement (NAFTA). In April 2012, the Obama Administration announced the conclusion of its three-year review of the U.S. Model BIT. In addition to U.S. The 2012 Model BIT clarifies which financial services provisions may fall under a prudential exception, such as to address balance of payments problems (Article 20). Transparency. U.S. Investment Agreements and Negotiations

As both a major source of and destination for FDI, the United States has engaged in negotiations through BITs and FTAs to remove restrictions on foreign investment and other market-distorting measures to maximize the benefits of such investment and provide for reciprocal non-discriminatory treatment for U.S. investors. BITs

Since 1982, the United States has concluded 47 BITs, 41 of which have entered into force (see Table 1 ). The United States also may launch new BIT negotiations with countries. Foreign investment is a priority issue in the ongoing Trans-Pacific Partnership (TPP) free trade agreement negotiation. Issues for Congress

Congress plays an active role in developing and implementing the U.S. policy on direct investment, including through setting investment negotiating objectives in trade promotion authority; Senate ratification of BITs; and approval and enactment of implementing legislation for trade agreements by both the House of Representatives and the Senate. Negotiating Priorities for the U.S. Investment Policy Agenda

U.S. investment negotiations can help to advance U.S. trade, foreign policy, and development objectives. The conclusion of high-standard investment agreements with such countries may prove difficult because of divergent views of certain investment-related issues, such as labor and environmental protections.
Foreign direct investment (FDI) is an increasingly important driver of the global economy. In the absence of an overarching multilateral framework on investment, bilateral investment treaties (BITs) and investment chapters in free trade agreements (FTAs), collectively referred to as "international investment agreements," have emerged as the primary mechanism for promoting a rules-based system for international investment. These agreements contain provisions on nondiscriminatory treatment of investments by the host country, limits on expropriation of investments, and access to impartial binding procedures to settle investment-related disputes with host governments, among other things. FTA investment chapters generally contain provisions identical or similar to those in U.S. BITs.
As FDI flows have expanded, the number of international investment agreements also has increased, both between developed and developing countries and between developing countries. Presently, there are over 3,000 BITs globally. The United States has concluded 47 BITs, 41 of which have entered into force. Of the 14 FTAs agreed by the United States, 12 contain investment provisions. Investment dynamics also have given rise to more investment disputes. In 2011, the number of investment disputes filed in international arbitration forums was 47, its highest level ever for a single year. Congress plays an active role in developing and implementing U.S. policy on FDI through its oversight and legislative responsibilities. Congress can set investment negotiating objectives for U.S. trade agreements in trade promotion authority (TPA). Unlike FTAs, which require a full vote of Congress on implementing legislation, BITs, as international treaties, require only Senate ratification.
The United States, which remains both a major source for and a major destination of FDI, uses international investment agreements to reduce restrictions on foreign investment, provide non-discriminatory treatment for foreign investment, and reduce other market-distorting measures to maximize the benefits of such investment, while balancing other U.S. policy interests. In April 2012, the Obama Administration announced the conclusion of its review of the U.S. Model BIT, the template which the United States uses to negotiate BITs and investment chapters in FTAs. The 2012 Model BIT maintains the "core" or substantive investor protections affirmed in the 2004 Model BIT. It also clarifies that BIT obligations apply to state-owned enterprises (SOEs); limits performance requirements; strengthens labor and environmental provisions; clarifies which financial services provisions may fall under a prudential exception (such as to address balance of payments problems); expands transparency obligations; and increases requirements for stakeholder input in the standards-setting process.
The conclusion of the Model BIT review may generate momentum to conclude previously launched negotiations with countries such as China and India, or to launch investment negotiations with other U.S. trading partners. Investment policy issues feature prominently in other ongoing U.S. trade negotiations, including the proposed Trans-Pacific Partnership (TPP) FTA, as well as the anticipated Transatlantic Trade and Investment Partnership (TTIP) negotiation. In addition to considering negotiating priorities for these and proposed BITs with major emerging economies, Members may also want to consider the effectiveness of BITs in promoting and protecting investment.