U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

29–118

" SENATE ! 108TH CONGRESS

2d Session

TREATY DOC. 

2004

108–18

ADDITIONAL INVESTMENT PROTOCOL WITH THE 

CZECH REPUBLIC

MESSAGE

FROM

THE PRESIDENT OF THE UNITED STATES

TRANSMITTING

ADDITIONAL PROTOCOL BETWEEN THE UNITED STATES OF AMERICA AND THE CZECH REPUBLIC TO THE TREATY BETWEEN THE 

UNITED STATES OF AMERICA AND THE CZECH AND SLOVAK 

FEDERAL REPUBLIC CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF INVESTMENT OF OCTOBER 22, 

1991, SIGNED AT BRUSSELS ON DECEMBER 10, 2003

MARCH 12, 2004.—The Protocol was read the first time, and together 

with the accompanying papers, referred to the Committee on Foreign 

Relations and ordered to be printed for the use of the Senate


E:\Seals\Congress.#13
(III)

LETTER OF TRANSMITTAL 

THE WHITE HOUSE, March 12, 2004. 

To the Senate of the United States: 

With a view to receiving the advice and consent of the Senate to 

ratification, I transmit herewith the Additional Protocol Between 

the United States of America and the Czech Republic to the Treaty 

Between the United States of America and the Czech and Slovak 

Federal Republic Concerning the Reciprocal Encouragement and 

Protection of Investment of October 22, 1991, signed at Brussels on 

December 10, 2003. I transmit also, for the information of the Senate, the report of the Department of State with respect to this Protocol. 

I have already forwarded to the Senate similar Protocols for Romania and Bulgaria and now forward simultaneously to the Senate 

Protocols for the Czech Republic, Estonia, Latvia, Lithuania, Poland, and the Slovak Republic. Each of these Protocols is the result 

of an understanding the United States reached with the European 

Commission and these six countries that will join the European 

Union (EU) on May 1, 2004, as well as with Bulgaria and Romania, 

which are expected to join the EU in 2007. 

The understanding is designed to preserve U.S. bilateral investment treaties (BITs) with each of these countries after their accession to the EU by establishing a framework acceptable to the European Commission for avoiding or remedying present and possible 

future incompatibilities between their BIT obligations and their future obligations of EU membership. It expresses the U.S. intent to 

amend the U.S. BITs, including the BIT with the Czech Republic, 

in order to eliminate incompatibilities between certain BIT obligations and EU law. It also establishes a framework for addressing 

any future incompatibilities that may arise as EU authority in the 

area of investment expands in the future, and endorses the principle of protecting existing U.S. investments from any future EU 

measures that may restrict foreign investment in the EU. 

The United States has long championed the benefits of an open 

investment climate, both at home and abroad. It is the policy of the 

United States to welcome market-driven foreign investment and to 

permit capital to flow freely to seek its highest return. This Protocol preserves the U.S. BIT with the Czech Republic, with which 

the United States has an expanding relationship, and the protections it affords U.S. investors even after the Czech Republic joins 

the EU. Without it, the European Commission would likely require 

the Czech Republic to terminate its U.S. BIT upon accession because of existing and possible future incompatibilities between our 

current BIT and EU law. 

IV

I recommend that the Senate consider this Protocol as soon as 

possible, and give its advice and consent to ratification at an early 

date. 

GEORGE W. BUSH.

(V)

LETTER OF SUBMITTAL 

DEPARTMENT OF STATE, Washington, DC, January 7, 2004. 

The PRESIDENT, The White House. 

THE PRESIDENT: I have the honor to submit to you the Additional 

Protocol Between the United States of America and the Czech Republic amending the Treaty Between the United States of America 

and the Czech and Slovak Federal Republic Concerning the Reciprocal Encouragement and Protection of Investment of October 22, 

1991, signed at Brussels on December 10, 2003. I recommend that 

this protocol be transmitted to the Senate for its advice and consent to ratification. 

This protocol is the result of an understanding that the United 

States reached with the European Commission and six countries 

that will join the European Union (‘‘EU’’) on May 1, 2004 (the 

Czech Republic, Estonia, Lativa, Lithuania, Poland and the Slovak 

Republic), as well as with Bulgaria and Romania, which are expected to join the EU in 2007. 

The understanding is designed to preserve our bilateral investment treaties (‘‘BITs’’) with these countries after their accession to 

the EU by establishing a framework for avoiding or remedying 

present and possible future incompatibilities between our BITs 

with these eight countries and their future obligations of EU membership. In this regard, the understanding expresses the U.S. intent to conclude substantively identical amendments and formal interpretations of the BITs with each of these eight countries. 

In addition, the understanding establishes a framework for addressing any future incompatibilities that may arise as European 

Union authority in the area of investment expands and evolves in 

the future. It endorses the principle of protecting existing U.S. investments in these countries from any future EU measures that 

may restrict foreign investment in the EU, and also clarifies certain protections afforded to U.S. investments in individual member 

states of the EU under the Treaty Establishing the European Community (‘‘EC Treaty’’). 

Finally, the understanding calls for the United States and each 

BIT partner to interpret, through an exchange of letters, two BIT 

provisions: (1) the right of each BIT Party to take measures necessary for the protection of its own essential security interests, and 

(2) the BIT prohibition on performance requirements.

Both interpretations were undertaken at the request of the European Commission to confirm the mutual understanding of the 

United States and the Czech Republic in the context of EU enlargement. For example, the interpretation of the BIT provision on esVerDate jul 14 2003 07:19 Mar 13, 2004 Jkt 029118 PO 00000 Frm 00005 Fmt 7633 Sfmt 6602 E:\HR\OC\TD018.XXX TD018
VI

sential security interests confirms that, for the Czech Republic, 

these interests may include interests deriving from the Czech Republic’s membership in the EU. As concerns the BIT prohibition on 

performance requirements, many U.S. BITs include a provision explicitly stating that the prohibition on performance requirements 

does not extend to conditions for the receipt or continued receipt 

of an advantage. The interpretation relating to performance requirements makes this explicit with respect to the U.S.-Czech BIT. 

The two interpretations are enclosed for the information of the Senate. 

Investment by the United States has played an important role in 

the economic transformation of these eight countries, and the U.S. 

BITs have afforded important protections to U.S. investors. Prior to 

acceding to the EU, however, the European Commission has required that these countries terminate any international treaty containing incompatibilities with EU law. Without the understanding 

and the steps contemplated therein, including the specific amendments in this protocol, these countries would be required to terminate their U.S. BITs and the great majority of protections these 

treaties afford U.S. investors. Therefore, the understanding, together with the interpretations and specific amendments in the 

protocol, will preserve the benefits of these treaties and provide important additional protections for U.S. investors as the EU continues to evolve. 

THE U.S.-CZECH PROTOCOL

The United States champions EU enlargement and, at the same 

time, intends that this BIT will continue to mutually benefit U.S. 

and Czech investors. By undertaking these amendments of the BIT 

with the Czech Republic, which would be brought into force just 

prior to its accession, incompatibilities between BIT protections 

and EU law are eliminated, and any future problems in this respect are addressed through a framework for consultations. This 

action preserves our BIT with the Czech Republic after its accession to the EU, and is consistent with the policy of the United 

States to welcome market-driven foreign investment and to permit 

capital to flow freely to seek its highest return. The Czech Republic 

is one of the newly democratized countries in Europe transitioning 

to a market economy, and foreign direct investment into the Czech 

Republic is very much in both our countries’ interests. Protection 

for investors facilitates investment activity, and thus directly supports U.S. policy objectives. 

The principal substantive articles of the protocol provide as follows.

Article I: that the article of the BIT prohibiting performance 

requirements does not limit the Czech Republic’s ability to impose, as necessary under EU law, certain kinds of performance 

requirements in the agricultural and audio-visual sectors; 

Article II: that the terms of the free trade area/customs 

union exception of the BIT shall apply, without limitation, to 

all of a Party’s obligations stemming from its membership in 

an economic integration agreement that includes a free trade 

area or customs union, such as the EU; 

VII

Article III: that the BIT Parties will consult promptly whenever either Party believes that steps are necessary to assure 

compatibility between the BIT and the EC Treaty; 

Article IV: that, in certain specified sectors or matters, the 

Czech Republic may take a reservation against the national 

treatment and most-favored-nation treatment obligations of the 

BIT, provided such reservation is necessary to meet the Czech 

Republic’s obligations under EU law, and subject to the following exception; 

that, notwithstanding any such new reservation, existing 

U.S. investments in the Czech Republic shall remain protected under the national treatment and most-favored-nation treatment obligations of the BIT for at least 10 years 

from the date of the relevant EU law necessitating the reservation; and finally, 

that the United States reserves the right to make or 

maintain limited exceptions to the national treatment obligation in two new sectors or matters, fisheries and subsidies, and to the most-favored-nation treatment obligation 

in one new sector, fisheries.

With respect to future developments in EU law, the United 

States recognizes that the possibility exists that these amendments 

may not suffice to ensure compatibility, and that consultations 

would be necessary to avoid or eliminate any incompatibilities that 

may arise. As noted above, the United States and the Czech Republic expressly agree to such consultations in the protocol. 

I support this protocol to the U.S. BIT with the Czech Republic 

and I favor its transmission to the Senate at an early date. 

Respectfully submitted. 

COLIN L. POWELL. 

Enclosures: As stated. 

(1)


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