I 

111TH CONGRESS 

1ST SESSION H. R. 1202 

To require a report on business and investment climates in foreign countries, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2009 

Mr. SHERMAN (for himself and Mr. ROYCE) introduced the following bill; 

which was referred to the Committee on Foreign Affairs 

A BILL 

To require a report on business and investment climates 

in foreign countries, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. ANNUAL COUNTRY REPORTS ON BUSINESS AND 

4 INVESTMENT CLIMATES. 

5 (a) ANNUAL COUNTRY REPORTS ON BUSINESS AND

6 INVESTMENT CLIMATES.—Not later than September 1 of 

7 each year, the Secretary of State, in consultation with the 

8 Assistant Secretary of State for Economic, Energy and 

9 Business Affairs, as well as the Assistant Secretary of 

10 Commerce for Trade Promotion and the Director General 


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1 of the Foreign Commercial Service, shall submit to the 

2 Committee on Foreign Affairs of the House of Representa3 tives and the Committee on Foreign Relations of the Sen4 ate a report providing— 

5 (1) detailed assessments with respect to each 

6 foreign country— 

7 (A) in which acts of unfair business and 

8 investment practices or other acts that have re9 sulted in poor business and investment climates 

10 were, in the opinion of the Secretary, of major 

11 significance; and 

12 (B) which the Secretary determines should 

13 be the subject of such a report; 

14 (2) all relevant information about such unfair 

15 business and investment practices or other actions 

16 during the preceding year by members of the busi17 ness community, the judiciary, and the government 

18 of such country which may have impeded United 

19 States business or investment in such country, in20 cluding the capacity for United States citizens to op21 erate their businesses without fear of reprisals; and 

22 (3) with respect to each foreign country from 

23 which the United States Government has sought co24 operation to assemble the annual country-specific in25 vestment climate reports required under this section 


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1 and address issues of unfair business and investment 

2 practices, information on— 

3 (A) the extent to which the government of 

4 each such foreign country is working to prevent 

5 unfair business and investment practices; and 

6 (B) the extent of United States Govern7 ment action to prevent unfair business and in8 vestment practices or other actions that harm 

9 United States business or investment interests 

10 in relevant cases. 

11 (b) PROVISIONS TO BE INCLUDED IN THE RE12 PORT.—The report under subsection (a) should, to the ex13 tent feasible, include— 

14 (1) with respect to paragraph (1)(A) of such 

15 subsection— 

16 (A) a review of the efforts undertaken by 

17 foreign countries to promote a healthy business 

18 and investment climate that is also conducive to 

19 the United States business community and 

20 United States investors, including, as appro21 priate, steps taken in international fora; 

22 (B) the response of the judicial and local 

23 arbitration systems of each foreign country that 

24 is the subject of such report with respect to 

25 matters relating to the business and investment 


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1 climates affecting United States citizens and 

2 entities, or that have, in the opinion of the Sec3 retary, and in consultation with the Director 

4 General of the Foreign Commercial Service, a 

5 significant impact on United States business 

6 and investment efforts; and 

7 (C) each foreign country’s access to the 

8 United States market; 

9 (2) with respect to paragraph (2) of such sub10 section, any— 

11 (A) actions undertaken by governments of 

12 foreign countries that prevent United States 

13 citizens and businesses from receiving equitable 

14 treatment; 

15 (B) actions taken by private businesses 

16 and citizens of foreign countries against mem17 bers of the United States business community 

18 and United States investors; 

19 (C) unfair decisions rendered by the legal 

20 systems of foreign countries that clearly benefit 

21 State and local corporations and industries; and 

22 (D) unfair decisions rendered by local arbi23 tration panels of foreign countries that do not 

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1 uitable ground for United States citizens and 

2 businesses to address their disputes; and 

3 (3) with respect to paragraph (3)(A) of such 

4 subsection, actions taken by the United States Gov5 ernment to— 

6 (A) promote the rule of law, in general; 

7 (B) prevent discriminatory treatment of 

8 United States citizens and businesses engaged 

9 in business or investment activities; 

10 (C) allow United States goods to enter for11 eign countries without requiring a co-production 

12 agreement; and 

13 (D) protect United States intellectual 

14 property rights. 

15 (c) PREPARATION OF REPORTS REGARDING BUSI16 NESS AND INVESTMENT CLIMATES.— 

17 (1) STANDARDS AND INVESTIGATIONS.—The 

18 Secretary of State shall ensure that the United 

19 States diplomatic and consular missions abroad 

20 maintain a consistent reporting standard and thor21 oughly investigate reports of unfair business and in22 vestment practices or any other actions that impede 

23 a strong business or investment climate in the coun24 tries in which such missions are located. 


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1 (2) UPDATING INFORMATION BASED ON FOR2 EIGN COUNTRY MEDIA.—In compiling data and as3 sessing the business and investment climates abroad 

4 for each report required under subsection (a), 

5 United States foreign service officers shall, as appro6 priate and with respect to the foreign country in 

7 which such officers are posted, research such coun8 try’s media sources, including newspaper, radio, and 

9 television, to document any cases with evidence of 

10 unfair business or investment practices or any occur11 rences that may destabilize the business or invest12 ment climate in such country. 

13 (3) CONTACTS WITH BUSINESS LEADERS.—In 

14 compiling data and assessing the business and in15 vestment climates abroad for each report required 

16 under subsection (a), United States foreign service 

17 officers shall, as appropriate and with respect to the 

18 foreign country in which such officers are posted, 

19 seek out and maintain contacts with corporate lead20 ers in all sectors of the market of such country to 

21 discuss issues of foreign direct investment and the 

22 challenges United States citizens or businesses may 

23 face in making investments or earning returns on in24 vestments. 


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1 (4) CONTACTS WITH UNION LEADERS.—In com2 piling data and assessing the business and invest3 ment climates abroad for each report required under 

4 subsection (a), United States foreign service officers 

5 shall, as appropriate and with respect to the foreign 

6 country in which such officers are posted, seek out 

7 and maintain contacts with leaders of local and na8 tional unions of such country to assess the political 

9 stability of such country as measured through social 

10 cohesion and the rights of workers. 

11 (5) CONTACTS WITH THE JUDICIARY.—In com12 piling data and assessing the business and invest13 ment climates abroad for each report required under 

14 subsection (a), United States foreign service officers 

15 shall, as appropriate and with respect to the foreign 

16 country in which such officers are posted, seek out 

17 and maintain contacts with members of the judicial 

18 system of such country to evaluate the capacity of 

19 the legal institutions to address discrepancies and 

20 disputes that may arise, including corruption and 

21 nationalization. Such officers shall also research the 

22 capacity for arbitration locally to address concerns if 

23 such country’s legal system is unable to provide suit24 able or satisfactory recourse in a matter relating to 


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1 an unfair business or investment practice involving 

2 a United States citizen or business. 

3 (6) CONTACTS WITH NONGOVERNMENTAL OR4 GANIZATIONS.—In compiling data and assessing the 

5 business and investment climates abroad for each re6 port required under subsection (a), United States 

7 foreign service officers shall, as appropriate and with 

8 respect to the foreign country in which such officers 

9 are posted, seek out and maintain contacts with 

10 members of nongovernmental organizations in such 

11 country that address the concerns of the business 

12 community, with the consent of such organizations, 

13 including receiving reports and updates from such 

14 organizations and, when appropriate, investigating 

15 such reports. 

16 (d) CLASSIFICATION OF REPORT.— 

17 (1) IN GENERAL.—A report required under sub18 section (a) of this section shall, to the extent prac19 ticable, be submitted in an unclassified form but 

20 may be accompanied by a classified appendix if the 

21 Secretary of State determines that such is appro22 priate. 

23 (2) COOPERATION.—If the Secretary of State 

24 determines that the submission of any information 

25 with respect to a foreign country under paragraph 


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1 (3) of subsection (a) in classified form would make 

2 more likely the cooperation of the government of 

3 such foreign country, the Secretary may submit such 

4 information in classified form. 

5 (3) SUMMARIZATION.—If the Secretary of State 

6 determines that it is in the national security inter7 ests of the United States or is necessary for the 

8 safety of individuals or entities to be identified in a 

9 report required under subsection (a) or is necessary 

10 to further the purposes of this Act, any information 

11 required under such subsection, including measures 

12 taken by the United States, may be summarized in 

13 such report and submitted in more detail in a classi14 fied addendum. 

15 SEC. 2. BUSINESS AND INVESTMENT CLIMATE WARNINGS. 

16 (a) IN GENERAL.—The Secretary of State, with the 

17 assistance of the Assistant Secretary of State for Eco18 nomic, Energy and Business Affairs, as well as the Assist19 ant Secretary of Commerce for Trade Promotion and the 

20 Director General of the Foreign Commercial Service, shall 

21 establish a system that informs members of the United 

22 States business community and United States investors 

23 prior to their entry into a foreign country of the business 

24 and investment conditions in such country. 


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1 (b) WARNINGS.—The system established under sub2 section (a) shall, if appropriate, issue investment warn3 ings— 

4 (1) to describe long-term, protracted conditions 

5 that make a country’s business or investment cli6 mate risky or potentially dangerous to members of 

7 the United States business community and United 

8 States investors; or 

9 (2) when the ability of the United States Gov10 ernment to assist such members and investors is 

11 constrained due to the closure of a United States 

12 diplomatic or consular mission in such country. 

13 (c) FOUR-TIER SYSTEM.— 

14 (1) IN GENERAL.—The Secretary of State and 

15 the Secretary of Commerce shall develop a four-tier 

16 system to grade the business and investment climate 

17 of each country that receives over $5,000,000,000 in 

18 exports, aid, and remittances from the United 

19 States, based on the following criteria: 

20 (A) Political stability. 

21 (B) Macroeconomic stability. 

22 (C) Rule of law. 

23 (D) Corruption and transparency. 

24 (E) Regulatory quality. 

25 (F) Good governance. 


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1 (G) Civil society engagement. 

2 (2) ADDITIONAL CRITERIA.—The grading with3 in the four-tier system referred to in paragraph (1) 

4 shall also address the following unfair business and 

5 investment practices with respect to each country 

6 identified and graded under such paragraph: 

7 (A) Discriminatory treatment of United 

8 States citizens and businesses engaged in busi9 ness or investment activities. 

10 (B) The status of allowing United States 

11 goods to enter each such country without re12 quiring a co-production agreement. 

13 (C) Protection of United States intellectual 

14 property rights. 

15 (d) PUBLIC ACCESSIBILITY.—The Secretary of State 

16 shall publish on the website of the Department of State 

17 information on countries under this section. 

18 SEC. 3. DEFINITIONS. 

19 In this Act: 

20 (1) CIVIL SOCIETY ENGAGEMENT.—The term 

21 ‘‘civil society engagement’’ means the extent to 

22 which individuals exercise peacefully their rights of 

23 expression, association, and assembly, including 

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1 governmental organizations, unions, and other civil 

2 society organizations. 

3 (2) CORRUPTION AND TRANSPARENCY.—The 

4 term ‘‘corruption and transparency’’ means the ex5 tent to which public officials seek illegitimate per6 sonal gain, including through bribery, extortion, 

7 graft, nepotism, or embezzlement. 

8 (3) CO-PRODUCTION AGREEMENT.—The term 

9 ‘‘co-production agreement’’ means a United States 

10 Government or United States business working with 

11 a foreign government, foreign company, or an inter12 national organization to produce or manufacture an 

13 item. 

14 (4) GOOD GOVERNANCE.—The term ‘‘good gov15 ernance’’ means the extent to which institutions are 

16 sustainable and democratic, with responsive, profes17 sional civil services providing high quality public 

18 services. 

19 (5) MACROECONOMIC STABILITY.—The term 

20 ‘‘macroeconomic stability’’ means the extent to 

21 which the economy of a foreign country is vulnerable 

22 to internal and external shocks. 

23 (6) POLITICAL STABILITY.—The term ‘‘political 

24 stability’’ means the likelihood that the government 


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1 of a foreign country will be destabilized or over2 thrown by unconstitutional or violent means. 

3 (7) REGULATORY QUALITY.—The term ‘‘regu4 latory quality’’ means the extent to which the gov5 ernment of a foreign country is able to formulate 

6 and implement sound policies and regulations that 

7 permit and promote private sector development. 

8 (8) RULE OF LAW.—The term ‘‘rule of law’’ 

9 means the extent to which laws of a foreign country 

10 are publicly promulgated, equally enforced, inde11 pendently adjudicated, and are consistent with inter12 national norms and standards. 

13 (9) UNFAIR BUSINESS AND INVESTMENT PRAC14 TICES.—The term ‘‘unfair business and investment 

15 practices’’ includes any of the following: 

16 (A) Unlawful actions under international 

17 law or the law of the foreign country taken by 

18 the government of such country or by busi19 nesses, citizens, or other entities of such coun20 try that have resulted in lost assets, contracts, 

21 or otherwise contributed to an inhospitable 

22 business or investment climate. 

23 (B) Discriminatory treatment of United 

24 States businesses, whether wholly- or partially25 owned. 


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1 (C) Failure to protect intellectual property 

2 rights. 

3 (D) Requiring a co-production agreement 

4 in order for goods from the United States to 

5 enter a foreign country. 

Æ 


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