The global landscape for foreign direct investment (FDI) is undergoing significant transformation. Over the past few decades, investment flows have increased with greater economic integration of the global economy and the growth of international value chains. Although global FDI flows dipped amid the 2008 international financial crisis, they surpassed pre-crisis levels in 2011. Previous distinctions between advanced country/capital exporters and developing country/capital importers are being blurred as more and more countries are both sources of and hosts for FDI. The United States, which remains a major source of and destination for FDI, seeks to facilitate investment flows by reducing restrictions on foreign investment and enhancing protections for investors, while balancing other policy interests. In 2011, the Obama Administration issued a statement reaffirming the United States' commitment to an open investment policy that treats all investors in a fair and equitable manner under the law, and encourages and supports business investment from both domestic and foreign sources. 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." The United States negotiates investment agreements to provide non-discriminatory treatment to private investment, help facilitate market-oriented policies in partner countries, and promote U.S. exports, among other goals. Congress plays an important role in shaping U.S. investment policy through its oversight and legislative responsibilities. For example, Congress can set trade policy negotiating objectives on investment in trade promotion authority (TPA). As international treaties, U.S. BITs require the advice and consent of two-thirds of the Senate in order to be ratified for implementation. U.S. FTAs, which generally include investment chapters, require enactment of implementing legislation by both the House of Representatives and the Senate. This report provides an overview of U.S. international investment agreements, focusing specifically on BITs and investment chapters in FTAs. It discusses key trends in U.S. and international investment flows, governance structures for investment at the bilateral and multilateral levels, the goals and basic components of investment provisions in U.S. international investment agreements, the outcomes of the Administration's Model BIT review, and key policy issues for Congress. In contrast to other areas of policymaking such as international trade, there is no comprehensive agreement on international rules for the promotion and protection of investment. Over the past several decades, efforts have been made through international organizations to develop investment rules. The last major effort was through the Organization for Economic Cooperation and Development (OECD). During the 1990s, developed countries in the OECD proposed a Multilateral Agreement on Investment (MAI), which would have included provisions to liberalize and provide non-discriminatory treatment for investment and provide a dispute settlement mechanism. The OECD negotiations ultimately were abandoned following policy disagreements among participating countries, the business community, and nongovernmental organizations. Although no comprehensive multilateral investment agreement has been negotiated, there are several multilateral agreements on investment that are limited in scope. The Energy Charter Treaty, agreed to in 1994, covers investment in the energy sector among its 51 member countries (the United States is not a member). Investment issues are also partly addressed in several World Trade Organization (WTO) agreements: The Trade-Related Investment Measures (TRIMS) Agreement prevents WTO member countries from applying restrictive investment measures that are inconsistent with national treatment obligations (such as performance requirements) under the General Agreement on Tariffs and Trade (GATT); The General Agreement on Trade in Services (GATS) includes investment liberalization provisions related to trade in services; and The Agreement on Subsidies and Countervailing Measures (ASCM) and the Government Procurement Agreement (GPA) deal indirectly with investment by including several investment incentives in its definition of subsidies and public procurement services, respectively. Some WTO members sought to include investment in the Doha Round of WTO trade negotiations. The 2001 WTO Doha Declaration directed the WTO Working Group on the Relationship between Trade and Investment to focus on several investment issues. However, widespread opposition to the inclusion of investment issues (as well as trade and competition and procurement) in the negotiations led to their omission from the WTO agenda at the 2003 WTO Ministerial Conference in Singapore. In addition, investment is covered by several so-called "soft law" (non-binding) efforts such as the OECD's Guidelines for Multinational Enterprises and the OECD's Code of Capital Movements. 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. BITs and FTA investment chapters are binding reciprocal agreements that promote and protect investors of one state (home) in the territory of another (host) by establishing a number of basic protections. The provisions of BITs are generally similar across countries. They are a combination of the substantive obligations for the home and host countries and provisions allowing for investor-state dispute resolution. The former typically include national treatment and most-favored nation (MFN) treatment of foreign investors in the host country, the right to transfer profits in hard currency to the home country, prohibition on the use of performance requirements, and the right to compensation for direct and indirect expropriation. For advanced economies, the primary rationale for signing a BIT is investment protection. Investment promotion is a secondary priority. Developing countries, on the other hand, conclude BITs primarily to promote inward FDI and signal to foreign investors that they will protect foreign property rights. There is a concern that many developing countries, where the quality of domestic institutions may be weak, may promise to protect foreign investors prior to an investment, only to change various terms (such as raising taxes, introducing various export quotas, or expropriation of assets) following the investment. Some analysts raise concerns that when BITs are a substitute for local legal institutions, rather than improve host country governance, their presence may lead to reductions in the quality of local institutions. Others argue that BITs serve as a model to improve local institutions and the rule of law. The failure to reach a comprehensive, multilateral agreement on investment protection and liberalization was a source of concern in the post-war economy. According to one analyst, In the period after World War II, as foreign investment gained momentum as an increasingly important international economic activity, foreign investors who sought the protection of international investment law encountered an ephemeral structure consisting largely of scattered treaty provisions, a few questionable customs, and contested general principles of law. Beginning in 1959, European countries, especially those lacking colonial ties and informal networks in developing countries, started negotiating investment treaties to safeguard their existing global investments and facilitate new investments. The first two BITs were signed by Germany in 1959 with Pakistan and the Dominican Republic, respectively. Switzerland signed an agreement with Tunisia in 1961. Early BITs allowed for direct state-to-state resolution of investment disputes. This changed in 1966 with the creation of the International Centre for the Settlement of Investment Disputes (ICSID). An affiliate organization of the World Bank, ICSID provides arbitration facilities for aggrieved investors to directly bring claims against a foreign government. By the mid-1960s, several European countries including France, the Netherlands, Denmark, and Norway had initiated BIT programs. Asian nations began to sign BITs in the 1970s; Japan signed its first BIT in 1977 with Egypt. They were followed by the United States, which initiated its BIT program in 1977. Following the fall of the Soviet Union, Central and Eastern European countries began signing BITs in the late 1980s and 1990s, and Latin American countries entered the arena in the 1990s. The BIT network grew slowly over the first three decades. In the beginning, BITs were drafted by capital-exporting states with the primary purpose of protecting their investors from unfair foreign treatment. For developing countries, there was a shared belief that BITs would increase foreign investment spurring economic growth. By the end of the 1980s, 385 BITs had been signed. From the late 1980s through the mid-1990s, BITs proliferated rapidly, both between developed and developing countries and between developing countries, as many developing countries embraced the so-called "Washington Consensus" reforms of macroeconomic discipline, market-based economies, and openness to trade and foreign direct investment ( Figure 1 ). By the end of 2011, 2,833 BITs had been concluded throughout the world. Adding FTAs with investment provisions, economic partnership agreements and regional agreements, the total now exceeds 3,000. The increase in the number of BITs worldwide is largely a consequence of the rapid growth of FDI in recent decades. FDI, capital flows between nations for the purpose of acquiring lasting interest in enterprises operating outside of the economy of the investor, more than tripled between 1995 and 2011 ( Figure 2 ). According to the United Nations Conference on Trade and Development (UNCTAD), global FDI declined by 18% in 2012 to an estimated $1.3 trillion from $1.5 trillion in 2011. FDI had recovered significantly in 2010 and 2011, and despite the decline remains especially strong in developing economies. Over the past decade, developing and transitioning economies have become an increasingly attractive destination for FDI and, since 2010, account for a majority of global FDI inflows. According to recent UNCTAD figures, FDI flows to developing countries exceeded those to developed countries for the first time in 2012, by $130 billion. Another significant trend over the past decade has been a decline in outward FDI from advanced economies and an increase in FDI from developing countries. This trend has been especially driven by the need for gas, oil, and other natural resources in China and other rapidly growing emerging markets.