The Global Development And Environment Institute



Search GDAE

Subscribe for
E-mail Updates

Leontief Prize

Recent Publications

Media Room

Upcoming Events

Publicaciones en Español

Publications en Francais

Publications in Chinese

Jobs and Resources


Globalization Research

Global Food Crisis
- Right to Food
- Revaluing Smallholder Farms
- Beyond Agricultural Subsidies
- Feeding the Factory Farm

Reforming US Trade Policy
- Lessons from NAFTA
- Reforming US FTAs
- WTO and Global Trade
- Modeling Policy Reform

Foreign Investment
- Foreign Direct Investment
- Capital Flows
- Treaty Reform

China & Latin America

Microfinance / Savings Groups

Working Group on Latin Am.
- Environment
- Foreign Investment
- Agriculture
- China in Latin America

Globalization Home
- About
- Publications Library
- Researchers

Globalization Media
- Multimedia
- In the News
- Columns & Commentaries

Read the Triple Crisis Blog

Subscribe for Updates

Follow us on Facebook

Reforming U.S. Investment Treaties: Recommendations from State Department Advisory Committee on International Economic Policy

On the campaign trail, Barack Obama pledged: “With regards to provisions in several free trade agreements that give foreign investors the right to sue governments directly in foreign tribunals, I will ensure that foreign investor rights are strictly limited and will fully exempt any law or regulation written
to protect public safety or promote the public interest. And I will never agree to granting foreign investors any rights in the U.S. greater than those of Americans.” Just months after President Obama took office he authorized an expert advisory committee to review U.S. investment agreements and investment provisions in U.S. trade treaties and make concrete recommendations for reform. GDAE's Kevin P. Gallagher served on this investment subcommittee of the U.S. Department of State's Advisory Committee on International Economic Policy, which submitted its report to the administration in September 2009.

The United States and China have agreed to an expedited process for negotiating a bilateral investment treaty (BIT), and pending trade agreements with Colombia, Panama, and South Korea all have
investment chapters identical to the Bush Administration's BITs. The
expert advisory committee questioned the efficacy of many of the
provisions last endorsed under the Bush Administration but was only able to reach consensus on a modest set of issues. Important among them was a request that the United States conduct a legal review of its safeguard mechanisms for maintaining financial stability as well as
review the extent to which current U.S. treaties undermine debt restructuring programs. Given the lack of consensus, a large portion of the committee issued its own set of recommendations calling for deeper reform of the U.S. approach. The four core recommendations from this group, which were presented at a Senate briefing, are that:

  • the current "investor-state" process should be replaced with a "state-state" process analogous to the WTO's dispute settlement rules;
  • language regarding subjective terms such as the right to give foreign investors "fair and equitable treatment"be clarified so as to not go beyond U.S. law;
  • language be strengthened to ensure that treaties protect the environment and worker rights;
  • safeguard mechanisms should be provided for nations to deploy capital controls to prevent and mitigate financial crises and to restructure sovereign debt under similar circumstances.

The findings from this group were presented at a Senate briefing Dec. 10, 2009 that received the following news coverage:

Read Kevin Gallagher’s testimony, submitted to the House Ways and Means Trade Subcommittee.

Download the full subcommittee report.

The more comprehensive reform proposals are contained in an annex to the full report.

Read more about GDAE’s research on Foreign Investment for Development.

The Global Development and Environment Institute’s Globalization and Sustainable Development Program examines the economic, social and environmental impacts of economic integration in developing countries, with a particular emphasis on the WTO and NAFTA's lessons for trade and development policy. The goal of the program is to identify policies and international agreements that foster sustainable development.

Tufts University Logo

Global Development And Environment Institute
Tufts University
44 Teele Avenue, Somerville, MA 02144 USA
Tel: 617-627-3530 | Email:

Copyright © 2002 – Tufts University