U.S. Trade and Investment Framework Agreements (TIFAs)

The United States has entered into trade and investment framework agreements (TIFAs), bilateral investment treaties (BITs) and Free Trade Agreements (FTAs) that contain investment provisions.

All of these provide a stable environment conducive to encouraging foreign investment, as well as securing important provisions for U.S. investors abroad.

According to the World Trade Organization (WTO), most of these frameworks have not undergone significant revisions in the past four years.

However, some new TIFAs have entered into force and the Mexico-U.S.-Canada Agreement (USMCA) includes a revised chapter on investment.

TIFAs have traditionally been used by the United States to have a greater degree of engagement and dialogue with trading partners to promote their mutual interest in trade and investment.

They have often served as an intermediate step before moving toward a deeper relationship in an FTA, and the vast majority are with developing countries.

TIFAs create binding obligations to meet and discuss matters within their scope, but do not usually create substantive trade and investment obligations, although there are exceptions.

It has not been necessary to amend U.S. law to implement the TIFAs.

Trade and Investment

In essence, most TIFAs establish a joint Council in which the parties agree to meet and engage in dialogue or consultations on trade and investment matters.

Often, TIFAs have served as an intermediate stage before establishing a deeper relationship through an FTA.

During the past four years, the United States has negotiated four new or revised TIFAs: with Brazil, Ecuador, Fiji and Paraguay.

The TIFA with Fiji, finalized in 2020, was the first U.S. TIFA with a small Pacific island nation.

In the case of Brazil and Ecuador, the existing agreements have been amended, both in 2020, to include a Protocol on Trade Rules and Transparency.

The Protocols agreed with Brazil and Ecuador are exceptional among TIFAs because they establish obligations for the parties that are similar to those observed in bilateral or multilateral trade agreements.

Each Protocol contains three Annexes: Trade Facilitation and Customs Administration, which is consistent with the Trade Facilitation Agreement (TFA), although the Annex goes beyond the TFA with respect to certain obligations; Good Regulatory Practices; and Anti-Corruption.

In addition, the Protocol agreed by Ecuador also contains a fourth Annex: Small and Medium-Sized Enterprises.

These recently signed TIFA Protocols with Brazil and Ecuador provide for a transition period for one or both parties to implement certain articles of the Agreements.