An agreement between two countries providing for nondiscriminatory treatment of direct investments. A BIT usually contains provisions for prompt and adequate compensation in the event of expropriation; guarantees on free transfers of investment earnings; freedom from performance requirements; and mechanisms for resolving disputes such as third-party arbitration. As of September 1993, the United States had signed 25 BITs --13 of which had entered into force --with another 20 under discussion with foreign countries.

A treaty between two countries with the goal of ensuring that investments made by either of them in the other receive treatment equal to that afforded their domestic entities or any third country entities.

Treaties negotiated with countries that do not have other treaties such as FTAs, to ensure protection of US investors' interests. BITs are similar to the investment chapters of free trade agreements and are often negotiated prior to full FTAs.