102d
CONGRESS 1st Session
SENATE TREATY Doc. 102-1
TREATY
WITH THE PEOPLE'S REPUBLIC OF THE CONGO CONCERNING THE RECIPROCAL
ENCOURAGEMENT AND PROTECTION OF INVESTMENT
MESSAGE
FROM
THE
PRESIDENT OF THE UNITED STATES
TRANSMITTING
TREATY
BEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT
OF THE PEOPLE'S REPUBLIC OF THE CONGO CONCERNING THE RECIPROCAL
ENCOURAGEMENT AND PROTECTION OF INVESTMENT, SIGNED AT WASHINGTON,
FEBRUARY 12,1990
MARCH 19,
1991.-Treaty was read for the first time, and together with the
accompanying papers, referred to the Committee on Foreign Relations and
ordered to be printed for the use of the Senate.
______________
U.S.
GOVERNMENT PRINTING OFFICE
WASHINGTON
: 1991
LETTER
OF TRANSMITTAL
__________________
THE WHITE
HOUSE, March 19, 1991.
To the
Senate of the United States:
With a
view to receiving the advice and consent of the Senate to ratification,
I transmit herewith the Treaty Between the United States of America and
the People's Republic of the Congo concerning the Reciprocal
Encouragement and Protection of Investment, signed at Washington on
February 12, 1990. I transmit also, for the information of the Senate,
the report of the Department of State with respect to this treaty.
The
Bilateral Investment Treaty (BIT) program, initiated in 1981, is
designed to encourage and protect U.S. investment. The treaty is an
integral part of U.S. efforts to encourage the Congo and other
governments to adopt macroeconomic and structural policies that will
promote economic growth. It is also fully consistent with U.S. policy
toward international investment. That policy holds that an open
international investment system in which participants respond to market
forces provides the best and most efficient mechanism to promote global
economic development. A specific tenet, reflected in this treaty, is
that U.S. direct investment abroad and foreign investment in the United
States should receive fair, equitable, and nondiscriminatory treatment.
Under this treaty, the Parties also agree to international law standards
for expropriation and compensation; to free financial transfers; and to
procedures, including international arbitration, for the settlement of
investment disputes.
I
recommend that the Senate consider this treaty as soon as possible and
give its advice and consent to ratification of the treaty at an early
date.
GEORGE
BUSH
LETTER
OF SUBMITTAL
DEPARTMENT OF STATE,
Washington,
March 11, 1991.
The
PRESIDENT,
The
White House,
THE
PRESIDENT: I have the honor to submit to you the Treaty Between the
United States of America and the People's Republic of the Congo
concerning the Reciprocal Encouragement and Protection of Investment,
signed at Washington, February 12, 1990. I recommend that this treaty be
transmitted to the Senate for its advice and consent to ratification.
This
treaty constitutes a continuation of the bilateral investment treaty
(BIT) program initiated in 1981. Negotiation of these treaties has been
pursued by the Office of the United States Trade Representative and the
Department of State with active participation of the Departments of
Commerce and Treasury, in conjunction with other U.S. Government
agencies. BITs with Bangladesh, Cameroon, Grenada, Senegal, Turkey, and
Zaire have entered into force.
The
global BIT program is intended to encourage and protect U.S. investment
in developing countries. By providing certain mutual guarantees and
protections, a BIT creates a more stable and predictable legal framework
for foreign investors in the territory of each of the treaty Parties.
The negotiation of a series of bilateral treaties with interested
countries establishes greater international discipline in the investment
area.
The BITs
which have been concluded, as well as others under negotiation, are an
integral part of U.S. efforts to encourage other governments to adopt
macroeconomic and structural policies that will promote economic growth.
Experience to date has shown that interested countries are willing to
provide U.S. investors with significant investment guarantees and
assurances as a way of inducing additional foreign investment. It is
U.S. policy to advise potential treaty partners that conclusion of a BIT
with the United States is an important and favorable factor in the
investment relationship, but does not in and of itself result in
immediate increases in U.S. investment flows.
The BIT
approach is similar to programs that have been undertaken with
considerable success by a number of European countries, including the
Federal Republic of Germany and the United Kingdom, since the early
1960s. Indeed, our industrialized partners already have over 200 BITs in
force, primarily with developing countries. U.S. treaties, which draw
upon language used in its Treaties of Friendship, Commerce, and
Navigation (FCNS) as well European counterparts, are more comprehensive
and far-reaching than European BITS.
THE
U.S.-CONGO TREATY
The
treaty with the Congo satisfies all four main BIT objectives:
-- foreign
investors are to be accorded treatment in accordance with international
law and are to be treated no less favorably than investors of the host
country or no less favorably than investors of third countries,
whichever is the most favorable treatment ("national" or "most-favored-nation"
treatment) subject certain specified exceptions;
--
international law standards shall apply to the expropriation of
investments and to the payment of compensation for expropriation;
-- free
transfers shall be afforded to funds associated with an investment into
and out of the host country; and
--
procedures shall allow an investor to take a dispute with a Party
directly to binding third-party arbitration.
The
provisions of the treaty with the Congo do not differ in any from the
U.S. model text used at the time of negotiation. A description of the
most significant provisions of the treaty follows.
The Congo
BIT's definition section clarifies terms such as "company of a
Party" and "investment." The BIT concept of "investment
is broad and designed to be flexible; although numerous types of
economic interests are enumerated, the intent is to include all
legitimate interests in the territory of either Party, whether directly
or indirectly controlled by nationals of the other, having economic
value or "associated" with an investment. "Companies of
Party are those legally constituted under the laws of a Party.
The Congo
BIT accords the better of national or most-favored nation (MFN)
treatment to foreign investment, subject to each Party's exceptions
which are set forth in the treaty or its annex, which forms an integral
part of the treaty. The exceptions are designed to protect state
regulatory interests and, for the United States, to accommodate the
derogations from national treatment in state or federal law relating to
such areas as air transport, shipping, banking, telecommunications,
energy and power production, insurance; and from national and MFN
treatment in the case of ownership of real property. The Congo has
listed the following sectors or matters as exceptions: the insurance
sector, government lending and insurance programs, energy production,
certified customs agents, real estate, radio and television broadcasts,
telephone and telegraph services, drinking water supply, rail
transportation, and air transport. Any additional restrictions or
limitations which Party may adopt with respect to those matters or
sectors are not to affect existing investments.
The BIT
also includes general treatment protections designed to be a guide to
interpretation and application of the treaty. Thus, the parties agree to
accord investments "fair and equitable treatment". Thus, the
Parties agree to accord investments "fair and equitable treatment"
and "full protection and security" in no case "less than
that required by international law." The BIT specifically grants
nationals of a Party the right to establish investments on a basis no
less favorable than the better of national or MFN treatment in the
territory of the other Party, restricts the right to impose performance
requirements, and obliges Parties to observe their contractual
obligations with investors. The BIT also provides that companies legally
constituted under the laws of a Party which are investments shall be
permitted to engage "top managerial personnel of their choice,
regardless of nationality."
The BIT
also confers protection from unlawful interference with property
interests and assures compensation in accordance with international law
standards. It provides that any direct or indirect taking must be: for a
public purpose; nondiscriminatory; accompanied by the payment of prompt,
adequate and effective compensation; and in accordance with due process
of law and the general standards of treatment discussed above. The
meaning of "expropriation" as used in the BIT is broad and
flexible; it includes any measure which is "tantamount to
expropriation or nationalization." Such compensation, which "shall
be equivalent to the fair market value of the expropriated investment
immediately before the expropriatory action was taken or became known,"
must be "without delay," "fully realizable," "freely
transferable" and "include interest at a commercially
reasonable rate from the date of expropriation . . ." The BIT
grants the right to "prompt review" by the relevant judicial
or administrative authorities in order to determine whether the
compensation offered is consistent with these principles. It also
extends national and MFN treatment to investors in cases of loss due to
war or other civil disturbance. The BIT does not provide, however, a
specific valuation method for compensating such losses.
The Congo
BIT provides for free transfers "related to an investment,"
specifically including returns, compensation for expropriation,
payments, arising out of an investment dispute, contract payments,
proceeds from the sale of an investment, and contributions to capital
for maintenance or development of an investment. Such transfers are to
be made in a "freely usable currency at the prevailing market rate
of exchange on the date of transfer with respect to spot transactions in
the currency to be transferred." The text recognizes that
notwithstanding this guarantee Parties can maintain certain laws and
regulations regarding transfers provided these are applied in a
non-discriminatory fashion. In particular, the text provides that
Parties can require reports of currency transfers and impose income
taxes by such means as a withholding tax on dividends. The article also
recognizes that Parties retain the right to protect the rights of
creditors and ensure the satisfaction of judgments in adjudicatory
proceedings.
The BIT
provides that where a defined investment dispute arises between a Party
and a national or company of the other Party, including a dispute as to
the interpretation of an investment agreement, and the dispute cannot be
solved through negotiation, it may be submitted to arbitration in
accordance with any dispute-settlement procedures to which the national
or company and the host country have previously agreed. Unless the
national or company has submitted the dispute to previously agreed
dispute settlement procedures or to adjudication by domestic courts or
other tribunals of the host country, the national or company may submit
the dispute to the International Centre for the Settlement of Investment
Disputes ("ICSID") for conciliation or binding arbitration.
Exhaustion of local remedies is not required. In a separate provision,
the Parties also agree to provide effective means of asserting claims
and enforcing rights with respect to investments.
The BIT
provides for state-to-state arbitration between the Parties in case of a
dispute regarding the interpretation or application of the treaty. In
the absence of an agreement that other rules apply, the BIT refers the
Parties to the arbitration rules of the United Nations Commission on
International Trade Law. The BIT also outlines the procedures for the
creation of the arbitral panel. Another BIT provision exempts disputes
arising under Export-Import Bank programs, or other credit guarantee or
insurance arrangements providing for alternative dispute settlement
arrangements, from the standard BIT arbitration clauses.
The BIT
exhorts Parties to apply their tax policies fairly and equitably.
Because the United States specifically addresses tax matters in tax
treaties, the BIT for the most part excludes such matters. The BIT also
states that the treaty shall not derogate from any obligations that
require more favorable treatment of investments. The treaty further
provides that measures necessary for public order or essential security
interests are not precluded.
The BIT
enters into force 30 days after exchange of ratifications and continues
in force for at least ten years. Thereafter, either Party may terminate
the treaty, subject to one year's written notice.
I join
with the U.S. Trade Representative and other U.S. Government agencies in
supporting the treaty and favor its transmission to the Senate at an
early date.
Respectfully submitted,
LAWRENCE
EAGLEBURGER.
TREATY
BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE
GOVERNMENT OF THE PEOPLE'S REPUBLIC OF THE CONGO CONCERNING THE
RECIPROCAL ENCOURAGEMENT AND PROTECTION OF INVESTMENT
The
Government of the United States of America and the Government of the
People's Republic of the Congo, desiring to promote greater economic
cooperation between them, with respect to investment by nationals and
companies of one Party in the territory of the other Party; and
Recognizing that agreement upon the treatment to be accorded such
investment will stimulate the flow of private capital and the economic
development of the Parties,
Agreeing
that fair and equitable treatment of investment is desirable in order to
maintain a stable framework for investment and maximum effective
utilization of economic resources, and
Having
resolved to conclude a Treaty concerning the encouragement and
reciprocal protection of investment,
Have
agreed as follows:
ARTICLE
I
1. For
the purpose of this Treaty,
(a) "company
of a Party" means any kind of corporation, company, association, or
other organization, legally constituted under the laws and regulations
of a Party or a political subdivision thereof whether or not organized
for pecuniary gain, or privately or governmentally owned;
(b) "investment"
means every kind of investment, in the territory of one Party owned or
controlled directly or indirectly by nationals or companies of the other
Party, such as equity, debt, and service and investment contracts; and
includes:
(i)
tangible and intangible property, including rights, such as mortgages,
liens and pledges;
(ii) a
company or shares of stock or other interests in a company or interests
in the assets thereof,
(iii) a
claim to money or a claim to performance having economic value, and
associated with an investment;
(iv)
intellectual and industrial property rights, including rights with
respect to copyrights, patents, trademarks, trade names, industrial
designs, trade secrets and know-how, and goodwill; and
(v) any
right conferred by law or contract, and any licenses and permits
pursuant to law;
(c) "national"
of a Party means a natural person who is a national of a Party under its
applicable law;
(d) "return"
means an amount derived from or associated with an investment, including
profit; dividend; interest; capital gain; royalty payment; management,
technical assistance or other fee; or returns in kind;
(e) "associated
activities" include the organization, control, operation,
maintenance and disposition of companies, branches, agencies, offices,
factories or other facilities for the conduct of business; the making,
performance and enforcement of contracts; the acquisition, use,
protection and disposition of property of all kinds including
intellectual and industrial property rights; and the borrowing of funds,
the purchase and issuance of equity shares, and the purchase of foreign
exchange for imports.
2. Each
Party reserves the right to deny to any company the advantages of this
Treaty if nationals of any third country control such company and, in
the case of a company of the other Party, that company has no
substantial business activities in the territory of the other Party or
is controlled by nationals of a third country with which the denying
Party does not maintain normal economic relations.
3. Any
alteration of the form in which assets are invested or reinvested shall
not affect their character as investment.
ARTICLE
II
1. Each
Party shall permit and treat investment, and activities associated
therewith, on a basis no less favorable than that accorded in like
situations to investment or associated activities of its own nationals
or companies, or of nationals or companies of any third country,
whichever is the most favorable, subject to the right of each Party to
make or maintain exceptions falling within one of the sectors or matters
listed in the Annex to this Treaty. Each Party agrees to notify the
other Party before or on the date of entry into force of this Treaty of
all such laws and regulations of which it is aware concerning the
sectors or matters listed in the Annex. Moreover, each Party agrees to
notify the other of any future exception with respect to the sectors or
matters listed in the Annex, and to limit such exceptions to a minimum.
Any future exception by either Party shall not apply to investment
existing in that sector or matter at the time the exception becomes
effective. The treatment accorded pursuant to any exceptions shall not
be less favorable than that accorded in like situations to investments
and associated activities of nationals or companies of any third
country, except with respect to ownership of real property. Rights to
engage in mining on the public domain shall be dependent on reciprocity.
2.
Investment shall at all times be accorded fair and equitable treatment,
shall enjoy full protection and security and shall in no case be
accorded treatment less than that required by international law. Neither
Party shall in any way impair by arbitrary and discriminatory measures
the management, operation, maintenance, use, enjoyment, acquisition,
expansion, or disposal of investments. Each Party shall observe any
obligation it may have entered into with regard to investments.
3.
Subject to the laws relating to the entry and sojourn of aliens,
nationals of either Party shall be permitted to enter and to remain in
the territory of the other Party for the purpose of establishing,
developing, administering or advising on the operation of an investment
to which they, or a company of the first Party, that employs them, have
committed or are in the process of committing a substantial amount of
capital or other resources.
4.
Companies which are legally constituted under the applicable laws or
regulations of one Party, and which are investments, shall be permitted
to engage top managerial personnel of their choice, regardless of
nationality.
5.
Neither Party shall impose performance requirements as a condition of
establishment, expansion or maintenance of investments, which require or
enforce commitments to export goods produced, or which specify that
goods or services must be purchased locally, or which impose any other
similar requirements.
6. Each
Party shall provide effective means of asserting claims and enforcing
rights with respect to investment agreements, investment authorizations
and properties.
7. Each
Party shall make public all laws, regulations, administrative practices
and procedures, and adjudicatory decisions that pertain to or affect
investments.
8. The
treatment accorded by the United States of America to investments and
associated activities under the provisions of this Article shall in any
State, Territory or possession of the United States of America be the
treatment accorded therein to companies legally constituted under the
laws and regulations of other States, Territories or possessions of the
United States of America.
9. The
most favored nation provisions of this Article shall not apply to
advantages accorded by either Party to nationals or companies of any
third country by virtue of that Party's binding obligations that derive
from full membership in a regional customs union or free trade area.
ARTICLE
III
1.
Investments shall not be expropriated or nationalized either directly or
indirectly through measures tantamount to expropriation or
nationalization ("expropriation") except for a public purpose;
in a non-discriminatory manner; upon payment of prompt, adequate and
effective compensation; and in accordance with due process of law and
the general principles of treatment provided for in Article 11(2).
Compensation shall be equivalent to the fair market value of the
expropriated investment immediately before the expropriatory action was
taken or became known; be paid without delay; include interest at a
commercially reasonable rate from the date of expropriation; be fully
realizable; and be freely transferable at the prevailing market rate of
exchange on the date of expropriation.
2. A
national or company of either Party that asserts that all or part of its
investment has been expropriated shall have a right to prompt review by
the appropriate judicial or administrative authorities of the other
Party to determine whether any such expropriation has occurred and, if
so, whether such expropriation, and any compensation therefor, conforms
to the principles of international law.
3.
Nationals or companies of either Party whose investments are losses in
the territory of the other Party owing to war or armed conflict,
revolution, state or national emergency, insurrection, civil disturbance
or other similar events shall be accorded treatment by such other Party
no less favorable than that accorded to its own nationals or companies
or to nationals or company of any third country, whichever is the most
favorable treatment, as regards any measures it adopts in relation to
such losses.
ARTICLE
IV
1. Each
Party shall permit all transfers related to an investment be made freely
and without delay into and out of its territory. Such transfers include:
(a) returns; (b) compensation pursuant to article III; (c) payments
arising out of an investment dispute; (d) agreements made under a
contract, including amortization of principle and accrued interest
payments made pursuant to a loan agreement; (e) proceeds from the sale
or liquidation of all or any part of investment; and (f) additional
contributions to capital for the maintenance or development of an
investment.
2. Except
as provided in Article III paragraph 1, transfers shall made in a freely
convertible currency at the prevailing market of exchange on the date of
transfer with respect to spot transactions in the currency to be
transferred.
3.
Notwithstanding the provisions of paragraphs 1 and 2, either may
maintain laws and regulations (a) requiring reports of currency
transfer; and (b) imposing income taxes by such means as withholding tax
applicable to dividends or other transfers. Furthermore, either Party
may protect the rights of creditors, or re the satisfaction of judgments
in adjudicatory proceedings, rough the equitable, nondiscriminatory and
good faith application of its law.
ARTICLE
V
The
Parties agree to consult promptly, on the request of either, resolve any
disputes in connection with the Treaty, or to discuss matters relating
to the interpretation or application of the treaty.
ARTICLE
VI
1. For
the purposes of this Article, an investment dispute is deed as a dispute
involving (a) the interpretation or application of investment agreement
between a Party and a national or company of the other Party; (b) the
interpretation or application of a investment authorization granted by a
Party's foreign investment authority to such national or company; or (c)
an alleged breach of any right conferred or created by this Treaty with
respect to an investment.
2. In the
event of an investment dispute between a Party and a national or company
of the other Party, the parties to the dispute shall initially seek to
resolve the dispute by consultation and negotiation, which may include
the use of non-binding, third party procedures. Subject to Paragraph 3
of this Article, if the dispute cannot be resolved through consultation
and negotiation, the dispute shall be submitted for settlement in
accordance with previously agreed, applicable dispute-settlement
procedures; any dispute-settlement procedures including those relating
to expropriation and specified in the investment agreement shall remain
binding and shall be enforceable in accordance with the terms of the
investment agreement, relevant provisions of domestic laws, and
applicable international agreements regarding enforcement of arbitral
awards.
3. (a)
The national or company concerned may choose to consent in writing to
the submission of the dispute to the International Settlement of
Investment Disputes ("Centre") or to plying the rules of the
Centre, for the settlement or binding arbitration, at any time after six
upon which the dispute arose. Once the national or company concerned has
so consented, either party to the dispute may institute such proceedings
provided:
(i) the
dispute has not been submitted by the national or company for resolution
in accordance with any applicable previously agreed dispute settlement
procedures; and
(ii) the
national or company concerned has not brought the dispute before the
courts of justice or administrative tribunals or agencies of competent
jurisdiction of the Party that is a party to the dispute. If the parties
disagree over whether conciliation or binding arbitration is the more
appropriate procedure to be employed, the opinion of the national or
company concerned shall prevail.
(b) Each
Party hereby consents to the submission of an investment dispute to the
Centre for settlement by conciliation or binding arbitration, or, in the
event the Centre is not available, to the submission of the dispute to
ad hoc arbitration applying the rules of the Centre.
(c)
Conciliation or binding arbitration of such disputes shall be done
applying the provisions of the Convention of the Settlement of
Investment Disputes Between States and Nationals of Other States done at
Washington, March 18, 1965 ("Convention") and the Regulations
and Rules or the Centre.
4. In any
proceeding involving an investment dispute, a Party shall not assert, as
a defense, counter-claim, right of set-off or otherwise, that the
national or company concerned has received or will receive, pursuant to
an insurance or guarantee contract, indemnification or other
compensation for all or part of its. alleged damages.
5. For
the purposes of this Article, any company legally constituted under the
applicable laws and regulations of either Party or a political
subdivision thereof but that, immediately before the occurrence of the
event or events giving rise to the dispute, was an investment of
nationals or companies of the other Party, shall, in accordance with
Article 25 (2) (b) of the Convention, be treated as a national or
company of such other Party.
ARTICLE
VII
1. Any
dispute between the Parties concerning the interpretation or application
of the Treaty which is not resolved through consultations other
diplomatic channels, shall be submitted, upon the request of either
Party, to an arbitral tribunal for binding decision in accordance with
the applicable rules of international law. In the absence of an
agreement by the Parties to the contrary, the arbitration rules of the
United Nations Commission on International Trade Law (UNCITRAL), except
to the extent modified by the Party or by the arbitrators, shall govern.
2. Within
two months of receipt of a request, each Party shall appoint an
arbitrator. The two arbitrators shall select a third arbitral as
Chairman, who is a national of a third State. The UNCITRAL Rules for
appointing members of three member panels shall apply mutatis
mutandis to the
appointment of the arbitral panel except that the appointing authority
referenced in those rules shall be the Secretary General of the Centre.
3. Unless
otherwise agreed, all submissions shall be made and all hearings shall
be completed within six months of the date of selection of the third
arbitrator, and the Tribunal shall render its decision within two months
of the date of the final submissions or the of the closing of the
hearings, whichever is later.
4.
Expenses incurred by the Chairman, the other arbitrators, an other costs
of the proceedings shall be paid for equally by the Parties. The
Tribunal may, however, at its discretion, direct that a higher
proportion of the costs be paid by one of the Parties.
ARTICLE
VIII
The
provisions of Article VI and VII shall not apply to a dispute arising
(a) under the export credit, guarantee or insurance programs of the
Export-Import Bank of the United States or (b) under other official
credit, guarantee or insurance arrangements pursuant to which the
Parties have agreed to other means of settling disputes.
ARTICLE
IX
This
Treaty shall not derogate from:
(a) laws
and regulations, administrative practices or procedures, or
administrative or adjudicators decisions of either Party;
(b)
international legal obligations; or
(c)
obligations assumed by either Party, including those contained in an
investment agreement or an investment authorization, that entitle
investments or associated activities to treatment more favorable than
that accorded by this Treaty in such situations.
ARTICLE
X
1. This
Treaty shall not preclude the application by either Party of measures
necessary for the maintenance of public order, the fulfillment of its
obligations with respect to the maintenance or restoration of
international peace or security, or the protection of its own essential
security interests.
2. This
Treaty shall not preclude either Party from prescribing special
formalities in connection with the establishment of investments, but
such formalities shall not impair the substance of any of the rights set
forth in this Treaty.
ARTICLE
XI
1. With
respect to its tax policies, each Party should strive to accord fairness
and equity in the treatment of investment of nationals and companies of
the other Party.
2.
Nevertheless, the provisions of this Treaty, and in particular Article
VI and VII, shall apply to matters of taxation only with respect to the
following:
(a)
expropriation, pursuant to Article III;
(b)
transfers, pursuant to Article IV; or
(c) the
observance and enforcement of terms of an investment agreement or
authorization as referred to in Article VI (1) (a) or (b), to the extent
they are not subject to the dispute settlement provisions of a
Convention for the avoidance of double taxation between the two Parties,
or have been raised under such settlement provisions and are not
resolved within a reasonable period of time.
ARTICLE
XII
This
Treaty shall apply, mutatis
mutandis, to the
political subdivisions of the parties.
ARTICLE
XIII
1. This
Treaty shall enter into force thirty days after the date of exchange of
instruments of ratification. It shall remain in force for a period of
ten years and shall continue in force unless terminated in accordance
with paragraph 2 of this Article. It shall apply to investments existing
at the time of entry into force as well as to investments made or
acquired thereafter.
2. Either
Party may, by giving one year's written notice to the other Party,
terminate this Treaty at the end of the initial ten year period or at
any time thereafter.
3. With
respect to investments made or acquired prior to the date of termination
of this Treaty and to which this Treaty otherwise applies, the
provisions of all of the other Articles of this Treaty shall thereafter
continue to be effective for a further period of ten years from such
date of termination.
4. The
Annex shall form an integral part of the Treaty.
IN
WITNESS WHEREOF, the respective plenipotentiaries have signed this
Treaty.
DONE in
duplicate at Washington on the twelfth day of February, 1990, in the
English and French languages, both texts being equally authentic.
For the
Government People's Republic of the Congo
ANTOINE
NDINGA-OBA.
For the
Government of the United States of America
CARLA
HILLS
ANNEX
Consistent with Article II paragraph 1, each Party reserves the right to
maintain limited exceptions in the sectors or matters it has indicated
below:
The
United States of America
Air
transportation; ocean and coastal shipping; banking; insurance;
government grants; government insurance and loan programs; energy and
power production; custom house brokers; ownership of real estate;
ownership and operation of broadcast or common carrier radio and
television stations; ownership of shares in the Communications Satellite
Corporation; the provisions common carrier telephone and telegraph
services; the provision of submarine cable services; use of land and
natural resources; primary dealerships in government securities;
land-based maritime transport facilities.
The
People's Republic of the Congo
The
insurance sector; government lending and insurance programs; energy
production; certified customs agents; real estate, radio and television
broadcasts; telephone and telegraph services drinking water supply; rail
transportation; air transport.
TREATY
WITH THE PEOPLE'S REPUBLIC OF THE CONGO CONCERNING THE RECIPROCAL
ENCOURAGEMENT AND PROTECTION OF INVESTMENT
____________________________
AUGUST 6
(legislative day, August 5) 1992 - Ordered to be printed
____________________________
Mr.
PELL, from the Committee on Foreign Relations, submitted the following
REPORT
[To
accompany Treaty Doc. 102-1]
The
Committee on Foreign Relations to which was referred the Treaty Between
the Government of the United States of America and the Government of the
People's Republic of the Congo Government, signed at Washington,
February 12, 1990, having considered the same, reports favorably thereon
without amendment and recommends that the Senate gave its advise and
consent to ratification thereof.
PURPOSE
The
Treaty Between the Government of the United States of America and the
Government of the People's Republic of the Congo Concerning the
Reciprocal Encouragement and Protection of Investment, signed at
Washington on February 12, 1990 was transmitted by President Bush on
March 19, 1991 (Treaty Doc. 102-1).
The
Treaty is part of a series of bilateral investment treaties being
negotiated by the United States. The principal purpose of the bilateral
investment treaties is to promote the free flow of international
investment and to encourage and protest United States investment in
developing countries.
MAJOR
PROVISIONS
Before
entering into negotiations, the United States developed a model treaty
which sought to incorporate provisions which would facilitate the free
flow of investment, prohibit practices which have emerged in various
countries which inhibit that free flow, and generally codify rules on
investment and dispute settlement, which the United States views as well
as established international law and precedent. Specifically, the model
treaty seeks to achieve the following objectives:
-- the
better of either national or most-favored nation treatment, for each
party to the treaty, thereby providing in the case of United States
companies a "level playing field" in competing with national
and third country investors, subject to specified exceptions set forth
in the annex to each treaty;
--
Application of international law standards to the expropriation of
investments, permitting expropriation only for a public purpose and
requiring the payment of prompt and fair compensation;
-- The
free transfer of funds associated with an investment into and out of the
host country;
-- Access
to binding international arbitration for settlement of investment
disputes;
-- A
prohibition on the imposition of performance requirement, which have
become important as countries have increasingly imposed requirement to
use domestically produced goods; and imposed requirements to use
domestically produced goods; and
-- The
right of companies to hire top managers of their choice; regardless of
nationality.
In each
of the bilateral investment treaties, including this treaty, the United
States has reserved the right to make of maintain limited exceptions to
national or most-favored nation treatment in specific sectors or matters
set forth in the annex to the treaty.
INVESTMENT
BARRIERS
The
Administration submitted the following response to the committee's
inquiry regarding investment barriers identified in the process of
negotiating this treaty.
As noted
above, the USF (United States Government) participates in BIT
discussions with countries whose investment regimes are roughly
consistent with the BIT principles. In every BIT, countries agree to
provide the better of national or most-favored nation treatment to
investments subject to each Party's exceptions. These exceptions are
designed to accommodate the derogations from national treatment in state
and national laws which may constitute investment barriers . . .
Concern
was raised over government screening of foreign investment. While some
Congolese laws are at present inconsistent with the elements of the
treaty, the treaty will supersede domestic law in the Congo. As a
result, United States investments will be granted at least the better of
national treatment of MFN on entry and post establishment.
BILATERAL
INVESTMENT TREATY PROGRAM
The
earliest formal economic treaties that the United States negotiated with
other countries were a series of Friendship, Commerce, and Navigation
(FCN) treaties. These treaties set the framework for U.S. trade and
investment relations with foreign countries.
With the
advent of the General Agreement on Tariffs and Trade (GATT), U.S. trade
relations began to be set with foreign countries through multilateral
trade agreements and the use of FCN treaties faded; the last two FCNs
were negotiated in the late 1960s. This multilateral approach left a gap
in relations with foreign countries involving U.S. investment issue of
performance requirements in the Trade Related Investment Measures
(TRIMS) of the current Uruguay trade negotiations. The North American
Free Trade Agreement also has investment provisions similar to a
bilateral investment treaty.
In an
attempt to promote the free flow of investment internationally, in the
absence of multilaterally agreed to rules, the United States began, in
1981, to negotiate a new series of treaties called the Bilateral
Investment Treaties (BITs). The BIT program is designed to provide
certain mutual guarantees and protections and to created a more stable
and predictable legal framework for foreign investors with each of the
treaty partners. A special tenet of the program is to ensure that United
States direct investment abroad and foreign investment in the United
States receive fair, equitable and non-discriminatory treatment. The
BITs are, therefore, the modern successor on the Investment side to the
Friendship, Commerce, and Navigation Treaty series. In comparison to its
predecessor, the BIT is far more detailed and provides greater
protection for the foreign investor, including an investor-to-state
disputes mechanism that generates to United States investors the right
to binding arbitration against the host state without the involvement of
the United States government.
The
Senate gave its advise and consent to ratification of BIT's with
Senegal, Zaire, Morocco, Turkey, Cameroon, Bangladesh, Egypt and Grenada
in 1988, and in 1990 a BIT with Panama and a business and economic
relations treaty with Poland was the first extension of this program to
facilitate the continuation of economic and political changes which have
taken place in Eastern Europe over the last four years. All of these
treaties have entered into force except the one with Poland. The treaty
with Poland has not been brought into force because Polish law on
intellectual property rights has not yet been revised in conformity with
the terms of the treaty.
The
negotiation of BITs has accelerated dramatically since 1990. The
administration has signed a BIT with Kazakhstan, Argentina and Romania.
These treaties should be submitted to the Senate later this year.
Negotiations are currently ongoing with Uruguay, Bolivia, Nigeria,
Hungary, Jamaica, Armenia, Costa Rica, Hong Kong, Venezuela, Colombia,
Pakistan, Peru, Mongolia, Kyrgyzsatan, Barbados and Bulgaria. In
addition, there are 14 other countries with which the Administration
hopes to initiate negotiations in the near future.
EXPERIENCE
OF TREATIES IN FORCE
The
administration has informed the committee that there have been no major
problems involving a U.S. investment, with the exception of Zaire, in
countries with which bilateral investment treaties are in force. They
have also stated there have been no cases in which the bilateral
investment treaty dispute settlement mechanism for international
arbitration has been invoked.
Our
experience to date with the United States bilateral investment treaties
in force is that they are a valuable tool, both for the United States
investor and the United States government, to insure that our bilateral
investment treaty partners protect United States investment. In two
cases (Panama and Zaire), the United States government has been notified
by the United States investors of potential bilateral investment treaty
violations, and in both cases the United States Embassy in the host
country made demarches to the host government. In one case, the host
government stopped the offending practice and in the other Zaire
-discussed infra) consultations are continuing.***
Recently
disputes have arisen between United States companies and the Government
of Zaire regarding the taking of petroleum product installations, and
compensation for the destruction of property during the civil
disturbances of September and October 1991. The United States has
informed the Government of Zaire that we expect Zaire to fulfill its
obligations under the bilateral investment treaty with respect to both
these problems, and to return the petroleum installations to their
United States owners. We have also advised the United States companies
involved of their rights under the bilateral investment treaty. If
negotiated settlement cannot be reached after six months, they have the
right directly to seek remedy in the courts of Zaire or through
international arbitration. We will continue to remain fully engaged with
the Government of Zaire in seeking resolution of these issues. (Answer
to questions submitted by Chairman Pell to the administration.)
The
administration has indicated that in a number of the countries with BITs
in effect, U.S. investment has increased since the BIT went into force.
However, the administration has pointed out that the existence of a BIT
will not guarantee increased U.S. investment. Because investment
decisions are based on a variety of factors and the BITs have only been
in force for a short period of time, the administration says it would be
difficult to draw a relationship between increased investment and the
BITs.
TREATY
PROVISIONS
The Congo
treaty is virtually identical to the model bilateral investment treaty
used by the administration and meets all of its objectives set forth
above.
The Congo
reserved the right to maintain limited exceptions to national or MFN
treatment in the following sectors or matters set forth in the Annex to
the treaty:
The
insurance sector; government lending and insurance programs; energy
production; certified customs agents; real estate; radio and television
broadcasts; telephone and telegraph services; drinking water supply;
rail transportation; and air transport.
ENTRY
INTO FORCE
The
treaty enters into force 30 days after exchange of ratification and
continues in force for at least ten years. Thereafter, either party may
terminate the treaty, subject to one year's written notice.
The
treaty text and the administration's summary analysis of the treaty is
set forth in Treaty Doc. 102-1. The administration's responses to
committee questions regarding the interpretation of treaty provisions is
available for review as part of the committee's hearing record on this
treaty.
COMMITTEE
ACTION
On August
4, 1992, the committee held a hearing on this treaty. Testimony was
received by the Hon. Eugene J. McAllister, Assistant Secretary for
Economic and Business Affairs Bureau, Department of State.
The
committee also received answers from the administration to numerous
questions regarding the operation of the bilateral investment treaty
program and the provisions of this treaty. This material, together with
the administration's "Description of the U.S. Model Bilateral
Investment Treaty (BIT) of February 1992", has been made a part of
the official record of these hearings.
In
addition, the committee received statements in support of the treaty
from the National Association of Manufacturers, the United States
Council for International Business and Kenneth J. Vandevelde, Associate
Professor of Law, Western State University College of Law, San Diego,
California.
The
committee voted to report favorably the treaty, and recommends that the
Senate give its advice and consent to ratification thereof by a voice
vote, with a quorum being present, at a meeting on August 6, 1992.
TEXT OF
RESOLUTION OF RATIFICATION
Resolved,
(two-thirds of the
Senators present concurring therein), That the Senate advise and
consent to the ratification of the Treaty Between the Government of the
United States of America and the Government of the People's Republic of
the Congo Concerning the Reciprocal Encouragement and Protection of
Investment, signed at Washington, February 12, 1990.
The TCC
offers these agreements electronically as a public service for general
reference. Every effort has been made to ensure that the text presented
is complete and accurate. However, copies needed for legal purposes
should be obtained from official archives maintained by the appropriate
agency.
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