LETTER OF SUBMITTAL

The PRESIDENT,
The White House.

DEPARTMENT OF STATE, Washington, March 11, 1991.

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 enterd 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 intergral 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

as 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 to 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 respect 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 a Party" are those legally constituted under the laws of a Party.

The Congo BIT accords the better of national or most-favorednation (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, and 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 a 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" 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 terri

tory 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 ExportImport 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 Pary; 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 knowhow, 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