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US Senate Approves Investment Treaty With Rwanda

by Leroy Baker,, New York

30 September 2011

The United States Senate, in what is hoped will be a major step forward in expanding trade and investment relations with Rwanda, has unanimously approved the United States-Rwanda Bilateral Investment Treaty (BIT).

It was said that the treaty, which was originally signed in 2008, will provide investors with the legal protections that treat investment in an open, transparent, and non-discriminatory way, and underscore the shared commitment of the United States and Rwanda to open investment and trade policies. The BIT should also help further economic growth in Rwanda by reinforcing that government's economic reform programme.

Apart from the requirement that investments of one BIT party in the territory of the other party be treated either as favorably as the host party treats its own investors or on a most-favored-nation basis, the treaty also, for example, provides for the transferability of investment-related funds into and out of a host country without delay, restricts the imposition of performance requirements, such as local content targets or export quotas, and gives investors from each party the right to submit an investment dispute to international arbitration.

“This treaty will protect the rights of US investors in Rwanda. The treaty will strengthen our two countries’ economic ties and enhance the confidence of US investors in Rwanda, helping to promote the new investment that is critical to Rwanda’s economic development,” said the United States Trade Representative Ron Kirk.

“Rwanda is recognized for its strong record of business climate reform and is capturing the attention of a growing number of US companies,” he added. “The Rwanda BIT will reinforce the Rwandan government’s efforts to further reform its economy and promote a strong, transparent business climate.”

This is the first BIT that the US has concluded with an African country in nearly a decade, and will serve as a model for future agreements with other African countries, including: Mauritius, where a BIT is under negotiation; Ghana, where a BIT has been proposed; and the East African Community, where a regional investment agreement has been proposed. The US currently has five BITs in force in sub-Saharan Africa, with Cameroon, the Democratic Republic of Congo, Mozambique, the Republic of Congo, and Senegal.

In addition, the US has had a trade and investment framework agreement (TIFA) with Rwanda since 2006. The US also has TIFAs with the East African Community and with the Common Market for Eastern and Southern Africa. Rwanda is a member of both regional organizations.

TAGS: investment | foreign direct investment (FDI) | law | investment treaty | agreements | legislation | Rwanda | United States | trade

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