BIT TALKS: LIMITED PROGRESS DURING KUFOUR VISIT

UNCLAS ACCRA 001179

SENSITIVE

SIPDIS
WHITE HOUSE FOR USTR
E.O. 12958:N/A
TAGS: EINV ETRD ECON EIND PGOV GH

SUBJECT: BIT TALKS: LIMITED PROGRESS DURING KUFOUR VISIT

REF: STATE 91791


1. SUMMARY: (SBU) Exploratory discussions regarding a
U.S.-Ghana Bilateral Investment Treaty (BIT) will likely
generate only limited progress during President KufuorQs
state visit to the United States (starting September 14,
2008). The Kufour Administration is shifting into
election mode and shying away from initiating major new
international agreements. Robert Ahomka-Lindsay, CEO of
the Ghana Investment Promotion Centre (a key advisor to
Kufuor) stated that labor and environmental provisions in
the U.S. model BIT would require further consultations
with additional GOG ministries. While not dismissing the
possibility of concluding a BIT in the future, Ahomka-
Lindsay suggested that a double-taxation agreement with
the U.S. was a higher priority. He lamented the
unfulfilled potential of AGOA, and discussed his agencyQs
priorities for attracting new investment to Ghana and
increasing GhanaQs exports to the U.S. Post believes the
Ghana delegation is now hoping for a credit agreement with
the EXIM Bank as an economic take-away from the visit.
END SUMMARY.

BACKGROUND
--------------


2. (SBU) An initial digital video conference was held on
August 21 to discuss differences between the US and Ghana
model BIT texts. REFTEL dipnote was developed to formally
restate three key USG questions to the GOG for the purpose
of assessing mutual interest in undertaking formal BIT
negotiations: 1) the acceptability of using the U.S. BIT
model as a basis for negotiations, 2) an assessment of the
challenging provisions of the U.S. BIT model, and 3) a
list of potential non-conforming measures Ghana may
propose in the course of a BIT negotiation. REFTEL
demarche was delivered. Despite the implicit time
pressures to reach a decision regarding mutual interest in
negotiating a BIT prior to President KufuorQs visit to the
United States, none of the three key questions were
answered by the GOG in writing.

GIPC CEO: NOT CHOMPING AT THE BIT
--------------


3. (SBU) To solicit feedback on the BIT, EMBOFFs called on
Robert Ahomka-Lindsay, CEO of the Ghana Investment
Promotion Centre. Ahomka-Lindsay has served as CEO of the
GIPC for nearly two years, following retirement from
serving as Coca-ColaQs VP for Africa.


4. (SBU) Ahomka-Lindsay tacitly conceded to the U.S. model
for any potential negotiations, but noted that labor and
environmental provisions were absent from GhanaQs model
BIT text (and other concluded BITs). He said that the
labor and environmental provisions posed significant
challenges and would require consultations with additional
ministries, which would take additional time. He pressed
EMBOFFS for a formal memo outlining the differences
between the U.S. and Ghana models. EMBOFFS explained that
USTR does not provide such analysis. Questioning the
benefits of a BIT for Ghana, Ahomka-Lindsay expressed that
a BIT is less important to corporate decision makers than
tax considerations. Accordingly, he posited that a
double-taxation agreement with the U.S. would be more
useful to spur investment than negotiating a BIT.
According to Ahomka-Lindsay, QAGOA gives us more than any
BIT.

GIPC CEO: THE POTENTIAL OF AGOA IS UNFULFILLED
-------------- -


5. (SBU) Ahomka-Lindsay repeatedly stated that the
economic potential created by the AGOA agreement has not
been fulfilled. He offered that the lack of foreign
direct investment was a key problem Q- Ghana needs to
start producing more diversified goods for the U.S.
market. He cited a statistic that U.S. FDI outside the
extractive industries has been less than $30 million since
AGOA was signed. In contrast with GhanaQs exports to
Europe, Ahomka-Lindsay also blamed the low level of U.S.-
Ghana trade on deficiencies in transportation, including
an insufficient number of direct flights for cargo, lack
of direct container shipments, and JFKQs inefficient
processing of fresh produce.


6. (SBU) Under Ahomka-LindsayQs leadership, the GIPC is
planning relationship-based investment promotion efforts
with targeted multinationals and within targeted
industries: agri-business, IT, tourism, financial
services, professional services, manufacturing, petroleum,
infrastructure and utilities. In addition, the GIPC is
exploring establishing trade promotion offices in the
United States, China, Germany and India. COMMENT:
Marketing aside, it is unclear how much government
attention is being paid to making the ground-level reality
of investing in Ghana efficient and hassle-free. END
COMMENT.

COMMENT
--------------


7. (SBU) A Kufour appointee with ties to the PresidentQs
inner circle, Robert Ahomka-Lindsay heads the lead
technical negotiating entity for the GOG on investment
agreements, and is among the key advisors accompanying
President Kufuor on the upcoming state visit to the U.S.
Given Ahomka-LindsayQs personal forcefulness, proximity to
Kufuor, U.S. MBA, and international corporate experience,
his assessments and opinions are likely to significantly
inform the GOGQs economic goals during this visit.
GhanaQs Foreign Ministry does not play a strong role in
international economic policy making, and may have
initiated talks on a BIT without the benefit of inter-
ministerial consultations in Accra. As the Kufour
Administration shifts into election mode, substantive
discussions and decisions on any major international
agreements will likely not be possible until after the
formation of a new administration next year. According to
contacts in the Ministry of Finance and Economic Planning,
the PresidentQs delegation will try to finalize a credit
agreement with the U.S. EXIM Bank as an economic take-away
from the visit.

Teitelbaum