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T.Doc.104-15 EXCHANGE OF NOTES RELATING TO THE TAX CONVENTION WITH KAZAKHSTAN ...


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   104th Congress 1st            SENATE              Treaty Doc.
         Session
                                                        104-14
_______________________________________________________________________



                                     



 
                INVESTMENT TREATY WITH TRINIDAD AND TOBAGO

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

 THE TREATY BETWEEN THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF 
 THE REPUBLIC OF TRINIDAD AND TOBAGO CONCERNING THE ENCOURAGEMENT AND 
RECIPROCAL PROTECTION OF INVESTMENT, WITH ANNEX AND PROTOCOL, SIGNED AT 
                    WASHINGTON ON SEPTEMBER 26, 1994


<GRAPHIC NOT AVAILABLE IN TIFF FORMAT>

 July 11, 1995.--Treaty was read 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
  
                         LETTER OF TRANSMITTAL

                              ----------                              

                                    The White House, July 11, 1995.
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 Government of the United States of America and the 
Government of the Republic of Trinidad and Tobago Concerning 
the Encouragement and Reciprocal Protection of Investment, with 
Annex and Protocol, signed at Washington on September 26, 1994. 
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) with Trinidad and 
Tobago is the third such treaty between the United States and a 
member of the Caribbean Community (CARICOM). The Treaty will 
protect U.S. investment and assist the Republic of Trinidad and 
Tobago in its efforts to develop its economy by creating 
conditions more favorable for U.S. private investment and thus 
strengthen the development of its private sector.
    The Treaty is fully consistent with U.S. policy toward 
international and domestic investment. A specific tenet of U.S. 
policy, reflected in this Treaty, is that U.S. investment 
abroad and foreign investment in the United States should 
receive national treatment. Under this Treaty, the parties also 
agree to international law standards for expropriation and 
compensation for expropriation; free transfer of funds related 
to investments; freedom of investments from performance 
requirements; fair, equitable, and most-favored-nation 
treatment; and the investor or investment's freedom to choose 
to resolve disputes with the host government through 
international arbitration.
    I recommend that the Senate consider this Treaty as soon as 
possible, and give its advice and consent to ratification of 
the Treaty, with Annex and Protocol, at an early date.

                                                William J. Clinton.
  
                          LETTER OF SUBMITTAL

                              ----------                              

                                       Department of State,
                                         Washington, June 22, 1995.
The President,
The White House.
    The President: I have the honor to submit to you the Treaty 
Between the Government of the United States of America and the 
Government of the Republic of Trinidad and Tobago Concerning 
the Encouragement and Reciprocal Protection of Investment, with 
Protocol, signed at Washington on September 26, 1994. I 
recommend that this Treaty, with Protocol, be transmitted to 
the Senate for its advice and consent to ratification.
    The bilateral investment treaty (BIT) with Trinidad and 
Tobago is the third such treaty between the United States and a 
member of the Caribbean Community (CARICOM). The Treaty is 
based on the view that an open investment policy contributes to 
economic growth. This Treaty will assist the Republic of 
Trinidad and Tobago in its efforts to develop its economy by 
creating conditions more favorable for U.S. private investment 
and thus strengthen the development of its private sector. It 
is U.S. policy, however, to advise potential treaty partners 
during BIT negotiations that conclusion of such a treaty does 
not necessarily result in immediate increases in private U.S. 
investment flows.
    To date, twenty-one BITs are in force for the United 
States--with Argentina, Bangladesh, Bulgaria, Cameroon, the 
Congo, the Czech Republic, Egypt, Grenada, Kazakhstan, 
Kyrgyzstan, Moldova, Morocco, Panama, Poland, Romania, Senegal, 
Slovakia, Sri Lanka, Tunisia, Turkey, and Zaire. In addition to 
the Treaty with Trinidad and Tobago, the United States has 
signed, but not yet brought into force, BITs with Albania, 
Armenia, Belarus, Ecuador, Estonia, Georgia, Haiti, Jamaica, 
Lativa, Mongolia, Russia, Ukraine and Uzbekistan.
    The Office of the United States Trade Representative and 
the Department of State jointly led this BIT negotiation, with 
assistance from the Departments of Commerce and Treasury.

                  the u.s.-trinidad and tobago treaty

    The Treaty with Trinidad and Tobago is based on the 1994 
U.S. prototype BIT and satisfies the United States' principal 
objectives in bilateral investment treaty negotiations:
  --All forms of U.S. investment in the territory of Trinidad 
        and Tobago are covered.
  --Covered investments receive the better of national 
        treatment or most-favored-nation (MFN) treatment both 
        on establishment and thereafter, subject to certain 
        specified exceptions.
  --Performance requirements may not be imposed upon or 
        enforced against covered investments.
  --Expropriation can occur only in accordance with 
        international law standards: that is, for a public 
        purpose; in a nondiscriminatory manner; in accordance 
        with due process of law; and upon payment of prompt, 
        adequate, and effective compensation.
  --The unrestricted transfer, in a freely usable currency, of 
        funds related to a covered investment is guaranteed.
  --Investment disputes with the host government may be brought 
        by investors, or by their subsidiaries, to binding 
        international arbitration as an alternative to domestic 
        courts.
    These elements, and the Treaty's noteworthy variations from 
the prototype BIT are further described below.
    The following is an article-by-article analysis of the 
provisions of the Treaty:

Title and Preamble

    The Title and Preamble state the goals of the Treaty. 
Foremost is the encouragement and protection of investment. 
Other goals include economic cooperation on investment issues; 
the stimulation of economic development; higher living 
standards; promotion of respect for internationally-recognized 
worker rights; and maintenance of health, safety, and 
environmental measures. While the Preamble does not impose 
binding obligations, its statement of goals may assist in 
interpreting the Treaty and in defining the scope of Party-to-
Party consultation procedures pursuant to Article VIII. 
Similarly article titles have been added to the Treaty. These 
do not change the Treaty in any way but were added to 
facilitate its reading.

Article I (Definitions)

    Article I defines terms used throughout the Treaty. In 
general, the definitions are designed to be broad and inclusive 
in nature.
            Company, company of a Party
    The definition of ``company'' is broad, covering all types 
of legal entities constituted or organized under applicable 
law, and includes corporations, trusts, partnerships, sole 
proprietorships, branches, joint ventures, and associations. 
The definition explicitly covers charitable and not-for-profit 
entities, as well as entities that are owned or controlled by 
the state. ``Company of a Party'' is defined as a company 
constituted or organized under the laws of that Party.
            National
    The Treaty defines ``national'' as a natural person who is 
a national of a Party under its own laws. Under U.S. law, the 
term ``national'' is broader than the term ``citizen.'' For 
example, a native of American Samoa is a national of the United 
States, but not a citizen.
            Investment, covered investment
    The Treaty's definition of investment is broad, recognizing 
that investment can take a wide variety of forms. Every kind of 
investment is specifically incorporated in the definition; 
moreover, it is explicitly noted that investment may consist or 
take the form of any of a number of interests, claims, and 
rights. Establishing a subsidiary is a common way of making an 
investment. Other forms that an investment might take include 
equity and debt interests in a company; contractual rights; 
tangible, intangible, and intellectual property; and rights 
conferred pursuant to law. Investment as defined by the Treaty 
generally excludes claims arising solely from trade 
transactions, such as a sale of goods across a border that does 
not otherwise involve an investment.
    The Treaty defines ``covered investment'' as an investment 
of a national or company of a Party in the territory of the 
other Party. An investment of a national or company is one that 
the national or company owns or controls, either directly or 
indirectly. Indirect ownership or control could be through 
other, intermediate companies or persons, including those of 
third countries. Control is not specifically defined in the 
Treaty; ownership of over fifty percent of the voting stock of 
a company would normally convey control, but in many cases the 
requirement could be satisfied by less than that proportion, or 
by other arrangements.
    The broad nature of the definitions of ``investment,'' 
``company,'' and ``company of a Party'' means that investments 
can be covered by the Treaty even if ultimate control lies with 
non-Party nationals. A Party may, however, deny the benefits of 
the Treaty in the limited circumstances described in Article 
XII.
            State enterprises, investment authorization, investment 
                    agreement
    The Treaty defines ``state enterprise'' as a company owned, 
or controlled through ownership interests, by a Party. Purely 
regulatory control over a company does not qualify it as a 
state enterprise.
    The Treaty defines an ``investment authorization'' as an 
authorization granted by the foreign investment authority of a 
Party to a covered investment or a national or company of the 
other Party.
    The Treaty defines an ``investment agreement'' as a written 
agreement between the national authorities of a Party and a 
covered investment or a national or company of the other Party 
that (1) grants rights with respect to natural resources or 
other assets controlled by the national authorities and (2) the 
investment, national, or company relies upon in establishing or 
acquiring a covered investment. This definition thus excludes 
agreements with subnational authorities (including U.S. States) 
as well as agreements arising from various types of regulatory 
activities of the national government, including, in the tax 
area, rulings, closing agreements, and advance pricing 
agreements.
            ICSID Convention, Centre, UNCITRAL Arbitration Rules
    The ``ICSID Convention,'' ``Centre,'' and ``UNCITRAL 
Arbitration Rules'' are explicitly defined to make the text 
brief and clear.
            Territory
    At the request of the Government of Trinidad and Tobago, a 
mutually agreed-upon definition of this term was added to the 
Treaty. This provision does not change the Treaty in any way, 
but merely makes explicit what is understood under 
international law.

Article II (Treatment of investment)

    Article II contains the Treaty's major obligations with 
respect to the treatment of covered investments.
    Paragraph 1 generally ensures the better of national or MFN 
treatment in both the entry and post-entry phases of 
investment. It thus prohibits, outside of exceptions listed in 
the Annex, ``screening'' on the basis of nationality during the 
investment process, as well as nationality-based post-
establishment measures. For purposes of the Treaty, ``national 
treatment'' means treatment no less favorable than that which a 
Party accords, in like situations, to investments in its 
territory of its own nationals or companies. For purposes of 
the Treaty, ``MFN treatment'' means treatment no less favorable 
than that which a Party accords, in like situations, to 
investments in its territory of nationals or companies of a 
third country. ``National and MFN treatment'' is defined as 
whichever of national treatment or MFN treatment is the most 
favorable. Paragraph 1 explicitly states that the national and 
MFN treatment obligation will extend to state enterprises in 
their sale of goods and services.
    Paragraph 2 states that the Parties may adopt or maintain 
exceptions to the national and MFN treatment standard with 
respect to the sectors or matters specified in the Annex. In 
principle, further restrictive measures are permitted in each 
sector. The careful phrasing and narrow drafting of these 
exceptions is therefore important. (The specific exceptions are 
discussed in the section entitled ``Annex'' below.) In the 
Annex, Parties may take exceptions only to the obligation to 
provide national and MFN treatment; there are no sectoral 
exceptions to the rest of the Treaty's obligations. Finally, in 
adopting any exception under this provision, a Party may not 
require the divestment of a preexisting covered investment.
    Paragraph 2 also states that a Party is not required to 
extend to covered investments national or MFN treatment with 
respect to procedures provided for in multilateral agreements 
concluded under the auspices of the World Intellectual Property 
Organization relating to the acquisition or maintenance of 
intellectual property rights. This provision clarifies that 
certain procedural preferences granted under existing 
conventions such as the Patent Cooperation Treaty fall outside 
the BIT. This exception parallels one in Uruguay Round's Trade-
Related Aspects of Intellectual Property Rights (TRIPS) 
agreement and the North American Free Trade Agreement (NAFTA). 
This provision complements the more specific IPR-related 
provisions contained in the U.S.-Trinidad and Tobago agreement 
on intellectual property rights.
    Paragraph 3 sets out a minimum standard of treatment based 
on standards found in customary international law. The 
obligations to accord ``fair and equitable treatment'' and 
``full protection and security'' are explicitly cited, as is 
the Parties' obligation not to impair, through unreasonable and 

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