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