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Receive4 by NSD/FARA Regis~tion Unit 08/24/2018 4':55:20 P

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T·HE BENEFITS OF USING INVESTMENT . AND TRADE TREATIES TO INVEST IN .

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IN.VEST BARBADOS~-: Wealth·Managerrtent Breakfast program, . Feb. 27, 2018, 60S1:9n~ Mass·.

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. . .. _ .B"~l!c:e iagari~ _· .. _. llerl_iner Co_r:coran & RoweJLP.

11.01 Seventeenth St:N.W., Ste. ilOO · · W~shi~gton, o.c. 20036: · ·

(202)293-2371 bzagaris@bcr0 dc.cor:n

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Table of Content-s

I. II. Investment Agre·em·ents-.......... ·~ .... _ ..•... ~ ......... ~ ...................... " ... ~ .... 4·

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;Ill. IV. : cARICOM Investment Agreements ........ , ............................... 43 v. C:.~.ri.b b~aJ1 Jr~ d.e Ptefe.reo ¢.~-~.•.•.• .•:• ~'! •. '! ~; •. !t •.!t}~.11;.•:•. ~!t .~·-~·-· •.!t .. -•.• ._II!.~--~··•-•: .. ·•~-·~. !I!. ·_44 · · VI. vn.

· Caribbean Single Market Economy (CSMEJ ........................... 45 . . . . I . . . . . : "· igl,-T~c_h Se.r.vJces~-•-•. ·-·~ ·~ ~ !~:!' .• ~_ •.•.•• _._._ .. _ ... ---·-~·-·-._._._._ .. _ ..... ~ .~i.9:•:• ._._. •~.• _._ •• ~ ...... _._.•II!._.. 53

VIII. Developments . .. . " . _, ' . -·

(.H.R■ 493~) .• -. a.: ••••••••• ~:······~· .................... -•• •~•·•·•··• .... ~ 62. 1.X~ "><.

Pot~nti~-1- S~rvic;e_$ Coc;,p~r~ti,;;,o ...... ~~··-"_.._ .. _._• .. ~·~•·!' .. .-.~ ..... _ .. !'•!'• .......... 64 • - ... - • • I •

C_Oi1cluslon -at1d ·FARA :DiSCIOs.ure ..... : .... ~ ........... -.-................................. s:s . I . . . .

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I. INTRODUCTION

- • A benefit to doing b1,Js.ine~s-in aa~bad9s is,the opportunity to take ·advantage of its investment and trade agreements·. This presentation wHI coyer: . .

--- · inve_strnent treaties

-,- trade agreements

trade preference arrangements · _

- -Caribbean Single Market Economy (CSME) · . - ,, . ..

• B~tb~dc;is ha$ serv~d a~ an exf~Jlert(Ji:Jrisqic_tJ911 fr6rfi whieh to invest in the 9 .countries with which it has a BIT, such as China and Venezuela. · •• The agreeme_nts provide better and. stable investment and trade mechanisms and the long friendship between the /two countries provides for _a good political environment within which to invest and trad_e. _ · _ __ _ __ · • The 4SMij a_nd trade preferential agreements Barbados has provi<;le add_itional unique. benefits. · · · · · ··

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II.INVESTMENT AGREEMENTS

• A. typ~$ of :Useful lnvest~ent Agreemenis . ·.• . .. . :

-- 1. Bilateral Investment Treaties

2~ Free Trade Agreernents (i.e., NAFTA) - 3. World Trade Organization.;.. a forum for establishing investment . . . .

rules- : .

- 4. Broad ~overage

5. Right of National and ·M9st-Favored Nation Treatment..,. found in . BITS. . . . . . . . I . ' ' : . .

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.... 6. Re.solution oftax Disput~s = sUbiilittedto ad hot tribunals

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II" INV:ESTMENTAGREEMENTS

• BITs·

• The investment provisions useful to internc:1tionaJ investors include onestn pifo1terql :ar,d multilateral investment treaties and the ·investn:,ent chapters of free trade agreements.

• Investment ~greernents broadly define investment.

·-~ lnc;lu.des cornpariy or ~nterprise; financial instruments; such as .. shares c;>fstock and other forms of equity, or bonds, debentures and

o(her form·s of debt; tangib.l~ property, i_nc:li.Jding r~al p_roperty; I

intangible property, including intellecbJal pr9perty and_ rights su.ch as I.eases, mortgages, Hens, and pledges} contract_ual rights, inc:ludJng profit~sharing rights, or r'igh~s conferred by law, having economic _·· · value; and interests that are: "owne_d and controlled, directly or indirectly."

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·11. INVESTMENT AGREEMENTS· , . :- .· - . -- ·'· -- . ,_ . . - ' - . . -- . ~-- - - -

• Investment a.grgernents h~ve ao ixp~nsiye :definjtioo ofinvestor. For this discussion I will use the Cuba~Ba~l:>agos· BIT a~ my . example. . . . . . . , . . .. - . . .. •· . . . . . I

• This includes: : . i

a'nafional ofa State that is[a party tofhe.-·agreement (in the case of . ' .

a Cuba-Barbados BITI; · i •-= an eJ:itity organized iri a St~tethat is party tothe agreement (e.g.;

enterprise o~ganized or consfituted fn 13arbados, or established and · recognized _in Cuba, in the tase bf the Cuba-Barbados BIT}. . . . . . I -· .. · -. . . .· ._

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·11. IN·VESTMENT AGREEMENTS

• A covered investment is an i.nvestment in the territory of an ihvestor,of the. other party, whether made,•'before or after the date' of en,try into fo'rce of the Agreern.ent_. _. . . ,

: . ., • An investrnent rneani every as§et that an investor ·owns, including, . · ' though not exclusively, 1

Moveable and immovable prop.erl:y and any other property righ.ts sue~ as n:iortgag~s, li~n.s or 'pie~ges; ' ' j ' . ' ' ' ' '' ' ·.· ' ' ' ' ' ' Shar~'i'n and stock and debentures ofa company c:1nd any other form of participation in a company; . 1 . .

- Clain;is to money or to any performao~e under coilt_rc:1ct h:c:1ving a fi,nancial . value . • ·· ; .. • - . · . .

. Intellectual property ri~ht:S, goodwill, t_echhicc:11 ptotE!s~es and know~how Business .concessions·.

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·· 11. INVESTMENT AGREEMENTS . . . -. " ' ' - . ,·

• The national tr~citrnent ~rtide of a BIT require$ each party to accord to investors of the other party treatment no less · favorable than that it accords, in like. circumstances, to investments or returns of its own nationals or companies or to

· investments or _retu.rns c,f n~tiQnaJs or companies of any thir<J state. ' I •

• Neither party may in its ter~itory subject nationals or cornpanies ' .

of the other party, as regarqs their management, maintenance, tJSe, enjoymentordi$posa_i ~ftheir investment$, to treatment less favorable than that whiFh it accords to its own nationals or companies or to nationals or companies of any third State. . ' .

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II,. INVESTMENT AGREEMENTS-.'

· • The Minimum Standard ofTreatment provisions require each party to accord to covered investm:entstreatment in accordance with customary internati<;>nal law, in•cluc;ling fair and equitable·.

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treatment and fu II protection and security .. · . . - . . .

• The concepts.of "fairand equitable .. treatment" arid "full PfQtectio n. and secu rin/' do not .req ulre treatment .beyond that

· required by th1;1t $tandard, and do not cre~t~ additional substantive rights. ·

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• · Other BrrS (e.g., Art. 5 of the US Model BIT) explaio that "fair . . and equitable treatment'' in~lµges ''the obligation notto deny . Justice 'in ctiriiinai, civil, or administrative adjudicatory

proceedings in accordance with the principle of due process embodied in t_he principc:11 legal sy~tems of the world."

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· II. INVESTMENT AGREEMENTS ,: 'j

• Expropriation _anct Compensation .

• Artlde 5(1) .of the Batbado,$-Cuba _BIT pr~cludes either party from e>t'ptoprfatjng or nationalizing a covered investment either directly or indirectiy through measures eqllivalent to . . e><propriation ·or nati:Onali.zc;1ti9n with the :f9llowing exc~ptions:

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..:... fora public purpose related to the internal needs of a party;. . .. . I .

-- in a hondiscrirninatory manner; and , --- . on payment of prompt, ade~uate, and effective compensation.

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11. INVESTM:ENT AGRE:EMENTS ·

• The cornpens_at,ion must:.

- Ar;nountto t,he real value 6fthe inve~mentexproprtate'd · im_mediately before thl:! ~~propriation ; · ·

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Made without delay, and'

..,; _be fully reali_zabl_e ·and free.ly-:traosferaple.

[ ·. • The national or company a:ffe~ted must hc:1ve c:1 right, J.111der the . law.of the host country, to prqrnpt.review, bya. jud.ic;:ial or other I ind~pendent authority pf that party, ofhis or her case and of the 1

- valuation of his or its inveitment. ·

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•·. B~ Corporate·Nationality and BITS . · •· The requirement of effective managementofthe

investing company in the place of ir1,~orpor.ation was · primarily includ~d in the 1987 ASEAN Agreement to avoid "protection shopping'\ 1.e., the adoption of a

. local corporate form Wi~hout ~ny real economic. · . cooperation to bri~g a f9reJgn investment within the

scope of treaty protection·· . . .. . . . . . . I ...... · . .. . :

• Ya.ung Chi Oo Trading P~e Ltd v. Myanmar, No: . . ARB/01/1 (AS~AN 2003), reprinted in 42 IL,M. 540; see 1987 ASEAN Agreemen~, art. i(l) (requiring ,,effective

. management" in _the hqme state) ·. · .. I ,.

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II. INVESTMENTAGREEMENTS I : . ' '

1 · - • With respe·ct td wh.ether an entity should have I . . . . .. . . . . . . . . ! . . . . . . . . . . . . .

· i : the protectio:n of a. BIT; the. predominant · ·_· factor which must·glilid.e the Tribunal's: _· ··

.· exercise of its funct.ibns is the:terms in which -. " . - - . . - r . .- - ·_ ~ .- . - . . -

. the parties to the 81J-ha.ve_ a.greed to establish ·_ i

, . the Tribunars j"urisdi-Fti~h· arid defined . . · .. . . "inves~or.': The_·partifs had comple:te freedom ·

of choice 1n this matter. Saluka v. Czech .. Republic 1241 fUNCl:TRA~ 2005·). ·

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l'lo INVESTMENTA-GREEMENTS ' .

•. That agreeddefinjtion. required on.ly that the ··. claimant-investor shot41d b~ constituted under

. the tc;1w_s of (i.n the present case} The. Netherlangs, and -it is not open to tne Tribunai to add other · requirements, which ~he parties could .. thernselves have add~d but which they omitted to add". :· · ·

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. • See Netherland.~-Ciech Bft, art. l(bl(ii) · · (,iinvestors'' defined a~ {ilegal perso.n~ constit_uted ·. under the law of one pf the Contracting part,es").

• Saluka,i 241. I

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11. IN:VESTMENTAGREEM.ENTS ' .,

• · Each investment or dispute: resolution agreement defines eligibility .. ffi.g., Article VU of'.the ·A.lgiers Accord, Claims Settlement DecL st~tes: "nijtional" of Iran or of the lJ.S., iilS the case. may be, means :

• (a) a natural, person who is !a·c.itizen of Iran or the U.S.; and I ' . "

· • (b) a corporation or other l~gal entity which is organized · under the laws of Iran or:ttle u:s, or ai")y of its states or

, · territorles-, D.C., or the Commonwealth of Puerto Rico, if, : collec;:tively, national persohs who are titiiens of su<;:h

country hold, directly or inairectly, an interest·in such corporation or·entityequi~alentto.50% of more of its

· capital stock. · j j

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11. INVESTMENTAGREEMENTS. --•:•••- -,-..,.·' "•••-_,F' •• ••,,•;;,:•·,,·••:,,:•~·•••-• 1•••- •.,•·••

• Tin'l'ing,_: 111:he Crltica(~ate is the on~ on· wh'ich the .. State adopts the disputed measure, even when· the mec!sure r~.presents the c;;ul_rnJngtion of a ·· process or seqyence pf events which may have started years earlier. lt iS not uncommon that- ·

. divergences or disagr~ements develop ovet a · . period of time befor~ they finally ;crystallize' in

an actual measure· affe:cting the ihvestot's treaty . . I . .. . .

rights." levy v .. Peru tiJO .• ARB/11/17, Award,I149 (ICSID ~015); accord fh!lip_ M_otris Asia ~td: •~·. -

· Australra, Award on J~r1sdrct1on:& Adm1ss1b1hty,i 532 (UNCITRAL 2015) ..

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II. INVESTME,N,T AGREEMENTS.

• "ForeseeabUitv'' -The.;Tribpnal flr~t c;onsiders the . po.int lo tlm,e when a c~aJ1ge of .nationality can become a11 abuse of pr:ocess .. _."the dividing-Jine ' . . ·' . t - .- ,, - '

. occurs.when the relevant party can se.e an actual

. dispute qr can .foresee ;a specific;- future dispute as

. a very high ptobability:and not m.efely as a 1

possible controversy ... fB]efore-that dividing~nne is . l reached, there will ,be prdinarily no ~buse of process; ~Yt ~fter_that!dividjng:IJne is passed, . -

. _· there ordinarily will be.'~ Pac Rim Cayman LLC v. El Salvador, No. ARB/q9/12 Decision on ·

· Jurisdiction ,i,i 2.96~2.99 (ICSID 2012). • . . I

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. ·ll. INVESTMENT AGREEMENTS

•. Corporate restructuring·even.to·attain BIT protection i's "perfectly legit.imat.e •. _.as far,as it

.. co.nterned future·disputes." . · , . · 0 But, 11[w]ith respect tc>" ·pre-existing disputes, the•- .. ,

i . . situatfon is different", a restructuring 11only in · order to gain Juri~dictiG)n under a BIT for such ,.

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disputes would constit:ute ... an abusive . · . .·. · m.anipulation of the sy§tem of international investment protection/under the ICSID · Convention and the snrs." (.quoting Phoenix

.· Action V. Czech• Republic (ICSI D 2008). i

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1;1.-INVES·TMEN-TAGR.EEMENTS . . . ' . . . . . . . '

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• The Chavez Governm~nt expro_priation dec:re~ of ' > ' • ~ ➔--, - ·, • • ,: ' • • • i . ' . '.. "'

· May 2009 was not for;eseeable ir:,. :·. · . · ~ebr·uary/March. 2009. when·aa·~b.a•dian.

nationaHty was estab~is~ed. · ·: _ ·_ _ . • See Tidewater; Inc. v. iVenezuela, N~. ARB/10/5. _.· -. ·.Decision on)urisdittion ,i,1197~98 (ICSID 2013)

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· (Tidewater Barbac;tos'f claims! "insofar _as they relate to causes of action that arose after its .

. acq.uisition of·tbe s,ha)res ofTtde:w~terCaribe are subject to ICS!Dju.risdiction.") · · ·

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II. INV.ESTMENT AGREEMENTS

• In Philip M,orrls Asia Ltd. v. Austra/Ja, Award on · Jurisdiction and Admissibility ,i 585 {UNCITRAL 201S'), • the Tribu,na! .concl~ded tnat the start of treaty based investor"-State arbitratioh:constituted an abuse of right . · (or abuse of process) when·an investor has changed its • . • • . • . J • • - • •

corporate structore to g~in the. protection.J:>f.an f . •• • . • .

investment treaty at a polnt in time where a dispute· was foreseeable. · i .. · · · · ·

· • A dispute is foreseeable '1vheri there exJsts a reasonable p~ospect. t~aJ a ~~,asure /may. give rise _to a treaty claim will matenahze. Tribunal Wound the claim "lr1admissible" because 9ispute was foreseeable at the. lime of transfer; Id~ ,1586. · · · ·

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II. IN,VESTMENT·.AGREEMENTS

c. Appli~tiQn of BITs to Taxation

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• The .abilitY of a,n investor to resort to the dispute resolution provisions.,of a BIT or investment rule~ of a free trade.agreement

can be enormously 1mpo~a11t.Jnresolving many cross"-borcler tax'-related disp1Jte$. Thi.s se(;tion dis<;:1Jsses in detail one case and i:n less detail a few others. .

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• · Overlaps in l_egislation of 81Ts and l)TJ\s cou)d lead to ~onflicting laws. lti·s possible that a conflict between the. rules of Bil's and·· OTAs conci"uded by same to.uhtries can arise, esp; when tax matters are not excluded frohl the MFN clause of BIT. ·

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II. ·1NVESTMENTAGR:EEMENTS .

• That conflict can be apdressed>using· general rules

I • . . :~~~7:/~!ti~!~~l;v0:oJ;:f~~~:!d~:;~:fit!1:5

nd · . · · DTAs require'.residenqy. If those requirements

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.. overlap, the [nvestor could, argu~:that it_shou.ld . receive the more favdrable tr~atment of a third.,,.

. · ·party DTA by applying the 8°IT1S: MFN clau·se. ·. . . . . . . . . . j' . . . . . .

~ He.nee, depending on1the wordJng of th.e MFN .. .. . I . ·. . . . .

clause, the 81T would'extend the scope of a tax . . . -· . . . .

treaty.

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II. INVESTMENT AGREEMENTS . . . -· ' . ·, . - ' ' .

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· • Another i.ssue is whether a misap_plication or, or a . fc)ilure to ,rpply, a DTAJ:ouJd be a violation ofa BIT . . and. whether an inve-s~menttripunal can.apply a

.· . OTA to resol_ve an inve'.stment dispute.·

• The wordit,g of the jµ_fisdictional c:lause of a BIT .. i rnay be decisive.

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• Whe:n the phrase '-'disputes arising out of any . - I . .

investment" is used, ·_if c:an be argued that tax . . disputes are covered bv a Bil~

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II. INVESTMENT AGREEMENTS· [ i l , . r. · • The Yu·kos cases, whJt_h c{oncerned the bankruptcy of 1 Yukos Oil Co. and the int'erests of its foreig·n investors,

· illustrate some is•sues· that arise when a tax case is · arbitrated under an investmerittribunal. ·

• The dispµte was arbitrat~d und~r the energy charter ... • The triblJnal found that the. taxes imposed on Yukos . had an effect equivalent to nat.ion~lizatJon or expropriation, saying Russia's primary objective was to

· bankruptYukos and appropriate its·v_aluable assets.

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· • · Th·Ei Tribunal found th~ tax ass~ssments .agai.nst . ·vukos·were,not consideted bona fide treatment-'

.. - , - • • ........ l - , +' •••• •·· ••• , • •''.•·. • • ••••• -

b.y RU$Siq, and the varJous rnea:sures it took were meant to depriv~ Yukq,s:of its .assets.. . . , · I . . . .

i • Hul/ey_Entetprises Ltd./.(Cyptus) v. Russian : . Federation, No. AA 226 (PCA 2014); Veteran · .. i

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'. · . . Petroleum Lt~. ·(cypruf) v. RU$Sian·Federation, No. ·. · A_A 228 (PCA 2014); aod YukQ$ Universal Ltd.' (Isle

ofManJv. Russian Fe~eratlon, No, AA. 227 (PCA · 2014); . . i

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II. INVESTMENTAGREEMENTS I .

D. Disputt! Resoh,1tion · ' ' !' Disputes.'between a national

1or company of one.·party (e.g.,

Barbados) and the other party (e.g., Cuba) concer·ningan . obligation of the latter, afterja p~rJod of3 rnorfrhs from written .

· notice of a clairn, must be sy/l;>mjtted to i!'1ternatJonal arbitration if the investor so wishes. • · · ·· · . . .. · .. · . . .· . I . . . . .

• The national or company an¢! host country may agree to refer the dispute to the Court of Arbitration oflhe rec or an international arbitrator or a? hoc arbitration tribunal to be apgointed·by a spec:i_aJ agre~rn~nt or es@blisheg ynqerthe Arbitration Rules of UN Commission-on International Trade Laws as then in fot~e.

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II. INVESTMENT·AGREEMENTS

1: Occidentp/v. Ecyq<Jor ,

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• An example of the use of a B.lff to Tesolve. a tax dispute is the· I .

case betwe.en Occidental ExpJoration and Production Co. (OEPC} and Ecuador. · / ·

• • f ••••

• On July i, 2004, an arbittal p~nel of the London Court of International Arbitration issued a final award iti favor of O!:PC; a U.S. company registered in Cf liforn'i,a, in i:3 c:Hs.pute over VAT and

. other taxes. ~gc:ii,n~ Ecu13dor. .

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ll ~··I NV~STM E:~T. AG .R~·E·M ENTS

• The UNCITRAl- tri~-~n~I held!thijt Ec::Uc;ldor rtllJSt pay- OEPC · $71,533,64~ plus interest .. · I · · •.

/.: • • • I • • .

• ihe tribunal's final. award is [an example whereby investors '·_ making transnational investfllehts that ehcounter tax disputes

can.access a !Jniqlie.and soRhisticate,d rnechariisrn to resolve. tho$e disputes. The. case alsp s_hows b.ow complex and involved

. • · resolving domestic:: t~x issy~~ can be. Here O~PC t_ried a con~uftci ·· (Ecuadorlan administrative proceeding) , litigation in Ecuadorian tax c::ourts, and" ultrma·tely, ~tbitratioh pursuant to the BIT. .

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II. INVESTMENT AGREEMENTS • ' - , I, , • . • • • • . •

I .

. 2, Other BIT Cqses on Tax-Related Dispqtes · .

• In Encana.v. Ecuqdor, c1n investor brought~ clc1im .. under the . Cc.1nada.-Ecuador. BIJ, The triqYn.al noted that unde.r the fc1Tr and

equitable treatment stanc:tarp, ''.th~ State mustact with reasonable consistency and without arbitrariness ir, its

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treatment of investments.II '. . . .. - . . .. . ... I

I - ' . ' . ' .

• In this regard, one c1gency of the state cannot affirm what another agency denies to thb detriment of the investor. The

· tribunal found that consistebcy. is an elementof the fair and equitable treattn.ent standar;d; However, because Encana had·

· not made that argument th;e tribunal did not dis:cus.s it further. . I . .

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11. INVE.STIVIENT AGREEMENTS . . . I . . . . .

• In Gontlnental Casµalty v. Arrientina; on~. of'the many cases · brought under the ArgentinatU.S. BIT, Argentina developed a

policy that .converted dollat.,.tlehomrnated assets into pesos at.a rate. of ARS 1.4 to the do.llar, as opposed to the prior rate of ,1 to

. • I • . • •

l; even though the real valu~.of the assets in fact decre.ased. Even with ·the dec:rea$ed. vaf~e, .Argentina sfill. irnposed a G?pital g?ins. ta_x on the i_nc:rec.ise i.n 1omir;:ial value ..

. ) : .

• The ICSID tribunal held that the tax.was co.nsistent,with common . .... . . . . . I . .· .· , ·j

tax accounting principles an~ hence was·nqt arbitrary and did · not violate the f~ir and eqyilable treatment standard.

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.llo INVESTMENT AGREE.MENTS

· • In MC/ Pqwer v. Ecuador, a ·~ase was ·bro~ght under the Ecuador'" U.S. Bit: The tribunal•found that the conduct of-the host state . . (Ecuador) towc1rd the ~lair:n, ;whjch incl yd~~ t.h~eateni~g -~ ta~ audit, investigating its legal repte$entative, c1nd instit1,1ting . litigation against itj consi~te~ Qf l_egitim.i;!te reg1.,1latory c1~ts rat.her than harassment. The MCI Power ~$e Ulust_ra:tes· how the . · .

. investor rnay invoke the Bl:r )to re~o[v.e t;3x a.nd other ·nonrn..x dispute$ sirnu.lt~ne.,og~ly; · · · ·

• .. The c1biHty tc:> demand both patiqnc1I c1nd rnost fc:Jvore.d natJon · . trec1tment as welrc1.s fair c1n~ equitc1l;>!e tre~trnent and trec1tment . in ac:cor9?!nc:e with ·internc1t1onal law provide$ cons:ideri;!ple proteqion to ·investor~. 1 · · · . , t .

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II. INVESTM.ENT AGREEMENTS - . - • j

E: Business Planning Opportunities · ' I

· • The BIT may enable a·foreign entity to obtain the r'ightto use p_ersonnel of its chojce a_nd overcome difficuft •Iabor and immigration laws of a country; · · · ·

• Article Hl of the Panama~u.s.'stT enables nationals and . . . .

companies of a treaty· party tp hire professionali technical, and

managerial p~r~onnel ?f theif. c;;h~ice, r~gardl~ss, of nationality, · to render te(;hn1cal and manageria, assistance necessary for the

.. . . . I . . . . . . .

planning and operation of their investment. . · • Uhdet existing U.S. law an ali

1en must be a national of a foreign

couhtty to obtain a_ treaty tr~de or treaty investor classification ynder 8 U.S.C. section 1101(a)(15)(3). · . ·

• Hence, the flii may help a Ctjmpal')y from a Country with a favorable BIT to secure additional employment rights.

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II. INVESTMENT AGR'EEMENTS " i .. ' .

J • " , • " I· ' ' , . '

• Another sector in which the!BiT has potential us·e is defense · procurement contracts'. sindesom~ countries.are exempt from

' ' ' ' - ' ) ' ' ' ' ' . the Buy America A~t, which !restricts in government_ .. procurement th.e use of unrnanufactured articles; material, and supplies not prqdu~ed i.n the lJ.S., .BIT pa_rtn~rsthroµgh nation.al or most favored nc;ttion trea~ment i:nay also sec;:ure an exemptipn

• • ' t ., . • • ,,

from the. act. : I I

, . . . • . , I , - . .

• ~uch an exei:nption m~y p~~,:nitB!T comp:~nies and foreign . · ... investors who engage 1n a JQlnt yentt,ire with. a ~ompc:1ny based 1n a .BIT country the-right to p~rticipate in bids on some lucrative

. federal contracts. i. ·

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11. lNVESTME~T AGREEMENTS l

. R Barbados BIT$ · · " .

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' ' . . . ; . ' : ' ' ' 'i· ' . " . ,· . " . ' , .

• 13'arbados has bilateralJnves:tment treaties (BITS) with the . • ' ! . .;

foll0Wi11g countries in force:i;Canada, Cuba,- Germany, Italy, the . . - . . .. . :... ·. - I . . - . . . . . . _ Mauritius~ P._R.C. Swi~erlan9, Venezuela, a'nd. the l,J.K. _

• · Barbados has BITs with Ghana a11d Belgi~m-Netherlands'-- . . . • ... l - .. . .

Luxembourg that await ratification. · . . . , . I . -

• In recefnt y~ars foreign-inves,tots have ~specially used the BITS __ with the P.R,C. ~nd Ve.nez~e)la: __ . · . _ _ · _ _ - . _ _ __ . . -

• · ~or a n_1.Hnber ofye_ars ~arbfdos was used as an 1nterrned1ary to · invest 1n. PRC: cornrnerc;:1c;!I re~l_l e$t~te.., In that _regard the 81T was quite ·useful. r . .

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llo INVESTMENT AGREEMENTS

• Iii connection with f9rergn investment in Venezuela, foreigners · hc!ve used Batbpdos because:ofits BIT and. the•ability to use the B.IT Tn th_e event of (:OJ'lf\staiion·or rnvest,:nent dispyte,s in . . Vene?:yel~ .

•• In both the ·case of Venezuela and the P:R.C. the BlT was an excellent complement to theidouble.tax treaty.

. . . . . . . i .. . ..

• . ~s Cul:>~ con~inues ~q JHleraH{e, foreign investors ~~e_likely!o use Barbados to invest 1n Cuba, ooth because of the BIT and OTA between Barbados and Cuba!.

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Ill. TRADE AGREEMENTS . I

. ' - .. , .\ ' - .. · _.··' . ',. ' ·:

• Potential oppQrt~nities to do business in Barbados arise out of · . the potential ability to use pr6VisiotisTnthe CARI FORUM-EC

· Economic Partnership Agreeinent ("EPJ\")and the Caribbean Single Market and Economy

1(CSME).

the ~PA . '

• fhe EPA is between the 2a iu members and the 15 mernbers of .. . ' . ' ' 1 •

CARI FORUM (Antigua & Bart:>udai the Bahamas, Barbados,_ Belize, Dominica, the Domin;ic_an· Republi.c, Grenad;;i, GtJYgrJa, H_aiti, Jamaica, St, Kitts ·ang ~evis, St. Lucia; St Vi_ncent and the . Grenadines, Suriname, and Tr'i'nidad .& Tobago. .

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Ill. TRADE'AGREEMENTS

• . 'Aithougn the EPA doe_s: no{J,over reciuction of double ta~ation and tax Infor:mation exchange policy, Jnvestors c.an take ·

· 9dv~ntc1$e of sqtn~ pQgble ~x t.recJtie~\ · .. · ~ · ' . ! ..

• E.g., Barbados-hastreaties~i~h-seyeral EU countries, such as . . I ' , . .

Au~tria, Finland, Malta, the N.et_herlands, Nor:way, Sweden, ,. ·Switzerland,andfheUK. ,·-.: . , .

• the 1994CARICOM.DTA may be useful.· . -"; ~

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Ill~ TRADE AGREEMENTS • • • ¢ --··· - ' - • ••

. ' •' J . ' ,, . ' • The EPA enables an EC investor to.establish a base in one of the

CARICOM me~b~-rs a·nd-take'..advantage· bfth~ OTA. ' ' ' ' .

• Hence EU investors rnay use pf the Barba·pos DTAs with the EC countries to TnV~stTn the CA.RI FORUM countries.

l . • Sirnilarly, investors in th~ CAtlF?RU~ countries can use . - ·.

Barbados and one of the aforementioned DTAs to undertake tax ' . .

planning for the investrnents in ·the EU, esp. under the EPA; -' ' . '

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Ill.TRADE AGREEMENTS_

1. Services. Liberalization · 1· t: ' I

• T~e Agreement includes a title On Setvices,dnvestrnent and £,., commerce andthe'relatedsclhecfOlesof commitments.. -· - - , - I --- - - --- -- - -

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-•· The EU ha_s _made im,porta'nt rew corrfrniJrrt~nts,Jnt_he areas of movement of service provici1rs involving, for instance, sellers of goods, investors, short term

1busihess :visitors, gtaduate trainees,

entertainers, artists; cooks, 'nd fashion models.

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'1 .. 11. TRAD.E AGREEMENTS

• The EPA grants persons in signatory states national treatment as wen as M.FN treatment for services and investments.

• ,!", ' ,·\ . . I .

• Investors of both CARl~ORUivl and the EQ will be able to take . I

advantage of these provisions. I. ' I . ! I . .

•. The ~U ppened more than 90% of the sectors in the W120 list .. -- - • • , . I ,, ·. - . , , -

·. u.s~g a§ bc3_si.$ fpr p~g~t_ic3tiors unde[th~, GAIS,

• These include business se~ites, communications, construction, · distribution, envirQnmenta( financial, transport, tourism, and recreatic;,n;:il services, I

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•-Ill. TRADE AGREEMENTS

i: Llb~r<Jlization of Entertainment Sectol

j • ·2s EU members Will liberalize entertainment services. i l I .

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• .. · An)nnovcitjV~ protpcol c;>n ClJ_ltlJralcooperatio~ further provides .opportunity to export services. .

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• In the EPA the acth,ities subject to libera.lization include the ·: - l . . .

while_ i:ange of art_ists and c;:lJ!.tYra! pra.ctition~r~ i_h mgsic, dance, . thec:1t~r, and visual arts, ~lS wFII as sc~lptors, authors, and poets.

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Ill. TRADE AGREEMENTS ..

3. investment ,• '

• EU has liberalized:alrtiostal! iove.~tmerit S.E;?ctors for·CARJFQRUM · persons. .. I

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- Gives tempor~ry ai;:ces$ for tARJFQRUM professic:>nals in 29 sectors. ·· · --e· .It pr¢dqde$ signatories fro:~ IJmiting. t;he part_icjpatJon of fQreign

· · ~~~~:a~~~d~~~~sof ma~irnu1 percf!ilta_ge limits qn foreign ·

Sign~to~ies cannot Hmit the )total value o.f indiv:idual or agg"fegate foreign investment. r · · · • . •

• . I . . .. EU cannot put quotas on thf number of service suppliers that can

enter·the EU market. ; i '

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IV. CARICOM INVESTMENT AGREEMENTS ~ •, ~

' . ' '. - . ' •- . ' ; ·. . ·, - ~. . ' . .~ . -- . . ' . '

• CARICOM ha~. 0bilat~ral'ir:1vestl!l~nt agree,ment:? wi~h·a number of · countries in the Western HJm·ispheie~ including ColOmbia, Costa

. I . . . • . .

Rica, Cuba, the Dominican ~epubltc:, and Ven~zu¢.la. ·

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I -• They can bE:? accessed at . 1 •. ·

http:/ fv-J_ww'.crn.m .or-g/i?de~.ph p?option=com _:'.content&view-ca tegory&1d,..44&1tem1d=79 f: _'.~ . . · .. . . · • . · · ... ·

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V. CARIBBEAN T~ADE PRE.FERENCES.

• · CARICOM couatries also benefit from the Caribbean B.asic I . . .

Economic Recovery Act and GARIBCAN {Canadian Trade Preferences f<.>r the Caribbean).

. . I . .. · • Canada and CARICOM have h'eld discussions with respect to·

extending the prefe.rences.

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VI .. CARIBBEAN SINGLE MARKET . .. ECONOMY (CSME)

• Key· el~ments of the Single rytarket arfd Economy include: .. · . . . . .. I . . . . . .

. ' '

.,- F[ee moveinent_ofgoods.and_ser:vices :-through measures such as • • ,. u • , ----· • ··~ • ~ - • • _ • . r . u _

elirn:inc!ti.ng ~Jl barrier$ to i~:tra-regional mov~m~nt.and harmonl:zi11_g st_ci.ndards to en~ur~ accept_c!bilfty of ~oods and . services traded• · [ · · . · ·

. . ~ight 9fEstabli~hment - to1perrnit the establishmentof CARI COM owned businesses iri any Member State without restrictions;

.i.. fl._ Common External Tari~ f a rate of duty applied by ~II ~embers of. · the Market to a product imported from a country which 1s not a ·

mem~er of t_he market; I . . ' . . . . . . --- F[ee _circulation . .,. free movement of goods imported from extra

-----:··.···-·.-·· .. · .. I··.. • .. · .· regional sources which wo

1uld require c0Uect1on of taxes at first

point of e.ntry in:to the Region and the provision for sharing of · col_lected CtJstoms revenue;

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Vl.CSME ' • ' ' .':, . :: : • • J ; t.

·_: . ·•' ~ ' ]

• Free movem'ent .of capital ~-t~rol!gh measures s~ch as eliminating for~Jgn exch~ngeicontrols, convertibility of · currencies (or a common currency) and integrated capital market, such as a regional st9ck exchange;

• A common trade policy:.. agr~em~nt among the members on · matters related to l~te·r~nal ·arid international trade and a

. . . . I . . . . .

toordinatec! external trade policy negotiated on a Joint basis; . . . . . . . . . I . . . . . . .· . . . • · Free.inovementofJabor.-ttirol!gh measvre,ssuch as re~oving

a1:i ob~tacles· to.ihtti=iegion~I movement ofskHls, 'labor arid . travel, har·monfzing s()ti~I serfces (education, health, etcJ;.

providing for the tra.n~fer Qf.~c;:,c;:ia.l security benefit:s a.nd · · establishing comrnpn ~tand~rds and measures for ac:creditation· and equivalency. . . · I . ·

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Vl.·CSME-~·- Other measure~: -

-· - Harmonization oflaws:such as the harmonization-of company, intellectual prop·erty and o~her laws·.'. .

I

·,.;.. there are also a number of economic, fiscal and monetary . ' ! _ _ measures and policies whic

1h are also important to support the

I . proper functioning of the C~M E. These include: • I

Economic Policy .measures~ ,coo_rdjnaffng and converging mi3c_ro-etonomit.polici~;{and p~ff?'i'tnahce_~ harmonizing foreign··_ -- _ · . · investm_e_nt policy and adopting meas·u·re$ to acquire, develop and transfer appropri~te techn61ogy; . -· _- . . . -

Monetary Poli.Cy measures:l coordina~ing·exchange rate and interest - ----- - - - - -- - -- --- - --- I

rgte polic_ies as well c!S the ~ommercial banking market; _ . . . . I . - . - . .

- Fiscal Polley measures: including toordit:,ating indirect taxes and - - . . . - . . . . .

national budget deficits. 47

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• Cari_bbean Community;,.espJcially the Ce>uncil c;>ri Trade and Economic Development(COTEO) and the Council for Finance and Planning (COFAP), play an important rol~ in reguli:iting fin9ncjal services with.in CSME. ·

'

• S~me e~ampies of ~ccomplithing so~e of the ~~ais of the. CSME, • such as-ftee movement df c1pital, are discrossed·below. ·

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· • ~rtide ~8oftheR.evised Tre~tycaUs for}he r~m6val of discriminatory restrictions on Bari king, lnsurance .and other financial services.·· ·· . . · · t ·· ' ; · · · · · • · ··

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0 Article 3~ re.qui.re$ CARICQN,1 mery:il:>e.rs·Jtot ~o introduce new restrictions on the moveme~_t9f q3pitaland payments· · .. connected withSuch 'rnovements: .· .

• Under .Article 42(1) ~f the ~J~·ised Treaty M·ember States must . . . . I . .

adopt measures to coordinate theitforeign exchange policies ln . . . . - I . . • '... . . . • .•

respect of the movement oflcapital.betWeen them and third_ States.

• The ab0Ve-;1J1entioned provi~ionsof the Revised Treaty are to facilitate the easy movement.of capital_ frorn one Member StaJe

· to another.· i · i ,· ! .

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• Article 4.4 requir~s, amoqg qtherthings, that the Council on Trade and Ece>nomic Development (COTED) and the_, Council for

. Finance and Planning (COFAP) act to abolish exchange control in the Community, and facilitate the_ free corivertibility of the c1,ffrerrcJes of the Member St~tes, the establishment of an inte~n;itec! cqpital market in\the Sommur1ity and conver~ence of macro-economic performan'ce and 'policies through the. coordination and harmonizJtion of monetary and fiscal policies,

- -- including, in particular, polidies concerning interest rates, _ exchange rates, ta>< struqur~s a.nd. national budget d.eficJts .. _

• . the Revised Treaty propose~ to help_ harmonize economic policy through the integration of tne financial and regulatory en,vironment:s in which Member States are to operate,.

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Vl~:CS.ME

• · Within the CSME the dominant enterprises in the banking and financial servic~ sectors are ext~rnal (e.g~, Canc1dian).

• . . . ' ' . ·., .. . I. ' . . •· . •·' . . . . . .

• Th: _r~.moval of fi~anci~-'- ~~rr'ierswithin t.h~ <:SME_ wiH n~t only. fac1htate greater investment ·,across the region, but also increase the Community's attractiven~is as an area for investment by both regional and n<:>n .. regio~al organizations .. · · ·

• . Financial· i?tegra!ic;>.n wt)! als,o1

incr~as_e the avclilabil~ty ~f capit~I to the entire region, which would promote development at both the national and regional lev~I by 'increasing investment and

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improving resource allocatio~. . ·

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VI .. CSME . - ~

. . .. . . . . -. . .. · ·l .-.. .. J. :- ••• - : .. • • , •• • •- • •

• While CARICOM have p.ropo~e·d .a Financial Institutions Bill and cARICO.Mfinancial Servrc·es~g-.-eement(CFSA) a:nd the latter is expected to play· a crucial roh~• by supporting the formation of a harmonized finahGial service~ rnarke.t Tn whiGh au economic

• • I . •

e11.tities will be governec:I _by ~hnilar reg1Jlg,tions, standgrds a.nd. . . , ! , . • •• ' •

co_nditiop·s across th,e Commv11ity, neither the Sill or Agreement are yet in place. . . · I · . ·.

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• .As the Fina.nciaUnstitutions ~ill, CFSA, and other mechanisms become 9peratJ9nal, stakeho;lders will undoybtec:llyc::ha.llenge

. certajn ~~gulations a~d the c::p. will n~ed: to interplayand apply_­. whether the mechanisms and 0regulat1ons are legal under the · Revised Treaty. · · · · 1 · · · · · ·

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. Rcceiv by. SD ARA Reg:istmtion Unit 08/24/2018_ 4:55:2~ PM

.. VII. HlGH--TE:CH SERVICES . ' -. . r··-·· ...

• As the Trump Admi'nistration has tightened the ability of u.s. companies· to bring H-1B. · . workers. ·companies may want to· look for ·new Jurisdictions whe-re they can locate highly · skilled immigrants. \ · _ · --.

• The main industry which utilizes the Hl-B . pro_gram ls the high-~ech sector, which

• -- • . ·- . . I , -·, .- . requites certa1h types of 1hfrastructure to·

· · function effectiveJy~ · ·

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VII. HIGH-TECH SERVICES· - - . - . ..., .. -r- · .. --- -. . -,. --"- - ,_,. - ~-- . ·-·-' t . . . I

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• The H-18 visa allowslforelgo professionals to. · ·. work hi the u.s~ f9r up to six years; The·fast-

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track processing o·ption ·has been -utilized to fill . . I

positions for new pr1jects ~n short noti~e.

. • These visas are frequ\errtly_us~d at large··. technology companies to bring top . · engineeringtalent to their u.s. offite$. The U.S. allows only 85,000 p~ople per year to enter the U.S. on H-1.B Visas. ·

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VII. HIGH-TECH SERVICES - ' . .: . . : ' '~ . ' ' . :- ,

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• On Feb. 22; iois, the: USCIS p·ublished a policy· · · · • •• -- I .

memorandum, clarify1ing that l)SCIS may request

detailed ·doc'umentatipn to ehsure a legitimate .. employer.-empJ6yee relationship is ,maintained while·?n employee. is ror,king ~t ath_ird-party works1te. . .. . . , . \ . . . . .. . . .

• The updated policy guid.ance aligns with· . President Trurrlp;s Buy American and Hire · • · American Executive o'rdet and the directive to .

protect the inte~ests 9t U.S. workers. · • The guidance is the latest.targeting H1-B workers~

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VII. ·HIGH-T:ECH SERVICES . . :, . . . . . . . . ' ~ '. ' ••. ., -- .

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• The inability of high-tech ~bmpariies to quickly obtain H-1B. applications for·high-tech'wqrkers in the U.S. Will mean th.at many of them will wanttd placethe-P,ersons in a nearby jU.risdittio.n. where they c.an work with U_.s. high-teth companles., .· . - .- -_ ;· . . . .

• The high--tech companies ~ill want to continue to quickiy b~i~n~ p~r.sor_ s from J:urisdi~tioos~ suth as India, SQ that they can work with them. · 1

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• To continue to work witht,hem means that the U.S. high­tec:h companies wHI want to plac:e these workers in a

. jyrisdict,ion in the _same tirhe-zone; and one which has a good infrastructure, good living conditions, ·and is safe.

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• VII. HIG.H-TE.cH·sERVICES . .

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•. Barbados is relatively well-equipped to meet those needs. It ls exceptionally well-connected . . . , . - ~ ' .

regarding telecommt1n·ications. - .· ' . . . ' . 1 : . . .

• Barbados was ranke~ by the International

. Telecommun_ications 1union in 20?7 ~s·th~ _ ·

14th most wired country per capita 1n the world.

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r ·. ··v1J. H.lGH-TiECH SERVICES ' 'j . t

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1 • In 1982, it.be.earn~ the. first Caribbean nation ·

l · with ·fiber optic teleco.~mU'flications cables •. - :.1 . y . ' .

• Barbados has stro·ng brpadband· internet access; With

/ . widely ayailabl~ Asymme~rit digital subscriber line : .

. _· (ADSL) services, Frame Re{av servites, a~:d additional,

more advanced services~_ i;ncluding an advanced cloud . ·

(;:Qmputing pla,tform ·avail~bJe to b~sinesses throughout . . I . . •

·· the nation and provided b'y Digicel.

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Vlt. HIGH-TECH SERVICES . . . I • .

• .. Barbados has investeo hea.vily in terms of both re.sources and plan·ning t'o. cteate-an infrastructure for ICT. . : . . . .

· • · Communlty technology fo:rograms have succeeded in placing computers in community centers across the COlJntry to establish natiq·nwide ·aqc~$S~ and the . gG>vern~ent has inves~~~ millions i:~. !~Ei Edu.cation Sector Enhancement Programme (gSEP, and previously

. known as EDUTECHJ, whi;ch succeeded in integrating · ihformation technology into Barba.dos' public and·

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p:riva.te schools. · ·

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. Received 6y NSD/F ARA .Re~tratton Unit 08/2472018 4:55:20 M

--. VII .. · HIGH-TECH SERVICES ,.

• Additionally,the government's ~ulti"million dollar . investment in ICT infrastructure hgs a11owed them to fully utHi~~ the infrasttucture to provide a.dditi_on_al services in many sectors, S.!,JCh a;S banking, insurance.,

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and customs enforcement. • · One success.story ofthe Barbadian investment in ICT

.· infrastructure is that of~CR Business.Solutions.· · ·

• Foundecf by Barbadian husband and wifeteam Anthony a.tld Celeste Foster, ACR has developed into an

, . . . l . . , . ·. .

· inte.rnationally recogniz~d and utilized business services and data analysis firm.

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VII; HlGH-T'ECH SERVICES +, • •, -

• ACR was·one, of the first companies in the Caribbean to enter the me,dicoltranscrip_tion business, and is now ·

- -. . . . . . d. . -.. - - . . transitioning into the IT-iin.tensive field of medico/data

d. . .. \

co ,ng.. _ _ - . i '. _ . • · This work requires a. q(.1allff~d a.n<;I $kJlleq labor force,

one Which ACR has been :able to.find ·rn Barbados and i the greaterCaribbean, \. - ·. ..·. _ . ·_ . _ .

• ACR's success demonstrates the .effectiveness with . • • • I . • • - -

which the Barbadian inve'.stment,in ·ICT education has beendable to create conditions suitable for the. . .. . .. -- . - ................. r ,. - .

development of a high-tech economy.

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VIII. Developme,nts (H.R.· 4939) I • 'r ~

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· • ·. On Dec; 16, 20.17, Congress ena~~ed· the Un1tedStates~caribbean _ Strategic Engc;1~ernent Act of 20li~, · · _ · ·

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• The Secretary.of State, in c.oordination with tl$AID, mustsubmitto the appropriate cc:>ilgressionc1I coin"1itt~es a multi-year strategy for U.S. engagement to support the effortts of interested nations in the

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Caribbean region·that: _ \ _ _ _ _ ,

• (1) identifies State & USAID priorities for us policyt:Owarqs the Caribbean; _ · . - ; · -- \ · - ·. - .-. ·

• (i) outlinesailapptoathto partn~rvl(it~ Cc1ti_bb.ean governments te- · improve citizen security, reduce the trafficking of illicit drugs, strengthen the rule of law, c1n.cf improve the ~ffectJveness & longevity of the . Caribbean Basin Security Initiative.

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'Received by SD/FARA, Registr3tio!1 Uritt 08/24/2018 4;5 :20 PM

. VIII.' Developments (H .. R. 4939} . .

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· • (3) esta.blishes a c;:oi:nprehenstve, integrated~ multi~yea._r stra.tegy .· to encourage efforts oftheC:~rtbbean regionto·implemen,

regional and national strategi~s tb~t improve e_nergy security;. I • •

" (4) outlines an appro_ach to improve diplomatic engagement with the govetnments of the Caribbean region; including w respect to

· . human rights and demo~ra·_cy;11 · . . ···• .. __ · · . _

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• .· (S) describes how the U.S.,ca11' develop an approach to supporting Caribbean Countries ·in efforts\to diversify their economies; and· .

·• ·. (6) des:ribes w_ay$t_o :nsure t~e ~ctive_P~-':i~ipation ~f ~itizensof the Carib.bean n;i e~1st1n~ p(ogriam a.nd 1n1t1a.t1_ves adm1n1stered by St:ate's 13ureau of Edµ<;.:a.t.19n a.net Cultural Affairs; . · ·

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IX .. Potential Service.s C.ooperation ' '. '• .

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• One pc;>tential arec:1 of new COQR~ratic;>n.b~tween ~arbados and . the Sputheast \.J.S. region is toqfism_. · ·

• Touri5,ts in Northern Europe _apd Asia like to take long vacatipns (3-4 weeks). .. . · •·•. · ·.. 1

• · • · · · _ .. _ ·_ · · · ·· •

• By having_tustomitedtoutism~oint ventures,_Bafbados and si;;1tes in the Southeast tan develop pack~gesfor heritage~ sports, and cultural tours: • _ _ . _· ·• . . . ·\ · " -. -_ .. . · · . _ . . · ·_ ·

• The priv~te s~ctorcan participrte_by offerins discounts.

• Th_e joint vent~r~s can be form1alized throug~ to~rism . . . . .

agre.ements, s1m1lar to the one1 betwl:;!en C:c1hforr11a c1nd Mexico . • • • I • . .

and the MOU between Califorqia c1nc:f Israel.

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·ReCC1vcd·byJNSD/FARA Regtstration·Urlit 08/24/2018 4:55:2_0.PM

· X. Concltis'ion and FARA Dlsclosure . I

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. Barbados·has a go:od mixturJ of investment andtrade . -·' - .:.·< ··.1··--•·.•- :·.

agreements to accommodate direct investment in Barbados as well as the use. of Barbados as an'ihtermedJary to inve$t in third

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countries. 1

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. l . -• This material is distributed by

1 Berlrner Corc0ran .& Rowe. LLP on

behalf of Invest Barbados. Additional information is available at the Department of Justice, Washingtor,i DC.

Received by NSD/Ft\RA ~egistriltio~ Unit 08124/2018 4:55:'.!0·PM .

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