1. CARICOM INVESTMENT AGREEMENTS
WITH THE UNITED STATES:
PROSPECTS FOR THE
INVESTMENT RELATIONSHIP
Dr Chantal Ononaiwu
Trade Policy & Legal Specialist
Caribbean Regional Negotiating Machinery
OAS/CRNM/CARICOM WORKSHOP
“NEGOTIATING CARICOM INVESTMENT AGREEMENTS: STATE OF PLAY
AND WAY FORWARD”
GRENADA REX RESORT HOTEL, GRENADA, 22-25 JUNE 2009

2. Overview
Investment agreements between individual CARICOM
countries and the US
Existing BITs with the US
Evolving US policy on investment protection
Investment agreements between CARICOM and the US
Prospects for a CARICOM-US FTA
The CARICOM-US Trade and Investment Framework
Agreement (TIFA)

3. IIAs with Individual CARICOM Countries
Only Haiti, Grenada, Jamaica and Trinidad & Tobago have concluded
BITs with the US
The BIT with Haiti was among the first negotiated by the US but has
not been ratified by either country
The BITs with Grenada, Trinidad & Tobago and Jamaica have been in
force since 1989, 1996 and 1997 respectively
Any future investment treaty negotiations with the US will need to be
informed by the evolving US policy on investment protection
The 2004 US Model BIT differs in several important respects from the
existing BITs between the US and CARICOM countries
The US is reviewing its model BIT

4. Existing US BITs with CARICOM Countries
The existing investment treaties are based on different US
model BITs. However, they all insist on strong investor
protection and share the following key features:
A broad definition of investment
Discretion to deny treaty benefits to investments of companies
without substantial business activities in the home country
Prohibition of discrimination in both the entry and post-entry
phases of investment
Guarantee of fair and equitable treatment, full protection and
security and the treatment required by international law
Requirement of host State to observe any obligation with regard to
investment (“umbrella clause”)
Obligation, subject to immigration and employment laws, to allow the
entry of the other Party’s nationals for certain purposes related to an
investment involving the commitment of a substantial amount of
capital

5. Existing US BITs with CARICOM Countries
Key features of existing BITs (cont’d):
Right of investors to engage top managerial personnel of their
choice
Restrictions on the right to impose performance requirements
Prohibition of unlawful expropriation, whether directly or
indirectly through measures ‘tantamount to expropriation’
Non-discriminatory treatment of investors who suffer losses due to
war or civil disturbance
Guarantees of free transfers relating to investments
Access to investor-State dispute settlement
‘Preservation of rights’ under domestic legislation, other international
legal obligations or agreements between the investor and host state

6. Evolving US Policy on Investment Protection
The 2004 US Model BIT features clarifications to
substantive provisions and introduces procedural
safeguards in relation to investor-State dispute settlement.
These changes integrate lessons from implementation of
NAFTA’s investment chapter and result from the US’
interest in striking a better balance between protection of
investment and the ability of governments to regulate in
the public interest.
However, strong investment protection remains high on
the agenda.

7. Evolving US Policy on Investment Protection
The 2004 Model BIT clarified a number of substantive
provisions:
The definition of investment
To qualify, an asset must have the “characteristics of an
investment”, which include the “commitment of capital, the
expectation of gain or profit, or the assumption of risk”.
Minimum standard of treatment
Guarantee of the MST in accordance with “customary
international law”, which includes fair and equitable treatment
and full protection and security.
Clarification of the shared understanding of “customary
international law”.

8. Evolving US Policy on Investment Protection
The 2004 Model BIT also clarified the provision
concerning:
Expropriation
Indirect expropriation occurs through “measures equivalent to
expropriation”.
Expropriation requires interference with a property right or
interest.
Certain factors must be considered in the determination of
indirect expropriation.
Only in “rare circumstances” do non-discriminatory regulations
designed and applied to protect public health, safety and the
environment constitute indirect expropriation.

9. Evolving US Policy on Investment Protection
The 2004 Model BIT also introduced procedural
safeguards:
Adding of preliminary procedures
Tribunals must decide as a preliminary question a respondent’s
objection that the claim is frivolous. If the tribunal finds that the
claim is frivolous, it may award costs and fees.
Greater transparency and openness of arbitral proceedings
The main documents of proceedings must be released to the
public and hearings must be open to the public except to prevent
the disclosure of confidential information.
A tribunal may accept and consider amicus submissions.
Anticipation of an appellate body to review awards rendered

10. Evolving US Policy on Investment Protection
A sub-committee to the Advisory Committee on
International Economic Policy is reviewing the US model
BIT.
In the current review, a central issue will be striking a
balance between investor protection and the government’s
right to regulate in the public interest.

11. CARICOM-
CARICOM-US Investment Agreement
There is no consensus among CARICOM countries as to the
desirability of negotiating a free trade agreement with the
US.
While some consider that an FTA would, inter alia,
improve prospects for attracting US investment to
CARICOM, others would prefer to focus on extension and
expansion of unilateral preferences.
CARICOM has deferred making a decision on negotiating
an FTA with the US until the completion of a trade and
development agreement with Canada.

12. CARICOM-
CARICOM-US Investment Agreement
A Trade and Investment Council (TIC) was established in
1991 as a forum for dialogue on trade and investment issues
between CARICOM and the US.
The Council met on two occasions but ceased to function
after 1999.
In 2006, CARICOM and the US have agreed to conclude a
Trade and Investment Framework Agreement (TIFA) in
order to reconstitute the TIC to consider a wide range of
trade and investment-related issues.
Earlier this year, CARICOM submitted its second proposal
for the TIFA.

13. CARICOM-
CARICOM-US Investment Agreement
Among the key elements of CARICOM’s revised text of the
TIFA are that the TIC:
shall meet annually
shall encourage progressive liberalization of trade and investment
between the Parties
may, at the request of the Parties, consult on trade and investment
matters
shall address the “Immediate Action Agenda” of trade and
investment issues, including
collaboration on matters relating to bilateral investment
arrangements between CARICOM and the US
promotion of investment opportunities
Review of investment aspects of tax treaties

14. Concluding Thoughts
Although the US remains one of the largest investors in
CARICOM, the stock of FDI is concentrated in a few
countries.
Investment agreements, whether concluded by
individual countries or CARICOM, may present
important prospects for developing the investment
relationship with the US.
CARICOM countries must track the evolving US policy
on investment countries and craft an appropriate
strategy for realizing their development objectives.

15. THANK YOU
chantal.ononaiwu@crnm.org
www.crnm.org