USING TRADE AGREEMENTS USING TRADE AGREEMENTS

AS TOOLS FOR AS TOOLS FOR

EXPLORING INVESTMENT EXPLORING INVESTMENT

OPPORTUNITY OPPORTUNITY OPPORTUNITY OPPORTUNITY

ST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINARST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINARST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINARST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINARST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINARST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINARST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINARST LUCIA NATIONAL DEVELOPMENT CORPORATION SEMINAR“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”“EXPLORING OPPORTUNITIES FOR INVESTMENT GENERATION WITH ST LUCIA’S KEY TRADING PARTNERS”

BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010BAY GARDENS HOTEL, ST LUCIA, 30 MARCH 2010

Dr Chantal OnonaiwuTrade Policy & Legal Specialist

Office of Trade Negotiations, CARICOM Secretariat

TTRADERADE AGREEMENTSAGREEMENTS: : TOOLSTOOLS FORFOR

EXPLORINGEXPLORING INVESTMENTINVESTMENT OPPORTUNITYOPPORTUNITY

� The extent to which trade agreements can be

used to generate investment opportunities

depends on their scope and content

� Trade agreements liberalise barriers to the � Trade agreements liberalise barriers to the

exchange of goods (and services)

� Preferential access to market of trading partner

can attract foreign investors looking to export

goods or services to that market

� Such preferential market access can be part of the

host country’s value proposition

TTRADERADE AGREEMENTSAGREEMENTS: : TOOLSTOOLS FORFOR

EXPLORINGEXPLORING INVESTMENTINVESTMENT OPPORTUNITYOPPORTUNITY

� Trade agreements offer additional avenues for

exploring investment opportunity if they contain

provisions aimed at the liberalisation, protection,

promotion and facilitation of investment

� Host country’s commitment to grant market access

to investors from the trading partner can signal to investors from the trading partner can signal

openness to investment flows

� Standards of behaviour for host states and access to

investor-State dispute settlement can signal a

secure and predictable legal framework for

investors

� Such a legal framework can constitute another element

of the host state’s value proposition

TTRADERADE AGREEMENTSAGREEMENTS: : TOOLSTOOLS FORFOR

EXPLORINGEXPLORING INVESTMENTINVESTMENT OPPORTUNITYOPPORTUNITY

� Transparency provisions can allow investors to

access information about host country’s

investment regime

� Trade agreements can provide for mechanisms to � Trade agreements can provide for mechanisms to

promote and facilitate investment flows between

trading partners

� Provision for technical assistance can help to

improve the regulatory framework and enhance

institutional capacity to attract investment

THE CARICOM THE CARICOM

MARKETMARKET

AND THE IMPACT AND THE IMPACT AND THE IMPACT AND THE IMPACT

OF A CARICOM OF A CARICOM

INVESTMENT CODEINVESTMENT CODE

IINTRANTRA--CARICOMCARICOM INVESTMENTINVESTMENT

� Emanates largely from a few Member States -

Trinidad & Tobago, Barbados and Jamaica.

� These countries are the primary sources of St Lucia’s

intra-regional investment

� Few firms from the LDCs have cross-border

operations

Major recipients are Barbados and Jamaica.� Major recipients are Barbados and Jamaica.

� Includes portfolio and direct investment (joint

venture, greenfield, M&A)

� Led largely by a few financial services firms and

conglomerates.

� Spans several sectors, including banking and other

financial services, distribution, food services ,

tourism, manufacturing.

CCOREORE PILLARSPILLARS OFOF THETHE CARICOMCARICOM SINGLESINGLE

MARKETMARKET

� In addition to the free movement of goods, the free provision of services and the free movement of skilled labour, the Revised Treaty of Chaguaramas guarantees:

� The right of establishment, which includes the right to create and manage economic enterprisesright to create and manage economic enterprises

�Enjoyed by CARICOM nationals, i.e.

� individuals who are nationals of CARICOM Member States

� firms incorporated in CARICOM that are substantially owned and effectively controlled by CARICOM nationals

� Free movement of capital

RRIGHTIGHT OFOF ESTABLISHMENTESTABLISHMENT & & FREEFREE

MOVEMENTMOVEMENT OFOF CAPITALCAPITAL

� The Treaty calls for the absence of restrictions on the

right of establishment, including those relating to:

� Registration of companies throughout the Region

� Establishing agencies, subsidiaries and branches

� Access to property

� Movement of managerial, technical and supervisory � Movement of managerial, technical and supervisory

staff

� In addition to the absence of restrictions on the

movement of capital and related payments and

transfers, the Revised Treaty calls for the

abolition of exchange controls and free

convertibility of currencies.

CCOMMUNITYOMMUNITY INVESTMENTINVESTMENT POLICYPOLICY

� The Revised Treaty calls for a Community

investment policy, including a harmonised system

of incentives

� The draft CARICOM Investment Code (CIC) was

developed as part of the process of formulating this

Community investment policy frameworkCommunity investment policy framework

� The draft CIC is an agreement among CARICOM

Member States that seeks to create a common

regime for the protection, promotion and

facilitation of investment in CARICOM

� A harmonised system of incentives is not a part of

the draft CIC

DDRAFTRAFT CARICOMCARICOM INVESTMENTINVESTMENT CODECODE

(CIC): O(CIC): OBJECTIVESBJECTIVES

� Promotion of CARICOM as a single investment

location with a single policy space

� Attraction of investment from investors of

CARICOM Member States and third countriesCARICOM Member States and third countries

� Greater cross-border investment within

CARICOM

� Enhancing transparency and predictability in

treatment of investment in the Community

� Reducing transaction costs

DDRAFTRAFT CIC: CIC: KEYKEY FEATURESFEATURES

� Standards of treatment of investors that host States must observe

�Measures to promote and facilitate investment flows

� Expediting investment approval process

� National IPAs and CARICOM investment promotion strategies

� National IPAs and CARICOM investment promotion strategies

� Cross-border registration

�Measures to ensure investment supports economic development

� promotion of corporate social responsibility of investors

� Investor-State dispute settlement mechanisms

EEXPLORINGXPLORING INVESTMENTINVESTMENT OPPORTUNITIESOPPORTUNITIES ININ

THETHE CARICOMCARICOM MARKETMARKET

� St Lucia has provided an enabling environment for

intra-regional investment flows through removing

restrictions on the right of establishment and the free

movement of capital

�Reflected in World Bank’s high ranking for ease of doing

businessbusiness

�Strategy for targeting and promoting desired

investments should seek to capitalise on this

� Liberalisation of restrictions on the right of

establishment and the free movement of capital by

other CARICOM Member States create opportunities

for St Lucian investors seeking to establish cross-

border operations.

EEXPLORINGXPLORING INVESTMENTINVESTMENT OPPORTUNITIESOPPORTUNITIES ININ

THETHE CARICOMCARICOM MARKETMARKET

� The CIC could further enable cross-border investment

activity within CARICOM by enhancing the legal

framework for the protection, promotion and

facilitation of investment within CARICOM.

THE

EU

MARKETMARKET

IINVESTMENTNVESTMENT RELATIONSHIPRELATIONSHIP WITHWITH EUEU

� EU is a significant source of FDI inflows for

CARIFORUM States

� Top capital-exporting EU countries include the

UK, Belgium, France, Netherlands, Spain

� Top EU investment destinations in CARIFORUM � Top EU investment destinations in CARIFORUM

include The Bahamas, Dominican Republic,

Jamaica and Trinidad & Tobago

� St Lucia has been the recipient of FDI inflows from

the EU

CCARIFORUMARIFORUM--ECEC ECONOMICECONOMIC PARTNERSHIPPARTNERSHIP

AGREEMENTAGREEMENT (EPA)(EPA)

� Comprehensive framework for trade and

investment between 15 CARIFORUM States and

the EC and its 27 Member States.

� Coverage extends to newer EU Member States and

the French Caribbean Outermost Regions of the EU.

� Provisionally applied since December 2008.� Provisionally applied since December 2008.

� Preferential market access for goods, services and

investment granted on a reciprocal basis.

PREFERENTIAL MARKET ACCESS TO PREFERENTIAL MARKET ACCESS TO

THE EU: SNAPSHOTTHE EU: SNAPSHOT

� Duty-free quota free access for most

CARIFORUM products

� Rules of origin allow for use of inputs from EU,

Overseas Caribbean Territories, other ACP

States, certain Latin American countries

CARIFORUM service providers can access EU � CARIFORUM service providers can access EU

market on a preferential basis, whether or not

they set up a commercial presence

� Liberalisation of investment in services and non-

services activities

EPA REPA RULESULES ONON INVESTMENTINVESTMENT: : SCOPESCOPE

� Commercial presences set up to carry on economic

activities

� Business or professional establishment

� Includes capital participation with a view to

establishing or maintaining lasting economic links

(i.e. portfolio investment excluded).

� Investors setting up a commercial presence

� EU/CARIFORUM nationals

� Entities set up under the laws of EU/CARIFORUM

State with substantial business operations in

EU/CARIFORUM State (i.e. mere shell companies

excluded)

EPA REPA RULESULES ONON INVESTMENTINVESTMENT: : SCOPESCOPE

� Excludes investors and commercial presences in

certain economic activities, such as audiovisual

services and air transport services.

� The Agreement doesn’t include investor

protection provisions (e.g. guarantees against

unlawful expropriation) and doesn’t provide for

investor-State dispute settlement.

� However, investors can access more favourable

treatment under investment treaties between

CARIFORUM and EU countries.

� St Lucia has bilateral investment treaties with the

UK and Germany

SSTT LLUCIAUCIA''SS EPAEPA COMMITMENTSCOMMITMENTS: : SECTORSSECTORS

� CARIFORUM and EU States undertook

commitments to grant each others’ investors and

commercial presences market access and national

treatment

� St Lucia committed to grant EU investors market � St Lucia committed to grant EU investors market

access in a wide range of non-services sectors,

including agriculture, fishing, and manufacturing

� Discretion retained to impose restrictions with

respect to production, transmission and distribution

of electricity, gas, steam and hot water

SSTT LLUCIAUCIA''SS EPAEPA COMMITMENTSCOMMITMENTS: : SECTORSSECTORS

� St Lucia also committed to grant market access to EU

investors in a host of services sectors, including,

� professional services (e.g. architectural services, medical and

dental services), computer and related services, privately-

funded R&D services, real estate services on a fee/contract

basis and other business services (e.g. services incidental to

manufacturing)

� telecommunications services

� environmental services (e.g. noise abatement)� environmental services (e.g. noise abatement)

� financial services (e.g. investment and property unit trust

services, reinsurance and retrocession)

� hospital services

� tourism (hotels and resorts in excess of 100 rooms, marina

services)

� recreational, cultural and sporting services (rental and leasing

of yachts, entertainment services)

� maritime transport services (cargo handling, storage and

warehouse services)

SSTT LLUCIAUCIA''SS EPAEPA COMMITMENTSCOMMITMENTS: : RESERVATIONSRESERVATIONS

� Certain non-services activities reserved for domestic

market unless production for export (e.g. agriculture,

certain manufacturing activities)

� Small business opportunities for nationals in some

services and non-services sectors

� Licensing requirements for foreign landholdings

� Joint venture requirements (e.g. architectural services, � Joint venture requirements (e.g. architectural services,

sporting, cultural and other recreational services, real

estate services on a fee/contract basis)

� Economic needs tests (e.g. installation of computer

hardware)

� Percentage of locals to be employed (e.g. data processing

services)

� Transfer of knowledge and technology (e.g. services

incidental to manufacturing)

SSTT LLUCIAUCIA''SS EPAEPA COMMITMENTSCOMMITMENTS: : TEMPORARYTEMPORARY

ENTRYENTRY OFOF BUSINESSBUSINESS PERSONSPERSONS

�With respect to employees of EU firms setting up

a commercial presence, St Lucia committed to

allow the temporary entry of key personnel not

available locally

� Business visitors (responsible for setting up

commercial presence)commercial presence)

� Intra-corporate transfers (managers and specialists)

� Entry subject to work permits and labour

market test.

SSTT LLUCIAUCIA''SS EPAEPA COMMITMENTSCOMMITMENTS: : OVERVIEWOVERVIEW

� Signal of openness to investment in sectors that St

Lucia actively targets for investment

� Tourism, ICT, manufacturing, agri-business, international

insurance

� Signal of openness to investment in services that

support targeted sectors

� Professional services, services incidental to

manufacturing, maritime transport services

� Reflect investment needs in new areas

� Hospital services, environmental services

� Reservations that aim to safeguard business

opportunities for domestic players

EC EC COMMITMENTSCOMMITMENTS UNDERUNDER THETHE EPAEPA

� EC undertook liberal commitments for

CARIFORUM investors and commercial presence

in a range of economic activities

� Non-services - agriculture, hunting, forestry; fishing

and aquaculture; mining and quarrying;

manufacturing; production, transmission and

distribution of electricity, gas, steam and hot water

Services - professional services, computer and related � Services - professional services, computer and related

services, privately funded R&D services, real estate

and communications services, construction and

related engineering services, privately funded

education and health services, tourism, financial,

distribution, transport and energy services

OOTHERTHER EPAEPA RULESRULES ONON INVESTMENTINVESTMENT

� Measures to ensure investors are forbidden from bribing

public officials, observe core labour and environmental

standards and maintain local community liaison processes

� Investment not to be encouraged by lowering domestic

environmental, labour or occupational heath and safety

standards

� Establishment of enquiry points to respond to investors’ Establishment of enquiry points to respond to investors’

requests for information on applicable laws, regulations

and other measures in the host state

� Transparency in processing applications for authorisation

for commercial presence and independent review of

administrative decisions

� Technical cooperation and assistance

� Promotion of investment and joint ventures

� Enhancing capacities of investment promotion agencies

UUSINGSING THETHE EPAEPA TOTO EXPLOREEXPLORE INVESTMENTINVESTMENT

OPPORTUNITIESOPPORTUNITIES

� Tool for encouraging EU investors to set up

commercial presence (incl. through capital

participation) in St Lucia

� Promotional efforts can be targeted at sectors of

interest to St Lucia

Opportunity to promote St Lucia as a base in � Opportunity to promote St Lucia as a base in

CARIFORUM for investors seeking to access the

EU market

�Firms must have substantive business operations in

CARIFORUM State(s)

� Technical assistance available under EPA to

enhance capacity in investment promotion

THE THE

FRENCHFRENCH

CARIBBEAN CARIBBEAN CARIBBEAN CARIBBEAN

OUTERMOST OUTERMOST

REGIONS REGIONS

CARIFORUM-EC EPA

� EPA applies to the French Caribbean Outermost

Regions (FCORs) of the EU (French Guiana,

Guadeloupe and Martinique).

� The FCORs are covered by the EU’s

commitments under the EPA but benefit from

EU measures aimed at addressing their special EU measures aimed at addressing their special

social and structural conditions

� The Agreement introduces reciprocity between

the FCORs and CARIFORUM States with

respect to preferential market access for goods

(as opposed to the previous unilateral preferences

CARIFORUM States enjoyed under the Cotonou

Agreement)

CARIFORUM-EC EPA

� Legal trade regime for the FCORs and

CARIFORUM States now covers trade in services

and investment.

� The EPA also encourages cooperation between

the CARIFORUM States and the FCORs in the

areas covered by the Agreement as well as areas covered by the Agreement as well as

� facilitation of trade in goods and services

� promotion of investment, and

� encouraging transport and communication links.

CARIFORUM/FCOR COOPERATION

� CARIFORUM/FCOR/Overseas Countries and

Territories (OCT) Task Force on Trade and

Investment was established in 2006 to implement

programmes targeted at increasing levels of trade and

investment between CARIFORUM countries and the

FCORs.

� Caribbean Export has commissioned a study on

opportunities for doing business between

CARIFORUM States and the FCORs

� Findings and recommendations will be used to

formulate strategies and policy responses that are

targeted at deepening the level of trade and

investment between the regions

EXPLORING INVESTMENT OPPORTUNITIES

WITH THE FCORS

� St Lucia is well positioned to explore investment

opportunities with the FCORs

� Existing transportation links to Martinique and

Guadeloupe

� No visa requirements for St Lucian nationals with respect

to short stay travel to FCORs

� Potential for St Lucia to be gateway for investors from

the FCORs looking to access the CARICOM market

� Potential for St Lucia to be gateway for investors

(incl. from CARICOM) to access the market in the

FCORs

EXPLORING INVESTMENT OPPORTUNITIES

WITH THE FCORS

� FCORs present important opportunities for St Lucian

investors looking to penetrate the larger EU market

� Joint ventures

� Integration into existing supply chains

CANADA ON THE CANADA ON THE

HORIZONHORIZONHORIZONHORIZON

CCARICOMARICOM--CANADACANADA INVESTMENTINVESTMENT

RELATIONSHIPRELATIONSHIP

� Canada is a significant source of investment for

CARICOM

� The stock of Canadian direct investment in

Caribbean economies increased from US$28 billion in

2000 to US$53 billion in 2006 (the bulk of which is in

Barbados)Barbados)

� CARICOM is also increasing its FDI presence in

Canada

� CARICOM stock of capital in Canada increased from

US$531 million in 2000 to US$760 million in 2006

� The Bahamas and Barbados have been the major

regional investors in Canada

CCARICOMARICOM--CANADACANADA TRADETRADE ANDAND ECONOMICECONOMIC

COOPERATIONCOOPERATION ARRANGEMENTSARRANGEMENTS

� 1979 CARICOM-Canada Trade and Economic

Cooperation Agreement and its Protocols,

including the 1998 Protocol on Rum

� CARIBCAN

� grants unilateral duty free access to eligible goods � grants unilateral duty free access to eligible goods

from beneficiary countries in the Commonwealth

Caribbean

� Doesn’t cover services

� Due to expire in 2011

� Only Barbados and Trinidad & Tobago have BITs

with Canada

CCARICOMARICOM--CANADACANADA NEGOTIATIONSNEGOTIATIONS FORFOR AA

TRADETRADE ANDAND DEVELOPMENTDEVELOPMENT AGREEMENTAGREEMENT

� Formally commenced in November 2009 and

second round being held in March 2010

� CARICOM is seeking a comprehensive

agreement covering market access for goods and

agriculture, trade in services, investment and a agriculture, trade in services, investment and a

strong development dimension

� Since St Lucia doesn’t have a BIT with Canada,

the Agreement could introduce a legal framework

for investment flows between the two countries

CCARICOMARICOM--CANADACANADA NEGOTIATIONSNEGOTIATIONS FORFOR AA

TRADETRADE ANDAND DEVELOPMENTDEVELOPMENT AGREEMENTAGREEMENT

� In the context of these negotiations, St Lucia

must identify:

� Activities in which investment has been attracted

from Canada and in which St Lucian investors have

invested in Canada

� Priority sectors for inward and outward investment

� Types of investment desired

� Areas in which St Lucia might want to reserve more

favourable treatment for locals

� Priorities for technical assistance and cooperation

THANK YOUTHANK YOUchantal.ononaiwu@crnm.orgchantal.ononaiwu@crnm.orgchantal.ononaiwu@crnm.orgchantal.ononaiwu@crnm.org

www.crnm.orgwww.crnm.org