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Investment Agreements in the Western Hemisphere: A Compendium

Trade and Integration Agreements


I. Scope of Application | A. Definition of Investment

North American Free Trade Agreement (NAFTA)

"Investment" means: (a) an enterprise; (b) an equity security of an enterprise; c) a debt security of an enterprise (i) where the enterprise is an affiliate of the investor, or (ii) where the original maturity of the debt security is at least three years, but does not include a debt security, regardless of original maturity, of state enterprise; (d) a loan to an enterprise (i) where the enterprise is an affiliate of the investor, or (ii) where the original maturity of the loan is at least three years, but does not include a loan, regardless of original maturity, to a state enterprise; (e) an interest in an enterprise that entitles the owner to share in income or profits of the enterprise; (f) an interest in an enterprise that entitles the owner to share in the assets of that enterprise in dissolution, other than a debt security or a loan excluded from subparagraph (c) or (d); (g) real estate or other property, tangible or intangible, acquired in the expectation or used for the purpose of economic benefit or other business purposes; and (h) interests arising from the commitment of capital or other resources in the territory of a Party to economic activity in such territory, such as under (i) contracts involving the presence of an investor=s property in the territory of the Party, including turnkey or construction contracts, or concessions, or (ii) contracts where remuneration depends substantially on the production, revenues or profits of an enterprise. (Article 1139 of NAFTA ).North American Free Trade Agreement (hereinafter NAFTA), December 17, 1992.

Investment does not mean: claims to money that arise solely from commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of another Party, or the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph (d); or any other claim to money, that do not involve the kinds of interests set out in subparagraphs (a) through (h). (Article 1139).

Free Trade Agreement of the Group of Three among Mexico, Colombia, and Venezuela (Group of Three)

"Investment" refers to resources transferred to the national territory of one Party or reinvested therein by investors of the other Party, including: (a) any type of asset or right the purpose of which is to produce economic benefits; (b) equity interest, in any proportion, by the investors of one Party in companies constituted or organized under the laws of another Party; (c) enterprises owned or effectively controlled by an investor of that Party that have been constituted or organized in the territory of the other Party; and (d) any other resources considered an investment under the laws of that Party.

Investment shall not include credit or debt transactions, such as: (a) a debt security of the State or a State enterprise, or a loan to the State or to a State enterprise; (b) claims to money that arise solely from: (i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of another Party; or (ii) the extension of credit in connection with a commercial transaction, such as trade financing. (Article 17-01 of the Group of Three ).Free Trade Agreement of the Group of Three among Mexico, Colombia, and Venezuela (hereinafter Group of Three), June 13, 1994.

Common Market of the South (MERCOSUR)

Members "Investment" means any kind of asset invested either directly or indirectly by an investor of one Contracting Party in the territory of the other Contracting Party, in accordance with the latter's laws and regulations. It includes in particular, though not exclusively: movable and immovable property and any related property rights, such as mortgages, liens or pledges; shares, stock, and any other form of participation in a company; claims to money and claims to performance having a financial value, and loans directly related to a specific investment; intellectual property rights, including with respect to copyrights, patents, trademarks as well as trade names, industrial designs, know how; concessions conferred by law or under contract to search for, cultivate, extract or exploit natural resources. (Article 1 (1) of the Colonia Protocol).Protocol of Colonia for the Reciprocal Promotion and Protection of Investment in Mercosur (hereinafter Colonia Protocol), January 17, 1994, Mercosur / CMC / Dec. No. 11/93.

Non-Members "Investment" means any kind of asset invested either directly or indirectly by an investor of a Third Party in the territory of a Member State, in accordance with the latter's laws and regulations. It includes in particular, though not exclusively: movable and immovable property and any related property rights, such as mortgages, liens or pledges; shares, stock, and any other form of participation in a company; claims to money and claims to performance having a financial value, and loans directly related to a specific investment; intellectual property rights, including with respect to copyrights, patents, trademarks as well as trade names, industrial designs, know how; concessions conferred by law or under contract to search for, cultivate, extract or exploit natural resources. (Article 2 (A)(1) of the Buenos Aires Protocol). Protocol for the Promotion and Protection of Investment of Third States (hereinafter Buenos Aires Protocol), August 5, 1994. According to Articles 1 and 2, Parties shall not grant to investments made by investors from non-member countries a more favorable treatment than the one established in this Protocol. The contents of the guidelines are included in the tables.

Andean Pact

Foreign Direct Investment means:

(a) Contributions originating abroad belonging to foreign individuals or companies to the capital of a company in freely convertible foreign exchange or in physical tangible goods, such as industrial plants, new and reconditioned machinery, new and reconditioned equipment, replacements, parts and pieces, raw materials and intermediate products.

(b) Investments in national currency deriving from resources having the right to be remitted abroad and the reinvestments made in accordance with this Decision.

(c) Intangible technological contributions, such as trademarks, industrial models, technical assistance and technical kow-how whether or not patented and that may take the form of physical goods, technical documentation, and instructions, as contributions to capital.
(Article 1 of Decision 291 ).Decision 291 of the Commission of the Cartagena Agreement. Common Code for the Treatment of Foreign Capital and on Trademarks, Patents, Licenses, and Royalties (hereinafter Decision 291), March 21, 1991.

Caribbean Community and the Caribbean Common Market (CARICOM)


 
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