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FTAA - Free Trade Area of the Americas

Draft Agreement

Chapter on Investment


(Continuation)

Article 9:  TRANSFERS 6

[1. Each Party shall permit all transfers relating to [an investment of an investor of] [another Party] [a covered investment] [in the territory of] [the Party] to be made freely and without delay [in its territory] [into and out of its territory]. Such transfers include:] 

[1. Each Party shall permit transfers, in freely convertible currencies, of funds related to an investment by the investor of a Party in the territory of another Party. Such transfers shall include, in particular, but not exclusively:] 

[1. The Contracting Parties shall guarantee investors from other Contracting Parties the free transfer of investment flows and earnings.] 

[1. Parties shall guarantee to an investor of another Party with respect to an investment covered by this agreement the free transfer of investments and returns on an investment. The investor may also transfer:]  

[1. Each Contracting Party shall accord to the investors of the other Contracting Party, the free transfer of investments, income, and, in particular, although not exclusively:]

a) [contributions to capital;] [the capital and additional sums necessary for the maintenance and development of the investments;] 

b) [profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance [and other fees], returns in kind and other amounts derived from the investment;]

[the profits, earnings, income, interest, dividends and other current income;] 

[interest, dividends, income, profits and other earnings;] 

[wages and other remuneration accruing to a citizen of another Party who was permitted to work in the territory of the Party receiving the investment in connection with an investment;] [the wages and salaries of the nationals of a Contracting Party that have obtained authorization to work in a position related to an investment.] [wages, salaries and other remuneration received by the citizens of a Contracting Party in the territory of one of the Parties, stemming from investment-related employment contracts;] 

[proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;] [the proceeds from the total or partial sale, or liquidation of an investment;] 

[profits, dividends, capital gains, and proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;] 

[interest, royalty payments, management fees, and technical assistance and other fees;] 

c) [payments made under a contract [entered into by the investor, or its investment,] including [payments made pursuant to] a loan agreement; [and]] [funds in repayments of loans related to an investment;] [funds for the reimbursement of loans directly linked to a specific investment;] [payments on foreign loans related to an investment;] 

d) [payments [derived from compensation for expropriation] [made in accordance with the Article on Expropriation]; and payments arising out of the application of the provisions [of the dispute settlement mechanism] [relating to the Section on dispute settlement] [relating to the mechanism of dispute settlement between a Party and a an investor of another Party] [of the dispute settlement mechanism set out in section B of this Chapter].] 

[compensation for expropriations;] [compensation for losses;] [financial settlement of a dispute;] 

[compensation [pursuant to] [owed to an investor by virtue of matters related to] (expropriation article) and (compensation for losses article) and payments arising out of an investment dispute.] 

[the compensation and other payments made as a result of expropriations and compensations;] 

e) [royalties, fees and any other payment related to intellectual property or intangible rights, including copyright and industrial property such as patents, industrial designs, marks, trade names, technical procedures, know-how and also royalties and fees deriving from licenses for prospecting, extracting and exploiting natural resources;] 

[2. [With respect to spot transactions in the currency to be transferred,] Each Party shall permit transfers [relating to a covered investment] to be made in a [freely convertible currency] [freely usable currency] [on the international financial market] at the market rate of exchange prevailing on the date of transfer.] 

[2. Transfers shall be made subject to compliance with the requirements set out in the domestic laws and, in particular, to payment of the relevant taxes. Transfers shall also be made in freely convertible currency, without restrictions or delay, at the rate of exchange applicable on the date of transfer, in accordance with the laws of the Contracting Party in whose territory the investment was made.] 

[2. Transfers shall be effected without delay in the convertible currency in which the capital was originally invested or in any other convertible currency agreed by the investor and the Contracting Party concerned. Unless otherwise agreed, transfers shall be effected at the applicable rate on the date of transfer, in accordance with regulations in effect with respect to foreign exchange regulations.] 

[2. Transfers shall be made without delay, in freely convertible currency, at the prevailing market exchange rate on the date of transfer, in conformity with the procedures stipulated by the Contracting Party in whose territory the investment was made.] 

[2. The transfers shall be made at the applicable market exchange rate on the date of transfer, pursuant to the prevailing legislation of the Contracting Party that admitted the investment, once the relevant tax obligations have been fulfilled.] 

[3. Each Party shall permit returns in kind relating to a covered investment to be made as authorized or specified in an investment authorization, investment agreement, or other written agreement between the Party and a covered investment or an investor of another Party.] 

[4. For purposes of this Chapter, a transfer shall be considered to have been made without delay when it has been made within the time period normally necessary for complying with transfer formalities.] 

[5. No Party may require its investors to transfer, or penalize its investors that fail to transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of another Party.] 

[6. Notwithstanding paragraphs [1 and 2,] [1 through 3,] a Party may prevent a transfer through the equitable [,] [and] non-discriminatory [and good faith] application [of its laws] [in the following cases] [of its law relating to]:] 

[6. Without prejudice to the provisions of paragraphs 1, 2 and 8, a Contracting Party may prevent a transfer for the purpose of protecting the rights deriving from administrative, judicial or arbitral awards, in particular, although not exclusively those related to:] 

[6. In relation to transfers, Parties may implement in an equitable, non-discriminatory manner their laws relating to:] 

a) [[bankruptcy, insolvency or the protection of the rights of creditors;] [bankruptcy or insolvency]] 

b) [[issuing, trading or dealing in securities,] [futures, options, or derivatives;] [related to the enforcement of laws and regulations: i) for issuing, trading or dealing in securities, futures or similar instruments; or ii) concerning reports or records of transfers; or]] 

c) [criminal or penal offenses [or administrative offenses] [or the rulings of administrative or legal proceedings;]] 

d) [[reports of transfers of currency or other monetary instruments; or] [failure to comply with the requirement of presenting reports of transfers of currency or other monetary instruments; or] [financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;]] 

e) [[ensuring the satisfaction of judgments] [or awards] [in adjudicatory proceedings] [or court orders]; [or,] [ensuring compliance with [orders or] judgments in judicial [or administrative] proceedings.] [guarantee of enforcement of warrants or judgments in judicial proceedings]] 

f) [the establishment of the instruments or mechanisms necessary for ensuring payment of income tax by means including the withholding of the amount corresponding to dividends or other items.] [Non-fulfillment of tax obligations] 

g) [non-fulfillment of labor obligations] 

h) [social security.] 

[7. Paragraph 5 shall not be construed to prevent a Party, through the equitable, non-discriminatory and good faith application of its legislation, to impose any measure related to subparagraphs a) through e) of paragraph 6.] 

[7. The provisions of this article shall not prevent the adoption of measures aimed at the equitable, impartial, non-discriminatory and good-faith enforcement of rights and obligations under the domestic laws of Contracting Parties and, in particular, the rights of the creditors of investors, as well as the enforcement of administrative and judicial awards that are made in the course of administrative, judicial or arbitration proceedings.] 

[8. Notwithstanding the provisions of paragraph 1, a Party may restrict transfers of returns in kind, in circumstances where it otherwise could restrict such transfers in accordance with this Agreement, including as provided for in paragraph 6.] 

[9. Notwithstanding the provisions of this article, each Party shall have the right, under circumstances of exceptional or grave difficulty in the balance of payments, to temporarily limit transfers, in an equitable and non-discriminatory manner, pursuant to internationally accepted criteria. Each Party shall give prompt notification to the other Party of the limitations adopted, maintained or eliminated pursuant to this paragraph.] [Notwithstanding the provisions of this Article, each Party may establish temporary limits on exchange operations, provided that the balance of payments of that Party is in serious imbalance and the Party implements a program in accordance with internationally accepted criteria.]] 

[9. Each Contracting Party shall be entitled, where severe balance-of-payment disequilibria or difficulties exist or are impending, to take steps to limit transfers temporarily in a manner that is equitable, non- discriminatory and in good faith.] 

[9. The provisions of this Chapter shall not prevent Contracting Parties from applying, in exceptional or serious cases of balance of payments, measures provided for in international Agreements.] 

[9. Notwithstanding the provisions of this Article, the Parties may establish temporary exchange controls in cases where there is fundamental disequilibrium in the Balance of Payments of the Party receiving the investment.] 

[9. Small economies may also restrict transfers in cases of severe balance of payments difficulties given the volatility and vulnerability of their economies.] 

[9. Without prejudice to this Article, each Party may limit transfer in accordance with the provisions contained in this Agreement relating to the Balance of Payments.] 

Article 10:  EXPROPRIATION AND COMPENSATION 

[1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of the other Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment (“expropriation”), except: 

(a) for a public purpose [or for reasons of public order [and] [or] social interest] [, as provided in the annex to this article] [in accordance with the national legislation of the Parties]; 

(b) on a non-discriminatory basis; 

(c) in accordance with due process of law [and Article] [on Fair and Equitable Treatment] [ __ (Minimum Standard of Treatment)]; and 

(d) on payment of compensation in accordance with [paragraphs 2 through 4] [paragraphs 2, 3, 5 y 9].] 

[1. No Party shall adopt measures to nationalize or expropriate, or any measure having the same effect, investments in its territory owned by investors from other Parties, unless such measures are adopted in the public or social interest, on a non-discriminatory basis and in accordance with due process of law. Such measures shall include provisions for the payment of a prompt, adequate and effective compensation.] 

[1. Investments or returns of investors of a Party shall not be nationalized, expropriated or subjected to measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as "expropriation") in the territory of another Party, except for a public purpose, under due process of law, in a non-discriminatory manner and against prompt, adequate and effective compensation. The extent of such compensation is to be determined through negotiation between the Party concerned and the affected investor and shall seek to provide fair recompense for the action taken.] 

[1. No Party shall expropriate or nationalize the investments of investors of another Contracting Party that are established in its territory nor enforce measures with equivalent effects, unless such measures are adopted in the cases provided for in the Political Constitutions of the Contracting Parties in accordance with the Law, on a non-discriminatory basis and upon prompt, adequate and effective compensation.] 

[2. Compensation shall be equivalent to the fair market value of the expropriated investment immediately before [any expropriation measure, adopted, or in the process of being adopted, is announced or published or made known publicly in any other way.] [the expropriation took place (date of expropriation), and shall not reflect any change in value occurring because the intended expropriation had become known earlier]. Valuation criteria may include going concern value, asset value, including declared tax value of tangible property and other criteria, as appropriate, to determine fair market value.] 

[2. The amount of such compensation shall be based on the market value of the expropriated investment immediately before the nationalization or expropriation was made public and shall include interest from the date of the expropriation until the date of payment.] 

[2. The compensation referred to in the previous paragraph shall be equivalent to the fair price of the investment immediately before the measures were adopted or before the measures were made public, whichever is earlier, and shall include interest accrued between the date of expropriation and the date of payment. Such compensation shall be freely realizable in accordance with the article on Transfers in this Chapter.] 

[3. a) Compensation shall be paid without delay and be fully realizable.] 

[3. b) If payment is made in a G7 currency, compensation shall include interest at a commercially reasonable rate for that currency from the date of expropriation until the date of actual payment.] 

[4. The amount paid as compensation shall be no less than the equivalent amount that, according to the rate of exchange prevailing on the date of the determination of the fair market value, would have been paid on such date to the investor subject to the expropriation, [in a freely usable currency in which the investment would have been made] [in a freely convertible currency in the international financial market.] Compensation shall include payment of interest from the date on which the investor has been dispossessed of [the expropriated asset] [the expropriated investment] until the date of payment, which shall be based on an average deposit rate of interest in the national banking system of the Party where the expropriation is carried out.] 

[5. Upon payment, compensation shall be freely transferable as provided in Article ___ (Transfers).] 

[5. Payments shall be freely transferable at the current exchange rate.] 

[6. The investor affected shall have a right, under the law of the Party making the expropriation, to prompt review, by a judicial or other independent authority of that Party, of its case and of the valuation of its investment or returns.] 

[6. An investor whose investment was subject to the measures referred to in this article shall be entitled to a review of his case and an assessment by the competent authorities of the Contracting Party that adopted it.] 

[7. For purposes of this article and for greater certainty, a non-discriminatory measure of general application shall not be considered a measure tantamount to an expropriation of [a debt instrument] [a debt security] or loan covered by this chapter solely on the ground that the measure imposes costs on the debtor that results in default on the debt.] 

[8. If one Party or one of its agencies makes a payment to an investor of a Party pursuant to an insurance against non-commercial risks to an investment of that investor, the Party in whose territory the investment was made shall recognize the subrogation of the Party, or of any of its agencies, having made such payment, to the rights or titles of the investor, for the purposes of obtaining the relevant compensation.] 

[9. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the TRIPS Agreement.] 

[10. Nothing in the provisions of this Agreement shall prevent, in accordance with the Law and to serve the public or social interest, the establishment of monopolies with the discretion to allocate revenue, subject to compensation of the investors that are deprived of their exercise of a licit economic activity. The provisions of this article shall apply in such cases.] 

Article 11: COMPENSATION FOR LOSSES 

[1. Investors of a Party, whose investments in another Party have incurred losses owing to war or other armed conflict, national state of emergency, uprising, insurrection or riots in the territory of the other Party shall, as a consequence thereof, receive treatment no less favorable than that accorded to their own investors or to the investors of other States as regards restitution, compensation or other form of indemnification.] 

[1. Each Party shall accord investors of another Party whose investments have been adversely affected in their territory as a result of armed conflicts or civil strife, [acts of God or force majeure (natural disasters),] non-discriminatory treatment with respect to [reparation, compensation or other settlement] [any measure adopted or maintained] in relation to [those] [such] losses.] 

[1. Where investors of one of the Contracting Parties incur losses because their investments have been adversely affected as a result of war, armed conflict, state of national emergency, civil strife or other similar events in the territory of the other Contracting Party, the latter shall accord those investors treatment no less favorable than that it accords its own investors and those of any other agreement, with regard to restitution, compensation or other settlement.] 

[1. Investors of a Contracting Party which suffer losses in their investments in the territory of the other Contracting Party, as a consequence of war, armed conflict, revolution, state of emergency, insurrection, or other similar situations, shall receive from that Contracting Party and in accordance with accepted principles of International Law in respect of reparation, compensation, or other settlement or indemnification, treatment no less favorable than that accorded to its own investors or investors of third States, whichever is more favorable.] 

[1. Investors of a Party who suffer losses because their investments or returns on the territory of another Party are affected by an armed conflict, a national emergency or a natural disaster on that territory, shall be accorded by that Party, in respect of restitution, indemnification, compensation or other settlement, treatment no less favorable than that which it accords to investors of any other State. Such compensation as may be granted shall be reinvested in the host country. Smaller economies may delay payment of compensation for balance of payments reasons and may prioritize payments to meet national development objectives.] 

[1. An investor of a Party which has suffered losses relating to its investment in the territory of another Party due to war or other armed conflict, revolution, national emergency, insurrection, civil disturbance, or similar events shall be accorded by the latter Party, as regards restitution, indemnification, compensation or any other settlement, treatment no less favorable than that which it accords to its own investors or to investors of any third State, whichever is more favorable to the investor.] 

[1. Without prejudice to the provisions of the fair and equitable treatment and to paragraph 6 (b) of the article on Reservations and Exceptions, each Party shall accord to the investors of another Party and to the investments of investors of another Party whose investments suffer losses in its territory as a result of armed conflicts or civil strife, non-discriminatory treatment in respect of any measures that it may or maintain in relation to such losses.] 

[2. Notwithstanding the preceding paragraph, an investor of a Party which, in any of the situations referred to in that paragraph, suffers a loss in the territory of another Party resulting from: 

(A) requisitioning of its investment or part thereof by the latter’s forces or authorities; or 

(B) destruction of its investment or part thereof by the latter’s forces or authorities, which was not required by the necessity of the situation, 

shall be accorded by the latter Party restitution or compensation which in either case shall be prompt, adequate and effective and, with respect to compensation, shall be in accordance with Article X [expropriation].] 

[2. The provisions of the previous paragraph does not apply to existing measures related to subsidies or onations that may be inconsistent with the provisions of the article on national treatment, except for what is provided for in paragraph 6(b) of the article on Reservations and Exceptions.] 

Article 12: GENERAL EXCEPTIONS AND RESERVATIONS 

[1. Any Party may present general exceptions, reservations and specific exceptions.] 

General Exceptions 

[1. Among general exceptions, all actions for the protection of international peace and security shall be permitted.] 

[1. Nothing in this Agreement shall prevent a Party from adopting or enforcing measures it deems necessary to: -

a) Protect public morality; 

b) Prevent crime and maintain public order; 

c) Protect or maintain its essential security interests; 

d) Protect human, animal and plant life; 

e) Protect the balance of payments and react to balance of payments difficulties; 

f) Secure compliance with laws or regulations relating to the prevention of deceptive and fraudulent practices and the effects of a default on contracts; 

g) Secure compliance with laws relating to taxation; 

h) Protect disadvantaged persons/minorities or regions;

i) Secure compliance with laws or regulations relating to the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; 

j) Protect national treasures of artistic, historical, anthropological, paleantological and archaeological value; 

k) Give effect to international obligations including treaties on the avoidance of double taxation; and 

l) Give effect to benefits granted as a result of agreements establishing customs unions, common markets, economic or monetary unions, or similar arrangements.] 

[2. Parties shall be permitted to adopt measures necessary for maintaining public order in cases where a genuine threat or act could affect a fundamental societal interest.] 

Reservations 

[1. Parties may present reservations regarding specific provisions and definitions of this Agreement. Parties may also present specific exceptions, in a schedule attached to the Agreement, for the purpose of excluding measures and/or sectors of economic activity in the application of provisions of the Agreement. For the purpose of presenting the country schedules of exceptions, and in order to ensure the necessary transparency, the following criteria shall be applied: 

a) Sector in which the exception is to be applied 

b) Sub-sector 

c) Specific obligations to be excepted 

d) Nature and specification of the measure (law, regulation, rule, ruling, or equivalent) 

e) Concise description of the measure.] 

[1. Articles____(National Treatment), _____(Most-Favored-Nation Treatment),____ (Performance Requirements) [and_______(Senior Management and Boards of Directors)] [and ___ (Senior Management)] shall not apply to: 

[any non-conforming measure that is maintained or adopted by a Party, regardless of the level or type of government, in section A “Non-Conforming Measures” of the Annex on “Non-Conforming and Future Measures,” which shall be listed at the time of the entry into force of this Agreement. Measures adopted by a Party shall not be more restrictive than those existing at the time the measure is implemented.] 

[(a) any existing non-conforming measure that is maintained by: 

(i) a Party at the national, or federal or state level, as set out in its schedule [in Annex I or III] [in the Annex on Existing Measures]; or 

(ii) a local or municipal government. 

b) the continuation or prompt renewal of any non-conforming measure referred to in sub-paragraph (a); or 

(c) the modification of any non-conforming measure referred to in paragraph (a), to the extent that such modification does not decrease the conformity of the measure, as it existed immediately before the modification, with Articles______ (National Treatment),______ (Most-Favored-Nation Treatment), _______(Performance Requirements) [and ____ Senior Management] [and ______ (Senior Management and Boards of Directors)].]] 

[1. Parties to this Agreement may maintain measures which are inconsistent with general provisions of this Chapter or which provide for special treatment for particular sectors of their economy, including activities reserved for the State, in consideration of national developmental objectives. Such reservations shall be listed in an Annex to the Chapter in a manner to be agreed upon by the Parties. Parties shall commence negotiations to remove some or all of these reservations within three (3) years of the entry into force of the Agreement. Smaller economies shall be entitled to maintain such reservations as are necessary to achieve their national development objectives and will be able to remove reservations at a slower pace than other Parties.] 

[2. Articles ___(National Treatment), ___(Most-Favored-Nation Treatment), ___(Performance Requirements) [and ___(Senior Management and Boards of Directors)] [and ___ Senior Management] shall not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors or activities, as set out [in section B “Future Measures” of the Annex on Non-Conforming and Future Measures,” which shall be listed at the time of the entry into force of this Agreement] [in its schedule in the Annex on Future Measures] [in Annex II].] 

[3. Article_______(Most-Favored-Nation Treatment) does not apply to treatment accorded by a Party pursuant to agreements or with respect to sectors, set out in its schedule [in the Annex on most-favored-nation treatment] [in Annex IV].] 

[4. Articles______(National Treatment),______(Most-Favored-Nation Treatment) [and _______ (Senior Management and Boards of Directors)][and ___ Senior Management] do not apply to: 

(a) procurements by a Party or a state enterprise; or 

(b) subsidies, [or donations] [or grants], including government-supported loans, guarantees and insurance provided by a Party or a State enterprise[, except as provided in Article (Compensation for Losses)].] 

[5. No Party shall, under to any measure adopted after the date of entry into force of this Agreement and covered by its schedule to [the Annex on Future Measures] [Annex II], require an investor of another Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.] 

[6.The articles on National Treatment and Most-Favored-Nation Treatment do not apply to any measure that constitute exceptions or exemptions from the obligations of a Party under the Agreement on Trade-Related Aspects of Intellectual Property Rights which is part of the WTO Agreement, as specifically stipulated in that Agreement.] 

[7. The provisions of: 

(a) sub-paragraphs (1)(a), (b) and (c), and 3(a) and (b) of the Article on Performance Requirements shall not apply to qualification requirements for goods or services with respect to export promotion and foreign aid programs; 

(b) sub-paragraphs (1)(b), (c), (f) and (g), and 3(a) and (b) of the Article on Performance Requirements shall not apply to procurement by a Party or a state enterprise; and 

(c) sub-paragraphs 3 (a) and (b) of the Article on Performance Requirements shall not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas.] 

[8. The articles on National Treatment, Most-Favored-Nation Treatment, Performance Requirements and Senior Management do not apply to functions that are carried out in accordance with special or voluntary investment.7 ] 

Article 13:  DISPUTE SETTLEMENT 

[1. The application of dispute settlement mechanisms shall be limited to acts or events that occurred or began after the entry into force of the Agreement.] 

[2. Disputes that arise as a result of direct or indirect governmental administrative decisions of a regulatory or enforcement nature shall not be subject to the dispute settlement provisions of this Agreement, provided that such decisions are consistent with the legislation of the respective Party and with the articles of this Agreement regarding national treatment and most-favored-nation treatment.] 

Continuation: [ Article 14: State-to-State Disputes

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6 [A delegation advises that a provision will be included to protect the faculty of central banks to restrict transfer rights.] 

7 [One delegation reserves the right to present changes to this paragraph, in relation to special investment regimes.]

 
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