Trade policy review

(3)Foreign Investment Regime

1.The principal agency responsible for the management and promotion of foreign investment in Grenada is the Grenada Industrial Development Corporation (GIDC), a statutory body established by an Act of Parliament in 1985. Under the policy guidance of the Ministry of Finance and the Ministry of Trade, where appropriate, its primary objective is to promote employment in Grenada through encouraging foreign investment whenever possible. Although the GIDC has identified agri-processing, information communication technology, tourism, and financial services as areas of interest, it is not limited to dealing with investment in those areas alone. Grenada welcomes any foreign investment likely to have positive effects on income, employment, skills development, energy savings, the country's foreign exchange profile, or likely to promote technology transfers domestically. Foreign investors are encouraged to enter and operate enterprises in all fields of lawful economic activity except in very small-scale and low-technology services activities, especially in areas where local capacity exists.⁴

2.With one exception, foreign investment in Grenada is not subject to any restrictions, and foreign investors receive national treatment. The only restriction is a requirement for foreign investors to obtain an Alien Landholding Licence to hold property, an interest in land, real estate or shares. These licences involve the payment of 10% of the value of the land or interest in the real estate or shares to be purchased. Licences are granted once applications have been properly submitted to Cabinet for consideration and fees have been paid.

3.Incentives for foreign investment in Grenada are governed by a number of Acts including the Investment Code Incentives Act of 1983, (the Investment Code) the Fiscal Incentives Act of 1974, and the Hotel Aids Act of 1954 (see Chapter III(3)(ii)). Benefits under the Investment Code, which allows the Minister of Finance to increase or extend concessions granted to investors already based in Grenada, include full repatriation of capital or profits arising out of an investment in Grenada; full income tax exemptions for any profits related to the investment; and consideration of depreciation in plant and machinery and hotel buildings in calculating property or other taxes. If not granted an exemption under the Fiscal Incentives Act, foreign investment profits are subject to a 30% tax rate. Grenada has a withholding tax of 15% and a 5% tax on the sale of property.

4.Grenada’s Economic Reform Programme 2006-08 introduced a new investment incentive policy, aimed at increasing the predictability, stability, and transparency of the legal regime for investment, while promoting the development of international best practices on investment. The programme outlined a series of measures including the cessation of tax holidays, measure adopted as from 1 January 2006, and the enactment before end 2007 of a single Investment Act.

5.Grenada has signed bilateral investment treaties with the United Kingdom and the United States.⁵ The Grenada/United Kingdom Investment Treaty, signed on 25 February 1998 for a duration of ten years, covers investment in all kind of assets and property rights, including intellectual property rights, and concessions to search for or exploit natural resources. Investments by nationals or companies of each contracting party are granted national treatment in the other country, and are also subject to an MFN engagement. The Grenada/United States Investment Treaty, signed on 2 May 1986, entered into force on 3 March 1989. Apart from investment, the treaty covers a non-exhaustive list of five groups of specific rights, including: traditional property rights; rights in companies; monetary claims and titles to performance associated with an investment; intellectual property rights; and rights conferred by law or contract or any licences and permits pursuant to law.

6.Grenada has double taxation arrangements with other CARICOM Member States through the Revised Treaty. Grenada has signed a tax information and exchange agreement (TIEA) with the United States, under which the two parties are obliged to exchange information relating to the enforcement of tax laws.

(4)International Relations

(i)World Trade Organization

1.Prior to Independence, on 7 February 1974, Grenada applied the GATT de facto as a member of the metropolitan territory of the United Kingdom. Grenada became a GATT contracting party on 9 February 1994, under Article XXVI:5(c) with its rights and obligations under GATT retroactive to the date of Independence.⁶ Grenada became a WTO Member in February 1996 and extends at least MFN treatment to all its trading partners.

2.Under the GATS, Grenada made initial commitments on tourism (hotels development), recreational (entertainment and sporting services), communications (telecommunications and courier services) and financial (reinsurance) services. Grenada presented an offer in the extended WTO negotiations on telecommunications, but did not participate in the extended negotiations on financial services. Grenada subscribed to the Fourth Protocol on basic telecommunications on 4 December 1997 and the agreement entered into force 5 February 1998.⁷ In March 2003, Grenada submitted an initial offer in the new services negotiations pursuant to the DDA.⁸ Grenada has not yet submitted a revised offer in the negotiations.

3.Although Grenada has not enacted a Uruguay Round Act, it has begun the process of incorporating the WTO Agreements into domestic law (see Chapter III). To the extent that some of the Agreements have been incorporated into domestic law, private individuals can invoke WTO provisions in domestic courts.

4.Grenada has made an important effort concerning notifications to the WTO. While it had made no notifications prior to 2001, it has submitted notifications in several areas since then (Table II.2).

Table II.2

Notifications to the WTO, 2001-07

WTO Agreement	Description	Document symbol
Anti-dumping (Article 18.5 and 32.6)	No laws relevant to the Agreement Notification of laws relevant to the Agreement	G/ADP/N/1/GRD/1 15 November 2001 G/ADP/N/1/GRD/2 5 April 2002
Import Licensing (Article 1.4a and 8.2b)	Notification of Import Licensing Procedures Replies to Questionnaire on Import licensing Procedures	G/LIC/N/1/GRD/1 10 April 2002 G/LIC/N/3/GRD/119 October 2006
Services Article V7(A) GATS	Notification as part of CARICOM of the removal of restrictions to the right of establishment and the provision of services among members	S/C/N/229 19 February 2003
Subsidies and Countervailing Measures (SCM) Article XVI.I GATT 1994 and Article 25 SCM	No specific subsidies within the meaning of the Agreement New and full notification of programmes forming the basis of a request for extension	G/SCM/N/71/GRD 15 November 2001 G/SCM/N/71/GRD/Suppl.1 19 March 2002 G/SCM/N/71/GRD/Suppl.2 12 November 2002 G/SCM/N/95/GRD 2 July 2003 G/SCM/N/99/GRD 2 July 2003
SCM Article 18.5 and 32 SCM Article 27.4	No laws relevant to the Agreement Notification of laws relevant to the Agreement Request for extension of time for the grant of certain subsidies	G/SCM/N/1/GRD/1 15 November 2001 G/SCM/N/1/GRD/2 5 April 2002 G/SCM/N/74/GRD 11 January 2002 G/SCM/N/74/GRD/Suppl.1 26 March 2002 G/SCM/N/114/GRD 1 July 2004 G/SCM/N/123/GRD 8 July 2005 G/SCM/N/128/GRD 8 July 2005 G/SCM/N/123/GRD/Corr.1 26 July 2005 G/SCM/N/128/GRD/Corr.1 26 July 2005 G/SCM/N/146/GRD 10 July 2006
TBT (Article10.6)	Notification of guidelines for various products	G/TBT/N/GRD/1-10, 30 April 2002- 5 July 2004
TRIPS (Article63.2)	Notification of main dedicated laws relating to intellectual property	IP/N/1/GRD/1 5 March 2002 IP/N/1/GRD/P/2, IP/N/1/GRD/C/2, and IP/N/1/GRD/C/1 12 March 2002 IP/N/1/GRD/P/1 IP/N/1/GRD/I/2, IP/N/1/GRD/I/1, and IP/N/1/GRD/D/1, 18 March 2002 IP/N/1/GRD/I/3 17 July 2002

Source: WTO Secretariat.

5.Grenada has been more active in the WTO since 2001, principally through its membership of CARICOM. It has supported the resumption of the Doha Round, as an active participant in ACP-EC ministerials, and has supported the need for special and differential treatment for developing WTO Members, as well as flexibilities for small and vulnerable economies in the negotiations. Grenada also supported a request in the Committee on Subsidies and Countervailing Measures for an extension of time for the continued grant of export subsidies until the year 2018, together with a number of other developing WTO Members.⁹ Together with these countries, Grenada has argued that the extension is necessary in order to allow more time for "fuller integration of small and vulnerable economies into the multilateral trading system."¹⁰

6.Grenada has not been a complainant or defendant in any case before the DSB. It has been a third party in one case: European Communities – Regime for the Importation, Sale and Distribution of Bananas.¹¹

(ii)Preferential agreements and arrangements

1.Grenada is a founding member of the Caribbean Community and Common Market (CARICOM), and of the Organization of Eastern Caribbean States (OECS, see Overview Report). Grenada is a traditional supporter of integration within the OECS and is committed to the establishment of the common market, which should result in the free movement of goods, services, persons, and capital. As a CARICOM  member, Grenada expects to benefit from the resulting economic integration, cooperation in non-economic areas, operation of certain common services, and coordination of foreign trade policies. Grenada expects the impact of the deepening integration within the OECS and CARICOM to be beneficial to its economy, resulting in increased investment, enhanced competitiveness, and terms-of-trade gains.

2.Grenada is a beneficiary of the Revised Cotonou Agreement, under which it receives favourable access to the U.K. market in particular for its banana exports. Exports from Grenada also enjoy preferential access to the Canadian market through CARIBCAN. Grenada is a beneficiary under the U.S. Caribbean Basin Initiative (CBI)¹²; the share of Grenada's exports under the CBI and CARIBCAN is low (Table AI.3).

3.As a member of CARICOM, Grenada has been involved in negotiations between the EC and CARIFORUM, which represents a negotiating partnership between CARICOM and the Dominican Republic, since 2004. The objective of the negotiations is to conclude an Economic Partnership Agreement between the parties (see Overview Report Chapter II(4)).

4.Grenada's products are eligible for the Generalized System of Preferences (GSP) schemes of Australia, Canada, the EC, Japan, New Zealand, Switzerland, and the United States. Although these preferential arrangements have helped secure markets for Grenada’s products, exports remain low. The authorities suggest that supply-side constraints have impeded Grenada's efforts to take advantage of preferential agreements and arrangements.