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Agreement between the Government of the United States and the Government of the United States and the Government of the Federated States of Micronesia regarding the Investment Development Fund of the Federated States of Micronesia concluded pursuant to section 111 c of the United States Public Law 99-239 [1986] PITSE 18 (11 July 1986)

AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES AND THE GOVERNMENT OF THE UNITED STATES AND THE GOVERNMENT OF THE FEDERATED STATES OF MICRONESIA REGARDING THE INVESTMENT DEVELOPMENT FUND OF THE FEDERATED STATES OF MICRONESIA CONCLUDED PURSUANT TO SECTION 111 c OF THE UNITED STATES PUBLIC LAW 99 – 239

(Washington, Kolonia, Pohnpei, 11 July 1986)
ENTRY INTO FORCE : 11 JULY 1986

This Agreement is concluded by the Signatory Governments and sets forth their mutual understanding and agreements with respect to the Investment Development Fund to be established pursuant to Section 111(b) of United States Public Law 99-239 and the Board of Advisors for the Investment Development Fund to be established pursuant to Section 111(c) of United States Public Law 99-239. The signatory governments accept that the purposes of the Investment Development Fund include the furtherance of close economic and commercial relations between the United States and the Federated States of Micronesia and the encouragement of the productive presence of citizens and commercial enterprises of the United States in the Federated States of Micronesia.

Article I

Definition of Terms

Except as otherwise provided in this Agreement, the Definition of Terms set forth in Article I of the Agreement Concerning Procedures for the Implementation of United States Economic Assistance, Programs and Services Provided in the Compact of Free Association between the Government of United States and the Government of the Federated States of Micronesia is incorporated in full into this Agreement.

Article II

Establishment and Administration of Investment Development Fund

1. The Government of the Federated States of Micronesia shall establish and administer, in accordance with the provisions of this Agreement, an Investment Development Fund (hereinafter "Fund").

2. The Government of the United States shall transfer to the account of the Government of the Federated States of Micronesia, in accordance with paragraph 1(c) of Article II of the Agreement Concerning Procedures for the Implementation of United States Economic Assistance, Programs and Services Provided in the Compact between the Government of the United States and the Government of the Federated States of Micronesia, the following sums for payment to the Fund:

(a) the sum of $12 million on the first day of the first full fiscal year after the effective date of the Compact or as soon as procedurally possible thereafter;

(b) the sum of $8 million on the first day of the third full fiscal year after the effective date of the Compact or as soon as procedurally possible thereafter; and

(c) such additional sums as are, from time to time, made available by the Government of the United States in accordance with Section 111(d) of United States Public Law 99-239.

3. The Government of the Federated States of Micronesia shall cause the Fund to be invested or otherwise obligated in order to maximize the amount of monies available for distribution in accordance with this Agreement. The corpus of the Fund, at any time, shall include contributions made to the Fund by the Government of the United States pursuant to paragraph 2 of this article, any repayments to such Fund by recipients of distributions, and any interest and earnings on such monies, minus distributions from the Fund. The Government of the United States shall not impose transaction fees or intermediary charges on the investment of the Fund in instruments of the Government of the United States.

4. The Fund shall be owned and administered exclusively by the Government of the Federated States of Micronesia and the Government of the Federated States of Micronesia shall make loans, grants, or other distributions from the Fund in furtherance of the purposes set forth in paragraph 6 of this Article and in accordance with the distribution guidelines to be promulgated by the Government of the Federated States of Micronesia pursuant to paragraph 7 of this Article. Upon expiration or termination of this Agreement the Fund shall be owned by the Government of the Federated States of Micronesia without condition.

5. Distributions from the Fund shall in no way obligate or create liability in the Government of the United States.

6. The purpose of the Fund is to compensate the Federated States of Micronesia, in part, for the adverse impacts on the finances and economy of such area resulting from the effect of the amendments contained in Title IV of United States Public Law 99-239 on the tax and trade provisions of the Compact. The Fund is intended to further close economic and commercial relations between the United States and the Federated States of Micronesia, to encourage investment and productive participation in economic development in the Federated States of Micronesia by citizens and commercial enterprises of the United States and the Federated States of Micronesia, particularly through joint ventures between United States and Federated States of Micronesia citizens and commercial enterprises, to provide alternative methods for addressing the tax and trade incentives affected by Title IV of United States Public Law 99-239, and to encourage the private sector employment and training of citizens of the Federated States of Micronesia and the productive utilization of the natural resources, manpower resources, and other resources of the Fed rated States of Micronesia.

7. The Government of the Federated States of Micronesia shall promulgate specific guidelines for distributions from the Fund, including guidelines relating to the nature of projects, programs and studies to be supported, the qualifications of recipients, and the terms for loans, grants and other distributions from the Fund.

8. The Government of the Federated States of Micronesia may use a reasonable portion of the Fund for administrative expenses of the Fund, including payments for the salaries and expenses of Fund employees, reimbursements for employees assigned to the Fund by the Government of the United States or the Government of the Federated States of Micronesia, expenses for the Board of advisors for the Fund, and technical assistance and consultancy services.

9. Pursuant to Section 226 of the Compact, the Government of the United States shall provide technical assistance, including training assistance, to the Government of the Federated States of Micronesia in administering the Fund, including technical and training assistance from the Office of Productivity, Technology and Innovation, U.S. Department of Commerce, in establishing an organization for managing the Fund, in evaluating proposals, and in eliciting interest from United States citizens and commercial enterprises.

Article III
Board of Advisors

1. Pursuant to Section 111(c) of United States Public Law 99-239, there is hereby established a board of Advisors for the Investment Development Fund of the Federated States of Micronesia (hereinafter "IDF Advisory Board" or "Board").

2. The IDF Advisory Board shall consist of eight persons appointed as follows:

(a) five persons appointed by the President of the Federated States of Micronesia or his designee, at least two of who shall be noted for their experience in business enterprises in the Federated States of Micronesia;

(b) two persons appointed by the President of the United States or his designee, each of whom shall be a citizen of the United States, none of whom shall be an official or employee of the Government of the United States, and each of whom shall be noted for their accomplishments, expertise, and experience in international business and industrial development; and

(c) the United States Representative to the Federated States of Micronesia.

3. The Government of the United States, in appointing its members to the IDF Advisory Board pursuant to subparagraph 2(b), shall consult with and afford the Government of the Federated States of Micronesia an opportunity to comment on its prospective candidates prior to their appointment or reappointment.

4. Members of the IDF Advisory Board shall serve at the pleasure of their appointing authority and may be removed with or without cause. Members of the IDF Advisory Board who are not officials or employees of the Government of the United States or who are not serving in their capacity as officials or employees of the National o r State Governments of the Federated States of Micronesia shall serve for a term of two years, and may be reappointed. Members of the IDF Advisory Board who are serving in the capacity of officials or employees of the National or State Governments of the Federated States of Micronesia shall serve for a term of three years while in office, and may be reappointed. The United States Representative shall serve during his incumbency; PROVIDED, that if a vacancy exists in such office, the acting or deputy United States Representative shall serve as a member of the Board until such vacancy is filled. A vacancy on the IDF Advisory Board shall be filled in the same manner as the original appointment for the remainder of any term.

5. The President of the Federated States of Micronesia shall designate the Chairman of the IDF Advisory Board and the Government of the United States shall designate the Vice Chairman. Appointments to the IDF Advisory Board shall be made as soon as practicable, and not later than 90 days after the effective date of this Agreement. The Chairman of the IDF Advisory Board shall call the organizational meeting of the IDF Advisory Board as soon as all initial appointments are made to the Board; PROVIDED, that organization of the IDF Advisory Board shall not be a prerequisite to transfer of the United States contributions pursuant to paragraph 2 of Article II of this Agreement or actions by the Government of the Federated States of Micronesia in administering the Fund.

6. The IDF Advisory Board shall adopt bylaws. The bylaws shall provide for regular meetings of the Board and for special meetings of the Board to be called by the Chairman on his own initiative or upon the petition of one-third of the members of the Board. Adequate written notice shall be given to all members of the Board prior to the convening of any Board meeting.

7. A quorum shall consist of a majority of all members of the Board. All business shall be conducted by a majority of those present unless otherwise provided by the bylaws of the Board. in the case of a tie vote on any issue before the Board, the issue shall be decided in accordance with the vote of the Chairman of Board.

8. The Board may appoint an executive committee for the transaction of business in the recess of the Board, which shall consist of not less than three members and not more than five members.

9. Members of the IDF Advisory Board who are not officials or employees of the Government of the United States shall receive per diem at standard Federated States of Micronesia National Government rates while on the business of the Board. Members of the IDF Advisory Board who are not officials or employees of the United States or of the National or State Governments of the Federated States of Micronesia may be authorized a reasonable honorarium at the discretion of the Board. These costs shall be financed by distributions from the Fund as requested by the Chairman of the Board. Costs for participation on the business of the IDF Advisory Board by a Board member who is an official or employee of the Government of the United States shall be borne by the Government of the United States, and such participation shall be considered to be included within the general responsibilities of such official or employee.

10. The IDF Advisory Board shall have the following duties and responsibilities:

(a) to review and provide comments to the Government of the Federated States of Micronesia on the guidelines to be promulgated pursuant to paragraph 7 of Article 11 of this Agreement;

(b) to provide advice and guidance to the Government of the Federated States of Micronesia on the evaluation of appropriate proposals and recipients for distributions from the Fund; PROVIDED, that the Board shall provide its comments within a reasonable period of time as determined by the Government of the Federated States of Micronesia;

(c) to recommend proposals for distributions from the Fund, subject to the review and approval of the Government of the Federated States of Micronesia;

(d) to review and provide comments to the Government of Federated States of Micronesia on the annual reports required by paragraph 1 of Article IV of this Agreement; and

(e) to assist the Government of the Federated States of Micronesia in the design and implementation of programs to attract investment and productive participation in economic development in the Federated States of Micronesia by citizens and commercial enterprises of the United States.

11. The Government of the Federated States of Micronesia shall provide such staff support and assistance as the IDF Advisory Board requests and the Government of the Federated States of Micronesia approves. The Government of the United States may provide additional staff support and assistance at its discretion and expense.

Article IV

Annual Reports, Consultation and Dispute Resolution

1. The Government of the Federated States of Micronesia shall provide to the Government of the United States by the first day of the third fiscal quarter of each year or as soon as practicable thereafter an annual report concerning the administration of the Investment Development Fund in the fiscal year most recently expired. Such annual report may be issued separately or, in whole or part, as a component of the annual report required by Section 211(c) of the Compact. The annual report shall include any relevant information specified in paragraph 3(c) of Article III of the Agreement Concerning Procedures for the Implementation of United States Economic Assistance, Programs and Services Provided in the Compact of Free Association between the Government of the United States and the Government of the Federated States of Micronesia, the information provided for in Section 111(d) of United States Public Law 99-239, and such other information as the Government of the Federated States of Micronesia deems appropriate.

2. The annual conference required by paragraph 3(d) of Article III of the Agreement Concerning Procedures for Implementation of United States Economic Assistance, Programs and Services Provided in the Compact of Free Association between the Government of the United States and the Government of the Federated States of Micronesia, shall include discussion of matters relating to the Investment Development Fund.

Disputes arising under the terms of this Agreement shall be resolved in accordance with the conference and dispute resolution procedures set forth in Article II of Title Four of the Compact of Free Association. The IDF Advisory Board may provide comments on any disputes arising under the terms of this Agreement.

Article V

Effective Date, Amendment and Duration

1. This Agreement shall come into effect on the later of the effective date of the Compact or the date that the Government of the Federated States of Micronesia confirms to the Government of the United States is the date of the completion of its applicable statutory processes with respect to this Agreement.

2. The provisions of this Agreement may be amended at any time by mutual agreement of the Government of the United States and the Government of the Federated States of Micronesia.

3. This Agreement shall remain in full force and effect until the fifteenth anniversary of the effective date of the Compact of Free Association, until terminated by mutual agreement, or until the expiration or termination of the provisions of Title Two of the Compact, whichever occurs first.

4. This Agreement may be accepted by signature or otherwise, by the Government of the United States and the Government of the Federated States of Micronesia. Each government shall possess an original English language version.

IN WITNESS WHEREOF, the undersigned, duly authorized, have signed this Agreement Between the Government of the United States and the Government of the Federated States of Micronesia Regarding the Investment Development Fund of the Federated States of Micronesia Concluded Pursuant to Section 111(c) of United States Public Law 99-239, which shall come into effect in accordance with its terms.

DONE AT Washington D.C., THIS 11th DAY OF July, ONE THOUSAND, NINE HUNDRED AND EIGHTY-SIX FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA

DONE AT Kolonia, Pohnpei, THIS 11th DAY OF July ONE THOUSAND, NINE HUNDRED AND EIGHTY-SIX FOR THE GOVERNMENT OF THE FEDERATED STATES OF MICRONESIA