wp195

Upload: faiz-ahmed

Post on 06-Jan-2016

215 views

Category:

Documents


0 download

TRANSCRIPT

  • Working Papers N

    o. 195

    August 2000

    From GATT to WTO and Beyond

    S. P. Shukla

  • 818:RUOG,QVWLWXWHIRU'HYHORSPHQW(FRQRPLFV5HVHDUFK818:,'(5

    :RUNLQJ3DSHUV1R

    )URP*$77WR:72DQG%H\RQG

    636KXNOD

    $XJXVW

    7KLV VWXG\ KDV EHHQ SUHSDUHG ZLWKLQ WKH 818:,'(5 SURMHFW RQ 1HZ5ROHV DQG )XQFWLRQV IRU WKH 8QLWHG 1DWLRQV DQG WKH %UHWWRQ :RRGV,QVWLWXWLRQVZKLFKLVGLUHFWHGE\3URIHVVRU'HHSDN1D\\DU8QLYHUVLW\RI'HOKL

    818:,'(5 JUDWHIXOO\ DFNQRZOHGJHV WKH ILQDQFLDO FRQWULEXWLRQV WR WKHSURMHFW E\ WKH 0LQLVWU\ IRU )RUHLJQ $IIDLUV RI )LQODQG DQG WKH 8QLWHG1DWLRQV'HSDUWPHQWRI(FRQRPLFDQG6RFLDO$IIDLUV'LYLVLRQ IRU6RFLDO3ROLF\DQG'HYHORSPHQW

    636KXNODLVWKHIRUPHU)LQDQFH6HFUHWDU\RIWKH*RYHUQPHQWRI,QGLD

  • 818:RUOG,QVWLWXWHIRU'HYHORSPHQW(FRQRPLFV5HVHDUFK818:,'(5$UHVHDUFKDQGWUDLQLQJFHQWUHRIWKH8QLWHG1DWLRQV8QLYHUVLW\

    7KH%RDUGRI818:,'(5

    1RUD/XVWLJ+DUULV0XWLR0XOH-XNND3HNNDULQHQ9LFH&KDLUSHUVRQ5XEHQ

  • LLL

    &217(176

    $%675$&7 LY

    ,1752'8&7,21

    , *$77,76%,57+$1')($785(6

    7KH+DYDQD&KDUWHU,72DQGLWVGHPLVH

    ,, 7+5(('(&$'(62)*$77

    7DULIIUHGXFWLRQFDXVHRUFRQVHTXHQFHRIJURZWK" 'HYHORSLQJFRXQWULHV*$77VUHVSRQVH $JULFXOWXUH 7H[WLOHVDQGFORWKLQJ &RQIOLFWLQJUHDFWLRQVKDOIZD\VROXWLRQV

    ,,, &5,6,6$1''(128(0(17

    $JJUHVVLYHXQLODWHUDOLVP 86LQLWLDWLYH*$77PLQLVWHULDOPHHWLQJ 7RZDUGVDQHZURXQGFRQIOLFWDQGDYLDPHGLD 7KH3XQWDGHO(VWHVROXWLRQ )URPWKH3XQWDGHO(VWHVROXWLRQWRWKH0RQWUHDOVWDOHPDWH

    7KHFRPSURPLVH$SULO

    ,9 :72$3$5$',*06+,)7

    (OHPHQWVRIWKH:72V\VWHPROGDQGQHZ 1HZGLVFLSOLQHV

    9 )52075,803+72),$6&2

    9, :+$7,672%('21(

    6WUDWHJLFFRQVLGHUDWLRQV ,QVWLWXWLRQDODQGSURJUDPPDWLFFRPSOHPHQWV

    $11(; 7KHODZHPERG\LQJSDUDGLJPVKLIW

    127(6

    5()(5(1&(6

  • LY

    $%675$&7

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

    7KHODVWSDUWRIWKH:RUNLQJ3DSHUDWWHPSWVWRGHOLQHDWHZKDWLVWREHGRQH7KHSRVVLELOLW\RI DGHJUHHRIPRGHUDWLRQ LI QRW UHGUHVV WR WKH RQJRLQJSURFHVV RI LQHTXLWDEOH LQWHJUDWLRQ FDQ HPHUJH RQO\ LI IRUPDO GHPRFUDWLFUHSUHVHQWDWLRQ DV PDQGDWHG LQ WKH FRQVWLWXWLRQ RI :72 LV VWUDWHJLFDOO\H[HUFLVHGE\WKRVHPDMRULW\PHPEHUVZKREHDUWKHFRVWVRILQWHJUDWLRQ

  • ,1752'8&7,21

    7KH REMHFW RI WKLV SDSHU LV WR DQDO\VH WKH HYROXWLRQ RI WKH LQWHUQDWLRQDOWUDGLQJV\VWHPIURPLWVLQFHSWLRQDVWKH*HQHUDO$JUHHPHQWRQ7DULIIVDQG7UDGH *$77 LQ WR LWV ODWHVW LQFDUQDWLRQ LQ WKH IRUP RI WKH:RUOG7UDGH2UJDQL]DWLRQ :72 FRPSULVLQJ WKH FRPSOH[ DUUD\ RI DJUHHPHQWVIRUPLQJLWVVXEVWDQFHDQGPDQGDWH7KHVWXG\IRFXVHVRQWKHDGHTXDF\RUWKH LQDGHTXDF\ RI WKH V\VWHP DV LW HYROYHG DQG IXQFWLRQHG LQ DQHQYLURQPHQWRIFKDQJLQJLQWHUQDWLRQDOHFRQRPLFDQGSROLWLFDO UHDOLW\7KHVWXG\DOVRDWWHPSWVWRJUDSSOHZLWKWKHPRUHGLIILFXOWTXHVWLRQRIORRNLQJDWWKHIXWXUHSURVSHFWVRIWKHV\VWHPWKHVWUDLQVWKDWLWZLOOQHHGWRIDFHDQGWKH VXEVHTXHQW FKDQJHV WKDW DUH FDOOHG IRU LQ LWV DSSURDFK FRQWHQW DQGIXQFWLRQLQJ WDNLQJLQWRDFFRXQWWKHIXWXUHJRYHUQDQFHQHHGVRI WKHZRUOGHFRQRP\DQGSROLW\

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

    , *$77,76%,57+$1')($785(6

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

  • -DFNVRQ,QRWKHUZRUGV *$77ZDVFRQVWUXFWHGRXWRIROGWUDGH DJUHHPHQW OXPEHU UHDG\ DW KDQG 6QDSH 1DWXUDOO\ WKHUHVXOWV ZHUH QRW TXLWH OLNH WKH QHDW PRGHOV RI WUDGH WKHRU\ EDVHG RQ WKHFRPSDUDWLYH DGYDQWDJH SULQFLSOH QRU ZHUH WKH\ LQ DFFRUGDQFH ZLWK WKHSROLWLFDOUKHWRULFRIIUHHWUDGH

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

    (LJKWEDVLFSULQFLSOHVFKDUDFWHUL]HGWKHV\VWHPWKDWHPHUJHG

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

    LL 7KH SURKLELWLRQ RI TXDQWLWDWLYH UHVWULFWLRQVDQG WKH DFFHSWDQFH RIWDULIIV LH SULFHEDVHG PHDVXUHV DV WKH RQO\ OHJLWLPDWH WRRO IRUUHJXODWLQJ H[WHUQDO WUDGH 7KLV LV SURYLGHG LQ $UWLFOH ;, ZKLFKDJDLQ KDV FHUWDLQ EXLOWLQ H[FHSWLRQV 7KH PDMRU H[FHSWLRQ ZDVLQWURGXFHG E\ WKH 8QLWHG 6WDWHV ZLWK WKH DLP RI DGDSWLQJ WKHSULQFLSOHWRVXSSRUWLWVV\VWHPRIGRPHVWLFDJULFXOWXUDOVXSSRUW

    LLL 7KH SULQFLSOH RI QDWLRQDO WUHDWPHQW UHFRUGHG LQ $UWLFOH ,,,VWLSXODWHV WKDW LQWHUQDO WD[HV RU UHJXODWLRQV PXVW QRW EH XVHG WRPRGHUDWHRUFRXQWHUDFWWDULIIUDWHVDQGFRQFHVVLRQV

    LY 7KHIRXUWKHOHPHQWUHODWHVWRWKHSURFHVVRIWDULIIQHJRWLDWLRQVDQGWKH XQGHUO\LQJ SULQFLSOH RI UHFLSURFLW\ 7KH SURFHVV RI WDULII

  • UHGXFWLRQQHJRWLDWLRQVLVEDVHGODUJHO\RQWHFKQLTXHVUHILQHGLQWKH$PHULFDQUHFLSURFDOWUDGHDJUHHPHQWV

    Y 7KHILIWKIHDWXUHXVXDOO\UHIHUUHGWRDVUHWDOLDWLRQLVUHODWHGWRWKHVDQFWLRQ RIIHUHG E\ WKH V\VWHP 7KLV LV WKH XOWLPDWH ZHDSRQSURYLGHGLQ$UWLFOH;;,,,WREHXVHGDIWHUDOORWKHUPHDVXUHVVXFKDV FRQVXOWDWLRQ LQYHVWLJDWLRQ DQG DGMXGLFDWLRQ KDYH EHHQH[KDXVWHG

    YL 7KH VDIHJXDUG PHFKDQLVP $UWLFOH ;,; FDQ EH DSSOLHG LQHPHUJHQF\VLWXDWLRQVZKHUHH[FHVVLYH LPSRUWVRIDSURGXFW FDXVHRU WKUHDWHQ WR FDXVH VHULRXV LQMXU\ WR GRPHVWLF SURGXFHUV RI OLNHSURGXFWDQGWKHSDUW\DIIHFWHGLVIUHHWRVXVSHQGLWVREOLJDWLRQRUWRPRGLI\ LWVFRQFHVVLRQLQ UHVSHFWRI WKHSURGXFW LQTXHVWLRQ WR WKHH[WHQWQHFHVVDU\WRSUHYHQWRUUHPHG\WKHLQMXU\

    YLL 7KH VHYHQWK HOHPHQW LV WKH UDWKHU REYLRXV RQH RI *$77 EHLQJGHVLJQHG WR GHDO ZLWK LQWHUQDWLRQDO LH FURVVERUGHU WUDGH LQJRRGV

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

    7KH+DYDQD&KDUWHU,72DQGLWVGHPLVH

    7KH+DYDQD&KDUWHU ,72ZDV WKH UHVXOW RI WKHPXOWLODWHUDOL]DWLRQ RI DQHDUOLHU ELODWHUDO SURFHVV IRUPXODWLQJ D SRVWZDU LQWHUQDWLRQDO WUDGH RUGHU5HIOHFWLQJ FRQFHUQV RI WKH ZLGHU JOREDO FRPPXQLW\ LW ZDV TXDOLWDWLYHO\GLIIHUHQW IURP *$77 LQ LWV HPSKDVLV RQ HPSOR\PHQW GHYHORSPHQW DQGUHFRQVWUXFWLRQJRDOVLWVSHUFHSWLRQRIWKHIDLOXUHRIWKHPDUNHWLQDUHDVRIFRPSHWLWLRQDQGFRPPRGLWLHVLWVUHFRJQLWLRQRIWKHUROHRIJRYHUQPHQWVLQPDLQWDLQLQJ KLJKHU OHYHOV RI HPSOR\PHQW UHJXODWLQJ IRUHLJQ LQYHVWPHQW

  • FRUUHFWLQJ PDUNHW IDLOXUHV LQ FRPPRGLWLHV DQG SUHYHQWLQJ UHVWULFWLYHEXVLQHVV SUDFWLFHV DQG ILQDOO\ LWV DGRSWLRQ RI D OHVV DV\PPHWULFDODSSURDFKWRWKHREOLJDWLRQVWREHXQGHUWDNHQE\PHPEHUV

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

  • ,, 7+5(('(&$'(62)*$77

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

    7DULIIUHGXFWLRQFDXVHRUFRQVHTXHQFHRIJURZWK"

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

    +RHNPDQDQG.RVWHFNL7KHLPSDFWRIWDULIIFXWVZDVIDUOHVVRQSURGXFWVRIH[SRUWLQWHUHVWWRGHYHORSLQJFRXQWULHV

    6WDUWLQJIURP WKHQH[W\HDUVZHUHDUHPDUNDEOHHUDRIHFRQRPLFXSVZLQJDVLQGXVWULDOFRXQWULHVUHFRUGHGDQXQSUHFHGHQWHGUDWHRIJURZWK:LWKRXWDGRXEWDQLPSRUWDQWVWLPXOXVIRUJURZWKLQWKLVSHULRGZDVWUDGH%XWLWQHHGVWREHUHPHPEHUHGWKDWWUDGHFRXOGLQFUHDVHEHFDXVHSURGXFWLRQIDFLOLWLHV LQ WKH ZDUGHYDVWDWHG HFRQRPLHV RI (XURSH ZHUH EHLQJ

  •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

    7XVVLH7KH FXPXODWLYH LPSDFW RI WKHVH WHQGHQFLHV HYHQWXDOO\OHG WR D YDVW HVFDODWLRQ LQ LQWUDFRUSRUDWLRQ WUDGH ,W DOVR OHG WR WKHLQWHUQDOL]DWLRQ RI WDULIIV DQG WRZKDW 7XVVLH FDOOV SDLQOHVV WDULIIFXWWLQJ7KH WDULIIFXWWLQJ H[HUFLVH LQ WKLV VLWXDWLRQ DSSHDUHG WR EH PRUH WKHFRQVHTXHQFH WKDQ WKH FDXVH RI WUDGH H[SDQVLRQ 2U SXWPRUH DFFXUDWHO\ERWK SKHQRPHQDZHUH FDXVHGE\ EDVLF FKDQJHV LQ LQYHVWPHQW SDWWHUQV DVZHOODVLQWKHRUJDQL]DWLRQDODVSHFWVRISURGXFWLRQ

    $QRWKHU IDFWRUXQGHUO\LQJ WKH WDULII UHGXFWLRQ H[HUFLVH XQGHU WKH DHJLVRI*$77ZDVOLQNHGWRWKHVLPSOHSROLWLFDODQGVWUDWHJLFREMHFWLYHRIWKHFROGZDU

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

  • HQYLURQPHQW 7KXV WKH ZLGHO\ KHOG EHOLHI WKDW *$77 WDULII UHGXFWLRQVFDXVHG WKH SKHQRPHQDO WUDGH H[SDQVLRQ DQG JURZWK GRHV QRW VHHPZDUUDQWHG(YHQOHVVVRXQGZRXOGDSSHDUWKHFODLPWKDWVXFKFDXVDOOLQNDJHLVYDOLGIRUDOOVLWXDWLRQVDQGWLPHV

    'HYHORSLQJFRXQWULHV*$77VUHVSRQVH

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

    6HFRQG LQ *$77 FRPPLVVLRQHG DQ H[SHUW VWXG\ XQGHU WKHFKDLUPDQVKLSRI0U+DEHUOHURQGHYHORSLQJFRXQWU\ WUDGHSUREOHPVVXFKDV WKH ORZ H[SRUW JURZWK IOXFWXDWLQJ FRPPRGLW\ SULFHV DQGSURWHFWLRQLVWSROLFLHV RI WKH LQGXVWULDO FRXQWULHV RQ DJULFXOWXUH ,Q WKH SDQHOVXEPLWWHG LWV UHSRUW SRSXODUO\ NQRZQ DV WKH +DEHUOHU 5HSRUW 7KHVXEVWDQFH RI WKH UHSRUW ZDV WKDW WKH SUHGLFDPHQW RI WKH XQGHUGHYHORSHGFRXQWULHV ZDV GXH LQ QR VPDOO PHDVXUH WR WKH WUDGH SROLFLHV RI WKHGHYHORSHGFRXQWULHV'DP

  • 7KH UXOHV RQ WDULII QHJRWLDWLRQV ZHUH DOVR FULWLFL]HG ,Q VKRUW WKHGHYHORSLQJFRXQWULHVIDFHGDGRXEOHKDQGLFDSWKHLQGXVWULDOFRXQWULHVZHUHQRW IROORZLQJ VSHFLILF*$77 UHJXODWLRQV DIIHFWLQJ WKHLU DUHDV RI LQWHUHVWDQGWKHEDVLFUXOHVRI*$77ZHUHZHLJKWHGDJDLQVWWKHP

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

  •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

    $JULFXOWXUH

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

    &RQVLGHULQJWKHWUDFNUHFRUGRIWKHWZRPDMRUSRZHUVLWLVQRVXUSULVHWKDW*$77VDJULFXOWXUDOUHJLPHZDVPDUNHGE\OD[GLVFLSOLQHRQTXRWDVOHVVHU

  • ELQGLQJV RQ WDULIIV OLWWOH GLVFLSOLQH RQ GRPHVWLF VXSSRUW RU VXEVLGL]DWLRQDQG D PHUH DSSHDO WR DYRLG H[SRUW VXEVLGLHV ZKLFK ZRXOG GLVWXUE WKHUHODWLYHVKDUHVLQWKHZRUOGPDUNHW$OOWKLVJURVVO\KXUWWKHWUDGHSURVSHFWVRIHIILFLHQWSURGXFHUVLQFOXGLQJPDQ\GHYHORSLQJFRXQWULHV

    7H[WLOHVDQGFORWKLQJ

    $GLVFULPLQDWRU\DQGUHVWULFWLYHUHJLPHZDVFODPSHGRQHIILFLHQWSURGXFHUVRI WH[WLOHVEHJLQQLQJZLWK-DSDQ/DWHURQWKHJURXQGV WKDW LPSRUWV IURP

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

    7KH WKLUG GHFDGH RI *$77 ZDV PDUNHG E\ LQFLSLHQW VWUDLQV LQ RWKHULQGXVWULDOVHFWRUVWKDWZHUHWRSODJXHWKHV\VWHPLQWRWKHV7KH\ZHUHREYLRXVLQWKHVWHHODQGDXWRPRWLYHLQGXVWULHVRIWKH8QLWHG6WDWHVDVZHOODVLQWKH((&7KH$PHULFDQHFRQRP\ZDVDOUHDG\GLVSOD\LQJVLJQVRILOO

  • KHDOWK %XW FDXVLQJ JUHDWHU FRQFHUQ ZHUH WKH GHYHORSPHQWV LQ WKH ZRUOGPRQHWDU\V\VWHPDVWKHXQGHUSLQQLQJVRIWKHSRVWZRUOGZDUV\VWHPZHUHXQUDYHOOLQJ DQG WKLV HQYLURQPHQW FRQWULEXWHG WR WKH SUHVVXUHV WKDWHQGDQJHUHGWKHWUDGLQJV\VWHPLQV

    &RQIOLFWLQJUHDFWLRQVKDOIZD\VROXWLRQV

    7ZR PDMRU UHDFWLRQV HQVXHG 2QH DFFHQWXDWHG WKH V\VWHPV LQKHUHQWWHQGHQF\RIH[FOXVLRQZKLOHWKHRWKHUIRFXVVHGRQWKHKRSHRIUHIRUPLQJLIQRWUHSODFLQJWKHV\VWHP7KHODXQFKRIWKH7RN\R5RXQGRI071 PDUNHG WKH IRUPHU DOWKRXJK DW WKDW WLPH H[FOXVLYLW\ ZDV UDWKHUVXEGXHGDFTXLULQJLWVYLUXOHQWIRUPRQO\ODWHULQWKHV7KHWKLUGZRUOGLQLWLDWLYH LQ WKH8QLWHG1DWLRQV IRU WKH QHZLQWHUQDWLRQDOHFRQRPLFRUGHU

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

    7KH WHQGHQF\ RI H[FOXVLRQ PDQLIHVWHG LQ YDULRXV ZD\V $XWKRULW\ IRUQHJRWLDWLRQV IRU WKH7RN\R5RXQGZDVREWDLQHGE\ WKH86DGPLQLVWUDWLRQZLWK D SURPLVH RI PRUH HIIHFWLYH UHDG PRUH UHVWULFWLYH DQG PRUHH[WHQVLYH V\VWHP WR JRYHUQ WKH WH[WLOH WUDGH ZLWK WKH 0XOWLILEUH$UUDQJHPHQW6HULRXVFRQFHUQVZHUHUDLVHGE\WKH8QLWHG6WDWHVDERXW WKH LPSOLFDWLRQV RI WKH LQFUHDVLQJ PHPEHUVKLS RI GHYHORSLQJFRXQWULHVLQ*$773URSRVDOVIRUWUDGHUHIRUPZHUHLQWURGXFHGWRHOXGHWKH

    IRUFHRIQXPEHUVORJLFDQGWRNHHSFRQWURORIWKHGHFLVLRQPDNLQJSURFHVVZLWK WKH WUDGLQJ PDMRUV DQG WKH VRFDOOHG FRGH RU VLGH DJUHHPHQW

    DSSURDFKHPHUJHGSURPLQHQWO\DW*$77

    'XULQJWKH7RN\R5RXQGFRGHVZHUHGHILQHGRQVXFKQRQWDULIIPHDVXUHVDV JRYHUQPHQW SURFXUHPHQW VXEVLGLHV GXPSLQJ DQG FRXQWHUYDLO 8QOLNHWDULIIV WKHVH FRGHV LPSLQJHG PRUH FORVHO\ RQ GRPHVWLF SROLFLHV DQGUHTXLUHG D GHJUHH RI FRPPRQDOLW\ LQ DSSURDFK DQG FLUFXPVWDQFHV 7KHUH

  • ZDV D WHQGHQF\ DPRQJ WKH WUDGLQJPDMRUV WR OLPLW FRGH QHJRWLDWLRQV WR DVPDOO JURXS RI LQGXVWULDO FRXQWULHV WR SUHVHQW WKH RXWFRPH WR RWKHUPHPEHUV DV PRUH RU OHVV D IDLW DFFRPSOL DQG WR H[WHQG EHQHILWV WRVLJQDWRULHVRQO\8QGHUGHYHORSHGFRXQWULHVYLHZHGWKHVHQHJRWLDWLRQVZLWKPLVJLYLQJ&RGHVWKXVDUWLFXODWHGDQGFRQGLWLRQDOO\DQGVHOHFWLYHO\DSSOLHGYLRODWHG WKH EDVLF SULQFLSOH RI QRQGLVFULPLQDWLRQ DQG WKUHDWHQHG WKHLQWHJULW\RIWKH*$77V\VWHPSHUSHWUDWLQJ\HWDQRWKHUH[FOXVLRQ

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

    ,,, &5,6,6$1''(128(0(17

    7KH \HDUV LQ*$77V KLVWRU\ZHUH WXUEXOHQW DQG IXOO RI WURXEOHEHFDXVH RI SUHVVXUHV LQGXFHG E\ WKH FKDQJLQJ JOREDO HFRQRPLF

  • HQYLURQPHQW DQG WKH LQDELOLW\ RU XQZLOOLQJQHVV RI WKH WUDGLQJ PDMRUV WRDELGH E\ WKH UXOHV WKH\ WKHPVHOYHV KDG VHW XS 7KH WXUEXOHQFH ZDVH[DFHUEDWHGEHFDXVHRIWKHFKDUDFWHULVWLFPDQQHULQZKLFKWKHPDMRUVWULHGWR IRUFH D GHQRXHPHQW WR WKHLU RYHUZKHOPLQJ DGYDQWDJH ILQDOO\VXFFHHGLQJ,WLVWKLVDVSHFWWKDWZHWXUQWRQRZ

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

    'HPDQG IRU SURWHFWLRQJUHZ IDVW LQ WKH8QLWHG 6WDWHV )OH[LEOH H[FKDQJHUDWHV DQG DEVHQFH RI FRRUGLQDWLRQ RI PDFURHFRQRPLF SROLFLHV DPRQJ WKHPDMRU LQGXVWULDOL]HGQDWLRQVSURYLGHGD FRQJHQLDO DWPRVSKHUH IRU FULHVRI

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

  • $JJUHVVLYHXQLODWHUDOLVP

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

    /RZ

    86LQLWLDWLYH*$77PLQLVWHULDOPHHWLQJ

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

  •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

    7RZDUGVDQHZURXQGFRQIOLFWDQGDYLDPHGLD

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

    7KH QH[W WZR \HDUV ZHUH ILOOHG ZLWK FRQWURYHUVLHV PRYHV DQG FRXQWHUPRYHVDQGWRUWXRXVQHJRWLDWLRQVDWWKHIRUPDODVZHOODVLQIRUPDOOHYHOV,WZDV QRW XQWLO 6HSWHPEHU WKDW WKH QHZ URXQG FRXOG EH LQLWLDWHG 1RSUHYLRXV*$77URXQGKDGEHHQODXQFKHGZLWKVRORQJDJHVWDWLRQSHULRGRUVRDFXWHODERXUSDLQV7KHUHDVRQZDVVLPSOHWKHVWDNHVZHUHKLJKIRUDOODVDOOSDUWLHVZHUHDFXWHO\DZDUH

    $VVWDWHGHDUOLHUWKHVHUYLFHVLVVXHZDVDWWKHFRUHRIWKH$PHULFDQDJHQGDIRUWUDGHQHJRWLDWLRQV2SSRVLWLRQE\WKHGHYHORSLQJFRXQWULHVZDVDWRQHOHYHOURRWHGLQWKHLUFROOHFWLYHPHPRU\RIWKHFRORQLDOSHULRG$WDQRWKHUOHYHOLWVUDWLRQDOHOD\LQDVRSKLVWLFDWHGDQDO\VLVRIWKHFRQWHPSRUDU\VWDJHLQ WKH GHYHORSPHQW RI JOREDO FDSLWDOLVP DQG LWV SHUFHLYHG GDQJHUV WR WKHWKLUG ZRUOGV DXWRFHQWULF SXUVXLW RI GHYHORSPHQW 'HYHORSLQJ FRXQWULHVZHUH DSSUHKHQVLYH WKDW DFFHVV IRU WKHLU JRRGV WR WKH PDUNHWV RI WKH

  •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

  •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

    7KH3XQWDGHO(VWHVROXWLRQ

    $FFRUGLQJ WR WKH IRUPDO SRVLWLRQ RI WKH JURXS RI WHQ OHG E\ ,QGLD DQG%UD]LOWKHUHFRXOGEHQRQHJRWLDWLRQVRQVHUYLFHVLQWKHQHZ*$77URXQG7KH FRPSURPLVH KDPPHUHG RXW LQ WKH FRPPRQ ZRUNLQJ SODWIRUP

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

    7KHRWKHUWZRQHZLVVXHVYL]WUDGHUHODWHGLQYHVWPHQWPHDVXUHV75,06DQGWUDGHUHODWHGLQWHOOHFWXDOSURSHUW\ ULJKWV 75,36ZHUH WDFNOHGODUJHO\ZLWKLQ WKH FRQILQHV RI WKH UHOHYDQW*$77DUWLFOHVZLWK WKH RXWFRPH WKDWWKH UHVXOWLQJ PDQGDWHV ZHUH PRGHVW DQG GLG QRW WUDQVJUHVV WKH *$77IUDPHZRUN

    ,QVXPWKHRXWFRPHRIWKH3XQWDGHO(VWHPHHWLQJRQWKHQHZLVVXHVZDVIDUVKRUWRIWKHREMHFWLYHVRIWKH8QLWHG6WDWHV%XWWKH86GLGVXFFHHGLQ

  • JHWWLQJ WKH QHZ URXQG RI PXOWLODWHUDO WUDGH QHJRWLDWLRQV ODXQFKHG ZLWKVHUYLFHV DV SDUW RI LW 7KLVZDV DV ODWHU GHYHORSPHQWVZRXOG EHDU RXW DIXUWKHUPLOHVWRQHRQWKHLUPDUFKWRZDUGWKHJRDORIWUDQVIRUPLQJ*$77

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

    )URPWKH3XQWDGHO(VWHVROXWLRQWRWKH0RQWUHDOVWDOHPDWH

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

  • RI WKH HQIRUFHPHQWPHFKDQLVPZKLFKZDV QRW DYDLODEOH LQ RWKHU IRUXPVOLNHWKH:RUOG,QWHOOHFWXDO3URSHUW\2UJDQL]DWLRQ:,32

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

    2Q WKH TXHVWLRQ RI 75,36 KRZHYHU GLVDJUHHPHQW DQG FRQIOLFW ZHUHLQHYLWDEOH JLYHQ WKH XQFRPSURPLVLQJ VWDQFH RI WKH GHYHORSHG FRXQWULHV7KHGLIIHUHQFHVEHWZHHQ WKH WZRRSSRVLQJYLHZVZHUH WRR IXQGDPHQWDOWREHUHVROYHG

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

  • WKH VSHFWDFOH RI WRWDO IDLOXUH %XW QRZ LW ZDV WKH WXUQ RI WKH ILYH /DWLQ$PHULFDQFRXQWULHVZKRKDGEHHQSURPLQHQW LQ WKHDJULFXOWXUHH[SRUWHUV

    FRDOLWLRQWRLQVLVWWKDWDOORWKHULVVXHVEHSXWRQKROGXQWLOWKHDJULFXOWXUDOTXHVWLRQKDGEHHQUHVROYHG

    2QWKHVXEMHFWVRIWH[WLOHVDQGFORWKLQJDQGVDIHJXDUG,QGLDLQFUHDVHGWKHVWDNHVE\LQVLVWLQJWKDWDGHILQLWHWLPHWDEOHEHVHWIRULQWHJUDWLQJWKHWH[WLOHVWUDGHLQWR*$77,WDOVRDVNHGIRUDQXQTXDOLILHGDQGDSULRULUHFRJQLWLRQRIQRQGLVFULPLQDWLRQDVWKHFRUQHUVWRQHRIWKHVDIHJXDUGGLVFLSOLQHDQGDQDJUHHPHQWWRUHPRYHDOOGLVFULPLQDWRU\WUDGHUHVWULFWLRQV7KLVZDVLQWKHH\HV RI 86 DQG ((& DQ DWWHPSW WR SUHMXGJH WKH XOWLPDWH UHVXOWV RI WKHQHJRWLDWLRQV D IDFWZKLFK WKH\ FRQVLGHUHG XQDFFHSWDEOH DQG WKHVH LVVXHVDOVRUHPDLQHGGHDGORFNHG

    $V D UHVXOW DW WKH HQG RI WKH 0RQWUHDO PLGWHUP PLQLVWHULDO PHHWLQJ LQ'HFHPEHUWKHDFKLHYHPHQWVLQRWKHUDUHDVZHUHSXWRQKROGSHQGLQJUHVROXWLRQ RI WKH SUREOHPV LQ DJULFXOWXUH 75,36 WH[WLOHV DQG VDIHJXDUG7KH\ZHUHH[SHFWHGWREHUHVROYHGLQWKHVXEVHTXHQWIRXUPRQWKVWKURXJKWKHHIIRUWVRIWKHGLUHFWRUJHQHUDO

    7KHFRPSURPLVH$SULO

    $JULFXOWXUH

    %\ $SULO D FRPSURPLVH EHFDPH SRVVLEOH RQ WKH TXHVWLRQ RIDJULFXOWXUHDVWKH$PHULFDQVKDGJLYHQXSWKHDPELWLRXVDQGXQUHDOL]DEOH]HUR]HURRSWLRQDQG((&KDGPRYHGFORVHUWRDFFHSWLQJWKHUHGXFWLRQRIEDUULHUV WRDJULFXOWXUDO WUDGH$JUHHPHQWZDVEDVHGRQ WKH ORQJWHUPJRDORI VXEVWDQWLYH SURJUHVVLYH UHGXFWLRQ LQ ERUGHU SURWHFWLRQ DV ZHOO DV DOOWUDGHGLVWRUWLQJVXSSRUWPHDVXUHV$IUHH]HRQGRPHVWLFDQGH[SRUWVXSSRUWOHYHOVFDOFXODWHGZLWKUHIHUHQFHWRWKHDJUHHGEDVHOHYHORIZDVWREHPDGHHIIHFWLYHLPPHGLDWHO\

    75,367KHJLYHDZD\

    2QWKHTXHVWLRQRI75,36WKHUHZDVLQWKHQDPHRIFRPSURPLVHDPDMRUJLYHDZD\ E\ WKH GHYHORSLQJ FRXQWULHV &RQWUDU\ WR WKHLU HDUOLHU UHVROXWHVWDQFH WKH\YLUWXDOO\ DFFHSWHG WKH FKDLUPDQV SURSRVDOVZKLFK HVVHQWLDOO\UHIOHFWHG WKH VWDQGRI WKH LQGXVWULDO FRXQWULHVZLWK VRPH LQVLSLG YHUELDJHWKURZQLQRVWHQVLEO\WRPHHWWKHFRQFHUQVRIGHYHORSLQJFRXQWULHV7KXVWKHGHYHORSHGFRXQWULHV VXFFHHGHG LQJHWWLQJZKDW WKH\KDGEHHQ VWULYLQJ

  • IRU VLQFH WKH 3XQWD GHO (VWH PHHWLQJ 7KH LQHYLWDEOH IDOORXW IURP WKLVFDSLWXODWLRQ ZRXOG XQGHUPLQH WKH HIIRUWV RI NHHSLQJ H[WUDQHRXV VXEMHFWVRXWRI*$77DQGLWVHQIRUFHPHQWPHFKDQLVP,WPDUNHGWKHEHJLQQLQJRIWKHQHZH[SDQGHG*$77DVFRQFHSWXDOL]HGE\WKH86,WDOVRPDUNHGWKHHQGRI WKHGHYHORSLQJFRXQWU\ UHVLVWDQFHWKDWKDGEHHQYRLFHGVLQFHPLQLVWHULDOPHHWLQJ

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

    7H[WLOHVDQGFORWKLQJDQGVDIHJXDUG

    7KH WZR RWKHU RXWVWDQGLQJ LVVXHV QDPHO\ WH[WLOHV DQG FORWKLQJ DQGVDIHJXDUG ZHUH VTXDUHG XS ZLWKRXW FRQFHGLQJ WKH EDVLF SRLQWV UDLVHG E\,QGLD 7KLV ZDV WR EH H[SHFWHG EHFDXVH XSSLQJ WKH DQWH WKDW ,QGLD KDGGRQH GXULQJ WKH FORVLQJ VWDJHV LQ 0RQWUHDO ZDV HVVHQWLDOO\ WDFWLFDO WRLPSURYHWKHEDUJDLQLQJSRVLWLRQRQ75,36DQGRQFHPHPEHUVKDGUHOHQWHGRQ WKDW FUXFLDO LVVXH LWZDVSRLQWOHVV IRU ,QGLD WRNHHSKROGLQJRQ WR WKHWDFWLFDOSRVLWLRQLQRWKHUDUHDV

    7KHFROODSVHRIWKH%UXVVHOVPLQLVWHULDOPHHWLQJ

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

  •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

    )URP%UXVVHOVWR0DUUDNHVKIRXUPDMRUGHYHORSPHQWV

    7KH SHULRG EHWZHHQ PLQLVWHULDO PHHWLQJV KHOG LQ %UXVVHOV LQ 'HFHPEHU DQG 0DUUDNHVK LQ $SULO ZKLFK XVKHUHG LQ WKH :RUOG 7UDGH2UJDQL]DWLRQ:72ZDVPDUNHGE\IRXUVLJQLILFDQWGHYHORSPHQWV

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

  •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

    7RZDUG WKH HQG RI DOO WKHVH PRYHV FXOPLQDWHG LQ D IXOOIOHGJHGSURSRVDOIRUWKHHVWDEOLVKPHQWRI072WKXVKHUDOGLQJWKHSDUDGLJPVKLIW

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

  • $SHFXOLDUEDFNWRIURQWDSSOLFDWLRQRIWKHFRQVHQVXVUXOLQJZDVLQYHQWHGDGHSDUWXUH IURP WKH'XQNHO'UDIW 7H[WZDV SHUPLWWHG RQO\ LI WKHUHZDV DFRQVHQVXV LQIDYRXURIVDLGGHYLDWLRQ&RQVHTXHQWO\ WKHUHZHUHYHU\ IHZPRGLILFDWLRQVWRWKHGUDIWWH[WZLWKWKHH[FHSWLRQRIDJULFXOWXUHZKHUHWKHWZRPDMRUV LQYROYHGDJUHHG WR LQFRUSRUDWH VRPHFKDQJHV7KH UHVWRI WKHGUDIW UHPDLQLQJ ODUJHO\ DV SUHVHQWHG E\ WKH GLUHFWRUJHQHUDO HYHQWXDOO\EHFDPH LQFRUSRUDWHG LQ WKH)LQDO$FW WKDWZDV VXEVHTXHQWO\DSSURYHG IRUDGRSWLRQE\WKHPLQLVWHUVDW0DUUDNHVKLQ$SULO

    7KLV SURFHVV RI DFKLHYLQJ D FRQVHQVXV ZDV QRQWUDQVSDUHQW DQGXQGHPRFUDWLF ,W IRUFHG D SDUDGLJP VKLIW RQ UHOXFWDQW PHPEHUV6WUDLJKWIRUZDUG OHJDO DYHQXHV DYDLODEOH LQ WKH *$77 WUHDW\ KDG EHHQE\SDVVHGDQGUHQGHUHGLQHIIHFWLYHLQRUGHUWRHOLPLQDWHWKHSRVVLELOLW\RIDQRSSRVLQJGHFLVLRQ7KHIHDURIWKHIRUFHRIQXPEHUVZDVDWWKHURRWRIWKHPDQRHXYUHV DQG DOO GHYLFHV KDG EHHQ HPSOR\HG WR NHHS QRUPDO UXOHVXQRSHUDWLRQDEOHDQGLQVXVSHQVLRQ

    7KHWKLUGGHYHORSPHQWZDV((&VSURJUHVVZLWKLWVUHIRUPRI&$3ZKLFKZDVPDLQO\GULYHQE\WKHUHDOL]DWLRQWKDWIURPDEXGJHWDU\SHUVSHFWLYHLWVVXSSRUW SROLFLHV ZHUH XQVXVWDLQDEOH /RZ 7KLV XOWLPDWHO\PDGHSRVVLEOHWKH86((&DFFRUGRQWKHTXHVWLRQRIDJULFXOWXUHNQRZQDVWKH%ODLU+RXVH$FFRUGRI1RYHPEHU7KHURDGWRWKHFRQFOXVLRQRIWKH8UXJXD\5RXQGKDGEHHQFOHDUHGRQFHWKHWZRPDMRUVIRXQGDPXWXDOO\VDWLVIDFWRU\VHWWOHPHQWRQWKHLVVXHWKDWKDGEHHQUHVSRQVLEOHIRUWKHIDLOXUHRIWZRHDUOLHUPLQLVWHULDOPHHWLQJV

    $QGWKHIRXUWKVLJQLILFDQWIDFWRUZDVUHODWHGWRWKH86VSXUVXLWRIUHJLRQDOWUDGH LQLWLDWLYHVZLWK&DQDGD0H[LFR DQG WKH /DWLQ $PHULFDQ FRXQWULHV2EYLRXVO\ WKH8QLWHG6WDWHVZDVVHULRXVO\H[SORULQJUHJLRQDODOWHUQDWLYHV7KHPHVVDJHZDVWKDWPXOWLODWHUDOLVPZDVDFFHSWDEOHSURYLGHGWKDWLWZDVFDVWLQDGHVLJQPRXOGHGE\86,ILWZHUHQRWVRFDVWRWKHURSWLRQVZHUHRSHQLQGHHGWKHVHRSWLRQVZHUHEHLQJKDUQHVVHGWRVKDSHPXOWLODWHUDOLVPDFFRUGLQJWRWKH$PHULFDQFKRLFH

    3HWHU6XWKHUODQGWKHGLUHFWRUJHQHUDORI*$77GHVFULEHGWKHHYHQWDWWKHFRQFOXVLRQRI WKHQHJRWLDWLRQVRQ'HFHPEHU ZKHQ WKH)LQDO$FW(PERG\LQJ WKH 5HVXOWV RI WKH 8UXJXD\ 5RXQG RI 0XOWLODWHUDO 7UDGH1HJRWLDWLRQV *$776HFUHWDULDW ZDV DSSURYHG IRU DGRSWLRQ E\ WKHPLQLVWHUVDVDGHILQLQJPRPHQWLQKLVWRU\,QZKDWZD\ZHVKDOOVRRQVHH

  • ,9 :72$3$5$',*06+,)7

    7KHVWDJHKDGQRZEHHQVHWIRUXVKHULQJLQWKH:RUOG7UDGH2UJDQL]DWLRQDW WKH PLQLVWHULDO PHHWLQJ DW 0DUUDNHVK 0RURFFR VFKHGXOHG IRU $SULO7KHRXWFRPHWKDWHPHUJHGZDVQRWMXVW*$77,,RU*$773OXVLWZDVQRWKLQJVKRUWRIDSDUDGLJPVKLIW

    *$77ZDVGHVLJQHG WRGHDOZLWK FURVVERUGHU WUDGH LQ JRRGV LW DYRLGHGLQYROYHPHQWLQGRPHVWLFSROLF\PDNLQJ*$77DOVRFRQIHUUHGWKHSULYLOHJHRI PRVWIDYRXUHGQDWLRQ WUHDWPHQW RQ LWV PHPEHUV 7KLV 0)1 SULYLOHJHFRXOGQRWEHDEULGJHGRU LQIULQJHGZLWKQHZFRQGLWLRQDOLWLHVRUDGGLWLRQDOREOLJDWLRQVH[FHSWE\DPHQGPHQWWRWKHEDVLFWHQHWLQ$UWLFOH,WKDWKDGWKHXQDQLPRXVDJUHHPHQWRIDOOFRQWUDFWLQJSDUWLHV7KH:72V\VWHPWKDW LVWRVD\WKHDUUD\RIDJUHHPHQWVGHFODUDWLRQVGHFLVLRQVDQGXQGHUVWDQGLQJVWKDWWKH:72$JUHHPHQWFRPSULVHVKDVVXSHUVHGHGERWKDVSHFWV

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

  • KDV EHHQ UHQGHUHG LQHIIHFWLYH (DUOLHU WKLV YHWR KDG EHHQ DYDLODEOH WR DOO*$77PHPEHUVLUUHVSHFWLYHRIWKHLUWUDGHZHLJKW

    (OHPHQWVRIWKH:72V\VWHPROGDQGQHZ

    :LWK UHVSHFW WR ROG WRSLFV DJULFXOWXUH WH[WLOHV DQG FORWKLQJ DQG VRPHV\VWHPLFLVVXHVQHHGPHQWLRQ

    $JULFXOWXUH

    ,Q DJULFXOWXUH *$77 KDG JHQHUDOO\ IROORZHG WKH GRFWULQH RI PLQLPDOLQWHUIHUHQFH,QVKDUSFRQWUDVWWKH$JUHHPHQWRQ$JULFXOWXUHWDNHVDPRUHLQWHJUDWHGYLHZRIDJULFXOWXUDO WUDGH LW WULHV WR UHGXFH WKH WUDGHGLVWRUWLQJHIIHFWVRIERUGHUSURWHFWLRQGRPHVWLFVXSSRUWSROLFLHVDQGH[SRUWVXEVLGLHVDQG DWWHPSWV WR VXEMHFW WUDGH DQG GRPHVWLF VXSSRUW UHJLPHV WR DFRPSUHKHQVLYH*$77GLVFLSOLQH

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

    1HYHUWKHOHVVWKHDJUHHPHQWFRQVLGHULQJWKHW\SHRIWUDGHUHJLPHWKDWKDGSUHYDLOHGLQWKLVVHFWRUWKURXJKRXWWKHOLIHWLPHRI*$77GRHVLQFRUSRUDWHVRPH GHJUHH RI GLVFLSOLQH SDUWLFXODUO\ IRU WKH LQGXVWULDO FRXQWULHV ZKLFKVKRXOG WR VRPH H[WHQW KHOS WKH VPDOO DQG HIILFLHQW H[SRUWHU FRXQWULHV+RZHYHU FRPPLWPHQWV RQ WKH UHGXFWLRQ RI GRPHVWLF VXSSRUW DQG H[SRUWVXEVLGLHV E\ WKH LQGXVWULDO FRXQWULHV DUH PRGHVW LQ FRPSDULVRQ WR WKH

  • SUHYDLOLQJKHDY\VXEVLGL]DWLRQOHYHO2QWKHRWKHUKDQGD ODUJHQXPEHURI GHYHORSLQJ FRXQWULHV PD\ ILQG WKH GLVFLSOLQH WRR WD[LQJ KLJKHUSHUPLVVLEOHVXEVLGLHVPD\QRWEHQHILW WKHVHQDWLRQVYHU\PXFKEHFDXVHRIWKHLU FKURQLF VKRUWDJH RI UHVRXUFHV IRU WKH SXUSRVH 7KH REOLJDWLRQ RIELQGLQJDOODJULFXOWXUDOWDULIIVLVLQHTXLWDEO\GLIILFXOWIRUWKHPFRQVLGHULQJWKDWWKH\ZRXOGWKHQKDYHQRIOH[LELOLW\WRXWLOL]HERUGHUPHDVXUHVWKHWRROXVHGE\LQGXVWULDOFRXQWULHVWKURXJKRXWWKHKLVWRU\RI*$77

    7H[WLOHVDQGFORWKLQJ

    7KHSDFHRILQWHJUDWLRQRIWKLVVHFWRUWKHSDULDKRIWKHV\VWHPLQWR*$77DVSURYLGHG LQ WKH$JUHHPHQW RQ7H[WLOHV DQG&ORWKLQJ LV YHU\ VORZ DQG

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

    6\VWHPLFLVVXHV

    7KHUH DUH WKUHH LPSRUWDQW DUHDV RI V\VWHPLF VLJQLILFDQFH FRYHUHG E\DJUHHPHQWVXQGHUVWDQGLQJV WKDW VKRXOG EH PHQWLRQHG L VDIHJXDUGV LLEDODQFHRISD\PHQWPHDVXUHVDQGLLLWKHGLVSXWHVHWWOHPHQWV\VWHP

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

  •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

  • DV WKLV DVSHFW UHPDLQV XQFKDQJHG FURVVUHWDOLDWLRQ FDQQRW EH PRGHUDWHGPXFK OHVV HVFKHZHG WKURXJK D SURFHGXUDO VHTXHQFH 7KH IXWLOLW\ RI VXFKSURFHGXUDO VDIHJXDUGV VKRXOG QRW FRPH DV D VXUSULVH EHFDXVH WKH ZKROHH[HUFLVH RI EULQJLQJ H[WUDQHRXV LVVXHV ZLWKLQ WKH DPELW RI *$77 ZDVPRWLYDWHG LQ WKH ILUVW LQVWDQFH E\ WKH GHVLUH WR XVH WKH OHYHUDJH LQ WKHJRRGVWUDGHWRHQIRUFHGLVFLSOLQHVLQWKHQHZLVVXHV

    1HZGLVFLSOLQHV

    75,06

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

    75,36

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

    $QLPSRUWDQWIHDWXUHWKDWGHVHUYHVWREHQRWHGLVWKHVRFDOOHGWUDQVLWLRQDODUUDQJHPHQWV7KHFRPSOH[FKDOOHQJHRIGHYHORSPHQWKDVEHHQUHGXFHGWR

  •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

    6HUYLFHV

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

    $PDMRUVKRUWFRPLQJRI*$76ZDVWKDWLWYLUWXDOO\RYHUORRNHGWKHODERXUVHFWRU$OWKRXJKPHQWLRQ LVPDGHRI WKH VXSSO\ RI D VHUYLFH WKURXJK WKHSUHVHQFHRIQDWXUDOSHUVRQVLQDIRUHLJQFRXQWU\WKH$QQH[RQ0RYHPHQWRI1DWXUDO3HUVRQV6XSSO\LQJ6HUYLFHVXQGHU WKHDJUHHPHQWPDGH LW FOHDU

  •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

    VWUXFWXUH H[SUHVVHG WKHLU JUDWLILFDWLRQ WKURXJK WKH IDPRXV UHPDUN RI WKHUHJLH WKDW LWV FRPSOHWLRQPDUNHG D GHILQLQJPRPHQW LQ KLVWRU\ %XW WKH

  • GHILQLQJPRPHQW DIIHFWHG GLIIHUHQW SDUWLFLSDQWV GLIIHUHQWO\ LQ ZD\V WKDWHPERGLHGEXLOWLQFRQWUDGLFWLRQV

    9 )52075,803+72),$6&2

    )URPWKHHDUO\V WKURXJKWRWKHHPHUJHQFHRI WKH:72WKH WUHQGRIRQ WKH SDUW RI WKH PDMRU LQGXVWULDO FRXQWULHV KDV EHHQ WR FDXVH WKH*$77:72 PDQGDWH WR WUDQVFHQG QDWLRQDO IURQWLHUV DQG HQWHU GRPHVWLFSROLF\ DUHDV RQ D ZKROH UDQJH RI QHZ LVVXHV ,QGLFDWLRQV VLQFH WKH0DUUDNHVKPHHWLQJWKURXJK WR6HDWWOHZKHWKHU WKH\FRQFHUQ((&VSXVKIRUDJOREDOLQYHVWPHQWUHJLPHWKHLQVLVWHQFHRIWKH86RQOLQNLQJODERXUVWDQGDUGVWRWUDGHLVVXHVRUWKHSURSRVDOWRELQGWDULIIVDW]HUROHYHORQHFRPPHUFH RU IRU WKDW PDWWHU MXGLFLDO ODZ WDLORUHG E\ WKH GLVSXWHVHWWOHPHQWDQGDSSHOODWHSDQHOVRI:72DOOXQPLVWDNDEO\UHLQIRUFHWKDWWUHQG 7KH SURFHVV LV GHVFULEHG DV KDUPRQL]DWLRQ RU GHHSHU LQWHJUDWLRQ*$77VLQWHJUDWLRQDFKLHYHGWKURXJKWKHLQWHUQDWLRQDOH[FKDQJHRIJRRGVDQG UHOHYDQW LQWHUQDWLRQDO GLVFLSOLQHV ZDV VKDOORZ 'HHSHU LQWHJUDWLRQVHHNVWRDFKLHYHWKHVWDQGDUGL]DWLRQRIGRPHVWLFSROLFLHVLQDZLGHUDQJHRILVVXHV LQFOXGLQJ LQYHVWPHQW FRPSHWLWLRQ WHFKQRORJ\ JRYHUQPHQWSURFXUHPHQW WD[DWLRQ ODERXUVWDQGDUGV DQG ZKDW LV SHUFHLYHG E\IRUHLJQHUVDVVWUXFWXUDOLPSHGLPHQWVDWHUPZKLFKFDQDWWLPHVEHJLYHQDQDEVXUGO\DOOHQFRPSDVVLQJFRQQRWDWLRQ$QGWKHSURFHVVPD\QRWVWRSWKHUH

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

    7KH SURSHOOLQJ IRUFH EHKLQG WKLV VWXSHQGRXV H[HUFLVH LV WKH HFRQRPLFSRZHUH[HUFLVHGE\WKHLQGXVWULDOVWDWHVRQEHKDOIRIRUDWWKHEHKHVWRI

  •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

    7KH RWKHU LQILUPLW\ RI WKLV DSSURDFK DW WKH RSHUDWLRQDO OHYHO LV WKDW LWPLQLPL]HV WKHVKHHUFRPSOH[LW\RI WKHH[HUFLVH LQYROYHG7KHSUREOHPRIWKHGLIIHUHQWOHYHOVRIUHJXODWLRQLQYDULRXVFRXQWULHVLVQRWHDV\WRKDQGOHLQ DQ LQWHUQDWLRQDO QRUPVHWWLQJ H[HUFLVH 7KH H[SHULHQFH RI ((& LVQRWHZRUWK\((&ZDVDUHODWLYHO\KRPRJHQRXVJURXSRIQDWLRQVERXQGE\FRPPRQKLVWRU\DQGFXOWXUH7KHSRVWZDUUHFRQVWUXFWLRQLQ WKHFRQWH[WRIWKH FROG ZDU KDG FUHDWHG D JUHDWHU IHHOLQJ RI VROLGDULW\ EXW HYHQ VR LWVSURJUHVVWRZDUGKDUPRQL]DWLRQZDVVORZ

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

    7KH :72 KDV FRQWLQXHG *$77V OHJDF\ RI IXQFWLRQLQJ LQ D QRQWUDQVSDUHQW JUHHQ URRP IDVKLRQ QRU KDV LW VKHG WKH H[LVWLQJ

    WUDGHZHLJKW V\QGURPH LQ LWVGHFLVLRQPDNLQJSURFHVV7KH:72 LV DOVRFRPPLWWHG WR GHHSHU LQWHJUDWLRQ $V D UHVXOW OHJLWLPDWH JRYHUQPHQWV DUHEHLQJ H[FOXGHG IURP WKH GHFLVLRQPDNLQJ SURFHVV 1DWLRQDO QRUPV DQGVWDQGDUGV HVWDEOLVKHG WKURXJK GHPRFUDWLF SURFHVVHV E\ VRYHUHLJQ

  • SDUOLDPHQWV DUH EHLQJ WUXPSHG E\ JOREDO VWDQGDUGV VHW DW WKH EHKHVW RISRZHUIXO WUDQVQDWLRQDO FRUSRUDWLRQV7KLV LVEHLQJ MXVWLILHG RQ WKHJURXQGWKDWSURYLGLQJ LQWHUQDWLRQDOO\FRQWHVWDEOHPDUNHWV LV WKH IXQGDPHQWDOJRDOWRZKLFK HYHU\PHPEHU FRXQWU\PXVW VXEVFULEH 1RZRQGHU WKDW:72V

    GHPRFUDWLFGHILFLWLVEXUJHRQLQJ

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

    7KHUH ZHUH GHHS GLVDJUHHPHQWV EHWZHHQ WKH LQGXVWULDO DQG GHYHORSLQJFRXQWULHVRQ LVVXHV UHODWLQJ ODERXU VWDQGDUGV LQYHVWPHQW DQG FRPSHWLWLRQSROLF\ 7KHUH ZHUH DOVR ODUJH GLIIHUHQFHV EHWZHHQ ((& DQG 86$ RQDJULFXOWXUH DQG EHWZHHQ WKH 86$ DQG -DSDQ RQ WKH DQWLGXPSLQJGLVFLSOLQH $OWKRXJK VRPH IRUPXODWLRQV WR VROYH VRPH RI WKH GLIIHUHQFHVZHUHUHDFKHGPDQ\RWKHUVVHHPHGXQEULGJHDEOH

    7KHGRPHVWLFSROLWLFVRQWKHHYHRIWKHSUHVLGHQWLDOHOHFWLRQ\HDUQRGRXEWFRQWULEXWHGWRWKHH[DJJHUDWHGGHPRQVWUDWLRQRIWKH86SRVLWLRQLQIDYRXURI ODERXUVWDQGDUGV DQ LVVXH MXGJHG E\ VRPH REVHUYHUV WR EH WKH PDMRUIDFWRU UHVSRQVLEOH IRU WKH IDLOXUH RI WKH 6HDWWOH PHHWLQJ 6LPLODUFLUFXPVWDQFHV SHUKDSV HQFRXUDJHG WKH ((& WR VWDQG ILUP RQ WKHDJULFXOWXUH TXHVWLRQ DQG QRW WR \LHOG WRR PXFK WR WKH ODPHGXFN$GPLQLVWUDWLRQRIWKH86&OHDUO\WKHUHZHUHDQXPEHURIIDFWRUVRSHUDWLQJVLPXOWDQHRXVO\WRFRQWULEXWHWRWKHILQDOILDVFR%XWLQWHUPVRIWKHV\VWHPWKHVLJQLILFDQFHRIRSHQGHILDQFHE\DODUJHQXPEHURIH[FOXVLRQFDVXDOWLHVOLWHUDOO\ LQ WHUPVRI WKH6HDWWOHPHHWLQJDQGVXEVWDQWLDOO\ LQ WHUPVRI WKHRSHUDWLRQDO HIIHFWV RI WKH *$77:72 V\VWHP VR IDU FDQ KDUGO\ EHH[DJJHUDWHG 7KH IDFW WKDW WKH WUDGHPDMRUVZHUH WU\LQJ IRU VRPH W\SH RIIDFHVDYLQJ RXWFRPH LQ WKH SHQXOWLPDWH VWDJH RI WKH FRQIHUHQFH DOEHLW

  • ZLWKRXWVXFFHVVDOVRDFNQRZOHGJHV WKH LPSRUWDQFHRI WKHVWURQJQHJDWLYHUHDFWLRQ RI PDQ\ GHYHORSLQJ FRXQWULHV ,Q KLQGVLJKW ZKDW WULJJHUHG WKHFROODSVH ZDV WKH GHYHORSLQJFRXQWU\ UHSUHVHQWDWLYHV GHHS GLVVDWLVIDFWLRQZLWK WKH SDOSDEOH H[FOXVLRQ WKDW ZDV SUDFWLVHG GXULQJ VXEVWDQWLYHQHJRWLDWLRQV

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

    9, :+$7,672%('21(

    6WUDWHJLFFRQVLGHUDWLRQV

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

  •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

    7KHSURFHVVRILQWHJUDWLRQZLWKEXLOWLQH[FOXVLRQLVXQIROGLQJQRWRQO\DWWKH JOREDO OHYHO LQ LQWHU VH UHODWLRQVKLSV EHWZHHQ LQGXVWULDOL]HG FRUHFRXQWULHVDQGGHYHORSLQJFRXQWULHVEXWDOVRDWWKHQDWLRQDOHFRQRP\OHYHO,W IXUWKHU GHHSHQV WKH VRFLDO DQG SROLWLFDO GLYLGH ZLWKLQ KLJKOLJKWV WKH

    GHPRFUDWLFGHILFLWRIWKHSURFHVVDQGOD\VEDUHWKHXQDFFRXQWDELOLW\RIWKHIRUFHV SURSHOOLQJ LW 7KLV G\QDPLFV VKRXOG SURYLGH WKH 6RXWK ZLWK DQREMHFWLYH IRXQGDWLRQ IRU WKH UHQHZDO RI VROLGDULW\ HQDEOLQJ WKH UHJLRQ WRFDSWXUH WKH GHPRFUDWLF VSDFH SURYLGHG E\ WKH FRQVWLWXWLRQ RI:72 7KLVZLOOFDOOIRUFHUWDLQLQVWLWXWLRQDODQGSURJUDPPDWLFLQLWLDWLYHV

  • ,QVWLWXWLRQDODQGSURJUDPPDWLFFRPSOHPHQWV

    5HYLYDODQGVWUHQJWKHQLQJRIWKH,QIRUPDO*URXSRI'HYHORSLQJ&RXQWULHV

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

    6WDQGVWLOODQGUROOEDFN

    7KH VHFRQG LPSRUWDQW DQG IRUPDO VWHS LV IRU WKH :72 WR GHFODUH D

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

    &RQVLGHULQJWKHGHPDQGLQJQDWXUHRIDQHZGLVFLSOLQHOLNH75,36DQGWKHGLIILFXOWLHV LW HQJHQGHUV IRU GHYHORSLQJ FRXQWULHV LWPD\ EH QHFHVVDU\ WR

  • ODXQFKIXUWKHUDFWLRQLQWKHIRUPRIDUROOEDFN7KHGHPDQGIRUDUHYLHZRIWKLV GLVFLSOLQH WKDW VXUIDFHG GXULQJ FRQVLGHUDWLRQ RI WKH EXLOWLQ

    LPSOHPHQWDWLRQDJHQGDIRUWKH6HDWWOHPHHWLQJSRLQWVWRWKHVDPHQHHG,WLV SRVVLEOH WKDW WKH DVVHVVPHQW H[HUFLVH SURSRVHG DERYH PD\ SURGXFHVXIILFLHQW PDWHULDO HYLGHQFH DQG UDWLRQDOH IRU LQLWLDWLQJ D UROOEDFN RI WKHLQWHJUDWLRQSURFHVVZKHUHQHFHVVDU\

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

    3OXULODWHUDODJUHHPHQWV

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

    ,WZRXOGEH OHJLWLPDWHIRUPHPEHUVRIVXFKDSOXULODWHUDODJUHHPHQW WRUHIUDLQIURPH[WHQGLQJWKHEHQHILWVRIWKHDUUDQJHPHQWWRQRQPHPEHUV

  •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

    5HIRUPRI'68

    7KLV DSSURDFK WR UHIRUPLQJ WKH :72 ZLOO QHFHVVLWDWH WZR DGG