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38

(iii)

The continuing vitality of constitutional and comity consideration that may

perhaps lead the US court to refuse to exercise the judicial authority which it

has, but only under United States laws.

However, the United States has shown in recent times its willingness to use its economic

prowess to extract fiscal information and has even offered economic incentives to add to

this. 113This attitude has been reflected in recent legislation known as the ‘Caribbean

Basin Economic Recovery Act.’ The countries that qualify under the act are allowed to

export most products to the United States free of US customs duties for a period of

twelve years. A United States tax deduction is also possible for expenses of attending

business or investment conventions in countries that qualify.

In order to qualify, states must be prepared to sign bilateral executive agreements with

the United States that provides for exchange of such ‘information as is necessary and

appropriate to carry out and enforce the tax laws of the two countries.’

114

Hence,

nondisclosure (bank secrecy) laws must be modified.

114

Id at page 522

115

Id at page 524

In the case of foreign banks, it is important for there to be a clear classification by the US

court of the type of foreign banking entity. Foreign banks can therefore be classified in

the five following categories:

115

113 Supra note 20 at page 521 The acts sets strict standard for such agreements, which must extend to civil and criminal matters and to United States, Act country and foreign residents. The agreements must not be limited to information required to be divulged under local law or administrative practice, as is true of some U.S. tax treaties.

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