January 2015

BEPS Comments SPECIAL FOCUS

Public comments on recent OECD discussion drafts suggest that business remains unconvinced by
the OECDs efforts to reduce double taxation and improve dispute resolution.

T
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he OECDs BEPS project was

the TP topic of 2014 and will
undoubtedly retain the top spot in
2015.
Discussion drafts have highlighted
the OECDs efforts but public comments suggest that business remains
increasingly sceptical of the OECDs
attempts to reduce double taxation
and improve dispute resolution.
This report contains coverage on
BEPS Action 7 and 10 criticism,
comments from business on dispute
resolution and taxpayer concerns
over PE rules, location savings and
intangibles.
Dont miss the opportunity to
get a free and exclusive insight into
the contentious issues at the heart
of the BEPS debate!

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Contents
BEPS Action 10 feedback shows cost pool remains a contentious issue
Why it is crucial the OECDs work on dispute resolution succeeds in
the eyes of business
BIACs opening remarks at OECDs consultation on preventing artificial
avoidance of PE
Action 7 feedback downplays OECDs progress and hints at
unravelling of universal approach
Consensus over definition of intangibles and location savings
increasingly unlikely
Business speaks out on preventing treaty abuse

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BEPS Action 10 feedback shows cost pool remains a

contentious issue
Sophie Harding
January 26 2015

ublic comments on BEPS Action 10 welcome the OECDs simplified approach to

dealing with low value-adding intra-group services and generally support the proposed profit
mark-up range. However, feedback has stressed
the need for clarification over more valuable
services and single cost pool allocation has been
deemed impractical.
The BEPS Monitoring Group stressed that
there should be a fundamental re-evaluation of
the OECD approach to transfer pricing, and not
just a patch-up of the current rules. The wide
variety of available methods, and the need for
detailed facts and circumstances analysis, have
created a system which is difficult to administer
and leaves considerable scope for subjective
judgment.

Simplification welcomed but not without

risks
From public comments, it seems that there is
consensus that simplification is the right
approach when dealing with low value-adding
intra-group services.
We support the recognition by the OECD,
that there must be a balance between simplifying the deduction of legitimate management
and head office expenses, that should be
charged to affiliated companies under the armslength principle, and addressing the concerns of
certain tax administrations and other
Stakeholders, that such recharges could potentially be used by multinational enterprises to
artificially reduce taxable profits in the payor

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country, said Will Morris, chairman of the

BIAC Tax and Fiscal Affairs Committee.
Simplification is expected to reduce the burden of both taxpayers and tax administrations
with regards to routine low value-adding intragroup transactions and help reduce multilateral
disputes with tax administrations.
However, for the benefits of a simplified
approach to unfold, a uniform adoption and
implementation of the provisions provided
within the Discussion Draft on a global level is
key, stressed the comments from BDI.

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Profit mark-ups
The discussion draft establishes a range of 2% to
5% in order to determine the arms-length
charge for low-value adding intra-group services. The draft mentions that the same mark-up
must be applied for all low-value adding services irrespective of service categories. No further
functional and economic analysis is required.
There is a concern about how an MNE
should interpret the range established by the
OECD. The discussion draft does not mention
if the range should be considered as a safe har-

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bour rule or not. A failure to further clarify this

topic may lead to disputes between tax administrations in the respective service provider and
service recipient locations, said the Siemens
commentary.
There is a risk that tax administrations in
locations where services are provided will
assume the upper limit proposed while the tax
administration of the payor country will assume
the opposite. The difference in interpretation by
the two countries could be drastically different
in the case of developing countries versus devel-

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oped countries and European versus nonEuropean countries.

However, businesses quite often are faced
with tax administrations of certain countries
from which intra-group services typically are
provided which argue for unrealistically high
profit mark-ups to be applied. With regard to
this situation the suggested approach would be
rather helpful, whether a range or a fixed markup percentage is agreed upon, said BDI.

Clarification needed on valuable intragroup services

While the feedback welcomes the simplified
approach for determining the arms-length
charges and documentation for low value-adding
intra-group services, numerous comments have

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stressed that the same approach should be

applied to more valuable intra-group services.
BASF strongly recommends to apply the
same proposed simplified approach (including
simplified benefit test), that focuses on creating
transparency on the service charging rather than
on proving benefits for single charges, for all
intra-group services covering both, low valueadding and non-low value-adding services.
Morris reiterated BASFs comments, highlighting the need for further guidance on more
valuable intra-group services.
Although we agree in principle that a separate regime for lower value services could be an
effective practical solution for certain services,
we are concerned that the Discussion Draft does
not substantially add guidance on the other,

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more valuable services...Such high value-adding

services have been identified as a BEPS concern
by many governments, and are the cause of
many disputes between MNEs and tax administrations. We believe that it would be helpful if
more specific guidance on these services could
be included in the transfer pricing guidelines.

Unfeasible cost pool

Paragraphs 7.52 and 7.53 of section D of the
discussion draft outline the recommended
approach for the determination of the cost pool.
Reed Elsevier considered the approach to be
overly prescriptive.
Quantera Global said: This paragraph
[7.52] seems to suggest that an MNE that elects
for the simplified approach should as an initial
step create one global cost pool for all costs
incurred by all members of the group in performing any low value-adding intra-group services. This suggests an all or nothing approach
that does not allow for a pooling of only certain
categories of qualifying services or pooling
between a selection of group companies.
The approach starts by creating a pool of
costs of all low value-adding intra-group services for the MNE group and then removes costs
to services provided by one group member,
solely to another group member, to arrive at the
pool of costs to be allocated. The guidelines
require a single calculation for the MNE covering all of its low value-adding services.
This approach is not workable on a practical
level for a number of reasons. Firstly, Reed
Elsevier is comprised of 5 separate divisions and
there are intra-group services that are specific to
each separate division. Secondly, recharges sole-

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ly between two entities are currently not included. Thirdly, intra-group services within Reed
Elsevier are usually calculated and recharged
separately for each specific category of services
and a different individual may be responsible for
the recharge calculation for each service, said
Paul Morton of Reed Elsevier.
For these reasons, to create a single cost
pool of all low value-adding intra-group services
for Reed Elsevier as a whole would require significant changes to our existing processes and
create a significant burden centrally in terms of
collating the data from a wide number of sources
within the business for no discernible benefit.
BIAC, Rdl & Partner, Swiss Holdings,
True Partners Consulting and USCIB all
stressed that robust guidelines on the cost pool
were sufficiently lacking in the draft.

Future focus
While feedback on Action 7 has been positive in
certain areas, it is clear the OECD will need to
clarify its position on higher value-adding services
and flesh out its guidelines regarding cost pools.
Cost pool allocation is without a doubt the
most contentious issue.
The OECD will have to work hard to reassure
multinationals that its approach can work effectively across multiple intercompany divisions.
The BEPS Monitoring Group stressed: As all
countries around the world now begin to implement these rules with more rigorous audits, they
are therefore likely to lead to greater uncertainty
and conflicts. At the same time, they impose significant strains on especially the poorer countries,
which can ill afford to waste scarce human
resources operating a dysfunctional system.

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Why it is crucial the OECDs work on dispute resolution succeeds

in the eyes of business
January 26 2015

he chairman of BIACs tax committee, Will

Morris, made an address to the OECDs
consultation on dispute resolution last week and
said success on the dispute resolution action
item is crucial to the overall success of the BEPS
project as a whole.
His comments to the OECD are as follows:
The concerns that we have raised before
about the risks of double taxation, discouraging
cross-border trade and investment remain crucial and, it should be said, these are equally
important for countries themselves, which are
anxious for foreign investment and the ongoing success of their businesses.
But I think there is also a different, and perhaps a more basic reason, why this action item
must succeed in the eyes of business.
The BEPS outcomes will likely raise taxes on
many businesses, and impose significant new
reporting and compliance burdens on most.
That is understood.
However, if the process also gives rise to a significant increase in cases of double taxation, the BEPS
plan may fail for the simple reason that, if businesses do not feel they are being treated fairly, they
will seek new ways to mitigate that double taxation.
Put slightly differently; however many hard
law aspects of BEPS are enacted, if the trust
between businesses and governments (which is
at the heart of cooperative compliance)
breaks down, then we could find ourselves back
in the adversarial situation that cooperative
compliance sought to end. And, I hope we all
agree, that would be to the substantial disadvantage of both sets of parties.

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Businesses will only be able to fully agree

with the projects conclusions if they feel the
new rules which aim to significantly increase
the burden on taxpayers are balanced with an
effective guarantee that their profits will not be
caught up in costly, lengthy, and potentially
unresolvable disputes between states.
Moving to specific issues, our comments
were relatively brief although we do support
the more detailed comments that many of our
members have sent in, as well as ICCs ongoing
work in the arbitration area.
I did, nevertheless, want to pick out one or
two particularly important points from our
comments:
As this is primarily an issue of tax administration, and because tax authorities have the
greater interest in maintaining cooperative compliance models, we believe that the FTA and, in
particular, the MAP Forum, should be central,
rather than parallel to this process. The FTA can
make a real difference here.
A political commitment is not enough.
There have to be robust mechanisms and
processes actually brought into effect as a direct
outcome of the BEPS process.
Binding arbitration is a critical part of any
solution. We understand some countries have
genuine concerns, but that is not a reason for
binding arbitration not to be the general standard for countries that are fully committed to
avoiding double taxation.
The MAP process must be properly
resourced and suitably positioned in the structure of a tax authority.
We have also surveyed our members on their
actual experiences with MAP in their countries

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and the practical issues which arise, and the survey results are attached to our comments.
Before closing, I would like to say two things
to my business colleagues:
First, thanks so much to all of you for all of
the hard and good work you have put into
drafting the comments on numerous papers.
Many of you really have put heart and soul into
this.
Second, let me also say that however strongly you feel about this topic and I know many

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of you, rightly, feel very strongly please lets

keep the tone constructive and respectful.
We can and should be robust, but we should
never forget that the government representatives are themselves under enormous pressure in
the BEPS project, and that we all have a common, ultimate aim government, business, and
civil society namely, a better, more effective,
more stable international tax system that
encourages growth in cross-border trade and
investment for the common good.

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BIACs opening remarks at OECDs consultation on preventing

artificial avoidance of PE
January 23, 2015

ill Morris, the chairman of the BIAC Tax

Committee delivered his opening remarks
to the OECD at the consultation on preventing
the artificial avoidance of PE status this week.
Addressing the OECD and government officials, Morris said:
I want to acknowledge the significant effort
and thought that has gone in to this discussion
draft.
Operating under almost impossible deadlines, you have produced a document which
shows much hard work, and poses many important questions. I also want to acknowledge
and this is very important that we both understand and appreciate that you have put out an
early draft, which does not represent a consensus document, or a polished conclusion.
Instead you responded to our requests for an
early opportunity for us and other stakeholders to engage in dialogue with you.
And finally, I want to acknowledge how open
the process of consultation with all stakeholders
has been, and the genuine effort which has gone
into that.
So let me just say a general word or two, and
then raise a couple of specific issues which, of
course, we explore at greater length in the
BIAC comment letter.
The current PE rules have worked well for
the past 50 years, in that they provide a level of
certainty and stability which has encouraged
business to engage in long-term cross-border
trade and investment.
Many of the major principles, such as the
authority to conclude contracts, are well-under-

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stood legal concepts with broadly agreed meanings.

We understand, however, that in recent
years, some governments have discerned planning techniques, which they believe seek to
exploit elements of the current rules, for example, those on the conclusion of contracts and
the preparatory or auxiliary rules.
So, we do recognise that the PE rules are
likely to change, but we would make three
observations:
First, any rule that makes it easier to establish
the presence of a PE will almost certainly
increase the substantive and administrative costs
of doing cross-border business for companies.
Second, if the rules are changed, then it is
crucial that any new rules be clear, and at least
as well understood as the rules that they replace.
If there is any vagueness and ambiguity in the
new rules, then that will inevitably increase disputes between countries with a resultant
increase in double taxation. And this second
problem will be exacerbated if it proves difficult
to make substantial progress on dispute resolution under Action 14.
Finally, in its current form, this project does,
at some level, implicate the balance between
source and residence country taxing rights that
are, explicitly, not a part of the BEPS project. It
might, however, be better to have that conversation directly rather than through the proxy of
the PE rules.
On specific issues, a couple of comments:
We understand that commissionaire arrangements are seen by many governments as being
aggressive or even abusive, and we recognise
that changes will be made to address those con-

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cerns. However, we do worry that some of the

proposals will go beyond tackling those specific
arrangements, and could impact other unintended structures, thus creating more friction in
the system for cross-border business.
For example, Options A & C appear to
implicate any relationship between an intermediary and a customer, and that would have a
very broad impact.
Also, the proposals under Option D, all
taken together, would substantially increase the
subjectivity of the threshold. So, although we
cannot yet fully endorse any of the options as
they stand in the draft, it does seem that Option
B could be the least damaging, and has the
greatest potential to provide some certainty and
objective clarity.
So, we would be very happy to work with
you all to help develop a clear definition of what
is meant by the material elements of a contract, which, we believe will be as beneficial for
governments as it is for taxpayers.
On the activity exemptions, we can understand the intentions behind a preparatory or
auxiliary override. But, again, I do worry that
the removal of the clear and objective exemptions would take away much certainty from the
PE standard, creating substantial practical difficulties. A case has been made, for example, for
the removal of the delivery exemption, but, nevertheless a broad international agreement would
be needed on how that removal would impact a
range of very routine situations.
Our final specific point relates to the lack of
focus on attribution of profits which is often
the most significant challenge in dealing with
PEs.

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An increase in the number of PEs will lead to

an increase in this challenge, especially where
losses are concerned. Further practical guidance
could reduce the difficulties that will be faced by
taxpayers and tax authorities.
We look forward to working with you on this
project, to hopefully bring it to a successful conclusion. And I do want to emphasise how anxious we are to make this succeed.
If we occasionally sound a little grumpy,
please put that down to the same timetables,
and the same pressures that you yourselves are
facing. We do genuinely appreciate the opportunity to participate in this process.
But, and I really will stop after this, we would
implore you to be very attentive to the dangers
of changing the PE rules without widespread
agreement amongst G20 and OECD countries,
and the dangers of changing these rules in a way
that broadens, rather than narrows, ambiguity
surrounding the presence of a PE. Both of these
would be to the disadvantage of not just taxpayers but also governments.

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Action 7 feedback downplays OECDs progress and hints at

unravelling of universal approach
Sophie Harding
January 21 2015

omments on Action 7 of the OECDs base

erosion and profit shifting (BEPS) project
show the draft has done little to clarify permanent establishment (PE) issues with many countries considering national measures to tackle
profit shifting
The discussion draft, BEPS Action 7:
Preventing the Artificial Avoidance of PE
Status, was released on October 31 2014.
The draft stressed the need to update the
treaty definition of PE to prevent abuses of the
threshold through commissionaire agreements
and specific activity exemptions.
Positive comments, submitted by interested
parties (taxpayers, NGOs and advisers), welcomed the OECDs shift away from stubborn
adherence to the separate entity principles and
voiced support for the need to amend specific
activity exemptions.
While comments acknowledged and
applauded the OECDs efforts, concerns appear
to outweigh the positives.

Minimalist proposals with maximum

ambiguity
The general reaction to the OECDs discussion
draft on Action 7 is that the OECD has taken a
cautious, minimalist approach.
The draft fails to sufficiently distinguish
between BEPS and the allocation of taxing
rights between the source state and residence
state.
The BEPS Monitoring Group said: The
proposals in the discussion draft are minimalist,

Contents

and would deal only with specific types of

abuse.
Both corporates and advisers have brought
up the OECDs failure to reduce the ambiguity
surrounding PEs and to provide solid arguments as to why a commissionare structure
should be deemed an artificial mechanism.
The draft considers commissionaires to be
structured primarily to allow MNEs to erode tax
bases but fails to provide analysis to back up this
argument.
The Tax Executives Institute (TEI) said:
There is no discussion, however, of the commissionaire as a legitimate business arrangement
often used by unrelated parties to conduct their
retrospective enterprises.
In some cases a commissionaire approach is
the best reflection of the relationships in place
within an MNE and is put in place for legitimate
business reasons such as defining and delegating
responsibilities, reducing compliance costs and
avoiding tax volatility.
Judging from this feedback, it is clear the
OECD will have to make significant efforts to
clarify its plan of action and elaborate on the
reasoning behind its view on commissionaires.

Compliance burdens, double taxation and

disputes
The drafts broad proposals would result in a
significant growth of PEs. Any rules that make
it easier to establish the presence of a PE are
likely to increase the administrative costs of
cross-border business.
Creating additional redundant costs, including expensive allocation and compliance
requirements that produce little to no tax, is

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clearly undesirable for both taxpayers and tax

authorities.
A proliferation of PEs within an MNEs
operations will complicate analysis when determining the proper amount of remuneration
between a PE and the rest of the enterprise.
TEI addressed the potential for creating
drastic tax consequences including double
taxation. Just as MNEs strive to avoid double
taxation in transfer pricing matters, it is likely
they will also do everything to avoid creating a
PE in particular jurisdictions.
In the experience of TEIs members, some
countries go so far as to assert a PE to force
MNEs to settle on unrelated transfer pricing
matters. The OECD should recognise that it
indirectly encourages tax authorities in these
endeavours by introducing unnecessary uncertainty into the PE definition while also lowering
the PE threshold.
In its comments, Volvo reiterated the vagueness of the drafts proposals and expressed concerns that changing the PE definition by
introducing additional subjectivity and unclear
PE tests would lead to an unsecure tax environment and increase risk of double taxation,
disputes and undue administration.
The feedback, across the board, stressed that
without clarification, the risk for compliance burdens, disputes and double taxation is far too high.

Fragmentation
It is likely the OECD shied away from more
ambitious proposals because of the challenges
that come with reaching a broad consensus.
While this is understandable, the OECD could
well be shooting itself in the foot and prompt-

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ing member countries to take things into their

own hands. Thus, contradicting efforts to create
a universal approach to tackle profit shifting.
Countries would still be able to adopt their
own preferred solutions. The UK has now proposed a Diverted Profits Tax, which would
attribute a PE if any activities take place in the
UK in connection with the supply of goods
and services there, in a way which it is reasonable to assume is designed to ensure that no
PE is created. This clearly goes beyond limited
proposals in the current discussion draft, said
the BEPS Monitoring Group.
Alternatives to deal with contract manufacturing that go beyond the limited proposals in
the OECDs discussion draft are already underway in countries such as Australia and Spain.
Wearing my BIAC hat, I do worry about
the precedent this might set for other countries
in terms of jumping the gun on the BEPS proposals. I do think that the principle that nothing is decided until everything is decided gives
the BEPS project the greatest chance of success.
Wearing my CBI hat, however, I am glad that
the government is prepared to consider changes
to the legislative language to narrow the scope
more narrowly to the aggressive planning that
they are targeting. I think, given the importance
of this provision, it is very important to get the
legislative language (and not just the guidance)
right, said Will Morris, Chair of the BIAC and
CBI Tax Committees.
It seems the OECD will have to bite the
bullet and adopt a more ambitious approach
or watch as member states unravel their holistic approach in favour of their own preferred
methods.

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Consensus over definition of intangibles and location savings

increasingly unlikely
Sophie Harding
December 10 2014

TP issues involving intellectual property

(IP)
Transfer of ownership

It is essential to determine the arms-length sale

value of an IP. Any IP transfer would constitute
a business restructure for transfer pricing purposes and would be subject to general anti
avoidance rules (GAAR).

ction 8 of the OECDs BEPS project on

the transfer pricing aspects of intangibles
aims to achieve universal consensus over definition. However, this is beginning to look like
an impossible task, with influential BRIC
countries such as India, making their own
interpretations.
The complexity surrounding intangibles is
clearly highlighted in the OECDs definition,
which is in fact a description of what an intangible is not.
According to the OECD, The word intangible is intended to address something which is
not a physical asset or a financial asset, which is
capable of being owned or controlled for use in
commercial activities, and whose use or transfer
would be compensated had it occurred in a
transaction between independent parties in
comparable circumstances.
In the OECDs Action 8 paper location savings have not been deemed an intangible.
Group synergies, market-specific characteristics
and work force are also not considered intangibles.

Differing interpretations
However, the OECDs take on intangibles,
which it hopes to implement globally, is definitely not universally shared.
What is considered an intangible in India, is
not necessarily an intangible in Europe, said
Anis Chakravarty of Deloitte.
India, for example, lists 12 categories of
intangibles for transfer pricing purposes.

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Licencing
Taxpayers must determine the arms-length royalty rates for licences such as copyrights, knowhow, patents, software etcetera.

Cost sharing
When group members agree to share the costs of
developing intangibles, it is important to determine the value of the pre-existing IP for buy-in
payments by new entrants and the resulting margins earned by the licensee in order to demonstrate the commerciality of the agreement.

IP issues emerging in India

The Indian Tax Administration (ITA) has stated
that more importance should be paid to location savings because the concept goes beyond
cost difference.
According to ITA, location saving advantages (LSAs) should include:
Highly specialised skilled manpower and
knowledge;
Access and proximity to growing local/
regional market;
Large customer base with increased spending capacity;
Superior information network; and
Superior distribution network.

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The ITA argues that relying on local comparable companies does not capture the benefit of
location savings and suggests profit split
method as a way to calculate location rents.
In my view, if you are selecting local comparables there is no need to make further adjustments for location savings. Location savings, if
any would be reflected in the margins of the
comparable companies. In a perfect competition, location savings would typically be passed
on to the customers, said Jitendra Jain of GE.

Marketing intangibles
There have been cases in India where excessive
marketing spends in relation to the comparables
have been alleged to create marketing intangibles for the parent. The ITA have taken a view
that such excess should be reimbursed by the
parent.
Under arms-length conditions, a limited
risk distributor would typically not incur significant marketing expenditure. On the other
hand, an entrepreneur would have the liberty to
incur significant marketing spends and benefit
from the same by exploiting it. Therefore, as a
taxpayer it is important to get your characterisation right, said Jain.

IP issues emerging in China

In China, LSAs include both location savings
and market premium, which relates to the additional profit because of higher selling prices.
Location savings should take location dis-savings into account and therefore the net amount
is normally used.
Local companies in China generally do not
have any LSAs.

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In the State Administration for Taxations

(SAT) view:
Auto joint ventures have both location savings and market premium with almost all
profits received by foreign automakers;
Chinese contract R&D service providers
need to earn higher profit margins due to
location savings; and
Market premiums exist for the luxury goods
sector.
China has been extremely vocal about marketing intangibles; however, the country is still
trying to get its act together at both city and
provincial levels, said Ed Heng of Syngeta.

Uncertain future
While the BEPS project has garnered support
and significant levels of cooperation, intangibles seem to be one of the most contentious
topics that could stand in the way of the
OECDs success.

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Business speaks out on preventing treaty abuse

Sophie Ashley
January 26 2015

usinesses have made their feelings clear

about the OECDs work on preventing
treaty abuse, which is a sub-section of the
organisations work on base erosion and profit shifting (BEPS).
Comments made in an address to the
OECD by Will Morris, chairman of BIACs
(business advisory arm to the OECD) tax
committee emphasised businesss concern that
the proposals in place so far, to prevent treaty
abuse, may become a barrier to trade.
There is an underlying concern among
BIAC members that many aspects of the proposals continue to risk removing treaty benefits in genuine commercial situations, said
Morris, at the public consultation in Paris last
week.
Morris said there is disappointment that
BIACs concerns have not been addressed in the
new discussion draft but that BIAC is determined these concerns are not swept under the
carpet and intends to reiterate them.
Again, it became clear that a balance has to
be found between the expectation of increased
burden on taxpayers and the need to cut out
base erosion.
Abuse should be targeted, but in a way
that doesnt cause undue burden, or remove
the clarity and certainty of treaty benefits for
the vast majority of genuine commercial structures and transaction, said Morris.
BIAC wants to encourage governments to
tackle tax avoidance through changes to local
laws.

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Treaties should remain focused on removing double taxation and promoting international trade and investment. We believe that
the only avoidance to be addressed in treaties
should be where benefits are obtained under
the treaty itself in an unintended manner; or
where the treaty would otherwise override the
local law which is aimed at tackling the
offending avoidance.
In BIACs comments to the OECD on the
issue, to be taken into consideration when the

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organisation draws up the guidelines, it said:

The Model Convention should provide that
either a Limitation on Benefits, or a Principal
Purpose Test approach should be adopted, but
not both.
Finally Morris said there was a point made
in BIACs original submission that pointed to
a worrying signal of a change in course.
Namely, the fact that the proposed preamble devotes one line to the prevention of double
taxation, and three lines to the prevention of

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abuse. We must remember that in facilitating

the development of a broad network of tax
treaties, the OECD has significantly contributed
to the astonishing expansion in cross-border
trade and investment over the past 50 years.
It is, of course, absolutely and entirely
appropriate to prevent abuse of treaties, but it
is not the purpose of a treaty to prevent that
abuse. As a result, therefore, we would suggest,
significantly altering treaty protection should
be approached with considerable caution.

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