Article 18.2. Definitions
For the purposes of this Chapter and Annex 18:
(a) "cross-border financial service supplier of a Party" means a person of a Party that is engaged in the business of supplying a financial service within the territory of the Party and that seeks to supply, or supplies, a financial service through the cross-border supply of such service;
(b) "cross-border supply of financial services" or "cross-border trade in financial services" means the supply of a financial service:
(i) from the territory of a Party into the territory of the other Party; or
(ii) in the territory of a Party by a person of that Party to a services consumer of the other Party;
(c) "financial institution" means a supplier of one or more financial services which is regulated or supervised in respect of the supply of those services as a financial institution under the law of the Party in whose territory it is located, including a branch in the territory of the Party of that financial service supplier whose head offices are located in the territory of the other Party;
(d) "financial service" means a service of a financial nature, including insurance and insurance- related services, banking and other financial services (excluding insurance). Financial services include the following activities:
(i) insurance and insurance-related services:
(A) direct insurance (including co-insurance):
(1) life; and
(2) non-life;
(B) reinsurance and retrocession;
(C) insurance inter-mediation, such as brokerage and agency; and
(D) services auxiliary to insurance, such as consultancy, actuarial, risk-assessment and claim-settlement services; and
(ii) banking and other financial services (excluding insurance):
(A) acceptance of deposits and other repayable funds from the public;
(B) lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transactions;
(C) financial leasing;
(D) all payment and money transmission services, including credit, charge and debit cards, travellers cheques and bankers drafts;
(E) guarantees and commitments;
(F) trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:
(1) money market instruments (including cheques, bills, certificates of deposits);
(2) foreign exchange;
(3) derivative products including futures and options;
(4) exchange rate and interest rate instruments, including products such as swaps and forward rate agreements;
(5) transferable securities; or
(6) other negotiable instruments and financial assets, including bullion;
(G) participation in issues of all kinds of securities, including underwriting and placement as agent, whether publicly or privately, and provision of services related to such issues;
(H) money broking;
(I) asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, and custodial, depository and trust services;
(J) settlement and clearing services for financial assets, including securities, derivative products and other negotiable instruments;
(K) provision and transfer of financial information, and financial data processing and related software; and
(L) advisory, intermediation and other auxiliary financial services on all the activities listed in subparagraphs (A) to (K), including credit reference and analysis, investment and portfolio research and advice, and advice on acquisitions and on corporate restructuring and strategy;
(e) "financial service supplier of a Party" means a natural or juridical person of a Party that seeks to supply, or supplies, a financial service, but does not include a public entity;
(f) "investor of a Party" means a natural or juridical person of a Party that seeks to establish, is establishing or has established a financial institution in the territory of the other Party;
(g) "juridical person of a Party" means:
(i) for the European Union: a juridical person constituted or organised under the law of the European Union or of at least one of its Member States and engaged in substantive business operations1 in the territory of the European Union; and
(ii) for Chile: a juridical person constituted or organised under the law of Chile and engaged in substantive business operations in the territory of Chile;
(h) "new financial service" means a service of a financial nature, including services related to existing and new products or the manner in which a product is delivered, which is not supplied by any financial service supplier in the territory of a Party but which is supplied in the territory of the other Party;
(i) "public entity" means:
(i) a government, a central bank or a monetary authority of a Party, or any entity owned or controlled by a Party, that is principally engaged in carrying out governmental functions or activities for governmental purposes, but does not include an entity principally engaged in supplying financial services on commercial terms; or
(ii) a private entity that performs functions normally performed by a central bank or monetary authority, when exercising those functions; and
1 In line with its notification of the Treaty establishing the European Community to the WTO (WT/REG39/1), the European Union understands that the concept of "effective and continuous link" with the economy of a Member State enshrined in Article 54 of the TFEU is equivalent to the concept of "substantive business operations".
(j) "self-regulatory organisation" means a non-governmental body, including a securities or futures exchange or market, clearing agency or other organisation or association, that exercises regulatory or supervisory authority over financial service suppliers or financial institutions by statute or delegation from central, regional or local governments or authorities, where applicable.
Article 18.3. National Treatment
1. Each Party shall accord to investors in financial institutions of the other Party and to covered enterprises that are financial institutions, with respect to the establishment, treatment no less favourable than the treatment it accords, in like situations (1), to its own investors in financial institutions and to their enterprises that are financial institutions.
2. Each Party shall accord to investors in financial institutions of the other Party and to covered enterprises that are financial institutions, with respect to the operation, treatment no less favourable than the treatment it accords, in like situations (2), to its own investors in financial institutions and to their enterprises that are financial institutions.
3. The treatment accorded by a Party under paragraphs 1 and 2 means:
(a) with respect to a regional or local government of Chile, treatment no less favourable than the most favourable treatment accorded, in like situations, by that level of government to investors in financial institutions of Chile and to their enterprises that are financial institutions in its territory;
(b) with respect to a government of, or in, a Member State, treatment no less favourable than the most favourable treatment accorded, in like situations, by that government to investors in financial institutions of that Member State and to their enterprises that are financial institutions in its territory (1).
Article 18.4. Public Procurement
1. Each Party shall ensure that financial institutions of the other Party established in its territory are accorded treatment no less favourable than that accorded, in like situations, to its own financial institutions with respect to any measure regarding the purchase of goods or services by a procuring entity for governmental purposes.
2. The application of the national treatment obligation provided for in this Article remains subject to security and general exceptions as set out in Article 21.3.
Article 18.5. Most-favoured-nation Treatment
1. Each Party shall accord to investors in financial institutions of the other Party and to covered enterprises that are financial institutions, with respect to the establishment, treatment no less favourable than the treatment it accords, in like situations (1), to investors in financial institutions of a third country and to their enterprises that are financial institutions.
2. Each Party shall accord to investors in financial institutions of the other Party and to covered enterprises that are financial institutions with respect to the operation, treatment no less favourable than the treatment it accords, in like situations (2), to investors in financial institutions of a third country and to their enterprises that are financial institutions.
3. Paragraphs 1 and 2 shall not be construed as obliging a Party to extend to investors in financial institutions of the other Party or to covered enterprises that are financial institutions the benefit of any treatment resulting from measures providing for the recognition of standards, including of the standards or criteria for the authorisation, licensing or certification of a natural person or an enterprise for carrying out an economic activity, or of prudential measures.
4. For greater certainty, the treatment referred to in paragraphs 1 and 2 does not include investment dispute resolution procedures or mechanisms provided for in other international investment treaties or trade agreements. The substantive provisions in other international investment treaties or trade agreements do not in themselves constitute "treatment" as referred to in paragraphs 1 and 2, and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Party. Measures of a Party applied pursuant to such substantive provisions may constitute "treatment" under this Article and thus give rise to a breach of this Article.
Article 18.6. Market Access
1. In the sectors or subsectors listed in Sections B of Appendices 18-1 and 18-2 where market access commitments are undertaken, a Party shall not adopt or maintain, with respect to market access through the establishment or operation of financial institutions by investors of the other Party, either on the basis of its entire territory or on the basis of a territorial subdivision, a measure that:
(a) limits the number of financial institutions, whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirement of an economic needs test;
(b) limits the total value of financial service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(c) limits the total number of financial service operations or the total quantity of financial services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;
(d) limits the total number of natural persons that may be employed in a particular financial services sector or that a financial institution may employ and who are necessary for, and directly related to, the supply of a specific financial service, in the form of numerical quotas or the requirement of an economic needs test; or
(e) restricts or requires specific types of legal entity or joint venture through which a financial institution may supply a service.
2. For greater certainty, this Article does not prevent a Party from requiring a financial institution to supply certain financial services through separate legal entities if, under the law of that Party, the range of financial services supplied by the financial institution cannot be supplied through a single entity.
Article 18.7. Cross-border Supply of Financial Services
1. Articles 11.4, 11.5, 11.6 and 11.7 are incorporated into and made part of this Chapter, and apply to measures affecting cross-border financial service suppliers supplying the financial services set out in Section A of Appendices 18-1 and 18-2.
2. A Party shall permit persons located in its territory, and its natural persons wherever located, to purchase financial services from cross-border financial service suppliers of the other Party located in the territory of the other Party. This obligation does not require a Party to permit those suppliers to do business or solicit in its territory. A Party may define "do business" and "solicit" for the purposes of this obligation, provided that those definitions are not inconsistent with paragraph 1 of this Article.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration or authorisation of cross-border financial service suppliers of the other Party and of financial instruments.
Article 18.8. Senior Management and Boards of Directors
A Party shall not require that a financial institution of the other Party, which is established in its territory, appoints natural persons of a particular nationality as members of boards of directors or to a senior management position, such as executives or managers.
Article 18.9. Performance Requirements
1. A Party shall not, in connection with the establishment or operation of a financial institution of a Party or of a third country in its territory, impose or enforce any requirement or enforce any commitment or undertaking to:
(a) export a given level or percentage of goods or services;
(b) achieve a given level or percentage of domestic content;
(c) purchase, use or accord a preference to goods produced or services provided in its territory, or purchase goods or services from natural persons or enterprises in its territory;
(d) relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such financial institution;
(e) restrict sales of goods or services in its territory that such financial institution produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
(f) transfer technology, a production process or other proprietary knowledge to a natural person or an enterprise in its territory;
(g) supply exclusively from the territory of the Party the goods it produces or the services it supplies to a specific regional or world market;
(h) locate the headquarters of that financial institution for a specific region of the world, which is broader than the territory of the Party, or the world market in its territory;
(i) hire a given number or percentage of its nationals; or
(j) restrict the exportation or sale for export.
2. A Party shall not condition the receipt or continued receipt of an advantage, in connection with the establishment or operation of a financial institution of a Party or of a third country in its territory, on compliance with any of the following requirements:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use or accord a preference to goods produced or services provided in its territory, or purchase goods or services from natural persons or enterprises in its territory;
(c) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such financial institution;
(d) to restrict sales of goods or services in its territory that such financial institution produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings; or
(e) to restrict the exportation or sale for export.
3. Paragraph 2 shall not be construed as preventing a Party from conditioning the receipt or continued receipt of an advantage, in connection with the establishment or the operation of financial institutions in its territory by an investor of a Party or a third country, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory.
4. Subparagraph (f) of paragraph 1 does not apply if:
(a) a Party authorises the use of an intellectual property right in accordance with Article 31 or 31bis of the TRIPS Agreement or adopts or maintains measures requiring the disclosure of data or proprietary information that fall within the scope of, and are consistent with, paragraph 3 of Article 39 of the TRIPS Agreement; or
(b) the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal, or competition authority in order to remedy a practice determined after judicial or administrative process to be a violation of the competition laws of the Party.
5. Subparagraphs (a), (b) and (c) of paragraph 1 and subparagraphs (a) and (b) of paragraph 2 do not apply to qualification requirements for goods or services with respect to participation in export promotion and foreign aid programmes.
6. Subparagraphs (a) and (b) of paragraph 2 do not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas.
7. For greater certainty, this Article shall not be construed as requiring a Party to permit a particular service to be supplied on a cross-border basis where that Party adopts or maintains restrictions or prohibitions on such provision of services which are consistent with the reservations, conditions or qualifications specified with respect to a sector, subsector or activity listed in Annex 18.
8. This Article is without prejudice to commitments of a Party made under the WTO Agreement.
Article 18.10. Non-conforming Measures
1. Articles 18.3, 18.5, 18.7, 18.8 and 18.9 do not apply to:
(a) any existing non-conforming measure that is maintained by:
(i) for the European Union:
(A) the European Union, as set out in Section C of Appendix 18-1;
(B) the central government of a Member State, as set out in Section C of Appendix 18-1;
(C) a regional level of government of a Member State, as set out in Section C of Appendix 18-1; or
(D) a local level of government; and
(ii) for Chile:
(A) the central government, as set out in Section C of Appendix 18-2;
(B) a regional level of government, as set out in Section C of Appendix 18-2; or
(C) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a) of this paragraph; or
(c) a modification to any non-conforming measure referred to in subparagraph (a) of this paragraph to the extent that the modification does not decrease the conformity of the measure, as it existed immediately before the modification, with Articles 18.3, 18.5, 18.7, 18.8 or 18.9.
2. Articles 18.3, 18.5, 18.7, 18.8 and 18.9 do not apply to any measure of a Party with respect to sectors, subsectors or activities, as set out by that Party in Section D of Appendices 18-1 and 18-2, respectively.
3. A Party shall not, under any measure adopted after the date of entry into force of this Agreement and covered by Section D of Appendix 18-1 or 18-2, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of its financial institution existing at the time the measure becomes effective.
4. Article 18.6 does not apply to any measure of a Party with respect to sectors, subsectors or activities as set out by that Party in Section B of Appendix 18-1 or 18-2.
5. Where a Party has set out a reservation to Articles 10.6, 10.8, 10.9, 10.10, 11.4 or 11.5 in Annex 10-A or 10-B, that reservation also constitutes a reservation to Articles 18.3, 18.5, 18.7, 18.8 or 18.9, as the case may be, to the extent that the measure, sector, sub-sector or activity set out in the reservation is covered by this Chapter.
Article 18.11. Prudential Carve-out
1. Nothing in this Agreement shall prevent a Party from adopting or maintaining measures for prudential reasons, such as:
(a) for the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier; or
(b) to ensure the integrity and stability of the financial system of a Party.
2. Where such measures do not conform with the provisions of this Agreement, they shall not be used as a means of avoiding the commitments or obligations of the Party under this Agreement.
Article 18.12. Treatment of Information
Nothing in this Agreement shall be construed as requiring a Party to disclose information relating to the affairs and accounts of individual customers or any confidential or proprietary information in the possession of public entities.
Article 18.13. Domestic Regulation and Transparency
1. Chapter 13, with the exception of subparagraphs (c) to (f) of Article 13.1(5), and Chapter 29 do not apply to measures of a Party within the scope of this Chapter.
2. To the extent practicable and in a manner consistent with its legal system for adopting measures, each Party shall:
(a) publish in advance:
(i) the laws and regulations of general application it proposes to adopt in relation to matters falling within the scope of this Chapter; or
(ii) documents that provide sufficient details about such possible new laws and regulations to allow interested persons and the other Party to assess whether and how their interests might be significantly affected;
(b) provide interested persons and the other Party a reasonable opportunity to submit comments on any proposed laws and regulations or documents published pursuant to subparagraph (a);
(c) consider any comments submitted in accordance with subparagraph (b); and
(d) allow a reasonable time between the publication of any laws and regulations pursuant to subparagraph (a)(i) and the date on which financial service suppliers must comply with them.
3. This Article applies to measures of a Party relating to licensing requirements and procedures and qualification requirements and procedures, and applies only in sectors for which the Party has undertaken specific commitments under this Chapter, and to the extent that those specific commitments apply.
4. If a Party adopts or maintains measures relating to the authorisation for the supply of a financial service, it shall ensure that:
(a) those measures are based on objective and transparent criteria (1);
(b) the authorisation procedures are impartial, and adequate for applicants to demonstrate whether they meet the requirements, if such requirements exist; and
(c) the authorisation procedures do not in themselves unjustifiably prevent fulfilment of the requirements.
5. If a Party requires authorisation (1) for the supply of a financial service, it shall promptly publish or otherwise make publicly available the information necessary for the applicant to comply with the requirements and procedures for obtaining, maintaining, amending and renewing such authorisation. Such information shall include, inter alia, where available:
(a) the requirements and procedures for obtaining, maintaining, amending and renewing such authorisation;
(b) contact information of relevant competent authorities;
(c) procedures for appeal or review of decisions concerning applications;
(d) procedures for monitoring or enforcing compliance with the terms and conditions of licences and qualifications; and