Article 70. Scope and Coverage

1. This Chapter shall apply to measures by a Party affecting trade in services.
2. This Chapter shall not apply to:
(a) in respect of air transport services, measures affecting traffic rights, however granted; or to measures affecting services directly related to the exercise of traffic rights, other than measures affecting:
(i) aircraft repair and maintenance services;
(ii) the selling and marketing of air transport services; and
(iii) computer reservation system services;
(b) cabotage in maritime transport services;
(c) subsidies provided by a Party or a state enterprise thereof, including grants, government-supported loans, guarantees and insurance;
(d) measures pursuant to immigration laws and regulations; and
(e) measures affecting natural persons seeking access to the employment market of a Party, or measures regarding nationality or citizenship, or residence or employment on a permanent basis.
3. Articles 72, 73 and 76 shall not apply to any measure by a Party with respect to government procurement.
4. Annex 5 provides supplementary provisions to this Chapter with respect to measures affecting the supply of financial services.

Article 71. Definitions

For the purposes of this Chapter:
(a) the term "aircraft repair and maintenance services" means such activities when undertaken on an aircraft or a part thereof while it is withdrawn from service and does not include so-called line maintenance;
(b) the term "commercial presence" means any type of business or professional establishment, including through:
(i) the constitution, acquisition or maintenance of a juridical person; or
(ii) the creation or maintenance of a branch or a representative office; within the Area of a Party for the purposes of supplying a service;
(c) the term "computer reservation system services"means services provided by computerized systems that contain information about air carriers' schedules, availability, fares and fare rules,through which reservations can be made or tickets may be issued;
(d) the term "juridical person of the other Party"means a juridical person which is either:
(i) constituted or otherwise organized under the law of the other Party; or
(ii) in the case of the supply of a service through commercial presence, owned or controlled by:
(aa) natural persons of the other Party; or
(bb) juridical persons of the other Party identified under subparagraph (i)above;
(e) a juridical person is:
(i) "owned" by persons if more than fifty (50)percent of the equity interest in it is owned by such persons;
(ii) "controlled" by persons if such persons have the power to name a majority of its directors or otherwise to legally direct its actions;
(iii) "affiliated" with another person when it controls, or is controlled by, that other person; or when it and the other person are both controlled by the same person;
(f) the term "measures by a Party" means measures taken by:
(i) central or local governments; and
(ii) non-governmental bodies in the exercise of powers delegated by central or local governments;
(g) the term "measures by a Party affecting trade in services" includes measures in respect of:
(i) the purchase, payment or use of a service;
(ii) the access to and use of, in connection with the supply of a service, services which are required by a Party to be offered to the public generally;
(iii) the presence, including commercial presence,of persons of a Party for the supply of a service in the Area of the other Party;
(h) the term "monopoly supplier of a service" means any person, public or private, which in the relevant market of the Area of a Party is authorized or established formally or in effect by that Party as the sole supplier of that service;
(i) the term "natural person of the other Party"means a natural person who resides in the otherParty or elsewhere and who under the law of the other Party is a national of the other Party;
(j) the term "sector" of a service means:
(i) with reference to a specific commitment, one or more, or all, subsectors of that service,as specified in a Party's Schedule of Specific Commitments in Part 1 of Annex 6;or
(ii) otherwise, the whole of that service sector,including all of its subsectors;
(k) the term "selling and marketing of air transport services" means opportunities for the air carrier concerned to sell and market freely its air transport services including all aspects of marketing such as market research, advertising and distribution. These activities do not include the pricing of air transport services nor the applicable conditions;
(l) the term "service consumer" means any person that receives or uses a service;
(m) the term "service of the other Party" means a service which is supplied:
(i) from or in the Area of the other Party, or in the case of maritime transport, by a vessel registered under the laws of the other Party, or by a person of the other Party which supplies the service through the operation of a vessel or its use in whole or in part; or
(ii) in the case of the supply of a service through commercial presence or through the presence of natural persons, by a service supplier of the other Party;
(n) the term "services" includes any service in any sector except services supplied in the exercise of governmental authority;
(o) the term "service supplied in the exercise of governmental authority" means any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers;
(p) the term "service supplier" means any person that supplies a service; Note: Where the service is not supplied directly by a juridical person but through other forms of commercial presence such as a branch or a representative office, the service supplier (i.e. the juridical person) shall, nonetheless, through such presence be accorded the treatment provided for service suppliers. Such treatment shall be extended to the presence through which the service is supplied and need not be extended to any other parts of the supplier located outside the Area where the service is supplied.
(q) the term "service supplier of the other Party"means any natural person of the other Party or juridical person of the other Party, that supplies a service;
(r) the term "state enterprise" means an enterprise owned or controlled by a Party;
(s) the term "supply of a service" includes the production, distribution, marketing, sale and delivery of a service;
(t) the term "trade in services" means the supply of a service:
(i) from the Area of one Party into the Area of the other Party ("cross-border mode");
(ii) in the Area of one Party to the service consumer of the other Party ("consumption abroad mode");
(iii) by a service supplier of one Party, through commercial presence in the Area of the other Party ("commercial presence mode");
(iv) by a service supplier of one Party, through presence of natural persons of that Party in the Area of the other Party ("presence of natural persons mode"); and
(u) the term "traffic rights" means the rights for scheduled and non-scheduled services to operate and/or to carry passengers, cargo and mail for remuneration or hire from, to, within, or over a Party, including points to be served, routes to be operated, types of traffic to be carried,capacity to be provided, tariffs to be charged and their conditions, and criteria for designation of airlines, including such criteria as number, ownership and control.

Article 72. Market Access

1. With respect to market access through the modes of supply defined in subparagraph (t) of Article 71, each Party shall accord services and service suppliers of the other Party treatment no less favorable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule of Specific Commitments in Part 1 of Annex 6.
Note: If a Party undertakes a market-access commitment in relation to the supply of a service through the mode of supply referred to in subparagraph (t)(i) of Article 71 and if the cross-border movement of capital is an essential part of the service itself, that Party is thereby committed to allow such movement of capital. If a Party undertakes a market-access commitment in relation to the supply of a service through the mode of supply referred to in subparagraph (t)(iii) of Article 71, it is thereby committed to allow related transfers of capital into its Area.
2. In sectors where market-access commitments are undertaken, the measures which a Party shall not maintain or adopt either on the basis of a regional subdivision or on the basis of its entire Area, unless otherwise specified in its Schedule of Specific Commitments in Part 1 of Annex 6, are defined as:
(a) limitations on the number of service suppliers whether in the form of numerical quotas,monopolies, exclusive service suppliers or the requirements of an economic needs test;
(b) limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(c) limitations on the total number of service operations or on the total quantity of service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test; Note: This subparagraph does not cover measures of a Party which limit inputs for the supply of services.
(d) limitations on the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or the requirement of an economic needs test;
(e) measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and
(f) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment.

Article 73. National Treatment

1. In the sectors inscribed in its Schedule of Specific Commitments in Part 1 of Annex 6, and subject to any conditions and qualifications set out therein, each Party shall accord to services and service suppliers of the other Party, in respect of all measures affecting the supply of services, treatment no less favorable than that it accords to its own like services and service suppliers. 

Note: Specific commitments assumed under this Article shall not be construed to require either Party to compensate for any inherent competitive disadvantages which result from the foreign character of the relevant services or service suppliers.
2. A Party may meet the requirement of paragraph 1 above by according to services and service suppliers of the other Party, either formally identical treatment or formally different treatment to that it accords to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be considered to be less favorable if it modifies the conditions of competition in favor of services or service suppliers of a Party compared to like services or service suppliers of the other Party.

Article 74. Additional Commitments

The Parties may negotiate commitments with respect to measures affecting trade in services not subject to scheduling under Articles 72 and 73, including those regarding qualifications, standards or licensing matters.Such commitments shall be inscribed in a Party's Schedule of Specific Commitments in Part 1 of Annex 6.

Article 75. Schedule of Specific Commitments

1. Each Party shall set out in a schedule the Specific Commitments it undertakes under Articles 72, 73 and 74.
2. With respect to sectors where the specific commitments are undertaken, each Schedule of Specific Commitments in Part 1 of Annex 6 shall specify:
(a) terms, limitations and conditions on market access;
(b) conditions and qualifications on national treatment;
(c) undertakings relating to additional commitments;and
(d) where appropriate, the time-frame for implementation of such commitments.
3. With respect to sectors or sub sectors where the specific commitments are undertaken and which are indicated with "SS", any terms, limitations, conditions and qualifications, referred to in subparagraphs 2(a) and (b)above, shall be limited to existing non-conforming measures.
4. Measures inconsistent with both Articles 72 and 73 shall be inscribed in the column relating to Article 72.This inscription will be considered to provide a condition or qualification to Article 73 as well. 5. Schedules of Specific Commitments shall be annexed to this Agreement as Part 1 of Annex 6.

Article 76. Most-favored-nation Treatment

1. Each Party shall accord to services and services uppliers of the other Party treatment no less favorable than that it accords, in like circumstances, to services and service suppliers of any non-Party.
2. The provision of paragraph 1 above shall not apply to any measure by a Party with respect to sectors, subsectors or activities, as set out in its Schedule to Part 2 of Annex 6.

Article 77. Authorization, Licensing or Qualification

With a view to ensuring that any measure by a Party relating to the authorization, licensing or qualification of service suppliers of the other Party does not constitute an unnecessary barrier to trade in services, each Party shall endeavor to ensure that such measure:
(a) is based on objective and transparent criteria,such as competence and the ability to supply the service;
(b) is not more burdensome than necessary to ensure the quality of the service; and
(c) does not constitute a disguised restriction on the supply of the services.

Article 78. Mutual Recognition

1. A Party may recognize the education or experience obtained, requirements met, or licenses or certifications granted in the other Party for the purposes of the fulfillment, in whole or in part, of its standards or criteria for the authorization, licensing or certification of service suppliers of the other Party.
2. Recognition referred to in paragraph 1 above, which may be achieved through harmonization or otherwise, may be based upon an agreement or arrangement between the Parties or may be accorded unilaterally.
3. Where a Party recognizes, by agreement or arrangement between the Party and a non-Party or unilaterally, the education or experience obtained, requirements met or licenses or certifications granted in the non-Party;
(a) nothing in Article 76 shall be construed to require the Party to accord such recognition to the education or experience obtained,requirements met or licenses or certifications granted in the other Party; and
(b) the Party shall accord the other Party an adequate opportunity to demonstrate that the education or experience obtained, requirements met or licenses or certifications granted in the other Party should also be recognized.

Article 79. Transparency

1. The competent authorities referred to in paragraph 2 of Article 3 shall, upon request by service suppliers of the other Party, promptly respond to specific questions from, and provide information to, the service suppliers with respect to matters referred to in paragraph 1 of Article 3, including requirements and procedures for licensing and qualification, through enquiry points. The enquiry points shall be notified to the other Party by diplomatic note on the date of entry into force of this Agreement.
2. Each Party shall prepare, forward to the other Party and make public a list providing all existing measures,within the scope of this Chapter, at the central governmental level and, in the case of Japan, prefectural governmental level, and in the case of the Philippines,provincial governmental level, which are inconsistent with Articles 72 and/or 73, whether or not these measures are included in its specific commitments in Part 1 of Annex 6.The list shall include the following elements and shall be reviewed annually and revised as necessary:
(a) sector and subsect or or matter;
(b) type of inconsistency (i.e. Market Access and/or National Treatment);
(c) legal source or authority of the measure; and
(d) succinct description of the measure. Note: The list under this paragraph will be made solely for the purposes of transparency, and shall not be construed to affect any rights and obligations of a Party under this Chapter.

Article 80. Monopolies and Exclusive Service Suppliers

1. Each Party shall ensure that any monopoly supplier of a service in its Area does not, in the supply of the monopoly service in the relevant market, act in a manner inconsistent with the Party's specific commitments.

2. Where a Party's monopoly supplier competes, either directly or through an affiliated company, in the supply of a service outside the scope of its monopoly rights and which is subject to that Party's specific commitments, the Party shall ensure that such a supplier does not abuse its monopoly position to act in its Area in a manner inconsistent with such commitments.
3. The provisions of this Article shall also apply to cases of exclusive service suppliers, where a Party,formally or in effect:
(a) authorizes or establishes a small number of service suppliers; and
(b) substantially prevents competition among those suppliers in its Area.

Article 81. Payments and Transfers

1. Except under the circumstances envisaged in Article 82, a Party shall not apply restrictions on international transfers and payments for current transactions relating to trade in services.

2. Nothing in this Chapter shall affect the rights and obligations of the Parties as members of the International Monetary Fund under the Articles of Agreement of the International Monetary Fund, including the use of exchange actions which are in conformity with the Articles of Agreement of the International Monetary Fund, provided that a Party shall not impose restrictions on any capital transactions inconsistently with its commitments under this Chapter regarding such transactions, except under Article 82, or at the request of the International Monetary Fund.

Article 82. Restrictions to Safeguard the Balance of Payments

1. In the event of serious balance-of-payments and external financial difficulties or threat thereof, a Party may adopt or maintain restrictions on trade in services,including on payments or transfers for transactions.
2. The restrictions referred to in paragraph 1 above:
(a) shall ensure that the other Party is treated as favorably as any non-Party;

(b) shall be consistent with the Articles of Agreement of the International Monetary Fund;
(c) shall avoid unnecessary damage to the commercial,economic and financial interests of the other Party;
(d) shall not exceed those necessary to deal with the circumstances described in paragraph 1 above; and
(e) shall be temporary and be phased out progressively as the situation specified in paragraph 1 above improves.
3. In determining the incidence of such restrictions, a Party may give priority to the supply of services which are more essential to their economic or development programs.However, such restrictions shall not be adopted or maintained for the purposes of protecting a particular service sector.
4. Any restrictions adopted or maintained under paragraph 1 above, or any changes therein, shall be promptly notified to the other Party.

Article 83. General Exceptions

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination against the other Party, or a disguised restriction on trade in services between the Parties, nothing in this Chapter shall be construed to prevent the adoption or enforcement by either Party of measures:
(a) necessary to protect public morals or to maintain public order; Note: The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.
(b) necessary to protect human, animal or plant life or health;
(c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Chapter including those relating to:
(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts;
(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts;
(iii) safety.

Article 84. Security Exceptions

1. Nothing in this Chapter shall be construed:
(a) to require a Party to furnish any information,the disclosure of which it considers contrary to its essential security interests; or
(b) to prevent a Party from taking any action which it considers necessary for the protection of its essential security interests:
(i) relating to the supply of services as carried out directly or indirectly for the purposes of provisioning a military establishment;
(ii) relating to the implementation of national policies or international agreements respecting the non-proliferation of weapons,or relating to fissionable and fusionable materials or the materials from which they are derived;
(iii) taken in time of war or other emergency in international relations; or
(c) to prevent a Party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
2. Each Party shall be informed to the fullest extent possible of measures taken by the other Party under subparagraphs 1(b) and (c) and of their termination.

Article 85. Denial of Benefits

1. A Party may deny the benefits of this Chapter to a service supplier of the other Party where the Party establishes that the service is being supplied by a juridical person that is owned or controlled by persons of a non-Party, and that denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party that prohibit transactions with the juridical person or that would be violated or circumvented if the benefits of this Chapter were accorded to the juridical person.
2. Subject to prior notification and consultation, a Party may deny the benefits of this Chapter to a service supplier of the other Party where the Party establishes that the service is being supplied by a juridical person that is owned or controlled by persons of a non-Party and that has no substantial business activities in the Area of that other Party. This paragraph shall not apply to maritime transport services supplied by a vessel registered under the laws of the other Party.

Article 86. Sub-committee on Trade In Services

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Trade in Services (hereinafter referred to in this Article as "the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) reviewing commitments, including the scope of commitments to be indicated with "SS" pursuant to paragraph 3 of Article 75, with respect to measures affecting trade in services in this Chapter, with a view to achieving further liberalization on a mutually advantageous basis and securing an overall balance of rights and obligations;
(b) reviewing the implementation and operation of this Chapter;
(c) exchanging information on domestic laws and regulations;
(d) discussing any issues related to this Chapter,including deadlines for preparing, forwarding to the other Party and making public the list referred to in Article 79;
(e) reporting the findings of the Sub-Committee to the Joint Committee; and
(f) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.

Chapter 8. Investment

Article 87. Scope and Coverage

1. This Chapter shall apply to measures adopted or maintained by a Party relating to:
(a) investors of the other Party; and
(b) investments of investors of the other Party in the Area of the former Party.
2. Nothing in this Chapter shall impose any obligation on either Party regarding measures pursuant to immigration laws and regulations.
3. Nothing in this Chapter shall be construed to expand the scope of the specific commitments undertaken by either Party pursuant to Chapter 7.
4. Articles 89, 90 and 93 shall not apply to any measure that the Philippines adopts or maintains relating to investors of Japan and their investments in service sectors with respect to the establishment, acquisition or expansion of investments.

Article 88. Definitions

For the purposes of this Chapter:
(a) the term "financial services" shall have the same meaning as in subparagraph 5(a) of the Annex on Financial Services of the GATS;
(b) the term "investments" means every kind of asset owned or controlled, directly or indirectly, by an investor of a Party, including:
(i) a juridical person;
(ii) shares, stocks or other forms of equity participation in a juridical person,including rights derived therefrom;
(iii) bonds, debentures, and loans and other forms of debt, including rights derived therefrom;
(iv) rights under contracts, including turnkey,construction, management, production or revenue-sharing contracts;
(v) claims to money and claims to any performance under contract having a financial value;
(vi) intellectual property rights, including copyrights, patent rights, rights relating to trademarks, industrial designs, layout-designs of integrated circuits, new varieties of plants, trade names,indications of source or geographical indications and undisclosed information;
(vii) rights conferred pursuant to laws and regulations or contracts such as concessions, licenses, authorizations, and permits; and
(viii) any other tangible and intangible, movable and immovable property, and any related property rights, such as leases, mortgages,liens and pledges; investments also include profits, capital gains,dividends, royalties, interests, fees and other current incomes accruing from investments. A change in the form in which assets are invested does not affect their character as investments;
(c) the term "investor of a Party" means:
(i) a natural person who is a national of a Party and who is not a national of the other Party; or
(ii) juridical person of a Party, that seeks to make, is making, or has made investments in the Area of the other Party. A branch of a juridical person of a non-Party,which is located in the Area of a Party, shall not be deemed as an investor of that Party;
(d) a juridical person is:
(i) "owned" by persons if more than fifty (50)percent of the equity interest in it is owned by such persons; or
(ii) "controlled" by persons if such persons have the power to name a majority of its directors or otherwise to legally direct its actions;
(e) the term "a juridical person of a Party" means a juridical person duly constituted or otherwise organized under the law of a Party, with its seat of control or substantial business activities in the Area of that Party; and
(f) the term "transfers" means transfers and international payments.

Article 89. National Treatment

Each Party shall accord to investors of the other Party and to their investments treatment no less favorable than that it accords, in like circumstances, to its own investors and to their investments with respect to the establishment, acquisition, expansion, management,operation, maintenance, use, possession, liquidation, sale,or other disposition of investments (hereinafter referred to in this Chapter as "investment activities").

Article 90. Most-favored-nation Treatment

Each Party shall accord to investors of the other Party and to their investments treatment no less favorable than that it accords, in like circumstances, to investors of a non-Party and to their investments with respect to investment activities.

Article 91. General Treatment

Each Party shall accord to investments of investors of the other Party treatment in accordance with international law, including fair and equitable treatment and full protection and security. Note: This Article prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments of investors of the other Party. The concepts of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement,does not ipso facto establish that there has been a breach of this Article.

Article 92. Access to the Courts of Justice

Each Party shall in its Area accord to investors of the other Party treatment no less favorable than the treatment which it accords, in like circumstances, to its own investors or investors of a non-Party with respect to access to its courts of justice and administrative tribunals and agencies in all degrees of jurisdiction, both in pursuit and in defense of such investors' rights.

Article 93. Prohibition of Performance Requirements

1. Neither Party shall impose or enforce, as a condition for investment activities in its Area of an investor of the other Party, any of the following requirements:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced or services provided in its Area, or to purchase goods or services from persons in its Area;
(d) to relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with investments related to such investment activities;
(e) to restrict sales of goods or services in its Area that investments related to such investment activities produce or provide by relating such sales to the volume or value of its exports or foreign exchange earnings;
(f) to appoint, as executives, managers or members of boards of directors, individuals of any particular nationality;
(g) to hire a given level of its nationals;
(h) to transfer technology, a production process or other proprietary knowledge to a person in its Area, except when the requirement:
(i) is imposed or enforced by a court,administrative tribunal or competition authority to remedy an alleged violation of competition laws; or
(ii) concerns the transfer of intellectual property rights which is undertaken in a manner not inconsistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement (hereinafter referred to in this Chapter as "the TRIPS Agreement");
(i) to locate the headquarters of that investor for a specific region or the world market in its Area;
(j) to achieve a given level or value of research and development in its Area; or
(k) to supply one or more of the goods that the investor produces or the services that the investor provides to a specific region or world market, exclusively from its Area.
2. The provision of paragraph 1 above does not preclude either Party from conditioning the receipt or continued receipt of an advantage, in connection with investment activities in its Area of an investor of the other Party,on compliance with any of the requirements set forth in subparagraphs (g) through (k) of paragraph 1 above.

Article 94. Reservations and Exceptions

1. Articles 89, 90 and 93 shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party at the central government level, as set out in its Schedule to Part l of Annex 7;
(b) any existing non-conforming measure that is maintained by:
(i) a prefecture in the case of Japan or a province in the case of the Philippines, for one (1) year after the date of entry into force of this Agreement, and thereafter as to be set out by a Party in its Schedule to Part l of Annex 7 in accordance with paragraph 2 below; or
(ii) a local government other than prefectures and provinces referred to in subparagraph (i) above;
(c) the continuation or prompt renewal of any nonconforming measure referred to in sub paragraphs (a) and (b) above; or
(d) an amendment to any non-conforming measure referred to in sub paragraphs (a) and (b) above,provided that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 89, 90 and 93.
2. Each Party shall set out in its Schedule to Part l of Annex 7, within one (1) year of the date of entry into force of this Agreement, any existing non-conforming measure maintained by a prefecture or a province referred to in subparagraph 1(b)(i) above and shall notify there ofthe other Party by a diplomatic note.
3. Articles 89, 90 and 93 shall not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors or activities, as set out in its Schedule to Part 2 of Annex 7, subject to the conditions set out therein.
4. Neither Party may, under any measure adopted after the date of entry into force of this Agreement and covered byPart 2 of Annex 7, require an investor of the other Party,by reason of its nationality, to sell or otherwise disposeof an investment existing at the time the measure becomes effective.
5. In cases where a Party makes an amendment referred to in subparagraph 1(d) above, or where a Party adopts any new or more restrictive measure with respect to sectors, subsectors or activities as set out in its Schedule to Part 2 of Annex 7 after the date of the entry into force of this Agreement, that Party shall, prior to the implementation of the amendment or the new or more restrictive measure, or in exceptional circumstances, as soon as possible thereafter: (a) notify the other Party of the following elements:
(i) sector and subsector or activity;
(ii) type of reservation;
(iii) level of Government;
(iv) measures; and
(v) description; and
(b) hold, upon request by the other Party,consultations in good faith with that other Party with a view to achieving mutual satisfaction.
6. Each Party shall endeavor, where appropriate, to reduce or eliminate the reservation set out in its Schedules to Parts 1 and 2 of Annex 7 respectively.
7. Articles 89, 90 and 93 shall not apply to any measure that a Party adopts or maintains with respect to government procurement.
8. Articles 89 and 90 shall not apply to any measure covered by an exception to the obligations under Articles 3 and 4 of the TRIPS Agreement, as specifically provided in those Articles and in Article 5 of the TRIPS Agreement.
9. Nothing in this Article shall be construed so as to derogate from the obligations of the Parties under the Agreement on Trade Related Investment Measures in Annex 1A to the WTO Agreement.

Article 95. Expropriation and Compensation

1. Neither Party shall expropriate or nationalize investments in its Area of investors of the other Party or take any measure equivalent to expropriation or nationalization (hereinafter referred to in this Chapter as"expropriation") except:
(a) for a public purpose;
(b) on anon-discriminatory basis;
(c) in accordance with due process of law; and
(d) upon payment of prompt, adequate and effective compensation.
2. Compensation shall be equivalent to the fair market value of the expropriated investments at the time when the expropriation was publicly announced or when the expropriation occurred without public announcement,whichever is the earlier. The fair market value shall not reflect any change in market value occurring because the expropriation had become publicly known earlier.
3. The compensation shall be paid without delay and shall carry an appropriate interest, taking into account the length of time from the time of expropriation until the time of payment. It shall be effectively realizable and freely transferable and shall be freely convertible, at the market exchange rate prevailing on the date of the expropriation, into the currency of the Party of the investors concerned and freely usable currencies defined in the Articles of Agreement of the International Monetary Fund.
4. The investors affected by expropriation shall have aright of access to the courts of justice or the administrative tribunals or agencies of the Party making the expropriation to seek a prompt review of the investor's case and the amount of compensation in accordance with the principles set out in this Article.

Article 96. Protection from Strife

1. Each Party shall accord to investors of the other Party that have suffered loss or damage relating to their investments in the Area of the former Party due to armed conflict or state of emergency such as revolution,insurrection, civil disturbance or any other similar event in the Area of that former Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favorable than the most favorable treatment which it accords to any investors.
2. Any payments made pursuant to paragraph 1 above shall be effectively realizable, freely convertible and freely transferable.

Article 97. Transfers

1. Each Party shall ensure that all transfers relating to investments in its Area of an investor of the other Party may be made freely into and out of its Area without delay.Such transfers shall include:
(a) the initial capital and additional amounts to maintain or increase investments;
(b) profits, capital gains, dividends, royalties,interests, fees and other current incomes accruing from investments;
(c) proceeds from the total or partial sale or liquidation of investments;
(d) payments made under a contract including loan payments in connection with investments;
(e) earnings and remuneration of personnel from the other Party who work in connection with investments in the Area of the former Party; and
(f) payments made in accordance with Articles 95 and 96.
2. Neither Party shall prevent transfers into and out of its Area from being made without delay in freely usable currencies at the market rate of exchange prevailing on the date of the transfer.
3. Notwithstanding paragraphs 1 and 2 above, a Party may delay or prevent a transfer into and out of its Area through the equitable, non-discriminatory and good-faith application of its laws relating to:
(a) bankruptcy, insolvency or the protection of the rights of creditors;
(b) issuing, trading or dealing in securities,futures, options or derivatives;
(c) criminal or penal offences;
(d) registration, reportorial and prior approval requirement concerning transfers of currency or other monetary instruments; or Note: Prior approval requirement applies only to short-term foreign currency loans with the original maturity of up to one (1) year.
(e) ensuring compliance with orders or judgments in adjudicatory proceedings.

Article 98. Subrogation

1. If a Party or its designated agency makes a payment to any of its investors pursuant to an indemnity, guarantee or insurance contract, arising from or pertaining to an investment of that investor within the Area of the other Party, that other Party shall:
(a) recognize the assignment, to the former Party or its designated agency, of any right or claim of such investor that formed the basis of such payment; and
(b) recognize the right of the former Party or its designated agency to exercise by virtue of subrogation any such right or claim to the same extent as the original right or claim of the investor.
2. Articles 95, 96 and 97 shall apply mutatis mutandis as regards payment to be made to the Party or its designated agency first mentioned in paragraph 1 above by virtue of such assignment of right or claim, and the transfer of such payment.

Article 99. General and Security Exceptions

1. Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination against the other Party, or a disguised restriction on investments of investors of the other Party in the Area of a Party,nothing in this Chapter other than Article 96 shall be construed to prevent a Party from adopting or enforcing measures:
(a) necessary to protect human, animal or plant life or health;
(b) necessary to protect public morals or to maintain public order; Note: The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.
(c) which it considers necessary for protection of its essential security interests;
(i) taken in time of war, or armed conflict, or other emergency in that Party or in international relations; or
(ii) relating to the implementation of national policies or international agreements respecting the non-proliferation of weapons;or
(d) in pursuance of its obligations under United Nations Charter for the maintenance of international peace and security.
2. In cases where a Party takes any measure, pursuant to paragraph 1 above, that does not conform with the obligations of the provisions of this Chapter other than Article 96, that Party shall, prior to the entry into force of the measure or as soon thereafter as possible, notify the other Party of the following elements:
(a) sector and subsector or activity;
(b) obligation or article in respect of the measure;
(c) legal source of the measure;
(d) succinct description of the measure; and
(e) purpose of the measure.
3. Notwithstanding the provisions of Article 89, each Party may prescribe special formalities in connection with the establishment of investments by investors of the other Party in its Area such as the compliance with registration requirements, provided that such special formalities do not impair the substance of the rights under this Chapter.

Article 100. Temporary Safeguard Measures

1. A Party may adopt or maintain measures in consistent with its obligations provided for in Article 89 relating to cross-border capital transactions and Article 97:
(a) in the event of serious balance-of-payments and external financial difficulties or threat thereof; or
(b) in cases where, in exceptional circumstances,movements of capital cause or threaten to cause serious difficulties for macroeconomic management in particular, monetary and exchange rate policies.
2. Measures referred to in paragraph 1 above:
(a) shall be consistent with the Articles of Agreement of the International Monetary Fund so long as the Party taking the measures is a party to the said Articles of Agreement;
(b) shall not exceed those necessary to deal with the circumstances set out in paragraph 1 above;
(c) shall be temporary and shall be eliminated as soon as conditions permit; and
(d) shall promptly be notified to the other Party.
3. Nothing in this Chapter shall be regarded as altering the rights enjoyed and obligations undertaken by a Party as a party to the Articles of Agreement of the International Monetary Fund.

Article 101. Prudential Measures

Notwithstanding any other provisions of this Chapter,a Party may adopt or maintain measures relating to financial services for prudential reasons, including measures for the protection of investors, depositors,policy holders or persons to whom a fiduciary duty is owed by a person supplying financial services, or to ensure the integrity and stability of the financial system. Where such measures do not conform with the provisions of this Chapter, they shall not be used as a means of avoiding the Party's commitments or obligations under this Chapter.

Article 102. Environmental Measures

Each Party recognizes that it is inappropriate to encourage investments by investors of the other Party by relaxing its environmental measures. To this effect each Party should not waive or otherwise derogate from such environmental measures as an encouragement for establishment, acquisition or expansion in its Area of investments by investors of the other Party.

Article 103. Investment and Labor

1. The Parties recognize that it is inappropriate to encourage investment by weakening or reducing the protections afforded in domestic labor laws. Accordingly, each Party shall strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws in a manner that weakens or reduces adherence to the internationally recognized labor rights referred to in paragraph 2 below as an encouragement for the establishment, acquisition, expansion or retention of an investment in its Area. If a Party considers that the other Party has offered such an encouragement, it may request consultations with the other Party and the Parties shall consult with a view to avoiding any such encouragement.
2. For purposes of this Article, "labor laws" means each Party's laws or regulations that are directly related tothe following internationally recognized labor rights:
(a) the right of association;
(b) the right to organize and bargain collectively;
(c) a prohibition on the use of any form of forced or compulsory labor;
(d) labor protections for children and young people,including a minimum age for the employment of children and the prohibition and elimination of the worst forms of child labor; and
(e) acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

Article 104. Taxation Measures as Expropriation

1. Article 95 shall apply to taxation measures, to the extent that such taxation measures constitute expropriation as provided for in paragraph 1 of Article 95.
2. Where paragraph 1 above applies, Articles 92 and 106 shall also apply in respect of taxation measures.

Note: A taxation measure which is applied in a nondiscriminatory manner shall not be considered to constitute expropriation.

Article 105. Denial of Benefits

A Party may deny the benefits of this Chapter to an investor of the other Party that is a juridical person of such Party and to an investment of such investor if the juridical person is owned or controlled by investors of anon-Party and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party that prohibit transactions with the juridical person or that would be violated or circumvented if the benefits of this Chapter were accorded to the juridical person or to its investments.

Article 106. Sub-committee on Investment

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Investment(hereinafter referred to in this Article as "the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) reviewing the implementation and operation of this Chapter;
(b) reviewing the reservations set out in the Schedules to Parts 1 and 2 of Annex 7 for the purposes of contributing to the reduction or elimination, where appropriate, of such reservation, and encouraging favorable conditions for investors of both Parties;
(c) discussing any issues related to this Chapter, including issues related to taxation measures as expropriation;
(d) reporting the findings of the Sub-Committee to the Joint Committee; and
(e) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.

Article 107. Further Negotiation

1. The Parties shall enter into negotiations after the date of entry into force of this Agreement to establish a mechanism for the settlement of an investment dispute between a Party and an investor of the other Party.
2. In the absence of the mechanism for the settlement of an investment dispute between a Party and an investor of the other Party, the resort to international conciliation or arbitration tribunal is subject to mutual consent of the parties to the dispute. This means that the disputing Party may, at its option or discretion, grant or deny its consent in respect of each particular investment dispute and that, in the absence of the express written consent of the disputing Party, an international conciliation or arbitration tribunal shall have no jurisdiction over the investment dispute involved.

Chapter 9. Movement of Natural Persons

Article 108. Scope and Coverage

1. This Chapter shall apply to measures affecting the movement of natural persons of a Party who enter into theother Party and who fall under one of the categories in paragraph 1 of Article 110.
2. This Chapter shall not apply to measures regarding nationality or citizenship, or residence or employment on a permanent basis.
3. This Chapter shall not prevent a Party from applying measures to regulate the entry of natural persons of the other Party into, or their temporary stay in, the former Party, including the requiring of visas from nationals of the other Party or such measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across, its borders, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to the other Party under the terms of a specific commitment.

Article 109. Definition

For the purposes of this Chapter, the term "natural person of the other Party" means a natural person whore sides in the other Party or elsewhere and who under the law of the other Party is a national of the other Party.

Article 110. Specific Commitments

1. Each Party shall set out in Annex 8 the specific commitments it undertakes for:
(a) short-term business visitors of the other Party;
(b) intra-corporate transferees of the other Party;
(c) investors of the other Party;
(d) natural persons of the other Party who engage in professional services;
(e) natural persons of the other Party who engage in supplying services, which require technology or knowledge at an advanced level or which require specialized skills belonging to particular fields of industry, on the basis of a contract with public or private organizations in the former Party; and
(f) natural persons of the other Party who engage in supplying services as nurses or certified care workers or related activities, on the basis of a contract with public or private organizations in the former Party or on the basis of admission to public or private training facilities in the former Party.
2. Natural persons covered by a specific commitment referred to in paragraph 1 above shall be granted entry and temporary stay in accordance with the terms and conditions of the specific commitment set out in Annex 8, provided that the natural persons comply with immigration laws and regulations applicable to entry and temporary stay which are not inconsistent with the provisions of this Chapter.
3. Neither Party shall impose or maintain any quantitative restriction on the number of natural persons to be granted entry and temporary stay under paragraph 1 above, without prejudice to any right of either Party to regulate the entry and temporary stay of natural persons of the other Party for the orderly implementation of the specific commitments under this Article.

Article 111. Requirements and Procedures Relating to the Movement of Natural Persons

1. Each Party shall establish and make publicly available requirements and procedures for application for a renewal of the period of temporary stay, a change of status of temporary stay or an issuance of a work permit for a natural person of the other Party who has been granted entry and temporary stay under paragraph 2 of Article 110.
2. Each Party shall endeavor to provide, upon request by a natural person of the other Party, information on requirements and procedures for applications referred to in paragraph 1 above.
3. Each Party shall ensure that fees charged by its competent authorities on application referred to in paragraph 1 above do not in themselves represent an unjustifiable impediment to movement of natural persons under this Chapter.
4. Each Party shall endeavor, to the maximum extent possible, to undertake measures to simplify the requirements and facilitate the procedures relating to the movement of natural persons of the other Party. Specific commitments on such measures shall be set out in Annex 8.

Article 112. Mutual Recognition

1. For the purposes of smooth movement of natural persons under this Chapter, a Party may recognize the education or experience obtained, requirements met, or licenses or certifications granted in the other Party for the purposes of the fulfillment, in whole or in part, of its standards or criteria for the authorization, licensing or certification of natural persons of the other Party.
2. Recognition referred to in paragraph 1 above, which may be achieved through harmonization or otherwise, may be based upon an agreement or arrangement between the Parties or may be accorded unilaterally.
3. Where a Party recognizes, by agreement or arrangement between the Party and a non-Party or unilaterally, the education or experience obtained, requirements met, or licenses or certifications granted in the non-Party, the Party shall accord the other Party an adequate opportunity to demonstrate that the education or experience obtained,requirements met or licenses or certifications granted in the other Party should also be recognized.

Article 113. Sub-committee on Movement of Natural Persons

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Movement of Natural Persons (hereinafter referred to in this Chapter as"the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) reviewing scope of commitments under this Chapter including examining possibilities of making other commitments on supplying service, that are not included in the specific commitments under paragraph 1 of Article 110 and of mutual interest to both Parties;
(b) reviewing the implementation and operation of this Chapter;
(c) discussing any issues related to this Chapter;
(d) reporting the findings of the Sub-Committee to the Joint Committee; and
(e) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.
3. The Sub-Committee shall be composed of representatives of the Governments of the Parties.
4. The Sub-Committee shall meet at least once a year.
5. (a) For purposes of the effective implementation and operation of Section 6 in Annex 8, the Sub-Committee shall establish a Special Sub-Committee on Nurses and Certified Careworkers.
(b) The functions of the Special Sub-Committee shall be:
(i) reviewing the implementation and operation of the said Section;
(ii) discussing any issues related to the said Section; and
(iii) reporting the findings of the Special Sub-Committee, through the Sub-Committee, to the Joint Committee.
(c) The Special Sub-Committee shall be composed of representatives of the Governments of the Parties.
6. (a) For purposes of the effective implementation and operation of Article 112, the Sub-Committee shall establish a Special Sub-Committee on Mutual Recognition.
(b) The functions of the Special Sub-Committee shall be:
(i) reviewing the implementation and operation of the said Article;
(ii) discussing any issue related to the said Article; and
(iii) reporting the findings of the Special Sub-Committee, through the Sub-Committee, to the Joint Committee.
(c) The Special Sub-Committee shall be composed of representatives of the Governments of the Parties.

Article 114. General Exceptions

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination against the other Party, or a disguised restriction on movement of natural persons between the Parties, nothing in this Chapter shall be construed to prevent the adoption or enforcement by either Party of measures:
(a) necessary to protect public morals or to maintain public order; Note: The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.
(b) necessary to protect human, animal or plant life or health; or
(c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Chapter including those relating to:
(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts;
(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; or
(iii) safety.

Article 115. Security Exceptions

Nothing in this Chapter shall be construed:
(a) to require a Party to furnish any information the disclosure of which it considers contrary to its essential security interests;
(b) to prevent a Party from taking any action which it considers necessary for the protection of its essential security interests:
(i) relating to the supply of services as carried out directly or indirectly for the purposes of provisioning a military establishment;
(ii) relating to the implementation of national policies or international agreements respecting the non-proliferation of weapons,or relating to fissionable and fusionable materials or the materials from which they are derived; or
(iii) taken in time of war or other emergency in international relations; or
(c) to prevent a Party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

Article 116. Review

The Parties shall undertake a review of the implementation and operation of, scope of commitmentsunder, and any issues related to, this Chapter, taking intoaccount the report of the Sub-Committee, every five (5)years after the entry into force of this Agreement andfurther whenever agreed by the Parties.

Chapter 10. Intellectual Property

Article 117. General Provisions

1. The Parties shall ensure adequate and nondiscriminatory protection of intellectual property,efficient and transparent administration of intellectual property protection system, and adequate and effective enforcement of intellectual property rights against infringement, counterfeiting and piracy, in accordance with the provisions of this Chapter and the international agreements to which both Parties are parties.
2. The Parties, recognizing the growing importance of intellectual property for promoting economic competitiveness in the knowledge-based economy, and of intellectual property protection in this new environment,shall develop and strengthen their cooperation in the field of intellectual property.
3. Intellectual property referred to in this Chapter shall cover all categories of intellectual property:
(a) that are subject of Articles 123 through 128;and/or
(b) that are under the TRIPS Agreement and/or the relevant international agreements referred to in the TRIPS Agreement.

Article 118. Definitions

For the purposes of this Chapter:
(a) the term "Paris Convention" means the Stockholm Act of 1967 of the Paris Convention for the Protection of Industrial Property;
(b) the term "rights management information" means information which identifies a work, performance or phonogram; the author of the work, the performer of the performance or the producer of the phonogram; the owner of any right in the work, performance or phonogram; or information about the terms and conditions of the use of the work, performance or phonogram; and any numbers or codes that represent such information, when any of these items of information is attached to a copy of a work, a fixed performance or a phonogram or appears in connection with the communication or making available of a work, a fixed performance or a phonogram to the public;and
(c) the term "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement.

Article 119. Cooperation

1. The areas and forms of cooperation referred to in paragraph 2 of Article 117 may include, but not be limited to:
(a) exchange of information and experts in the field of intellectual property;
(b) strengthening the intellectual property protection system;
(c) promotion of mutual understanding of intellectual property protection system of each Party;
(d) promotion of public awareness on intellectual property;
(e) organizing international symposiums, workshops and fairs; and
(f) technical assistance to be agreed upon between the Parties in the development of information and communications technology-related projects for efficient administration of intellectual property protection system.
2. The implementation of such cooperation shall be subject to the availability of appropriated funds and the applicable laws and regulations of each Party.
3. Costs of such cooperation shall be borne in as an equitable manner as possible between the Parties through efficient and effective utilization of resources. 4. The dispute settlement procedures provided for in Chapter 15 shall not apply to this Article. Any differences between the Parties as to the implementation of this Article may be, upon agreement between the Parties,referred to the Sub-Committee on Intellectual Property for appropriate action.

Article 120. Streamlining and Harmonization of Procedural Matters

1. For the purposes of providing efficient administration of intellectual property protection system, each Party shall endeavor to streamline its administrative procedures concerning intellectual property.
2. No Party may require the authentication of signatures or other means of self-identification on documents to be submitted to the competent authority of the Party, including applications, translations into a language accepted by such authority of any earlier application whose priority is claimed, powers of attorney and certifications of assignment, in the course of application procedure or other administrative procedures on patents, utility models, industrial designs, or trademarks except as provided in paragraph 3 below.
3. A Party may require as exceptions to paragraph 2 above:
(a) the authentication of signatures or other means of self-identification, if the law of the Party so provides, where the signatures or other means of self-identification concern the surrender of a patent or a registration of utility models, industrial designs or trademarks; and
(b) the submission of evidence if there is reasonable doubt as to the authenticity of signatures or other means of self-identification on documents submitted to the competent authority of the Party. Where the competent authority notifies the person that evidence is required, the notification shall state the substantial reason for requiring the submission.
4. Where the certification of a translation of an earlier application whose priority is claimed is required by a Party under its laws and regulations, such a requirement shall be deemed to be satisfied by the submission of a written statement by the translator that, to the best of his knowledge, the translation of the earlier application is faithful and accurate.
5. Applications for and registrations of relevant intellectual property rights and publications thereof shall be classified in accordance with the laws and regulations of each Party and, to the extent possible, in conformity with the international patent classification system and international classification system of goods and services for the purposes of the registration of marks under existing international intellectual property agreements administered under the auspices of the World Intellectual Property Organization.

Article 121. Transparency

For the purposes of further promoting transparency in the administration of its intellectual property protection system, each Party shall, in accordance with its laws and regulations, take appropriate measures to:
(a) publish information on applications for and grants of patents, and applications for registrations of and registrations of utility models, industrial designs, trademarks, layout-designs of integrated circuits and new varieties of plants, and make easily available to the public information contained in the files thereof held by the competent authority; and
(b) make easily available to the public information on intellectual property protection system including information on its efforts to provide effective enforcement of intellectual property rights.

Article 122. Promotion of Public Awareness Concerning Protection of Intellectual Property

The Parties shall take necessary measures to enhance public awareness of protection of intellectual property including educational and dissemination projects on the use of intellectual property as well as on the enforcement of intellectual property rights.

Article 123. Patents

Each Party shall, in accordance with its laws and regulations, ensure that any applicant for a patent may file a request to the competent authority that his application be examined promptly.

Note: For the purpose of this Article, the term "competent authority" means, for the Philippines, the Director of the Bureau of Patents of the Intellectual Property Office.

Article 124. Industrial Designs

Each Party shall provide for the protection of industrial designs in accordance with the TRIPS Agreement. 

Article 125. Trademarks for Goods and Services

Each Party shall provide for the protection of trademarks in accordance with the Paris Convention and the TRIPS Agreement.

Article 126. Copyright and Related Rights

1. Each Party shall provide to authors, performers and producers of phonograms the exclusive right of authorizing the making available to the public of their works,performances fixed in phonograms and phonograms,respectively, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them.
2. Each Party shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors,performers or producers of phonograms in connection with the exercise of their rights under the laws and regulations of the Party and that restrict acts, in respect of theirworks, performances or phonograms, which are not authorized by the authors, performers or producers of phonograms concerned or permitted by the laws and regulations of the Party.
3. Each Party shall provide adequate and effective legal remedies against any person knowingly performing any of the following acts knowing, or with respect to civil remedies having reasonable grounds to know, that it will induce,enable, facilitate or conceal an infringement of copyrights and related rights:
(a) to remove or alter any electronic rights management information without authority;
(b) to distribute, import for distribution,broadcast, communicate or make available to the public, without authority, works, copies of works, performances, copies of fixed performances or phonograms knowing that electronic rights management information has been removed or altered without authority.

Article 127. New Varieties of Plants

Each Party recognizes the importance of providing a system of protection of new varieties of plants and shall,within its capabilities, endeavor to increase the number of plant genera and species that can be protected under its laws and regulations. In this regard, each Party shall consider the concerns of the other Party.

Article 128. Unfair Competition

1. Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.
2. Each Party shall, in accordance with its laws and regulations, ensure that any acts of unfair competition,which shall include, but not be limited to, the following acts, are prohibited:
(a) acts of selling goods which imitate the appearance of another person's goods; and
(b) acts of such a nature as to create confusion by any means whatever with the services of a competitor.
3. Each Party shall ensure in its laws and regulations adequate and effective protection of undisclosed information in accordance with the TRIPS Agreement.

Article 129. Enforcement

1. Each Party shall, in accordance with its laws and regulations consistent with the TRIPS Agreement, provide for procedures concerning the suspension by the customs authority of the release of infringing goods in cases of infringement of patents, utility models, industrial designs, trademarks or copyrights and related rights.
2. Each Party shall ensure that the right holder of intellectual property has the right to claim against the infringer damages adequate to compensate for the injury the right holder has suffered because of an infringement of that person's intellectual property right by an infringer who knowingly, or with reasonable grounds to know, engaged in infringing activity.
3. Each Party shall provide for criminal procedures and penalties to be applied in cases of wilful trademark counterfeiting, copyright piracy, infringement of right relating to new varieties of plants or infringement or repetition of infringement, as the case may be, of patents,utility models, industrial designs or layout-designs of integrated circuits on a commercial scale. Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity as may be provided for in the laws and regulations of each Party.

Article 130. Sub-committee on Intellectual Property

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Intellectual Property (hereinafter referred to in this Article as "the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) reviewing the implementation and operation of this Chapter;
(b) discussing the following issues, as appropriate,related to intellectual property with a view to enhancing protection of intellectual property and enforcement of intellectual property rights:
(i) scope of patentable inventions and of priorart;
(ii) translation requirements of priority documents;
(iii) scope of registrable industrial designs;
(iv) protection of well-known trademarks;
(v) international system for trade markregistration;
(vi) liability of internet service providers;
(vii) collective management organizations for copyright and related rights;
(viii) protection of new varieties of plants;
(ix) adequate and effective enforcement; and
(x) fair and equitable enforcement procedures,including procedures for border measures;
(c) reporting the findings of the Sub-Committee to the Joint Committee;
(d) making appropriate recommendations, as needed, to the Joint Committee; and
(e) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.
3. The Sub-Committee shall meet at such venue and times as may be agreed by the Parties.

Chapter 11. Government Procurement

Article 131. Procurement Principles

The Parties recognize that it is important for a Party to accord national treatment and most-favored-nation treatment to goods, services and suppliers of the other Party with respect to the measures regarding government procurement, and that it is desirable to provide transparency of the measures regarding government procurement, with a view to achieving greater liberalization and expansion of trade between the Parties. The Parties also recognize the need to take into account the development, financial and trade needs of the Parties. Each Party shall ensure a fair and effective implementation of the measures regarding government procurement.

Article 132. Negotiations on Non-discrimination

In the event that a Party offers a non-Party any advantages of access to its government procurement market or any advantageous treatment concerning the measures regarding government procurement, the former Party shall consent to enter into negotiations with the other Party with a view to extending these advantages or advantageous treatment to the other Party.

Article 133. Sub-committee on Government Procurement

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Government Procurement (hereinafter referred to in this Article as"the Sub-Committee" ) shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) exchanging information on the measures regarding government procurement of each Party;
(b) analyzing available information on each Party's government procurement market;
(c) discussing any issues relating to government procurement, including:
(i) possibility of according national treatment and most-favored-nation treatment to goods, services and suppliers of the other Party;
(ii) enhancement of transparency;
(iii) fair and effective implementation of the measures regarding government procurement including challenge procedures; and
(iv) consistency of each Party's measures regarding government procurement with international principles on government procurement, such as, but not limited to, the Agreement on Government Procurement in Annex 4 to the WTO Agreement (hereinafter referred to in this Chapter as "the GPA");
(d) reporting the findings of the Sub-Committee to the Joint Committee; and
(e) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.
3. The Sub-Committee shall meet at such venue as may be agreed by the Parties and shall make efforts to meet once a year.

Article 134. Further Negotiations

The Parties shall enter into negotiations at the earliest possible time, not later than five (5) years after the date of the entry into force of this Agreement, with a view to liberalizing their respective government procurement markets. In such negotiations, the Parties shall review all aspects of their measures regarding government procurement and shall consider the following factors:
(a) according national treatment and most-favored nation treatment to goods, services and suppliers of the other Party;
(b) enhancement of transparency;
(c) consistency of each Party's measures regarding government procurement with international principles on government procurement, such as, but not limited to, the GPA; and
(d) other matters necessary for a fair and effective implementation of the measures regarding government procurement including challenge procedures.

Chapter 12. Competition

Article 135. Promotion of Competition by Addressing Anti-competitive Activities

1. Each Party shall, in accordance with its applicable laws and regulations, take measures which it considers appropriate to promote competition by addressing anti-competitive activities, in order to facilitate trade and investment flows between the Parties and the efficient functioning of its market. Any such measures shall be taken in conformity with the principles of transparency, non-discrimination and procedural fairness.
2. Each Party shall, when necessary, review and improve or adopt laws and regulations to effectively promote competition by addressing anti-competitive activities.

Article 136. Cooperation on Promoting Competition by Addressing Anti-competitive Activities

1. The Parties shall, in accordance with their respective laws and regulations, cooperate in the field of promoting competition by addressing anti-competitive activities, subject to their respective available resources.
2. The details and procedures of cooperation under this Article shall be specified in the Implementing Agreement.

Article 137. Non-application of Chapter 15

The dispute settlement procedures provided for in Chapter 15 shall not apply to this Chapter.

Chapter 13. Improvement of the Business Environment

Article 138. Principles and Cooperation

1. Each Party shall, in accordance with its laws and regulations, take appropriate measures to further improve the business environment for the persons of the other Party conducting their business activities in the Area of the former Party.
2. The Parties shall, in accordance with their respective laws and regulations, promote cooperation to further improve the business environment in the Area of the Parties and take necessary measures including establishing such institutions as provided for in Articles 139, 140 and 141.