(b) the purchase or use of, or payment for, a service;
(c) the access to and the use of services offered to the public generally, including distribution, transport or telecommunications networks, in connection with the supply of a service; and
(d) the presence in its Area of a service supplier of the other Party.
2. This Chapter shall not apply to:
(a) cabotage in maritime transport services;
(b) financial services, as defined in Article 128;
(c) in respect of air transport services, measures affecting traffic rights, however granted; or 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;
(d) government procurement;
(e) subsidies provided by a Party or a state enterprise, including grants, government-supported loans, guarantees and insurance;
(f) measures affecting natural persons of a Party seeking access to the employment market of the other Party, or measures regarding nationality or citizenship, or residence or employment on a permanent basis; and
(g) services supplied in the exercise of governmental authority.
Article 107. National Treatment
Each Party shall accord to services and service suppliers of the other Party treatment no less favorable than that it accords, in like circumstances, to its own services and service suppliers.
Note: For greater certainty, nothing in this Article shall 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.
Article 108. Most -Favored-Nation Treatment
Each Party shall accord to services and service suppliers of the other Party treatment no less favorable than that it accords, in like circumstances, to services and service suppliers of any non-Party.
Article 109. Local Presence
Neither Party shall require a service supplier of the other Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its
Area as a condition for the cross-border supply of a service.
Note: The term "cross-border supply of a service" has the same meaning as the term "cross-border trade in services".
Article 110. Non-Conforming Measures
1. Articles 107, 108 and 109 shall not apply to:
(a) any existing non-conforming measure that is maintained by:
(i) with respect to Chile:
(A) the national government, as set out in its Schedule in Annex 6; or
(B) a local government; and
Note: "The national government" includes regional governments.
(ii) with respect to Japan:
(A) the central government or a prefecture, as set out in its Schedule in Annex 6; or
(B) a local government other than prefectures;
(b) the continuation or prompt renewal of any non- conforming measure referred to in subparagraph (a); or
(c) an amendment or a modification to any non- conforming measure referred to in subparagraph (a), to the extent that the amendment or modification does not decrease the conformity of the measure, as it existed immediately before the amendment or modification, with Articles 107, 108 and 109.
2. Articles 107, 108 and 109 shall not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors or activities, as set out in its Schedule in Annex 7.
Article 111. Notification
1. In the case where a Party makes an amendment or a modification to any existing non-conforming measure as set out in its Schedule in Annex 6, the Party shall notify the other Party, as soon as possible, of such amendment or modification.
2. In the case where a Party adopts any measure after the entry into force of this Agreement, with respect to sectors, sub-sectors or activities as set out in its Schedule in Annex 7, the Party shall, to the extent possible, notify the other Party of such measure.
Article 112. Authorization, Qualification, Technical Standard and Licensing
With a view to ensuring that any measure adopted or maintained by a Party in any services sector relating to the authorization, qualification requirements and procedures, technical standards and licensing requirements of service suppliers of the other Party does not constitute an unnecessary barrier to cross-border trade in services, each Party shall endeavor to ensure that such measure:
(a) is based on objective and transparent criteria, such as the competence and 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 service.
Article 113. 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, 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 108 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 114. 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 cross-border trade in services, including on payments or transfers for transactions.
2. The restrictions referred to in paragraph 1:
(a) shall be applied on the basis of national treatment and most-favored-nation treatment;
(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; and
(e) shall be temporary and be phased out progressively as the situation specified in paragraph 1 improves.
3. In determining the incidence of such restrictions, a Party may give priority to the cross-border supply of services which are more essential to its 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, or any changes therein, shall be promptly notified to the other Party.
Article 115. Denial of Benefits
1. A Party may deny the benefits of this Chapter to a service supplier of the other Party that is an enterprise of the other Party, where the former Party establishes that the enterprise is owned or controlled by persons of a non- Party, and the former 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 enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise.
2. Subject to prior notification and consultation, a Party may deny the benefits of this Chapter to a service supplier of the other Party that is an enterprise of the other Party where the former Party establishes that the enterprise is owned or controlled by persons of a non-Party and has no substantial business activities in the Area of the other Party.
Article 116. Definitions
1. 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 services and does not include so-called line maintenance;
(b) 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 may be made or tickets may be issued;
(c) the term “cross-border trade in services” means the supply of a service:
(i) from the Area of a Party into the Area of the other Party;
(ii) in the Area of a Party by a natural person or an enterprise of that Party to a natural person or an enterprise of the other Party; and
(iii) by a natural person of a Party in the Area of the other Party,
but does not include the supply of services by an investment of an investor of a Party, as defined in Article 105, in the Area of the other Party;
(d) the term “measure adopted or maintained by a Party” means any measure adopted or maintained by:
(i) any level of government or authority of a Party; and
(ii) non-governmental bodies in the exercise of powers delegated by any level of government or authority of a Party;
(e) 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;
(f) the term “service supplier” means a person that seeks to supply or supplies a service;
(g) the term “supply of a service” includes the production, distribution, marketing, sale and delivery of a service;
(h) the term “the 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; and
(i) 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.
2. For the purposes of this Chapter, an enterprise is:
(a) “owned” by a person if more than 50 percent of the equity interests in it is beneficially owned by the person; and
(b) “controlled” by a person if the person has the power to name a majority of its directors or otherwise to legally direct its actions in accordance with the laws and regulations of a Party.
Chapter 10. Financial Services
Article 117. Scope
1. This Chapter shall apply to measures adopted or maintained by a Party relating to:
(a) financial institutions of the other Party;
(b) investors of the other Party, and investments of such investors, in financial institutions in the Area of the former Party; and
(c) cross-border trade in financial services.
2. Articles 81 through 86, 114 and 115 shall apply to measures described in paragraph 1, mutatis mutandis. For greater certainty, no other provision of Chapter 8 or 9 shall apply to measures described in paragraph 1.
3. This Chapter is subject to Annex 5.
4. This Chapter shall not apply to:
(a) measures adopted or maintained by a Party relating to:
(i) activities conducted by the central bank or monetary authority of the Party or by any other public entity in pursuit of monetary or exchange rate policies;
(ii) activities or services forming part of a public retirement plan or statutory system of social security, unless the Party allows any of such activities or services to be conducted by its financial institutions in competition with a public entity ora financial institution; or
(iii) activities or services conducted for the account or with the guarantee or using the financial resources of the Party, including its public entities, unless the Party allows any of such activities or services to be conducted by its financial institutions in competition with a public entity or a financial institution;
(b) government procurement;
(c) subsidies provided by a Party or a state enterprise thereof, including grants, government- supported loans, guarantees and insurance; and
(d) measures affecting natural persons of a Party seeking access to the employment market of the other Party, or measures regarding nationality or citizenship, or residence or employment on a permanent basis.
Article 118. National Treatment
1. In the sectors inscribed in its Schedule in Annex 10, subject to any conditions and qualifications set out therein, each Party shall accord to investors of the other Party treatment no less favorable than that it accords to its own investors, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, maintenance, use, enjoyment and sale or other disposition of financial institutions and investments in financial institutions in its Area.
2. In the sectors inscribed in its Schedule in Annex 10, subject to any conditions and qualifications set out therein, each Party shall accord to financial institutions of the other Party and to investments of investors of the other Party in financial institutions treatment no less favorable than that it accords to its own financial institutions, and to investments of its own investors in financial institutions, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, maintenance, use, enjoyment and sale or other disposition of financial institutions and investments.
Article 119. Market Access for Financial Institutions
1. With respect to market access for financial institutions, each Party shall accord to financial institutions of the other Party and investors of the other Party who seek to establish financial institutions in the Area of the former Party treatment no less favorable than that provided for under the terms, limitations and conditions specified in its Schedule in Annex 10.
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 in Annex 10, are defined as:
(a) limitations on the number of financial institutions whether in the form of numerical quotas, monopolies, exclusive financial institutions or the requirements of an economic needs test;
(b) limitations on the total value of financial 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 financial service operations or on the total quantity of financial service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;
Note: Subparagraph (c) does not cover measures of a Party which limit inputs for the supply of financial services.
(d) limitations on the total number of natural persons that may be employed in a particular financial service 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; and
(e) measures which restrict or require specific types of legal entity or joint venture through which a financial institution may supply a financial service.
Article 120. Cross-Border Trade
1. Each Party shall permit, under terms and conditions that accord national treatment, cross-border financial service suppliers of the other Party to supply the financial services specified in its Schedule in Annex 11, subject to any terms and conditions set out therein.
2. Each Party shall permit persons located in its Area, and its natural persons in the Area of the other Party, to purchase the financial services specified in its Schedule in Annex 12, subject to any terms and conditions set out therein, from cross-border financial service suppliers of the other Party located in the Area of the other Party. This obligation does not require a Party to permit cross-border financial service suppliers of the other Party to do business or solicit in the Area of the former Party. The former Party may define "doing business" and "solicitation" for the purposes of this Article as long as such definitions are not inconsistent with its obligations under paragraph 1.
3. A Party may require the registration of cross-border financial service suppliers of the other Party and of their financial instruments.
Article 121. New Financial Services
1. Each Party shall permit financial institutions of the other Party to offer in its Area any new financial service in sectors or sub-sectors where commitments are undertaken in its Schedule in Annex 10 and subject to the terms, limitations, conditions and qualifications set out in that Schedule and provided that the introduction of this new financial service does not require the former Party to adopt a new law or modify an existing law.
2. Each Party may determine the legal form through which the new financial service may be supplied and may require authorization for the supply of the new financial service.
Article 122. Treatment of Certain Information
Nothing in this Chapter shall be construed to require 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 123. Exceptions
Notwithstanding any other provision of this Chapter and Chapters 8 and 9, a Party shall not be prevented from adopting or maintaining measures for prudential reasons, including for the protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial institution or cross-border financial service supplier, or to ensure the integrity and stability of the financial system. Where such measures do not conform with the provisions of this Agreement, they shall not be used as a means of avoiding the Party's commitments or obligations under this Agreement.
Article 124. Self-Regulatory Organizations
Where a Party requires a financial institution of the other Party to be a member of, participate in, or have access to, a self-regulatory organization to supply a financial service in the Area of the former Party, the former Party shall ensure that such organization accords national treatment to the financial institution of the other Party.
Article 125. Payment and Clearing Systems
Under terms and conditions that accord national treatment, each Party shall grant to financial institutions of the other Party established in its Area access to payment and clearing systems operated by public entities, and to official funding and refinancing facilities available in the normal course of ordinary business. This Article is not intended to confer access to the Partyâs lender of last resort facilities.
Article 126. Committee on Financial Services
1. For the purposes of the effective implementation and operation of this Chapter, the Parties hereby establish a Committee on Financial Services (hereinafter referred to in this Article as "Committee").
2. The functions of the Committee shall be:
(a) reviewing and monitoring the implementation and operation of this Chapter;
(b) discussing any issues related to this Chapter;
(c) reporting the findings of the Committee to the Commission; and
(d) carrying out other functions as may be delegated by the Commission in accordance with Article 190.
3. The Committee shall be composed of:
(a) with respect to Japan, officials from the Ministry of Foreign Affairs and the Financial Services Agency; and
(b) with respect to Chile, officials from the Ministry of Finance (Ministerio de Hacienda).
4. The Committee shall meet at such venues and times as may be agreed by the Parties.
Article 127. Dispute Settlement
1. The consultations under Article 177 on prudential issues and other financial matters shall be participated in by:
(a) with respect to Japan, officials from the Ministry of Foreign Affairs and the Financial Services Agency; and
(b) with respect to Chile, officials from the Ministry of Finance (Ministerio de Hacienda).
2. A Party shall not be required to disclose information or refrain from taking any action with respect to specific regulatory, supervisory, administrative or enforcement Matters, solely by reason of the consultations under Article 177.
3. The arbitral tribunal established under Article 178 for disputes arising under this Chapter shall be composed entirely of arbitrators who have expertise or experience in financial services law or practice, which may include the laws and regulations of financial institutions.
Article 128. Definitions
For the purposes of this Chapter:
(a) the term “cross-border financial service supplier of a Party” means a person of a Party that is engaged in the business of supplying financial services within the Area of the Party and that seeks to supply or supplies financial services through the cross-border supply of financial services;
Note: The term “cross-border supply of financial services” has the same meaning as the term “cross-border trade in financial services”.
(b) the term “cross-border trade in financial services” means the supply of a financial service: