Article 112. Licences
1. Three years after the entry into force of this Agreement, a licence may only be required for services which are within the scope of the universal service.
2. Where a licence is required, the following shall be made publicly available:
(a) all the licensing criteria and the period of time normally required to reach a decision concerning an application for a licence; and
(b) the terms and conditions of licences.
3. The reasons for denial of a licence shall be made known to the applicant upon request and an appeal procedure through an independent body will be established by each Party. Such a procedure will be transparent, non-discriminatory, and based on objective criteria.
Article 113. Independence of the Regulatory Body
The regulatory body shall be legally separate from and not accountable to any supplier of postal and courier services. The decisions of and the procedures used by the regulatory body shall be impartial with respect to all market participants.
Article 114. Regulatory Approximation
1. The Parties recognise the importance of the approximation of Ukraine's existing legislation to that of the European Union. Ukraine shall ensure that its existing laws and future legislation will be gradually made compatible with the EU acquis.
2. Such approximation will start on the date of signing of this Agreement, and will gradually extend to all the elements of the EU acquis referred to in Annex XVII to this Agreement.
Subsection 5. Electronic Communications
Article 115. Scope and Definitions
1. This Sub-section sets out the principles of the regulatory framework for all electronic communication services liberalised pursuant to Sections 2, 3 and 4 of this Chapter excluding broadcasting.
2. For the purposes of this Sub-section and Sections 2, 3 and 4 of this Chapter:
(a) "electronic communication services" means all services that consist of the transmission and reception of electromagnetic signals and are normally provided for remuneration, excluding broadcasting, which does not cover the economic activity consisting in the provision of content that requires telecommunications for its transport. Broadcasting is defined as the uninterrupted chain of transmission required for the distribution of television and radio programme signals to the general public, but does not cover contribution links between operators;
(b) "public communication network" means an electronic communication network used wholly or mainly for the provision of publicly available electronic communication services;
(c) "electronic communication network" means transmission systems and, where applicable, switching or routing equipment and other resources which permit the conveyance of signals by wire, by radio, by optical or by other electromagnetic means, including satellite networks, fixed (circuit- and packet-switched, including Internet) and mobile terrestrial networks, and electricity cable systems, to the extent that they are used for the purpose of transmitting signals, networks used for radio and television broadcasting, and cable television networks, irrespective of the type of information conveyed;
(d) a "regulatory authority" in the electronic communication sector means the body or bodies charged with the regulation of electronic communication mentioned in this Chapter;
(e) a service supplier shall be deemed to have "significant market power" if, either individually or jointly with others, it enjoys a position equivalent to dominance, that is to say a position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers;
(f) "interconnection" means the physical and/or logical linking of public communication networks used by the same or a different service supplier in order to allow the users of one service supplier to communicate with users of the same or another service supplier, or to access services provided by another service supplier. Services may be provided by the parties involved or other parties who have access to the network. Interconnection is a specific type of access implemented between public network operators;
(g) "universal service" means the set of services of specified quality that is made available to all users in the territory of a Party regardless of their geographical location and at an affordable price; its scope and implementation are decided by each Party;
(h) "access" means the making available of facilities and/or services, to another service supplier, under defined conditions, on either an exclusive or non-exclusive basis, for the purpose of providing electronic communication services. It covers, inter alia, access to network elements and associated facilities, which may involve the connection of equipment by fixed or non-fixed means (in particular this includes access to the local loop and to facilities and services necessary to provide services over the local loop), access to physical infrastructure including buildings, cable ducts, and masts; access to relevant software systems including operational support systems, access to numbering translation or systems offering equivalent functionality, access to fixed and mobile networks, in particular for roaming, access to conditional access systems for digital televisions services, access to virtual network services;
(i) "end-user" means a user not providing public communication networks or publicly available electronic communication services;
G) "local loop" means the physical circuit connecting the network ter- mination point at the subscriber's premises to the main distribution frame or equivalent facility in the fixed public communication network.
Article 116. Regulatory Authority
1. The Parties shall ensure that regulatory authorities for electronic communication services are legally distinct and functionally independent from any service supplier of electronic communication services. If a Party retains ownership or control of a service supplier providing public communication networks or services, such Party shall ensure the effective structural separation of the regulatory function from activities associated with ownership or control.
2. The Parties shall ensure that the regulatory authority is sufficiently empowered to regulate the sector. The tasks to be undertaken by a regulatory authority shall be made public in an easily accessible and clear form, in particular where those tasks are assigned to more than one body.
3. The Parties shall ensure that the decisions of and the procedures used by the regulatory authorities are impartial with respect to all market participants and transparent.
4. The regulatory authority shall have the power to carry out an analysis of the indicative list of relevant product and service markets included in the Annexes (1) to this Agreement. Where the regulatory authority is required to determine under Article 118 of this Agreement whether to impose, maintain, amend or withdraw obligations, it shall determine on the basis of a market analysis whether the relevant market is effectively competitive.
5. Where the regulatory authority determines that a relevant market is not effectively competitive, it shall identify and designate service suppliers with significant market power on that market and shall impose, maintain or amend specific regulatory obligations referred to in Article 118 of this Agreement as it is appropriate. Where the regu- latory authority concludes that the market is effectively competitive it shall not impose or maintain any of the regulatory obligations referred to in Article 118 of this Agreement.
6. The Parties shall ensure that a service supplier affected by the decision of a regulatory authority shall have a right to appeal against that decision to an appeal body that is independent of the parties involved in the decision. The Parties shall ensure that the merits of the case are duly taken into account. Pending the outcome of any such appeal, the decision of the regulator shall stand, unless the appeal body decides otherwise. Where the appeal body is not judicial in character, written reasons for its decision shall always be given and its decisions shall also be subject to review by an impartial and inde- pendent judicial authority. Decisions taken by appeal bodies shall be effectively enforced.
7. The Parties shall ensure that where the regulatory authorities intend to take measures related to any of the provisions of this Sub-section and which have a significant impact on the relevant market, they give the interested parties the opportunity to comment on the draft measure within a reasonable period of time. Regulators shall publish their consultation procedures. The results of the consultation procedure shall be made publicly available except in the case of confidential information.
8. The Parties shall ensure that service suppliers providing electronic communication networks and services provide all the information, including financial information, necessary for regulatory authorities to ensure conformity with the provisions of this Sub-section or decisions made in accordance with this Sub-section. These service suppliers shall provide such information promptly on request and to the timescales and level of detail required by the regulatory authority. The information requested by the regulatory authority shall be proportionate to the performance of that task. The regulatory authority shall give the reasons justifying its request for information.
Article 117. Authorisation to Provide Electronic Communication Services
1. The Parties shall ensure that the provision of services is authorised, as much as possible, following mere notification and/or registration.
2. The Parties shall ensure that a licence can be required to address issues of attributions of numbers and frequencies. The terms and conditions for such licences shall be made publicly available.
3. The Parties shall ensure that where a licence is required:
(a) all the licensing criteria and a reasonable period of time normally required to reach a decision concerning an application for a licence are made publicly available;
(b) the reasons for the denial of a licence are made known in writing to the applicant upon request;
(c) the applicant of a licence is able to seek recourse before an appeal body in case that a licence is unduly denied;
(d) licence fees (1) required by any Party for granting a licence do not exceed the administrative costs normally incurred in the management, control and enforcement of the applicable licences. Licence fees for the use of radio spectrum and numbering resources are not subject to the requirements of this paragraph.
Article 118. Access and Interconnection
1. The Parties shall ensure that any service supplier authorised to provide electronic communication services has the right and obligation to negotiate interconnection with other providers of publicly available electronic communications networks and services. Interconnection should in principle be agreed on the basis of commercial negotiation between the legal persons concerned.
2. The Parties shall ensure that service suppliers that acquire information from another service supplier during the process of negotiating interconnection arrangements use that information solely for the purpose for which it was supplied and respect at all times the confidentiality of information transmitted or stored.
3. The Parties shall ensure that upon the finding in accordance with Article 116 of this Agreement that a relevant market, including those in the attached Annexes to this Agreement, is not effectively competitive, the regulatory authority has the power to impose on the service supplier designated as having significant market power one or more of the following obligations in relation to interconnection and/or access:
(a) obligation of non-discrimination to ensure that the operator applies equivalent conditions in equivalent circumstances to other service suppliers providing equivalent services, and provides services and information to others under the same conditions and of the same quality as it provides for its own services, or those of its subsidiaries or partners;
(b) obligation on a vertically integrated company to make transparent its wholesale prices and its internal transfer prices, where there is a requirement for non-discrimination or for prevention of unfair cross-subsidy. The regulatory authority may specify the format and accounting methodology to be used;
(c) obligations to meet reasonable requests for access to, and use of, specific network elements and associated facilities including unbundled access to the local loop, inter alia, in situations where the regulatory authority considers that denial of access or unreasonable terms and conditions having a similar effect would hinder the emergence of a sustainable competitive market at the retail level, or would not be in the end-user's interest;
(d) obligation to provide specified services on a wholesale basis for resale by third parties; to grant open access to technical interfaces, protocols or other key technologies that are indispensable for the interoperability of services or virtual network services; to provide co-location or other forms of facility sharing, including cable duct, building or mast sharing; to provide specified services needed to ensure interoperability of end-to-end services to users, including facilities for intelligent network services; to provide access to operational support systems or similar software systems necessary to ensure fair competition in the provision of services; to interconnect networks or network facilities.
Regulatory authorities may attach conditions including fairness, reasonableness and timeliness to the obligations included under points (c) and (d) of this paragraph;
(e) obligations relating to cost recovery and price controls, including obligations for cost orientation of prices and obligations concerning cost accounting systems, for the provision of specific types of interconnection and/or access, in situations where a market analysis indicates that a lack of effective competition means that the operator concerned might sustain prices at an excessively high level, or apply a price squeeze, to the detriment of end-users;
Regulatory authorities shall take into account the investment made by the operator and allow him a reasonable rate of return on adequate capital employed.
(f) obligation to publish the specific obligations imposed on a service supplier by the regulatory authority identifying the specific product/ service and geographical markets. Up-to-date information, provided that it is not confidential and does not comprise business secrets is to be made publicly available in a manner that guarantees all interested parties easy access to that information;
(g) obligations of transparency requiring operators to make public specified information and in particular, where an operator has obligations of non-discrimination, the regulator may require that operator to publish a reference offer, which shall be sufficiently unbundled to ensure that service suppliers are not required to pay for facilities which are not necessary for the service requested, giving a description of the relevant offerings broken down into components according to market needs, and the associated terms and conditions including prices.
4. The Parties shall ensure that a service supplier requesting interconnection with a service supplier designated as having significant market power shall have recourse, either at any time or after a reasonable period of time which has been made publicly known, to an independent domestic body, which may be a regulatory body as referred to in Article 115(2)(d) of this Agreement, to resolve disputes regarding terms and conditions for interconnection and/or access.
Article 119. Scarce Resources
1. The Parties shall ensure that any procedures for the allocation and use of scarce resources, including frequencies, numbers and rights of way, shall be carried out in an objective, proportionate, timely, transparent and non-discriminatory manner. The current state of allocated frequency bands shall be made publicly available, but detailed identification of frequencies allocated for specific government uses is not required.
2. The Parties shall ensure the effective management of radio frequencies for telecommunications services in their territory with a view to ensuring effective and efficient use of the spectrum. Where demand for specific frequencies exceeds their availability, appropriate and transparent procedures shall be followed for the assignment of these frequencies in order to optimize their use and facilitate the development of competition.
3. The Parties shall ensure that the assignment of national numbering resources and the management of national numbering plans are entrusted to the regulatory authority.
4. Where public or local authorities retain ownership or control of service suppliers operating public communications networks and/or services, effective structural separation needs to be ensured between the function responsible for granting the rights of way from activities associated with ownership or control.
Article 120. Universal Service
1. Each Party has the right to define the kind of universal service obligations it wishes to maintain.
2. Such obligations will not be regarded as anti-competitive per se, provided they are administered in a transparent, objective and non-discriminatory way. The administration of such obligations shall also be neutral with respect to competition and be not more burdensome than necessary for the kind of universal service defined by the Party.
3. The Parties shall ensure that all service suppliers should be eligible to ensure universal service and no service supplier shall be a priori excluded. The designation shall be made through an efficient, transparent, objective and non-discriminatory mechanism. Where necessary, Parties shall assess whether the provision of universal service represents an unfair burden on organisations(s) designated to provide universal service. Where justified on the basis of such calculation, and taking into account the market benefit if any which accrues to an organisation that offers universal service, regulatory authorities shall determine whether a mechanism is required to compensate the service supplier(s) concerned or to share the net cost of universal service obligations.
4. The Parties shall ensure that:
(a) directories of all subscribers (1) are available to users, whether printed or electronic, or both, and are updated on a regular basis, and at least once a year;
(b) organisations that provide the services referred to in paragraph (a) apply the principle of non-discrimination to the treatment of information that has been provided to them by other organisations.
Article 121. Cross-border Provision of Electronic Communication Services
The Parties shall not adopt or maintain any measure restricting the cross-border provision of electronic communication services.
Article 122. Confidentiality of Information
Each Party shall ensure the confidentiality of electronic communication and related traffic data by means of a public electronic communication network and publicly available electronic communication services without restricting trade in services.
Article 123. Disputes between Service Suppliers
1. The Parties shall ensure that in the event of a dispute arising between service suppliers of electronic communication networks or services in connection with rights and obligations referred to in this Chapter, the regulatory authority concerned shall, at the request of either Party, issue a binding decision to resolve the dispute in the shortest possible timeframe and in any case within four months.
2. The decision of the regulatory authority shall be made available to the public, having regard to the requirements of business confidentiality. The parties concerned shall be given a full statement of the reasons on which it is based.
3. When such a dispute concerns the cross-border provision of services, the regulatory authorities concerned shall co-ordinate their efforts in order to bring about a resolution of the dispute.
Article 124. Regulatory Approximation
1. The Parties recognise the importance of the approximation of Ukraine's existing legislation to that of the European Union. Ukraine shall ensure that its existing laws and future legislation will be gradually made compatible with the EU acquis.
2. Such approximation will start on the date of signing of this Agreement, and will gradually extend to all the elements of the EU acquis referred to in Annex XVII to this Agreement.
Subsection 6. Financial Services
Article 125. Scope and Definitions
1. This Sub-section sets out the principles of the regulatory framework for all financial services liberalised pursuant to Sections 2, 3 and 4 of this Chapter.
2. For the purposes of this Sub-section and of Sections 2, 3 and 4 of this Chapter:
(a) "financial service" means any service of a financial nature offered by a financial service supplier of a Party. Financial services include the following activities:
(i) Insurance and insurance-related services
1. direct insurance (including co-insurance):
(a) life;
(b) non-life.
2. reinsurance and retrocession;
3. insurance intermediation, such as brokerage and agency; and
4. services auxiliary to insurance, such as consultancy, actu- arial, risk assessment and claim settlement services.
(ii) Banking and other financial services (excluding insurance):
1. acceptance of deposits and other repayable funds from the public;
2. lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transactions;
3. financial leasing;
4. all payment and money transmission services, including credit, charge and debit cards, travellers cheques and bankers drafts;
5. guarantees and commitments;
6. trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:
(a) money market instruments (including cheques, bills, certificates of deposit);
(b) foreign exchange;
(c) derivative products including, but not limited to, futures and options;
(d) exchange rate and interest rate instruments, including products such as swaps and forward rate agreements;
(e) transferable securities;
(f) other negotiable instruments and financial assets, including bullion.
7. participation in issues of all kinds of securities, including underwriting and placement as agent (whether publicly or privately) and provision of services related to such issues;
8. money broking;
9. asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services;
10. settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;
11. provision and transfer of financial information, and financial data processing and related software;
12. advisory, intermediation and other auxiliary financial services concerning all the activities listed in subparagraphs (1) to (11), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy.
(b) "financial service supplier" means any natural or legal person of a Party that seeks to provide or provides financial services. The term "financial service supplier" does not include a public entity.
(c) "public entity" means:
1. a government, central bank or a monetary authority, of a Party, or an entity owned or controlled by a Party, which is principally engaged in carrying out governmental functions or activities for governmental purposes, not including an entity principally engaged in supplying financial services on commercial terms; or
2. a private entity, performing functions normally performed by a central bank or monetary authority, when exercising those functions.
(d) "new financial service" means a service of a financial nature, including services related to existing and new products or the manner in which a product is delivered, which is not supplied by any financial service supplier in the territory of a Party but which is supplied in the territory of the other Party.
Article 126. Prudential Carve-out
1. Each Party may adopt or maintain measures for prudential reasons, such as:
(a) the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier;
(b) ensuring the integrity and stability of a Party's financial system.
2. These measures shall not be more burdensome than necessary to achieve their aim, and shall not discriminate against financial service suppliers of the other Party in comparison to its own like financial service suppliers.
3. Nothing in this Agreement shall be construed to require a Party to disclose information relating to the affairs and accounts of individual consumers or any confidential or proprietary information in the possession of public entities.
4. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration of cross-border financial service suppliers of the other Party and of financial instruments.
Article 127. Effective and Transparent Regulation
1. Each Party shall make its best endeavours to provide in advance to all interested persons any measure of general application that the Party proposes to adopt in order to allow such persons an opportunity to comment on the measure. Such measure shall be provided:
(a) by means of an official publication; or
(b) in other written or electronic form.
2. Each Party shall make available to all interested persons its requirements for completing applications relating to the supply of financial services.
On the request of an applicant, the concerned Party shall inform the applicant of the status of its application. If the concerned Party requires additional information from the applicant, it shall notify the applicant without undue delay.
Each Party shall make its best endeavours to ensure that internationally agreed standards for regulation and supervision in the financial services sector and for the fight against tax evasion and avoidance are implemented and applied in its territory. Such internationally agreed standards are, inter alia, the Basel Committee's "Core Principle for Effective Banking Supervision", the International Association of Insurance Supervisors' "Insurance Core Principles", the International Organisation of Securities Commissions' "Objectives and Principles of Securities Regulation", the OECD's "Agreement on exchange of information on tax matters" the G20 "Statement on Transparency and exchange of information for tax purposes" and the Financial Action Task Force's "Forty Recommendations on Money Laundering" and "Nine Special Recommendations on Terrorist Financing".
The Parties also take note of the Ten Key Principles for Information Exchange promulgated by the Finance Ministers of the G7 Nations, and will take all steps necessary to try to apply them in their bilateral contacts.
Article 128. New Financial Services
Each Party shall permit a financial service supplier of the other Party established in the territory of that Party to provide any new financial service of a type similar to those services that the Party would permit its own financial service suppliers to provide under its domestic law in like circumstances. A Party may determine the juridical form through which the service may be provided and may require authorisation for the provision of the service. Where such authorisation is required, a decision shall be made within a reasonable time and the authorisation may only be refused for the reasons set out in Article 126 of this Agreement.
Article 129. Data Processing
1. Each Party shall permit a financial service supplier of the other Party to transfer information in electronic or other form, into and out of its territory, for data processing where such processing is required in the ordinary course of business of such financial service supplier.
2. Each Party shall adopt adequate safeguards for the protection of privacy and fundamental rights and the freedom of individuals, in particular with regard to the transfer of personal data.
Article 130. Specific Exceptions
1. Nothing in this Chapter shall be construed in such a way as to prevent a Party, including its public entities, from exclusively conducting or providing in its territory activities or services forming part of a public retirement plan or statutory system of social security, except when those activities may be carried out, as provided by the Party's domestic regulation, by financial service suppliers in competition with public entities or private institutions.
2. Nothing in this Agreement applies to activities conducted by a central bank or monetary authority or by any other public entity in pursuit of monetary or exchange rate policies.
3. Nothing in this Chapter shall be construed in such a way as to prevent a Party, including its public entities, from exclusively conducting or providing in its territory activities or services for the account of, or with the guarantee or using the financial resources of the Party, or its public entities.
Article 131. Self-regulatory Organisations
When a Party requires membership of or participation in, or access to, any self-regulatory body, securities or futures exchange or market, clearing agency, or any other organisation or association, in order for financial service suppliers of the other Party to supply financial services on an equal basis with financial service suppliers of the Party, or when the Party provides directly or indirectly such entities, privileges or advantages in supplying financial services, the Party shall ensure observance of the obligations under Articles 88 and 94 of this Agreement.
Article 132. Clearing and Payment Systems
Under terms and conditions that accord national treatment, each Party shall grant to financial service suppliers of the other Party established in its territory 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 Party's lender of last resort facilities.
Article 133. Regulatory Approximation
1. The Parties recognise the importance of the approximation of Ukraine's existing legislation to that of the European Union. Ukraine shall ensure that its existing laws and future legislation will be gradually made compatible with the EU acquis.
2. Such approximation will start on the date of signing of this Agreement, and will gradually extend to all the elements of the EU acquis referred to in Annex XVII to this Agreement.