(b) activities or services carried out for the account or with the guarantee of, or using the financial resources of, the Party, including its public entities.
However, this Chapter shall apply to activities or services referred to in subparagraph (a) or (b) that the Party permits to be performed by its financial institutions in competition with a public entity or a financial institution.
Furthermore, this Chapter shall not prevent a Party, including its public entities, from carrying out or providing such activities exclusively in its territory.
Article 11.3. National Treatment
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments in financial institutions in its territory.
2. Each Party shall accord to financial institutions of the other Party, and to investments of investors of the other Party in financial institutions of the Party, treatment no less favorable than that it accords, in like circumstances, to its own financial institutions and to investments of its own investors in financial institutions with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments.
Article 11.4. Most-Favored-Nation Treatment
Each Party shall accord to investors of the other Party, to financial institutions of the other Party, to investments of investors of the other Party in financial institutions of the other Party, and to cross-border financial service suppliers of the other Party, treatment no less favorable than that it accords, in like circumstances, to investors, to financial institutions, to investments of investors in financial institutions, and to cross-border financial service suppliers of a non-Party.
Article 11.5. Recognition of Prudential Measures
1. A Party may recognize a prudential measure of the other Party or of a non-Party in the application of a measure covered by this Chapter. Such recognition may be:
(a) granted unilaterally;
(b) achieved through harmonization or other means, or
(c) based on an agreement or arrangement with the other Party or a non-Party.
2. A Party granting recognition of a prudential measure of a non-Party shall provide the other Party with adequate opportunity to demonstrate that circumstances exist in which there is or will be equivalent regulation, supervision and enforcement of regulation and, if appropriate, that there are or will be procedures relating to the exchange of information between the Parties.
3. Where a Party grants recognition to prudential measures of a non-Party in accordance with subparagraph 1(c) and the circumstances set out in paragraph 2 exist, the Party shall provide adequate opportunity for the other Party to negotiate accession to the convention or agreement, or to negotiate a comparable convention or agreement.
Article 11.6. Right of Establishment
1. A Party shall permit an investor of the other Party to establish in its territory a financial institution through any of the modes of establishment and operation that its law permits at the time of establishment, without the imposition of numerical restrictions or requirements of specific types of legal form. The obligation not to impose a requirement to adopt a specific legal form does not preclude a Party from imposing a condition or requirement in connection with the establishment of a particular type of entity chosen by an investor of the other Party.
2. For greater certainty, a Party shall permit an investor of the other Party that owns or controls a financial institution in the Party's territory to establish such additional financial institutions as may be necessary to enable the full range of financial services permitted under the Party's domestic law to be provided at the time of the establishment of the additional financial institutions. Subject to Article 11.3, a Party may impose a term or condition on the establishment of additional financial institutions and determine the institutional and legal form to be used for the supply of a specified financial service or the conduct of a specified activity.
3. The right of establishment under paragraphs 1 and 2 shall include the acquisition of an existing entity.
4. Subject to Article 11.3, a Party may prohibit a particular financial service or activity. Such prohibition may not apply to the entire financial sector or to an entire subsector of financial services, such as the banking subsector.
5. For the purposes of this Article, without prejudice to other forms of prudential regulation, a Party may require that an investor of the other Party be engaged in the business of supplying financial services in the territory of that other Party, where so provided in applicable law.
6. For purposes of this Article, numerical restrictions means limitations imposed on the number of financial institutions whether in the form of a numerical quota, a monopoly, an exclusive service supplier, or the requirements of an economic needs test.
Article 11.7. Cross-Border Trade
1. Each Party shall permit, on terms and conditions that accord national treatment, cross-border financial service suppliers of the other Party to supply the services specified in Annex 11.7.
2. Each Party shall permit a person located in its territory, and its nationals wherever located, to purchase financial services from cross-border financial service suppliers of the other Party located in the territory of the other Party. This does not oblige a Party to allow such cross-border financial service suppliers to do business or advertise in its territory. Each Party may define doing business and advertising for the purposes of this obligation, provided that such definitions are not inconsistent with paragraph 1.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration or authorization of cross-border financial service suppliers of the other Party and of financial instruments.
Article 11.8. New Financial Services
1. Each Party shall permit a financial institution of the other Party to supply any new financial service that the Party would, in like circumstances, permit its financial institutions to supply in accordance with its domestic law, provided that the introduction of the financial service does not require a new law or the amendment of an existing law.
2. Each Party may determine the legal and institutional form through which the new financial service may be supplied and may subject the supply of the new financial service to authorization or notification. Where authorization is required, the decision shall be made within a reasonable period of time and may be withheld only for prudential reasons.
3. Nothing in this Article shall prevent a financial institution of a Party from requesting the other Party to authorize the supply of a financial service that is not supplied in the territory of either Party. Such a request shall be subject to the domestic law of the Party to which the request is made and, for greater certainty, shall not be subject to the obligations of this Article.
Article 11.9. Treatment of Certain Types of Information
Nothing in this Chapter obliges a Party to disclose or allow access to:
(a) information relating to the financial affairs and accounts of an individual customer of a financial institution or cross-border financial service supplier, or.
(b) any confidential information the disclosure of which would impede compliance with domestic law or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of a particular enterprise.
Article 11.10. Senior Executives and Boards of Directors or Boards of Directors
1. No Party may require financial institutions of the other Party to employ personnel of a particular nationality to fill senior executive or other key personnel positions.
2. No Party may require that the board of directors or board of trustees of a financial institution of the other Party be composed of more than a simple majority of nationals of the Party, residents of its territory, or a combination of both.
Article 11.11. Nonconforming Measures
1. Articles 11.3, 11.4, 11.6, 11.7, and 11.10 shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party at the central level, as indicated in Section A of its Schedule to Annex III;
(b) the continuation or prompt renewal of a non-conforming measure referred to in subparagraph (a); or
(c) a modification of any nonconforming measure referred to in subparagraph (a) provided that such modification does not diminish the conformity of the measure as it was in effect:
(i) immediately before the modification, with Articles 11.3, 11.4, 11.6, and 11.10; or
(ii) on the date of entry into force of this Agreement, with Article 11.7.
2. Articles 11.3, 11.4, 11.6, 11.7, and 11.10 shall not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors, or activities as set out in Section B of its Schedule to Annex III.
3. A non-conforming measure established by a Party in its Schedule to Annex I or II with respect to Articles 9.3 (Most-Favored-Nation Treatment), 9.5 (National Treatment), 10.3 (National Treatment), or 10.4 (Most-Favored-Nation Treatment), shall be treated as a non-conforming measure not subject to Articles 11.3 or 11.4, as the case may be, to the extent that the measure, sector, subsector, or activity set out in the non-conforming measure is covered by this Chapter.
Article 11.12. Exceptions
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures for prudential reasons, such as:
(a) the protection of investors, depositors or other creditors users of the financial market, policy holders or beneficiaries, or persons who are creditors of fiduciary obligations owed by a financial service supplier;
(b) the maintenance of the safety, soundness, solvency, integrity or financial responsibility of financial service suppliers; or
(c) to ensure the integrity and stability of the financial system.
Where such measures are not in accordance with the provisions of this Agreement, they shall not be used as a means of avoiding the commitments or obligations of the Parties under this Chapter.
2. Nothing in this Agreement shall apply to non-discriminatory measures of general application taken by any public entity in pursuance of monetary and related credit or exchange rate policies. This paragraph shall not affect the obligations of the Parties under Article 10.7 (Performance Requirements) with respect to measures covered by Chapter 10 (Investment), or under Article 10.12 (Transfers), or Article 9.11 (Transfers and Payments).
3. Notwithstanding Articles 9.11 (Transfers and Payments) and 10. 12 (Transfers), as incorporated into this Chapter, a Party may prevent or limit transfers by a financial institution or cross-border financial service supplier to or for the benefit of a person related or connected to such institution or supplier through the equitable, non-discriminatory and good faith application of measures relating to the maintenance of the safety, soundness, strength, integrity or financial responsibility of financial institutions or cross-border financial service suppliers. The provisions of this paragraph shall be without prejudice to any other provision of this Agreement that permits a Party to restrict transfers.
4. For greater certainty, nothing in this Chapter shall be construed to prevent a Party from adopting or applying measures necessary to secure compliance with laws or regulations that are not inconsistent with this Chapter, including a measure relating to the prevention of deceptive and fraudulent practices or to address the effects of a breach of financial services contracts. A Party shall not apply the measures in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on investment in a financial institution or on cross-border trade in financial services.
Article 11.13. Transparency
1. The Parties recognize that transparent regulations and policies governing the activities of financial institutions and financial service suppliers are important to facilitate financial institutions and financial service suppliers' access to and operations in their respective markets. Each Party undertakes to promote regulatory transparency in financial services.
2. In lieu of Article 16.3 (Publication), each Party shall, to the extent practicable and in accordance with its domestic law:
(a) publish in advance any regulations of general application relating to matters in this Chapter that it proposes to adopt;
(b) provide interested persons and the other Party a reasonable opportunity to comment on the proposed regulations; and
(c) provide a reasonable period of time between the publication of final regulations and their entry into force.
3. The regulatory authorities of each Party shall make publicly available all information regarding the requirements, including any necessary documentation, for completing and submitting applications relating to the supply of financial services.
4. Upon request, the relevant authority of a Party shall inform the applicant of the status of its application. Where the authority requires additional information from the applicant, it shall notify the applicant without undue delay.
5. Within 120 days, the relevant authority of a Party shall make an administrative decision on a complete application of an investor in a financial institution, a financial institution or a cross-border financial service supplier of the other Party relating to the provision/supply of a financial service, and shall notify the applicant of the decision in a timely manner. An application shall not be considered complete until all relevant hearings have been held and all necessary information has been received. Where it is not practicable to make a decision within 120 days, the relevant authority shall notify the applicant without undue delay and shall endeavor to make the decision within a reasonable time thereafter.
6. Each Party shall maintain or establish appropriate mechanisms to respond to inquiries from interested parties, as soon as practicable, with respect to measures of general application covered by this Chapter.
7. Each Party shall endeavor to ensure that standards of general application adopted or maintained by self-regulatory organizations of the Party are published in a timely manner or otherwise made available so that interested persons may become aware of them.
8. Each Party shall ensure that all measures of general application to which this Chapter applies are administered in a reasonable, objective, and impartial manner.
Article 11.14. Self-Regulatory Organizations
Where a Party requires a financial institution or cross-border financial service supplier of the other Party to be a member of, participate in, or have access to a self-regulatory organization in order to provide a financial service in or into its territory, the Party shall ensure that such self-regulatory organization complies with the obligations in Articles 11.3 and 11.4.
Article 11.15. Payment and Clearing Systems
Subject to terms and conditions that accord national treatment, each Party shall grant to a financial institution of the other Party established in its territory access to payment and clearing systems administered by public entities and to official financing and refinancing facilities available in the normal course of business. This Article does not confer access to the Party's lender of last resort services.
Article 11.16. Financial Services Committee
1. The Parties establish the Financial Services Committee. The principal representative of each Party shall be an official of the competent authority of the Party set out in Annex 11.16. Representatives of other institutions may also participate as the competent authorities deem appropriate.
2. The Committee shall:
(a) shall oversee the implementation of this Chapter and its further development;
(b) consider matters relating to financial services referred to it by a Party, and
(c) participate in dispute settlement procedures in accordance with Article 11.19; and (d) consider matters relating to financial services referred to it by a Party.
3. The Committee shall meet as it so decides to evaluate the operation of this Agreement with respect to financial services. The Committee shall report to the Commission on the results of each meeting.
Article 11.17. Consultations
1. A Party may request consultations with the other Party with respect to any matter under this Agreement affecting a financial service. The other Party shall give due consideration to the request. The Parties shall inform the Committee of the results of the consultations.
2. In consultations under this Article, officials of the competent authorities specified in Annex 11.16 shall participate.
3. A Party may request that the regulatory authorities of the other Party participate in consultations under this Article with respect to measures of general application of that other Party that may affect the operations of financial institutions or cross-border financial service providers in the territory of the Party requesting the consultation. The other Party shall give due consideration to such request.
4. Nothing in this Article shall be construed to require regulatory authorities involved in consultations under paragraph 3 to disclose information or to act in a manner that would interfere with particular regulatory, supervisory, administrative or enforcement matters.
5. Where a Party requires information for supervisory purposes relating to a financial institution in the territory of the other Party or a cross-border financial service supplier in the territory of the other Party, nothing in this Article shall be construed to prevent the Party from approaching the relevant authority in the territory of that other Party to request the information.
6. Nothing in this Article shall be construed to require a Party to derogate from or amend its domestic law relating to the exchange of information between financial regulators or the requirements of an agreement or arrangement between the Parties' financial authorities.
Article 11.18. Data Processing
1. Subject to prior authorization by the relevant regulator or authority, where required, each Party shall permit financial institutions of the other Party to transfer information into or out of the territory of the Party, using any means authorized therein, for processing, where necessary to carry out the ordinary business activities of those institutions.
2. For greater certainty, where the information referred to in paragraph 1 consists of or contains personal data or confidential information, the transfer of such information shall be carried out in accordance with the national legislation on the protection of individuals with respect to the transfer and processing of personal data of the Party in or from whose territory the information is transferred.
Article 11.19. Settlement of Disputes between Parties
1. Chapter 18 (Dispute Settlement) applies, as modified by this Article, to the settlement of disputes arising out of the application of this Chapter.
2. For purposes of Article 18.10 (Arbitral Panel Membership), arbitrators, in addition to Article 18.9 (Panelists' List and Qualifications), shall have expertise or experience in financial law or financial services practice, which may include the regulation of financial institutions unless otherwise agreed by the Parties.
3. For the purposes of Article 18.10 (Membership of the Arbitral Panel), the time limit for appointing an arbitrator and for proposing candidates to act as chairperson of the Arbitral Panel shall be 30 days in each case.
4. In any dispute in which the Arbitral Panel has found a measure to be inconsistent with the obligations of this Agreement, where the suspension of benefits referred to in Article 18.17 (Non-Compliance and Suspension of Benefits) is appropriate and the measure affects:
(a) the financial services sector and any other sector, the complaining Party may suspend benefits in the financial services sector that have an effect equivalent to the effect of the measure on the Party's financial services sector; or
(b) only to a sector other than the financial services sector, the complaining Party may not suspend benefits in the financial services sector.
Article 11.20. Financial Services Investment Disputes
1. Where an investor of a Party submits a claim to arbitration under Section C (Investor-State Dispute Settlement) of Chapter 10 (Investment) and the respondent Party invokes an exception under Article 11.12, the Tribunal shall refer the matter in writing to the Committee for a decision under paragraph 2 of this Article.3 The Tribunal may not proceed until it receives a decision or report under this Article.
2. On referral of the matter under paragraph 1, the Committee shall decide whether Article 11.12 is a valid defense to the investor's claim. The Committee shall transmit a copy of its decision to the Tribunal and to the Commission. The decision shall be binding on the Tribunal.
3. Where the Committee has not decided the matter within 60 days after receipt of the referral in terms of paragraph 1, any Party may request, within 10 days thereafter, the establishment of a panel under Article 18.8 (Request for Establishment of Arbitral Panel), to decide the matter. The Arbitral Panel shall be constituted in accordance with Article 18.8 (Request for Establishment of Arbitral Panel). In addition to the provisions of Article 18.15 (Final Report), the Arbitral Panel shall transmit its final report to the Committee and to the Tribunal. The report shall be binding on the Tribunal.
3 For the purposes of this Article, decision means a joint determination by the competent authorities listed in Annex 11.16.
4. Where a request for the establishment of a panel under paragraph 3 has not been made within 10 days after the expiration of the 60-day period referred to in paragraph 3, the Tribunal may proceed to decide the matter.
5. Each disputing Party shall take the necessary steps to ensure that the members of the Arbitral Tribunal have the expertise or experience described in Article 11.19(2). The expertise or experience of particular candidates with respect to financial services shall be taken into account to the extent possible in the case of the appointment of the presiding arbitrator of the Arbitral Tribunal.
Annex 11.17. CROSS-BORDER TRADE
Insurance and insurance-related services
1. Article 11.7 applies to cross-border trade or supply of financial services, as defined in subparagraph (a) of the definition of cross-border trade or supply of financial services in Article 11.1, with respect to:
(a) insurance against risks relating to:
(i) international maritime transport, international commercial aviation, and space launching and transportation (including satellites), covering any or all of the following: the goods being transported, the vehicle transporting the goods, and the liability that may arise therefrom, and.
(ii) goods in international transit;
(b) reinsurance and retrocession;
(c) consulting, actuarial services, risk assessment; and
(d) brokerage of insurance included in subparagraphs (a) and (b).
Annex 11.16. FINANCIAL SERVICES COMMITTEE
Competent Authorities for the Administration of this Chapter
1. The competent authorities of each Party shall be:
(a) for the case of Mexico, the Secretaría de Hacienda y Crédito Público.
(b) in the case of Panama, the Dirección Nacional de Administración de Tratados Comerciales Internacionales y Defensa Comercial (DINATRADEC) of the Ministerio de Comercio e Industrias, in consultation with the Superintendencia de Bancos, the Superintendencia de Seguros y Reaseguros, and the Superintendencia del Mercado de Valores,
or their respective successors.
It shall be the responsibility of each Party to keep this Annex updated. For such purposes, the Parties shall notify in writing any changes to the information contained in paragraph 1.
Chapter 12. TELECOMMUNICATIONS
Article 12.1. Definitions
For the purposes of this Chapter, the following definitions shall apply:
telecommunications regulatory authority: the body or bodies, in the telecommunications services sector, entrusted with any of the regulatory tasks assigned in accordance with the domestic law of each Party;
authorization: the licenses, concessions, permits, registrations or other types of authorizations that a Party may require to supply public telecommunications services;
leased circuits: telecommunications facilities between two or more designated points that are intended for the dedicated use or availability to a particular customer or to other users chosen by that customer;
authorization: the licenses, concessions, permits, registrations or other types of authorizations that a Party may require to supply public telecommunications services;
leased circuits: telecommunications facilities between two or more designated points that are intended for the dedicated use or availability to a particular customer or to other users chosen by that customer;
co-location: access to and use of physical space for the purpose of installing, maintaining or repairing equipment on premises owned or controlled and used by another major supplier for the provision of public telecommunications services;
network element: any facility or equipment used for the provision of a public telecommunications service, the technical definition of which shall include its characteristics, functions and capabilities that are provided by such facilities or equipment;
undertaking: as defined in Article 2.1 (Definitions of General Application);
essential elements: those elements of the public telecommunications network or service that:
(a) are indispensable for the provision of public telecommunications services;
(b) are supplied exclusively or predominantly by a single supplier or a limited number of suppliers; and
(c) it is not economically or technically feasible to substitute them for the purpose of supplying a service;
interconnection: the link between two or more public telecommunications networks for the purpose of enabling the users of one supplier to communicate with the users of another supplier and also to have access to the services supplied by another supplier;
non-discriminatory: treatment no less favorable than that accorded to any other user of similar public telecommunications networks or services, under similar circumstances;
reference interconnection offer: an interconnection offer offered by a major supplier and registered with or approved by the telecommunications regulatory body that is sufficiently detailed to enable suppliers of public telecommunications services who wish to accept such rates, terms and conditions to obtain interconnection without having to engage in negotiations with the supplier in question;
standard interconnection offer: an interconnection offer offered by a major supplier that is sufficiently detailed to enable suppliers of public telecommunications services who wish to accept such rates, terms and conditions to obtain interconnection without having to engage in negotiations with the supplier in question;
cost-oriented: cost-based, and may include a reasonable utility and involve different costing methodologies for different facilities or services;
number portability: the ability of end users of public telecommunication services to keep, in the same geographical area (1) , the same telephone numbers when switching to a similar public telecommunication service provider;
dominant (2) or major supplier: a supplier of public telecommunications services that has the ability to significantly affect the conditions of participation, from the point of view of prices and supply in the relevant market of public telecommunications networks or services, as a result of:
(a) the control of essential elements, or.
(b) the use of its position in the market;
network termination point: the point where a public telecommunications network is connected to the facilities and equipment of end users or, as the case may be, the point where other telecommunications networks are connected to it;
public telecommunications network: the infrastructure used to provide public telecommunications services;
public telecommunications service: any telecommunications service offered to the general public. These services may include, among others, telephony and data transmission, without any end-to-end change in the form or content of such information, but does not include information services;
telecommunications: the emission, transmission and reception of signals by any physical, electromagnetic or optical means;
user: the natural or legal person who uses telecommunication services, which may be a supplier of public telecommunication services; and
end user: a user who consumes, as a final recipient, a telecommunication service.