ANNEX 8-B. Financial services
Article 1. Scope
1. This Annex provides for measures additional to Chapter 8 (Trade in Services) in relation to financial services.
2. This Annex applies to measures affecting the supply of financial services. Reference to the supply of a financial service in this Annex shall mean the supply of a financial service:
(a) from the territory of a Party into the territory of the other Party;
(b) in the territory of a Party to the service consumer of the other Party;
(c) by a service supplier of a Party, through commercial presence in the territory of the other Party; or
(d) by a service supplier of a Party, through presence of natural persons of that Party in the territory of the other Party.
Article 2. Definitions
1. For the purposes of this Annex, "services supplied in the exercise of governmental authority" as referred to in Chapter 8 (Trade in Services) of this Agreement means the following:
(a) activities conducted by a central bank or monetary authority or by any other public entity in pursuit of monetary or exchange rate policies;
(b) activities forming part of a statutory system of social security or public retirement plans; or
(c) other activities conducted by a public entity for the account or with the yap y guarantee or using the financial resources of the government,
except where a Party allows the activities referred to in paragraph 1(b) or paragraph 1(c) to be conducted by its financial service suppliers in competition with a public entity or a financial service supplier.
2. The definition of "service supplied in the exercise of governmental authority" in Article 8.2 (Definitions) of Chapter 8 (Trade in Services) shall not apply to services covered by this Annex.
3. For the purposes of this Annex:
(a) financial service is any service of a financial nature offered by a financial service supplier of a Party. Financial services include all insurance and insurance-related services, and all banking and other financial services (excluding insurance). Financial services include the following activities:
Insurance and insurance-related services
(i) direct insurance (including co-insurance):
(A) life; and
(B) non-life;
(ii) reinsurance and retrocession;
(iii) insurance intermediation, such as brokerage and agency;
(iv) services auxiliary to insurance, such as consultancy, actuarial, risk assessment, actuarial and claim settlement services;
Banking and other financial services (excluding insurance)
(v) acceptance of deposits and other repayable funds from the public;
(vi) lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transaction;
(vii) financial leasing;
(viii) all payment and money transmission services, including credit, charge and debit cards, travellers cheques and bankers drafts;
(ix) guarantees and commitments;
(x) 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 deposits);
(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, forward rate agreements;
(E) transferable securities; and
(F) other negotiable instruments and financial assets, including bullion;
(xi) 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;
(xii) money broking;
(xiii) asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services;
(xiv) settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;
(xv) provision and transfer of financial information, and financial data processing and related software by suppliers of other financial services; and
(xvi) advisory, intermediation and other auxiliary financial services on all the activities listed in paragraphs 3(a)(v) through 3(a)(xv), 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 juridical person of a Party wishing to supply or supplying financial services but does not include a public entity; and
(c) public entity means:
(i) a government, a central bank or a monetary authority of a Party, or an entity owned or controlled by a Party, that 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
(ii) a private entity performing functions normally performed by a central bank or monetary authority, when exercising those functions.
Article 3. Domestic Regulation
1. Notwithstanding any other provisions of this Chapter, a Party shall not be prevented from adopting or maintaining reasonable measures for prudential reasons, including for:
(a) the protection of investors, depositors, policy-holders, policy-claimants, persons to whom a fiduciary duty is owed by a financial service supplier, or any similar financial market participants; or
(b) ensuring the integrity and stability of that Party's financial system.
2. Where such measures do not conform with the provisions of this Chapter, they shall not be used as a means of avoiding that Party's commitments or obligations under this Chapter. Such measures shall not constitute a disguised restriction on trade in services and shall not discriminate against financial services or financial service suppliers of the other Party in comparison to the Party's own like financial services or like financial service suppliers.
3. 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 4. Recognition
1. A Party may recognise prudential measures of the other Party, or a non-party, in determining how the Party's measures relating to financial services shall be applied. Such recognition, which may be achieved through harmonisation or otherwise, may be based upon an agreement or arrangement with an international standard-setting body, the other Party, or a non-party concerned, or may be accorded autonomously.
2. A Party that is a party to such an agreement or arrangement referred to in paragraph 1, whether future or existing, shall afford adequate opportunity for the other Party to negotiate its accession to such agreements or arrangements, or to negotiate comparable ones with it, under circumstances in which there would be equivalent regulation, oversight, implementation of such regulation, and, if appropriate, procedures concerning the sharing of information between the parties to the agreement or arrangement.
3. Where a Party accords recognition autonomously, it shall afford adequate opportunity for the other Party to demonstrate that such circumstances as referred to in paragraph 2 exist.
Article 5. Regulatory Transparency
1. The Parties recognise that transparent measures governing the activities of financial institutions and cross-border financial service suppliers are important in facilitating their ability to gain access to and operate in each other's market.
2. Each Party shall ensure that measures of general application adopted or maintained by a Party are promptly published or otherwise made publicly available.
3. Each Party shall take such reasonable measures as may be available to it to ensure that the rules of general application adopted or maintained by self-regulatory organisations (1) of the Party are promptly published or otherwise made publicly available.
4. Each Party shall maintain or establish appropriate mechanisms for responding to inquiries from interested persons (2) of the other Party regarding measures of general application to which this Annex applies.
5. Each Party's regulatory authorities shall make publicly available their requirements, including any documentation required, for completing applications relating to the supply of financial services.
6. Each Party's regulatory authorities shall make administrative decisions on a completed application of a financial service supplier of the other Party seeking to supply a financial service in that Party's territory within 180 days and shall notify the applicant of the decision where possible in writing, without undue delay:
(a) an application shall not be considered complete until all relevant proceedings are conducted and the regulatory authorities consider all necessary information has been received; and
(b) where it is not practicable for a decision to be made within 180 days, the regulatory authority shall notify the applicant without delay and shall endeavour to make the decision within a reasonable time thereafter.
7. On the written request of an unsuccessful applicant, a regulatory authority that has denied an application shall endeavour to inform the applicant of the reasons for denial of the application in writing.
Article 6. Dispute Settlement
Arbitrators on an arbitral tribunal established in accordance with Chapter 15 (Dispute Settlement) for disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial service under dispute.
Article 7. Committee on Financial Services
1. The Parties hereby establish a Committee on Financial Services (hereinafter referred to as the "Committee").
2. The Committee shall comprise officials of each Party from authorities responsible for financial services. The authorities responsible for financial services are:
(a) for Australia, the Treasury and the Department of Foreign Affairs and Trade and, as necessary, officials from the relevant regulatory authorities including the Australian Prudential Regulation Authority, Reserve Bank of Australia and Australian Securities and Investment Commission; and
(b) for China, the Ministry of Commerce and, as necessary, officials from the relevant regulatory authorities, including the People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission and the State Administration of Foreign Exchange.
3. The Committee shall:
(a) supervise the implementation of this Annex and its further elaboration; and
(b) consider issues regarding financial services that are referred to it by a Party, including ways for the Parties to incorporate into this Agreement development in their markets for financial services and to cooperate more effectively in the financial services sector.
4. The Committee shall meet every two years, or as otherwise agreed, to assess the functioning of this Agreement as it applies to financial services.
Article 8. Consultations
A Party may request consultations with the other Party regarding any matter arising under this Agreement that affects financial services. The other Party shall give sympathetic consideration to the request.
Body
Chapter 9. Investment
Section A. Investment
Article 9. Definitions
For the purposes of this Chapter:
(a) covered investment means, with respect to a Party, an investment in its territory of an investor of the other Party in existence at the date of entry into force of this Agreement or established, acquired, or expanded thereafter and which, where applicable, has been admitted by the host Party, subject to its relevant laws, regulations and policies;
(b) enterprise means any entity constituted or organised under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including a corporation, trust, partnership, sole proprietorship, joint venture, association, or similar organisation; and a branch of an enterprise;
(c) enterprise of a Party means an enterprise constituted or organised in accordance with the laws of a Party, and a branch located in the territory of a Party and carrying out business activities there;
(d) investment means every kind of asset that an investor owns or controls, directly or indirectly, which has the characteristics of an investment, such as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that investments may take include:
(i) an enterprise and a branch of an enterprise;
(ii) shares, stocks or other forms of equity participation in an enterprise, including rights derived therefrom;
(iii) bonds, debentures, loans and other forms of debt, including rights derived therefrom;
(iv) fights under contracts, including tumkey, construction, management, production or revenue sharing contracts;
(v) claims to money and claims to any performance under a contract associated with an investment and having a financial value;
(vi) intellectual property rights;
(vii) rights conferred pursuant to laws and regulations or contracts such as concessions, licenses, authorisations 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;
Note: Investments also include the amounts yielded by investments that are reinvested, in particular, profit, interest, capital gains, dividends, royalties and fees. A change in the form in which assets are invested does not affect their character as investments.
(e) investor of a Party means a Party, a natural person of a Party, or an enterprise of a Party, that seeks to make, is making or has made a covered investment;
Article 9.2. Scope
1. This Chapter shall apply to measures adopted or maintained by a Party relating to:
(a) investors of the other Party; and
(b) covered investments.
2. This Chapter shall not apply to measures adopted or maintained by a Party to the extent that they are covered by Chapter 8 (Trade in Services) or Chapter 10 (Movement of Natural Persons).
3. This Chapter shall not apply to:
(a) government procurement; or
(b) subsidies or grants provided by a Party, including government-supported loans, guarantees and insurance.
4. For greater certainty, this Chapter shall not bind either Party in relation to any act or fact that took place or any situation that ceased to exist before the date of entry into force of this Agreement.
Article 9.3. National Treatment
1, Australia shall accord to investors of China treatment no less favourable 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 investments in its territory.
2. China shall accord to investors of Australia treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the expansion, (1) management, conduct, operation and sale or other disposition of investments in its territory.
3. Australia shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
4. China shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the expansion, management, conduct, operation and sale or other disposition of investments in its territory.
Article 9.4. Most-favoured-nation Treatment (2)
1. Each Party shall accord to investors of the other Party, and covered investments, in relation to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory, treatment no less favourable than that it accords, in like circumstances, to investors and investments in its territory of investors of any non-Party.
2. For greater certainty, the treatment referred to in this Article does not encompass Investor-State Dispute Settlement procedures or mechanisms.
3. Notwithstanding paragraph 1, each Party reserves the right to adopt or maintain any measure that accords more favourable treatment to investors of non-parties in accordance with any bilateral or multilateral international agreement in force prior to the date of entry into force of this Agreement. (3)
4. Notwithstanding paragraph 1, each Party reserves the right to adopt or maintain any measure that accords more favourable treatment to investors of non-parties in accordance with any bilateral or multilateral international agreement in force on, or signed after, the date of entry into force of this Agreement involving:
(a) aviation;
(b) fisheries; or
(c) maritime matters, including salvage.
Article 9.5. Non-conforming Measures (4)
1. For Australia, Article 9.3 and Article 9.4 shall not apply to:
(a) any existing non-conforming measure that is maintained on the date of entry into force of this Agreement:
(i) at the central level of government, as set out by Australia in Section A of its Schedule of Non-Conforming Measures in Annex III
(ii) by a State or Territory of Australia, as set out by Australia in Section A of its Schedule of Non-Conforming Measures in Annex III; or
(iii) at a local level of Australian government;
(b) the continuation of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment or 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, with Article 9.3 and Article 9.4.
2. For China, Article 9.3 and Article 9.4 shall not apply to: (a) any existing non-conforming measures maintained within its territory;
(b) the continuation of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not increase the non-conformity of the measure, as it existed immediately before the amendment, with Article 9.3 and Article 9.4.
3. Article 9.3 and Article 9.4 shall not apply to any measure that Australia adopts or maintains with respect to sectors, sub-sectors, or activities, as set out in Section B of its Schedule of Non-Conforming Measures in Annex II.
4. The Parties shall endeavour to progressively remove the non-conforming measures.
Article 9.6. Denial of Benefits
1. A Party may deny the benefits of this Chapter to an investor of the other Party and to investments of that investor if the investor is an enterprise:
(a) owned or controlled either by persons of a non-party or of the denying Party; and
(b) that has no substantive business operations in the territory of the other Party.
2. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of the other Party and to investments of that investor if persons of a non-party own or control the enterprise and the denying Party adopts or maintains measures with respect to the non-party or a person of 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 or its investments.
Article 9.7. Committee on Investment
1. The Parties hereby establish a Committee on Investment that shall meet on the request of either Party or the FTA Joint Commission to consider any matter arising under this Chapter.
2. The Committee's functions shall include:
(a) reviewing the implementation of this Chapter;
(b) identifying and recommending measures or initiatives to promote and increase investment flows between the Parties; and