(3) The setting up of secondary establishments includes the right to acquire controlling stakes in a company of a Party.
(4) National includes a permanent resident if he or she is treated as a national in accordance with the legislation of such Party.
Article 21. Market Access
In those sectors and modes of supply which shall be liberalised pursuant to the decision provided for in paragraph 3 of Article 24, no Party shall adopt or maintain:
(a) limitations on the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test;
(b) limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(c) limitations on the total number of service operations or on the total quantity of service output expressed in the terms of designated numerical units in the form of quotas or the requirement of an economic needs test;
(d) limitations on the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or a requirement of an economic needs test;
(e) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment; and
(f) measures which require specific types of legal entities or joint ventures through which a service supplier of another Party may supply a service.
Article 22. Most Favoured Nation Treatment
1. Subject to exceptions that may derive from harmonisation of regulations based on agreements concluded by a Party with a third country providing for mutual recognition in accordance with Article VII of the GATS, the EFTA States and Mexico shall accord to service suppliers of another Party treatment no less favourable than that they accord to like service suppliers of any other country.
2. Treatment granted under other agreements concluded by one of the Parties with a third country which have been notified under Article V of the GATS shall be excluded from this provision.
3. If a Party enters into an agreement of the type referred to in paragraph 2, it shall afford adequate opportunity to the other Parties to negotiate the benefits granted therein.
4. The Parties agree to review the exclusion provided for in paragraph 2 with a view to its deletion not later than three years after the entry into force of this Agreement.
Article 23. National Treatment
1. Each Party shall, in accordance with Article 24, grant to service suppliers of another Party, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like service suppliers.
2. A Party may meet the requirement of paragraph 1 by according to service suppliers of another Party, either formally identical treatment or formally different treatment to that it accords to its own like service suppliers.
3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of service suppliers of a Party compared to like service suppliers of the other Party.
Article 24. Trade Liberalisation
1. As provided for in paragraphs 2 to 4, the Parties shall liberalise trade in services between themselves, in conformity with Article V of the GATS.
2. From the entry into force of this Agreement, neither Party shall adopt new, or more, discriminatory measures as regards services or service suppliers of another Party, in comparison with the treatment accorded to its own like services or service suppliers.
3. No later than three years following the entry into force of this Agreement, the Joint Committee shall adopt a decision providing for the elimination of substantially all remaining discrimination between the Parties in the sectors and modes of supply covered by this Section. That decision shall contain:
(a) a list of commitments establishing the level of liberalisation which the Parties agree to grant each other at the end of a transitional period of ten years from the entry into force of this Agreement;
(b) a liberalisation calendar for each Party in order to reach, at the end of the ten-year transitional period, the level of liberalisation described in paragraph a).
4. Except as provided for in paragraph 2, Articles 21, 22 and 23 shall become applicable in accordance with the calendar and subject to any reservations stipulated in the Parties' lists of commitments provided for in paragraph 3.
5. The Joint Committee may amend the liberalisation calendar and the list of commitments established in accordance with paragraph 3, with a view to removing or adding exceptions.
Article 25. Right to Regulate
1. Each Party may regulate, and introduce new regulations, on the supply of services within its territory in order to meet national policy objectives, in so far as regulations do not impair on any rights and obligations arising under this Agreement.
2. Each Party shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.
Article 26. Mutual Recognition
1. In principle no later than three years following the entry into force of this Agreement, the Joint Committee shall establish the necessary steps for the negotiation of agreements providing for the mutual recognition of requirements, qualifications, licenses and other regulations, for the purpose of the fulfilment, in whole or in part, by service suppliers of the criteria applied by each Party for the authorisation, licensing, operation and certification of service suppliers and, in particular, professional services.
2. Any such agreement shall be in conformity with the relevant provisions of the WTO and, in particular, Article VII of the GATS.
Section II. Maritime Transport
Article 27. International Maritime Transport
1. This Section applies to international maritime transport, including door-to-door and intermodal transport operations involving a sea-leg.
2. The definitions contained in Article 20 apply to this Section. (5)
3. In view of the existing levels of liberalisation between the Parties in international maritime transport:
(a) the Parties shall continue to effectively apply the principle of unrestricted access to the international maritime market and traffic on a commercial and non-discriminatory basis;
(b) each Party shall continue to grant to ships operated by service suppliers of another Party treatment no less favourable than that accorded to its own ships with regard to, inter alia, access to ports, use of infrastructure and auxiliary maritime services of the ports, as well as related fees and charges, customs facilities and the assignment of berths and facilities for loading and unloading.
4. Each Party shall permit to service suppliers of another Party to have a commercial presence in its territory under conditions of establishment and operation no less favourable than those accorded to its own service suppliers or those of any third country, whichever are the better, in conformity with the applicable legislation and regulations in each Party.
5. Paragraph 4 shall become applicable in accordance with the calendar and subject to any reservation stipulated in the Parties' list of commitments provided for in paragraph 3 of Article 24.
Section III. Financial Services
Article 28. Definitions
In accordance with the terms of the Annex on Financial Services to the GATS and the GATS Understanding on Commitments in Financial Services, for the purposes of this Section:
"commercial presence" means a juridical entity within a Party's territory that supplies financial services and includes wholly or partly owned subsidiaries, joint ventures, partnerships, branches, agencies, representative offices or other organisations through franchising operations.
"financial service" means any service of a financial nature offered by a financial service supplier of a Party. Financial services comprise the following activities:
A. Insurance and insurance-related services:
1. direct insurance (including co-insurance):
(a) life;
(b) non-life;
2. reinsurance and retrocession;
3. insurance inter-mediation, such as brokerage and agency; and
4. services auxiliary to insurance, such as consultancy, actuarial, risk assessment and claim settlement services.
B. 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 transaction;
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 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; (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 by suppliers of other financial services;
12. advisory, intermediation and other auxiliary financial services on all the activities listed in subparagraphs (1) through (11), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy;
"financial service supplier" means any natural or juridical person of a Party authorised to supply financial services. The term "financial service supplier" does not include a public entity;
"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, that is not supplied by any financial service supplier in the territory of a Party but which is supplied in the territory of another Party;
"public entity" means:
1. 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
2. a private entity, performing functions normally performed by a central bank or monetary authority, when exercising those functions.
Article 29. Establishment of Financial Service Suppliers
1. Each Party shall allow the financial service suppliers of another Party to establish, including through the acquisition of existing enterprises, a commercial presence in its territory.
2. Each Party may require a financial service supplier of another Party to incorporate under its own law or impose terms and conditions on establishment that are consistent with the other provisions of this Section.
3. No Party may adopt new measures as regards to the establishment and operation of financial service suppliers of another Party, which are more discriminatory than those applied on the date of entry into force of this Agreement.
4. No Party shall maintain or adopt the following measures:
(a) limitations on the number of financial service suppliers whether in the form of numerical quotas, monopolies, exclusive financial service suppliers 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 test;
(c) limitations on the total number of service operations or on the total quantity of service output expressed in the terms of designated numerical units in the form of quotas or the requirement of an economic needs test;
(d) limitations on the total number of natural persons that may be employed in a particular financial service sector or that a financial service supplier 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 a requirement of an economic needs test; and
(e) limitations on the participation of foreign capital in the terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment.
Article 30. Cross-border Provision of Financial Services
1. Each party shall allow the cross-border provision of financial services.
2. No Party may adopt new measures as regards the cross-border provision of financial services by financial service suppliers of another Party, which are more discriminatory as compared to those applied on the date of entry into force of this Agreement.
3. Without prejudice to other means of prudential regulation of the cross-border provision of financial services, a Party may require the registration of cross-border financial service suppliers of another Party.
4. Each Party shall permit persons located in its territory to purchase financial services from financial service suppliers of another Party located in the territory of that other Party. This obligation does not require a Party to permit such suppliers to do business or carry on commercial operations, or to solicit, market or advertise their activities in its territory. Each Party may define the meaning of "doing business", "carry on commercial operations", "solicit", "market" and "advertise" for purposes of this obligation.
Article 31. National Treatment
1. Each Party shall grant to financial service suppliers of the other Parties, including those already established in its territory on the date of entry into force of this Agreement, treatment no less favourable than that it accords to its own like financial service suppliers with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of commercial operations of financial service suppliers in its territory.
2. Where a Party permits the cross-border provision of a financial service it shall accord to the financial service suppliers of the other Party treatment no less favourable than that it accords to its own like financial service suppliers with respect to the provision of such a service.
3. A Party's treatment of financial service suppliers of another Party, whether different or identical to that accorded to its own like financial service suppliers, is consistent with paragraph 1 if the treatment affords equal competitive opportunities.
4. A Party's treatment affords equal competitive opportunities if it does not modify the conditions of competition in favour of its own financial service suppliers as compared to like financial service suppliers of any other Party.
5. Differences in market share, profitability or size do not in themselves establish a denial regarding equal competitive opportunities, but such differences may be used as evidence regarding whether a Party's treatment affords equal competitive opportunities.
Article 32. Most Favoured Nation Treatment
1. Each Party shall accord to financial service suppliers of another Party treatment no less favourable than it accords to the like financial service suppliers of another Party or a non-Party.
2. Treatment granted under other agreements concluded by one of the Parties with a third country which have been notified under Article V of the GATS shall be excluded from this provision.
3. If a Party enters into an agreement of the type referred to in paragraph 2, it shall afford adequate opportunity to the other Parties to negotiate the benefits granted therein.
4. The Parties agree to review the exclusion provided for in paragraph 2 with a view to its deletion not later than three years after the entry into force of this Agreement.
Article 33. Key Personnel
1. No Party may require a financial service supplier of another Party to engage individuals of any particular nationality as senior managerial or other key personnel.
2. No Party may require that more than a simple majority of the board of directors of a financial service supplier of another Party be composed of nationals of the Party, persons residing in the territory of the Party, or a combination thereof.
Article 34. Commitments
1. Nothing in this Section shall be construed to prevent a Party from applying:
(a) any existing measure inconsistent with Articles 29 to 33 which is listed in Annex VIII; or
(b) an amendment to any discriminatory measure referred to in Annex VIII in subparagraph (a) to the extent that the amendment does not increase the inconsistency of the measure with Article 29 to 33, as it existed immediately before the amendment.
2. The measures listed in Annex VIII as well as in paragraph 2 of Article 29 shall be reviewed by the Sub-Committee on Financial Services established under Article 40, with a view to proposing to the Joint Committee their modification, suspension or elimination.
3. No later than three years following the entry into force of this Agreement, the Joint Committee shall adopt a decision providing for the elimination of substantially all remaining discrimination. That decision shall contain a list of commitments establishing the level of liberalisation which the Parties agree to grant each other.
Article 35. Right to Regulate
1. Each Party may regulate, and introduce new regulations, on the supply of financial services within their territory in order to meet national policy objectives, in so far as regulations do not impair on any rights and obligations arising under this Agreement.
2. Each Party shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.
Article 36. Prudential Carve-out
1. Nothing in this Section shall be construed to prevent a Party from adopting or maintaining reasonable measures for prudential reasons, such as:
(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) the maintenance of the safety, soundness, integrity or financial responsibility of financial service suppliers; or
(c) 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 another Party in comparison to its own like financial service suppliers. 3. Nothing in this Section 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.
Article 37. 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 an opportunity for such persons 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's appropriate financial authorities shall make available to interested persons its requirements for completing applications relating to the supply of financial services.
3. On the request of an applicant, the appropriate financial authorities shall inform the applicant of the status of its application. If such authorities require additional information from the applicant, they shall notify the applicant without undue delay.
4. Each Party shall make its best endeavours to ensure that the Basle Committee's "Core Principles for Effective Banking Supervision", the standards and principles of the International Association of Insurance Supervisors and the International Organisation of Securities Commissions' "Objectives and Principles of Securities Regulation" are implemented and applied in its territory.
Article 38. New Financial Services
Each Party shall permit a financial service supplier of another Party to provide any new financial service of a type similar to those services that the Party permits 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 prudential reasons.
Article 39. Data Processing
1. Each Party shall permit a financial service supplier of another 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. As far as the transfer of personal data is concerned, each Party shall adopt adequate safeguards to the protection of privacy and fundamental rights, and freedom of individuals. To that end, the Parties agree to co-operate in order to improve the level of protection, in accordance with standards adopted by relevant international organisations.
3. Nothing in this Article restricts the right of a Party to protect personal data, personal privacy and the confidentiality of individual records and accounts so long as such right is not used to circumvent the provisions of this Agreement.
Article 40. Sub-committee on Financial Services
1. A Sub-Committee on Financial Services is hereby established. The Sub-Committee shall comprise representatives of the Parties. The principal representative of each Party shall be an official of the Party's authorities responsible for financial services set out in Annex IX.
2. The functions of the Sub-Committee are set out at Annex X to this Agreement.
Article 41. Consultations
1. A Party may request consultations with another Party regarding any matter arising under this Section. The other Party shall give sympathetic consideration to the request. The Parties shall report the results of their consultations to the Sub-Committee on Financial Services at its annual meeting.
2. Consultations under this Article shall include officials of the authorities specified in Annex IX.
3. Nothing in this Article shall be construed to require financial authorities participating in consultations to disclose information or take any action that would interfere with individual regulatory, supervisory, administrative or enforcement matters.
4. Where a competent authority of a Party requires information for supervisory purposes concerning a financial service supplier in another Party's territory, it may approach the competent authorities in the other Party's territory to seek the information.
Article 42. Dispute Settlement
Arbitrators appointed in accordance with Chapter VIII for disputes on prudent ial issues and other financial matters shall have the necessary expertise relevant to the specific financial service under dispute, as well as expertise or experience in financial services law or practice, which may include the regulation of financial institutions.
Article 43. Specific Exceptions
1. Nothing in Sections I, II and III of this Chapter shall be construed 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 on a commercial basis.
2. Nothing in this Section 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 Section shall be construed to prevent a Party, including its public entities, from exclusively conducting or providing in its territory activities or services for the account or with the guarantee or using the financial resources of the Party, or its public entities.