(c) an amendment to a non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 10.2, 10.3, 10.4, and10.8. (7)
2. Articles 10.2 through 10.5 and Article 10.8 do not apply to a measure that a Party adopts or maintains with respect to sectors, sub-sectors, or activities, as set out by that Party in Section B of its Schedule to Annex III.
3. A non-conforming measure set out in a Party's Schedule to Annex I or II as not subject to Article 8.3 (National Treatment), 8.4 (Most-Favoured-Nation Treatment), 9.2 (National Treatment), or 9.3 (Most-Favoured-Nation Treatment) shall be treated as a non-conforming measure not subject to Article 10.2 or 10.3, as the case may be, to the extent that the measure, sector, sub-sector, or activity set out in the non-conforming measure is covered by this Chapter.
Article 10.10. Exceptions
1. This Chapter, or Chapter Eight (Investment), Chapter Nine (Cross-Border Trade in Services), Chapter Eleven (Telecommunications), Chapter Twelve (Temporary Entry for Business Persons), Chapter Thirteen (Electronic Commerce), Chapter Fourteen (Government Procurement), or Chapter Fifteen (Competition Policy, Monopolies and State Enterprises), are not to be construed to prevent a Party from adopting or maintaining measures for prudential reasons (8) , including for the protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial institution or cross-border financial service supplier, or to ensure the integrity and stability of the financial system. If such measures do not conform to the provisions of this Agreement referred to in this paragraph, they shall not be used as a means of avoiding the Party's commitments or obligations under such provisions.
2. This Chapter, or Chapter Eight (Investment), Chapter Nine (Cross-Border Trade in Services), Chapter Eleven (Telecommunications), Chapter Thirteen (Electronic Commerce), or Chapter Fifteen (Competition Policy, Monopolies and State Enterprises), do not apply to non-discriminatory measures of general application taken by a public entity in pursuit of monetary and related credit policies or exchange rate policies. This paragraph shall not affect a Party's obligations under Article 8.8 (Performance Requirements), with respect to measures covered by Chapter Eight (Investment) or under Articles 8.12 (Transfers) and 9.11 (Payments and Transfers).
3. Notwithstanding Articles 8.12 (Transfers) and 9.11 (Payments and 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, an affiliate of or person related to that institution or supplier, through the equitable, non-discriminatory, and good faith application of measures relating to maintenance of the safety, soundness, integrity, or financial responsibility of financial institutions or cross-border financial service suppliers. This paragraph does not prejudice any other provision of this Agreement that permits a Party to restrict transfers.
4. For greater certainty, this Chapter is not to be construed to prevent the adoption or enforcement by a Party of measures necessary to secure compliance with its domestic laws or regulations that are not inconsistent with this Chapter, including those relating to the prevention of deceptive and fraudulent practices or to deal with the effects of a default on financial services contracts, subject to the requirement that those measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on investment in financial institutions or cross-border trade in financial services.
5. The Parties recognise the importance of accommodating new financial services in their markets consistent with prudential requirements. The Parties confirm that Article 10.6 does not apply to cross-border trade in financial services or any new financial service that the Party would not permit its own financial institutions, in like circumstances, to supply. The Parties further confirm that a Party may apply prudential regulations to new financial services.
Article 10.11. Transparency
1. The Parties recognise that transparent regulations and policies governing the activities of financial institutions and cross-border financial service suppliers are important in facilitating access of foreign financial institutions and foreign cross-border financial service suppliers to, and their operations in, each other's market. Each Party commits to promote regulatory transparency in financial services.
2. Each Party shall ensure that all measures of general application to which this Chapter applies are administered in a reasonable, objective, and impartial manner.
3. In lieu of Article 19.1 (Publication), each Party shall, to the extent practicable:
(a) publish in advance regulations of general application relating to the subject matter of this Chapter that it proposes to adopt;
(b) provide interested persons and the other Party with a reasonable opportunity to comment on those proposed regulations; and
(c) allow reasonable time between the publication of final regulations and their effective date.
4. Each Party should, at the time it adopts final regulations and to the extent practicable, address in writing substantive comments received from interested persons with respect to the proposed regulations.
5. Each Party shall ensure that the rules of general application adopted or maintained by self-regulatory organisations of the Party are promptly published or otherwise made available in a manner as to enable interested persons to become acquainted with them.
6. Each Party shall maintain or establish appropriate mechanisms that will, as soon as practicable, respond to inquiries from interested persons regarding measures of general application relating to the subject matter covered by this Chapter.
7. Each Party's regulatory authorities shall make available to interested persons the requirements, including any documentation required, for completing applications relating to the supply of financial services.
8. At the request of an applicant, a Party's regulatory authority shall inform the applicant of the status of its application. If the authority requires additional information from the applicant, it shall notify the applicant without undue delay.
9. A Party's regulatory authority shall make an administrative decision on a completed 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 supply of a financial service within 120 days, and shall promptly notify the applicant of the decision. An application shall not be considered complete until all relevant hearings are held and all necessary information is received. If it is not practicable for a decision to be made within 120 days, the regulatory authority shall notify the applicant without undue delay and shall endeavour to make the decision within a reasonable time.
10. At the request of an unsuccessful applicant, a regulatory authority that has denied an application shall, to the extent practicable, inform the applicant of the reasons for denial of the application.
Article 10.12. Self-regulatory Organisations
If a Party requires a financial institution or a cross-border financial service supplier of the other Party to be a member of, participate in, or have access to, a self-regulatory organisation to provide a financial service in or into its territory, the Party shall ensure that the self-regulatory organisation observes the obligations of Articles 10.2 and 10.3.
Article 10.13. Payment and Clearing Systems
Under terms and conditions that accord national treatment, each Party shall grant financial institutions of the other Party access to payment and clearing systems operated by public entities, or to payment and clearing systems operated by any entity exercising any governmental authority delegated to it by a Party, and to official funding and refinancing facilities available in the normal course of ordinary business. This Article is not to be construed to confer access to the Party's lender of last resort facilities.
Article 10.14. Recognition
1. A Party may recognise prudential measures of a non-party in the application of measures covered by this Chapter. This recognition may be:
(a) accorded unilaterally;
(b) achieved through harmonisation or other means; or
(c) based upon an agreement or arrangement with the non-party.
2. A Party according recognition of prudential measures pursuant to paragraph 1 shall provide adequate opportunity to the other Party to demonstrate that circumstances exist in which there are or would be equivalent regulation, oversight, implementation of regulation, and, if appropriate, procedures concerning the sharing of information between the Parties.
3. If a Party accords recognition of prudential measures pursuant to paragraph 1(c) and the circumstances set out in paragraph 2 exist, the Party shall provide adequate opportunity to the other Party to negotiate accession to the agreement or arrangement, or to negotiate a comparable agreement or arrangement.
Article 10.15. Specific Commitments
Annex 10-B sets out certain specific commitments by each Party.
Article 1016. Financial Services Committee
1. The Parties hereby establish a Financial Services Committee. The principal representative of each Party shall be an official of the Party's authority responsible for financial services set out in Annex 10-C.
2. The Committee shall:
(a) supervise the implementation of this Chapter and its further elaboration;
(b) consider issues regarding financial services that are referred to it by a Party; and
(c) participate in dispute settlement procedures pursuant to Article 10.19.
3. The Committee shall meet annually, or as it otherwise decides, to assess the functioning of this Agreement as it applies to financial services. The Committee shall inform the Commission of the results of each meeting.
Article 10.17. Consultations
1. A Party may request consultations with the other Party regarding a matter arising under this Agreement that affects financial services. The other Party shall give sympathetic consideration to the request and any request to include regulatory authorities of the other Party in these consultations. The Parties shall report the results of their consultations to the Committee.
2. Consultations pursuant to this Article shall include officials of the authorities specified in Annex 10-C.
3. For greater certainty, this Article is not to be construed to require a Party to derogate from its relevant domestic law regarding sharing of information among financial regulators or the requirements of an agreement or arrangement between financial authorities of the Parties, or require regulatory authorities to take an action that would interfere with specific regulatory, supervisory, administrative, or enforcement matters.
Article 10.18. Dispute Settlement
1. Chapter Twenty-One (Dispute Settlement), as modified by this Article, applies to the settlement of disputes arising under this Chapter.
2. If a Party claims that a dispute arises under this Chapter, Article 21.7 (Panel Composition) shall apply, except that:
(a) if the Parties so agree, the panel must be composed entirely of panelists meeting the qualifications in paragraph 3; and
(b) in any other case:
(i) each Party may select panellists meeting the qualifications set out in paragraph 3 or in Article 21.7 (Panel Composition), except that each panellist may be a national of either Party; and
(ii) the chair of the panel must meet the qualifications set out in paragraph 3, unless the Parties agree otherwise.
3. Financial services panellists must:
(a) have expertise or experience in financial services law or practice, which may include the regulation of financial institutions; and
(b) meet the qualifications set out in Article 21.7 (Panel Composition) except that, other than the chair of the panel, each panellist may be a national of either Party.
4. Notwithstanding Article 21.11 (Non-Implementation – Suspension of Benefits), if a panel finds a measure to be inconsistent with this Agreement and the measure affects:
(a) only the financial services sector, the complaining Party may suspend benefits only in the financial services sector;
(b) 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 in the Party's financial services sector; or
(c) only a sector other than the financial services sector, the complaining Party shall not suspend benefits in the financial services sector.
Article 10.19. Investor-state Dispute Settlement In Financial Services
1. If an investor of a Party submits a claim under Article 8.18 (Claim by an Investor of a Party on Its Own Behalf) or 8.19 (Claim by an Investor of a Party on Behalf of an Enterprise) to arbitration under Section B of Chapter Eight (Investor-State Dispute Settlement) and the disputing Party invokes an exception pursuant to Article 10.10, the Tribunal shall, at the request of the disputing Party, refer the matter in writing to the Committee for a decision. The Tribunal shall not proceed until it receives the decision or report under this Article.
2. In a referral pursuant to paragraph 1, the Committee shall decide whether and to what extent Article 10.10 is a valid defence to the claim of the investor. 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. If the Committee has not decided the issue within 60 days of the receipt of the referral pursuant to paragraph 1, either Party may request the establishment of a panel pursuant to Article 21.6 (Establishment of a Panel). The panel shall be constituted in accordance with Article 10.18 and shall transmit its final report to the Committee and to the Tribunal. The report shall be binding on the Tribunal.
4. If a Party does not request the establishment of a panel pursuant to paragraph 3 within 10 days after the expiration of the 60-day period, the Tribunal may proceed to decide the matter.
Article 10.20. Definitions
For the purposes of this Chapter:
cross-border financial service supplier of a Party means a person of a Party that is engaged in the business of supplying a financial service within the territory of the Party and that seeks to supply or supplies a financial service through the cross-border supply of those services;
cross-border trade in financial services or cross-border supply of financial services means 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 by a person of that Party to a person of the other Party; or
(c) by a national of a Party in the territory of the other Party,
but does not include the supply of a financial service in the territory of a Party by an investment in that territory;
financial institution means a financial intermediary or other enterprise that is authorised to do business and regulated or supervised as a financial institution under the domestic law of the Party in whose territory it is located;
financial institution of the other Party means a financial institution, including a branch, located in the territory of a Party that is controlled by a person of the other Party;
financial service means a service of a financial nature. Financial services include all insurance and insurance-related services, and all banking and other financial services, excluding insurance, as well as services incidental or auxiliary to a service of a financial nature. Financial services include the following activities:
Insurance and insurance-related services
(a) direct insurance (including co-insurance):
(i) life; or
(ii) non-life;
(b) reinsurance and retrocession;
(c) insurance intermediation, such as brokerage and agency;
(d) services auxiliary to insurance, such as consultancy, actuarial, risk assessment, and claim settlement services;
Banking and other financial services (excluding insurance)
(e) acceptance of deposits and other repayable funds from the public;
(f) lending of all types, including consumer credit, mortgage credit, factoring, and financing of commercial transactions;
(g) financial leasing;
(h) payment and money transmission services, including credit, charge and debit cards, travellers checks, and bankers drafts;
(i) guarantees and commitments;
(j) trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:
(i) money market instruments, including checks, bills, and certificates of deposits;
(ii) foreign exchange;
(iii) derivative products, including futures and options;
(iv) exchange rate and interest rate instruments, including products such as swaps, and forward rate agreements;
(v) transferable securities; or
(vi) other negotiable instruments and financial assets, including bullion;
(k) 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;
(l) money broking;
(m) asset management such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services;
(n) settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;
(o) provision and transfer of financial information, financial data processing and related software by suppliers of other financial services; and
(p) advisory, intermediation, and other auxiliary financial services on all the activities listed in subparagraphs (e) through (o), including credit reference and analysis, investment and portfolio research and advice, and advice on acquisitions and on corporate restructuring and strategy;
financial service supplier of a Party means a person of a Party that is engaged in the business of supplying a financial service within the territory of that Party;
investment means "investment" as defined in Article 8.45 (Definitions), except that, with respect to "loans" and "debt instruments" referred to in that Article: (a) a loan to or debt instrument issued by a financial institution is an investment only where it is treated as regulatory capital by the Party in whose territory the financial institution is located; and
(b) a loan granted by or debt instrument owned by a financial institution, other than a loan to or debt instrument of a financial institution referred to in subparagraph (a), is not an investment;
for greater certainty, a loan granted by or debt instrument owned by a cross-border financial service supplier, other than a loan to or debt instrument issued by a financial institution, is an investment if such loan or debt instrument meets the criteria for investments set out in Article 8.45 (Definitions);
investor of a Party (9) means a Party or state enterprise thereof, or a person of a Party, that seeks to make, is making, or has made an investment in the territory of the other Party. A natural person who is a dual citizen is deemed to be exclusively a national of a State of his or her dominant and effective citizenship. A natural person who is a citizen of a Party and a permanent resident of the other Party is deemed to be exclusively a national of the Party of which he or she is a citizen;
new financial service means a financial service not supplied in a Party's territory that is supplied within the territory of the other Party, and includes a new form of delivery of a financial service or the sale of a financial product that is not sold in the Party's territory;
person of a Party means "person of a Party" as defined in Article 1.8 (Definitions of General Application) and, for greater certainty, does not include a branch of an enterprise of a non-party;
public entity means a central bank or monetary authority of a Party, or a financial institution owned or controlled by a Party. A central bank or monetary authority of a Party, or a financial institution that performs a financial regulatory function and is owned or controlled by a Party is not considered a designated monopoly or a state enterprise for the purposes of Chapter Fifteen (Competition Policy, Monopolies and State Enterprises); and
self-regulatory organisation means a non-governmental body, including securities or futures exchange or market, clearing agency, or other organisation or association, that exercises regulatory or supervisory authority over financial service suppliers or financial institutions by statute or delegation from national, sub-national, or local governments or authorities. A self-regulatory organisation is not considered a designated monopoly or a state enterprise for the purposes of Chapter Fifteen (Competition Policy, Monopolies and State Enterprises).
Chapter Eleven. Telecommunications
Article 11.1. Scope and Coverage
1. This Chapter applies to:
(a) measures adopted or maintained by a Party affecting access to and use of public telecommunications transport networks and services;
(b) measures adopted or maintained by a Party relating to obligations of suppliers of public telecommunications transport networks and services;
(c) other measures adopted or maintained by a Party relating to public telecommunications transport networks and services; and
(d) measures adopted or maintained by a Party relating to the supply of value-added services.
2. This Chapter does not apply to measures adopted or maintained by a Party affecting the transmission by any means of telecommunications, including broadcast or cable distribution, of radio or television programming intended for reception by the public.
3. This Chapter is not to be construed to:
(a) require a Party to authorise a service supplier of the other Party to establish, construct, acquire, lease, operate, or supply telecommunications transport networks or services, other than as specifically provided in this Agreement; or
(b) require a Party, or require a Party to oblige any service supplier under its jurisdiction, to establish, construct, acquire, lease, operate, or supply telecommunications transport networks or services not offered to the public generally.
Article 11.2. Access to and Use of Public Telecommunications Transport Networks and Services
1. Subject to a Party's right to restrict the supply of a service in accordance with the reservations in its Schedule to Annex I or II, a Party shall ensure that enterprises of the other Party are accorded access to and use of public telecommunications transport networks and services on reasonable and non-discriminatory terms and conditions, including as set out in paragraphs 2 through 6.
2. Each Party shall ensure that enterprises of the other Party have access to and use of any public telecommunications transport networks and services offered within or across its borders, including private leased circuits, and to this end shall ensure, subject to paragraphs 5 and 6, that such enterprises are permitted to:
(a) purchase or lease and attach terminal or other equipment which interfaces with the public telecommunications transport networks and services;
(b) interconnect private leased or owned circuits with public telecommunications transport networks and services of that Party or with circuits leased or owned by another enterprise;
(c) use operating protocols of their choice; and
(d) perform switching, signalling, and processing functions.
3. Each Party shall ensure that enterprises of the other Party may use public telecommunications transport networks and services for the movement of information in its territory or across its borders, including for intra-corporate communications of such enterprises, and for access to information contained in data bases or otherwise stored in machine-readable form in the territory of either Party.
4. Further to Article 22.1(General Exceptions) and notwithstanding paragraph 3, a Party may take measures necessary to ensure the security and confidentiality of messages or to protect the privacy of users of public telecommunications transport services. These measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade in services.
5. Each Party shall ensure that a condition is not imposed on access to and use of public telecommunications transport networks or services other than as necessary to:
(a) safeguard the public service responsibilities of suppliers of public telecommunications transport networks and services, in particular their ability to make their networks or services available to the public generally;
(b) protect the technical integrity of public telecommunications transport networks and services; or
(c) ensure that service suppliers of the other Party do not supply services limited by the Party's reservations under Annex I or II.
6. Provided that they satisfy the criteria in paragraph 5, conditions for access to and use of public telecommunications transport networks or services may include:
(a) restrictions on resale or shared use of such services;
(b) a requirement to use specified technical interfaces, including interface protocols, for interconnection with such networks and services;
(c) requirements, where necessary, for the inter-operability of such services;
(d) type approval of terminal or other equipment which interfaces with the network and technical requirements relating to the attachment of such equipment to such networks;
(e) restrictions on interconnection of private leased or owned circuits with such networks or services or with circuits leased or owned by another service supplier; and
(f) notification, registration, and licensing.
Article 11.3. Licensing Procedure
1. If a license is required to supply public telecommunications transport networks or services, each Party shall make publicly available: