(k) services includes any service in any sector except services supplied in the exercise of governmental authority;
(l) service supplied in the exercise of governmental authority means any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers;
(m) service supplier of a Party means a person of that Party that supplies a service (6);
(n) supply of a service includes the production, distribution, marketing, sale and delivery of a service;
(o) trade in services means the supply of a service:
(i) from the territory of one Party into the territory of the other Party;
(ii) in the territory of one Party to the service consumer of the other Party;
(iii) by a service supplier of one Party, through commercial presence in the territory of the other Party; and
(iv) by a service supplier of one Party, through presence of natural persons of that Party in the territory of the other Party; and
(p) traffic rights means the right for scheduled and non-scheduled services to operate and/or to carry passengers, cargo and mail for remuneration or hire from, to, within, or over the territory of a Party, including points to be served, routes to be operated, types of traffic to be carried, capacity to be provided, tariffs to be charged and their conditions, and criteria for designation of airlines, including such criteria as number, ownership and control.
Article 8.3. National Treatment
1. In sectors inscribed in its schedules of specific commitments in Annex 3 (Schedules of Specific Services Commitments) or Annex 4 (Schedules of Movement of Natural Persons Commitments), and subject to any conditions and qualifications set out therein, each Party shall accord to services and service suppliers of the other Party, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like services and service suppliers (7).
2. A Party may meet the requirement of paragraph 1 by according to services and service suppliers of the other Party, either formally identical treatment or formally different treatment to that it accords to its own like services and 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 services or service suppliers of the Party compared to like services or service suppliers of the other Party.
Article 8.4. Institutional Arrangements
The FTA Joint Commission or a subsidiary body established by it may consider any matters relating to the implementation of this Chapter and its Annex on Financial Services, Chapter 9 (Telecommunications Services), Chapter 10 (Movement of Natural Persons), and Chapter 11 (Framework on Mutual Recognition Arrangements), including:
(a) reviewing and monitoring the implementation and operation of these chapters and annex;
(b) identifying areas to be improved for facilitating trade between the Parties;
(c) the implementation of Article 8.13 (Emergency Safeguard Measures);
(d) consideration of the application of Most-Favoured-Nation (MFN) treatment;
(e) facilitating cooperation between the Parties; and
(f) discussing any other issues related to these chapters and annex.
Article 8.5. Market Access
1. With respect to market access through the modes of supply identified in subparagraph (0) of Article 8.2 (Definitions), each Party shall accord services and service suppliers of the other Party treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in its schedules of specific commitments in Annex 3 (Schedules of Specific Services Commitments) or Annex 4 (Schedules of Movement of Natural Persons Commitments) (8).
2. In sectors where market access commitments are undertaken, the measures which a Party shall not maintain or adopt either on the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in its schedules of specific commitments in Annex 3 (Schedules of Specific Services Commitments) or Annex 4 (Schedules of Movement of Natural Persons Commitments), are defined as:
(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 services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test (9);
(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 the requirement of an economic needs test;
(e) measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and
(f) 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.
Article 8.6. Schedules of Specific Commitments
1. Each Party shall set out in a schedule the specific commitments it undertakes under Article 8.3 (National Treatment), Article 8.5 (Market Access) and Article 8.7 (Additional Commitments). With respect to sectors where such commitments are undertaken, each schedule shall specify:
(a) terms, limitations and conditions on market access;
(b) conditions and qualifications on national treatment;
(c) undertakings relating to additional commitments; and
(d) where appropriate, the timeframe for implementation of such commitments.
2. Measures inconsistent with both Article 8.3 (National Treatment) and Article 8.5 (Market Access) shall be inscribed in the column relating to Market Access. In this case, the inscription will be considered to provide a condition or qualification to National Treatment as well.
3. Schedules of specific commitments in respect of services shall be set out in Annex 3 (Schedules of Specific Services Commitments) of this Agreement. The specific commitments in respect of the supply of a service by a service supplier of one Party through presence of natural persons of a Party in the territory of the other Party shall be set out in Annex 4 (Schedules of Movement of Natural Persons Commitments) of this Agreement.
Article 8.7. Additional Commitments
The Parties may negotiate commitments with respect to measures affecting trade in services not subject to scheduling under Article 8.3 (National Treatment) and Article 8.5 (Market Access), including those regarding qualifications, standards or licensing matters. Such commitments shall be inscribed in a Party's schedules of specific commitments in Annex 3 (Schedules of Specific Services Commitments) and in Annex 4 (Schedules of Movement of Natural Persons Commitments).
Article 8.8. Modification of Schedules
1. A Party may modify or withdraw any commitment in its schedules of specific commitments in Annex 3 (Schedules of Specific Services Commitments) or Annex 4 (Schedules of Movement of Natural Persons Commitments), at any time after three years have elapsed from the date on which this Agreement enters into force, in accordance with the procedures set out in Article XXI of GATS, mutatis mutandis, and the Procedures for the Implementation of Article XXI of GATS set out in WTO document S/L/80 of 29 October 1999 (the GATS Article XXI Procedures), mutatis mutandis, as amended from time to time.
2. For the avoidance of doubt, references in Article XXI of GATS and the GATS Article XXI Procedures to the "Secretariat" and the "Council for Trade in Services" shall each be read as references to the FTA Joint Commission.
Article 8.9. Domestic Regulation
1. In sectors where specific commitments are undertaken, each Party shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.
2. With a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements and procedures, do not constitute unnecessary barriers to trade in services, the Parties shall jointly review the results of the WTO negotiations on disciplines on such measures, pursuant to Article V1.4 of GATS, and shall amend this Article, as appropriate, after consultations between the Parties, to bring the results of those negotiations into effect under this Agreement. The Parties note that the disciplines arising from such negotiations shall aim to ensure that qualification requirements and procedures, technical standards and licensing requirements and procedures are, inter alia:
(a) based on objective and transparent criteria, such as competence and the ability to supply the service;
(b) not more burdensome than necessary to ensure the quality of the service; and
(c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.
3. In sectors in which a Party has undertaken specific commitments under Article 8.3 (National Treatment), Article 8.5 (Market Access) and Article 8.7 (Additional Commitments), pending the incorporation of the disciplines referred to in paragraph 2, that Party shall not apply licensing and qualification requirements and technical standards that nullify or impair such specific commitments under this Agreement in a manner which:
(a) does not comply with the criteria outlined in subparagraphs 2(a), (b) or (c); and
(b) could not reasonably have been expected of that Party at the time the specific commitments in those sectors were made.
4. In determining whether a Party is in conformity with its obligations under subparagraph 3(a), account shall be taken of international standards of relevant international organisations applied by that Party (10).
5. Where authorisation is required for the supply of a service on which a specific commitment has been made, the competent authorities of that Party shall:
(a) in the case of an incomplete application, at the request of the applicant, identify all the additional information that is required to complete the application and provide the opportunity to remedy deficiencies within a reasonable timeframe;
(b) within a reasonable period of time after the submission of an application considered complete under laws and regulations, inform the applicant of the decision concerning the application;
(c) at the request of the applicant, provide, without undue delay, information concerning the status of the application under consideration; and
(d) if an application is terminated or denied, to the maximum extent possible, inform the applicant in writing, and without delay, the reasons for such action. The applicant will have the possibility of resubmitting, at its discretion, a new application.
6. In sectors where specific commitments regarding professional services are undertaken, each Party shall provide for adequate procedures to verify the competency of professionals of the other Party.
7. Subject to its laws and regulations, each Party shall permit service suppliers of the other Party to use the business names under which they ordinarily trade in the territory of the other Party and otherwise ensure that the use of business names is not unduly restricted.
Article 8.10. Recognition
1. A Party may recognise the education or experience obtained, requirements met, or licences or certification granted in the other Party for purposes of the fulfilment, in whole or in part, of its standards or criteria for the authorisation, licensing, or certification of service suppliers of the other Party, subject to the requirements of paragraph 4.
2. Recognition referred to in paragraph 1, which may be achieved through harmonisation or otherwise, may be based upon an agreement or arrangement between the Parties or may be accorded unilaterally.
3. Where a Party recognises, unilaterally or by agreement or arrangement, the education or experience obtained, requirements met or licences or certifications granted in the territory of a non-Party, a Party that is a party to an agreement or arrangement of the type referred to in paragraph 2, whether existing or future, shall afford adequate opportunity for the other Party, if the other Party is interested, to negotiate accession to such an agreement or arrangement or to negotiate a comparable one with it. Where a Party accords recognition unilaterally, it shall afford the other Party an adequate opportunity to demonstrate that the education or experience obtained, requirements met or licences or certifications obtained in the other Party should also be recognised.
4. A Party shall not accord recognition in a manner which could constitute a means of discrimination between countries in the application of its standards or criteria for the authorisation, licensing or certification of service suppliers or a disguised restriction on trade in services.
Article 8.11. Monopoly and Exclusive Services Suppliers
1. Each Party shall ensure that any monopoly supplier of a service in its territory does not, in the supply of the monopoly service in the relevant market, act in a manner inconsistent with that Party's obligations under Article 8.3 (National Treatment) and Article 8.5 (Market Access).
2. Where a Party's monopoly supplier competes, either directly or through an affiliated company, in the supply of a service outside the scope of its monopoly rights and which is subject to that Party's specific commitments the Party shall ensure that such a supplier does not abuse its monopoly position to act in its territory in a manner inconsistent with such commitments.
3. If a Party has reason to believe that a monopoly supplier of a service of the other Party is acting in a manner inconsistent with paragraph 1 or 2, it may request the Party establishing, maintaining or authorising such supplier to provide specific information concerning the relevant operations in its territory.
4. The provisions of this Article shall also apply to cases of exclusive service suppliers, where a Party, formally or in effect:
(a) authorises or establishes a small number of service suppliers; and
(b) substantially prevents competition among those suppliers in its territory.
Article 8.12. Business Practices
1. Parties recognise that certain business practices of service suppliers, other than those falling under Article 8.11 (Monopoly and Exclusive Services Suppliers), may restrain competition and thereby restrict trade in services.
2. Each Party shall, at the request of the other Party, enter into consultations with a view to eliminating practices referred to in paragraph 1. The Party addressed shall accord full and sympathetic consideration to such a request and shall cooperate through the supply of publicly available non-confidential information available to the requesting Party. The requested Party may also provide other information available to the requesting Party, subject to its laws and regulations and to the conclusion of satisfactory agreement concerning the safeguarding of its confidentiality by the requesting Party.
Article 8.13. Emergency Safeguard Measures
1. The Parties shall initiate discussions within one year from the entry into force of this Agreement to develop mutually acceptable guidelines and procedures for the application of emergency safeguard measures within five years of the entry into force of this Agreement.
2. Notwithstanding paragraph 1, if:
(a) a Party considers it has suffered a substantial adverse impact caused by a specific commitment in Annex 3 (Schedules of Specific Services Commitments) or Annex 4 (Schedules of Movement of Natural Persons Commitments); and
(b) a Party provides for more favourable treatment under this Agreement than the Party is obliged to provide to services and service suppliers of the other Party under GATS or the AANZFTA Agreement at the time this Agreement enters into force, the affected Party may request consultations with the other Party to deal with such situation and the requested Party shall respond to the request in good faith.
3. In undertaking such consultations, the Parties shall endeavour to reach a mutually acceptable solution within a reasonable time.
Article 8.14. Payments and Transfers
1. Except under the circumstances envisaged in Article 18.4 (Measures to Safeguard the Balance-of-Payments) of Chapter 18 (General Provisions and Exceptions), a Party shall not apply restrictions on international transfers and payments for current transactions relating to its specific commitments.
2. Nothing in this Chapter shall affect the rights and obligations of the Parties as members of the International Monetary Fund (IMF) under the IMF Articles of Agreement, including the use of exchange actions which are in conformity with the IMF Articles of Agreement, provided that a Party shall not impose restrictions on any capital transactions inconsistently with its commitments under this Chapter regarding such transactions, except under Article 18.4 (Measures to Safeguard the Balance-of- Payments) of Chapter 18 (General Provisions and Exceptions), or at the request of the IMF.
Article 8.15. Denial of Benefits
A Party may deny the benefits of this Chapter:
(a) to the supply of any service, if it establishes that the service is supplied from or in the territory of a non-Party;
(b) in the case of the supply of a maritime transport service, if it establishes that the service is supplied:
(i) by a vessel registered under the law of a non-Party; and
(ii) by a person of a non-Party which operates and/or uses the vessel in whole or in part;
(c) to a service supplier, that is a juridical person, if it establishes that it is not a service supplier of the other Party.
Article 8.16. Review of Commitments
1. The Parties shall review commitments on trade in services with the first review within three years from the date of entry into force of this Agreement, and at least every five years subsequently, with the aim of improving the overall commitments undertaken by the Parties under this Agreement on a mutually advantageous basis.
2. In reviewing the commitments in accordance with paragraph 1, the Parties shall take into account paragraph 1 of Article IV and paragraph 2 of Article XIX of the GATS.
Annex on financial services
Article 1. Scope
1. This Annex provides for commitments additional to Chapter 8 (Trade in Services), Chapter 12 (Investment) and Chapter 17 (Transparency) in relation to financial services and shall prevail to the extent of any inconsistency with those Chapters.
2. This Annex shall apply to measures adopted or maintained by a Party 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 one Party into the territory of the other Party;
(b) inthe territory of one Party to the service consumer of the other Party;
(c) by a service supplier of one Party, through commercial presence in the territory of the other Party; or
(d) by aservice supplier of one Party, through presence of natural persons of that Party in the territory of the other Party.
3. This Annex does not apply to services supplied in the exercise of governmental authority as follows:
(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 guarantee or using the financial resources of the government.
4. If a Party allows any of the activities referred to in subparagraphs 3(b) or (c) to be conducted by its financial institutions in competition with a public entity or a financial institution, this Annex shall apply to such activities.
5. Subparagraph (I) of Article 8.2 (Definitions) in Chapter 8 (Trade in Services) shall not apply to services covered by this Annex.
Article 2. Definitions
For the purposes of this Annex:
(a) financial institution means any financial intermediary or other juridical person that is authorised to do business and regulated or supervised as a financial institution under the law of the Party in whose territory it is located;
(b) financial service is any service of a financial nature. 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):
(AA) life; and
(BB) non-life;
(ii) reinsurance and retrocession;
(iii) insurance intermediation, such as brokerage and agency; and
(iv) services auxiliary to insurance, such as consultancy, actuarial, risk assessment 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:
(AA) money market instruments (including cheques, bills, certificates of deposits);
(BB) foreign exchange;
(CC) derivative products including, but not limited to, futures and options;
(DD) exchange rate and interest rate instruments, including products such as swaps, forward rate agreements;
(EE) transferable securities; and
(FF) 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 subparagraphs (v) through (xv), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy;
(c) financial service supplier means any natural person or juridical person of a Party wishing to supply or supplying financial services but the term "financial service supplier" does not include a public entity;
(d) new financial service means a financial service that is not supplied by any financial institutions in the territory of a Party but which is supplied in the territory of the other Party. This includes existing and new products or services, and the manner in which the product or service is delivered;
(e) public entity means 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. This does not include an entity principally engaged in supplying financial services on commercial terms;
(f) self-regulatory organisation means:
(i) for Australia: any non-government body, including any securities or futures exchange or market, clearing or payment settlement agency, or other organisation or association that exercises its own or delegated regulatory or supervisory authority over financial service suppliers or financial institutions; and
(ii) for Malaysia: any non-government body, including any securities or futures exchange or market, clearing or payment settlement agency, other organisation or association that is recognised by legislation as a_ self-regulatory organisation and exercises regulatory or supervisory authority over financial service suppliers or financial institutions pursuant to legislation or delegation from central, regional or local governments or authorities.