Annex I. Reservations for Existing Measures and Liberalization Commitments
1. The Schedule of a Party sets out, pursuant to Articles 808 (Investment – Reservations and Exceptions) and 908 (Cross-Border Trade in Services – Non- Conforming Measures) the reservations taken by that Party with respect to existing measures by a Party that do not conform with obligations imposed by:
a. Articles 803 (Investment – National Treatment), 903 (Cross-Border Trade in Services – National Treatment) or 1102 (Financial Services - National Treatment);
b. Articles 804 (Investment - Most-Favoured-Nation Treatment), 904 (Cross-Border Trade in Services - Most-Favoured-Nation Treatment) or 1103 (Financial Services - Most-Favoured-Nation Treatment);
c. Article 907 (Cross-Border Trade in Services - Local Presence);
d. Article 807 (Investment - Performance Requirements);
e. Article 806 (Investment - Senior Management and Boards of Directors); or
f. Article 906 (Cross-Border Trade in Services - Market Access).
2. Each reservation sets out the following elements:
a. Sector refers to the general sector in which the reservation is taken;
b. Sub-Sector refers to the specific sector in which the reservation is taken;
c. Industry Classification refers, where applicable, to the activity covered by the reservation according to industry classification codes;
d. Type of Reservation specifies the obligation referred to in paragraph 1 for which a reservation is taken;
e. Measures identifies the laws, regulations or other measures, as qualified, where indicated, by the Description element, for which the reservation is taken. A measure cited in the Measures element:
i. means the measure as amended, continued or renewed as of the date of entry into force of this Agreement, and
ii. includes any subordinate measure adopted or maintained under the authority of and consistent with the measure;
f. Description sets out the non-conforming aspects of the existing measures for which the reservation is taken. It may also set out commitments for liberalization.
3. In the interpretation of a reservation, all elements of the reservation, with the exception of Industry Classification, shall be considered. A reservation shall be interpreted in the light of the relevant provisions of the Articles against which the reservation is taken. To the extent that:
a. the Measures element is qualified by a liberalization commitment from the Description element, the Measures element as so qualified shall prevail over all other elements; and
b. the Measures element is not so qualified, the Measures element shall prevail over all other elements, unless any discrepancy between the Measures element and the other elements considered in their totality is so substantial and material that it would be unreasonable to conclude that the Measures element should prevail, in which case the other elements shall prevail to the extent of that discrepancy.
4. Where a Party maintains a measure that requires a service provider be a citizen, permanent resident or resident of its territory as a condition to the provision of a service in its territory, a reservation for that measure taken with respect to Article 903, 904 or 907 (Cross-Border Trade in Services – National Treatment, Most-Favoured-Nation or Local Presence) shall operate as a reservation with respect to Article 803, 804 or 807 (Investment - National Treatment, Most-Favoured-Nation or Performance Requirements) to the extent of that measure.
5. The listing of a measure in this Annex is without prejudice to a future claim that Annex II may apply to the measure or some application of the measure.
6. For purposes of this Annex:
CPC means Central Product Classification (CPC) numbers as set out in Statistical Office of the United Nations, Statistical Papers, Series M, No. 77, Provisional Central Product Classification, 1991; and
SIC means Standard Industrial Classification (SIC) numbers as set out in Statistics Canada, Standard Industrial Classification, fourth edition, 1980.
Annex I. Schedule of Canada
Sector:
All Sectors
Sub-Sector:
Industry Classification:
Type of Reservation:
National Treatment (Article 803)
Performance Requirements (Article 807)
Senior Management and Boards of Directors (Article 806)
Measures:
Investment Canada Act, R.S.C. 1985, c. 28 (1st Supp.) Investment Canada Regulations, SOR/85-611, as qualified by paragraphs 8 through 12 of the Description element
Description:
Investment
1. Under the Investment Canada Act, the following acquisitions of Canadian businesses by "non Canadians" are subject to review by the Director of Investments:
a. all direct acquisitions of Canadian businesses with assets of C$5 million or more;
b. all indirect acquisitions of Canadian businesses with assets of C$50 million or more; and
c. indirect acquisitions of Canadian businesses with assets between C$5 million and C$50 million that represent more than 50 percent of the value of the assets of all the entities the control of which is being acquired, directly or indirectly, in the transaction in question.
2. A "non-Canadian" is an individual, government or agency thereof or an entity that is not "Canadian". "Canadian" means a Canadian citizen or permanent resident, government in Canada or agency thereof or Canadian-controlled entity as provided for in the Investment Canada Act.
3. In addition, specific acquisitions or establishment of new businesses in designated types of business activities relating to Canada's cultural heritage or national identity, which are normally notifiable, may be reviewed if the Governor-in-Council authorizes a review in the public interest.
4. An investment subject to review under the Investment Canada Act may not be implemented unless the Minister responsible for the Investment Canada Act advises the applicant that the investment is likely to be of net benefit to Canada. Such a determination is made in accordance with six factors described in the Act, summarized as follows:
a. the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment, on the utilization of parts, components and services produced in Canada, and on exports from Canada;
b. the degree and significance of participation by Canadians in the investment;
c. the effect of the investment on productivity, industrial efficiency, technological development and product innovation in Canada;
d. the effect of the investment on competition within any industry or industries in Canada;
e. the compatibility of the investment with national industrial, economic and cultural policies, taking into consideration industrial, economic and cultural policy objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment; and
f. the contribution of the investment to Canada's ability to compete in world markets.
5. In making a net benefit determination, the Minister, through the Director of Investments, may review plans under which the applicant demonstrates the net benefit to Canada of the proposed acquisition. An applicant may also submit undertakings to the Minister in connection with any proposed acquisition which is the subject of review. In the event of noncompliance with an undertaking by an applicant, the Minister may seek a court order directing compliance or any other remedy authorized under the Act.
6. Non-Canadians who establish or acquire Canadian businesses, other than those that are subject to review, as described above, must notify the Director of Investments.
7. The Director of Investments will review an "acquisition of control", as defined in the Investment Canada Act, of a Canadian business by an investor of Peru if the value of the gross assets of the Canadian business is not less than the applicable threshold.
8. The higher review threshold, calculated as set out in paragraph 13, does not apply to acquisitions in the following sectors: uranium production and ownership of uranium producing properties; financial services; transportation services; and cultural businesses.
9. Notwithstanding the definition of "investor of a party" in Article 847, only investors who are nationals, or entities controlled by nationals as provided for in the Investment Canada Act, of Peru may benefit from the higher review threshold.
10. An indirect "acquisition of control" of a Canadian business in any sector other than those sectors identified in paragraph 8 by an investor of Peru is not reviewable.
11. Notwithstanding Article 807, Canada may impose requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, conduct or operation of an investment of an investor of Peru or of a non-Party for the transfer of technology, production process or other proprietary knowledge to a national or enterprise, affiliated to the transferor, in Canada, in connection with the review of an acquisition of an investment under the Investment Canada Act.
12. Except for requirements, commitments or undertakings relating to technology transfer as set out in paragraph 11, Article 807 shall apply to requirements, commitments or undertakings imposed or enforced under the Investment Canada Act. Article 807 shall not be construed to apply to any requirement, commitment or undertaking imposed or enforced in connection with a review under the Investment Canada Act, to locate production, carry out research and development, employ or train workers, or to construct or expand particular facilities, in Canada.
13. For direct acquisitions of control by investors of Peru or for investors of a non-Party where the Canadian business is controlled by an investor of Peru, the applicable threshold for review is C$295 million for the year 2008 and for each year thereafter the amount determined by the Minister in January of that year arrived at by using the following formula:
Annual Adjustment =
Current Nominal GDP at Market Prices Previous Year Nominal GDP at amount determined for X previous year
"Current Nominal GDP at Market Prices" means the average of the Nominal Gross Domestic Products at Market Prices for the most recent four consecutive quarters.
"Previous Year Nominal GDP at Market Prices" means the average of the Nominal Gross Domestic Product for the four consecutive quarters for the comparable period in the year preceding the year used in calculating the "Current Nominal GDP at Market Prices."
The amounts determined in this manner will be rounded to the nearest million dollars.
Sector:
All Sectors
Sub-Sector:
Industry Classification:
Type of Reservation:
National Treatment (Article 803)
Senior Management and Boards of Directors (Article 806)
Measures:
As set out in the Description element
Description:
Investment
Canada or any province, when selling or disposing of its equity interests in, or the assets of, an existing state enterprise or an existing governmental entity, may prohibit or impose limitations on the ownership of such interests or assets, and on the ability of owners of such interests or assets to control any resulting enterprise, by investors of Peru or of a non-Party or their investments. With respect to such a sale or other disposition, Canada or any province may adopt or maintain any measure relating to the nationality of senior management or members of the board of directors.
For purposes of this reservation:
a. any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationality requirements described in this reservation shall be deemed to be an existing measure; and
b. "state enterprise" means an enterprise owned or controlled through ownership interests by Canada or any province and includes an enterprise established after the date of entry into force of this Agreement solely for the purposes of selling or disposing of equity interests in, or the assets of, an existing state enterprise or governmental entity.
Sector:
All Sectors
Sub-Sector:
Industry Classification:
Type of Reservation:
National Treatment (Article 803)
Measures:
Canada Business Corporations Act, R.S.C. 1985, c. C-44
Canada Corporations Act, R.S.C. 1970, c. C-32
Canada Business Corporations Act Regulations, SOR/79- 316
Description:
Investment
"Constraints" may be placed on the issue, transfer and ownership of shares in federally incorporated corporations. The object is to permit corporations to meet Canadian ownership requirements, under certain laws set out in the Canada Business Corporations Act Regulations, in sectors where ownership is required as a condition to operate or to receive licenses, permits, grants, payments or other benefits. In order to maintain certain "Canadian" ownership levels, a corporation is permitted to sell shareholders' shares without the consent of those shareholders, and to purchase its own shares on the open market. "Canadian" is defined in the Canada Business Corporations Act Regulations.
Sector:
All Sectors
Sub-Sector:
Industry Classification:
Type of Reservation:
Senior Management and Boards of Directors (Article 806)
Measures:
Canada Business Corporations Act, R.S.C. 1985, c. C-44
Canada Business Corporations Act Regulations,SOR/79-316
Canada Corporations Act, R.S.C. 1970, c. C-32
Special Acts of Parliament incorporating specific compames
Description:
Investment
The Canada Business Corporations Act requires, for most federally-incorporated corporations, that 25 percent of directors be resident Canadians. A simple majority of resident Canadian directors is required for corporations in prescribed sectors. These sectors are: uranium mining; book publishing or distribution; book sales, where the sale of books is the primary part of the corporation's business; and film or video distribution. Similarly, corporations that, by an Act of Parliament or Regulation, are individually subject to minimum Canadian ownership requirements are required to have a majority of resident Canadians directors.
For purposes of the Act, "resident Canadian" means an individual who is a Canadian citizen ordinarily resident in Canada, a citizen who is a member of a class set out in the Canada Business Corporations Act Regulations, or a permanent resident as defined in the Immigration and Refugee Protection Act other than one who has been ordinarily resident in Canada for more than one year after he or she became eligible to apply for Canadian citizenship.
In the case of a holding corporation, not more than one third of the directors need be resident Canadians if the earnings in Canada of the holding corporation and its subsidiaries are less than five percent of the gross earnings of the holding corporation and its subsidiaries.
Under Part IV of the Canada Corporations Act, asimple majority of the elected directors of a Special Act corporation must be resident in Canada and citizens of a Commonwealth country. This requirement applies to every joint stock company incorporated subsequent to
22 June 1869 by any Special Act of Parliament.
Sector:
All Sectors
Sub-Sector:
Industry Classification:
Type of Reservation:
National Treatment (Article 803)
Measures:
Citizenship Act, R.S.C. 1985, c. C-29
Foreign Ownership of Land Regulations, SOR/79-416
Description:
Investment
The Foreign Ownership of Land Regulations are made pursuant to the Citizenship Act and the Alberta Agricultural and Recreational Land Ownership Act. In Alberta, an ineligible person or foreign-owned or controlled corporation may only hold an interest in controlled land consisting of not more than two parcels containing, in the aggregate, not more than 20 acres. An" ineligible person" is:
a. an individual who is not a Canadian citizen or permanent resident;
b. a foreign government or agency thereof; or
c. a corporation incorporated elsewhere than in Canada.
"Controlled land" means land in Alberta but does not include:
a. land of the Crown in right of Alberta;
b. land within a city, town, new town, village or summer village; and
c. mines or minerals.
Sector:
All Sectors
Sub-Sector:
Industry Classification:
Type of Reservation:
National Treatment (Article 803)
Measures:
Air Canada Public Participation Act, R.S.C. 1985, c. 35 (4th Supp.)
Canadian Arsenals Limited Divestiture Authorization Act, S.C. 1986, c. 20
Eldorado Nuclear Limited Reorganization and Divestiture Act, S.C. 1988, c. 41
Nordion and Theratronics Divestiture Authorization Act, S.C. 1990, c. 4
Description:
Investment
A "non-resident" or "non-residents" may not own more than a specified percentage of the voting shares of the corporation to which each Act applies. For some companies the restrictions apply to individual shareholders, while for others the restrictions may apply in the aggregate. Where there are limits on the percentage that an individual Canadian investor can own, these limits also apply to non-residents. The restrictions are as follows:
Air Canada: 25 percent in the aggregate;
Cameco Limited (formerly Eldorado Nuclear Limited): 15 percent per individual non-resident, 25 percent in the aggregate;
Nordion International Inc.: 25 percent in the aggregate;
Theratronics International Limited: 49 percent in the aggregate;
Canadian Arsenals Limited: 25 percent in the aggregate.
"Non-resident" generally means: