2. When a Party intends to modify an Annex to this Chapter, the Party shall: (a) notify the other Party in writing; and
(b) include in the notification a proposal for appropriate compensatory adjustments to the other Party to maintain a level of coverage comparable to that existing prior to the modification.
3. Notwithstanding subparagraph 2(b), a Party does not need to provide compensatory adjustments if the modification covers an entity over which the Party has effectively eliminated its control or influence. Government control or influence over the covered procurement of entities listed in Annex [X] to this Chapter is presumed to be effectively eliminated insofar as the entity's procurement is concerned where the entity is exposed to competition on markets to which access is not restricted.
4. If the other Party disputes that:
(a) an adjustment proposed under sub-paragraph 2 (b) is adequate to maintain a comparable level of mutually agreed coverage;
(b) the modification covers an entity over which the Party has effectively eliminated its control or influence under sub-paragraph 3.
it shall object in writing within 45 days of receipt of the notification referred to in sub- paragraph 2 (a) or be deemed to have accepted the adjustment or modification, including for the purposes of Chapter X (Dispute Settlement).
Rectifications
5. The following changes to a Party's Annexes shall be considered a rectification of a purely formal nature, provided that they do not affect the mutually agreed coverage provided for in the Chapter:
(a) a change in the name of an entity; (b) a merger of two or more entities listed within an Annex; and
(c) the separation of an entity listed in an Annex into two or more entities that are all added to the entities listed in the same Annex.
6. In the case of proposed rectifications to a Party's Annexes, the Party shall notify the other Party every two years following the entry into force of this Chapter.
7. A Party may notify the other Party of an objection to a proposed rectification within 45 days from having received the notification. Where a Party submits an objection, it shall set out the reasons why it believes the proposed rectification is not a change provided for in paragraph 5 of this Article, and describe the effect of the proposed rectification on the mutually agreed coverage provided for in the Chapter. If no such objection is submitted in writing within 45 days after having received the notification, the Party shall be deemed to have agreed to the proposed rectification.
Consultations and Dispute resolution
8. If the other party objects to the proposed modification or rectification, the Parties will seek to resolve the issue through consultations. If no agreement is found within 60 days of receipt of the objection, the Party seeking to modify or rectify its Annex may refer the matter to the Dispute Settlement procedure under this Agreement. The intended modification or rectification of the Annex will take effect only when both Parties have agreed or on the basis of a final decision of the Dispute Settlement body.
9. The consultation procedure under paragraph 8 is without prejudice of the consultation under the Dispute Settlement procedure of this Agreement.
Article 21.20. Sub-Committee on Government Procurement
1. The Parties hereby establish a Sub-Committee on Government Procurement comprising representatives of the European Union and of Chile. On request of a Party, the Sub- Committee shall meet to address matters related to the implementation and operation of this Chapter, including the following:
(a) the modification of Appendix [X];
(b) issues regarding government procurement that are referred to it by a Party;
(c) monitoring the cooperation activities undertaken by the Parties as provided by Article 21.22;
(d) facilitation of participation of SMEs in covered procurement as provided in Article 21.21;
(e) discussion on status of implementation of the single point of access under
Article 21.6. Paragraph 7.
Article 21.21. Facilitation of Participation by Small and Medium Sized Enterprises (SMEs)
1. The Parties recognise the important contribution that SMEs can make to economic growth and employment and the importance of facilitating the participation of SMEs in government procurement.
2. The Parties recognize the importance of electronic procurement in facilitating the participation of SMEs in procurement procedures by ensuring transparency.
3. The Parties also recognize the importance of business alliances between suppliers of each Party, and in particular between SMEs, including the joint participation in tendering procedures.
4. The Parties may:
(a) provide information related to their measures used in order to contribute, promote, encourage or facilitate SMEs participation in government procurement;
(b) cooperate in the elaboration of mechanisms in order to provide information to the SMEs of the means for participating in covered procurement under this Chapter.
5. To facilitate participation of SMEs in covered procurement, each Party shall, to the extent possible:
(a) provide a definition of SMEs in an electronic portal;
(b) endeavor to make all tender documentation available free of charge;
(c) undertake any other activity designed to facilitate the participation of SMEs in
government procurement covered by this Chapter, provided that these measures are not discriminatory against the other Party's enterprises.
Article 21.22. Cooperation
1. The Parties shall make their best effort to develop cooperation activities with a view to achieving a better understanding of their respective government procurement systems, as well as a better access to their respective markets, in matters such as:
(a) exchanging experiences and information, such as regulatory frameworks, best practices and statistics;
(b) facilitating participation by suppliers in covered procurement, in particular, with respect to SMEs;
(c) developing and expanding the use of electronic means in government procurement systems;
(d) building capability by fostering mutual learning of government officials and staff of procuring entities with a view to fulfilling the provisions of this Chapter .
2. The Parties shall inform the Sub-Committee established in Article 21.20 of any of such activities.
Article 21.23. Further Negotiations
The Sub-Committee on Government Procurement shall review the operation of this Chapter and, no later than four years after the date of entry into force of this Agreement, may propose to the Trade Committee to recommend to the Parties to hold further negotiations with a view to achieving additional market access opening.
Chapter 22. STATE-OWNED ENTERPRISES, ENTERPRISES GRANTED SPECIAL RIGHTS OR
PRIVILEGES AND DESIGNATED MONOPOLIES
Article 22.1. Definitions
For the purposes of this Chapter, the following definitions shall apply:
(a) (b)
(c)
(d)
(e)
(f)
"State-owned enterprise" means an enterprise owned or controlled by a Partyâ.
"Enterprise granted special rights or privileges?" means any enterprise, public or private, that has been granted by a Party, [in law or in fact], special rights or privileges. Special rights or privileges are granted by a Party when it designates or limits to two or more the number of enterprises authorized to provide a good or a service, taking into account the specific sectorial regulation under which the granting of the right or privilege has taken place, other than according to objective, proportional and non- discriminatory criteria, substantially affecting the ability of any other enterprise to supply the same good or service in the same geographical area under substantially equivalent conditions.
A "designated monopolyâ means: an entity, including a group of entities or a government agency, that in a relevant market in the territory of a Party is designated as the sole supplier or purchaser of a good or service, but does not include an entity that has been granted an exclusive intellectual property right solely by reason of such grant.
"Designate" means to establish or authorize a monopoly, or to expand the scope of a monopoly to cover an additional good or service.
âCommercial activitiesâ means activities, the end result of which is the production of a good or supply of a service, which will be sold in the relevant market in quantities and at prices determined by the enterprise, and are undertaken with an orientation towards profit-makingâ,
"Commercial considerations" means price, quality, availability, marketability, transportation and other terms and conditions of purchase or sale or other factors that would normally be taken into account in the commercial decisions of a privately owned
' For the establishment of ownership or control, all relevant legal and factual elements shall to be examined on a case-by-case basis.
2 For greater certainty, the granting of a license to a limited number of enterprises in allocating a scarce resource through objective, proportional and non-discriminatory criteria is not in and of itself an exclusive or special privilege.
3 For greater certainty, this excludes activities undertaken by an enterprise: (a) which operates on a not-for-profit basis; or (b) which operates on cost recovery basis.
enterprise operating according to market economy principles in the relevant business or industry.
(g) "A service supplied in the exercise of governmental authority" has the same meaning as in the GATS, including the meaning in the Annex on Financial Services where applicable.
Article 22.2. Scope of Application
1. The Parties confirm their rights and obligations under paragraphs 1 through 3 of Article XVI of the GATT 1994, the Understanding on the Interpretation of Article XVII of the GATT 1994 as well as under paragraphs 1, 2 and 5 of Article VIII of the GATS.
2. This Chapter applies to state-owned enterprises, enterprises granted special rights or privileges or designated monopolies engaged in commercial activities. Where an enterprise combines commercial and non-commercial activities,4 only the commercial activities of that enterprise are covered by this Chapter.
3. This Chapter applies to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies at all levels of government.
4. This Chapter does not apply to the procurement by a Party of a good or service purchased for governmental purposes and not with a view to commercial resale, or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is a "covered procurement" within the meaning of Article 21.2 (Scope and coverage) of the Public Procurement Chapter.
5. This Chapter shall not apply to any service supplied in the exercise of governmental authority.
6. This Chapter shall not apply to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies if in any one of the three previous consecutive fiscal years the annual revenue derived from the commercial activities of the enterprise was less than 100 million SDR.
7. Article 22.4 (Non-Discriminatory Treatment and Commercial Considerations) does not apply to the services sectors which are outside the scope of this Agreement.
8. Article 22.4 (Non-Discriminatory Treatment and Commercial Considerations) shall not apply to the extent that a Partyâs state-owned enterprise, enterprise granted special rights or privileges or designate monopoly makes purchases and sales of goods or services pursuant to:
* Such as carrying out a legitimate public service mandate or any activity directly related to the provision of national defence or public security.
5 During the first five years from the entry into force of this Agreement, the threshold will be of less than 200 million SDR.
(a) any existing non-conforming measure in accordance with Article X.X (Non- Conforming Measures) of Chapter (Cross-Border Trade in Services) or Article X.X (Non-Conforming Measures) of Chapter (Investment) or Article X.X (Non-Conforming Measures) of Chapter (Financial Services) that the Party maintains, continues, renews or amends set out in its Schedule in Annex XI; or
(b) any non-conforming measure that the Party adopts or maintains with respect to sectors, subsectors, or activities in accordance with Article X.X (Non- Conforming Measures) of Chapter (Cross-Border Trade in Services) or Article X.X (Non-Conforming Measures) of Chapter (Investment) or Article X.X (Non-Conforming Measures) of Chapter (Financial Services) as set out in its Schedule in Annex XII.
Article 22.3. General Provisions
Without prejudice to the Partiesâ rights and obligations under this Chapter, nothing in this Chapter prevents the Parties from establishing or maintaining state-owned enterprises or designating or maintaining monopolies or from granting enterprises special rights or privileges.
Article 22.4. Non-discriminatory Treatment and Commercial Considerations
1. Each Party shall ensure that each of its state-owned enterprises, enterprises granted special rights or privileges and designated monopolies, when engaging in commercial activities:
(a) acts in accordance with commercial considerations in its purchase or sale of a good or service, except to fulfil any terms of its public service mandate that are not inconsistent with subparagraph (b) or (c);
(b) in its purchase of a good or service:
(i) accords to a good or service supplied by an enterprise of the other Party treatment no less favourable than it accords to a like good or a like service supplied by enterprises of the Party; and
(ii) accords to a good or service supplied by an enterprise that is a covered investment in the Partyâs territory treatment no less favourable than it accords to a like good or a like service supplied by enterprises in the relevant market in the Partyâs territory that are investments of investors of the Party; and
(c) in its sale of a good or service:
(i) accords to an enterprise of the other Party treatment no less favourable than it accords to enterprises of the Party; and
Gi) accords to an enterprise that is a covered investment in the Partyâs territory treatment no less favourable than it accords to enterprises in the relevant market in the Partyâs territory that are investments of investors of the Party.
2. Paragraph 1 does not preclude state-owned enterprises, enterprises granted special rights or privileges or designated monopolies from
(a) purchasing or supplying goods or services on different terms or conditions, including those relating to price; or
(b) refusing to purchase or supply goods or services,
provided that such different terms or conditions or refusal is undertaken in accordance with commercial considerations.
Article 22.5. Regulatory Framework
1. The Parties shall make best use of international standards, as applicable, including, inter alia, the OECD Guidelines on Corporate Governance of State-Owned Enterprises, as appropriate.
2. Each Party shall ensure that any regulatory body or function that it establishes or maintains
(a) is independent from and not accountable to any of the enterprises that it regulates in order to ensure the effectiveness of the regulatory function, and
(b) acts impartially® in like circumstances with respect to all enterprises that it regulates, including state-owned enterprises, enterprises granted special rights or privileges and designated monopolies.â
3. Each Party shall apply its laws and regulations to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies in a consistent and non- discriminatory manner.
Article 22.6. Transparency
1. A Party which has reason to believe that its interests under this Chapter are being adversely affected by the commercial activities of state-owned enterprises, enterprises granted special rights or privileges or designated monopolies of the other Party may request the other Party in
6 For greater certainty, the impartiality with which the regulatory body exercises its regulatory functions is to be assessed by reference to a general pattern or practice of that regulatory body.
7 For greater certainty, for those sectors in which the Parties have agreed to specific obligations relating to the regulatory body in other Chapters, the relevant provision in the other Chapters as set out in this Agreement shall prevail.
writing to supply information on the commercial activities of the enterprise related to the carrying out of the provisions of this Chapter.
2. The requested Party shall provide the following information, provided that the request includes an explanation of (i) how the activities of the entity may be affecting the interests of the requesting Party under this Chapter and (ii) which of the following information shall be provided:
(a) the ownership and the voting structures of the enterprise, indicating the percentage of shares that the Party, its state-owned enterprises, enterprises granted special rights or privileges or designated monopolies cumulatively own, and the percentage of voting rights that they cumulatively hold, in the entity;
(b) a description of any special shares or special voting or other rights that the Party, its state-owned enterprises, enterprises granted special rights or privileges or designated monopolies hold, [when] such rights are different from those attached to the general common shares of the entity;
(c) the organisational structure of a state-owned enterprise, enterprise granted special rights or privileges or designated monopoly and the composition of its board of directors or of an equivalent body;
(d) a description of which government departments or public bodies regulate and/or monitor the enterprise; a description of the reporting requirements imposed on it by those departments or public bodies; and the rights and practices of those government or any public bodies with respect to the appointment, dismissal or remuneration of senior executives and members of its board of directors or any other equivalent management body;
(e) the [entity]âs annual revenue and total assets over the most recent three year period for which information is available;
(f) any exemptions, immunities and related measures from which the entity benefits under the laws and regulations of the requested Party; and
(g) any additional information regarding the enterprise that is publicly available, including annual financial reports and third party audits.
3. The provisions of paragraphs 1 and 2 shall not require any Party to disclose confidential information the disclosure of which would be inconsistent with its laws and regulations, impede law enforcement, or otherwise be contrary to the public interest, or would prejudice the legitimate commercial interests of particular enterprises.
4. If the requested information is not available to the Party, that Party shall provide the reasons for this in writing to the other Party who requested the information.
Article 22.7. Party-Specific Annexes
1. Article 22.4 (Non-discriminatory Treatment and Commercial Considerations) shall not apply with respect to the non-conforming activities of state-owned enterprises or designated
monopolies that a Party lists in its Schedule to Annex X (Chileâs schedule) in accordance with the terms of the Partyâs Schedule.®
5 Before the end of five years from the entry into force of this Agreement, the Trade Council shall consider amendments to Annex X (Party-specific Annex).
Chapter 23. COMPETITION POLICY
Article 23.1. Principles
The Parties recognise the importance of free and undistorted competition in trade and investment. The Parties acknowledge that anti-competitive practices have the potential to distort the proper functioning of markets and undermine the benefits of trade liberalisation.
Article 23.2. Legislative Framework
1. Each Party shall (adopt or) maintain a competition law which applies to all sectors of the economy ! and addresses all of the following practices in an effective manner:
(a) agreements between enterprises, decisions by associations of enterprises and concerted practices which have as their object or effect the prevention, restriction or distortion of competition;
(b) abuses by one or more enterprises of a dominant position; and
(c) mergers between enterprises which significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position.
2. All enterprises, private or public, shall be subject to the competition law referred to in this Article.
3. The application of the competition law should not obstruct the performance, in law or in fact, of particular tasks of public interest that may be assigned to the enterprises in question. Exemptions to the competition law of a Party should be limited to tasks of public interest, limited to what is strictly necessary to achieve the desired public policy objective and transparent.
Article 23.3. Implementation
1. Each Party shall maintain a functionally independent authority responsible for, and appropriately equipped with the powers and resources necessary for the full application and the effective enforcement of the competition law referred to in Article 23.2 (Legislative Framework).
For greater certainty, competition rules in the EU apply to the agricultural sector in accordance with Regulation 1308/2013 of the European Parliament and Council establishing a common organisation of the markets in agricultural products and its subsequent amendments or replacements, if any (Official Journal L347/2013).
2. Each Party shall apply its respective competition law in a transparent and non- discriminatory manner, respecting the principles of procedural fairness and rights of defence of the enterprises concerned, irrespective of their nationality or ownership status.
Article 23.4. Cooperation
1. The Parties acknowledge that it is in their common interest to promote cooperation regarding competition policy and enforcement.
2. To facilitate such cooperation, the Partiesâ competition authorities may exchange information, subject to the confidentiality rules as foreseen in the Partiesâ respective laws and regulations.
3. The competition authorities of the Parties will endeavour to coordinate, where this is possible and appropriate, their enforcement activities relating to the same or related conduct or cases.
Article 23.5. Consultation
1. To foster mutual understanding between the Partiesâ, or to address specific matters on the interpretation or application of this Chapter, each Party shall, upon the request of the other Party, enter into consultations on issues raised by the other Party. The Party requesting consultations shall indicate, if relevant, how the matter affects trade between the Parties.
2. The Parties shall promptly discuss, upon the request of either Party, any questions arising from the interpretation or application of this Chapter.
3. To facilitate discussion of the matter that is the subject of the consultations, each
Party shall endeavour to provide relevant non-confidential information to the other Party.
Article 23.6. Non-application of Dispute Settlement
The provisions of this Chapter shall not be subject to dispute settlement in accordance with Chapter [x. Dispute settlement].
2 For the EU, the interlocutor is DG Competition of the European Commission.
Chapter 24. SUBSIDIES
Article 24.1. Principles
The Parties agree that subsidies can be granted when they are necessary to achieve public policy objectives. The Parties acknowledge, however, that certain subsidies have the potential to distort the proper functioning of markets and undermine the benefits of trade liberalisation and competition. Therefore, in principle, subsidies should not be granted when they negatively affect, or are likely to negatively affect, trade or competition between the Parties.
Article 24.2. Definition and Scope
1. For the purposes of this Chapter, a subsidy means a measure which fulfils the conditions set out in Article 1.1 of the WTO Agreement on Subsidies and Countervailing Measures (hereinafter referred to as âSCM Agreementâ) irrespective of whether it is granted to an enterprise supplying goods or services.!
2. A subsidy is subject to this Chapter only if this subsidy is determined to be specific in accordance with Article 2 of the SCM Agreement.