i) non-discriminatory quantitative restrictions, in accordance with Article 10-08; and
ii) modifications to the measures referred to in Article 10-06; and
b) the conclusion of negotiations aimed at deepening the liberalization of services between the Parties, in accordance with Article 10-09.
Article 10-12. Granting of Permits, Authorizations and Licenses.
In order to ensure that any measures that a Party adopts or maintains relating to the requirements and procedures for the granting of permits, authorizations and licenses to nationals of another Party do not constitute an unnecessary barrier to trade, each Party shall endeavor to ensure that such measures:
a) are based on objective and transparent criteria, such as capacity, aptitude and competence to provide a service;
b) are not more burdensome than necessary to ensure the quality of a service; and
c) do not constitute a disguised restriction on the cross-border provision of a service.
Article 10-13. Denial of Benefits.
A Party may deny benefits under this Chapter to a service supplier of another Party, after notification and consultations, where the Party determines that the service is being supplied by a service supplier that does not conduct substantive business operations in the territory of another Party and that, in accordance with that Party's applicable law, is owned or controlled by persons of a non-Party.
Article 10-14. Technical Cooperation.
The Parties shall establish, no later than one year after the entry into force of this treaty, a system to provide service suppliers with information conceming their markets in relation to:
a) commercial and technical aspects of service provision;
b) the possibility of obtaining service technology; and
c) all those aspects that the Commission identifies in the area of services.
Article 10-15. Other Disciplines.
1. The Commission shall determine the procedures for the establishment of disciplines relating to:
a) safeguard measures; and
b) subsidies that may have trade-distorting effects on trade in services.
2. For the purposes of paragraph 1, the work of the relevant international organizations shall be taken into account.
Article 10-16. Relationship with Multilateral Agreements on Services.
1. The Parties shall apply among themselves the provisions contained in the multilateral agreements on services of which they are members.
2. Notwithstanding the provisions of paragraph 1, in the event of incompatibility between such agreements and the present treaty, the latter shall prevail over the former, to the extent of the incompatibility.
Annex 10-10. Cross-Border Trade in Services and Investment Committee
Pursuant to Article 10-10, the Committee on Cross-Border Trade in Services and Investment shall be composed of:
a) in the case of El Salvador: the Ministry of Economy, or its successor;
b) in the case of Guatemala: the Ministry of Economy, or its successor;
c) in the case of Honduras: the Secretariat of State in the Offices of Industry and Commerce, or its successor, and
d) in the case of Mexico: the Ministry of Commerce and Industrial Development, or its successor.
Chapter XI. FINANCIAL SERVICES
Article 11-01. Definitions.
For the purposes of this chapter, the following definitions shall apply:
competent authority: the authorities of each Party listed in Annex 11-01;
public entity: a central bank, monetary authority or any institution of a public nature in the financial system of a Party that is owned or controlled by the government of a Party, performing governmental, regulatory or supervisory functions, excluding public entities principally engaged in the supply of financial services on a commercial basis;
financial institution: any financial intermediary or an enterprise that is authorized to supply financial services and is regulated or supervised as a financial institution under the laws of the Party in whose territory it is incorporated;
financial institution of another Party: a financial institution, incorporated in the territory of a Party, that is owned or controlled by persons of another Party; investment:
a) shares and quotas and any other form of participation, in any proportion, in a financial institution, including the investment made by the latter in a company that provides complementary or auxiliary services for the fulfillment of its corporate purpose, which entitles the owner to participate in the income or profits of the same; and
b) an interest in a financial institution, including the investment made by it in a company that provides complementary or auxiliary services for the fulfillment of its corporate purpose, which entitles the owner to participate in the equity of that financial institution in a liquidation;
However, it shall not be understood as an investment:
a) pecuniary claims arising exclusively from:
i) commercial contracts for the sale of goods or services by a person in the territory of a Party to an enterprise in the territory of another Party; or
ii) the granting of credit in connection with a commercial transaction, such as trade financing;
b) any other pecuniary claim that does not involve the types of rights set forth in the subparagraphs of the definition of investment; or
c) a loan granted by a financial institution or a debt security owned by a financial institution, other than a loan granted to a financial institution or a debt security issued by a financial institution that is treated as equity for regulatory purposes by the Party in whose territory the financial institution is incorporated;
investment of an investor of a Party: an investment owned or controlled directly or indirectly by an investor of a Party in the territory of another Party;
investment of a non-Party: an investment of an investor that is not an investor of a Party; investor of a Party: a Party, an enterprise of the State of that Party, or a person of that Party that intends to make, is making, or has made an investment in the territory of another Party; disputing investor: a person bringing a claim under Chapter XIV, Section B;
new financial service: a financial service not supplied in the territory of a Party that is supplied in the territory of another Party, including any new form of distribution of a financial service, or sale of a financial product that is not sold in the territory of a Party;
self-regulatory bodies: any non-governmental entity, including any stock or futures exchange, clearing house or any other association or organization that exercises proprietary or delegated regulatory or supervisory authority over financial institutions or cross-border financial service providers;
person: a national or an enterprise of a Party, not including branches;
cross-border provision of financial services or cross-border trade in financial services: the provision of a financial service:
a) from the territory of one Party into the territory of another Party;
b) in the territory of a Party by a person of that Party to a person of another Party; or
c) by a person of a Party in the territory of another Party;
financial service supplier of a Party: a person of a Party engaged in the business of supplying any financial service in the territory of that Party;
cross-border financial service supplier of a Party: a financial institution of a Party seeking to supply or supplying cross-border financial services; and
financial service: a service of a financial nature offered by a financial institution of a Party, which includes all insurance, reinsurance, banking and other services involving financial intermediation, including related and auxiliary services of a financial nature.
Article 11-02. Scope of Application and Extent of Obligations.
1. This Chapter applies to measures adopted or maintained by a Party relating to:
a) financial institutions of another Party;
b) cross-border trade in financial services; and
c) The Party shall not apply to investments of investors of another Party and investments of such investors in financial institutions in the territory of the Party, as well as to investments of the latter in companies that provide them with complementary or auxiliary services for the fulfillment of their corporate purpose.
2. This chapter does not apply to:
a) activities or services that are part of public retirement plans or public social security systems;
b) the use of financial resources owned by another Party; or
c) other financial activities or services on behalf of, or with the guarantee of, the Party or its public entities.
3. In case of incompatibility between the provisions of this chapter and any other provision of this treaty, the provisions of this chapter shall prevail to the extent of the incompatibility.
4. Article 14-11 and Section B of Chapter XIV are incorporated into this chapter.
Article 11-03. Self-regulated Organizations.
Where a Party requires a financial institution or cross-border financial service provider of another Party to be a member of, participate in, or have access to a self-regulatory body in order to offer a financial service in or into its territory, the Party shall ensure that such body complies with the obligations of this Chapter.
Article 11-04. Right of Establishment.
1. The Parties recognize the principle that investors of a Party should be permitted to establish a financial institution in the territory of another Party, through any of the modes of establishment and operation permitted under the laws of that Party.
2. Each Party may impose, at the time of the establishment of a financial institution, terms and conditions that are consistent with Article 11-06.
Article 11-05. Cross Border Trade.
1. Each Party shall permit persons located in its territory and its nationals, wherever located, to purchase financial services from cross-border financial service suppliers of another Party located in the territory of that other Party. This does not oblige a Party to allow such cross-border financial service suppliers to advertise or conduct business by any means in its territory. Parties may define what is "advertising" and "doing business" for purposes of this obligation.
2. Where a Party permits the cross-border supply of financial services, and without prejudice to other means of prudential regulation of cross-border trade in financial services, the Party may require the registration of cross-border financial service suppliers of another Party and of financial instruments.
Article 11-06. National Treatment.
1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords to its own like investors with respect to the establishment, acquisition, expansion, management, conduct, operation, sale or other disposition of like financial institutions and investments in like financial institutions in its territory.
2. Each Party shall accord to financial institutions of another Party, and to investments of investors of another Party in financial institutions, treatment no less favorable than that it accords to its own similar financial institutions and to similar investments of its own similar investors in similar financial institutions with respect to the establishment, acquisition, expansion, management, conduct, operation, sale or other disposition of financial institutions and investments.
3. Where a Party permits the cross-border supply of a financial service under Article 11-05, it shall accord to cross-border financial service suppliers of another Party treatment no less favorable than that it accords to its own like financial service suppliers with respect to the supply of such service.
4. Treatment accorded by a Party to financial institutions and cross-border financial service suppliers of another Party, whether identical to or different from that accorded to its own like institutions or service suppliers, is consistent with paragraphs 1 through 3, if it provides equal opportunity to compete.
5. The treatment of a Party does not afford equal opportunity to compete if it places like financial institutions and cross-border financial service suppliers of another Party at a disadvantage in their ability to supply financial services compared to the ability of the Party's own financial institutions and financial service suppliers to supply such services.
Article 11-07. Most Favored Nation Treatment.
Each Party shall accord to financial institutions of another Party, cross-border financial service suppliers of another Party, investors of another Party and investments of such investors in financial institutions, treatment no less favorable than that accorded to like financial institutions, cross-border financial service suppliers, investors and investments of such investors in like financial institutions of another Party or of another non-Party.
Article 11-08. Recognition and Harmonization.
1. In applying the measures covered by this Chapter, a Party may recognize the prudential measures of another Party or of a non-Party. Such recognition may be:
a) unilaterally granted;
b) achieved through harmonization or other means; or
c) granted on the basis of an agreement or arrangement with another Party or a non-Party.
2. A Party granting recognition of prudential measures pursuant to paragraph 1 shall provide appropriate opportunities for any other Party to demonstrate that there are circumstances under which equivalent regulations exist or will exist, supervision and enforcement of the regulation and, if appropriate, procedures for sharing information between the Parties.
3. Where a Party grants recognition of prudential measures in accordance with paragraph 1 and the circumstances set out in paragraph 2 exist, that Party shall provide adequate opportunity for another Party to negotiate accession to the agreement or arrangement, or to negotiate a similar agreement or arrangement.
Article 11-09. Exceptions.
1. The provisions of this chapter shall not be construed to prevent a Party from adopting or maintaining reasonable prudential measures of a financial nature, for reasons such as:
a) protect investors, depositors or other creditors, policyholders or beneficiaries or persons who are creditors of fiduciary obligations owed by a financial institution or a cross-border financial services provider;
b) maintaining the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service providers; and
c) ensure the integrity and stability of that Party's financial system.
2. The provisions of this Chapter do not apply to non-discriminatory measures of general application adopted by a public entity in the conduct of monetary policy or credit policy, or exchange rate policy. This paragraph shall not affect the obligations of any Party under Article 11-17 or 14-07.
3. Notwithstanding Article 11-17, a Party may prevent or limit transfers from a financial institution or cross-border financial service supplier to or for the benefit of an affiliate or a person related to that institution or service supplier through the fair and non-discriminatory application of measures relating to the maintenance of the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service suppliers. The provisions of this paragraph shall be without prejudice to any other provision of this treaty that permits a Party to restrict transfers.
4. Article 11-06 shall not apply to the granting of exclusive rights by a Party to a financial institution to supply a financial service referred to in paragraph 2(a) of Article 11-02.
Article 11-10. Transparency.
1. In addition to the provisions of Article 17-02, each Party shall ensure that any measure it adopts on matters related to this Chapter is officially published or otherwise made known in writing in a timely manner to those to whom it is addressed.
2. The competent authorities of each Party shall make available to interested parties any information regarding the requirements for completing and submitting an application for the supply of financial services.
3. At the request of the applicant, the competent authority shall inform him/her of the status of his/her application. Where that authority requires additional information from the applicant, it shall inform the applicant without undue delay.
4. Each competent authority shall, within 120 days, issue an administrative ruling on a complete application related to the supply of a financial service, submitted by an investor in a financial institution, by a financial institution or by a cross-border financial service supplier of another Party. The authority shall communicate the determination to the interested party without delay. The application shall not be considered complete until all relevant hearings have been held and all necessary information has been received. Where it is not practicable to issue a determination within 120 days, the competent authority shall inform the person concerned without undue delay and thereafter endeavor to issue the determination within a reasonable period of time.
5. Nothing in this chapter requires a Party to disclose or allow access to:
a) information relating to the financial affairs and accounts of individual customers of financial institutions or cross-border financial service providers; or
b) any confidential information the disclosure of which could hinder law enforcement, be contrary to the public interest or harm the legitimate commercial interests of a particular person.
6. Each competent authority shall maintain or establish one or more consultation centers to respond in writing as soon as possible to all reasonable questions submitted in writing by interested persons regarding the measures of general application to be adopted by each Party in relation to this Chapter.
Article 11-11. Financial Services Committee.
1. The Parties establish the Financial Services Committee composed of the competent authorities of each Party. Likewise, representatives of other institutions may participate when the competent authorities deem it convenient.
2. The Committee :
a) supervise the implementation of this chapter and its further development;
b) shall consider the financial services aspects submitted to it by a Party;
c) participate in dispute settlement procedures in accordance with the provisions of Articles 11-18 and 11-19; and
d) facilitate the exchange of information between national supervisory authorities and cooperate in the area of prudential regulation, seeking the harmonization of regulatory frameworks and other policies when deemed appropriate.
3. The Committee shall meet at least once a year to evaluate the operation of this chapter.
Article 11-12. Consultations.
1. Any Party may request consultations with another Party with respect to any matter related to this Agreement affecting financial services and the other Party shall give sympathetic consideration to such request. The consulting Parties shall make the results of their consultations known to the Committee at its meetings.
2. Officials of the competent authorities of the Parties shall participate in the consultations provided for in this article.
3. Each Party may request that the competent authorities of another Party participate in consultations under this Article to discuss measures of general application of that other Party that may affect the operations of financial institutions or cross-border financial service providers in the territory of the Party requesting the consultation.
4. The provisions of this Article shall not be construed to require the competent authorities involved in consultations pursuant to paragraph 3 to disclose information or to act in a manner that would interfere with particular regulatory, supervisory, administrative or enforcement matters.
5. In cases where, for supervisory purposes, a Party needs information on a financial institution in the territory of another Party or on cross-border financial service providers in the territory of another Party, the Party may approach the responsible competent authority in the territory of that other Party to request the information.
Article 11-13. New Financial Services and Data Processing.
1. Each Party shall permit a financial institution of another Party to provide any new financial service of a type similar to those that such other Party permits its financial institutions to provide, in accordance with its legislation. The Party may decide the institutional and legal modality through which such service is offered and may require authorization for the provision of such service. When such authorization is required, the respective resolution shall be issued within a reasonable period of time and authorization may only be denied for prudential reasons.
2. Each Party shall permit financial institutions of another Party to transfer, for processing, information into or out of the territory of the Party, using any means authorized therein, when necessary to carry out the ordinary business activities of those institutions.
Article 11-14. Senior Management and Boards of Directors.
1. No Party may require financial institutions of another Party to recruit personnel of any particular nationality for senior corporate management or other key positions.
2. No Party may require that the board of directors or the board of trustees of a financial institution of another Party be composed of more than a simple majority of nationals of that Party, residents of its territory, or a combination of both.
Article 11-15. Reservations and Specific Commitments.
1. Except as provided in Annex 11-15, no later than two years after the entry into force of this treaty, the Parties shall negotiate reservations and commitments to Articles 11-04, 11-05, 11-06, 11-07, 11-13 and 11-14.
2. The Parties shall gradually liberalize, through future negotiations among themselves, any financial reserves referred to in paragraph 1.
3. When a Party is not in a position to comply with the time limit established in paragraph 1, it shall notify the Commission, which shall automatically extend the time limit for a further two years.
Article 11-16. Denial of Benefits.
A Party may deny, in whole or in part, benefits under this Chapter to a financial institution of another Party or a cross-border financial service supplier of another Party, after notice and consultations in accordance with Articles 11-10 and 11-12, where the Party determines that the service is being provided by an enterprise that does not conduct substantial business activities in the territory of any Party or that, in accordance with each Party's applicable law, is owned or controlled by persons of a non-Party.
Article 11-17. Transfers.
1. Each Party shall permit all transfers relating to an investment in its territory of an investor of another Party to be made freely and without delay. Such transfers include:
a) earnings, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other charges, earnings in kind and other amounts derived from the investment;
b) proceeds from the sale or liquidation, in whole or in part, of the investment;
c) payments made under a contract to which an investor or its investment is a party;
d) payments made in accordance with article 14-11; or
e) payments resulting from a dispute settlement procedure pursuant to Section B of Chapter XIV.
2. Each Party shall allow transfers to be made in freely convertible currency at the market rate of exchange prevailing on the date of transfer for spot transactions of the currency to be transferred, without prejudice to the provisions of Article 20-06.
3. No Party may require its investors to make transfers of their income, earnings or profits or other amounts derived from or attributable to investments made in the territory of another Party.
4. Notwithstanding the provisions of paragraphs 1 and 2, each Party may prevent transfers, through the equitable, non-discriminatory application of its laws, in the following cases:
a) bankruptcy, insolvency or protection of creditors' rights;
b) issuance, trading and operations of securities;
c) criminal or administrative offenses;
d) reports of currency transfers or other monetary instruments; or
e) guarantee of compliance with rulings in a contentious proceeding.
3. For the purposes of the constitution of the arbitral tribunal, the list referred to in paragraph 2 shall be used, unless the disputing Parties agree that individuals not included in that list may serve on the arbitral tribunal, provided that they comply with the requirements set forth in paragraph 2. The chairman of the arbitral tribunal shall always be chosen from that list.