3. Transfers of returns in kind relating to a covered investment will be permitted as authorized or specified in a written agreement between an authority of the territory of a Participant and an investor of the territory of the other Participant or a covered investment.
4. Investors of the territory of a Participant will not be required to transfer, or be penalized for failing to transfer, the income, earnings, profits, or other amounts derived from, or attributable to, an investment in the territory of the other Participant.
5. Notwithstanding subparagraphs 1, 2, 3, and 4, a transfer may be prevented or limited through the equitable, non-discriminatory, and good faith application of the domestic law of the territory of a Participant relating to:
(a) bankruptcy, insolvency, or the protection of the rights of a creditor;
(b) issuing, trading, or dealing in securities;
(c) criminal or penal offences;
(d) financial reporting or record keeping of transfers if necessary to assist law enforcement or financial regulatory authorities;
(e) ensuring compliance with an order or judgment in judicial or administrative proceedings; or
(f) social security, public retirement, or compulsory savings programmes.
6. Notwithstanding subparagraphs 1, 2, and 4, and without limiting the applicability of subparagraph 3, transfers by a financial institution to, or for the benefit of, an affiliate of or person related to that institution, may be prevented or limited through the equitable, non-discriminatory, and good faith application of a measure relating to maintenance of the safety, soundness, integrity, or financial responsibility of financial institutions.
7. Notwithstanding subparagraph 3, transfers of returns in kind may be restricted in circumstances in which an authority of the territory of a Participant could otherwise restrict those transfers under the WTO Agreement and as set out in subparagraph 5.
Article 10. Taxation Measures
1. Except as set out in this Paragraph, this Arrangement will not apply to a taxation measure.
2. This Arrangement will not affect the rights and obligations of a party, or the benefits and commitments of a participant, under a tax convention or arrangement. In the event of any inconsistency between the dispositions of this Arrangement and any such tax convention or arrangement, the provisions or dispositions of that tax convention or arrangement will prevail to the extent of the inconsistency.
3. Subject to subparagraph 2, the dispositions of Paragraph 4 and Paragraph 5 will apply to all taxation measures, other than those on income, capital gains, or on the taxable capital of corporations, except that nothing in those Paragraphs will apply:
(a) to a non-conforming provision of an existing taxation measure;
(b) to the continuation or prompt renewal of a non-conforming provision of an existing taxation measure;
(c) to an amendment to a non-conforming provision of an existing taxation measure to the extent that the amendment does not decrease its conformity at the time of the amendment with those Paragraphs; or
(d) to a new taxation measure that is aimed at ensuring the equitable and effective imposition or collection of taxes (including, for greater certainty, a measure that is taken by an authority of the territory of a Participant to ensure compliance with the taxation system in its territory, or to prevent the avoidance or evasion of taxes) and that does not arbitrarily discriminate between persons, goods, or services of the territories of the Participants.
4. The dispositions of Paragraph 8 will apply to taxation measures.
5. Each Participant will publish and notify the other Participant of the identity and contact information of the taxation authority of the territory of the Participant.
Article 11. Performance Requirements
1. No requirement will be imposed or enforced, and no commitment or undertaking will be enforced, by an authority of the territory of a Participant in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in that territory:
(a) to export a given level or percentage of a good or service;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use, or accord a preference to a good produced or service provided in the territory of the Participant, or to purchase a good or service from a person in the territory of the Participant;
(d) to relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment;
(e) to restrict sales of a good or service in the territory of the Participant that the investment produces or provides by relating those sales to the volume or value of the investment’s exports or foreign exchange earnings;
(f) to transfer technology, a production process, source code of software, or other proprietary knowledge to a person in the territory of the Participant;
(g) (i) to purchase, use, or accord a preference to, in the territory of the Participant, technology of an authority or a person of the territory of the Participant, (4) or
(ii) that prevents the purchase or use of, or the according of a preference to, in the territory of the Participant, a technology;
(h) that prohibits or restricts the transfer of information by electronic means into or out of the territory of the Participant, if this transfer is related to the business of a covered investment or the business of an investor of the territory of a Participant; or
(i) to supply exclusively from the territory of the Participant a good that the investment produces or a service it provides to a specific regional market or to the world market.
2. The receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in the territory of a Participant, will not be conditioned by an authority of the territory of a Participant on compliance with a requirement:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use, or accord a preference to a good produced in the territory of the Participant, or to purchase a good from a producer in the territory of the Participant;
(c) to relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment; or
(d) to restrict sales of a good or service in the territory of the Participant that the investment produces or provides by relating those sales to the volume or value of the investment’s exports or foreign exchange earnings.
3. The Participants understand that:
(a) subparagraph 2 will not prevent an authority of the territory of a Participant from conditioning the receipt or continued receipt of an advantage, in connection with any investments, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development in its territory;
(b) subparagraphs 1(a), 1(b), 1(c), 2(a), and 2(b) will not apply to a qualification requirement for a good or service with respect to export promotion and foreign aid programs;
(c) subparagraphs 1(b), 1(c), 1(f), 1(g), 1(h), 1(i), 2(a), and 2(b) will not apply to procurement by an authority of the territory of a Participant;
(d) subparagraphs 2(a) and 2(b) will not apply to a requirement imposed by an importing authority of the territory of a Participant relating to the content of a good necessary to qualify for a preferential tariff or preferential quota;
(e) subparagraphs 1(f) and 1(g) will not apply:
(i) if the use of an intellectual property right is authorized in accordance with Article 31 of the TRIPS Agreement (5), or to a measure requiring the disclosure of proprietary information that falls within the scope of, and is consistent with, Article 39 of the TRIPS Agreement, or
(ii) if the requirement is imposed or the requirement, commitment, or undertaking is enforced by a court, administrative tribunal, or competition authority to remedy an alleged violation of domestic competition law;
(f) subparagraphs 1(b), 1(c), 1(f), 1(g), 1(h), 2(a), and 2(b) will not prevent an authority of the territory of a Participant from adopting or maintaining a measure to achieve a legitimate public policy objective, provided that the measure:
(i) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade, and
(ii) does not impose restrictions greater than are required to achieve the objective;
(g) subparagraph 1(f) will not preclude a regulatory body or judicial authority of the territory of a Participant from requiring a person of the territory of the other Participant to preserve and make available the source code of software, or an algorithm expressed in that source code, to the regulatory body for a specific investigation, inspection, examination, enforcement action, or judicial proceeding, (6) subject to safeguards against unauthorized disclosure;
(h) subparagraphs 1(g) and 1(h) will not apply to a measure adopted or maintained by an authority of the territory of a Participant relating to a financial institution; and
(i) subparagraph 1(h) will not apply to information held or processed by or on behalf of an authority of the territory of a Participant, or a measure related to this information, including a measure related to its collection.
Article 12. Senior Management, Boards of Directors, and Entry of Personnel
1. An enterprise of the territory of a Participant that is a covered investment will not be required by an authority of the territory of that Participant to appoint to a senior management position an individual who is from a particular territory.
2. A majority of the board of directors, or a committee thereof, of an enterprise of the territory of a Participant that is a covered investment may be required by an authority of the territory of that Participant to hold a particular passport or be a resident in the territory of that Participant, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
3. Enterprises may be encouraged by an authority of the territory of a Participant to consider greater diversity in senior management positions or on boards of directors, which may include a requirement to nominate women.
4. Subject to the domestic law of the territory of a Participant relating to the entry of natural persons of other territories, temporary entry will be granted to natural persons employed by an investor of the territory of the other Participant who seek to render managerial or executive services, or services that require specialized knowledge, to a covered investment of that investor.
Article 13. Subrogation
If an authority or an agency of the territory of a Participant makes a payment to one of the investors of the territory of that Participant under a guarantee or a contract of insurance, or other form of indemnity it has entered into in respect of a covered investment:
(a) the validity of the subrogation or transfer of any benefits the investor would have possessed with respect to the covered investment but for the subrogation or transfer will be recognized by an authority of the territory where the covered investment was made; and
(b) the investor will be precluded from pursuing these benefits to the extent of the subrogation or transfer, unless authorized by an authority or an agency of the territory of a Participant to act on its behalf.
Article 14. Transparency
1. The laws, regulations, procedures, and administrative rulings of general application in the territory of a Participant, respecting a matter covered by this Arrangement, will be promptly published or otherwise made available by an authority of the territory of that Participant in such a manner as to enable interested persons and authorities of the territory of the other Participant to become acquainted with them.
2. To the extent possible:
(a) any measure referred to in subparagraph 1 that an authority of the territory of a Participant proposes to adopt will be published in advance;
(b) interested persons and authorities of the territory of the other Participant will be provided a reasonable opportunity to comment on that proposed measure; and
(c) reasonable time will be allowed between publication of the measure referred to in subparagraph 1 and the date on which investors of the territory of a Participant must comply with the measure.
3. The laws, regulations, procedures, and administrative rulings of the territory of a Participant with regards to the rights of Indigenous Peoples, including any applicable consultation process, will be made available by an authority of the territory of that Participant in such a manner as to enable an interested person to duly comply with the domestic laws of the territory of that Participant.
4. Appropriate mechanisms for responding to enquiries from interested persons regarding the measures referred to in subparagraphs 1 and 3 will be maintained or established by an authority of the territory of a Participant.
5. On request by an authority of the territory of a Participant, information and responses to questions pertaining to a proposed or actual measure that the requesting authority considers affects or may affect an investment will be promptly provided by an authority of the territory of the other Participant. Such requests or information may be conveyed through contact points designated pursuant to subparagraph 6.
6. Each Participant will designate a contact point to facilitate communications between the Participants on any matter covered by this Arrangement. Each Participant will notify the other Participant in writing of its designated contact point no later than 60 days after the date when this Arrangement comes into effect. Each Participant will promptly notify the other Participant in the event of any change to its contact point.
Article 15. Responsible Business Conduct
1. The Participants reaffirm that investors and their investments will comply with domestic laws and regulations of the territory within which the investment is made, including laws and regulations on human rights, the rights of Indigenous Peoples, gender equality, environmental protection, and labour.
2. Each Participant reaffirms the importance of internationally recognized standards, guidelines, and principles of responsible business conduct that have been endorsed or are supported by the authorities of the territory of that Participant, including the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights. Investors and enterprises operating within the territory of a Participant or subject to the jurisdiction of the authorities of the territory of a Participant will be encouraged to voluntarily incorporate these standards, guidelines, and principles into their business practices and internal policies. These standards, guidelines, and principles address areas such as labour, environment, gender equality, human rights, community relations, and anti-corruption.
3. Investors or enterprises operating within the territory of a Participant will be encouraged by an authority of the territory of that Participant to undertake and maintain meaningful engagement and dialogue, in accordance with international responsible business conduct standards, guidelines, and principles that have been endorsed or are supported by the authorities of the territory of that Participant, with Indigenous Peoples and local communities.
4. The Participants reaffirm the importance of cooperating on and facilitating joint initiatives to promote responsible business conduct.
Article 16. Denial of Benefits
The benefits of this Arrangement may be denied by an authority of the territory of a Participant to an investor of the territory of the other Participant that is an enterprise of the territory of the latter Participant and to investments of that investor if:
(a) an investor of a third territory owns or controls the enterprise; and
(b) the denying authority of the territory of the Participant adopts or maintains a measure with respect to the third territory or investors of the third territory that:
(i) relates to the maintenance of international peace and security, and
(ii) prohibits transactions with the enterprise or would be violated or circumvented if the benefits of this Arrangement were accorded to the enterprise or to its investments.
Part C. Investment Promotion and Facilitation
Article 17. Promotion of Investment
The creation of favourable conditions for investment in the territory of a Participant by investors of the territory of the other Participant will be encouraged by an authority of the territory of the former Participant and those investments will be admitted in accordance with this Arrangement.
Article 18. Processing of Applications for an Authorization
1. Authorization procedures adopted or maintained in the territory of a Participant will not unduly complicate or delay the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of an investment in the territory of that Participant.
2. A competent authority of the territory of a Participant will:
(a) accept applications for an authorization in electronic format under similar conditions of authenticity as paper submissions; and
(b) accept authenticated copies, if considered appropriate, in place of original documents.
3. At the request of an applicant, a competent authority of the territory of a Participant will provide, without undue delay, information concerning the status of the application for an authorization.
4. If a competent authority of the territory of a Participant considers an application for an authorization to be incomplete, the competent authority will, within a reasonable period of time, inform the applicant for an authorization, identify the additional information required to complete the application for an authorization, and provide the applicant for an authorization an opportunity to correct deficiencies.
5. The processing of an application for an authorization, including reaching a final decision, will be completed within a reasonable timeframe from the submission of a complete application for an authorization.
6. An authorization, once granted, will enter into effect without undue delay, in accordance with the terms and conditions specified therein.
7. If a competent authority of the territory of a Participant rejects an application for an authorization, the applicant will be:
(a) informed in writing and without undue delay;
(b) informed, upon request, of the reasons the application for an authorization was rejected and of the timeframe for an appeal or review against the decision; and
(c) permitted to resubmit an application for an authorization.
Article 19. Fees and Charges
1. A fee that a competent authority of the territory of a Participant imposes on an applicant in relation to its application for an authorization will be reasonable and commensurate with the costs incurred to process the application, and will not in itself restrict the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of an investment in the territory of the Participant.
2. Authorization fees do not include payments for auction, the use of natural resources, royalties, tendering or other non-discriminatory means of awarding concessions, or mandated contributions to provide a universal service.
3. This Paragraph will not apply to a measure adopted or maintained in relation to a financial institution.
Part D. Reservations, Exceptions, Exclusions
Article 20. Non-Conforming Measures
1. Paragraph 4, Paragraph 5, Paragraph 11, Paragraph 12, and Part C (Investment Promotion and Facilitation) will not apply to:
(a) any existing non-conforming measure maintained in the territory of a Participant;
(b) any measure adopted or maintained after the date of coming into effect of this Arrangement that, at the time of sale or other disposition of an authority’s equity interests in, or the assets of, an existing publicly-owned enterprise or an existing entity of the authority:
(i) prohibits or imposes limitations on the ownership or control of equity interests or assets, or
(ii) requires senior management or members of the board of directors to be of a particular territory;
(c) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a) or (b); or
(d) an amendment to any non-conforming measure referred to in subparagraph (a) or (b) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Paragraph 4, Paragraph 5, Paragraph 11, Paragraph 12, and Part C (Investment Promotion and Facilitation).
2. Paragraph 4, Paragraph 5, Paragraph 11, Paragraph 12, and Part C (Investment Promotion and Facilitation) will not apply to a measure that an authority of the territory of a Participant adopts or maintains with respect to sectors, subsectors, or activities, as set out in its schedule to Annex I.
3. No investor of the territory of the other Participant will be required, under any measure adopted after the date of coming into effect of this Arrangement and covered by its schedule to Annex I, by reason that the investor is a natural person of a specific territory, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.
4. Paragraph 5 will not apply to treatment accorded pursuant to agreements or arrangements set out in Annex II.
5. In respect of intellectual property rights, an authority of the territory of a Participant may derogate from Paragraph 4, Paragraph 5, and Paragraph 11 in a manner that is consistent with:
(a) the TRIPS Agreement;
(b) an amendment to the TRIPS Agreement in force for the territories of both Participants; and
(c) a waiver to the TRIPS Agreement granted pursuant to Article IX of the WTO Agreement.
6. Paragraph 4, Paragraph 5, and Paragraph 12 will not apply to:
(a) procurement by an authority of the territory of a Participant; or
(b) a subsidy or grant provided by an authority of the territory of a Participant, including an authority-supported loan, a guarantee, or insurance.
Article 21. General Exceptions
1. This Arrangement will not apply to a measure that an authority of the territory of the CTOT adopts or maintains as necessary to fulfill Aboriginal or treaty rights as recognized and affirmed by section 35 of the Constitution Act, 1982, including land claims agreements, and those rights set out in self-government agreements between the federal, provincial, or territorial authorities of the territory of the CTOT and Aboriginal peoples.
2. Notwithstanding the other dispositions of this Arrangement, this Arrangement will not apply to measures that the authorities in the territory of a Participant adopt or maintain for prudential reasons, (7) including for the protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial institution, or to ensure the integrity and stability of the financial system. If the measure does not conform with the dispositions of this Arrangement to which this exception applies, the measure will not be used as a means of avoiding the Participant’s commitments under those dispositions.
3. This Arrangement will not apply to non-discriminatory measures of general application taken by a central bank or monetary authority of the territory of a Participant, or a financial institution that is owned or controlled by an authority of the territory of a Participant, in pursuit of monetary and related credit or exchange rate policies. This subparagraph will not affect a Participant’s commitments under Paragraph 9 or Paragraph 11.
4. This Arrangement will not:
(a) require an authority of the territory of a Participant to furnish or allow access to information if an authority of the territory of that Participant determines that the disclosure of this information would be contrary to the essential security interests of the territory of that Participant;
(b) prevent an authority of the territory of a Participant from taking an action that it considers necessary to protect the essential security interests of the territory of the Participant:
(i) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services, and technology undertaken directly or indirectly for the purpose of supplying a military or other security establishment,
(ii) taken in time of war or other emergency in international relations, or
(iii) relating to the implementation of domestic policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; or
(c) prevent an authority of the territory of a Participant from fulfilling any obligations as applicable to it for the maintenance of international peace and security, under the United Nations Charter as applicable to a territory.
5. This Arrangement will not require an authority of the territory of a Participant to furnish or allow access to information, the disclosure of which would be contrary to the law of the territory of that Participant, or would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice the legitimate commercial interests of particular enterprises, public or private.
6. This Arrangement will not apply to a measure adopted or maintained by an authority of the territory of a Participant with respect to a person engaged in a cultural industry. “Person engaged in a cultural industry” means a person engaged in the following activities:
(a) the publication, distribution or sale of books, magazines, periodicals, or newspapers in print or machine-readable form, except when printing or typesetting any of the foregoing is the only activity;
(b) the production, distribution, sale, or exhibition of film or video recordings;
(c) the production, distribution, sale, or exhibition of audio or video music recordings;
(d) the publication, distribution, or sale of music in print or machine-readable form; or
(e) radio communications in which the transmissions are intended for direct reception by the general public, and all radio, television, or cable broadcasting undertakings and all satellite programming and broadcast network services.
7. If a benefit or commitment in this Arrangement duplicates the substance of a right or obligation under the WTO Agreement, a measure adopted or maintained by an authority of the territory of a Participant in conformity with a waiver decision granted by the WTO pursuant to Article IX of the WTO Agreement will be deemed to be also consistent with the present Arrangement.
Article 22. Exclusions
1. Part E (Differences between an Investor and a Participant) and Part F (Consultations between the Participants) of this Arrangement will not apply to a measure adopted or maintained relating to a review under the Investment Canada Act, R.S.C. 1985, c. 28, as amended, with respect to whether or not to permit an investment that is subject to review.
2. Part E (Differences between an Investor and a Participant) and Part F (Consultations between the Participants) of this Arrangement will not apply to a tobacco control measure adopted or maintained by an authority of the territory of a Participant. A “tobacco control measure” means a measure of an authority of the territory of a Participant related to the production or consumption of manufactured tobacco products (including products made or derived from tobacco), their distribution, labelling, packaging, advertising, marketing, promotion, sale, purchase, or use, as well as enforcement measures, such as inspection, recordkeeping, and reporting requirements. A measure with respect to tobacco leaf that is not in the possession of a manufacturer of tobacco products, or that is not part of a manufactured tobacco product, is not a tobacco control measure.
3. Part E (Differences between an Investor and a Participant) and Part F (Consultations between the Participants) of this Arrangement will not apply to a measure adopted or maintained relating to a review under the Statute for Investment by Foreign Nationals (1997), as amended, with respect to whether or not to permit an investment that is subject to review.