3. Nothing in this Chapter shall prevent a financial regulatory body of a Party, including a non-governmental body, such as a securities or futures exchange or market, clearing agency, or other organisation or association, from exercising regulatory or supervisory authority over financial services suppliers.
4. Nothing in this Chapter shall prevent a Party, or one of its state enterprises or state-owned enterprises from undertaking activities for the purpose of the resolution of a failing or failed established financial service supplier or any other failing or failed enterprise principally engaged in the supply of financial services.
5. This Chapter does not apply with respect to a sovereign wealth fund of a Party, except:
(a) Paragraphs 1 and 3 of Article 18.6 (Non-commercial Assistance) apply with respect to a Party's indirect provision of non-commercial assistance through a sovereign wealth fund; and
(b) Paragraph 2 of Article 18.6 (Non-commercial Assistance) applies with respect to a sovereign wealth fund's provision of non-commercial assistance.
6. This Chapter does not apply with respect to:
(a) an independent pension fund of a Party; or
(b) an enterprise owned or controlled by an independent pension fund of a Party, except:
(i) Paragraphs 1 and 3 of Article 18.6 (Non-commercial Assistance) apply with respect to a Party's direct or indirect provision of non-commercial assistance to an enterprise owned or controlled by an independent pension fund; and
(ii) Paragraphs 1 and 3 of Article 18.6 (Non-commercial Assistance) apply with respect to a Party's indirect provision of non-commercial assistance through an enterprise owned or controlled by an independent pension fund.
7. This Chapter does not apply to:
(a) government procurement; or
(b) audio-visual services.
8. Subparagraphs 1(a) and 1(b) of Article 18.4 (Non-discriminatory Treatment and Commercial Considerations) do not apply where a state-owned enterprise accords more favourable treatment to Indigenous persons (10) and organisations in the purchase of goods and services.
9. Nothing in this Chapter shall prevent a state-owned enterprise of a Party from providing goods or services exclusively to that Party for the purposes of carrying out that Party's governmental functions.
10. Nothing in this Chapter shall be construed to prevent a Party from:
(a) establishing or maintaining a state enterprise or a state-owned enterprise; or
(b) designating a monopoly.
11. Article 18.4 (Non-discriminatory Treatment and Commercial Considerations), Article 18.6 (Non-commercial Assistance) and Article 18.10 (Transparency) do not apply to any service supplied in the exercise of governmental authority. (11)
12. Subparagraphs 1(b), 1(c), 2(b) and 2(c) of Article 18.4 (Non-discriminatory Treatment and Commercial Considerations) do not apply to the extent that a Party's state-owned enterprise or designated monopoly makes purchases and sales of goods or services pursuant to:
(a) any existing non-conforming measure that the Party maintains, continues, renews or amends in accordance with paragraph 1 of Article 13.13 (Non-Conforming Measures - Investment), paragraph 1 of Article 8.7 (Non-Conforming Measures â Cross-Border Trade in Services) or paragraph 1(a) to (c) of Article 9.10 (Non-Conforming Measures - Financial Services), as set out in its Schedule to Annex I (Schedules of Non-Conforming Measures for Services and Investment) or in Section A of its Schedule to Annex II (Schedules of Non-Conforming Measures for Financial Services); or
(b) any non-conforming measure that the Party adopts or maintains with respect to sectors, subsectors, or activities in accordance with paragraph 2 of Article 13.13 (Non-Conforming Measures â Investment), paragraph 2 of Article 8.7 (Non-Conforming Measures - Cross-Border Trade in Services) or paragraph 1(d) of Article 9.10 (Non-Conforming Measures - Financial Services), as set out in its Schedule to Annex II (Schedules of Non-Conforming Measures for Services and Investment) or in Section B of its Schedule to Annex III (Schedules of Non-Conforming Measures for Financial Services).
Article 18.3. Delegated Authority
Each Party shall ensure that, when its state-owned enterprises, state enterprises and designated monopolies exercise any regulatory, administrative or other governmental authority that the Party has directed or delegated to such entities to carry out, those entities act in a manner that is not inconsistent with that Party's obligations under this Agreement. (12)
Article 18.4. Non-discriminatory Treatment and Commercial Considerations
1. Each Party shall ensure that each of its state-owned enterprises, 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 (c)(ii);
(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 or of any non-party; and
(ii) accords to a good or service supplied by an enterprise that is a covered investment in the Party's 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 Party's territory that are investments of investors of the Party or ofany non-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 or of any non-party; and
(ii) accords to an enterprise that is a covered investment in the Party's territory treatment no less favourable than it accords to enterprises in the relevant market in the Party's territory that are investments of investors of the Party or of any non-party. (13)
2. Each Party shall ensure that each of its designated monopolies:
(a) acts in accordance with commercial considerations in its purchase or sale of the monopoly good or service in the relevant market, except to fulfil any terms of its designation that are not inconsistent with subparagraph (b), (c) or (d);
(b) in its purchase of the monopoly 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 or of any non-party; and
(ii) accords to a good or service supplied by an enterprise that is a covered investment in the Party's 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 Party's territory that are investments of investors of the Party or of any non-party; and
(c) inits sale of the monopoly good or service:
(i) accords to an enterprise of the other Party treatment no less favourable than it accords to enterprises of the Party or of any non-party; and
(ii) accords to an enterprise that is a covered investment in the Party's territory treatment no less favourable than it accords to enterprises in the relevant market in the Party's territory that are investments of investors of the Party or of any non-party; and
(d) does not use its monopoly position to engage in, either directly or indirectly, including through its dealings with its parent, subsidiaries, or other entities the Party or the designated monopoly owns, anticompetitive practices in a non-monopolised market in its territory that negatively affect trade or investment between the Parties. (14)
3. Subparagraphs 1(b), 1(c), 2(b) and 2(c) do not preclude a state-owned enterprise or designated monopoly from:
(a) purchasing or selling goods or services on different terms or conditions including those relating to price; or
(b) refusing to purchase or sell goods or services,
provided that such differential treatment or refusal is undertaken in accordance with commercial considerations.
Article 18.5. Courts and Administrative Bodies
1. Each Party shall provide its courts with jurisdiction over civil claims against an enterprise owned or controlled through ownership interests by a foreign government based on a commercial activity carried on in its territory. (15) This shall not be construed to require a Party to provide jurisdiction over such claims if it does not provide jurisdiction over similar claims against enterprises that are not owned or controlled through ownership interests by a foreign government.
2. Each Party shall ensure that any administrative body that the Party establishes or maintains that regulates a state-owned enterprise exercises its regulatory discretion in an impartial manner with respect to enterprises that it regulates, including enterprises that are not state-owned enterprises. (16)
Article 18.6. Non-commercial Assistance
1. Neither Party shall cause (17) adverse effects to the interests of the other Party through the use of non-commercial assistance that it provides, either directly or indirectly, (18) to any of its state-owned enterprises with respect to:
(a) the production and sale of a good by the state-owned enterprise;
(b) the supply of a service by the state-owned enterprise from the territory of the Party into the territory of the other Party; or
(c) the supply of a service in the territory of the other Party through an enterprise that is a covered investment in the territory of the other Party.
2. Each Party shall ensure that its state enterprises and state-owned enterprises do not cause adverse effects to the interests of the other Party through the use of non-commercial assistance that the state enterprise or state-owned enterprise provides to any of its state-owned enterprises with respect to:
(a) the production and sale of a good by the state-owned enterprise;
(b) the supply ofa service by the state-owned enterprise from the territory of the Party into the territory of the other Party; or
(c) the supply of a service in the territory of the other Party through an enterprise that is a covered investment in the territory of the other Party.
3. Neither Party shall cause injury to a domestic industry (19) of the other Party through the use of non-commercial assistance that it provides, either directly or indirectly, to any of its state-owned enterprises that is a covered investment in the territory of the other Party in circumstances where:
(a) the non-commercial assistance is provided with respect to the production and sale of a good by the state-owned enterprise in the territory of the other Party; and
(b) a like good is produced and sold in the territory of the other Party by the domestic industry of the other Party. (20)
4. A service supplied by a state-owned enterprise of a Party within the Party's territory shall be deemed not to cause adverse effects. (21)
Article 18.7. Adverse Effects
1. For the purposes of paragraphs 1 and 2 of Article 18.6 (Non-commercial Assistance), adverse effects arise if the effect of the non-commercial assistance is:
(a) that the production and sale of a good by a Party's state-owned enterprise that has received the non-commercial assistance displaces or impedes from the Party's market imports of a like good of the other Party or sales of a like good produced by an enterprise that is a covered investment in the territory of the Party;
(b) that the production and sale of a good by a Party's state-owned enterprise that has received the non-commercial assistance displaces or impedes from:
(i) the market of the other Party sales of a like good produced by an enterprise that is a covered investment in the territory of that other Party; or
(ii) the market of a non-party imports of a like good of the other Party;
(c) a significant price undercutting by a good produced by a Party's state-owned enterprise that has received the non-commercial assistance and sold by the enterprise in:
(i) the market of a Party as compared with the price in the same market of imports of a like good of the other Party or a like good that is produced by an enterprise that is a covered investment in the territory of the Party, or significant price suppression, price depression, or lost sales in the same market; or
(ii) the market of a non-party as compared with the price in the same market of imports of a like good of the other Party, or significant price suppression, price depression, or lost sales in the same market;
(d) that services supplied by a Party's state-owned enterprise that has received the non-commercial assistance displace or impede from the market of the other Party a like service supplied by a service supplier of the other Party; or
(e) a significant price undercutting by a service supplied in the market of the other Party by a Party's state-owned enterprise that has received the non-commercial assistance as compared with the price in the same market of a like service supplied by a service supplier of the other Party, or significant price suppression, price depression, or lost sales in the same market. (22)
2. For the purposes of subparagraphs 1(a), 1(b) and 1(d), the displacing or impeding of a good or service includes any case in which it has been demonstrated that there has been a significant change in relative shares of the market to the disadvantage of the like good or like service. "Significant change in relative shares of the market" shall include any of the following situations:
(a) there is a significant increase in the market share of the good or service of the Party's state-owned enterprise;
(b) the market share of the good or service of the Party's state-owned enterprise remains constant in circumstances in which, in the absence of the non-commercial assistance, it would have declined significantly; or
(c) the market share of the good or service of the Party's state-owned enterprise declines, but at a significantly slower rate than would have been the case in the absence of the non-commercial assistance.
The change must manifest itself over an appropriately representative period sufficient to demonstrate clear trends in the development of the market for the good or service concerned, which, in normal circumstances, shall be at least one year.
3. For the purposes of subparagraphs 1(c) and 1(e), price undercutting shall include any case in which such price undercutting has been demonstrated through a comparison of the prices of the good or service of the state-owned enterprise with the prices of the like good or service.
4. Comparisons of the prices in paragraph 3 shall be made at the same level of trade and at comparable times, and due account shall be taken for factors affecting price comparability. If a direct comparison of transactions is not possible, the existence of price undercutting may be demonstrated on some other reasonable basis, such as, in the case of goods, a comparison of unit values.
5. Non-commercial assistance that a Party provides:
(a) before the signing of this Agreement; or
(b) within three years of signing of this Agreement, pursuant to a law that is enacted, or contractual obligation undertaken, prior to the signing of this Agreement,
shall be deemed not to cause adverse effects.
6. For the purposes of subparagraphs 1(b) and 2(b) of Article 18.6 (Non-commercial Assistance), the initial capitalisation of a state-owned enterprise, or the acquisition by a Party of a controlling interest in an enterprise, that is principally engaged in the supply of services within the territory of the Party, shall be deemed not to cause adverse effects.
Article 18.8. Injury
1. For the purposes of paragraph 3 of Article 18.6 (Non-commercial Assistance), the term "injury" means material injury to a domestic industry, threat of material injury to a domestic industry, or material retardation of the establishment of such an industry. A determination of material injury shall be based on positive evidence and involve an objective examination of the relevant factors, including the volume of production by the covered investment that has received non-commercial assistance, the effect of such production on prices for like goods produced and sold by the domestic industry, and the effect of such production on the domestic industry producing like goods. (23)
2. With regard to the volume of production by the covered investment that has received non-commercial assistance, consideration shall be given as to whether there has been a significant increase in the volume of production, either in absolute terms or relative to production or consumption in the territory of the Party in which injury is alleged to have occurred. With regard to the effect of the production by the covered investment on prices, consideration shall be given as to whether there has been a significant price undercutting by the goods produced and sold by the covered investment as compared with the price of like goods produced and sold by the domestic industry, or whether the effect of production by the covered investment is otherwise to depress prices to a significant degree or to prevent price increases, which otherwise would have occurred, to a significant degree. No one or several of these factors can necessarily give decisive guidance.
3. The examination of the impact on the domestic industry of the goods produced and sold by the covered investment that received the non-commercial assistance shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, such as actual and potential decline in output, sales, market share, profits, productivity, return on investments, or utilisation of capacity; factors affecting domestic prices; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments, and, in the case of agriculture, whether there has been an increased burden on government support programmes. This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.
4. It must be demonstrated that the goods produced and sold by the covered investment are, through the effects (24) of the non-commercial assistance, causing injury within the meaning of this Article. The demonstration of a causal relationship between the goods produced and sold by the covered investment and the injury to the domestic industry shall be based on an examination of all relevant evidence. Any known factors other than the goods produced by the covered investment which at the same time are injuring the domestic industry shall be examined, and the injuries caused by these other factors must not be attributed to the goods produced and sold by the covered investment that has received non-commercial assistance. Factors which may be relevant in this respect include, among other things, the volumes and prices of other like goods in the market in question, contraction in demand or changes in the patterns of consumption, and developments in technology and the export performance and productivity of the domestic industry.
5. A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture, or remote possibility and shall be considered with special care. The change in circumstances which would create a situation in which non-commercial assistance to the covered investment would cause injury must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, there should be consideration of relevant factors (25) and of whether the totality of the factors considered lead to the conclusion that further availability of goods produced by the covered investment is imminent and that, unless protective action is taken, material injury would occur.
Article 18.9. Application to Sub Central State-Owned Enterprises and Designated Monopolies
Article 18.4 (Non-discriminatory Treatment and Commercial Considerations), Article 18.5 (Courts and Administrative Bodies), Article 18.6 (Non-commercial Assistance) and Article 18.10 (Transparency) shall not apply with respect to a Party’s state-owned enterprises or designated monopolies as set out in Annex 18-D (Application to Sub-Central StateOwned Enterprises and Designated Monopolies).
Article 18.10. Transparency
1. Each Party shall provide to the other Party or otherwise make publicly available on an official website a list of its state-owned enterprises no later than six months after the date of entry into force of this Agreement, and thereafter shall update the list annually.
2. Each Party shall promptly notify the other Party or otherwise make publicly available on an official website the designation of a monopoly or expansion of the scope of an existing monopoly and the terms of its designation.
3. On the written request of the other Party, a Party shall promptly provide the following information concerning a state-owned enterprise or a government monopoly, provided that the request includes an explanation of how the activities of the entity may be affecting trade or investment between the Parties:
(a) the percentage of shares that the Party, its state-owned enterprises or designated monopolies cumulatively own, and the percentage of votes 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 or designated monopolies hold, to the extent these rights are different than the rights attached to the general common shares of the entity;
(c) the government titles of any government official serving as an officer or member of the entity's board of directors;
(d) the entity's annual revenue and total assets over the most recent three- year period for which information is available;
(e) any exemptions and immunities from which the entity benefits under the Party's law; and
(f) any additional information regarding the entity that is publicly available, including annual financial reports and third-party audits, and that is sought in the written request.
4. On the written request of the other Party, a Party shall promptly provide, in writing, information regarding any policy or programme it has adopted or maintains that provides for non-commercial assistance, provided that the request includes an explanation of how the policy or programme affects or could affect trade or investment between the Parties.
5. When a Party provides a response pursuant to paragraph 4, the information it provides shall be sufficiently specific to enable the requesting Party to understand the operation of and evaluate the policy or programme and its effects or potential effects on trade or investment between the Parties. The Party responding to a request shall ensure that the response it provides contains the following information:
(a) the form of the non-commercial assistance provided under the policy or programme, for example, grant or loan;
(b) the names of the government agencies, state-owned enterprises, or state enterprises providing the non-commercial assistance and the names of the state-owned enterprises that have received or are eligible to receive the non-commercial assistance;
(c) the legal basis and policy objective of the policy or programme providing for the non-commercial assistance;
(d) with respect to goods, the amount per unit of the non-commercial assistance or, in cases where this is not possible, the total amount or the annual amount budgeted for the non-commercial assistance, indicating, if possible, the average amount per unit in the previous year;
(e) with respect to services, the total amount or the annual amount budgeted for the non-commercial assistance, indicating, if possible, the total amount in the previous year;
(f) with respect to policies or programmes providing for non-commercial assistance in the form of loans or loan guarantees, the amount of the loan or amount of the loan guaranteed, interest rates, and fees charged;
(g) with respect to policies or programmes providing for non-commercial assistance in the form of the provision of goods or services, the prices charged, if any;
(h) with respect to policies or programmes providing for non-commercial assistance in the form of equity capital, the amount invested, the number and a description of the shares received, and any assessments that were conducted with respect to the underlying investment decision;
(i) the duration of the policy or programme or any other time-limits attached to it; and
(j) statistical data permitting an assessment of the effects of the non- commercial assistance on trade or investment between the Parties.
6. If a Party considers that it has not adopted or does not maintain any policies or programmes referred to in paragraph 4, it shall so inform the requesting Party in writing.
7. If any relevant points in paragraph 5 have not been addressed in the written response, an explanation shall be provided in the written response itself.
8. The Parties recognise that the provision of information under paragraphs 5 and 7 does not prejudge the legal status of the assistance that was the subject of the request under paragraph 4 or the effects of that assistance under this Agreement.
9. When a Party provides written information pursuant to a request under this Article and informs the requesting Party that it considers the information to be confidential, the requesting Party shall not disclose the information without the prior consent of the Party providing the information.
Article 18.11. Cooperation
1. The Parties recognise the importance of the development of transparent, robust and effective international trade rules to ensure open and fair competition between state-owned and privately-owned enterprises in global trade. The Parties also recognise the importance of addressing trade-distorting practices by state-owned enterprises, including the provision of non-commercial assistance that impairs the proper functioning of markets. The Parties further recognise the role of relevant international standards, including the OECD Guidelines on Corporate Governance of State-Owned Enterprises, adopted by the OECD Council on 8 July 2015 in developing such rules.
2. Accordingly, the Parties shall, where appropriate and subject to available resources, engage in mutually agreed technical cooperation activities, including:
(a) cooperating in international fora that deal with regulation of state- owned enterprises in global trade, including in particular the WTO and the OECD;
(b) exchanging information regarding each Party's experiences in improving the corporate governance and operation of their state- owned enterprises;
(c) sharing best practices on policy approaches to ensure a level playing field between state-owned and privately owned enterprises, including policies related to competitive neutrality; and
(d) organising international seminars, workshops, or any other appropriate forum for sharing technical information and expertise related to the governance and operations of state-owned enterprises.
Article 18.12. Contact Points
Each Party shall designate and notify a contact point on State-Owned Enterprises and Designated Monopolies to facilitate communications between the Parties on any matter covered by this Chapter.
Article 18.13. Exceptions
1. Nothing in Article 18.4 (Non-discriminatory Treatment and Commercial Considerations) or Article 18.6 (Non-commercial Assistance) shall be construed to:
(a) prevent the adoption or enforcement by a Party of measures to respond temporarily to a national or global economic emergency; or
(b) apply to a state-owned enterprise with respect to which a Party has adopted or enforced measures on a temporary basis in response to a national or global economic emergency, for the duration of that emergency.