(b) issues regarding government procurement that are referred to it by a Party;
(c) any other matter related to the operation of this Chapter.
Article 174. Transitional Period
This Chapter shall become applicable three years after the entry into force of this Agreement.
Chapter 10. TRADE AND SUSTAINABLE DEVELOPMENT
Article 175. Context and Objectives
1. The Parties recall Agenda 21 of the UN Conference on Environment and Development of 1992, the International Labour Organization's (hereinafter referred to as "ILO") Declaration on Fundamental Principles and Rights at Work of 1998, the Ministerial Declaration of the UN Economic and Social Council on Full Employment and Decent Work of 2006, the ILO Declaration on Social Justice for a Fair Globalisation of 2008 and the UN 2030 Agenda for Sustainable Development of 2015 with its Sustainable Development Goals (hereinafter referred to as "SDGs").
2. The Parties reaffirm their commitments to promote the development of international trade and investment in such a way as to contribute to the objective of sustainable development and the fight against climate change. In this context, the Parties recognise that economic development, social development and environmental protection are interdependent and mutually reinforcing components of sustainable development.
Article 176. Right to Regulate and Levels of Protection
1. The Parties recognise the right of each Party to establish its own levels of domestic environmental and labour protection, and to adopt or modify its relevant law and policies accordingly, in accordance with internationally recognised standards and agreements and with a view to achieving high levels of environmental and labour protection.
2. The Parties recognise that it is inappropriate to encourage trade or investment by weakening or reducing the level of protection afforded in their environmental law or in their labour law and standards.
3. A Party shall not seek to encourage trade or investment by derogating from or, through a sustained or recurring course of action or inaction, failing to enforce its environmental and labour law effectively.
Article 177. Multilateral Environmental Agreements and Labour Conventions
1. The Parties recognise the value of international environmental governance and agreements as a response of the international community to global or regional environmental challenges as well as of full and productive employment, including skills development and decent work for all, as a key element of sustainable development for all countries and as a priority objective of international cooperation.
2. In this context, and taking into account Articles 259 to 265 of this Agreement, the Parties reaffirm their commitment to effectively implement the multilateral environmental agreements, including the Paris Agreement on Climate Change, that they have ratified respectively.
3. Taking into account Articles 285 to 288 of this Agreement, the Parties reaffirm their commitment to effectively implement the fundamental ILO conventions, as well as other ILO conventions that they have ratified respectively, and to maintain an effective labour inspection system consistent with their commitments as members of the ILO.
Article 178. Trade and Investment Favouring Sustainable Developments
1. The Parties reaffirm their commitment to enhance the contribution of trade to the objective of sustainable development. Accordingly, they agree to promote the use of sustainability assurance schemes, such as fair and ethical trade or eco-labelling, corporate social responsibility and responsible business conduct practices and trade and investment in environmental goods and services as well as in climate-friendly products and technologies.
2. The Parties shall exchange information and share experience on their actions to promote coherence and mutual supportiveness between trade, social and environmental policies, and shall strengthen dialogue and cooperation on sustainable development issues that may arise in the context of their trade relations.
3. Such dialogue and cooperation between the Parties should involve relevant stakeholders, in particular social partners, as well as other civil society organisations, including through the civil society cooperation established pursuant to Article 314, as appropriate.
Article 179. Dispute Settlement
Articles 223, 224 and 225 do not apply to disputes under this Chapter. For any such dispute, after the arbitration panel has delivered its final report pursuant to Articles 219 and 220, the Parties, taking that report into account, shall discuss suitable measures to be implemented. The Cooperation Committee shall monitor the implementation of any such measures and shall keep the matter under review, including through the mechanism referred to in Article 178(3).
Chapter 11. ANTICOMPETITIVE CONDUCT, MERGER CONTROL AND SUBSIDIES
Article 180. Principles
The Parties recognise the importance of free and undistorted competition in their trade and investment relations. The Parties acknowledge that anticompetitive business practices and State interventions have the potential to distort the proper functioning of markets and undermine the benefits of trade and investment liberalisation.
Article 181. Competitive Neutrality
The Parties shall apply this Chapter to all enterprises, public and private.
Article 182. Economic Activities
This Chapter applies to economic activities.
For the purposes of this Chapter, "economic activities" means those activities pertaining to the offering of goods and services in a market.
Section A. ANTICOMPETITIVE CONDUCT AND MERGER CONTROL
Article 183. Legislative Framework
Each Party shall adopt or maintain competition law which applies to all enterprises in all sectors of the economy (22) and addresses, in an effective manner, the following practices:
(a) horizontal and vertical 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) the abuse by one or more enterprises of a dominant position; and
(c) concentrations between enterprises which would significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position.
Article 184. Services of General Economic Interest
The Parties shall ensure that enterprises entrusted with the operation of services of general economic interest are subject to the rules set out in this Section, in so far as the application of those rules does not obstruct the performance, in law or in fact, of the tasks assigned to such enterprises. The tasks assigned shall be transparent and any limitation to or deviation from the application of the rules set out in this Section shall not go beyond what is strictly necessary to achieve those tasks.
Article 185. Implementation
1. Each Party shall establish or maintain an operationally independent competition authority which is responsible for, and appropriately equipped with the powers and resources necessary to ensure, the full application and the effective enforcement of its competition law referred to in Article 183.
2. Each Party shall apply its competition law referred to in Article 183 in a transparent manner, respecting the principles of procedural fairness, including the rights of defence of the enterprises concerned, in particular the right to be heard and the right to judicial review.
Article 186. Cooperation
1. The Parties acknowledge that it is in their common interest to promote cooperation with regard to competition policy and enforcement.
2. To facilitate such cooperation, the competition authorities of the Parties may exchange information, subject to the confidentiality rules laid down in the Parties' respective law.
3. The competition authorities of the Parties shall endeavour to coordinate, where possible and appropriate, their enforcement activities relating to the same or related conduct or cases.
Article 187. Non-application of Dispute Settlement
Chapter 14 does not apply to this Section.
Section B. SUBSIDIES
Article 188. Definition and Scope
1. For the purposes of this Section, "a subsidy" means a measure that fulfils the conditions set out in paragraph 1.1 of Article 1 of the SCM Agreement, irrespective of whether it is granted to an enterprise supplying goods or services (23) .
2. This Section applies to subsidies that are specific within the meaning of Article 2 of the SCM Agreement or that fall within the scope of Article 192 of this Agreement.
3. The Parties shall ensure that subsidies to enterprises entrusted with the operation of services of general economic interest are subject to the rules set out in this Section, in so far as the application of those rules does not obstruct the performance, in law or in fact, of the tasks assigned to these enterprises. The tasks assigned shall be transparent and any limitation to or deviation from the application of the rules set out in this Section shall not go beyond what is strictly necessary to achieve those tasks.
4. Article 191 of this Agreement does not apply to subsidies related to trade in goods covered by Annex 1 to the Agreement on Agriculture.
5. Articles 191 and 192 do not apply to the audio-visual sector.
6. Article 192 does not apply to subsidies formally agreed or granted before or within five years of the entry into force of this Agreement.
Article 189. Relationship with the WTO
Nothing in this Section shall affect the rights or obligations of either Party under the SCM Agreement, the Agreement on Agriculture, Article XVI of GATT 1994 or Article XV of GATS.
Article 190. Transparency
1. Each Party shall, with respect to a subsidy granted or maintained within its territory, make the following information public:
(a) the legal basis and purpose of the subsidy;
(b) the form of the subsidy;
(c) the amount of the subsidy or the amount budgeted for the subsidy; and
(d) if possible, the name of the recipient of the subsidy.
2. A Party shall comply with paragraph 1 by:
(a) submitting a notification pursuant to Article 25 of the SCM Agreement, which is provided at least every two years;
(b) submitting a notification pursuant to Article 18 of the Agreement on Agriculture; or
(c) ensuring that the information referred to in paragraph 1 is published by itself or on its behalf on a publicly accessible website by 31 December of the calendar year subsequent to the year in which the subsidy was granted or maintained.
Article 191. Consultations
1. If a Party considers that a subsidy is adversely affecting or is likely to adversely affect its trade or investment liberalisation interests, it may express its concern in writing to the other Party and request further information on the matter.
2. The request referred to in paragraph 1 shall include an explanation of how the subsidy is adversely affecting or is likely to adversely affect the requesting Party's interests. The requesting Party may seek the following information about the subsidy:
(a) the legal basis for and policy objective or purpose of the subsidy;
(b) the form of the subsidy;
(c) the dates and duration of the subsidy and any other time limits attached to it;
(d) the eligibility requirements for the subsidy;
(e) the total amount or the annual amount budgeted for the subsidy;
(f) if possible, the name of the recipient of the subsidy; and
(g) any other information permitting an assessment of the adverse effects of the subsidy.
3. The requested Party shall provide the information requested in writing within a reasonable period of time, in principle not exceeding 60 days after the date of delivery of the request. In the event that the requested Party does not provide any of the information requested, that Party shall explain the absence of such information in its written response within the same period of time.
4. After having received the information requested, the requesting Party may request consultations on the matter. Consultations between the Parties to discuss the concerns raised shall be held within a reasonable period of time, in principle not exceeding 60 days after the date of delivery of the request for consultations.
5. The Parties shall make every attempt to arrive at a mutually satisfactory resolution of the matter.
Article 192. Subsidies Subject to Conditions
1. The following subsidies shall be allowed subject to the conditions below for the purposes of this Section:
(a) subsidies whereby a government guarantees debts or liabilities of certain enterprises, provided that the amount of those debts and liabilities or the duration of such guarantee are limited; and
(b) subsidies to insolvent or ailing enterprises in various forms, provided that:
(i) there is a credible restructuring plan based on realistic assumptions with a view to ensuring the return to long-term viability of the insolvent or ailing enterprise within a reasonable time period; and
(ii) the enterprise contributes to the costs of restructuring; small and medium-sized enterprises are not obliged to contribute to the costs of restructuring.
2. Point (b) of paragraph 1 does not apply to subsidies provided to enterprises as temporary liquidity support in the form of loan guarantees or loans during the period which is necessary to prepare a restructuring plan. Such temporary liquidity support shall be limited to the amount needed to merely keep the enterprise in business.
3. Subsidies to ensure the orderly market exit of a company shall be allowed.
4. This Article does not apply to subsidies the cumulative amounts or budgets of which are less than EUR 200 000 per enterprise over a period of three consecutive years.
5. Paragraph 1 does not apply to subsidies that are granted to remedy a serious disturbance in the economy of a Party. A disturbance in the economy of a Party shall be considered serious if it is exceptional, temporary and significant.
6. To the extent that they do not fall within the scope of Article 188(3), subsidies provided for implementation of programmes, in particular in the areas of social housing and railway transport for commodities, are exempted from respecting the conditions referred to in paragraph 1 of this Article provided that they are socially oriented.
Article 193. Use of Subsidies
Each Party shall ensure that enterprises use subsidies only for the policy objective for which the subsidies were granted (24).
Chapter 12. STATE-OWNED ENTERPRISES, ENTERPRISES GRANTED SPECIAL RIGHTS OR PRIVILEGES, AND DESIGNATED MONOPOLIES
Article 194. Definitions
For the purposes of this Chapter:
(a) "Arrangement" means the Arrangement on Officially Supported Export Credits of the Organisation for Economic Co-operation and Development (hereinafter referred to as "OECD") or a successor undertaking, whether developed within or outside of the OECD framework, that has been adopted by at least 12 original WTO Members that were Participants to the Arrangement as of 1 January 1979.
(b) "commercial activities" means activities the end result of which is the production of a good or supply of a service which will be sold in quantities and at prices determined by an enterprise, and are undertaken with an orientation towards profit-making (25) ;
(c) "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 commercial decisions of a privately owned enterprise operating according to market economy principles in the relevant business or industry;
(d) "designated monopoly" means an entity, including a consortium 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 granting;
(e) "designate" means to establish or authorise a monopoly, or to expand the scope of a monopoly to cover an additional good or service;
(f) "enterprise granted special rights or privileges" means an enterprise, public or private, to which a Party has granted, in law or in fact, special rights or privileges by designating or limiting to two or more the number of enterprises authorised to supply a good or a service, other than according to objective, proportional and non-discriminatory criteria, in a way that substantially affects the ability of any other enterprise to supply the same good or service in the same geographical area under substantially equivalent conditions;
(g) "service supplied in the exercise of governmental authority" means a service supplied in the exercise of governmental authority as defined in GATS, including, where applicable, in the Annex on Financial Services to GATS.
(h) "state-owned enterprise" means an enterprise in which a Party:
(i) directly owns more than 50 % of share capital;
(ii) controls, directly or indirectly, the exercise of more than 50 % of the voting rights;
(iii) holds the power to appoint a majority of the members of the board of directors or an equivalent management body; or
(iv) has the power to exercise control over the enterprise.
Article 195. Scope
1. The Parties confirm their rights and obligations under paragraphs 1, 2 and 3 of Article XVII of GATT 1994, the Understanding on the Interpretation of Article XVII of GATT 1994, as well as under paragraphs 1, 2 and 5 of Article VIII of GATS.
2. This Chapter applies to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies engaged in a commercial activity. Where such enterprises or monopolies engage in both commercial and non-commercial activities, only the commercial activities 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 state-owned enterprises, enterprises granted special rights or privileges or designated monopolies when they act as procuring entities covered under each Party's annexes to Appendix I to the Agreement on Government Procurement, done at Marrakesh on 15 April 1994, contained in Annex 4 to the WTO Agreement and under Annex 9 to this Agreement for governmental purposes and not with a view to commercial resale of the goods or services procured or with a view to use the goods or the services procured in the production of goods or in the supply of services for commercial sale.
5. This Chapter does not apply to any service supplied in the exercise of governmental authority.
6. This Chapter does not apply to state-owned enterprises, enterprises granted special rights or privileges or designated monopolies engaged exclusively in the production of military and defence-related products (26).
7. This Chapter does not apply to a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly if in any one of the three previous consecutive fiscal years the annual revenue derived from the commercial activities of that enterprise or monopoly was less than 50 million special drawing rights.
8. Article 197 does not apply to the supply of financial services by a state-owned enterprise pursuant to a government mandate if that supply of financial services:
(a) supports exports or imports, provided that the services are:
(i) not intended to displace commercial financing; or
(ii) offered on terms no more favourable than those that could be obtained for comparable financial services in the commercial market;
(b) supports private investment outside the territory of the Party, provided that the services are:
(i) not intended to displace commercial financing; or
(ii) offered on terms no more favourable than those that could be obtained for comparable financial services in the commercial market; or
(c) is offered on terms consistent with the Arrangement, provided that it falls within the scope of the Arrangement. (27)
9. Article 197 does not apply to the service sectors outside the scope of this Agreement as set out in Chapter 6.
Article 196. General Provisions
1. Without prejudice to the rights and obligations of each Party under this Chapter, nothing in this Chapter prevents a Party from establishing or maintaining state-owned enterprises, granting enterprises special rights or privileges or designating or maintaining monopolies.
2. Neither Party shall require or encourage a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly to act in a manner inconsistent with this Chapter.
Article 197. 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 a service, except to fulfil any terms of its public service mandate (28), for example concerning socially-oriented programmes and projects, that are not inconsistent with point (b) or (c);
(b) in its purchase of a good or a service:
(i) accords to a good or a service supplied by an enterprise of the other Party treatment no less favourable than that which it accords to a like good or a like service supplied by its enterprises; and
(ii) accords to a good or a service supplied by an enterprise of the other Party that is a covered investment in its territory treatment no less favourable than that which it accords to a like good or a like service supplied by enterprises in the relevant market in its territory that are investments of investors of the Party; and
(c) in its sale of a good or a service:
(i) accords to an enterprise of the other Party treatment no less favourable than that which it accords to its enterprises; and
(ii) accords to an enterprise of the other Party that is a covered investment in its territory treatment no less favourable than that which it accords to enterprises in the relevant market in its territory that are investments of its investors.
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, provided that the purchase or supply is undertaken in accordance with commercial considerations; or
(b) refusing to purchase or supply goods or services, provided that this is done on the basis of commercial considerations.
Article 198. Regulatory Framework
1. The Parties shall endeavour to respect and make best use of relevant international standards, including the OECD Guidelines on Corporate Governance of State-Owned Enterprises.
2. Each Party shall ensure that any regulatory body that it establishes or maintains or any body that it entrusts with a regulatory function: