d) The presence in its territory of a service provider of the other party; and
e) The provision of a bond or other form of financial security as a condition for the provision of a cross-border service.
2. For purposes of this chapter shall apply to measures adopted or maintained by a Party includes measures adopted or maintained by institutions or agencies not
In the exercise of governmental authority and administrative regulations or other governmental delegated to them by that Party.
3. This chapter does not apply to:
a) Subsidies or grants provided by a party or a state enterprise, including loans, guarantees and insurance supported by a party;
b) Air services including domestic and international air transportation, l scheduled and non-scheduled and ancillary activities in support of air services except:
i) Maintenance services and repair of aircraft during the period in which an aircraft is withdrawn from service;
ii) Air and specialty services;
iii) Computer reservation systems;
c) Government services or functions such as law enforcement services, social rehabilitation, pension or unemployment insurance or social security services, social welfare, education, training and public health care or protection of children;
d) Cross-border financial services; and
e) Government procurement by a party or a State enterprise.
4. Nothing in this chapter shall be construed to impose any obligation on a Party with respect to a national of the other party who wish to enter the labour market or who is permanently employed in its territory, or confer any right on that with respect to that national access or employment.
Article 11.03. National Treatment
Each Party shall accord to cross-border services and service providers of the other party treatment no less favourable than that accorded to its own like services and service providers.
Article 11.04. Most Favoured Nation Treatment
Each Party shall accord immediately and unconditionally to cross-border services and service providers of the other party treatment no less favourable than that it accords to like services and service providers of any other country.
Article 11.05. Standard of Treatment
Each Party shall accord to cross-border services and service providers of the other party the better of the treatment required by articles 1103 and 11.04.
Article 11.06. Local Presence
No Party shall require a service provider of the other party to establish or maintain a representative office or other company or resident in its territory as a condition to the provision of a cross-border service.
Article 11.07. Granting Licences, Authorizations or Licences, Certifications
With a view to ensuring that any measure that adopts or maintains a Party with respect to the requirements and procedures for the granting of permits and authorizations, licenses or certifications to nationals of the other party does not constitute an unnecessary barrier to cross-border services each Party shall endeavour to ensure that such measure:
a) Based on objective and transparent criteria, such as the capacity and ability to provide a cross-border service;
b) Not more burdensome than necessary to ensure the quality of a cross-border service; and
c) Do not constitute a disguised restriction on the cross-border provision of a service.
Article 11.08. Reservations
1. Articles 1106, 11.04 1103 and do not apply to:
a) Any Non-Conforming Measure existing Non-Conforming Measure that is maintained by:
i) A Party at the national level, as provided for in its list of annex 1; or
ii) A local or municipal government;
b) The continuation or prompt renewal of any Non-Conforming Measure referred to in subparagraph (a); or
c) The modification of any Non-Conforming Measure referred to in subparagraph (a), provided that the amendment does not decrease the level of conformity of the measure as currently in force immediately before the amendment with articles 1106 and 1103, 11.04.
2. Articles 1106 and 1103, 11.04 shall not apply to any measure that adopts or maintains a Party with respect to the sectors or sub-sectors or activities as set out in annex II to its schedule.
Article 11.09. Non-discriminatory Quantitative Restrictions
1. Each Party shall establish a list of existing measures that constitute non-discriminatory quantitative restrictions, which are set out in annex V.
2. Each Party shall notify the other party of any measure constitutes a quantitative restriction non-discriminatory different from those of a local or municipal government level that is adopted after the entry into force of this Treaty, and shall set out the restriction in the list referred to in paragraph 1.
3. Periodically, at least once every two (2) years, the Parties shall endeavour to negotiate for liberalizing or eliminate:
a) Existing quantitative restrictions maintained by a party, the list referred to in paragraph 1; or
b) Quantitative restrictions adopted by a Party after the entry into force of this Treaty.
Article 11.10. Denial of Benefits
Subject to prior notification and consultation in accordance with articles 18.04 (provision of information) and 20.06 (consultations), a Party may deny the benefits of this chapter to a service provider of the other party, when it determines that the service is being provided by an enterprise that has no substantial business activities in the territory of the other party and that, in accordance with the other party of legislation that is owned or controlled by persons of a non- party.
Article 11.11. Future Liberalization
Through future negotiations to be convened by the Commission, the parties reached the deepen liberalization in services sectors with a view to achieving the elimination of the remaining restrictions listed in accordance with article 1108 (1) And (2).
Article 11.12. Proceedings
The Parties shall establish procedures for:
a) A Party shall notify the other Party and include in its relevant schedule:
i) Amendments of the measures referred to in article 1108 (1) and (2); and
ii) Quantitative restrictions in accordance with article 6 -; 11.09 .11
b) Indicate their commitments to liberalize quantitative restrictions, licensing requirements, and other measures and non-discriminatory;
c) Consultations on reservations or quantitative restrictions or commitments with a view to achieving further liberalisation.
Article 11.13. Recognition of Higher Education Degrees
In ANNEX 11.13 lays down the rules to be observed by the parties for the recognition of certificates issued by any of the Parties.
Article 11.14. Disclosure of Confidential Information
Nothing in this chapter shall be construed to impose obligations on the parties to provide the disclosure of confidential information which could constitute a
Impede law enforcement or otherwise be contrary to the public interest or would prejudice legitimate commercial interests of particular public or private enterprises.
Article 11.15. Committee on Investment and Cross-border Trade In Services
1. The parties establish a committee on investment and cross-border trade in services, whose composition stated in annex 11.15.
2. The Committee shall hear matters relating to this chapter and chapter 10 (investment), and without prejudice to article 1905 (2) (Committees), shall have the following functions:
a) Monitor the implementation and administration of 10 chapters (investment) and eleven (cross-border trade in services);
b) Discuss matters on investment and cross-border trade in services that are submitted by either party;
c) Discuss issues related to these matters discussed in other international fora;
d) To facilitate the exchange of information between the parties and cooperate in the field of advice on investment and cross-border trade in services; and
e) Create working groups or convene expert groups on topics of mutual interest to the parties.
3. The Committee shall meet when necessary or at any time upon the request of either party. It may also include representatives of other institutions where the responsible authorities as appropriate.
Article 11.16. International Inland Freight Transport
Annex 11.16 establishes the rules to be observed by the Parties to apply the measures that will regulate international land cargo transportation services.
Chapter 12. Financial Services
Article 12.01. Definitions
For purposes of this chapter:
Regulatory authorities: any government entity or supervisory authority over Financial Services service or financial institutions;
Public entity means a central bank or monetary authority of a party, or any financial institution of public nature, owned by a party or under its control, when it is not exercising business functions;
Enterprise: "enterprise" as defined in Chapter 2 (General definitions);
Financial institution means any financial intermediary or other enterprise that is authorized to do business or supervised and regulated Financial Services as a financial institution under the law of the Party in whose territory it is located;
Financial institution of the other party means a financial institution including a branch of the same constituted in accordance with the legislation in force in the territory of a Party that is owned or controlled by persons of the other party;
Investment means every kind of assets or rights of any kind, acquired or used for the purpose of obtaining an economic benefit or other business purposes, with resources transferred or acquired by an investor reinvested and includes:
a) A company, shares of a company; shares in the capital of an enterprise that allow the owner to participate in its income or profits. Debt instruments of an enterprise and loans to an enterprise where:
i) The enterprise is an affiliate of the investor; or
ii) The original maturity of the debt instrument or loan is at least three (3) years;
b) An interest in an enterprise that grants to the owner the right to participate in the assets of that enterprise in liquidation, provided that it does not result in a debt instrument or a loan excluded under subparagraph (a) 12 - 2;
c) Real estate or other property, tangible or intangible rights, including in the field of intellectual property as well as any other proprietary right (such as mortgages, pledge, usufruct and similar rights), acquired with the expectation of used or with the purpose of obtaining an economic benefit or other business purposes;
d) Participation or benefit resulting of capital or other resources committed for the development of an economic activity in the territory of a party, inter alia, under:
i) Contracts involving the presence of an investor property in the territory of the party, including concessions and contracts for construction and turnkey; or
ii) Contracts where remuneration depends substantially on the production, income or profits of an enterprise; and
e) A loan granted by a service or a Financial Services value of debt owned by the same except a loan to a financial institution or a value of debt issued by the same;
But investment does not mean,
- A payment obligation or a credit granted to the State or a state enterprise;
- Monetary claims derived exclusively from:
i) Commercial contracts for the sale of goods or services by a national or enterprise in the territory of a party to an enterprise in the territory of the other party; or
ii) The granting of credit in connection with a commercial transaction, the expiry date is less than three (3) years, such as trade financing; except a loan covered by the provisions of subparagraph (a);
- Any other monetary claim that does not involve the kinds of interests set out in subparagraphs (a) to (e);
- A loan to a financial institution or a debt owned by a financial institution, except a loan to a financial institution that is treated as capital for regulatory purposes, by any Party in whose territory the financial institution is located;
Investment of an investor Party a means of an investment owned or controlled directly or indirectly by an investor of that Party.
In case of a company, an investment is owned by an investor if the investor of a Party has an ownership of more than fifty percent (50%) of its equity capital.
An investment is controlled by an investor of a party if the investor has the power to:
i) Designate a majority of its directors; or
ii) Otherwise legally direct its operations;
An investor of a Party means a Party or a company of the same or a national of that Party or an enterprise that seeks to perform or performs or has made an investment in the territory of the other party. The intention to make an investment may occur, inter alia, through legal acts aimed at achieving the investment, or are in the process of committing resources required therefor;
Investor combatant: an investor to submit a claim to arbitration under article 12.19 and section B of chapter 10 (investment);
New financial service means a financial service not paid in the territory of a Party that is provided in the territory of the other party, including any new form of delivery of a financial service or the sale of a financial product that is not sold in the territory of the Party;
Agencies autoregulados: a non-governmental entity, including an exchange or securities and futures, central securities clearing house or any other organisation or association that exercises its own or delegated authority, regulatory or supervisory;
Cross-border supply of financial services or cross-border trade
Financial services means the supply of a financial service:
a) The territory of a party into the territory of the other party;
b) In the territory of one party to the service consumer of the other party; or
c) By a service provider of a party through the presence of natural persons of a Party in the territory of the other party;
Financial Services Service of a Party means a person of a Party that is engaged in the business of providing financial services in the territory of the Party;
Financial Services Service of a Party means a person of a Party that is engaged in the business of providing financial services in its territory that seeks to perform or performs the cross-border supply of financial services; and
Financial service means a service of a financial nature including banking, insurance, reinsurance and any related auxiliary service or to a service of a financial nature.
Article 12.02. Scope of Application
1. This chapter applies to measures adopted or maintained by a Party relating to:
a) Financial institutions of the other party;
b) A Party of investors and investments of investors in those financial institutions in the territory of the other party; and
c) Cross-border trade in financial services.
2. Nothing in this chapter shall be construed as preventing a party or its public entities, leading or provide exclusively in its territory:
a) Activities carried out by the monetary authorities or by any other public institution in pursuit of monetary or exchange rate policies;
b) Activities or services forming part of a public retirement plan or statutory system of social security; or
c) Other activities or services for the account or with the guarantee or using the financial resources of the same or its public entities.
3. The provisions of this chapter shall take precedence over the other, except in cases where reference is made to those chapters.
4. Article (10.11 expropriation and compensation) form an integral part of this chapter.
Article 12.03. Autoregulados Agencies
When a party requires that a financial institution or a Financial Services Service is member of the other party engages in, or have access to an agency autoregulado to provide a financial service in or into its territory, the Party shall make every effort to that body complies with the obligations of this chapter.
1. The Parties recognize the principle that investors of one party, they should be permitted to establish a financial institution in the territory of the other party, by any of the modalities for the establishment and operation of the legislation 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 12.06.
Article 12.04. Right of Establishment
1. No party will increase the degree of inconsistency of its measures relating to cross-border trade in financial services, under the provisions of this Treaty, by Financial Services Service of the other party, after the entry into force of this Treaty, except as provided in section B of the list of the Party in annex VI.
2. Each Party shall permit persons located in its territory and to its nationals, wherever located, to purchase Financial Services Financial Services Service of the other party located in the territory of that other party. It does not require a party to permit such suppliers to do business Financial Services or advertising in its territory. The Parties may define what is "notice" and "business" for purposes of this obligation.
3. Without prejudice to other means of prudential regulation of cross-border trade in Financial Services, a Party may require the registration of Financial Services Service of the other party and of financial instruments.
Article 12.05. Cross-border Trade
1. No Party shall increase the degree of non-conformity of its measures relating to cross-border trade in financial services with respect to the provisions of this Agreement undertaken by cross-border financial service suppliers of the other Party after the entry into force of this Agreement, except as provided for in Section B of the Party's Schedule to Annex VI.
2. 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 the other Party located in the territory of that other Party. This does not oblige a Party to allow such cross-border financial service suppliers to do business or advertise in its territory. Parties may define "advertising" and "doing business" for purposes of this obligation.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require registration of cross-border financial service suppliers of the other Party and of financial instruments.
Article 12.06. National Treatment
1. Each Party shall accord to investors of the other party treatment no less favourable than that it accords to its own investors with respect to the establishment, expansion and acquisition, administration, management, operation and sale or other disposition of Similar financial institutions and investments in financial institutions in its territory.
2. Each Party shall accord to financial institutions of the other party and to investments of investors of the other party in financial institutions treatment no less favourable than that it accords to its own similar financial institutions and to its own investments of investors in similar financial institutions with regard to the establishment, expansion and acquisition, administration, management, operation and sale or other disposition of financial institutions and investments.
3. Pursuant to article 12.05 pm, where a Party permits the cross-border provision of a financial service it shall accord to the Financial Services Service of another party treatment no less favourable than that it accords to its own Financial Services service with respect to the provision of that service.
4. A Party that the treatment accorded to similar financial institutions and similar Financial Services Service of the other party, whether the same or different to that accorded to its own institutions or providers of similar services is consistent with paragraphs 1 to 3, if affords equal competitive opportunities.
5. The treatment of a Party does not provide equal opportunities at a competitive disadvantage if similar financial institutions and similar Financial Services Service of the other party in their ability to provide financial services as compared with the ability to its own similar financial institutions and service providers of the other party to provide such services.
Article 12.07. Most Favoured Nation Treatment
Each Party shall accord to investors of the other party in financial institutions of the other party and to investments of investors in financial institutions and Financial Services Service of another party treatment no less favourable than that accorded to investors of similar financial institutions and to investments of investors in similar financial institutions and similar Financial Services Service of the other party or of a non- party.
Article 12.08. Recognition and Harmonization
1. In applying measures under this chapter, a Party may recognize prudential measures of the other party or of a non- party. Such recognition may be:
a) Accorded unilaterally;
b) Achieved through harmonization or other means; or
c) Based on an agreement or arrangement with the other party or non-party country.
2. The party that grants recognition of prudential measures under paragraph 1 shall provide adequate opportunity to the other party to demonstrate that circumstances exist in which there are or would be equivalent regulations, monitoring and implementation
Implementation of the regulation and, where appropriate, procedures for the sharing of information between the parties.
3. Where a Party grants recognition of prudential measures under paragraph 1 (c) and the circumstances set out in paragraph 2, that Party shall afford adequate opportunity for the other party to negotiate accession to the agreement or arrangement to negotiate or a comparable agreement or arrangement.
4. Nothing in this article shall be interpreted as the implementation of a mandatory revision of the financial system or prudential measures of a party by the other party.