(b) the purchase or use of, or payment for, a service;
(c) access to and use of distribution and transportation systems, or telecommunications networks and services related to the supply of a service;
(d) the presence in its territory of a service supplier of the other Party; and
(e) the provision of a bond or other form of financial security as a condition for the supply of a service.
2. For the purposes of this Chapter, measures adopted or maintained by a Party means measures adopted or maintained by:
(a) central or local governments or authorities; and
(b) non-governmental institutions in the exercise of powers delegated to them by central or local governments or authorities.
3. This Chapter shall not apply to:
(a) air services (1), including scheduled and non-scheduled domestic and international air transport services, as well as related services in support of air services, except:
(i) aircraft repair and maintenance services while the aircraft is out of service;
(ii) the sale and marketing of air transport services; and
(iii) computer reservation system (CRS) services;
(b) government procurement; and
(c) subsidies or grants provided by a Party, including government-supported loans, guarantees and insurance.
4. Articles 13.2, 13.5, 13.9, and 13.10 shall apply to measures of a Party that affect the supply of a service in its territory by a covered investment.2 5.
5. This Chapter does not impose any obligation on a Party with respect to a national of the other Party seeking to enter its labor market or to have permanent employment in its territory, or to confer any rights on that national with respect to such access or employment, nor shall it apply to measures relating to citizenship or residence on a permanent basis.
6. Nothing in this Chapter shall be construed to impose any obligation on a Party with respect to its immigration measures.
7. This Chapter does not apply to services supplied in the exercise of governmental authority. A service supplied in the exercise of governmental authority means any service that is supplied neither on a commercial basis nor in competition with one or more service suppliers.
8. This Chapter does not apply to measures adopted or maintained by a party with respect to financial services 3 except as provided in Chapter 14 (Financial Services).
9. For the purposes of this Agreement, the extraction of natural resources, the generation of electricity, the refining of crude oil and petroleum products, hunting and fishing shall not be considered services.
Article 13.2. SUBSIDIES
1. Notwithstanding Article 13.1.3(c), if the results of the negotiations relating to Article XV.1 of the GATS enter into force for each Party, this Article shall be reviewed jointly, as appropriate, with a view to determining whether this Article should be modified so that those results are incorporated into this Agreement. The Parties agree to coordinate such negotiations, as appropriate.
2 The Parties understand that nothing in this Chapter, including this paragraph, is subject to Section B (Investor-State Dispute Settlement) of Chapter 12 (Investment).
3 For greater certainty, the supply of financial services shall mean the supply of services as defined in Article I.2 of the GATS.
Article 13.3. NATIONAL TREATMENT
Each Party shall accord to service suppliers of the other Party treatment no less favorable than that it accords, in like circumstances, to its service suppliers.
Article 13.4. MOST-FAVORED-NATION TREATMENT
Each Party shall accord to service suppliers of the other Party treatment no less favorable than that it accords, in like circumstances, to service suppliers of a non-Party.
Article 13.5. MARKET ACCESS
No Party may adopt or maintain, on the basis of a regional subdivision or its entire territory, measures that:
(a) impose limitations on:
(i) the number of service suppliers, whether in the form of numerical quotas, monopolies or exclusive service suppliers or by requiring an economic needs test;
(ii) the total value of assets or service transactions in the form of numerical quotas or through the requirement of an economic needs test;
(iii) the total number of service transactions or the total amount of service output, expressed in designated numerical units, in the form of quotas or through the requirement of an economic needs test (4);
(iv) the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and that are necessary for and directly related to the supply of a specific service, in the form of numerical quotas or through the requirement of an economic needs test; or (v) the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and that are necessary for and directly related to the supply of a specific service, in the form of numerical quotas or through the requirement of an economic needs test; or
(b) restrict or prescribe the specific types of legal entity or joint venture through which a service supplier may supply a service.
Article 13.6. LOCAL PRESENCE
No Party may require a service supplier of the other Party to establish or maintain a representative office or other form of business, or to reside in its territory, as a condition for the cross-border supply of a service.
Article 13.7. NON-CONFORMING MEASURES
1. Articles 13.3, 13.4, 13.5, and 13.6 shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government, as set out by that Party in its Schedule to Annex I; or
(ii) the local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in paragraph (a); or
(c) the modification of any non-conforming measure referred to in paragraph (a), provided that such modification does not decrease the degree of conformity of the measure, as in effect immediately prior to the modification, with Article 13.3, 13.4, 13.5 or 13.6.
2. Articles 13.3, 13.4, 13.5, and 13.6 shall not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors, or activities as set out in its Schedule to Annex II.
Article 13.8. NOTIFICATION5
1. In the event that a Party makes an amendment or modification to any existing non-conforming measure set out in its Schedule to Annex I, in accordance with Article 13.7.1(c), the Party shall notify the other Party of such amendment or modification at the meetings of the Commission.
2. In the event that a Party adopts a measure after the entry into force of this Agreement with respect to the sectors, subsectors or activities set out in its Schedule to Annex II, the Party shall, to the extent possible, notify the other Party of such measure.
5 The Parties understand that nothing in this Article is subject to the dispute settlement procedure of this Agreement set out in Chapter 18 (Dispute Settlement).
Article 13.9. TRANSPARENCY IN THE DEVELOPMENT AND APPLICATION OF REGULATIONS (6)
In addition to Chapter 19 (Transparency):
(a) each Party shall establish or maintain appropriate mechanisms to respond to inquiries from interested persons concerning its regulations relating to the subject matter of this Chapter (7);
(b) at the time of adopting final regulations relating to the subject matter of this Chapter, each Party shall respond in writing, to the extent practicable, including upon request, to substantive comments received from interested persons with respect to the draft regulations; and
(c) to the extent possible, each Party shall provide a reasonable period of time between the publication of final regulations and the date on which they become effective.
Article 13.10. DOMESTIC REGULATIONS
1. Each Party shall ensure that all measures of general application to which this Chapter applies are administered in a reasonable, objective, and impartial manner. This obligation shall not apply to the measures covered by Annex I or to the measures covered by Annex II of each Party.
(a) Each Party shall maintain or establish as soon as practicable judicial, arbitral or administrative tribunals or procedures that permit, at the request of an affected service supplier of the other Party, the prompt review of administrative decisions affecting trade in services and, where warranted, the application of appropriate remedies. Where such procedures are not independent of the body responsible for the administrative decision in question, the Party shall ensure that they do in fact permit an objective and impartial review.
(b) The provisions of paragraph 2(a) shall not be construed to impose an obligation on any Party to establish such tribunals or procedures where this would be inconsistent with its constitutional structure or the nature of its legal system.
3. Where a Party requires authorization for the supply of a service, the competent authorities of that Party shall, within a reasonable period of time after the submission of an application that is considered complete under its national laws and regulations shall inform the applicant of the decision on its application. At the request of such applicant, the competent authorities of the Party shall, without undue delay, provide information concerning the status of the application. This obligation shall not apply to authorization requirements covered by Article 13.7.2.
4. In order to ensure that measures relating to qualification requirements and procedures, technical standards, and licensing requirements do not constitute unnecessary barriers to trade in services, each Party shall endeavor to ensure, in a manner appropriate to each individual sector, that such measures:
(a) are based on objective and transparent criteria, such as competence and ability to supply the service;
(b) are no more burdensome than necessary to ensure quality of service; and
(c) in the case of licensing procedures, do not in themselves constitute a restriction on the supply of the service.
5. In determining whether a Party is in conformity with its obligations under paragraph 4, account shall be taken of the provisions of Article VI.5(b) of the GATS.
6. The Parties recognize their mutual obligations relating to domestic regulation in Article VI.4 of the GATS and affirm their commitment to the development of any necessary disciplines under Article VI.4. To the extent that any such disciplines are adopted by WTO Members, the Parties shall jointly review them, as appropriate, with a view to determining whether this Article should be modified so that such results are incorporated into this Agreement.
Article 13.11. MUTUAL RECOGNITION
1. For the purposes of complying, in whole or in part, with its standards or criteria for the authorization or certification of service suppliers or the licensing of service suppliers, and subject to the requirements of paragraph 4, a Party may recognize education or experience obtained, requirements met, or licenses or certificates granted in a particular country. Such recognition, which may be effected through harmonization or otherwise, may be based on an agreement or arrangement with the country concerned or may be granted autonomously.
2. Where a Party recognizes, autonomously or by agreement or arrangement, education or experience obtained, qualifications completed, or licenses or certificates granted in the territory of a non-Party, nothing in Article 13.4 shall be construed to require the Party to grant such recognition to education or experience obtained, qualifications completed, or licenses or certificates granted in the territory of the other Party.
3. A Party that is a party to an existing or future agreement or arrangement of the type referred to in paragraph 1 shall provide adequate opportunities for the other Party, if the other Party is interested, to negotiate its accession to such agreement or arrangement or to negotiate comparable agreements or arrangements with it. Where a Party grants recognition autonomously, it shall provide adequate opportunities for the other Party to demonstrate that education, experience, licenses or certificates obtained or requirements fulfilled in the territory of that other Party should be subject to recognition.
4. No Party shall grant recognition in a manner that would constitute a means of discrimination between countries in the application of its standards or criteria for the authorization or certification of, or the licensing of service suppliers, or a disguised restriction on trade in services.
5. The Parties shall endeavor, to the extent possible, to encourage relevant professional services bodies in their territory to consider the use of standards and criteria in Annex 13-A in discussions for a potential agreement or arrangement referred to in paragraph 1.
Article 13.12. TRANSFERS AND PAYMENTS
1. Each Party shall permit all transfers and payments relating to the cross-border supply of services to be made freely and without delay into and out of its territory.
2. Each Party shall permit all transfers and payments related to the cross-border supply of services to be made in freely usable currency at the market rate of exchange prevailing on the date of the transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay the completion of the transfer or payment by the equitable, non-discriminatory and good faith application of its laws with respect to:
(a) bankruptcy, insolvency or protection of creditors' rights;
(b) issuance, trading or dealing in securities, futures, options or derivatives;
(c) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(d) criminal or penal offenses; or
(e) securing compliance with judicial or administrative orders or judgments.
Article 13.13. DENIAL OF BENEFITS
Subject to prior notification in accordance with Article 19.3 (Provision of Information) and consultations (8), a Party may deny the benefits of this Chapter to:
(a) a service supplier of the other Party if the service supplier is an enterprise owned or controlled by persons of a non-Party and the enterprise does not have substantial business activities in the territory of the other Party; or
(b) a service supplier of the other Party if the service supplier is an enterprise owned or controlled by persons of the denying Party and the enterprise does not have substantial business activities in the territory of the other Party.
Article 13.14. IMPLEMENTATION
The Parties shall consult annually, or as otherwise agreed, to review the implementation of this Chapter and to consider other matters of trade in services of mutual interest.
Article 13.15. DEFINITIONS
For purposes of this Chapter:
cross-border trade in services or cross-border supply of services means the supply of a service:
(a) from the territory of a Party into the territory of the other Party;
(b) in the territory of a Party, by a person of that Party, to a person of the other Party; or
(c) by a national of a Party into the territory of the other Party,
but does not include the supply of a service in the territory of a Party by a covered investment or by an investor of the other Party, as defined in Article 12.31 (Definitions);
enterprise means an enterprise as defined in Article 1.4 (Definitions of General Application) and a branch of an enterprise;
existing means in effect on the date of entry into force of this Agreement;
service supplier of a Party means a person of that Party that intends to supply or does supply a service (9);
specialized air services means any air services other than transportation, such as aerial mapping, aerial surveying, aerial photography, forest fire control, firefighting, aerial advertising, glider towing, parachute services, construction air services, log or log timber transport, scenic flights, training flights, aerial inspection and surveillance and spraying, and other air services related to agriculture and industry;
aircraft repair and maintenance services means activities performed on an aircraft or part of an aircraft while the aircraft is out of service and does not include so-called line maintenance;
computer reservation system (CRS) services means services provided by means of computerized systems containing information about air carrier schedules, available seats, fares and fare setting rules, and by means of which reservations can be made or tickets issued;
professional services means services which for their supply require higher education (10) or equivalent training or experience and the exercise of which is authorized or restricted by a Party, but does not include services supplied by persons engaged in a trade or to crew members of merchant ships and aircraft; and
sale or marketing of an air transport service means the opportunities for the air carrier concerned to freely sell and market its air transport services, and all aspects of marketing, such as market research, advertising and distribution, but does not include the pricing of air transport services or the applicable conditions.
Annex 13-A. PROFESSIONAL SERVICES
Development of Professional Services Standards
1. Each Party shall encourage the relevant bodies in its respective territory to develop mutually acceptable standards and criteria for the licensing and certification of professional service suppliers and to submit recommendations to the Commission on their mutual recognition.
2. The standards and criteria referred to in paragraph 1 may be developed in relation to the following:
(a) education: accreditation of educational institutions or academic programs;
(b) examinations: qualifying examinations for licensing, including alternative methods of evaluation, such as oral examinations and interviews;
(c) experience: length and nature of experience required to obtain a license;
(d) conduct and ethics: standards of professional conduct and the nature of disciplinary action in the event of contravention of those standards;
(e) professional development and recertification: continuing education and the corresponding requirements for maintaining professional certification;
(f) scope of practice: scope or limits of authorized activities; and
(g) local knowledge: requirements regarding knowledge of aspects such as laws, regulations, language, geography or local climate.
3. Upon receipt of a recommendation referred to in paragraph 1, the Commission shall review it within a reasonable time to decide whether it is consistent with this Agreement. Based on the Commission's review, each Party shall encourage its respective competent authorities to implement that recommendation, where appropriate, within a mutually agreed time period.
Temporary Licenses
4. For mutually agreed individual professional services, each Party shall encourage the competent bodies in its territory to develop procedures for the temporary licensing of professional service suppliers of the other Party.
Working Group on Professional Services
5. The Parties, by mutual agreement, may establish a Working Group on Professional Services, including representatives of the relevant professional bodies of each Party, to facilitate the activities listed in paragraphs 1 and 4.
6. The Working Group may consider the following matters:
(a) procedures to encourage the development of mutual recognition agreements or arrangements between their relevant professional bodies;
(b) developing workable procedures on standards for licensing and certification of professional service providers;
(c) identify priority professional services for their work; and
(d) other matters of mutual interest related to the provision of professional services.
7. Pursuant to paragraph 1, the Parties shall use their best efforts to establish the Working Group no later than one year after the entry into force of this Agreement.
8. Within one year of the establishment of the Working Group, the Working Group shall report to the Commission on its progress and future work plan.
Review
9. The Commission shall review the implementation of this Annex at least once every three years.
Chapter 14. FINANCIAL SERVICES
Article 14.1. SCOPE OF APPLICATION
1. This Chapter shall apply to measures adopted or maintained by a Party relating to:
(a) financial institutions of the other Party;
(b) investors of the other Party, and investments of such investors, in financial institutions in the territory of the Party; and
(c) cross-border trade in financial services.
2. Chapters 12 (Investment) and 13 (Cross-Border Trade in Services) shall apply to the measures described in paragraph 1 only to the extent that those Chapters or Articles of those Chapters are incorporated into this Chapter.
(a) Articles 12.8 (Measures Relating to Health, Safety, Environment, and Labor Rights), 12.11 (Expropriation and Compensation), 12.12 (Transfers), 12.13 (Denial of Benefits), 12.14 (Special Formalities and Information Requirements) and 13.13 (Denial of Benefits) are incorporated into and form an integral part of this Chapter.
(b) Section B (Investor-State Dispute Settlement) of Chapter 12 (Investment) is incorporated into and made part of this Chapter only for claims that a Party has breached Article 12.11 (Expropriation and Compensation), 12.12 (Transfers), and 12.13 (Denial of Benefits), or 12.14 (Special Formalities and Information Requirements), as incorporated into this Chapter.
(c) Article 13.12 (Transfers and Payments) is incorporated into and forms an integral part of this Chapter to the extent that cross-border trade in financial services is subject to the obligations under Article 14.5.
3. This Chapter does not apply to measures adopted or maintained by a Party relating to:
(a) activities or services that are part of a public retirement plan or statutory social security scheme; or
(b) activities or services carried out for the account or with the guarantee of the Party or with the use of financial resources of the Party, including its public entities,
provided, however, that this Chapter shall apply if a Party permits any of the activities or services referred to in paragraph (a) or (b) to be performed by its financial institutions in competition with a public entity or a financial institution.
Article 14.2. NATIONAL TREATMENT
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments in financial institutions in its territory.