2. For greater certainty, Chapter 10 (Investment Liberalisation) applies to measures adopted or maintained by a Party:
(a) relating to investors of a Party and covered enterprises of those investors in financial services which are not financial institutions; and
(b) other than measures relating to the supply of financial services, relating to investors of a Party or financial institutions of those investors.
3. This Chapter does not apply to measures adopted or maintained by a Party relating to:
(a) activities or services forming part of a public retirement plan or statutory system of social security; or
(b) activities or services conducted for the account or with the guarantee or using the financial resources of the Party, including its public entities,
except to the extent that a Party allows any of the activities or services referred to in subparagraphs (a) or (b) to be conducted by its financial institutions in competition with a public entity or financial institution.
4. This Chapter does not apply to government procurement of financial services.
5. Nothing in this Agreement applies to activities conducted by a central bank or monetary authority or by any other public entity in pursuit of monetary or exchange rate policies.
6. The provisions of Chapters 10 (Investment Liberalisation) and 11 (Cross-Border Trade in Services) apply to measures within the scope of this Chapter only to the extent that those provisions are incorporated into and made part of this Chapter.
7. Articles 10.11 (Formal Requirements), 10.13 (Denial of Benefits) and 11.9 (Denial of Benefits) are hereby incorporated and made part of this Chapter and apply, mutatis mutandis, to measures adopted or maintained by a Party relating to financial institutions of the other Party, investors of the other Party and financial institutions of those investors in the Party’s territory.
8. If an inconsistency arises between this Chapter and any other provision of the Agreement, this Chapter shall prevail to the extent of the inconsistency.
ARTICLE 18.3
National Treatment
1. Article 10.7 (National Treatment) is hereby incorporated into and made part of this Chapter and applies to investors and financial institutions of the other Party and their enterprises that are financial institutions.
2. The treatment accorded by a Party to its own investors and enterprises of its own investors pursuant to Article 10.7 (National Treatment) means treatment accorded to its own financial institutions and enterprises of its own investors that are financial institutions.
ARTICLE 18.4
Most-Favoured-Nation Treatment
1. Article 10.8 (Most-Favoured-Nation Treatment) is hereby incorporated into and made part of this Chapter and applies to measures adopted or maintained by a Party relating to investors and financial institutions of the other Party and their enterprises that are financial institutions.
2. The treatment accorded by a Party to investors of a third country and investments of investors of a third country pursuant to Article 10.8 (Most-Favoured-Nation Treatment) means treatment accorded to financial institutions of a third country and to investors of a third country and their enterprises that are financial institutions.
ARTICLE 18.5
Market Access
1. A Party shall not adopt or maintain with respect to a financial institution of the other Party or with respect to market access through establishment of a financial institution by an investor of the other Party, either on the basis of its entire territory or on the basis of a territorial subdivision, a measure that:
(a) imposes limitations on:
(i) the number of financial institutions, whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirement of an economic needs test;
(ii) the total value of financial service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(iii) the total number of financial service operations or the total quantity of financial services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test; or
(iv) the total number of natural persons that may be employed in a particular financial services sector or that a financial institution may employ and who are necessary for, and directly related to, the performance of a specific financial service in the form of numerical quotas or the requirement of an economic needs test; or
(b) restricts or requires specific types of legal entity or joint venture through which a financial institution may perform an economic activity.
2. For greater certainty, this Article shall not be construed as preventing a Party from requiring a financial institution to supply certain financial services through separate legal entities if, under the law of that Party, the range of financial services supplied by the financial institution may not be supplied through a single entity.
ARTICLE 18.6
Senior Management and Board of Directors
Article 10.10 (Senior Management and Board of Directors) is hereby incorporated into and made a part of this Chapter and applies to measures adopted or maintained by Party relating to financial institutions.
ARTICLE 18.7
Cross-Border Trade in Financial Services
1. Articles 11.4 (Market Access) and 11.6 (National Treatment), are hereby incorporated into and made part of this Chapter and apply to measures adopted or maintained by a Party relating to cross-border financial service suppliers of the other Party supplying the financial services specified in Annex 18-A (Cross-Border Trade in Financial Services).
2. The treatment accorded by a Party to its own services and service suppliers pursuant to Article 11.6 (National Treatment) means treatment accorded to its own financial services and financial service suppliers.
3. The measures which a Party shall not adopt or maintain with respect to services and service suppliers of the other Party pursuant to Article 11.4 (Market Access) means measures relating to cross-border financial service suppliers of the other Party supplying financial services.
4. Article 11.7 (Most-Favoured-Nation Treatment) is hereby incorporated into and made part of this Chapter and applies to measures adopted or maintained by a Party regarding cross-border financial service suppliers of the other Party.
5. The treatment accorded by a Party to services and service suppliers of a third country pursuant to Article 11.7 (Most-Favoured-Nation Treatment) means treatment accorded to financial services of a third country and financial service suppliers of a third country.
6. Article 11.5 (Local Presence) is hereby incorporated into and made part of this Chapter and applies to cross-border financial service suppliers of the other Party supplying the financial services specified in Annex 18-A (Cross-Border Trade in Financial Services).
7. 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 its territory. This obligation does not require a Party to permit such suppliers to do business or solicit in its territory. A Party may define "doing business" and "solicitation" for the purposes of this obligation provided that those definitions are not inconsistent with paragraph 1.
8. This Article shall not be construed as preventing a Party from adopting or maintaining a measure that prescribes formal requirements in connection with the supply of a cross-border financial service, such as the registration or authorisation of cross-border financial service suppliers and of financial instruments provided that those requirements are not applied in a discriminatory manner.
ARTICLE 18.8
Performance Requirements
1. The Parties shall jointly determine disciplines on performance requirements such as those set out in Article 10.9 (Performance Requirements) that shall apply to enterprises that are financial institutions.
2. Within 180 days following the joint determination of the performance requirement disciplines pursuant to paragraph 1, the Trade Council shall modify by a decision paragraph 1 in order to integrate those disciplines into this Article and may modify, as appropriate, the reservations and non-conforming measures of each Party in Annex VI (Financial Services).
3. Article 18.12 applies to measures listed with respect to the performance requirement disciplines referred to in paragraph 1.
ARTICLE 18.9
Financial Services New to the Territory of a Party
1. A Party shall permit a financial institution of the other Party to supply any new financial service that the former Party would permit to be supplied by its own financial institutions in accordance with its domestic law in like situations without adopting a law or modifying an existing law.
2. Notwithstanding Article 18.8(1) in conjunction with Article 11.4 (Market Access), a Party may determine the institutional and legal form through which the new financial service may be supplied and may require authorisation for the supply of the service. If that authorisation is required, a decision shall be made within a reasonable time and the authorisation may only be refused for prudential reasons.
ARTICLE 18.10
Review Clause on Data Flows
The Parties shall reassess within three years of the date of entry into force of this Agreement the need for inclusion of provisions on the free flow of data for conducting the activities that are within the scope of this Chapter.
ARTICLE 18.11
Treatment of Information
Nothing in this Agreement shall be construed as requiring a Party to disclose information relating to the affairs and accounts of individual customers or any confidential or proprietary information in the possession of public entities.
ARTICLE 18.12
Reservations and Non-Conforming Measures
1. Articles 18.3 to 18.7 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party at the level of:
(i) the European Union, as set out in Appendix VI-A (List of the EU) to Annex VI (Financial Services);
(ii) a central government, as set out by that Party in Section A of the List in its Appendix to Annex VI (Financial Services);
(iii) a regional government, as set out by that Party in Section A of the List in its Appendix to Annex VI (Financial Services); or
(iv) a local government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure as it existed:
(i) immediately before the amendment, with Article 18.3, 18.4, 18.5, or 18.6; or
(ii) on the date of entry into force of the Agreement, with Article 18.7.
2. Articles 18.3 to 18.7 do not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors or activities, as set out by that Party in Section B of the List of its Appendix to Annex VI (Financial Services).
3. A reservation of a Party to Articles 10.6 (Market Access), 10.7 (National Treatment), 10.8 (Most-Favoured-Nation Treatment), 10.10 (Senior Management and Board of Directors), 11.4 (Market Access), 11.5 (Local Presence), 11.6 (National Treatment) or 11.7 (Most‑Favoured‑Nation Treatment) listed in its Appendix to Annexes I or II also constitutes a reservation to Articles 18.3, 18.4, 18.5, 18.6 or 18.7, as the case may be, to the extent that the measure, sector, subsector or activity set out in the reservation is within the scope of this Chapter.
4. A Party shall not adopt any measure covered by a reservation listed in its respective Appendix to Annex II (Future Measures) that requires directly or indirectly an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of a covered enterprise existing at the time the measure becomes effective.
ARTICLE 18.13
Prudential Carve-Out
1. Nothing in this Agreement shall be construed as preventing a Party from adopting or maintaining measures for prudential reasons, 6 including to:
(a) protect investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier; or
(b) ensure the integrity and stability of the financial system of that Party.
2. Where such measures do not conform to the other provisions of this Agreement, they shall not be used as a means of avoiding the commitments or obligations of a Party under this Agreement.
ARTICLE 18.14
Recognition
1. A Party may recognise prudential measures of the other Party or a third country in determining how the measures of the former Party relating to financial services shall be applied. Such recognition may be achieved either autonomously, through harmonisation or based on an agreement or other arrangement.
2. If a Party recognises a prudential measure of a third country in accordance with paragraph 1, that Party shall afford adequate opportunity to the other Party to demonstrate that the circumstances in which the Party recognised the prudential measure of the third country exist in the other Party and that under those circumstances there are or would be equivalent regulation, oversight and implementation in the other Party as well as, if appropriate, procedures for exchanging information between the Parties.
3. Nothing in this Agreement shall be construed as requiring a Party to recognise a prudential measure of the other Party.
ARTICLE 18.15
International Standards
Each Party shall endeavour to ensure that internationally agreed standards for regulation and supervision in the financial services sector and for the fight against avoidance and evasion of taxes are implemented and applied in its territory. Those internationally agreed standards include, among others, those adopted by the G20, the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS), the International Association of Insurance Supervisors (IAIS), the International Organisation of Securities Commissions (IOSCO), the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes of the OECD.
ARTICLE 18.16
Self-Regulatory Organisations
If a Party requires a financial institution or a cross-border financial service supplier of the other Party to be a member of, participate in, or have access to, a self-regulatory organisation in order to provide a financial service in or into its territory, the former Party shall ensure that the self‑regulatory organisation complies with the obligations set out in Articles 18.3, 18.4 and 18.7.
ARTICLE 18.17
Payment and Clearing Systems
Each Party shall grant to financial institutions of the other Party established in its territory access to payment and clearing systems operated by public entities, and to official funding and refinancing facilities available in the normal course of ordinary business under terms and conditions that accord national treatment. This Article does not confer access to the Party's lender of last resort facilities.
ARTICLE 18.18
Domestic Regulation and Transparency
1. Chapters 13 (Domestic Regulation) and 28 (Good Regulatory Practices) do not apply to measures adopted or maintained by a Party relating to the scope of this Chapter.
2. Each Party shall ensure that all measures of general application to which this Chapter applies are administered in a reasonable, objective and impartial manner.
3. For the purposes of paragraph 2, each Party shall, to the extent practicable and in a manner consistent with its law:
(a) publish in advance its proposed laws and regulations related to matters within the scope of this Chapter, or publish in advance documents that provide sufficient details about such potential new laws and regulations to allow interested persons and the other Party to assess whether and how their interests could be significantly affected;
(b) provide interested persons and the other Party a reasonable opportunity to comment on the proposed measures or documents referred to in subparagraph (a); and
(c) consider comments received in accordance with subparagraph (b).
4. If a Party requires an authorisation for the supply of a financial service, the competent authorities of that Party shall:
(a) permit an applicant, to the extent practicable, to submit an application at any time;
(b) allow a reasonable period of time for the submission of an application if specific time periods for applications exist;
(c) provide to service suppliers and persons seeking to supply a service the information necessary to comply with the requirements and procedures for obtaining, maintaining, amending and renewing such authorisation;
(d) provide, to the extent practicable, an indicative timeframe for processing of an application;
(e) endeavour to accept applications in electronic format;
(f) accept copies of documents which are authenticated in accordance with the law of the Party, in place of original documents, unless the presentation of original documents is required for protecting the integrity of the authorisation process;
(g) provide, at the request of the applicant, without undue delay information concerning the status of the application;
(h) if an application is considered complete for processing under the law of the Party, ensure that the processing of an application is finalised, and that the applicant is informed of the decision within a reasonable period of time after the submission of the application, to the extent possible in writing; 7
(i) if an application is considered incomplete for processing under the law of the Party, within a reasonable period of time and to the extent practicable:
(i) inform the applicant that the application is incomplete;
(ii) provide, at the request of the applicant, guidance on why the application is considered incomplete;
(iii) provide the applicant with the opportunity 8 to submit the additional information that is required to complete the application; and
(iv) if none of the above is practicable, and the application is rejected due to incompleteness, ensure that the applicant is informed within a reasonable period of time;
(j) if an application is rejected, inform the applicant, to the extent practicable, either on its own initiative or on the request of the applicant, of the reasons for rejection and, if applicable, the procedures for resubmission of an application;
(k) ensure that the authorisation fees 9 charged by the competent authority are reasonable, are transparent and do not in themselves restrict the supply of the relevant service or the pursuit of any other economic activity; and
(l) ensure that the authorisation, once granted, enters into effect without undue delay subject to the applicable terms and conditions.
ARTICLE 18.19
Sub-Committee on Financial Services
1. The Sub-Committee on Financial Services established by Article 33.4.1(i) (Sub-Committees and Other Bodies) shall meet annually, unless otherwise agreed, to:
(a) monitor the implementation and operation of this Chapter;
(b) consider matters regarding financial services that are referred to it by a Party;
(c) provide a forum for dialogue between the Parties on the regulation of the financial services sector with a view to improving mutual knowledge of their respective regulatory systems and to cooperate in the development of international standards;
and
(d) to assess the functioning of this Agreement as it applies to financial services.
2. Further to paragraph 1 of Article 33.4 (Sub-Committees and other Bodies), the composition of the Sub-Committee on Financial Services shall include financial services experts and representatives of authorities in charge of financial services policy. For Mexico, the authority responsible for financial services policy is the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) or its successor.
3. On request of either Party, the Sub-Committee on Financial Services shall discuss the development of appropriate guidelines for the interpretation of this Chapter. The Trade Council may adopt such guidelines by means of a recommendation.
ARTICLE 18.20
Consultations
1. A Party may request, in writing, consultations with the other Party regarding any matter arising under this or related Agreements that affects financial services. The other Party shall accord sympathetic consideration to that request. The consulting Parties shall report the results of their consultations to the Sub-Committee on Financial Services.
2. Each Party shall ensure that its delegation in the consultations includes officials with the relevant expertise in financial services or financial institutions covered by this Chapter. For Mexico, the officials of the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) or its successor fulfil this requirement.
3. Nothing in this Article shall be construed as requiring a Party to derogate from its law regarding the sharing of information among financial authorities or the requirements of an agreement or arrangement between financial authorities of the Parties, or require financial authorities to take any action that would interfere with specific regulatory, supervisory, administrative or enforcement matters.
4. Nothing in this Article shall be construed as preventing a Party from requiring information for supervisory purposes concerning a financial institution, or a cross-border financial service supplier, located in the territory of other Party. That Party may approach the financial authority of the other Party to seek the information.
ARTICLE 18.21
Dispute Settlement
1. Chapter 31 (Dispute Settlement), including Annexes 31-A (Rules of Procedure) and 31‑B (Code of Conduct), applies as modified by this Article to the settlement of disputes concerning the application and interpretation of the provisions of this Chapter.
2. In addition to the requirements set out in Article 31.9 (Requirements for Panellists), panellists shall have expertise or experience in financial services law or practice, which may include the regulation of financial institutions, unless the Parties agree otherwise.
3. The Trade Committee shall, no later than six months after the date of entry into force of this Agreement, adopt a list of at least 15 individuals, fulfilling the requirements set out in paragraph 2, who are willing and able to serve as panellists. The list shall be composed of three sub-lists:
(a) a sub-list of individuals of the European Union;
(b) a sub-list of individuals of Mexico; and
(c) a sub-list of individuals who shall serve as chairperson to the panel.
4. For the purposes of this Chapter, the sub-lists referred to in paragraph 3 shall, after adoption, replace the sub-lists set out in paragraph 1 of Article 31.8 (Lists of Panellists).
5. In any dispute where a panel finds a measure to be inconsistent with the obligations of this Agreement and the measure affects:
(a) the financial services sector and any other sector, the complaining Party may suspend benefits in the financial services sector that have an effect equivalent to the effect of the measure in the financial services sector of the other Party; or
(b) only a sector other than the financial services sector, the complaining Party may not suspend benefits in the financial services sector.
Chapter 19. DIGITAL TRADE
ARTICLE 19.1
Definitions
For the purposes of this Chapter: