(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party or a person of the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise.
2. Subject to Article 19.5 (Consultations), a Party may deny the benefits of this Chapter to a service supplier of the other Party if the service is being supplied by an enterprise that has no substantial business activities in the territory of the other Party and persons of a non-Party, or of the denying Party, own or control the enterprise.
Article 10.12. Implementation
The Parties shall meet annually, and as otherwise agreed, on any issues or questions of mutual interest arising from the implementation of this Chapter.
Article 10.13. 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 one Party into the territory of the other Party;
(b) in the territory of one Party by a person of that Party to a person of the other Party; or
(c) by a national of a Party in the territory of the other Party;
but does not include the supply of a service in the territory of a Party by a BIT investment;
enterprise means an enterprise as defined in Article 1.3 (Definitions), and a branch of an enterprise;
enterprise of a Party means an enterprise organized or constituted under the laws of a Party; and a branch located in the territory of a Party and carrying out business activities there;
professional services means services, the supply of which requires specialized postsecondary education, or equivalent training or experience, and for which the right to practice is granted or restricted by a Party, but does not include services supplied by trades-persons or vessel and aircraft crew members;
service supplier means a person that seeks to supply or supplies a service (3); and
specialty air services means any non-transportation air services, such as aerial firefighting, sightseeing, spraying, surveying, mapping, photography, parachute jumping, glider towing, and helicopter-lift for logging and construction, and other airborne agricultural, industrial, and inspection services.
ANNEX 10-A. Express delivery services
1. For purposes of this Agreement, express delivery services means the collection, transport, and delivery of documents, printed matter, parcels, goods, or other items on an expedited basis, while tracking and maintaining control of these items throughout the supply of the service. Express delivery services do not include (1) air transport services, (2) services supplied in the exercise of government authority, and (3) maritime transport services. (4)
2. The Parties confirm their desire to maintain at least the level of open market access for express delivery services existing on the date this Agreement is signed. If a Party considers that the other Party is not maintaining such level of access, it may request consultations. The other Party shall afford adequate opportunity for consultations and, to the extent possible, shall provide information in response to inquiries regarding the level of access and any related matter.
3. Each Party shall ensure that, where a Party's monopoly supplier of postal services competes, either directly or through an affiliated company, in the supply of express delivery services outside the scope of its monopoly rights, such supplier does not abuse its monopoly position to act in its territory in a manner inconsistent with the Party's obligations under Articles 10.2, 10.3, or 10.4. The Parties also reaffirm their obligations under Article VIII of GATS.
4. Each Party confirms that it has no intention to direct revenues derived from the supply of postal monopoly services to confer an advantage to its own or any other competitive supplier of express delivery services.
ANNEX 10-B. Professional services
Development of Professional Standards
1. The Parties shall encourage the relevant bodies in their respective territories to develop mutually acceptable standards and criteria for licensing and certification of professional service suppliers and to provide recommendations on mutual recognition to the Joint Committee established under Chapter Eighteen (Administration of the Agreement).
2. The standards and criteria referred to in paragraph 1 may be developed with regard to the following matters:
(a) education - accreditation of schools or academic programs;
(b) examinations - qualifying examinations for licensing;
(c) experience - length and nature of experience required for licensing;
(d) conduct and ethics - standards of professional conduct and the nature of disciplinary action for non-conformity with those standards;
(e) professional development and re-certification - continuing education and ongoing requirements to maintain professional certification;
(f) scope of practice - extent of, or limitations on, permissible activities;
(g) local knowledge - requirements for knowledge of such matters as local laws, regulations, language, geography, or climate; and
(h) consumer protection - including alternatives to residency requirements, such as bonding, professional liability insurance, and client restitution funds, to provide for the protection of consumers.
3. On receipt of a recommendation referred to in paragraph 1, the Joint Committee shall review the recommendation within a reasonable period to determine whether it is consistent with this Agreement. Based on the Joint Committee's review, each Party shall encourage its respective competent authorities, where appropriate, to implement the recommendation within a mutually agreed time.
Temporary Licensing
4. Where the Parties agree, each Party shall encourage the relevant bodies in its territory to develop procedures for the temporary licensing of professional service suppliers of the other Party.
Review
5. The Joint Committee shall, at least once every three years, review the implementation of this Annex.
Chapter Eleven. Financial Services
Article 11.1. Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party relating to:
(a) financial institutions of the other Party; and
(b) cross-border trade in financial services.
2. Chapter Ten (Cross-Border Trade in Services) applies to measures described in Paragraph 1 only to the extent that such Chapter or an Article of such Chapter is incorporated into this Chapter.
(a) Article 10.11 (Denial of Benefits) is hereby incorporated into and made a part of this Chapter.
(b) Article 10.10 (Transfers and Payments) is incorporated into and made a part of this Chapter to the extent that cross-border trade in financial services is subject to obligations pursuant to Article 11.5.
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 that this Chapter shall apply if 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 a financial institution.
Article 11.2. National Treatment
1. Each Party shall accord to financial institutions of the other Party treatment no less favorable than that it accords to its own financial institutions, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions.
2. For purposes of the national treatment obligations in Article 11.5.1, a Party shall accord to cross-border financial service suppliers of the other Party treatment no less favorable than that it accords to its own financial service suppliers, in like circumstances, with respect to the supply of the relevant service.
Article 11.3. Most-favored-nation Treatment
1. Each Party shall accord to financial institutions of the other Party and cross-border financial service suppliers of the other Party treatment no less favorable than that it accords to the financial institutions and cross-border financial service suppliers of a non-Party, in like circumstances.
2. A Party may recognize prudential measures of a non-Party in the application of measures covered by this Chapter. Such recognition may be:
(a) accorded unilaterally;
(b) achieved through harmonization or other means; or
(c) based upon an agreement or arrangement with the non-Party.
3. A Party according recognition of prudential measures under paragraph 2 shall provide adequate opportunity to the other Party to demonstrate that circumstances exist in which there are or would be equivalent regulation, oversight, implementation of regulation, and, if appropriate, procedures concerning the sharing of information between the Parties.
4. Where a Party accords recognition of prudential measures under paragraph 2(c) and the circumstances set out in paragraph 3 exist, the Party shall provide adequate opportunity to the other Party to negotiate accession to the agreement or arrangement, or to negotiate a comparable agreement or arrangement.
Article 11.4. Market Access for Financial Institutions
Neither Party may adopt or maintain, with respect to financial institutions of the other Party or investors of the other Party seeking to establish such institutions, either on the basis of a regional subdivision or on the basis of its entire territory, measures that:
(a) impose 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 on 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; (1) or
(iv) the total number of natural persons that may be employed in a particular financial service sector or that a financial institution may employ and who are necessary for, and directly related to, the supply of a specific financial service in the form of a numerical quota or the requirement of an economic needs test; or
(b) restrict or require specific types of legal entity or joint venture through which a financial institution may supply a service.
Article 11.5. Cross-border Trade
1. Each Party shall permit, under terms and conditions that accord national treatment, cross-border financial service suppliers of the other Party to supply the services specified in Annex 11-A.
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 the other Party. This obligation does not require a Party to permit such suppliers to do business or solicit in its territory. Each Party may define "doing business" and "solicitation" for purposes of this obligation, provided that those definitions are not inconsistent with paragraph 1.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration of cross-border financial service suppliers of the other Party and of financial instruments.
Article 11.6. New Financial Services (2)
1. Each Party shall permit a financial institution of the other Party, on request or notification to the relevant regulator, where required, to supply any new financial service that the first Party would permit its own financial institutions, in like circumstances, to supply under its domestic law, provided that the introduction of the new financial service does not require the Party to adopt a new law or modify an existing law.
2. A Party may determine the institutional and juridical form through which the new financial service may be supplied and may require authorization for the supply of the service. Where a Party would permit the new financial service and authorization is required, the decision shall be made within a reasonable time and authorization may only be refused for prudential reasons.
Article 11.7. Treatment of Certain Information
Article 20.4 (Disclosure of Information) does not apply to this Chapter. Nothing in this Chapter shall be construed to require a Party to furnish or allow access to:
(a) information related to the financial affairs and accounts of individual customers of financial institutions or cross-border financial service suppliers; or
(b) any confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice legitimate commercial interests of particular enterprises.
Article 11.8. Senior Management and Boards of Directors
1. Neither Party may require financial institutions of the other Party to engage individuals of any particular nationality as senior managerial or other essential personnel.
2. Neither Party may require that more than a minority of the board of directors of a financial institution of the other Party be composed of nationals of the Party, persons residing in the territory of the Party, or a combination thereof.
Article 11.9. Non-conforming Measures
1. Articles 11.2 through 11.5 and 11.8 do 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 III;
(ii) a regional level of government, as set out by that Party in its Schedule to Annex III; or
(iii) a local level of 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 immediately before the amendment, with Articles 11.2, 11.3, 11.4, or 11.8. (3)
2. Annex 11-B sets out certain specific commitments by each Party.
3. A non-conforming measure set out in a Party's Schedule to Annex I or II as a measure to which Article 10.2 (National Treatment), 10.3 (Most-Favored-Nation Treatment), or 10.4 (Market Access) does not apply shall be treated as a nonconforming measure to which Article 11.2, 11.3, or 11.4, as the case may be, does not apply, to the extent that the measure, sector, sub-sector, or activity set out in the Schedule of non-conforming measures is covered by this Chapter.
Article 11.10. Exceptions
1. Notwithstanding any other provision of this Chapter or Chapters Twelve (Telecommunications) or Thirteen (Electronic Commerce), including specifically Article 12.16 (Relationship to Other Chapters), and in addition Article 10.1.3 (Scope and Coverage) with respect to the supply of financial services in the territory of a Party, neither Party shall be prevented from adopting or maintaining measures for prudential reasons, (4) including for the protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial institution or cross-border financial service supplier, or to ensure the integrity and stability of the financial system. Where such measures do not conform with the provisions of this Agreement referred to in this paragraph, they shall not be used as a means of avoiding the Party's commitments or obligations under such provisions.
2. Nothing in this Chapter or Chapters Twelve (Telecommunications) or Thirteen (Electronic Commerce), including specifically Article 12.16 (Relationship to Other Chapters), and in addition Article 10.1.3 (Scope and Coverage) with respect to the supply of financial services in the territory of a Party, applies to nondiscriminatory measures of general application taken by any public entity in pursuit of monetary and related credit policies or exchange rate policies. This paragraph shall not affect a Party's obligations under Article 10.10 (Transfers and Payments).
3. Notwithstanding Article 10.10 (Transfers and Payments), as incorporated into this Chapter, a Party may prevent or limit transfers by a financial institution or cross-border financial service supplier to, or for the benefit of, an affiliate of or person related to such institution or supplier, through the equitable, non-discriminatory, and good faith application of measures relating to maintenance of the safety, soundness, integrity, or financial responsibility of financial institutions or cross-border financial service suppliers. This paragraph does not prejudice any other provision of this Agreement that permits a Party to restrict transfers.
4. For greater certainty, nothing in this Chapter shall be construed to prevent the adoption or enforcement by a Party of measures necessary to secure compliance with laws or regulations that are not inconsistent with this Chapter, including those relating to the prevention of deceptive and fraudulent practices or to deal with the effects of a default on financial services contracts, subject to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on financial institutions of the other Party or cross-border trade in financial services, as covered by this Chapter.
Article 11.11. Transparency
1. The Parties recognize that transparent regulations and policies governing the activities of financial institutions and cross-border financial service suppliers are important in facilitating both access of foreign financial institutions and foreign cross-border financial service suppliers to, and their operations in, each other's market. Each Party commits to promote regulatory transparency in financial services.
2. In lieu of Article 17.1 (Publication), each Party shall, to the extent practicable,
(a) publish in advance any regulations of general application relating to the subject matter of this Chapter that it proposes to adopt; and
(b) provide interested persons and the other Party a reasonable opportunity to comment on such proposed regulations.
3. At the time it adopts final regulations of general application relating to the subject matter of this Chapter, each Party should, to the extent practicable, address in writing substantive comments received from interested persons with respect to the proposed regulations.
4. To the extent practicable, each Party should allow reasonable time between publication of such final regulations and their effective date.
5. Each Party shall ensure that the rules of general application adopted or maintained by self-regulatory organizations of the Party are promptly published or otherwise made available in such a manner as to enable interested persons to become acquainted with them.
6. Each Party shall maintain or establish appropriate mechanisms for responding to inquiries from interested persons regarding measures of general application relating to the subject matter of this Chapter.
7. Each Party's regulatory authorities shall make available to interested persons their requirements, including any documentation required, for completing applications relating to the supply of financial services.
8. On the request of an applicant, a Party's regulatory authority shall inform the applicant of the status of its application. If the authority requires additional information from the applicant, it shall notify the applicant without undue delay.
9. A Party's regulatory authority shall make an administrative decision on a completed application of a financial institution or a cross-border financial service supplier of the other Party relating to the supply of a financial service within 120 days, and shall promptly notify the applicant of the decision. An application shall not be considered complete until all relevant hearings are held and all necessary information is received. Where it is not practicable for a decision to be made within 120 days, the regulatory authority shall notify the applicant without undue delay and shall endeavor to make the decision within a reasonable time thereafter.
Article 11.12. Self-regulatory Organizations
Where 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 organization to provide a financial service in or into its territory, the Party shall ensure observance of the obligations of Articles 11.2 and 11.3 by such self-regulatory organization.
Article 11.13. Payment and Clearing Systems
Under terms and conditions that accord national treatment, each Party shall grant financial institutions of the other Party 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. This paragraph is not intended to confer access to the Party's lender of last resort facilities.
Article 11.14. Domestic Regulation
Each Party shall ensure that all measures of general application to which this Chapter applies are administered in a reasonable, objective, and impartial manner.
Article 11.15. Expedited Availability of Insurance Services
The Parties recognize the importance of maintaining and developing regulatory procedures to expedite the offering of insurance services by licensed suppliers.
Article 11.16. Denial of Benefits
1. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of such other Party and to a financial institution of the other Party that is a BIT investment of that investor if persons of a non-Party own or control the enterprise and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party or a person of the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or the financial institution.
2. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of such other Party and to a financial institution of the other Party that is a BIT investment of that investor if the enterprise has no substantial business activities in the territory of the other Party and persons of a non-Party, or of the denying Party, own or control the enterprise.
Article 11.17. Information Requirements
Notwithstanding Articles 11.2 and 11.3, a Party may require a financial institution of the other Party to provide information concerning the financial institution solely for informational or statistical purposes. The Party shall protect any business information that is confidential from any disclosure that would prejudice the competitive position of the financial institution. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.
Article 11.18. Financial Services Subcommittee
1. The Parties hereby establish a Financial Services Subcommittee. The principal representative of each Party shall be an official of the Party's authority responsible for financial services set out in Annex 11-D.
2. The Subcommittee shall: (a) supervise the implementation of this Chapter and its further elaboration; and (b) consider issues regarding financial services that are referred to it by a Party.
3. The Subcommittee shall meet annually, or as otherwise agreed, to assess the functioning of this Agreement as it applies to financial services. The Subcommittee shall inform the Joint Committee established under Chapter Eighteen (Administration) of the results of each meeting.
Article 11.19. Consultations
1. A Party may request consultations with the other Party regarding any matter arising under this Agreement that affects financial services. The other Party shall give sympathetic consideration to the request. The Parties shall report the results of their consultations to the Financial Services Subcommittee.
2. Consultations under this Article shall include officials of the authorities specified in Annex 11-D.
Article 11.20. Dispute Settlement
1. Chapter Nineteen (Dispute Settlement) applies as modified by this Article to the settlement of disputes arising under this Chapter.
2. When a Party claims that a dispute arises under this Chapter, Article 19.7 (Establishment of Panel) shall apply, except that:
(a) where the Parties so agree, the panel shall be composed entirely of panelists meeting the qualifications in paragraph 3;
(b) in any other case, (i) each Party may select panelists meeting the qualifications set out in paragraph 3 or Article 19.7.4 (Establishment of Panel), and (ii) if the Party complained against invokes Article 11.10, the chair of the panel shall meet the qualifications set out in paragraph 3, unless the Parties agree otherwise.
3. Financial services panelists shall:
(a) have expertise or experience in financial services law or practice, which may include the regulation of financial institutions;
(b) be chosen strictly on the basis of objectivity, reliability, and sound judgment; and
(c) meet the qualifications set out in Article 19.7.4(b) and (c) (Establishment of Panel).
4. Notwithstanding Article 19.11 (Non-Implementation), where a panel finds a measure to be inconsistent with this Agreement and the measure under dispute affects:
(a) only a sector other than the financial services sector, the complaining Party may not suspend benefits in the financial services sector; or