(a) to require any Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests;
(b) to prevent any Party from taking any actions that it considers necessary for the protection of its essential security interests
(i) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services and technology undertaken directly or indirectly for the purpose of supplying a military or other security establishment,
(ii) taken in time of war or other emergency in international relations, or
(iii) relating to the implementation of national policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; or
(c) to prevent any Party from taking action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
Article 2103. Taxation
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of any Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency.
3. Notwithstanding paragraph 2:
(a) Article 301 (Market Access - National Treatment) and such other provisions of this Agreement as are necessary to give effect to that Article shall apply to taxation measures to the same extent as does Article III of the GATT; and
(b) Article 314 (Market Access - Export Taxes) and Article 604 (Energy Export Taxes) shall apply to taxation measures.
4. Subject to paragraph 2:
(a) Article 1202 (Cross-Border Trade in Services - National Treatment) and Article 1405 (Financial Services - National Treatment) shall apply to taxation measures on income, capital gains or on the taxable capital of corporations, and to those taxes listed in paragraph 1 of Annex 2103.4, that relate to the purchase or consumption of particular services, and
(b) Articles 1102 and 1103 (Investment - National Treatment and Most-Favored Nation Treatment), Articles 1202 and 1203 (Cross-Border Trade in Services - National Treatment and Most-Favored Nation Treatment) and Articles 1405 and 1406 (Financial Services - National Treatment and Most-Favored Nation Treatment) shall apply to all taxation measures, other than those on income, capital gains or on the taxable capital of corporations, taxes on estates, inheritances, gifts and generation-skipping transfers and those taxes listed in paragraph 1 of Annex 2103.4,
except that nothing in those Articles shall apply
(c) any most-favored-nation obligation with respect to an advantage accorded by a Party pursuant to a tax convention,
(d) to a non-conforming provision of any existing taxation measure,
(e) to the continuation or prompt renewal of a non-conforming provision of any existing taxation measure,
(f) to an amendment to a non-conforming provision of any existing taxation measure to the extent that the amendment does not decrease its conformity, at the time of the amendment, with any of those Articles,
(g) to any new taxation measure aimed at ensuring the equitable and effective imposition or collection of taxes and that does not arbitrarily discriminate between persons, goods or services of the Parties or arbitrarily nullify or impair benefits accorded under those Articles, in the sense of Annex 2004, or
(h) to the measures listed in paragraph 2 of Annex 2103.4.
5. Subject to paragraph 2 and without prejudice to the rights and obligations of the Parties under paragraph 3, Article 1106(3), (4) and (5) (investment - Performance Requirements) shall apply to taxation measures.
6. Article 1110 (Expropriation and Compensation) shall apply to taxation measures except that no investor may invoke that Article as the basis for a claim under Article 1116 (Claim by an Investor of a Party on its Own Behalf) or 1117 (Claim by an Investor of a Party on Behalf of an Enterprise), where it has been determined pursuant to this paragraph that the measure is not an expropriation. The investor shall refer the issue of whether the measure is not an expropriation for a determination to the appropriate competent authorities set out in Annex 2103.6 at the time that it gives notice under Article 1119 (Notice of Intent to Submit a Claim to Arbitration). If the competent authorities do not agree to consider the issue or, having agreed to consider it, fail to agree that the measure is not an expropriation within a period of six months of such referral, the investor may submit its claim to arbitration under Article 1120 (Submission of a Claim to Arbitration).
Article 2104. Balance of Payments
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures that restrict transfers where the Party experiences serious balance of payments difficulties, or the threat thereof, and such restrictions are consistent with paragraphs 2 through 4 and are:
(a) consistent with paragraph 5 to the extent they are imposed on transfers other than Cross-Border trade in financial services; or
(b) consistent with paragraphs 6 and 7 to the extent they are imposed on Cross- Border trade in financial services.
General Rules
2. As soon as practicable after a Party imposes a measure under this Article, the Party shall:
(a) submit any current account exchange restrictions to the IMF for review under Article VIII of the Articles of Agreement of the IMF;
(b) enter into good faith consultations with the IMF on economic adjustment measures to address the fundamental underlying economic problems causing the difficulties; and
(c) adopt or maintain economic policies consistent with such consultations.
3. A measure adopted or maintained under this Article shall:
(a) avoid unnecessary damage to the commercial, economic or financial interests of another Party;
(b) not be more burdensome than necessary to deal with the balance of payments difficulties or threat thereof;
(c) be temporary and be phased out progressively as the balance of payments situation improves;
(d) be consistent with paragraph 2(c) and with the Articles of Agreement of the IMF; and
(e) be applied on a national treatment or most-favored-nation treatment basis, whichever is better.
4. A Party may adopt or maintain a measure under this Article that gives priority to services that are essential to its economic program, provided that a Party may not impose a measure for the purpose of protecting a specific industry or sector unless the measure is consistent with paragraph 2(c) and with Article VII(3) of the Articles of Agreement of the IMF.
Restrictions on Transfers Other than Cross-Border Trade in Financial Services
5. Restrictions imposed on transfers, other than on cross border trade in financial services:
(a) where imposed on payments for current international transactions, shall be consistent with Article VIII(3) of the Articles of Agreement of the IMF;
(b) where imposed on international capital transactions, shall be consistent with Article VI of the Articles of Agreement of the IMF and be imposed only in conjunction with measures imposed on current international transactions under paragraph 2(a);
(c) where imposed on transfers covered by Article 1109 (Investment - Transfers) and transfers related to trade in goods, may not substantially impede transfers from being made in a freely usable currency at a market rate of exchange; and
(d) may not take the form of tariff surcharges, quotas, licenses or similar measures.
Restrictions on Cross-Border Trade in Financial Services
6. A Party imposing a restriction on Cross-Border trade in financial services: (a) may not impose more than one measure on any transfer, unless consistent with paragraph 2(c) and with Article VIII(3) of the Articles of Agreement of the IMF; and
(b) shall promptly notify and consult with the other Parties to assess the balance of payments situation of the Party and the measures it has adopted, taking into account among other elements
(i) the nature and extent of the balance of payments difficulties of the Party,
(ii) the external economic and trading environment of the Party, and
(iii) alternative corrective measures that may be available.
7. In consultations under paragraph 6(b), the Parties shall:
(a) consider if measures adopted under this Article comply with paragraph 3, in particular paragraph 3(c); and
(b) accept all findings of statistical and other facts presented by the IMF relating to foreign exchange, monetary reserves and balance of payments, and shall base their conclusions on the assessment by the IMF of the balance of payments situation the Party adopting the measures.
Article 2105. Disclosure of Information
Nothing in this Agreement shall be construed to require a Party to furnish or allow access to information the disclosure of which would impede law enforcement or would be contrary to the Party's law protecting personal privacy or the financial affairs and accounts of individual customers of financial institutions.
Article 2106. Cultural Industries
Annex 2106 applies to the Parties specified in that Annex with respect to cultural industries.
Article 2107. Definitions
For purposes of this Chapter:
cultural industries means persons engaged in any of the following activities:
(a) the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;
(b) the production, distribution, sale or exhibition of film or video recordings;
(c) the production, distribution, sale or exhibition of audio or video music recordings;
(d) the publication, distribution or sale of music in print or machine readable form; or
(e) radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television and cable broadcasting undertakings and all satellite programming and broadcast network services;
international capital transactions means "international capital transactions" as defined under the Articles of Agreement of the IMF;
IMF means the International Monetary Fund;
payments for current international transactions means "payments for current international transactions" as defined under the Articles of Agreement of the IMF;
tax convention means a convention for the avoidance of double taxation or other international taxation agreement or arrangement;
taxes and taxation measures do not include:
(a) a "customs duty" as defined in Article 318 (Market Access Definitions); or
(b) the measures listed in exceptions (b),(c), (d) and (e) of that definition; and
transfers means international transactions and related international transfers and payments.
Annex 2103.4. Specific Taxation Measures
1. For purposes of Article 2103(4)(a) and (b), the listed tax is the asset tax under the Asset Tax Law ("Ley del Impuesto al Activo") of Mexico.
2. For purposes of Article 2103(4)(h), the listed tax is any excise tax on insurance premiums adopted by Mexico to the extent that such tax would, if levied by Canada or the United States, be covered by Article 2103(4)(d), (e) or (A).
Annex 2103.6. Competent Authorities
For purposes of this Chapter:
competent authority means
(a) in the case of Canada, the Assistant Deputy Minister for Tax Policy, Department of Finance;
(b) in the case of Mexico, the Deputy Minister of Revenue of the Ministry of Finance and Public Credit ("Secretarfa de Hacienda y Crédito Piiblico");
(c) in the case of the United States, the Assistant Secretary of the Treasury (Tax Policy), Department of the Treasury.
Annex 2106. Cultural Industries
Notwithstanding any other provision of this Agreement, as between Canada and the United States, any measure adopted or maintained with respect to cultural industries, except as specifically provided in Article 302 (Market Access - Tariff Elimination), and any measure of equivalent commercial effect taken in response, shall be governed under this Agreement exclusively in accordance with the provisions of the Canada - United States Free Trade Agreement. The rights and obligations between Canada and any other Party with respect to such measures shall be identical to those applying between Canada and the United States.
Chapter Twenty-Two. FINAL PROVISIONS
Article 2201. Annexes
The Annexes to this Agreement constitute an integral part of this Agreement.
Article 2202. Amendments
1. The Parties may agree on any modification of or addition to this Agreement.
2. When so agreed, and approved in accordance with the applicable legal procedures of each Party, a modification or addition shall constitute an integral part of this Agreement.
Article 2203. Entry Into Force
This Agreement shall enter into force on January 1, 1994, on an exchange of written notifications certifying the completion of necessary legal procedures.
Article 2204. Accession
1. Any country or group of countries may accede to this Agreement subject to such terms and conditions as may be agreed between such country or countries and the Commission and following approval in accordance with the applicable legal procedures of each country.
2. This Agreement shall not apply as between any Party and any acceding country or group of countries if, at the time of accession, either does not consent to such application.
Article 2205. Withdrawal
A Party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties. If a Party withdraws, the Agreement shall remain in force for the remaining Parties.
Article 2206. Authentic Texts
The English, French and Spanish texts of this Agreement are equally authentic.
IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed this Agreement.
Attachments
Annex I. Reservations for Existing Measures and Liberalization Commitments
1. The Schedule of a Party sets out, pursuant to Articles 1108(1) (Investment), 1206(1) (Cross-Border Trade in Services) and 1409(4) (Financial Services), the reservations taken by that Party with respect to existing measures that do not conform with obligations imposed by:
(a) Article 1102, 1202 or 1405 (National Treatment),
(b) Article 1103, 1203 or 1406 (Most-Favored-Nation Treatment),
(c) Article 1205 (Local Presence),
(d) Article 1106 (Performance Requirements), or
(e) Article 1107 (Senior Management and Boards of Directors),
and, in certain cases, sets out commitments for immediate or future liberalization.
2. Each reservation sets out the following elements:
(a) Sectorrefers to the general sector in which the reservation is taken;
(b) Sub-Sector refers to the specific sector in which the reservation is taken;
(c) Industry Classification refers, where applicable, to the activity covered by the reservation according to domestic industry classification codes;
(d) Type of Reservation specifies the obligation referred to in paragraph 1 for which a reservation is taken;
(e) Level of Government indicates the level of government maintaining the measure for which a reservation is taken;
(f) Measures identifies the laws, regulations or other measures, as qualified, where indicated, by the Description element, for which the reservation is taken. A measure cited in the Measures element
(i) means the measure as amended, continued or renewed as of the date of entry into force of this Agreement, and
(ii) includes any subordinate measure adopted or maintained under the authority of and consistent with the measure;
(g) Description sets out commitments, if any, for liberalization on the date of entry into force of this Agreement, and the remaining non-conforming aspects of the existing measures for which the reservation is taken; and
(h) Phase-Out sets out commitments, if any, for liberalization after the date of entry into force of this Agreement.
3. In the interpretation of a reservation, all elements of the reservation shall be considered. A reservation shall be interpreted in the light of the relevant provisions of the Chapters against which the reservation is taken. To the extent that:
(a) the Phase-Out element provides for the phasing out of non-conforming aspects of measures, the Phase-Outelement shall prevail over all other elements;
(b) the Measures element is qualified by a liberalization commitment from the Description element, the Measures element as so qualified shall prevail over all other elements; and
(c) the Measures element is not so qualified, the Measures element shall prevail over all other elements, unless any discrepancy between the Measures element and the other elements considered in their totality is so substantial and material that it would be unreasonable to conclude that the Measures element should prevail, in which case the other elements shall prevail to the extent of that discrepancy.
4. Where a Party maintains a measure that requires that a service provider be a citizen, permanent resident or resident of its territory as a condition to the provision of a service in its territory, a reservation for that measure taken with respect to Article 1202, 1203 or 1205 or Article 1404, 1405 or 1406 shall operate as a reservation with respect to Article 1102, 1103 or 1106 to the extent of that measure.
5. For purposes of this Annex:
CMAP means Clasificación Mexicana de Actividades y Productos (CMAP) numbers as set out in Instituto Nacional de Estadística, Geografía e Informática, Clasificación Mexicana de Actividades y Productos, 1988;
concession means an authorization provided by the State to a person to exploit a natural resource or provide a service, for which Mexican nationals and Mexican enterprises are granted priority over foreigners;
CPC means Central Product Classification (CPC) numbers as set out in Statistical Office of the United Nations, Statistical Papers, Series M, No. 77, Provisional Central Product Classification, 1991;
foreigners' exclusion clause means the express provision in an enterprise's by-laws stating that the enterprise shall not allow foreigners, directly or indirectly, to become partners or shareholders of the enterprise;
international cargo means goods that have an origin or destination outside the territory of a Party;
Mexican enterprise means an enterprise constituted under the law of Mexico; and
SIC means:
(a) with respect to Canada, Standard Industrial Classification (SIC) numbers as set out in Statistics Canada, Standard Industrial Classification, fourth edition, 1980; and
(b) with respect to the United States, Standard Industrial Classification (SIC) numbers as set out in the United States Office of Management and Budget, Standard Industrial Classification Manual, 1987.
Annex I. Schedule of Canada
Sector: Agriculture
Sub-Sector:
Industrial Classification:
Type of Reservation : National Treatment (Article 1102)
Level of Government: Federal
Measures: Farm Credit Act, R.S.C. 1985, c. F2
Farm Credit Regulations, C.R.C. 1978, c. 644
Description: Investment
Loans by the Farm Credit Corporation may be made only to:
(a) individuals who are Canadian citizens or permanent residents;
(b) farming corporations controlled by Canadian citizens or permanent residents; or
(c) cooperative farm associations, all members of which are Canadian citizens or permanent residents.