(b) relating to one of the following sectors or activities:
(i) for Canada, cultural industries and, as set out in its Schedule to Annex II, social services, aboriginal affairs, minority affairs, gambling and betting services, and the collection, purification, and distribution of water; and
(ii) for the EU Party, audio-visual services and, as set out in its Schedule to Annex II, health, education, and social services, gambling and betting services (1), and the collection, purification, and distribution of water.
Article 12.3. Licensing and Qualification Requirements and Procedures
1. Each Party shall ensure that licensing requirements, qualification requirements, licensing procedures, or qualifi- cation procedures it adopts or maintains are based on criteria that preclude the competent authority from exercising its power of assessment in an arbitrary manner.
2. The criteria referred to in paragraph 1 shall be:
(a) clear and transparent;
(b) objective; and
(c) established in advance and made publicly accessible.
3. The Parties recognise that the exercise of statutory discretion conferred on a minister with respect to a decision on the granting of an authorisation in the public interest is not inconsistent with subparagraph 2(c), provided that it is exercised consistently with the object of the applicable statute and not in an arbitrary manner, and that its exercise is not otherwise inconsistent with this Agreement.
4. Paragraph 3 does not apply to licensing requirements, or qualification requirements for a professional service.
5. Each Party shall ensure that an authorisation is granted as soon as the competent authority determines that the conditions for the authorisation have been met, and once granted, that the authorisation enters into effect without undue delay, in accordance with the terms and conditions specified therein.
6. Each Party shall maintain or institute judicial, arbitral, or administrative tribunals or procedures that provide for, at the request of an affected investor, as defined in Article 8.1 (Definitions), or an affected service supplier, as defined in Article 1.1 (Definitions of general application), a prompt review of, and if justified, appropriate remedies for, administrative decisions affecting the supply of a service or the pursuit of any other economic activity. If such procedures are not independent of the agency entrusted with the administrative decision concerned, each Party shall ensure that the procedures are applied in a way that provides for an objective and impartial review.
7. Each Party shall ensure that licensing procedures or qualification procedures it adopts or maintains are as simple as possible, and do not unduly complicate or delay the supply of a service, or the pursuit of any other economic activity.
8. An authorisation fee that an applicant may incur in relation to its application for an authorisation shall be reasonable and commensurate with the costs incurred, and shall not in itself restrict the supply of a service or the pursuit of any other economic activity.
9. Authorisation fees do not include payments for auction, the use of natural resources, royalties, tendering or other non-discriminatory means of awarding concessions, or mandated contributions to provide a universal service.
10. _ Each Party shall ensure that licensing procedures, or qualification procedures used by the competent authority and decisions of the competent authority in the authorisation process are impartial with respect to all applicants. The competent authority should reach its decisions in an independent manner and in particular should not be accountable to any person supplying a service or pursuing any other economic activity for which the authorisation is required.
11. If specific time periods for authorising applications exist, an applicant shall be allowed a reasonable period for the submission of an application. The competent authority shall initiate the processing of an application without undue delay. If possible, applications should be accepted in electronic format under similar conditions of authenticity as paper submissions.
12. Authenticated copies should be accepted, if considered appropriate, in place of original documents.
13. Each Party shall ensure that the processing of an authorisation application, including reaching a final decision, is completed within a reasonable timeframe from the submission of a complete application. Each Party should establish the normal timeframe for the processing of an application.
14. At the request of an applicant, a Party's competent authority shall provide, without undue delay, information concerning the status of the application.
15. If an application is considered incomplete, a Party's competent authority shall, within a reasonable period of time, inform the applicant, identify the additional information required to complete the application, and provide the applicant an opportunity to correct deficiencies.
16. If a Party's competent authority rejects an application, it shall inform the applicant in writing and without undue delay. Upon request of the applicant, the Party's competent authority shall also inform the applicant of the reasons the application was rejected and of the timeframe for an appeal or review against the decision. An applicant should be permitted, within reasonable time limits, to resubmit an application.
Chapter THIRTEEN. Financial Services
Article 13.1. Definitions
For the purposes of this Chapter:
cross-border financial service supplier of a Party means a person of a Party that is engaged in the business of supplying a financial service within the territory of the Party and that seeks to supply or supplies a financial service through the cross-border supply of that service;
cross-border supply of financial services or cross-border trade in financial services means the supply of a financial service:
(a) from the territory of a Party into the territory of the other Party; or
(b) in the territory of a Party by a person of that Party to a person of the other Party;
but does not include the supply of a service in the territory of a Party by an investment in that territory;
financial institution means a supplier that carries out one or more of the operations defined as being financial services in this Article, if the supplier is regulated or supervised in respect of the supply of those services as a financial institution under the law of the Party in whose territory it is located, including a branch in the territory of the Party of
that financial service supplier whose head offices are located in the territory of the other Party;
financial institution of the other Party means a financial institution, including a branch, located in the territory of a Party that is controlled by a person of the other Party;
financial service means a service of a financial nature, including insurance and insurance-related services, banking and other financial services (excluding insurance), and services incidental or auxiliary to a service of a financial nature. Financial services include the following activities:
(a) insurance and insurance-related services
(i) direct insurance (including co-insurance):
(A) life; or
(B) non-life;
(ii) reinsurance and retrocession;
(ii) insurance intermediation, such as brokerage and agency; or
(iv) services auxiliary to insurance, such as consultancy, actuarial, risk assessment, and claim settlement services; and
(b) banking and other financial services (excluding insurance):
(i) acceptance of deposits and other repayable funds from the public;
(ii) lending of all types, including consumer credit, mortgage credit, factoring, and financing of commercial transactions;
(ii) financial leasing;
(iv) all payment and money transmission services, including credit, charge and debit cards, travellers cheques, and bankers drafts;
(v) guarantees and commitments;
(vi) trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:
(A) money market instruments (including cheques, bills or certificates of deposits);
(B) foreign exchange;
(C) derivative products including futures and options;
(D) exchange rate and interest rate instruments, including products such as swaps and forward rate agreements;
(E) transferable securities; or
(F) other negotiable instruments and financial assets, including bullion;
(vii) participation in issues of all kinds of securities, including underwriting and placement as agent (whether publicly or privately), and supply of services related to such issues;
(viii) money broking;
(ix) asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository, and trust services;
(x) settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;
(xi) provision and transfer of financial information, and financial data processing and related software; or
(xii) advisory, intermediation and other auxiliary financial services on all the activities listed in sub-subparagraphs (i) through (xi), including credit reference and analysis, investment and portfolio research and advice, and advice on acquisitions and on corporate restructuring and strategy;
financial service supplier means a person of a Party that is engaged in the business of supplying a financial service within the territory of that Party but does not include a public entity;
investment means "investment" as defined in Article 8.1 (Definitions), except that for the purposes of this Chapter, with respect to "loans" and "debt instruments" referred to in that Article:
(a) a loan to or debt instrument issued by a financial institution is an investment in that financial institution only if it is treated as regulatory capital by the Party in whose territory the financial institution is located; and
(b) a loan granted by or debt instrument owned by a financial institution, other than a loan to or debt instrument of a financial institution referred to in subparagraph (a), is not an investment;
for greater certainty,
(c) Chapter Eight (Investment) applies to a loan or debt instrument to the extent that it is not covered in this Chapter; and
(d) a loan granted by or a debt instrument owned by a cross-border financial service supplier, other than a loan to or debt instrument issued by a financial institution, is an investment for the purposes of Chapter Fight (Investment) if that loan or debt instrument meets the criteria for investments set out in Article 8.1 (Definitions);
investor means "investor" as defined in Article 8.1 (Definitions);
new financial service means a financial service that is not supplied in the territory of a Party but that is supplied in the territory of the other Party and includes any new form of delivery of a financial service or the sale of a financial product that is not sold in the Party's territory;
person of a Party means "person of a Party" as defined in Article 1.1 (Definitions of general application) and, for greater certainty, does not include a branch of an enterprise of a third country;
public entity means:
(a) a government, a central bank or a monetary authority of a Party or any entity owned or controlled by a Party, that is principally engaged in carrying out governmental functions or activities for governmental purposes, but does not include an entity principally engaged in supplying financial services on commercial terms; or
(b) a private entity that performs functions normally performed by a central bank or monetary authority when exercising those functions; and
self-regulatory organisation means a non-governmental body, including any securities or futures exchange or market, clearing agency, other organisation or association, that exercises its own or delegated regulatory or supervisory authority over financial service suppliers or financial institutions.
Article 13.2. Scope
1. This Chapter applies to a measure adopted or maintained by a Party relating to:
(a) financial institutions of the other Party;
(b) an investor of the other Party, and an investment of that investor, in a financial institution in the Party's territory; and
(c) cross-border trade in financial services.
2. For greater certainty, the provisions of Chapter Eight (Investment) apply to:
(a) a measure relating to an investor of a Party, and an investment of that investor, in a financial service supplier that is not a financial institution; and
(b) a measure, other than a measure relating to the supply of financial services, relating to an investor of a Party or an investment of that investor in a financial institution.
3. Articles 8.10 (Treatment of investors and of covered investments), 8.11 (Compensation for losses), 8.12 (Expropriation), 8.13 (Transfers), 8.14 (Subrogation), 8.16 (Denial of benefits), and 8.17 (Formal requirements) are incorporated into and made a part of this Chapter.
4. Section F of Chapter Eight (Resolution of investment disputes between investors and states) is incorporated into and made a part of this Chapter solely for claims that a Party has breached Article 13.3 or 13.4 with respect to the expansion, conduct, operation, management, maintenance, use, enjoyment, and sale or disposal of a financial institution or an investment in a financial institution, or Article 8.10 (Treatment of investors and of covered investments), 8.11 (Compensation for losses), 8.12 (Expropriation), 8.13 (Transfers), or 8.16 (Denial of benefits).
5. This Chapter does not apply to a measure 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 of the Party, with the guarantee or using the financial resources of the Party, including its public entities,
except that this Chapter applies to the extent that a Party allows activities or services referred to in subparagraph (a) or (b) to be conducted by its financial institutions in competition with a public entity or a financial institution.
6. Chapter Twelve (Domestic Regulation) is incorporated into and made a part of this Chapter. For greater certainty, Article 12.3 (Licensing and qualification requirements and procedures) applies to the exercise of statutory discretion by the financial regulatory authorities of the Parties.
7. The provisions of Chapter Twelve (Domestic Regulation) incorporated into this Chapter under paragraph 6 do not apply to licensing requirements, licensing procedures, qualification requirements or qualification procedures:
(a) pursuant to a non-conforming measure maintained by Canada, as set out in its Schedule to Annex III-A;
(b) pursuant to a non-conforming measure maintained by the European Union, as set out in its Schedule to Annex I, to the extent that such measure relates to financial services; and
(c) as set out in Article 12.2.2(b) (Scope), to the extent that such measure relates to financial services.
Article 13.3. National Treatment
1. Article 8.6 (National treatment) is incorporated into and made a part of this Chapter and applies to treatment of financial institutions and investors of the other Party and their investments in financial institutions.
2. The treatment accorded by a Party to its own investors and investments of its own investors under Article 8.6 (National treatment) means treatment accorded to its own financial institutions and investments of its own investors in financial institutions.
Article 13.4. Most-favoured-nation Treatment
1. Article 8.7 (Most-favoured-nation treatment) is incorporated into and made a part of this Chapter and applies to treatment of financial institutions and investors of the other Party and their investments in financial institutions.
2. The treatment accorded by a Party to investors of a third country and investments of investors of a third country under paragraphs 1 and 2 of Article 8.7 (Most-favoured-nation treatment) means treatment accorded to financial institutions of a third country and investments of investors of a third country in financial institutions.
Article 13.5. Recognition of Prudential Measures
1. A Party may recognise a prudential measure of a third country in the application of a measure covered by this Chapter. That recognition may be:
(a) accorded unilaterally;
(b) achieved through harmonisation or other means; or (c) based upon an agreement or arrangement with the third country.
2. A Party according recognition of a prudential measure shall provide adequate opportunity to the other Party to demonstrate that circumstances exist in which there are or will be equivalent regulation, oversight, implementation of regulation and, if appropriate, procedures concerning the sharing of information between the Parties.
3. Ifa Party recognises a prudential measure under subparagraph 1(c) and the circumstances described in paragraph 2 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 13.6. 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, on the basis of its entire territory or on the basis of the territory of a national, provincial, territorial, regional, or local level of government, 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;
(ii) 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;
(iv) the participation of foreign capital in terms of maximum percentage limit on foreign shareholding in financial institutions or the total value of individual or aggregate foreign investment in financial institutions; or
(v) 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. Article 8.4.2 (Market access) is incorporated into and made a part of this Article.
3. For greater certainty:
(a) a Party may impose terms, conditions, and procedures for the authorisation of the establishment and expansion of a commercial presence provided that they do not circumvent the Party's obligation under paragraph 1 and are consistent with the other provisions of this Chapter; and
(b) this Article does not prevent a Party from requiring a financial institution to supply certain financial services
through separate legal entities if, under the law of the Party, the range of financial services supplied by the financial institution may not be supplied through a single entity.
Article 13.7. Cross-border Supply of Financial Services
1. Articles 9.3 (National treatment), 9.4 (Formal requirements), and 9.6 (Market access) are incorporated into and made a part of this Chapter and apply to treatment of cross-border financial service suppliers supplying the financial services specified in Annex 13-A.
2. The treatment accorded by a Party to its own service suppliers and services under Article 9.3.2 (National treatment) means treatment accorded to its own financial service suppliers and financial services.
3. The measures that a Party shall not adopt or maintain with respect to service suppliers and services of the other Party under Article 9.6 (Market access) means measures relating to cross-border financial service suppliers of the other Party supplying financial services.
4. Article 9.5 (Most-favoured-nation treatment) is incorporated into and made a part of this Chapter and applies to treatment of cross-border financial service suppliers of the other Party.
5. The treatment accorded by a Party to service suppliers and services of a third country under Article 9.5 (Most-favoured-nation treatment) means treatment accorded to financial service suppliers of a third country and financial services of a third country.
6. Each Party shall permit a person located in its territory, and a national wherever they are located, to purchase a financial service from a cross-border financial service supplier of the other Party located in the territory of that 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 the purposes of this Article, in conformity with paragraph 1.
7. For the financial services specified in Annex 13-A, each Party shall permit a cross-border financial service supplier of the other Party, on request or notification to the relevant regulator, where required, to supply a financial service through any new form of delivery, or to sell a financial product that is not sold in the Party's territory where the first Party permits its own financial service suppliers to supply such a service or to sell such a product under its law in like situations.
Article 13.8. Senior Management and Boards of Directors
A Party shall not require that a financial institution of the other Party appoint to senior management or board of director positions, natural persons of any particular nationality.
Article 13.9. Performance Requirements
1. The Parties shall negotiate disciplines on performance requirements such as those contained in Article 8.5 (Performance requirements) with respect to investments in financial institutions.
2. If, after three years of entry into force of this Agreement, the Parties have not agreed to such disciplines, upon request of a Party, Article 8.5 (Performance requirements) shall be incorporated into and made a part of this Chapter and shall apply to investments in financial institutions. For this purpose, "investment" in Article 8.5 (Performance requirements) means "investment in a financial institution in its territory".
3. Within 180 days following the successful negotiation by the Parties on the performance requirement disciplines pursuant to paragraph 1, or following a Party's request for incorporation of Article 8.5 (Performance requirements) into this Chapter pursuant to paragraph 2, as the case may be, each Party may amend its Schedule as required. Any amendment must be limited to the listing of reservations for existing measures that do not conform with the performance requirements obligation under this Chapter, for Canada in Section A of its Schedule to Annex III and for the European Union in its Schedule to Annex I. Article 13.10.1 shall apply to such measures with respect to the performance requirement disciplines negotiated pursuant to paragraph 1, or Article 8.5 (Performance requirements) as incorporated into this Chapter pursuant to paragraph 2, as the case may be.
Article 13.10. Reservations and Exceptions
1. Articles 13.3, 13.4, 13.6, and 13.8 do not apply to:
(a) an existing non-conforming measure that is maintained by a Party at the level of:
(i) the European Union, as set out in its Schedule to Annex I;
(ii) a national government, as set out by Canada in Section A of its Schedule to Annex III or the European Union in its Schedule to Annex J;
(ii) a provincial, territorial, or regional government, as set out by Canada in Section A of its Schedule to Annex III or the European Union in its Schedule to Annex J; or
(iv) a local government; the continuation or prompt renewal of a non-conforming measure referred to in subparagraph (a); or prompt ig paragrap:
(c) an amendment to a 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 13.3, 13.4, 13.6, or 13.8.
2. Article 13.7 does not apply to:
(a) an existing non-conforming measure that is maintained by a Party at the level of:
(i) the European Union, as set out in its Schedule to Annex I;
(ii) a national government, as set out by Canada in Section A of its Schedule to Annex III or the European Union in its Schedule to Annex I;
(ii) a provincial, territorial, or regional government, as set out by Canada in Section A of its Schedule to Annex II or the European Union in its Schedule to Annex I; or
(iv) a local government;
(b) the continuation or prompt renewal of a non-conforming measure referred to in subparagraph (a); or