50.9. Business Practices
1. The Parties recognise that certain business practices of service suppliers, other than those falling under Article 50.8, may restrain competition and thereby restrict trade in services.
2. Each Party shall, at the request of any other Party, enter into consultations with a view to eliminating practices referred to in paragraph 1. The Party addressed shall accord full and sympathetic consideration to such a request and shall cooperate through the supply of publicly available non-confidential information of relevance to the matter in question. The Party addressed shall also provide other information available to the requesting Party, subject to its laws and to the conclusion of satisfactory agreement concerning the safeguarding of its confidentiality by the requesting Party.
50.10. Safeguards
1. The Parties note the multilateral negotiations pursuant to Article X of the GATS on the question of emergency safeguard measures based on the principle of non-discrimination. Upon the conclusion of such multilateral negotiations, the Parties shall conduct a review for the purpose of discussing appropriate amendments to this Chapter so as to incorporate the results of such multilateral negotiations.
2. In the event that the implementation of the commitments made in this Chapter causes substantial adverse impact to a service sector of a Party before the conclusion of the multilateral negotiations referred to in paragraph 1, the affected Party may request consultations with the Party or Parties concerned. The requested Party or Parties shall enter into consultations with the requesting Party on the commitments that the requested Party or Parties consider may have caused substantial adverse impact and on the possibility of the requesting Party adopting any measure to alleviate such impact. The requesting Party shall notify all the other Parties of its request for consultations under this paragraph.
3. Any measures taken pursuant to paragraph 2 shall be mutually agreed by the consulting Parties.
4. The consulting Parties shall notify the results of the consultations to all other Parties as soon as practicable and by no later than the next meeting of the Sub-Committee on Trade in Services referred to in Article 50.24 following the conclusion of consultations.
50.11. Payments and Transfers
1. Except under the circumstances envisaged in Article 50.12, a Party shall not apply restrictions on international transfers and payments for current transactions relating to its specific commitments.
2. Nothing in this Chapter shall affect the rights and obligations of the Parties as members of the International Monetary Fund (hereinafter referred to as “IMF”) under the Articles of Agreement of the International Monetary Fund (hereinafter referred to as the “Articles of Agreement of the IMF”), including the use of exchange actions which are in conformity with the Articles of Agreement of the IMF, provided that a Party shall not impose restrictions on any capital transactions inconsistently with its specific commitments regarding such transactions, except under Article 50.12 or at the request of the IMF.
50.12. Restrictions to Safeguard the Balance of Payments
1. In the event of serious balance of payments and external financial difficulties or threat thereof, a Party may adopt or maintain restrictions on trade in services on which it has undertaken specific commitments including on payments or transfers for transactions related to such commitments.
2. The restrictions referred to in paragraph 1:
(a) shall not discriminate among Parties;
(b) shall be consistent with the Articles of Agreement of the IMF;
(c) shall avoid unnecessary damage to the commercial, economic and financial interests of the other Parties;
(d) shall not exceed those necessary to deal with the circumstances described in paragraph 1; and
(e) shall be temporary and be phased out progressively as the situation specified in paragraph 1 improves.
3. In determining the incidence of such restrictions, a Party may give priority to the supply of services which are more essential to its economic or development programmes. However, such restrictions shall not be adopted or maintained for the purposes of protecting a particular service sector.
4. Any restrictions adopted or maintained under paragraph 1, or any changes therein, shall be promptly notified to the other Parties.
5. Where a Party has adopted restrictions pursuant to paragraph 1 and if consultations in relation to the restrictions adopted by it are not taking place at the World Trade Organization, the Party, upon request, shall promptly commence consultations with any requesting Party in order to review those restrictions adopted by the former Party.
50.13. General Exceptions
Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between Parties where like conditions prevail, or a disguised restriction on trade in services, nothing in this Chapter shall be construed to prevent the adoption or enforcement by any Party of measures:
(a) necessary to protect public morals or to maintain public order;
Note: The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.
(b) necessary to protect human, animal or plant life or health;
(c) necessary to secure compliance with laws or regulations which are not inconsistent with this Chapter including those relating to:
(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts;
(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; or
(iii) safety;
(d) inconsistent with Article 50.18, provided that the difference in treatment is aimed at ensuring the equitable or effective imposition or collection of direct taxes in respect of services or service suppliers of other Parties; or
Note: Measures that are aimed at ensuring the equitable or effective imposition or collection of direct taxes include measures taken by a Party under its taxation system which:
(i) apply to non-resident service suppliers in recognition of the fact that the tax obligation of non-residents is determined with respect to taxable items sourced or located in the territory of the Party;
(ii) apply to non-residents in order to ensure the imposition or collection of taxes in the territory of the Party;
(iii) apply to non-residents or residents in order to prevent the avoidance or evasion of taxes, including compliance measures;
(iv) apply to consumers of services supplied in or from the territory of another Party in order to ensure the imposition or collection of taxes on such consumers derived from sources in the territory of the Party;
(v) distinguish service suppliers subject to tax on worldwide taxable items from other service suppliers, in recognition of the difference in the nature of the tax base between them; or
(vi) determine, allocate or apportion income, profit, gain, loss, deduction or credit of resident persons or branches, or between related persons or branches of the same person, in order to safeguard the Party’s tax base.
Tax terms or concepts in this subparagraph and this Note are determined according to tax definitions and concepts, or equivalent or similar definitions and concepts, under the law of the Party taking the measure.
(e) inconsistent with Article 50.3, provided that the difference in treatment is the result of an agreement on the avoidance of double taxation or provisions on the avoidance of double taxation in any other international agreement or arrangement by which the Party is bound.
50.14. Subsidies
1. Except where provided in this Article, this Chapter shall not apply to subsidies or grants provided by a Party, or to any conditions attached to the receipt or continued receipt of such subsidies or grants, whether or not such subsidies or grants are offered exclusively to domestic services, service consumers or service suppliers. If such subsidies or grants significantly affect trade in services committed under this Chapter, any Party may request consultations with a view to an amicable resolution of this matter. The requested Party shall accord sympathetic consideration to such request.
2. Pursuant to this Chapter, the Parties shall:
(a) on request, provide information on subsidies related to trade in services committed under this Chapter to any requesting Party; and
(b) review the treatment of subsidies when relevant disciplines are developed by the World Trade Organization.
50.15. Cooperation
The Parties shall strengthen cooperation efforts in services sectors, including sectors which are not covered by existing cooperation arrangements in accordance with Chapter 8. The Parties are encouraged to discuss and mutually agree on the sectors for cooperation and develop cooperation programmes in these sectors in order to improve their domestic capacities, efficiencies and competitiveness.
50.16. Increasing Participation of Newer ASEAN Member States
In order to increase the benefits of this Chapter for the newer ASEAN Member States, and in accordance with Articles 2, 3 and 52, the Parties recognise the importance of according special and differential treatment to the newer ASEAN Member States and facilitating their participation in this Chapter through negotiated specific commitments relating to:
(a) strengthened domestic services capacity and its efficiency and competitiveness, inter alia, through access to technology on a commercial basis;
(b) improved access to distribution channels and information networks;
(c) commitments in sectors of export interest to newer ASEAN Member States; and
(d) recognising that commitments by each newer ASEAN Member State may be made in accordance with its individual stage of development.
50.17. Market Access
1. With respect to market access through the modes of supply identified in subparagraph (v) of Article 50.1, a Party shall accord services and service suppliers of any other Party treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule of Specific Commitments in Annex 6.
Note: If a Party undertakes a market-access commitment in relation to the supply of a service through the mode of supply referred to in subparagraph (v)(i) of Article 50.1 and if the cross-border movement of capital is an essential part of the service itself, that Party is thereby committed to allow such movement of capital. If a Party undertakes a market-access commitment in relation to the supply of a service through the mode of supply referred to in subparagraph (v)(iii) of Article 50.1, it is thereby committed to allow related transfers of capital into its territory.
2. In sectors where market-access commitments are undertaken, the measures, which a Party shall not maintain or adopt either on the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in its Schedule of Specific Commitments in Annex 6, are defined as:
(a) limitations on the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test;
(b) limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(c) limitations on the total number of service operations or on the total quantity of service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;
Note: This subparagraph does not cover measures of a Party which limit inputs for the supply of services.
(d) limitations on the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or the requirement of an economic needs test;
(e) measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and
(f) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment.
50.18. National Treatment
1. In the sectors inscribed in its Schedule of Specific Commitments in Annex 6, and subject to any conditions and qualifications set out therein, each Party shall accord to services and service suppliers of any other Party, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like services and service suppliers.
Note: For greater certainty, no specific commitments in this Article shall be construed to require any Party to compensate for any inherent competitive disadvantages, which result from the foreign character of the relevant services or service suppliers.
2. A Party may meet the requirement of paragraph 1 by according to services and service suppliers of any other Party, either formally identical treatment or formally different treatment to that it accords to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of services or service suppliers of the Party compared to like services or service suppliers of any other Party.
4. A Party shall not invoke the preceding paragraphs under Chapter 9 with respect to a measure of any other Party that falls within the scope of an international agreement between them relating to the avoidance of double taxation.
50.19. Additional Commitments
The Parties may negotiate commitments with respect to measures affecting trade in services not subject to scheduling under Articles 50.17 and 50.18, including those regarding qualifications, standards or licensing matters. Such commitments shall be inscribed in a Party’s Schedule of Specific Commitments in Annex 6.
50.20. Schedules of Specific Commitments
1. Each Party shall set out in a schedule the specific commitments it undertakes under Articles 50.17, 50.18 and 50.19. With respect to sectors or subsectors where such commitments are undertaken, each Schedule of Specific Commitments in Annex 6 shall specify:
(a) terms, limitations and conditions on market access;
(b) conditions and qualifications on national treatment;
(c) undertakings relating to additional commitments; and
(d) where appropriate the timeframe for implementation of such commitments.
2. With respect to sectors or subsectors where the specific commitments are undertaken and which are indicated with “SS”, any terms, limitations, conditions and qualifications referred to in subparagraphs 1(a) and (b), other than those based on measures pursuant to immigration laws and regulations, shall be limited to existing non-conforming measures.
Note: For the purposes of this paragraph, “existing” means in effect on the date of entry into force of the First Protocol.
3. Measures inconsistent with both Articles 50.17 and 50.18 shall be inscribed in both the columns relating to Articles 50.17 and 50.18.
50.21. Application and Extension of Commitments
Each Party shall make its individual Schedule of Specific Commitments under Article 50.20 and shall apply such Schedule to other Parties.
50.22. Progressive Liberalisation
The Parties may enter into successive rounds of negotiations so as to progressively liberalise trade in services among the Parties.
50.23. Modification of Schedules
1. A Party may modify or withdraw any commitment in its Schedule of Specific Commitments, at any time after three (3) years from the date on which that commitment has entered into force provided that:
(a) it notifies the other Parties as well as the ASEAN Secretariat of its intention to modify or withdraw a commitment no later than three (3) months before the intended date of implementation of the modification or withdrawal; and
(b) it enters into negotiations with any affected Party to agree to the necessary compensatory adjustment.
2. In achieving a compensatory adjustment, the Parties shall ensure that the general level of mutually advantageous commitment is not less favourable to trade than provided for in the Schedules of Specific Commitments prior to such negotiations.
3. Any compensatory adjustment pursuant to this Article shall be accorded on a non-discriminatory basis to all the Parties.
4. If the Parties concerned are unable to reach an agreement on the compensatory adjustment, the matter shall be settled by arbitration under Chapter 9. The modifying Party may not modify or withdraw its commitment until it has made compensatory adjustments in conformity with the findings of the arbitration.
5. If the modifying Party implements its proposed modification or withdrawal and does not comply with the findings of the arbitration, any Party that participated in the arbitration may modify or withdraw substantially equivalent benefits in conformity with those findings. Notwithstanding Articles 50.3 and50.21, such a modification or withdrawal may be implemented solely with respect to the modifying Party.
50.24. Sub-Committee on Trade In Services
1. For the purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Trade in Services (hereinafter referred to in this Article as “the Sub-Committee”) shall be established pursuant to Article 11.
2. The functions of the Sub-Committee shall be to:
(a) review the implementation and operation of this Chapter;
(b) review commitments, with respect to measures affecting trade in services, with a view to achieving further liberalisation on a mutually advantageous basis and securing an overall balance of rights and obligations;
(c) discuss any issues related to this Chapter;
(d) report the outcome of discussions of the Sub-Committee to the Joint Committee; and
(e) carry out other functions as may be delegated by the Joint Committee in accordance with Article 11 of this Agreement.
3. The Sub-Committee shall be:
(a) composed of representatives of the Governments of Japan and all ASEAN Member States; and
(b) co-chaired by an official of the Government of Japan and an official of one of the Governments of the ASEAN Member States.
4. The Sub-Committee, based on the consensus of the Parties, may invite representatives of relevant entities other than the Governments with the necessary expertise relevant to the issues to be discussed to participate in the Sub-Committee’s discussions.
5. The Sub-Committee shall meet at such venues and times as may be agreed by the Parties.
50.25. Review
1. With the objective of further liberalising trade in services among the Parties, including the possibility of the re-negotiation of the format of schedules, the Parties shall undertake a review of this Chapter with Annexes A and B to this Chapter and Annexes 6 through 8 at the occasion of a general review pursuant to Article 75 or other occasions as may be otherwise agreed by the Parties.
2. If, after the entry into force of the First Protocol, a Party has undertaken further liberalisation autonomously in any of services sectors, subsectors or activities, pursuant to Article 50.22, it may consider any requests by the other Parties for the possible incorporation into this Agreement of such autonomous liberalisation.
50.26. Denial of Benefits
A Party may deny the benefits of this Chapter:
(a) to the supply of a service, if it establishes that the service is supplied from or in the territory of a non-Party;
(b) in the case of the supply of a maritime transport service, if it establishes that the service is supplied:
(i) by a vessel registered under the laws of a non-Party; and
(ii) by a person of a non-Party which operates and/or uses the vessel in whole or in part;
(c) to a service supplier that is a juridical person, if it establishes that it is not a service supplier of another Party.
Annex A to Chapter 6. Financial Services
A.1. Scope and Definitions
1. This Annex shall apply to measures affecting the supply of financial services. Reference to the supply of a financial service in this Annex shall mean the supply of a service as defined in subparagraph (u) of Article 50.1.
2. (a) For the purposes of this Annex, the term:
(i) “financial service” means any service of a financial nature offered by a financial service supplier of a Party.
Financial services include all insurance and insurance-related services, and all banking and other financial services (excluding insurance). Financial services include the following activities:
Insurance and insurance-related services
(A) direct insurance (including coinsurance):
(1) life; and
(2) non-life;
(B) reinsurance and retrocession;
(C) insurance intermediation, such as brokerage and agency;
(D) services auxiliary to insurance, such as consultancy, actuarial, risk assessment and claim settlement services;
Banking and other financial services (excluding insurance)
(E) acceptance of deposits and other repayable funds from the public;
(F) lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transaction;
(G) financial leasing;
(H) all payment and money transmission services, including credit, charge and debit cards, travellers cheques and bankers drafts;
(I) guarantees and commitments;
(J) trading for own account or for account of customers, whether on an exchange, in an over-thecounter market or otherwise, the following:
(1) money market instruments (including cheques, bills, certificates of deposits);
(2) foreign exchange;
(3) derivative products including, but not limited to, futures and options;
(4) exchange rate and interest rate instruments, including products such as swaps, forward rate agreements;
(5) transferable securities; and
(6) other negotiable instruments and financial assets, including bullion;
(K) participation in issues of all kinds of securities, including underwriting and placement as agent, whether publicly or privately, and provision of services related to such issues;
(L) money broking;
(M) asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services;
(N) settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;
(O) provision and transfer of financial information, and financial data processing and related software by suppliers of other financial services; and
(P) advisory, intermediation and other auxiliary financial services on all the activities listed in subparagraphs (E) through (O), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy;
(ii) “financial service supplier” means any natural or juridical person of a Party wishing to supply or supplying financial services but “financial service supplier” does not include a public entity;