9. Each Party may organize by state or department any portion of the report referred to in paragraph 7 that pertains to the entities set forth in the Protocol that the Parties develop pursuant to Article 15-26 for state or departmental government entities.
10. Each Party shall make available to the other Parties and to the suppliers that request it, during the first quarter of the year, its annual purchase program. This provision shall not constitute a purchase commitment for the entities.
Article 15-21. Technical Cooperation.
1. The Parties shall cooperate, on mutually agreed terms, to achieve a better understanding of their government procurement systems, with a view to achieving greater access to government procurement opportunities for suppliers of either Party.
2. Each Party shall provide to the other Parties and to the suppliers of these Parties, on a cost recovery basis, information concerning training and orientation programs relating to its government procurement systems, and access, without discrimination, to any programs it conducts.
3. The training and orientation programs referred to in paragraph 2 include:
a) training of public sector personnel directly involved in public sector procurement procedures;
b) training of suppliers interested in taking advantage of public sector procurement opportunities;
c) the explanation and description of specific aspects of each Party's government procurement system, such as its challenge mechanism; and
d) information regarding opportunities in the government procurement market.
4. Each Party shall establish upon entry into force of this Agreement at least one point of contact to provide information on the training and orientation programs referred to in this Article.
Article 15-22. Joint Participation Programs for Micro, Small and Medium Industry.
1. The Parties hereby establish the Micro, Small and Medium Industries Committee, composed of representatives of each Party. The Committee shall meet by agreement of the Parties, but not less than once a year, and shall report annually to the Commission on the efforts of the Parties to promote government procurement opportunities for their micro, small and medium industries.
2. The committee will work to facilitate the following activities of the Parties:
a) the identification of available opportunities for the training of personnel from micro, small and medium-size industries in public sector procurement procedures;
b) the identification of micro, small and medium-sized industries interested in becoming business partners of micro, small and medium-sized industries in the territory of another Party;
c) the development of databases on micro, small and medium-sized industries in the territory of each Party for use by entities of another Party wishing to make purchases from smaller-scale enterprises;
d) consulting with respect to the factors that each Party uses to establish its eligibility criteria for any micro, small and medium-sized industry program; and
e) carrying out activities to deal with any related matter.
Article 15-23. Rectifications or Modifications.
1. A Party may modify its coverage under this chapter only in exceptional circumstances. 2. When a Party modifies its coverage under this chapter:
a) communicate the modification to the other Parties;
b) incorporate the change in the corresponding annex; and
c) propose to the other Parties appropriate compensatory adjustments to its coverage, with the objective of maintaining a level of coverage comparable to that existing prior to the modification.
3. Notwithstanding the provisions of paragraphs 1 and 2, a Party may make formal rectifications and minor amendments only to its lists in Annexes 1 to Article 15-02, as well as to the Protocol that the Parties develop pursuant to Article 15-26 for state or departmental government entities, provided that it communicates such rectifications to the other Parties, and no Party expresses its objection to the proposed rectifications within a period of thirty days. In such cases, it shall not be necessary to propose compensation.
4. Nocompensation need be proposed where a Party reorganizes its entities, including through programs for the decentralization of the procurement of those entities or where the relevant government functions are no longer performed by any public sector entity, whether or not covered by this Chapter. No Party may undertake such reorganizations or programs for the purpose of avoiding compliance with the obligations of this Chapter.
5. A Party may have recourse to the dispute settlement procedure under Chapter XIX where a Party considers that:
a) the adjustment proposed in accordance with paragraph 2, subparagraph c) is not adequate to maintain a level comparable to that of the mutually agreed coverage; or
b) a rectification or minor amendment pursuant to paragraph 3 or a reorganization pursuant to paragraph 4 does not meet the requirements of those paragraphs and, as a result, requires compensation.
Article 15-24. Disposal of Entities.
1. Nothing in this chapter prevents a Party from disposing of an entity covered by this chapter.
2. If, by means of a public offering of shares of an entity listed in Annex 2 to Article 15-02 or by other methods, the entity ceases to be subject to federal or central government control, the Party may remove that entity from its list in that Annex and withdraw the entity from coverage under this Chapter, after notifying the other Parties.
3. Where a Party objects to the withdrawal of the entity on the grounds that the entity remains subject to federal or central government control, that Party may have recourse to the dispute settlement procedure under Chapter XIX.
Article 15-25. Future Negotiations.
1. The Procurement Committee shall recommend to the Parties to initiate negotiations with a view to the further liberalization of their respective government procurement markets.
2. In these negotiations, the Parties shall review all aspects of their government procurement practices for the purpose of:
a) evaluate the operation of its public sector procurement systems;
b) to seek to expand the chapter's coverage; and
c) revise the value of the thresholds.
3. Prior to such review, the Parties shall consult with their state or departmental governments with a view to reaching commitments, on a voluntary and reciprocal basis, for the incorporation into this chapter of purchases by state or departmental entities and enterprises owned or controlled by them.
Article 15-26. Protocols Annexed.
To reflect the outcome of the negotiations referred to in Article 15-25, the Parties shall develop Protocols.
Chapter XVI. Policy with Respect to State Enterprises
Article 16-01. Definitions.
For the purposes of this chapter, the following definitions shall apply:
designation: establishment, authorization or extension of the scope of the government monopoly to include an additional good or service, after the date of entry into force of this Agreement.
enterprise: any entity incorporated or organized under applicable law, whether or not for profit, including any corporation, trust, partnership, sole proprietorship, joint venture, joint venture or other association, except state- owned enterprises.
State enterprise: an enterprise owned or controlled by a Party through equity participation. market: the geographic and commercial market for a good or service.
monopoly: an entity, including a consortium or government agency, that, in any relevant market in the territory of a Party, has been designated as the sole supplier or purchaser of a good or service. It does not include an entity that has been granted an exclusive intellectual property right derived solely from that grant.
government monopoly: a monopoly owned or controlled by a Party or another government monopoly through equity participation.
according to commercial considerations: in accordance with the normal business practices of the private companies involved in the industry.
non-discriminatory treatment: the better treatment between national treatment and most-favored-nation treatment, as set forth in the relevant provisions of this Agreement.
Article 16-02. Monopolies and State Enterprises.
1. Each Party undertakes to ensure that its state enterprises grant to legal or natural persons of the other Parties non-discriminatory treatment in its territory with respect to the sale of goods and provision of services for similar commercial operations.
2. Each Party undertakes to ensure that its government monopolies and state-owned enterprises:
a) act solely on commercial considerations in the purchase or sale of the monopolized good or service in the relevant market in the territory of that Party, including with respect to its price, quality, availability, saleability, transportation and other terms and conditions for its purchase and sale; and
b) do not use their monopoly position in their territory to engage in anticompetitive practices in a non-monopolized market that may adversely affect persons of another Party.
3. Paragraph 2 does not apply to the acquisition of goods or services by government monopolies or state enterprises for official purposes, and:
a) without the purpose of commercial resale;
b) without the purpose of using them in the production of goods for commercial sale; or
c) without the purpose of using them in the provision of services for commercial sale.
4. With respect to the sale price of a good or service, paragraph 2, subparagraph a), applies only to the sale by government monopolies and state enterprises of:
a) goods or services to persons engaged in the production of industrial goods;
b) services to persons engaged in commercial resale; or
c) services to companies producing industrial goods.
5. The provisions of paragraph 2, subparagraph a) shall not apply to those activities of a government monopoly that are carried out in accordance with the terms of its designation, and respect the principles enshrined in paragraphs 1 and 2, subparagraph b).
Article 16-03. Committees.
Within three months of the entry into force of this Treaty, the Commission shall establish the following committees:
a) a competition committee, composed of representatives of each Party, which shall submit reports and recommendations to the Commission regarding further work on relevant issues concerning the relationship between competition laws and policies and trade in the free trade area;
b) a committee which, in order to detect those practices of state enterprises that may be discriminatory or contrary to the provisions of this chapter, shall prepare reports and recommendations with respect to such practices.
Chapter XVII. Investment
Section A. Investment
Article 17-01. Definitions
For the purposes of this chapter, the following definitions shall apply:
enterprise: any entity incorporated, organized or protected under applicable law, whether or not for profit and whether privately or governmentally owned, including partnerships, foundations, companies, branches, trusts, participations, sole proprietorships, joint ventures or other associations;
investment: resources transferred to or reinvested in the national territory of a Party by investors of another Party, including:
a) any type of asset or right whose purpose is to produce economic benefits;
b) the participation of investors of a Party, in any proportion, in the capital stock of companies incorporated or organized under the laws of another Party;
c) enterprises owned or effectively controlled by an investor of that Party, which are incorporated or organized in the territory of the other Party; and
d) any other resource considered an investment under the laws of that Party. I
nvestment does not include credit or debt operations, among them:
a) a payment obligation of the State or of a State enterprise, nor the granting of a credit to the State or to a State enterprise;
b) pecuniary rights derived exclusively from:
(i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of another Party; or
(ii) the granting of credit in connection with a commercial transaction, such as trade financing.
investor of a Party: any of the following persons who holds an investment in the territory of another Party:
a) the Party itself or any of its public entities or State enterprises;
b) a natural person who has the nationality of that Party in accordance with its laws;
c) an enterprise incorporated, organized or protected under the laws of that Party;
d) A branch located in the territory of that Party and carrying out commercial activities therein.
Article 17-02. Scope of Application.
1. This Chapter applies to measures adopted or maintained by a Party relating to:
a) investments of investors of another Party made in its territory;
b) investors of another Party in all matters relating to their investment; and
c) with respect to Article 17-04, to all investments in the territory of the Party.
2. This Chapter shall not apply to measures adopted or maintained by the Parties on financial services pursuant to Chapter XII, except as expressly provided in that Chapter.
3. This chapter applies throughout the territory of the Parties and at any level or order of government.
4. Nothing in this Chapter shall be construed to prevent a Party from adopting or maintaining measures to preserve its national security or public order, or to enforce the provisions of its criminal laws.
Article 17-03. National Treatment and Most-Favored Nation Treatment.
1. Each Party shall accord to investors of another Party, and to investments of such investors, treatment no less favorable than that it accords, in like circumstances, to its own investors and investments.
2. Each Party shall accord to investors of another Party, and to investments of such investors, treatment no less favorable than that it accords, in like circumstances, to investors and their investments of another Party or of a non-Party. Most-favored-nation treatment shall not apply to the provisions of Article 17-01.
3. The provisions of paragraphs 1 and 2 shall extend to any measure adopted or maintained by a Party in connection with losses due to armed conflict, civil strife, disturbances of public order, acts of God or force majeure.
4. No Party shall be obliged to extend to investors or investments of another Party the advantages it has granted or will grant to investors or investments of another Party or of a non-Party under a treaty for the avoidance of double taxation.
Article 17-04. Performance Requirements.
1. No Party shall establish performance requirements by adopting investment measures that are mandatory or enforceable for the establishment or operation of an investment, or compliance with which is necessary to obtain or maintain an advantage or incentive, and that prescribe:
a) the purchase or use by an enterprise of products of domestic origin of that Party, or from domestic sources of that Party, whether specified in terms of particular products, in terms of volume or value of products, or as a proportion of the volume or value of its local production;
b) that the purchase or use of imported products by an enterprise is limited to an amount related to the volume or value of local products exported by the enterprise;
c) restrictions on the importation by an enterprise of products used in or related to its local production by limiting the enterprise's access to foreign exchange to an amount related to the inflow of foreign exchange attributable to that enterprise;
d) restrictions on the export or sale for export of products by an enterprise, whether specified in terms of particular products, in terms of volume or value of products, or as a proportion of volume or value of its local production.
2. The provisions contained in:
a) paragraph 1, subparagraphs a) and d), do not apply with respect to the requirements for qualification of goods with respect to export promotion programs;
(b) paragraph 1(a) does not apply with respect to purchase or use by a Party or a State enterprise;
(c) paragraph 1(a) above does not apply with respect to requirements imposed by an importing Party relating to the necessary content of goods to qualify for preferential tariffs or quotas.
3. Nothing in this Article shall be construed to prevent a Party from imposing, in connection with any investment in its territory, requirements regarding the geographical location of productive units, the generation of employment or training of labor, or the conduct of research and development activities.
4. Inthe event that, in the judgment of a Party, the imposition by another Party of any other requirement not provided for in paragraph 1 adversely affects the flow of trade, or constitutes a significant barrier to investment, the matter shall be considered by the Commission.
5. If the Commission finds that the requirement in question does in fact adversely affect the flow of trade or constitutes a significant barrier to investment, it shall recommend to the Party concerned the suspension of the respective practice.
Article 17-05. Employment and Business Management.
Limitations on the number or proportion of foreigners who may work in an enterprise or perform managerial or administrative functions as provided for in the laws of each Party shall in no case prevent or hinder the exercise by an investor of control over its investment.
Article 17-06. Preparation of Reservations
1. Within eight months following the signature of the Treaty, the Parties shall draw up a Protocol consisting of four lists containing the sectors and sub-sectors in which each Party may maintain measures not in conformity with Articles 17-03, 17-04 and 17-05, in accordance with the following criteria:
a) with respect to the measures contained in Schedule 1, no Party shall increase the degree of nonconformity with those Articles as of the date of signature of this Agreement. Any amendment of any such measure shall not diminish the degree of conformity of the measure as in effect immediately prior to the amendment;
b) with respect to the measures contained in Schedule 2, each Party may adopt or maintain new measures inconsistent with those Articles or make such measures more restrictive;
c) List 3 shall contain the economic activities reserved to the State;
d) Schedule 4 shall contain exceptions to article 17-03, paragraph 2, in relation to bilateral or multilateral international treaties signed or to be signed by the Parties.
2. The Parties, in the negotiations referred to in Schedule 2 of paragraph 1, shall seek to reach agreements on the basis of reciprocity, aimed at achieving an overall balance in the concessions granted.
Article 17-07. Transfers.
1. Each Party shall permit all transfers relating to an investment of an investor of another Party in the territory of the Party to be made freely and without delay.
These transfers include:
a) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance, in-kind profits and other amounts derived from the investment;
b) proceeds from the sale or liquidation, in whole or in part, of the investment;
c) payments made under a contract to which an investor or its investment is a party;
d) payments derived from compensation for expropriation; and
e) payments arising from the application of the provisions relating to the dispute resolution system.
2. Each Party shall permit transfers to be made in freely convertible currencies at the market rate of exchange prevailing on the date of transfer for spot transactions in the currency to be transferred, subject to paragraph 6.
3. Notwithstanding the provisions of paragraphs 1 and 2, each Party may, to the extent and for so long as necessary, prevent transfers by equitable, non-discriminatory application of its laws in the following cases:
a) bankruptcy, insolvency or protection of creditors' rights;
b) issuance, trading and operations of securities;
c) criminal or administrative offenses; or
d) ensuring compliance with judgments in a contentious proceeding.
4. In addition, each Party may, through the equitable and non-discriminatory application of its laws, request information and establish reporting requirements for transfers of currency or other monetary instruments.
5. Each Party may retain laws and regulations providing for income and supplementary taxes by such means as withholding taxes applicable to dividends and other transfers, provided that they are not discriminatory.
6. Notwithstanding the provisions of this Article, each Party shall have the right, in circumstances of exceptional or severe balance of payments difficulties, to limit transfers temporarily and on an equitable and non-discriminatory basis, in accordance with internationally accepted criteria.
Article 17-08. Expropriation and Compensation.
1. No Party shall, except as provided in the Annex to this Article, expropriate or nationalize, directly or indirectly, an investment of an investor of another Party in its territory, or take any action tantamount to expropriation or nationalization of such investment (expropriation), except as provided in the Annex to this Article:
a) for reasons of public utility;
b) on a non-discriminatory basis;
c) in accordance with the principle of legality; and
d) by indemnification in accordance with paragraphs 2 to 4.
2. Compensation will be equivalent to the fair market value of the investment at the time of expropriation, and will not reflect any change in value due to the fact that the intention to expropriate was known prior to the date of expropriation. The valuation criteria will include the declared tax value of tangible assets, as well as other criteria that are appropriate to determine the fair market value.
3. The indemnity payment shall be fully liquidable and freely transferable under the terms of Article 17-07.