b) avoid technical interference with or impairment of public telecommunication services;
c) avoid electromagnetic interference and ensure compatibility with other uses of the electromagnetic spectrum;
d) prevent malfunctioning of the billing equipment; or
e) to ensure the security of the user and his access to and interworking with public telecommunication networks or services.
2. The Parties may establish the requirement of approval for terminal equipment or other systems and equipment, when these are intended to be connected to the public telecommunications network, provided that the approval criteria are compatible with the provisions of paragraph 1.
3. The user's terminal equipment may be approved or may be required to be approved, according to the conditions applicable for connection to the Party's public telecommunications network, in accordance with the provisions of this Article. Terminal equipment approved by an authority recognized by the Party concerned shall be sufficient and no Party shall require additional authorization on the approval aspects.
4. Each Party shall ensure that the terminal points of public telecommunications networks are defined on a reasonable and transparent basis.
5. Each Party, in relation to the approval:
a) ensure that its conformity assessment procedures are transparent and non-discriminatory and that applications for conformity assessment are processed expeditiously;
b) allow any technically qualified entity registered in the Parties to perform the required testing of terminal equipment or other equipment or system to be connected to the public telecommunications network, in accordance with the Party's evaluation procedures, without prejudice to the right of the Party to review the accuracy and completeness of the test results; and
c) ensure that the measures it adopts or maintains to authorize persons acting as agents of suppliers of telecommunications equipment to the Party's competent conformity assessment bodies are non-discriminatory.
6. Within twelve months after the entry into force of this Agreement, each Party, through the High Level Telecommunications Group of the Group of Three, shall adopt, among its conformity assessment procedures, the necessary provisions to accept the results of tests performed, based on its established standards and procedures, by laboratories authorized and recognized by competent entities, which are located in the territory of another Party.
7. The Parties, through the High Level Telecommunications Group of the Group of Three, shall design the work program for the implementation of the guidelines contained in this Chapter and established in accordance with the provisions of this Article.
Article 11-07. Monopolies.
1. Where a Party maintains or establishes a monopoly to provide public telecommunications networks and services, and that monopoly competes, directly or through affiliates, in the manufacture or sale of telecommunications goods, in the provision of value-added services, or other telecommunications services, the Party shall ensure that the monopolist does not use its monopoly position to engage in anti-competitive practices in those markets, either directly or through dealings with its affiliates, in a manner that adversely affects a person of another Party. Prohibitions may relate to cross-subsidies between enterprises, conduct leading to abuse of dominance, and discriminatory access to public telecommunications networks and services.
2. Each Party shall adopt or maintain effective measures to prevent the anticompetitive conduct referred to in paragraph 1, such as:
a) accounting requirements;
b) structural separation requirements;
c) rules to ensure that the monopoly grants its competitors access to and use of its telecommunications networks or services on terms and conditions no less favorable than those it grants to itself or its affiliates; or
d) rules to ensure timely disclosure of technical changes to public telecommunications networks and their interfaces.
3. Each Party shall inform the other Parties of the measures referred to in paragraph 2.
Article 11-08. Relationship with International Organizations and Agreements.
1. The Parties shall make their best efforts to encourage the performance of regional and subregional organizations and promote them as forums for the development of telecommunications in the region.
2. The Parties, recognizing the importance of international standards in achieving global compatibility and interoperability of telecommunication networks or services, undertake to promote the application of standards issued by competent international bodies, such as the International Telecommunication Union and the International Organization for Standardization.
3. In the case of particular or joint technological developments of the Parties, mechanisms shall be established for the application of regional standards related to such developments.
Article 11-09. Technical Cooperation.
1. In order to stimulate the development of interoperable telecommunications infrastructure and services, the Parties shall cooperate in the exchange of technological information, in the development of human resources in the sector, as well as in the creation and development of business, academic and intergovernmental exchange programs.
2. The Parties shall encourage and support cooperation in telecommunications at the international, regional and subregional levels.
Article 11-10. Transparency.
Each Party shall make available to the public and to the other Parties information on measures relating to access to and use of public telecommunications networks or services, including measures relating to:
a) rates and other terms and conditions of service;
b) specifications of the technical interfaces with these services and networks;
c) information on the authorities responsible for the development and adoption of standardization measures affecting such access and use;
d) conditions applicable to the connection of terminal or other equipment to the public telecommunications network;
e) any communication, permit, registration or licensing requirements.
Article 11-11. Denial of Benefits.
A Party may deny the benefits of this chapter:
a) to a person of another Party that supplies value-added services, if it determines that the service and the facilities incidental to its supply are located in the territory of a country that is not a Party to this Agreement; or
b) to a service supplier that is a juridical or legal person, if it establishes that the ownership or control of that person is ultimately vested in persons of a non-Party.
Article 11-12. Schedule for the Release of Value-added Services.
1. For value added services, the provisions of Chapter X shall apply. 2. The release of value-added services will be based on the following schedule:
a) each Party shall, upon entry into force of this Agreement, permit:
i) the cross-border provision of value-added services, with the exception of videotext services and enhanced packet-switched services;
ii) investment, up to 100%, by natural or juridical persons, including state enterprises of another Party, in enterprises established or to be established in its territory for the supply of value-added services, with the exception of videotext services and enhanced packet-switched services;
b) the limitations established in subparagraph a), with respect to videotext services and enhanced packet-switched services, shall be eliminated as of July 1, 1995.
Article 11-13. Other Provisions.
Subject to the analysis of the integration achieved in value-added services, the Parties shall, within two years following the entry into force of this Agreement, hold appropriate consultations to determine the deepening and broadening of the coverage of the free trade area in telecommunications services.
Chapter XII. Financial Services
Article 12-01. Definitions.
For the purposes of this chapter, the following definitions shall apply:
enterprise: any entity incorporated or organized under applicable law, whether or not for profit and whether privately or governmentally owned, including companies, partnerships, sole proprietorships, joint ventures or other associations.
public entity: a central bank, or monetary authority of a Party, or any financial institution of a public nature owned or controlled by a Party.
financial institution: any financial intermediary or other enterprise that is authorized to transact financial business and is regulated or supervised as a financial institution under the laws of the Party in whose territory it is located.
financial institution of another Party: a financial institution located in the territory of a Party that is controlled by persons of another Party.
investment:
a) acompany;
b) shares of a company;
c) an interest in an enterprise that entitles the owner to share in the income or profits of the enterprise;
d) an interest in a company that entitles the owner to participate in the equity of that company in a liquidation;
e) real estate or real property or other property, tangible or intangible, acquired or used for the purpose of economic benefit or for other business purposes; and
f) benefits derived from allocating capital or other resources to the development of an economic activity in the territory of another Party, in accordance with, inter alia:
i) contracts that involve the presence in the territory of another Party of assets of an investor, such as concessions, construction contracts and turnkey contracts; or
ii) contracts in which the consideration depends substantially on the production, revenues or profits of an enterprise.
Investment shall not be understood as an investment: a) pecuniary claims arising 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 extension of credit in connection with a commercial transaction, such as trade financing; or
b) any other pecuniary claim that does not involve the types of rights set forth in the subparagraphs of the definition of investment;
c) a loan granted by a financial institution or a debt security owned by a financial institution, unless it is a loan to a financial institution or a debt security of a financial institution that is treated as equity for regulatory purposes by the Party in whose territory the financial institution is located.
disputing investor: an investor of a Party that makes a claim under the rules relating to the settlement of disputes between a Party and an investor of another Party.
investment of an investor of a Party: an investment owned or controlled directly or indirectly by an investor of that Party in the territory of another Party.
investment of a non-Party: the investment of an investor that is not an investor of a Party.
investor of a Party: a Party or an enterprise of the State of that Party, or a person of that Party, that intends to make, is making or has made an investment in the territory of another Party.
measure: any action, act or decision, taken or which may be taken by a Party whether in the form of law, regulation, rule, procedure, administrative decision or provision, requirement or practice, or in any other form.
new financial service: a financial service not provided in the territory of the Party that is provided in the territory of another Party, and includes any new form of distribution of a financial service, or sale of a financial product that is not sold in the territory of the Party.
self-regulatory bodies: any non-governmental entity, including any stock or futures exchange or market, clearinghouse or any other association or organization exercising proprietary or delegated regulatory or supervisory authority over financial service providers or financial institutions.
person of a Party: a national or an enterprise of a Party, does not include a branch of an enterprise of a non- Party.
cross-border provision of financial services or cross-border trade in financial services: a) the supply of a financial service from the territory of a Party into the territory of another Party; (b) in the territory of a Party by a person of that Party to a person of another Party; or c) by a person of a Party in the territory of another Party.
financial service supplier of a Party: a person of a Party engaged in the business of supplying any financial service in the territory of the Party.
cross-border financial service supplier of a Party: a financial service supplier of a Party seeking to supply or supplying financial services through the cross-border supply of such services.
financial service: a service of a financial nature, including insurance, reinsurance, and any service related or auxiliary to a service of a financial nature.
Article 12-02. Scope of Application.
1. This chapter refers to a Party's measures relating to:
a) financial institutions of another Party;
b) investors of another Party and investments of such investors in financial institutions in the territory of the Party; and
c) cross-border trade in financial services.
2. This chapter does not apply to:
a) activities or services that are part of public retirement plans or public social security systems;
b) the use of financial resources owned by the Party;
c) other activities or services on behalf of, or with the guarantee of, the Party or its public entities.
3. Each Party undertakes to release progressively and gradually, through successive negotiations, any financial restrictions or reservations for the purpose of giving effect to economic complementation between them. In the event of any inconsistency between the provisions of this Chapter and any other provision of this Agreement, the provisions of this Chapter shall prevail to the extent of the inconsistency.
4. Articles 17-08 and 17-13 of Chapter XVII are an integral part of this chapter.
Article 12-03. Self-regulated Organizations.
Where a Party requires a financial institution or cross-border financial service provider of another Party to be a member of, participate in, or have access to a self-regulatory body in order to offer a financial service in or into its territory, the Party shall use its best efforts to bring that body into compliance with the obligations of this Chapter.
Article 12-04. Right of Establishment.
1. The Parties recognize the principle that investors of each Party engaged in the business of supplying financial services in the territory of that Party should be permitted to establish a financial institution in the territory of another Party, by whatever means of establishment and operation the latter may permit.
2. A Party may impose, at the time of establishment, terms and conditions that are consistent with Article 12-06.
Article 12-05. Cross-border Trade.
1. No Party shall increase the degree of non-conformity of its measures relating to cross-border trade in financial services by cross-border financial service suppliers of another Party after the entry into force of this Agreement.
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 another Party located in the territory of that other Party or of another Party. This does not oblige a Party to allow such service suppliers to do business or advertise in its territory. Subject to paragraph 1, each Party may define "doing business" and "advertising" for the purposes of this obligation.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require registration of cross-border financial service suppliers of another Party and of financial instruments.
Article 12-06. National Treatment.
1. In like circumstances, each Party shall accord to investors of another Party treatment no less favorable than that it accords to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments in financial institutions in its territory.
2. In like circumstances, each Party shall accord to financial institutions of another Party and to investments of investors of another Party in financial institutions, treatment no less favorable than that it accords to its own financial institutions and to investments of its own investors in financial institutions with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of financial institutions and investments.
3. In similar circumstances, under Article 12-05 where a Party permits the cross-border supply of a financial service, it shall accord to cross-border financial service suppliers of another Party treatment no less favorable than that it accords to its own financial service suppliers with respect to the supply of such service.
4. Treatment by a Party of financial institutions and cross-border financial service suppliers of another Party, whether identical to or different from that accorded to its own institutions or service suppliers in like circumstances, is consistent with paragraphs 1 to 3 if it provides equal opportunity to compete.
5. A Party's treatment does not provide equal opportunity to compete if, in like circumstances, it would disadvantage the financial institutions and cross-border financial service suppliers of another Party in their ability to supply financial services compared to the ability of the Party's own financial institutions and service suppliers to supply such services.
Article 12-07. Most Favored Nation Treatment.
Each Party shall accord to investors of another Party, financial institutions of another Party, investments of investors in financial institutions and cross-border financial service suppliers of another Party, in like circumstances, treatment no less favorable than that accorded to investors, financial institutions, investments of investors in financial institutions and cross-border financial service suppliers of another Party or of a non-Party.
Article 12-08. Recognition and Harmonization.
1. In applying the measures covered by this Chapter, a Party may recognize the prudential measures of another Party or a non-Party. Such recognition may be granted unilaterally, achieved through harmonization or other means, or on the basis of an agreement or arrangement with the other Party or the non-Party.
2. A Party granting recognition of prudential measures pursuant to paragraph 1 shall provide appropriate opportunities for any other Party to demonstrate that circumstances exist whereby there are or will be equivalent regulations, supervision and enforcement of the regulation, and, if appropriate, procedures for sharing information between the Parties.
3. Where a Party grants recognition of prudential measures in accordance with paragraph 1 and the circumstances set out in paragraph 2 exist, the Party shall provide adequate opportunity for another Party to negotiate accession to the agreement or arrangement, or to negotiate a similar agreement or arrangement.
Article 12-09. Exceptions.
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining reasonable prudential measures of a financial nature for such reasons as:
a) protect policyholders, as well as investors, depositors or other creditors, policyholders or beneficiaries or persons who are creditors of fiduciary obligations owed by a financial institution or a cross-border financial services provider;
b) to maintain the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service providers; and
c) to ensure the integrity and stability of the financial system of that Party.
2. Nothing in Chapters X, XI, XIII, XVI, XVII of this Agreement applies to nondiscriminatory measures of general application adopted by public entities responsible for adopting or conducting monetary or related credit or exchange rate policies. This paragraph shall not affect a Party's obligations under Articles 17- 04, 17-07 and 12-18.
3. Notwithstanding any other provision of this Agreement that permits a Party to restrict transfers, and notwithstanding Article 12-18, paragraphs 1 through 3, a Party may prevent or limit transfers by a financial institution or a cross-border financial service supplier to, or for the benefit of, an affiliate or a person related to that institution or that service supplier through the fair and non-discriminatory application of measures relating to the maintenance of the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service suppliers.
4. Article 12-06 shall not apply to the granting of exclusive rights by a Party to a financial institution to supply one of the financial services referred to in Article 12-02, paragraph 2(a).
Article 12-10. Transparency.
1. Each Party shall ensure that any measure it adopts on matters related to this Chapter is formally published or otherwise made known in writing in a timely manner to those to whom it is addressed.
2. The regulatory authorities of each Party shall make available to interested parties the requirements for completing an application for the supply of financial services.
3. At the request of the applicant, the regulatory authority shall inform him/her of the status of his/her application. When the regulatory authority requires additional information from the applicant, it shall inform the applicant without undue delay.
4. The regulatory authorities of each Party shall, within 120 days, issue an administrative ruling on a complete application related to the supply of a financial service submitted by an investor in a financial institution, by a financial institution or by a cross-border financial service supplier of another Party. The authority shall, without delay, communicate the determination to the interested party. The application shall not be considered complete until all relevant hearings have been held and all necessary information has been received. Where it is not practicable to issue a determination within 120 days, the regulatory authority shall inform the person concerned without undue delay and thereafter endeavor to issue the determination within a reasonable period of time.
5. Nothing in this chapter obligates a Party either to disclose or to allow access to:
a) information relating to the financial affairs and accounts of individual customers of financial institutions or of cross-border financial service providers; or
b) any confidential information the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or harm the legitimate commercial interests of particular enterprises.
6. Each Party shall maintain or establish one or more consultation centers, within 360 days after entry into force of this Agreement, to respond promptly to all reasonable inquiries from interested persons regarding measures of general application to be adopted by that Party relating to this Chapter.
Article 12-11. Financial Services Committee.
1. The Parties hereby establish the Financial Services Committee. The principal representative of each Party shall be an official of the competent authority of that Party.
2. The Committee:
a) supervise the implementation of this chapter and its further development;
b) consider the financial services aspects submitted to it by a Party;
c) participate in dispute settlement procedures in accordance with articles 12-19 and 12-20;
d) facilitate the exchange of information among supervisory authorities and cooperate, in the area of prudential regulatory advice, in seeking the harmonization of regulatory frameworks and other policies when deemed appropriate.
3. The Committee shall meet at least once a year to evaluate the operation of this Treaty with respect to financial services.
Article 12-12. Consultations.
1. Each Party may request consultations with another Party with respect to any matter related to this Agreement affecting financial services. The other Party shall give sympathetic consideration to such a request. The consulting Parties shall make the results of their consultations known to the Committee at its meetings.
2. Officials of the competent authorities of the Parties shall participate in the consultations provided for in this Article.
3. Each Party may request that the regulatory authorities of another Party intervene in consultations held pursuant to this Article to discuss measures of general application of that other Party that may affect the operations of financial institutions or cross-border financial service providers in the territory of the Party requesting the consultation.
4. Nothing in this Article shall be construed to require regulatory authorities involved in consultations under paragraph 3 to disclose information or act in a manner that would interfere with particular regulatory, supervisory, administrative or enforcement matters.
5. In cases where, for supervisory purposes, a Party needs information on a financial institution in the territory of another Party or on cross-border financial service providers in the territory of another Party, the Party may approach the responsible regulatory authority in the territory of the other Party to request the information.
Article 12-13. New Financial Services and Data Processing.
1. Each Party shall permit a financial institution of another Party to provide any new financial service of a type similar to those which that Party permits its financial institutions to provide under its law in like circumstances. The Party may decide the institutional and legal modality through which such service is offered and may require authorization for the provision of such service. When such authorization is required, the respective resolution shall be issued within a reasonable period of time and authorization may only be denied for prudential reasons.
2. Each Party shall permit financial institutions of another Party to transfer for processing information into or out of the territory of the Party, using any means authorized therein, when necessary to carry out the ordinary business activities of those institutions.
Article 12-14. Senior Management and Management Bodies.
1. No Party may require financial institutions of another Party to employ personnel of any particular nationality for senior corporate management or other key positions.
2. No Party may require that the board of directors or the board of trustees of a financial institution of another Party be composed of more than a simple majority of nationals of that Party, residents of its territory, or a combination of both.