5. The application of competition law shall not obstruct the performance, in law or in fact, of the particular tasks of public interest assigned to the enterprises in question. Exemptions from the competition law of a Party shall be limited to tasks of public interest, proportionate to the desired public policy objective and transparent.
Section B. Subsidies
Article 10.4. Principles
1. The Parties agree that a Party may grant subsidies when they are necessary to achieve a public policy objective. The Parties acknowledge that certain subsidies have the potential to distort the proper functioning of markets and undermine the benefits of trade liberalisation. In principle, a Party should not grant subsidies to enterprises providing goods or services if they negatively affect, or are likely to negatively affect, competition and trade.
2. An illustrative list of public policy objectives for which a Party may grant subsidies, subject to the conditions set out in this Section, includes the following:
(a) making good the damage caused by natural disasters or exceptional occurrences;
(b) promoting the economic development of areas where the standard of living is abnormally low or where there is serious underemployment;
(c) remedying a serious disturbance in the economy of one of the Parties;
(d) facilitating the development of certain economic activities or of certain economic areas, including but not limited to, subsidies for clearly defined research, development and innovation purposes, subsidies for training or for the creation of employment, subsidies for environmental purposes, subsidies in favour of small and medium-sized enterprises as defined in the Parties' respective legislations; and
(e) promoting culture and heritage conservation.
3. Each Party shall ensure that enterprises use the specific subsidies provided by a Party only for the policy objective for which the specific subsidies have been granted. (42)
Article 10.5. Definition and Scope
1. For the purposes of this Section, a "subsidy" means a measure which fulfils the conditions set out in Article 1.1 of the SCM Agreement irrespective of whether it is granted to an enterprise manufacturing goods or supplying services (43).
2. This Section applies only to subsidies which are specific in accordance with Article 2 of the SCM Agreement. Subsidies to individual consumers or general measures, including subsidies or measures intended to achieve social policy objectives, are not considered as specific.
3. This Section applies to specific subsidies to all enterprises, including public and private enterprises.
4. The application of this Section shall not obstruct the performance, in law or in fact, of the particular tasks of public interest, including public service obligations, assigned to the enterprises concerned. Exemptions should be limited to tasks of public interest, proportionate to the public policy objectives assigned to those enterprises, and transparent.
5. This Section does not apply to non-economic activities.
6. Paragraph 1 of Article 10.9 (Specific Subsidies Subject to Conditions) does not apply to fisheries subsidies and subsidies related to trade in goods covered by Annex 1 to the Agreement on Agriculture.
7. This Section applies only to specific subsidies of which the amount per beneficiary over a period of three years is above 300 000 special drawing rights (44).
8. With regard to subsidies to enterprises supplying services, Article 10.7 (Transparency) and Article 10.9 (Specific Subsidies Subject to Conditions) apply only to the following services sectors: telecommunications, banking, insurance, transport including maritime transport, energy, computer services, architecture and engineering, and construction and environmental services, subject to the reservations provided for in Chapter 8 (Liberalisation of Investment, Trade in Services and Electronic Commerce).
9. This Section does not apply to sectors or sub-sectors which the Parties have not listed in Chapter 8 (Liberalisation of Investment, Trade in Services and Electronic Commerce).
10. Article 10.9 (Specific Subsidies Subject to Conditions) does not apply to subsidies formally agreed or granted before or within five years after the entry into force of this Agreement.
Article 10.6. Relationship with the WTO
This Section applies without prejudice to the rights and obligations of each Party under Article VI of GATT 1994, the SCM Agreement and the Agreement on Agriculture.
Article 10.7. Transparency
1. Each Party shall ensure transparency in the area of specific subsidies. To that end, each Party shall notify the other Party every four years of the legal basis, form, amount or budget, and if possible, the recipient of a specific subsidy (45).
2. The notification obligation referred to in paragraph 1 is deemed to have been fulfilled if the Party makes the relevant information available on a publicly accessible website, as from 31 December of the calendar year which follows the year when the subsidy was granted. The first notification shall be made available no later than four years after the date of entry into force of this Agreement.
Article 10.8. Consultations
1. If a Party considers that a specific subsidy granted by the other Party, which is not covered by Article 10.9 (Specific Subsidies Subject to Conditions), negatively affects or may negatively affect its trade or investment interests, that Party may express its concern in written form to the other Party and request consultations on the matter. The requested Party shall accord sympathetic consideration to this request. The consultations should, in particular, aim at identifying whether:
(a) the specific subsidy was only granted to achieve a public policy objective;
(b) the amount of the subsidy in question is limited to the minimum needed to achieve this objective;
(c) the subsidy creates an incentive; and
(d) the negative effect on trade and investment of the requesting Party is limited.
2. In order to facilitate the consultations, the requested Party shall provide information on the specific subsidy in question within 90 days of the date of receipt of the request. If the requesting Party, after receiving information on the subsidy in question, considers that the subsidy concerned by the consultations negatively affects or may negatively affect in a disproportionate manner its trade or investment interests, the requested Party shall use its best endeavours to eliminate or minimise these negative effects caused by the subsidy in question.
Article 10.9. Specific Subsidies Subject to Conditions
1. The Parties shall apply conditions to the following specific subsidies:
(a) a legal arrangement whereby a government or any public body is responsible for covering debts or liabilities of certain enterprises is allowed, provided that the coverage of the debts and liabilities is limited as regards the amount of those debts and liabilities or the duration of that responsibility;
(b) support to insolvent or ailing enterprises in various forms, such as loans and guarantees, cash grants, capital injections, provision of assets below market prices, and tax exemptions, with a duration of more than one year is allowed provided that a credible restructuring plan has been prepared, which is based on realistic assumptions with a view to ensuring the return of the enterprise to long-term viability within a reasonable time and with the enterprise itself contributing to the costs of restructuring (46).
2. Paragraph 1 does not apply to specific subsidies for which the Party granting the subsidy has demonstrated, upon a written request of the other Party, that the subsidy in question does neither affect nor is likely to affect trade or investment of the other Party.
3. Paragraph 1 does not apply to specific subsidies that are granted to remedy a serious disturbance in the economy of a Party. A disturbance in the economy of a Party shall be considered serious if it is exceptional, temporary and significant and affects the Member States or the whole economy of a Party rather than a specific region or economic sector.
Article 10.10. Review
The Parties shall review this Section no later than five years after the entry into force of this Agreement and at regular intervals thereafter. The Parties shall consult each other on the need to modify this Section in light of the experience gained and the development of any corresponding rules in the WTO. The Parties shall, in particular, review the inclusion of additional services sectors under the scope of this Section in Article 10.5 (Definition and Scope).
Section C. Definitions and Common Principles
Article 10.11. Definitions
For the purposes of this Chapter:
(a) "public policy objective" means the general goal to deliver an outcome in the overall public benefit; and
(b) "tasks of public interest" means specific activities which deliver outcomes in the overall public benefit that would not be supplied or would be supplied under different conditions in terms of accessibility, quality, safety, affordability or equal treatment by the market without public intervention.
Article 10.12. Confidentiality
1. When exchanging information under this Chapter, the Parties shall take into account the limitations imposed by their respective legislation concerning professional and business secrecy and shall ensure the protection of business secrets and other confidential information.
2. Any information communicated under this Agreement shall be treated by the receiving Party as confidential unless the other Party has authorised the disclosure or made that information available to the general public.
Article 10.13. Dispute Settlement
No Party shall have recourse to dispute settlement under this Agreement for any matter arising under Section A (Anti- Competitive Conduct) of this Chapter and Article 10.8 (Consultations).
Article 10.14. Cooperation
In order to fulfil the objectives of this Chapter and to enhance effective competition enforcement, the Parties acknowledge that it is in their common interest to strengthen cooperation with regard to competition policy development, including subsidy control, subject to the availability of funding under the Parties' cooperation instruments and programmes.
Chapter 11. State-owned Enterprises, Enterprises Granted Special Rights or Privileges, and Designated Monopolies
Article 11.1. Definitions
For the purposes of this Chapter:
(a) "commercial activities" means activities the end result of which is the production of a good or supply of a service, which will be sold in the relevant market in quantities and at prices determined by the enterprise, and are undertaken with an orientation towards profit-making; (47)
(b) "commercial considerations" means price, quality, availability, marketability, transportation and other terms and conditions of purchase or sale, or other factors that would normally be taken into account in the commercial decisions of an enterprise operating according to market economy principles in the relevant business or industry;
(c) "designate" means to establish or authorise a monopoly, or to expand the scope of a monopoly to cover an additional good or service;
(d) "designated monopoly" means an entity, including a group of entities or a government agency, and any subsidiary thereof, that in a relevant market in the territory of a Party is designated as the sole supplier or purchaser of a good or service, but does not include an entity that has been granted an exclusive intellectual property right solely by reason of such grant;
(e) "enterprise granted special rights or privileges" means any enterprise, including any subsidiary, public or private, that has been granted by a Party, in law or in fact, special rights or privileges;
(f) "special rights or privileges" means rights or privileges granted by a Party to a limited number of enterprises, or any subsidiaries thereof, within a given geographical area or product market, the effect of which is to substantially limit the ability of any other enterprise to carry out its activity in the same geographical area or product market in like circumstances; the granting of a license or a permit to a limited number of enterprises in allocating a scarce resource through objective, proportional and non-discriminatory criteria is not in and of itself a special right or privilege; and
(g) "state-owned enterprise" means an enterprise, including any subsidiary, in which a Party, directly or indirectly:
(i) owns more than 50 per cent of the enterprise's subscribed capital or controls more than 50 per cent of the votes attached to the shares issued by the enterprise;
(ii) can appoint more than half of the members of the enterprise's board of directors or an equivalent body; or (ii) can exercise control over the strategic decisions of the enterprise.
Article 11.2. Scope of Application
1. The Parties affirm their rights and obligations under paragraphs 1 to 3 of Article XVII of GATT 1994 and the Understanding on the Interpretation of Article XVII of the General Agreement On Tariffs And Trade 1994 as well as under paragraphs 1, 2 and 5 of Article VIII of GATS which are hereby incorporated into and made part of this Agreement, mutatis mutandis.
2. This Chapter applies to all state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies, engaged in a commercial activity. If an enterprise combines commercial and non-commercial activities (48), only the commercial activities of that enterprise are covered by this Chapter.
3. This Chapter does not apply to state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies, for which a Party has taken measures on a temporary basis in response to a national or global economic emergency.
4. This Chapter does not apply to state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies if in any one of the three previous consecutive years the annual revenue derived from the commercial activities of that enterprise or that monopoly was less than 200 million special drawing rights. (49) This threshold applies to state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies, at sub-central levels of government, as from five years after the date of entry into force of this Agreement.
5. This Chapter does not apply to covered procurement by a Party or its procuring entities within the meaning of Article 9.2 (Scope and Coverage).
6. This Chapter does not apply to state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies, owned or controlled by a governmental authority of a Party in charge of national defence, public order or public security, except if these are engaged exclusively in commercial activities unrelated to national defence, public order or public security.
7. This Chapter does not apply to any service supplied by state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies, in the exercise of governmental authority. (50)
8. This Chapter does not apply to measures or activities listed in Annex 11 (Specific Rules for Viet Nam on State-Owned Enterprises, Enterprises Granted Special Rights or Privileges, and Designated Monopolies).
Article 11.3. General Provisions
1. Nothing in this Chapter shall affect the laws and regulations of a Party governing its systems of state ownership.
2. Without prejudice to the Parties' rights and obligations under this Chapter, nothing in this Chapter shall prevent a Party from establishing or maintaining state-owned enterprises, from granting enterprises special rights or privileges, or from designating or maintaining monopolies.
3. A Party shall not require or encourage its state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies to act in a manner inconsistent with this Chapter.
Article 11.4. Non-Discrimination and Commercial Considerations
1. Each Party shall ensure that its state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies, when engaging in commercial activities:
(a) act in accordance with commercial considerations in their purchases or sales of goods or services, except to fulfil the terms of their public mandate that are not inconsistent with subparagraph 1(b);
(b) in their purchase of a good or service:
(i) accord to a good or service supplied by an enterprise of the other Party treatment no less favourable than they accord to a like good or a like service supplied by enterprises of the Party; and
(ii) accord to a good or service supplied by an enterprise of investors of the other Party in the Party's territory treatment no less favourable than they accord to a like good or a like service supplied by enterprises of investors of the other Party in the relevant market in the Party's territory;
(c) in their sale of a good or service:
(i) accord to an enterprise of the other Party treatment no less favourable than they accord to enterprises of the Party; and
(i) accord to an enterprise of investors of the other Party in the Party's territory treatment no less favourable than they accord to enterprises of investors of the other Party in the relevant market in the Party's territory.
2. Paragraph 1 does not preclude state-owned enterprises, enterprises granted special rights or privileges or designated monopolies from:
(a) purchasing or supplying goods or services on different terms or conditions, including those relating to price, or
(b) refusing to purchase or supply goods or services,
provided that such different terms or conditions or refusal is undertaken in accordance with commercial considerations.
3. Paragraphs 1 and 2 do not apply to the sectors referred to in Article 8.3 (Scope) and Article 8.9 (Scope).
4. Paragraphs 1 and 2 apply to commercial activities of state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies, if the same activity would affect trade in services and investment with respect to which a Party has undertaken a commitment under Articles 8.5 (National Treatment), 8.6 (Most-Favoured-Nation Treatment), 8.11 (National Treatment), subject to the conditions or qualifications set out in its Schedule of Specific Commitments in Annex 8-A (The Union's Schedule of Specific Commitments) or 8-B (Viet Nam's Schedule of Specific Commitments), respectively, pursuant to Articles 8.7 (Schedule of Specific Commitments) and 8.12 (Schedule of Specific Commitments). For greater certainty, in the event of a conflict between paragraph 4 of Article 11.2 Scope of Application) and the conditions or qualifications set out in a Party's Schedule of Specific Commitments pursuant to Articles 8.7 (Schedule of Specific Commitments) and 8.12 (Schedule of Specific Commitments), those schedules shall prevail.
Article 11.5. Regulatory Framework
1. The Parties shall endeavour to ensure that state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies observe internationally recognised standards of corporate governance.
2. Each Party shall ensure that its regulatory bodies or functions are not accountable to any enterprises or entities that they regulate in order to ensure the effectiveness of the regulatory bodies or functions, and act impartially (51) in like circumstances with respect to all enterprises or entities that they regulate, including state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies (52).
3. Each Party shall ensure the enforcement of laws and regulations in a consistent and non-discriminatory manner, including with regard to state-owned enterprises, enterprises granted special rights or privileges, and designated monopolies.
Article 11.6. Transparency
1. A Party which has reasonable reason to believe that its interests under this Chapter are being adversely affected by the commercial activities of a state-owned enterprise, an enterprise granted special rights or privileges, or a designated monopoly, of the other Party may request the other Party in writing to provide information about the operations of that enterprise or monopoly. The request shall indicate the enterprise or monopoly, the products or services and markets concerned, and include indications that the enterprise or monopoly is engaging in practices that hinder trade or investment between the Parties.
2. The information referred to in paragraph 1 shall include:
(a) the ownership and the voting structure of the enterprise or monopoly, indicating the percentage of shares and the percentage of voting rights that a Party or a state-owned enterprise, an enterprise granted special rights or privileges, or a designated monopoly cumulatively own;
(b) a description of any special shares or special voting or other rights that a Party or a state-owned enterprise, an enterprise granted special rights or privileges, or a designated monopoly hold, where such rights differ from the rights attached to the common shares of such enterprise or monopoly;
(c) the organisational structure of the enterprise or monopoly, the composition of its board of directors or of an equivalent body exercising direct or indirect control in such an enterprise or entity, and cross-holdings and other links with different state-owned enterprises, enterprises granted special rights or privileges, or designated monopolies;
(d) a description of which government departments or public bodies regulate or monitor the enterprise or monopoly, a description of the reporting lines (53), and the rights and practices of the government department or public bodies in the appointment, dismissal or remuneration of managers;
(e) annual revenue or total assets, or both;
(f) exemptions, immunities and any other measures, including more favourable treatment, applicable in the territory of the requested Party to any state-owned enterprise, enterprise granted special rights or privileges, or designated monopoly.
3. A Party may request the other Party to provide additional information regarding the calculations of the revenue threshold referred to in paragraph 4 of Article 11.2 (Scope of Application).
4. Paragraphs 1 to 3 shall not require a Party to disclose confidential information which would be inconsistent with its laws and regulations, impede law enforcement or otherwise be contrary to the public interest or prejudice the legitimate commercial interests of particular enterprises.
5. In the case of the Union, subparagraphs 2(a) to 2(e) do not apply to enterprises which qualify as small or medium-sized enterprises as defined in Union law.
Article 11.7. Technical Cooperation
Recognising the importance of promoting effective legal and regulatory frameworks for state-owned enterprises, the Parties shall engage in mutually agreed technical cooperation activities with a view to promoting efficiency and transparency of state-owned enterprises, subject to the availability of funding under the Party's cooperation instruments and programmes.
Chapter 12. Intellectual Property
Section A. General Provisions and Principles
Article 12.1. Objectives
1. The objectives of this Chapter are to:
(a) facilitate the creation, production and commercialisation of innovative and creative products between the Parties, contributing to a more sustainable and inclusive economy in each Party; and
(b) achieve an adequate and effective level of protection and enforcement of intellectual property rights.
2. The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.
Article 12.2. Nature and Scope of Obligations
1. The Parties affirm their rights and obligations under the international treaties dealing with intellectual property to which they are party, including the TRIPS Agreement. The Parties shall ensure an adequate and effective implementation of those treaties. This Chapter shall complement and further specify those rights and obligations between the Parties with an aim at ensuring adequate and effective implementation of those treaties, as well as the balance between the rights of intellectual property holders and the interest of the public.
2. For the purposes of this Agreement, intellectual property refers at least to all categories of intellectual property that are referred to in Sections 1 to 7 of Part II of the TRIPS Agreement, namely:
(a) copyright and related rights;
(b) trademarks;
(c) geographical indications;
(d) industrial designs;
(e) patent rights;
(f) layout-designs (topographies) of integrated circuits; (g) protection of undisclosed information; and
(h) plant varieties.
3. The protection of intellectual property includes protection against unfair competition as referred to in Article 10bis of the Paris Convention for the Protection of Industrial Property of 20 March 1883, as last revised at Stockholm on 14 July 1967 (hereinafter referred to as "the Paris Convention").
Article 12.3. Most-Favoured-Nation Treatment
With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Party to the nationals of any third country shall be accorded immediately and unconditionally to the nationals of the other Party, subject to the exceptions provided for in Articles 4 and 5 of the TRIPS Agreement.
Article 12.4. Exhaustion
Each Party shall be free to establish its own regime for the exhaustion of intellectual property rights subject to the relevant provisions of the TRIPS Agreement.