- Each Party shall establish a work program to develop common procedures throughout its territory for the authorization of foreign legal consultants.
- Each Party shall promptly review any recommendation referred to in paragraphs 2 and 3 to ensure its consistency with this Agreement. If the recommendation is consistent with this Agreement, each Party shall encourage its competent authorities to implement the recommendation within one year.
- Each Party shall report to the Commission within one year of the date of entry into force of this Agreement, and each year thereafter, on its progress in implementing the work program referred to in paragraph 4.
- The Parties shall meet within one year of the date of entry into force of this Agreement with a view to:(a) assessing the implementation of paragraphs 2 through 5;(b) amending or removing, where appropriate, reservations on foreign legal consultancy services; and(c) assessing further work that may be appropriate regarding foreign legal consultancy services.
Section III. Temporary Licensing of Engineers
1. The Parties shall meet within one year of the date of entry into force of this Agreement to establish a work program to be undertaken by each Party, in conjunction with its relevant professional bodies, to provide for the temporary licensing in its territory of nationals of the other Party who are licenced as engineers in the territory of the other Party.
2. To this end, each Party shall consult with its relevant professional bodies to obtain their recommendations on:
(a) the development of procedures for the temporary licensing of such engineers to permit them to practice their engineering specialties in each jurisdiction in its territory;
(b) the development of model procedures for adoption by the competent authorities throughout its territory to facilitate the temporary licensing of such engineers;
(c) the engineering specialties to which priority should be given in developing temporary licensing procedures; and
(d) other matters relating to the temporary licensing of engineers identified by the Party in such consultations.
3. Each Party shall request its relevant professional bodies to make recommendations on the matters referred to in paragraph 2 within two years of the date of entry into force of this Agreement.
4. Each Party shall encourage its relevant professional bodies to meet at the earliest opportunity with the relevant professional bodies of the other Party with a view to cooperating in the development of joint recommendations on the matters referred to in paragraph 2 within two years of the date of entry into force of this Agreement. Each Party shall request an annual report from its relevant professional bodies on the progress achieved in developing those recommendations.
5. The Parties shall promptly review any recommendation referred to in paragraph 3 or 4 to ensure its consistency with this Agreement. If the recommendation is consistent with this Agreement, each Party shall encourage its competent authorities to implement the recommendation within one year.
6. The Commission shall review the implementation of this Section within two years of the date of entry into force of this Section.
Chapter H bis. Financial Services
Article Hbis-01. Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party relating to:
- a. financial institutions of the other Party;
- b. investors of the other Party, and investments of such investors, in financial institutions in the Party’s territory; and
- c. cross-border trade in financial services.
2. Articles G-09 (Investment – Transfers), G-10 (Investment – Expropriation and Compensation), G-11 (Investment – Special Formalities and Information Requirements), G-13 (Investment – Denial of Benefits), G-14 (Investment – Environmental Measures) and H-11 (Cross-Border Trade in Services – Denial of Benefits), including any Annex relevant to their interpretation and application, are hereby incorporated into and made a part of this Chapter. Section II of Chapter G (Investment) is hereby incorporated into and made a part of this Chapter solely for breaches by a Party of Articles G-09 (Investment –Transfers), G-10 (Investment – Expropriation and Compensation), G 11 (Investment – Special Formalities and Information Requirements) and G-13 (Investment – Denial of Benefits) as incorporated into this Chapter. No other provision of Chapter G (Investment) or H (Cross – Border Trade in Services) shall apply to a measure described in paragraph 1.
3. Nothing in this Chapter shall be construed to prevent a Party, including its public entities, from exclusively conducting or providing in its territory:
- a. activities or services forming part of a public retirement plan or statutory system of social security; or
- b. activities or services for the account or with the guarantee or using the financial resources of the Party, including its public entities.
Article Hbis-02. National Treatment
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords to its own investors, in like circumstances, 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. Each Party shall accord to financial institutions of the other Party and to investments of investors of the other Party in financial institutions treatment no less favourable than that it accords to its own financial institutions and to investments of its own investors in financial institutions, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments.
3. For purposes of the national treatment obligations in Article H bis-05(1), a Party shall accord to cross-border financial service suppliers of the other Party treatment no less favourable than that it accords to its own financial service suppliers, in like circumstances, with respect to the supply of the relevant service.
4. The treatment that a Party is required to accord under paragraphs 1, 2 and 3 means, with respect to measures adopted or maintained by a government of a Province, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that subnational government to investors in financial institutions, financial institutions, investments of investors in financial institutions and financial service suppliers of the Party of which it forms a part.
5. Differences in market share, profitability or size do not in themselves establish a breach of any of the obligations under this Article.
Article Hbis-03. Most-favoured-nation Treatment
1. Each Party shall accord to investors of the other Party, financial institutions of the other Party, investments of investors of the other Party in financial institutions and cross border financial service suppliers of the other Party treatment no less favourable than that it accords to the investors, financial institutions, investments of investors in financial institutions and cross-border financial service suppliers of a non-Party, in like circumstances.
2. A Party may recognize prudential measures of a non-Party in the application of measures covered by this Chapter. Such recognition may be:
a. accorded unilaterally;
b. achieved through harmonization or other means; or
c. based upon an agreement or arrangement with the non-Party.
3. A Party according recognition of prudential measures under paragraph 2 shall provide adequate opportunity to the other Party to demonstrate that circumstances exist in which there are or will be equivalent regulation, oversight, implementation of regulation, and, if appropriate, procedures concerning the sharing of information between the Parties.
4. Where a Party accords recognition of prudential measures under paragraph 2(c) and the circumstances set out in paragraph 3 exist, the Party shall provide adequate opportunity to the other Party to negotiate accession to the agreement or arrangement or to negotiate a comparable agreement or arrangement.
Article Hbis-04. Right of Establishment
1. A Party shall permit an investor of the other Party that does not own or control a financial institution in the Party’s territory to establish a financial institution permitted to supply financial services that such an institution may supply under the domestic law of the Party at the time of establishment, without the imposition of numerical restrictions or requirements to take a specific juridical form. The obligation not to impose requirements to take a specific juridical form does not prevent a Party from imposing conditions or requirements in connection with the establishment of a particular type of entity chosen by an investor of the other Party.
2. A Party shall permit an investor of the other Party that owns or controls a financial institution in the Party’s territory to establish such additional financial institutions as may be necessary for the supply of the full range of financial services allowed under the domestic law of the Party at the time of establishment of the additional financial institutions. Subject to Article H bis-02, a Party may impose terms and conditions on the establishment of additional financial institutions and determine the institutional and juridical form that shall be used for the supply of specified financial services or the carrying out of specified activities.
3. The right of establishment under paragraphs 1 and 2 shall include the acquisition of entities which already exist.
4. Subject to Article H bis-02, a Party may prohibit a particular financial service or activity. Such a prohibition may not apply to all financial services or to a complete financial services sub-sector such as banking.
5. For the purposes of this Article:
a. investor of the other Party means an investor of the other Party engaged in the business of providing financial services in the territory of that Party; and
b. numerical restrictions means limitations imposed, either on the basis of a regional subdivision or on the basis of the entire territory of a Party, on the number of financial institutions whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test.
Article Hbis-05. Cross-border Trade
1. Each Party shall permit, under terms and conditions that accord national treatment, cross-border financial service suppliers of the other Party to supply the financial services specified in Annex H bis-05.
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 the other Party located in the territory of the other Party. This obligation does not require a Party to permit such suppliers to do business or solicit in its territory. Subject to paragraph 1, each Party may define “doing business” and “solicitation” for purposes of this obligation.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration of cross-border financial service suppliers of the other Party and of financial instruments.
Article Hbis-06. New Financial Services
1. Each Party shall permit a financial institution of the other Party, on request or notification to the relevant regulator, where required, to supply any new financial service that the first Party would permit its own financial institutions, in like circumstances, to supply under its domestic law, provided that the introduction of the financial service does not require the Party to adopt a new statute or modify an existing one.
2. A Party may determine the institutional and juridical form through which the new financial service may be supplied and may require authorization for the supply of the service. Where such authorization is required, the decision shall be made within a reasonable time and authorization may only be refused for prudential reasons.
3. Nothing in this Article shall be construed to prevent a financial institution of a Party from applying to the other Party to consider authorizing the supply of a financial service that is not supplied within either Party’s territory. Such application shall be subject to the domestic law of the Party to which the application is made and shall not be subject to the obligations of this Article.
Article Hbis-07. Treatment of Certain Information
Nothing in this Chapter requires a Party to furnish or allow access to:
a. information related to the financial affairs and accounts of individual customers of financial institutions or cross-border financial service suppliers; or
b. any confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice legitimate commercial interests of particular enterprises.
Article Hbis-08. Senior Management and Boards of Directors
1. A Party may not require financial institutions of the other Party to engage individuals of any particular nationality as senior managerial or other essential personnel.
2. A Party may not require that more than a simple majority of the board of directors of a financial institution of the other Party be composed of nationals of the Party, persons residing in the territory of the Party, or a combination thereof.
Article Hbis-09. Non-conforming Measures and Certain Specific Commitments
1. Articles H bis-02, H bis-03 and H bis-08 do not apply to:
a. any existing non-conforming measure that is maintained by:
i. a Party at the national level, as set out in Section I of its Schedule to Annex VI, or
ii. a province or local government;
b. the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
c. an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with
2. Articles H bis-04 and H bis-05 do not apply to:
a. any existing non-conforming measure that is maintained by:
i. a Party at the national level, as set out in Section I of its Schedule to Annex VI, or
ii. a province or local government;
b. the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
c. an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed upon the entry into force of the Amending Agreement, with Articles H bis-04 and H bis-05.
3. Articles H bis-02, H bis-03, H bis-04, H bis-05 and H bis-08 do not apply to any non-conforming measure that a Party adopts or maintains in accordance with Section II of its Schedule to Annex VI.
4. Where a Party has set out a reservation to Article G-02 (Investment – National Treatment), G-03 (Investment – Most Favoured Nation Treatment), H-02 (Cross-Border Trade in Services – National Treatment) or H-03 (Cross-Border Trade in Services – Most Favoured-Nation-Treatment) in its Schedule to Annex I, II, or III, the reservation also constitutes a reservation to Article H bis-02 or H bis-03, as the case may be, to the extent that the measure, sector, subsector or activity set out in the reservation is covered by this Chapter.
5. Annex H bis-09 sets out certain specific commitments by each Party.
Article Hbis-10. Exceptions
1. Nothing in this Chapter or Chapters G (Investment), H (Cross-Border Trade in Services), I (Telecommunications), J (Competition Policy, Monopolies and State Enterprises) or K (Temporary Entry for Business Persons) of this Agreement shall be construed to prevent a Party from adopting or maintaining measures for prudential reasons, including for the protection of investors, depositors, policy holders, persons to whom a fiduciary duty is owed by a financial institution or cross-border financial service supplier, or to ensure the integrity and stability of the financial system (1). Where such measures do not conform with the provisions of this Chapter or of Chapters G (Investment), H (Cross-Border Trade in Services), I (Telecommunications), J (Competition Policy, Monopolies and State Enterprises) or K (Temporary Entry for Business Persons) of this Agreement, they shall not be used as a means of avoiding the Party’s obligations under such provisions (2).
2. Nothing in this Chapter or Chapters G (Investment), H (Cross-Border Trade in Services), I (Telecommunications), J (Competition Policy, Monopolies and State Enterprises) or K (Temporary Entry for Business Persons) of this Agreement applies to non-discriminatory measures of general application taken by any public entity in pursuit of monetary and related credit policies or exchange rate policies. This paragraph shall not affect a Party’s obligations under Article G-06 (Investment – Performance Requirements) with respect to measures covered by Chapter G (Investment) or Article G-09 (Investment – Transfers).
3. Notwithstanding Article G-09 (Investment – Transfers), as incorporated into this Chapter, a Party may prevent or limit transfers by a financial institution or cross-border financial service supplier to, or for the benefit of, an affiliate of or person related to such institution or supplier, through the equitable, non-discriminatory and good faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service suppliers. This paragraph does not prejudice any other provision of this Agreement that permits a Party to restrict transfers.
4. For greater certainty, nothing in this Chapter shall be construed to prevent the adoption or enforcement by a Party of measures necessary to secure compliance with laws or regulations that are not inconsistent with this Chapter, including those relating to the prevention of deceptive and fraudulent practices or to deal with the effects of a default on financial services contracts, subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on investment in financial institutions or cross-border trade in financial services as covered in this Chapter.
Article Hbis-11. Transparency
1. The Parties recognize that transparent regulations and policies governing the activities of financial institutions and financial service suppliers, as well as the reasonable, objective, and impartial administration of such regulations and policies are important in facilitating both access of financial institutions and financial service suppliers to, and their operations in, each other’s markets. Each Party commits to promoting regulatory transparency in financial services.
2. In lieu of Article L-02 (Publication, Notification and Administration of Laws – Publication) each Party shall, to the extent practicable:
- a. publish in advance any regulations of general application relating to the subject matter of this Chapter that it proposes to adopt;
- b. provide interested persons and the other Party a reasonable opportunity to comment on such proposed regulations; and
- c. allow reasonable time between publication of final regulations and their effective date.
3. Each Party’s regulatory authorities shall make available to interested persons their requirements, including any documentation required, for completing applications relating to the supply of financial services.
4. On the request of an applicant, a regulatory authority shall inform the applicant of the status of its application. If such authority requires additional information from the applicant, it shall notify the applicant without undue delay.
5. A regulatory authority shall make an administrative decision on a completed application of an investor in a financial institution, a financial institution or a cross-border financial service supplier of the other Party relating to the supply of a financial service within 120 days, and shall promptly notify the applicant of the decision. An application shall not be considered complete until all relevant hearings are held and all necessary information is received. Where it is not practicable for a decision to be made within 120 days, the regulatory authority shall notify the applicant without undue delay and shall endeavour to make the decision within a reasonable time thereafter.
6. Each Party shall maintain or establish appropriate mechanisms that will, as soon as practicable, respond to inquiries from interested persons regarding measures of general application covered by this Chapter.
Article Hbis-12. Self-regulatory Organizations
Where a Party requires a financial institution or a cross-border financial service supplier of the other Party to be a member of, participate in or have access to a self regulatory organization to provide a financial service in or into the territory of that Party, the Party shall ensure observance of the obligations of this Chapter by such a self regulatory organization.
Article Hbis-13. Payment and Clearing Systems
Under terms and conditions that accord national treatment, each Party shall grant to financial institutions of the other Party established in its territory access to payment and clearing systems operated by public entities, or to payment and clearing systems operated by any entity pursuant to governmental authority delegated to it by a Party, as well as to official funding and refinancing facilities available in the normal course of ordinary business. This Article is not intended to confer access to the Party’s lender of last resort facilities.
Article Hbis-14. State Enterprises
Each Party shall ensure, through regulatory control, administrative supervision or the application of other measures, that any state enterprise that it maintains or establishes, whenever such enterprise exercises any regulatory, administrative or other governmental authority that the Party has delegated to it, acts in a manner that is not inconsistent with the Party’s obligations under this Chapter.
Article Hbis-15. Financial Services Committee
1. The Parties hereby establish the Financial Services Committee (the “Committee”). The principal representative of each Party shall be an official of the Party’s authority responsible for financial services set out in Annex H bis-15.
2. In accordance with Article N-01(2)(d) (Institutional Arrangements and Dispute Settlement Procedures – the Free Trade Commission) the Committee shall:
- a. supervise the implementation of this Chapter and its further elaboration;
- b. consider issues regarding financial services that are referred to it by a Party; and
- c. participate in the dispute settlement procedures in accordance with Article H bis-18.
3. The Committee shall meet annually, or as otherwise agreed, to assess the functioning of this Agreement as it applies to financial services. The Committee shall inform the Commission of the results of each meeting.
Article Hbis-16. Consultations
1. A Party may request in writing consultations with the other Party regarding any matter arising under this Agreement that affects financial services. The other Party shall give sympathetic consideration to the request. The Parties shall report the results of their consultations to the Committee.
2. Officials from the authorities specified in Annex H bis-15 shall participate in the consultations under this Article.
3. A Party may request that regulatory authorities of the other Party participate in consultations under this Article regarding that other Party’s measures of general application which may affect the operations of financial institutions or cross-border financial service suppliers in the requesting Party’s territory.
4. Nothing in this Article shall be construed to require regulatory authorities participating in consultations to disclose information or take any action that would interfere with specific regulatory, supervisory, administrative or enforcement matters.
5. Where a Party requires information for supervisory purposes concerning a financial institution in the other Party’s territory or a cross-border financial service supplier in the other Party’s territory, the Party may approach the competent regulatory authority in the other Party’s territory to seek the information.
6.Nothing in this Article shall be construed to require a Party to derogate from its domestic law regarding the sharing of information among financial regulators or the requirements of an agreement or arrangement between financial authorities of the Parties.
Article Hbis-17. Dispute Settlement
1. Section II of Chapter N (Institutional Arrangements and Dispute Settlement Procedures), as modified by this Article, applies to the settlement of disputes arising under this Chapter.
2. Consultations held pursuant to Article H bis-16 with respect to a measure or matter constitute consultations under Article N-06 (Institutional Arrangements and Dispute Settlement Procedures – Consultations), unless the Parties otherwise agree. Upon initiation of consultations, the Parties shall provide information and give confidential treatment to the information exchanged in accordance with Article N-06(4)(b). If the matter has not been resolved within 45 days after commencing consultations under Article H bis-16 or 90 days after the delivery of the request for consultations under Article H bis-16, whichever is earlier, the complaining Party may request in writing the establishment of an arbitral panel.
3. The following procedures shall replace Article N-09 (Institutional Arrangements and Dispute Settlement Procedures – Panel Selection):
a. the panel shall be composed of three members;
b. each Party shall, within 30 days of the delivery of the request for the establishment of the panel, appoint a panelist who may be a national of that Party and notify the other Party in writing of the appointment. If a Party fails to appoint a panelist within 30 days, the other Party may request the Appointing Authority to appoint, in the discretion of the Appointing Authority, and subject to paragraph 4, the panelist not yet appointed;
c. the Parties shall endeavour to agree on the appointment of the third panelist who shall chair the panel and, unless the Parties agree otherwise, shall not be a national of either Party. If the chair of the panel has not been appointed within 30 days of the most recent appointment under subparagraph (b), either Party may request the Appointing Authority to appoint, in the discretion of the Appointing Authority, and subject to paragraph 4, the chair of the panel, who shall not be a national of either Party; and
d. subparagraphs (b) and (c) shall apply mutatis mutandis where a panelist or the chair of the panel withdraws, is removed or becomes unable to serve on the panel. In such a case, any time period applicable to the panel proceeding shall be suspended for a period beginning on the date the panelist ceases to serve and ending on the date the replacement is appointed.
4. Each panelist on panels constituted for disputes arising under this Chapter shall have the qualifications required by Article N-10 (Institutional Arrangements and Dispute Settlement Procedures – Qualifications of Panelists). In addition, each panelist shall have expertise or experience in financial services law or practice, which may include the regulation of financial institutions.
5. In any dispute where a panel finds a measure to be inconsistent with the obligations of this Agreement and the measure affects:
a. only the financial services sector, the complaining Party may suspend benefits only in the financial services sector;
b. the financial services sector and any other sector, the complaining Party may suspend benefits in the financial services sector that have an effect equivalent to the effect of the measures in the Party’s financial services sector; or
c. only a sector other than the financial services sector, the complaining Party may not suspend benefits in the financial services sector.
Article Hbis-18. Investment Disputes In Financial Services
1. Where an investor of a Party submits a claim under Article G-17 (Investment – Claim by an Investor of a Party on Its Own Behalf) or G-18 (Investment – Claim by an Investor of a Party on Behalf of an Enterprise) to arbitration under Section II of Chapter G (Investment) and the respondent Party invokes Article H bis-10, on request of the respondent Party the Tribunal shall refer the matter in writing to the Committee for a decision. The Tribunal may not proceed pending receipt of a decision or report under this Article.
2. In a referral pursuant to paragraph 1, the Committee shall decide the issue of whether and to what extent Article H bis-10 is a valid defence to the claim of the investor. The Committee shall transmit a copy of its decision to the Tribunal and to the Commission. The decision shall be binding on the Tribunal.
3. Where the Committee has not decided the issue within 60 days of the receipt of the referral under paragraph 1, either Party may request the establishment of an arbitral panel under Article N-08 (Institutional Arrangements and Dispute Settlement Procedures – Request for an Arbitral Panel) to decide the issue. The panel shall be constituted in accordance with Article H bis-17. Further to Article N-15 (Institutional Arrangements and Dispute Settlement Procedures – Final Report), the panel shall transmit its final report to the Committee and to the Tribunal. The report shall be binding on the Tribunal.
4. Where no request for the establishment of a panel pursuant to paragraph 3 has been made within 10 days of the expiration of the 60 day period referred to in paragraph 3, the Tribunal may proceed to decide the matter.
Article Hbis-19. Definitions
For purposes of this Chapter:
Amending Agreement means the Agreement to Amend the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, done at Santiago on 5 December 1996, as amended, between the Government of Canada and the Government of the Republic of Chile;
Appointing Authority means the President, the Vice-President or next senior Judge of the International Court of Justice, who is not a national of either Party;
cross-border financial service supplier of a Party means a person of a Party that is engaged in the business of supplying a financial service within the territory of the Party and that seeks to supply or supplies a financial service through the cross-border supply of such services;
cross-border trade in financial services or cross-border supply of financial services means the supply of a financial service:
- from the territory of one Party into the territory of the other Party;
- in the territory of a Party by a person of that Party to a person of the other Party; or
- by a national of a Party in the territory of the other Party;
but does not include the supply of a service in the territory of a Party by an investment in that territory;
existing means in effect on the date of entry into force of the Amending Agreement;
financial institution means any financial intermediary or other enterprise that is authorized to do business and regulated or supervised as a financial institution under the law of the Party in whose territory it is located;financial institution of the other Party means a financial institution, including a branch, located in the territory of a Party that is controlled by persons of the other Party;
financial service means any service of a financial nature. Financial services include all insurance and insurance-related services, and all banking and other financial services (excluding insurance), as well as services incidental or auxiliary to a service of a financial nature. Financial services include the following activities:
Insurance and insurance-related services
1. Direct insurance (including co-insurance)
Life
Non-Life
2. Reinsurance and retrocession;
3. Insurance intermediation, such as brokerage and agency;
4. Services auxiliary to insurance, such as consultancy, actuarial, risk assessment, and claim settlement services.
Banking and other financial services (excluding insurance)
5. Acceptance of deposits and other repayable funds from the public;
6. Lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transactions;
7. Financial leasing;
8. All payment and money transmission services, including credit, charge and debit cards, travelers checks, and bankers drafts;
9. Guarantees and commitments;
10. Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market, or otherwise, the following: