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Proposal for a COUNCIL DECISION on the provisional application of the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part

COM/2016/0470 final - 2016/0220 (NLE)
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Strasbourg, 5.7.2016

COM(2016) 470 final

2016/0220(NLE)

Proposal for a

COUNCIL DECISION

on the provisional application of the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part


EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

Reasons for and objectives of the proposal

On the basis of negotiating directives adopted by the Council, the European Commission has negotiated the Comprehensive Economic and Trade Agreement (CETA) with a view to establishing a state of the art and priviledged economic relationship with Canada. Canada is a strategic partner of the European Union with whom we share a past history based on common values and interests, and with whom we also wish to define a positive forward-looking relationship for the future. This should create new opportunities for trade and investment between the European Union and Canada, notably through improved market access for goods and services and enhanced rules on trade for economic actors.

To this end, the EU and Canada have reached an ambitious agreement which will open up new opportunities for trade and investment for economic actors on both sides of the Atlantic. Both sides have also underlined through this agreement the importance of economic activity taking place within a framework of clear and transparent regulation defined by public authorities, and that they consider the right to regulate in the public interest as a basic underlying principle of the Agreement.

The attached proposal for a Council Decision constitutes the legal instrument for the provisional application of the Comprehensive Economic and Trade Agreement (CETA)
between the European Union and its Member States, of the one part, and Canada, of the other part.

The CETA negotiations were completed and initialled at the level of the Chief Negotiators on 1 August 2014 and President Barroso, President Van Rompuy and Prime Minister Harper jointly announced the end of the CETA negotiations at the EU-Canada Summit on 26 September 2014 following which the text of the agreement was made public the same day. The legally reviewed text of CETA has been published on 29 February 2016 and can be found on the following link:

http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf

Consistency with existing policy provisions in the policy area

The EU and Canada have a longstanding trade and economic cooperation relationship, developed under the 1976 Framework Agreement for Commercial and Economic Cooperation, the 1996 Joint Action Plan and the 1998 EU-Canada Trade Initiative. In addition, the EU and Canada have concluded several bilateral sectoral agreements, notably the 1996 Agreement for Scientific and Technological Cooperation, the 1998 Agreement on Mutual Recognition of Conformity Assessments, the 1998 Veterinary Agreement, the 1999 Competition Agreement, the 2003 Agreement on Trade in Wines and Spirits Drinks, the 2009 Civil Aviation Safety Agreement and the 2009 Comprehensive Air Transport Agreement.

These agreements will remain in place with the exception that:

The 1989 Alcoholic Beverages Agreement and the 2003 Wines and Spirit Drinks Agreement will be incorporated into and made part of CETA, as amended by Annex 30-B.

The 1998 Agreement on Mutual Recognition will be terminated from the date of entry into force of CETA.

The EU and Canada recognise the achievements that have been accomplished under the Agreement between the European Community and the Government of Canada on sanitary measures to protect public and animal health in respect of trade in live animals and animal products, done at Ottawa on 17 December 1998 (the “Veterinary Agreement”) and confirm their intention to continue this work under CETA. The 1998 Veterinary Agreement shall be replaced by CETA from the date of entry into force of CETA.

The bilateral agreements listed below shall cease to have effect, and shall be replaced and superseded by CETA. The termination of those agreements shall take effect from the date of entry into force of CETA.

Agreement between the Government of the Republic of Croatia and the Government of Canada for the Promotion and Protection of Investments, done at Ottawa on 3 February 1997.

Agreement between the Czech Republic and Canada for the Promotion and Protection of Investments, done at Prague on 6 May 2009.

Agreement between the Government of the Republic of Hungary and the Government of Canada for the Promotion and Reciprocal Protection of Investments, done at Ottawa on 3 October 1991.

Agreement between the Government of the Republic of Latvia and the Government of Canada for the Promotion and Protection of Investments, done at Riga on 5 May 2009.

Exchange of Notes between the Government of Canada and the Government of the Republic of Malta Constituting an Agreement Relating to Foreign Investment Insurance, done at Valletta on 24 May 1982.

Agreement between the Government of the Republic of Poland and the Government of Canada for the Promotion and Reciprocal Protection of Investments, done at Warsaw on 6 April 2009.

Agreement between the Government of Romania and the Government of Canada for the Promotion and Reciprocal Protection of Investments, done at Bucharest on 8 May 2009.

Agreement between the Slovak Republic and the Government of Canada for the Promotion and Protection of Investments, done at Bratislava on 20 July 2010.

Consistency with other Union policies

CETA is fully consistent with Union policies, including those affecting international trade. In this respect, CETA will not lower or amend EU legislation, nor it will amend, reduce or eliminate EU standards in any regulated area. All imports from Canada will have to satisfy EU rules and regulations (e.g. technical rules and product standards, sanitary or phytosanitary rules, regulations on food and safety, health and safety standards, rules on GMO’s, environmental protection, consumer protection, etc…).

CETA also includes chapters on Trade and Sustainable Development, Trade and Labour and Trade and Environment, which link the trade agreement to the EU’s overall objectives in sustainable development and specific objectives in the area of labour, environment, and climate change.

Furthermore, like in all its other trade agreements, in CETA the EU fully safeguards public services. EU Member States will be able to run public monopolies for a particular service if they wish to. CETA will not force or incite governments to privatise or deregulate public services like water supply, health, social services or education. EU Member States will continue to be able to decide which services they wish to keep universal and public and to subsidise them if they want to. In addition, nothing in CETA will stop a government in a EU Member State to reverse in the future at any time any autonomous decision it may have taken to privatise these sectors.

CETA ensures that Governments’ right to regulate for public policies is fully preserved. In addition, any decision of the CETA Joint Committee has to be approved by each Party, and therefore subject to the EU’s applicable internal requirements and procedures.

The Regulatory Cooperation Forum within CETA will function as a voluntary cooperation mechanism to exchange experiences and relevant information among regulators, and to help identify areas where regulators could cooperate. It will not be able to change existing regulations or develop new legislation. The Regulatory Cooperation Forum will only provide assistance and make suggestions to regulators and legislators. It will in no way restrict the decision-making power of regulators in the EU's Member States or at EU level.

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

Legal basis

CETA has identical objectives and essentially the same contents as the Free Trade Agreement with Singapore (EUSFTA). Therefore, the Union's competence is the same in both cases. In view of the doubts raised with regard to the extent and the nature of the Union's competence to conclude EUSFTA, in July 2015 the Commission requested from the Court of Justice an opinion under Article 218(11) TFEU (case A – 2/15). In case A -2/15 the Commission has expressed the view that the Union has exclusive competence to conclude EUSFTA alone and, in the alternative, that it has at least shared competence in those areas where the Union's competence is not exclusive. Many Member States, however, have expressed a different opinion. In view of this, and in order not to delay the signature of the Agreement, the Commission has decided to propose the signature of the Agreement as a mixed agreement. Pending the completion of the procedures for its conclusion, the agreement should be provisionally applied. Nevertheless, this is without prejudice to the views expressed by the Commission in Case A – 2/15. Once the Court issues its opinion in case A-2/15, it will be necessary to draw the appropriate conclusions.

Subsidiarity (for non-exclusive competence)

The common commercial policy, in accordance with Article 3 of the TFEU, is defined as an exclusive Union competence. The Commission takes the view that other matters falling outside of the common commercial policy covered under this Agreement fall under the EU's exclusive competence.

Proportionality

This proposal is in line with the vision of Europe 2020 strategy and contributes to the Union's trade and development objectives.

Choice of the instrument

This proposal is in accordance with Article 218(5) TFEU, which envisages the adoption by the Council of decisions on international agreements. There exists no other legal instrument that could be used in order to achieve the objective expressed in this proposal.

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

Ex-post evaluations/fitness checks of existing legislation

Not applicable.

Stakeholder consultations

Prior to the start of the negotiations with Canada, the EU and Canada decided in 2007 to jointly undertake a study to examine and assess the costs and benefits of a closer economic partnership. In the context of this joint study 1 , the European Commission and Canada carried out two stakeholder consultations. The European Commission undertook a web-based civil society consultation in February and March 2008 on the basis of a questionnaire covering various aspects of the EU-Canada trade and investment relationship. In March and April 2008 Canada distributed a similar questionnaire among the members of its domestic steering committee.

A high proportion of the respondents expressed the view that, despite the robustness of the existing trade and investment relationship between the EU and Canada, there were still many obstacles and therefore much potential to improve the bilateral relationship.

There was a general consensus among EU respondents that enhanced economic cooperation between Canada and the EU was desirable.

There appeared to be a particular emphasis on the need to remove tariff peaks and onerous non-tariff barriers to trade as well as a strong request for enhanced regulatory cooperation.

In addition, during the CETA negotiations, a range of consultation methods were used in the context of the Sustainability Impact Assessment 2 . This included amongst others civil society meetings, a stakeholder workshop, and a project website with a discussion forum. The civil society meetings took place in Brussels and Ottawa and were attended by broad section of different interest groups and unions. The stakeholder workshop in Ottawa included participants from industry and trade associations, labour organisations, public workers’ unions and unions for workers in private sector, environmental organisations, etc. Several academic and institute-based experts also provided helpful comments on the SIA.

Collection and use of expertise

A Joint EU-Canada study was produced with the assistance of Professor Walid Hejazi (Rotman Business School, University of Toronto) for the drafting of this study and Professor Joe Francois (University of Linz) for the economic modelling part of the study.

The CETA Sustainability Impact Assessment has been carried out by the external contractor “Development Solutions”.

Impact assessment

In October 2008, the EU and Canada released their joint study "Assessing the Costs and Benefits of a Closer EU-Canada Economic Partnership". At the time the study indicated that the liberalisation of trade in goods and services will bring benefits both to the EU and to Canada. The full report is available on the DG TRADE website:

http://trade.ec.europa.eu/doclib/docs/2008/october/tradoc_141032.pdf

Furthermore, the Sustainability Impact Assessment (SIA), carried out during the negotiation, provides a comprehensive assessment of the potential impacts of trade liberalisation under the Agreement. The analysis assesses the economic, social and environmental impacts in Canada and the European Union across three main sectors, sixteen sub-sectors and seven cross-cutting issues. It also assesses the potential impacts of CETA on the U.S., Mexico and other countries and regions, including a number of developing countries as well as the EU Overseas Customs and Territories of Saint-Pierre-et-Miquelon and Greenland. The terms of reference, interim report, and the final report are available on the DG TRADE website:

http://ec.europa.eu/trade/policy/policy-making/analysis/sustainability-impact-assessments/assessments/#study-geo-14

The EU and Canada have reached an ambitious agreement which will open new opportunities for trade and investment on both sides of the Atlantic and support jobs in Europe. CETA will remove customs duties, end limitations on access to public contracts, open up services' market, offer predictable conditions for investors and, last but not least, help prevent illegal copying of EU innovations and traditional products. The agreement also contains all the guarantees to make sure that the economic gains do not come at the expense of fundamental rights, social standards, governments' right to regulate, environment protection or consumers' health and safety.

Regulatory fitness and simplification

CETA is not subject to REFIT procedures; nevertheless it does have some special provisions for SMEs (for example potentially reducing the cost of litigation under the Investment Court System for claimants who are SMEs).

Fundamental rights

The proposal does not affect the protection of fundamental rights in the Union.

4.BUDGETARY IMPLICATIONS

The impact of this agreement for the EU budget will be twofold:

On the INCOME: it is estimated that foregone duty will reach an amount of € 311 million upon full implementation of the Agreement after seven years, as 97,7 % of the EU tariffs lines will be eliminated at the entry into force of the agreement and then an additional 1% gradually within 3, 5 or 7 years. The amount of € 311 million corresponds to the 80 % of estimated duties collected by EU Member States on imported Canadian products on the basis of 2015 data. The estimate takes into account the new Own Resources Decision, which lowers the collecting costs that Member States retain, from 25% to 20%.

On the EXPENDITURE: the CETA will be the first to incorporate the new Investment Court System (ICS) in the context of the Investment Dispute Resolution System. Accordingly, an amount of € 0,5 million of additional yearly expenditure is foreseen from 2017 onwards (subject to ratification) to finance the permanent structure comprising a First Instance and an Appeal Tribunal.

On the other hand, the proposal entails the use of administrative resources under budget line XX 01 01 01 (Expenditure related to officials and temporary staff working with the Institution), since it is estimated that one Administrator will be dedicated as FTE to the tasks inherent to this agreement. This is indicated in the Legislative Financial Statement and is subject to the conditions mentioned in it.

5.OTHER ELEMENTS

Implementation plans and monitoring, evaluation and reporting arrangements

The administrative and institutional chapter establishes a CETA Joint Committee that will continuously monitor the implementation, operation and impact of this agreement. The CETA Joint Committee is comprised of representatives of the European Union and representatives of Canada who will meet once a year or at the request of a Party and will supervise the work of all specialised committees and other bodies established under this Agreement.

It is important to note that the CETA Joint Committee is not an independent body and shall make its decisions and recommendations only by agreement between the EU and Canada. It will in no way restrict the decision-making power of regulators in the EU's Member States or at EU level, or of their authorising institutions.

The EU and Canada may, through the CETA Joint Committee, decide to amend the Annexes. When the Parties approve such a decision, it has to be subject to their respective applicable internal requirements and procedures. The EU therefore decides whether or not to agree to a decision of the Joint Committee by following the EU internal procedures as stipulated in the EU Treaty. The CETA Joint Committee can therefore not act without a decision of the EU institutions, taken according to the EU’s internal legal process.

The possibility of Joint Committees adopting certain amendments is a common feature of all international agreements, including EU trade agreements.

As a special procedure, as stated in Article 30.2, the CETA Joint Committee cannot decide to amend a specific list of annexes for which the full amendment procedure will be needed. This list includes: Chapter 8 - Investment, Chapter 9 - Cross-Border Trade in Services, Chapter 10 - Temporary Entry and Stay of Natural Persons for Business Purposes, and Chapter 13 - Financial Services (with the exception for Annex 10-A List of Contact Points of the Member States of the European Union).

The following specialised committees will be established under the auspices of the CETA Joint Committee:

the Committee on Trade in Goods, which addresses matters concerning trade in goods, tariffs, technical barriers to trade, the Protocol on the mutual acceptance of the results of conformity assessment and intellectual property rights related to goods. The Committee on Agriculture, the Committee on Wines and Spirits, and the Joint Sectoral Group on Pharmaceuticals shall also be established under and report to the Committee on Trade in Goods.

the Committee on Services and Investment, which addresses matters concerning cross-border trade in services, investment, temporary entry, electronic commerce, and intellectual property rights related to services.

the Joint Customs Cooperation Committee (JCCC), established under the 1998 Agreement between the European Community and Canada on Customs Cooperation and Mutual Assistance in Customs Matters, which addresses matters under this Agreement concerning rules of origin, origin procedures, customs and trade facilitation, border measures and temporary suspension of preferential tariff treatment;

the Joint Management Committee on Sanitary and Phytosanitary Measures, which addresses matters concerning sanitary and phytosanitary measures;

the Committee on Government Procurement, which addresses matters concerning government procurement;

the Financial Services Committee, which addresses matters concerning financial services;

the Committee on Trade and Sustainable Development, which addresses matters concerning sustainable development;

the Regulatory Cooperation Forum, which addresses matters concerning regulatory cooperation; and

the CETA Committee on Geographical Indications, which addresses matters concerning geographical indications.

To the extent that any of such specialised Committee has any decision-making power under CETA, those decisions will be taken in the same manner as those of the Joint Committee.

Implementation in the EU

Certain actions will need to be taken in order to ensure implementation of the Agreement. These will be put in place in time for the application of the Agreement. These are a Commission implementing regulation to be adopted pursuant to Article 58(1) of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code opening the tariff rate quotas provided for by the Agreement.

Explanatory documents (for directives)

Not applicable.

Detailed explanation of the specific provisions of the proposal

CETA is a comprehensive trade and investment agreement which contains provisions on national treatment and market access for goods, trade remedies, technical barriers to trade, sanitary and phytosanitary measures, customs and trade facilitation, subsidies, investment, cross-border trade in services, temporary entry and stay of natural persons for business purposes, mutual recognition of professional qualifications, domestic regulation, financial services, international maritime transport services, telecommunications, electronic commerce, competition policy, state enterprises, monopolies, and enterprises granted special rights or privileges, government procurement, intellectual property, regulatory cooperation, trade and sustainable development, trade and labour, trade and environment, bilateral dialogues and cooperation, administrative and institutional provisions, transparency and dispute settlement.

CETA will significantly improve business opportunities for European companies in Canada. With CETA, European companies will receive the best treatment that Canada has ever offered to any trading partner, thus levelling the playing field on the Canadian market for EU companies.

By opening markets, CETA should support growth and jobs in the EU and bring further benefits for European consumers. It has the potential to keep prices down and provide consumers with greater choice of quality products. CETA will not change EU standards. Standards and regulations related to food safety, product safety, consumer protection, health, environment, social or labour standards etc. will remain untouched. All imports from Canada will have to satisfy all EU product rules and regulations – without exception.

More specifically CETA will offer:

Savings on customs duties

CETA will bring tangible benefits to European consumers and companies by eliminating or cutting customs duties– some of the most far reaching cuts achieved by the EU in a trade agreement. This will provide important market opportunities for European companies including SMEs. Importantly, most customs duties will be removed as soon as CETA comes into effect. Cutting customs duties will not lower or change EU standards. Canadian imports will have to respect EU regulations.

Opportunities for service suppliers and transparent and effective investment protection and dispute settlement mechanisms

CETA is by far the most far reaching agreement ever concluded by EU in the area of services and investment. European firms will have more opportunities to provide specialised maritime transport services like dredging, moving empty containers, and shipping of certain cargo within Canada. European firms will also have new advantages when it comes to getting investment projects approved in Canada, protecting their investments and enforcing their rights in case of unfair treatment through a balanced and effective dispute settlement system. For all services sectors, such as environmental services, telecom and finance, market access is ensured, both at federal level and - for the first time – provincial level. In CETA – as in all its trade agreements – the EU protects public services. Again, Canadian investors and service providers will have to respect applicable EU regulations.

Investment protection and investment dispute settlement

CETA includes all the innovations of the EU's new approach on investment and its dispute settlement mechanism, thus meeting the expectations of stakeholders for a fairer, more transparent and institutionalised system for the settlement of investment disputes. It introduces important innovations in this field, ensuring a high level of protection for investors, while fully preserving the right of governments to regulate and pursue legitimate public policy objectives such as the protection of health, safety or the environment. CETA represents a significant break with the traditional approach to investment protection and settlement of investment disputes in most of the existing bilateral investment treaties worldwide. It removes ambiguities that made the old system open to abuses or excessive interpretations and creates an independent investment court system, consisting of a permanent tribunal and an appeal tribunal that will conduct dispute settlement proceedings in a transparent and impartial manner.

Mutual recognition of professional qualifications

The agreement provides a framework to facilitate the mutual recognition of qualifications in regulated professions such as architects, accountants and engineers. The relevant professional organisations in the EU and Canada now have a framework that sets out the conditions for the negotiation of mutual recognition agreements for their respective professions. These will then have to be confirmed and agreed by the EU and Canada.

Easier transfers of company staff and other professionals between the EU and Canada

CETA will make it easier for firms to move staff temporarily between the EU and Canada. This will facilitate European companies' operations in Canada. It will be also easier for providers of professional services to temporarily supply legal, accounting, architectural or similar services.

Improve ability of European companies to provide after sales services

CETA will make it easier for EU firms to export equipment, machinery and software by allowing firms to send maintenance engineers and other specialists to provide after-sales and related services.

Access to Canadian public tenders

Canada has opened up its government tenders to EU companies to a greater extent than with any of its other trading partners. EU firms will be able to bid to provide goods and services not only at federal level but also to Canadian provinces and municipalities, the first non-Canadian firms to be able to do so. Canada’s provincial procurement market is estimated to be double the size of its federal equivalent.

Avoiding costs related to double testing

The EU and Canada have agreed to accept each other’s conformity assessment certificates in areas such as electrical goods, electronic and radio equipment, toys, machinery or measuring equipment. This means that a conformity assessment body in the EU can test EU products for export to Canada according to Canadian rules and vice versa. This will avoid both sides doing the same test and could greatly reduce costs for companies and consumers alike. This is of particular benefit to smaller companies for whom paying twice for the same test can be prohibitive. While this falls short of how the EU operates within its borders, it is nevertheless a very big step forward in the EU's International agreements.

Better protection for EU innovation and creative works

CETA will create a more level playing field between Canada and the EU on intellectual property rights. It will strengthen the protection of copyrights (alignment with EU rules on protection of technological measures and digital rights management as well as on the liability of internet service providers) and enforcement (namely by foreseeing the possibility of provisional measures and injunctions for intermediaries involved in infringing activities). It will improve how Canada’s IPR system protects patents for EU pharmaceutical products. Canada also agreed to strengthen its border measures against counterfeit trademark goods, pirated copyright goods and counterfeit geographical indication goods.

Market advantage for producers of traditional European products

Many medium-sized and smaller businesses trading in agricultural products will benefit from Canada agreeing to protect 143 geographical indications for high-quality European products, such as Roquefort cheese, balsamic vinegar from Modena or Dutch Gouda cheese and many others.

Commitment to Sustainable Development

In CETA, the EU and Canada affirm their commitment to sustainable development. Both agree that trade and investment should further environmental protection and labour rights – and not be at their expense. The EU and Canada are committed to CETA helping to ensure that economic growth, social development and environmental protection are mutually supportive. CETA integrates the EU’s and Canada's obligations to international rules on workers’ rights and environmental protection, and gives a strong role to EU and Canadian civil society in participating in the implementation of the commitments in these areas in CETA. CETA also sets up a process for settling disputes, including government consultations and a panel of experts.

2016/0220 (NLE)

Proposal for a

COUNCIL DECISION

on the provisional application of the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 91, Article 100(2) and the first subparagraph of Article 207(4), in conjunction with Article 218(5), thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)On 24 April 2009 the Council authorised the Commission to open negotiations for a Comprehensive Economic and Trade Agreement with Canada.

(2)The negotiations have been concluded.

(3)In accordance with Council Decision No [XX], the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part, was signed on [27 October 2016].

(4)Article 30.7(3) of the Agreement provides for its provisional application.

(5)The Agreement should be applied on a provisional basis, subject to the fulfilment of the procedures required for its conclusion at a later date.

(6)Pursuant to Article 218(7) of the Treaty on the Functioning of the European Union, it is appropriate for the Council to authorise the Commission to approve modifications to Annex 20-A of the Agreement to be adopted by the CETA Joint Committee, as set out in Article 26.1 of the Agreement, on a recommendation by the CETA Committee on Geographical Indications pursuant to Article 20.22 of the Agreement.

(7)In accordance with Article 30.6(1) of the Agreement it should not confer rights or obligations which can be directly invoked before Union or Member State courts or tribunals.

HAS ADOPTED THIS DECISION:

Article 1

1.The Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part shall be applied on a provisional basis by the Union as provided for in its Article 30.7(3), pending the completion of the procedures for its conclusion.

2.In order to determine the date of provisional application, the Council shall fix the date by which the notification referred to in Article 30.7(3) of the Agreement is to be sent to Canada.

3.The date from which the Agreement will be provisionally applied will be published in the Official Journal of the European Union by the General Secretariat of the Council.

Article 2

For the purposes of Article 20.22 of the Agreement, modifications to Annex 20-A of the Agreement through decisions of the CETA Joint Committee shall be approved by the Commission on behalf of the Union. If an opposition is received in the framework of the examination carried out under Article 20.19.1, and no agreement can be reached between interested parties, the Commission shall adopt its position in accordance with the procedure laid down in Article 57(2) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council.

Article 3

This Decision shall enter into force on the day of its adoption.

Done at Strasbourg,

   For the Council

   The President

LEGISLATIVE FINANCIAL STATEMENT

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.Title of the proposal/initiative

1.2.Policy area(s) concerned in the ABM/ABB structure

1.3.Nature of the proposal/initiative

1.4.Objective(s)

1.5.Grounds for the proposal/initiative

1.6.Duration and financial impact

1.7.Management mode(s) planned

2.MANAGEMENT MEASURES

2.1.Monitoring and reporting rules

2.2.Management and control system

2.3.Measures to prevent fraud and irregularities

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

3.2.Estimated impact on expenditure 

3.2.1.Summary of estimated impact on expenditure

3.2.2.Estimated impact on operational appropriations

3.2.3.Estimated impact on appropriations of an administrative nature

3.2.4.Compatibility with the current multiannual financial framework

3.2.5.Third-party contributions

3.3.Estimated impact on revenue

LEGISLATIVE FINANCIAL STATEMENT

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.Title of the proposal/initiative

Comprehensive Economic and Trade Agreement (CETA)

1.2.Policy area(s) concerned in the ABM/ABB structure 3  

20.02 – Trade Policy

1.3.Nature of the proposal/initiative

 The proposal/initiative relates to a new action 

 The proposal/initiative relates to a new action following a pilot project/preparatory action 4  

 The proposal/initiative relates to the extension of an existing action 

 The proposal/initiative relates to an action redirected towards a new action 

1.4.Objective(s)

1.4.1.The Commission's multiannual strategic objective(s) targeted by the proposal/initiative

The proposal can be framed in the the first of the ten Juncker priorities – Job, Growth and Investment.

1.4.2.Specific objective(s) and ABM/ABB activity(ies) concerned

Specific objective No

1

ABM/ABB activity(ies) concerned

20.02 Trade Policy .

1.4.3.Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

CETA will bring tangible benefits to European consumers and companies by eliminating or cutting customs duties.

The provisions in the CETA agreement having a budgetary impact relate to the setting up and running of the Investment Court System (ICS).

The establishment of new Investment Court System will meet the high expectations of citizens and industry for a fairer, more transparent and institutionalised system of settling investment disputes.

In addition, the agreement will impact customs duties (see 3.3).

1.4.4.Indicators of results and impact

Specify the indicators for monitoring implementation of the proposal/initiative.

Maintaining or improving level of trade and investment flows between the EU and Canada.

1.5.Grounds for the proposal/initiative

1.5.1.Requirement(s) to be met in the short or long term

Maintain or improve level of trade and investment flows between the EU and Canada.

1.5.2.Added value of EU involvement

Canada is one of the EUs oldest and closest strategic partners in the world. We have a long history of shared values and therefore work closely together on many global challenges such as the environment, climate change, energy security, regional stability etc. Canada is the 11th largest economy in the world and is the 12th largest trading partner of the EU. With CETA, European companies will receive the best treatment that Canada has ever offered to any trading partner, thus levelling the playing field on the Canadian market for EU operators. By opening markets, CETA should support growth and jobs in the EU and bring further benefits for European consumers.

1.5.3.Lessons learned from similar experiences in the past

N/A

1.5.4.Compatibility and possible synergy with other appropriate instruments

N/A

1.6.Duration and financial impact

 Proposal/initiative of limited duration

   Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY

   Financial impact from YYYY to YYYY

☑ Proposal/initiative of unlimited duration

Implementation with a start-up period from 2017 (subject to ratification in the Council and the European Parliament).

followed by full-scale operation.

1.7.Management mode(s) planned 5  

 Direct management by the Commission

◻ by its departments, including by its staff in the Union delegations;

   by the executive agencies

 Shared management with the Member States

Indirect management by entrusting budget implementation tasks to:

◻ third countries or the bodies they have designated;

☑ international organisations and their agencies (to be specified);

◻the EIB and the European Investment Fund;

◻ bodies referred to in Articles 208 and 209 of the Financial Regulation;

◻ public law bodies;

◻ bodies governed by private law with a public service mission to the extent that they provide adequate financial guarantees;

◻ bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that provide adequate financial guarantees;

◻ persons entrusted with the implementation of specific actions in the CFSP pursuant to Title V of the TEU, and identified in the relevant basic act.

If more than one management mode is indicated, please provide details in the ‘Comments’ section.

Comments

A contribution will be given to an "existing structure" (namely, the ICSID) so that it channels the retainer fees to be paid to the judges composing the ICS. It is only in case that a dispute arises that the fees for case management could materialize, the services of ICSID as secretariat being otherwise free of charge.

2.MANAGEMENT MEASURES

2.1.Monitoring and reporting rules

Specify frequency and conditions.

As per the provisions of the framework agreement concluded with the organisation concerned.

2.2.Management and control system

2.2.1.Risk(s) identified

As per the provisions of the framework agreement concluded with the organisation concerned.

2.2.2.Information concerning the internal control system set up

As per the provisions of the framework agreement concluded with the organisation concerned. In particular, the applicable verification rules.

2.2.3.Estimate of the costs and benefits of the controls and assessment of the expected level of risk of error

Given the estimated financial impact, no substantive quantifiable costs or benefits can be identified. The contribution will be part of DG Trade’s overall control system. As regards non-quantifiable benefits.

2.3.Measures to prevent fraud and irregularities

Specify existing or envisaged prevention and protection measures.

As per the provisions of the framework agreement concluded with the organisation concerned. In addition, DG Trade’s anti-fraud strategy, which contains a dedicated chapter on financial management, will apply.

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

Existing budget lines

In order of multiannual financial framework headings and budget lines.

Heading of multiannual financial framework

Budget line

Type of
expenditure

Contribution

Number
4

Diff./Non-diff. 6

from EFTA countries 7

from candidate countries 8

from third countries

within the meaning of Article 21(2)(b) of the Financial Regulation

20.0201

Diff.

NO

NO

NO

NO

New budget lines requested

In order of multiannual financial framework headings and budget lines.

Heading of multiannual financial framework

Budget line

Type of
expenditure

Contribution

Number
N/A

Diff./Non-diff.

from EFTA countries

from candidate countries

from third countries

within the meaning of Article 21(2)(b) of the Financial Regulation

N/A

YES/NO

YES/NO

YES/NO

YES/NO

3.2.Estimated impact on expenditure

3.2.1.Summary of estimated impact on expenditure

EUR million (to three decimal places)

Heading of multiannual financial
framework

Number

4

DG: TRADE

Year
2017

Year
2018

Year
2019

Year
2020

Enter as many years as necessary to show the duration of the impact (see point 1.6)

TOTAL

• Operational appropriations

Number of budget line 20.0201

Commitments

(1)

0.500

0.500

0.500

0.500

2.000

Payments

(2)

0.500

0.500

0.500

0.500

2.000

Number of budget line

Commitments

(1a)

-

-

-

-

Payments

(2a)

-

-

-

-

Appropriations of an administrative nature financed from the envelope of specific programmes 9  

0

0

0

0

Number of budget line

(3)

TOTAL appropriations
for DG TRADE

Commitments

=1+1a +3

0.500

0.500

0.500

0.500

2.000

Payments

=2+2a

+3

0.500

0.500

0.500

0.500

2.000






TOTAL operational appropriations

Commitments

(4)

0.500

0.500

0.500

0.500

2.000

Payments

(5)

0.500

0.500

0.500

0.500

2.000

• TOTAL appropriations of an administrative nature financed from the envelope for specific programmes

(6)

0

0

0

0

TOTAL appropriations
under HEADING 4
of the multiannual financial framework

Commitments

=4+ 6

0.500

0.500

0.500

0.500

2.000

Payments

=5+ 6

0.500

0.500

0.500

0.500

2.000

If more than one heading is affected by the proposal / initiative:

• TOTAL operational appropriations

Commitments

(4)

Payments

(5)

• TOTAL appropriations of an administrative nature financed from the envelope for specific programmes

(6)

TOTAL appropriations
under HEADINGS 1 to 4
of the multiannual financial framework

(Reference amount)

Commitments

=4+ 6

Payments

=5+ 6





Heading of multiannual financial
framework

5

‘Administrative expenditure’

EUR million (to three decimal places)

Year
2017

Year
2018

Year
2019

Year
2020

Enter as many years as necessary to show the duration of the impact (see point 1.6)

TOTAL

DG: TRADE

• Human resources

0.134

0.134

0.134

0.134

0.536

• Other administrative expenditure

0

0

0

0

TOTAL DG TRADE

Appropriations

0.134

0.134

0.134

0.134

0.536

TOTAL appropriations
under HEADING 5
of the multiannual financial framework
 

(Total commitments = Total payments)

0.134

0.134

0.134

0.134

0.536

EUR million (to three decimal places)

Year
N 10

Year
N+1

Year
N+2

Year
N+3

Enter as many years as necessary to show the duration of the impact (see point 1.6)

TOTAL

TOTAL appropriations
under HEADINGS 1 to 5
of the multiannual financial framework
 

Commitments

0.634

0.634

0.634

0.634

2.536

Payments

0.634

0.634

0.634

0.634

2.536

3.2.2.Estimated impact on operational appropriations

   The proposal/initiative does not require the use of operational appropriations

   The proposal/initiative requires the use of operational appropriations, as explained below:

Commitment appropriations in EUR million (to three decimal places)

Indicate objectives and outputs

Year
2017

Year
2018

Year
2019

Year
2020

Enter as many years as necessary to show the duration of the impact (see point 1.6)

TOTAL

OUTPUTS

Type 11

Average cost

No

Cost

No

Cost

No

Cost

No

Cost

No

Cost

No

Cost

No

Cost

Total No

Total cost

SPECIFIC OBJECTIVE No 1 12

Running of the ICS

- Output

Secretariat

1

0.500

0.500

0.500

0.500

- Output

Case(s)

-

p.m.

p.m.

p.m.

- Output

Subtotal for specific objective No 1

0.500

0.500

0.500

0.500

SPECIFIC OBJECTIVE No 2 ...

- Output

Subtotal for specific objective No 2

TOTAL COST

0.500

0.500

0.500

0.500

3.2.3.Estimated impact on appropriations of an administrative nature

3.2.3.1.Summary

   The proposal/initiative does not require the use of appropriations of an administrative nature

   The proposal/initiative requires the use of appropriations of an administrative nature, as explained below:

EUR million (to three decimal places)

Year
N 13

Year
N+1

Year
N+2

Year
N+3

Enter as many years as necessary to show the duration of the impact (see point 1.6)

TOTAL

HEADING 5
of the multiannual financial framework

Human resources

0.134

0.134

0.134

0.134

0.536

Other administrative expenditure

0

0

0

0

Subtotal HEADING 5
of the multiannual financial framework

Outside HEADING 5 14
of the multiannual financial framework

Human resources

Other expenditure
of an administrative nature

Subtotal
outside HEADING 5
of the multiannual financial framework

TOTAL

0.134

0.134

0.134

0.134

0.536

The appropriations required for human resources and other expenditure of an administrative nature will be met by appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

3.2.3.2.Estimated requirements of human resources

   The proposal/initiative does not require the use of human resources.

   The proposal/initiative requires the use of human resources, as explained below:

Estimate to be expressed in full time equivalent units

Year
N

Year
N+1

Year N+2

Year N+3

Enter as many years as necessary to show the duration of the impact (see point 1.6)

• Establishment plan posts (officials and temporary staff)

XX 01 01 01 (Headquarters and Commission’s Representation Offices)

1

1

1

1

XX 01 01 02 (Delegations)

XX 01 05 01 (Indirect research)

10 01 05 01 (Direct research)

External staff (in Full Time Equivalent unit: FTE) 15

XX 01 02 01 (AC, END, INT from the ‘global envelope’)

XX 01 02 02 (AC, AL, END, INT and JED in the delegations)

XX 01 04 yy  16

- at Headquarters

- in Delegations

XX 01 05 02 (AC, END, INT - Indirect research)

10 01 05 02 (AC, END, INT - Direct research)

Other budget lines (specify)

TOTAL

1

1

1

1

XX is the policy area or budget title concerned.

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

Description of tasks to be carried out:

Officials and temporary staff

Monitoring of the running of the ICS/Case handling

External staff

3.2.4.Compatibility with the current multiannual financial framework

   The proposal/initiative is compatible the current multiannual financial framework.

   The proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework.

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding amounts.

[…]

   The proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework.

Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts.

[…]

3.2.5.Third-party contributions

The proposal/initiative does not provide for co-financing by third parties.

The proposal/initiative provides for the co-financing estimated below:

Appropriations in EUR million (to three decimal places)

Year
N

Year
N+1

Year
N+2

Year
N+3

Enter as many years as necessary to show the duration of the impact (see point 1.6)

Total

Specify the co-financing body : Canadian government

0.500

0.500

0.500

0.500

2.000

TOTAL appropriations co-financed

0.500

0.500

0.500

0.500

2.000



3.3.Estimated impact on revenue

   The proposal/initiative has no financial impact on revenue.

   The proposal/initiative has the following financial impact:

   on own resources

   on miscellaneous revenue

EUR million (to three decimal places)

Budget revenue line:

Appropriations available for the current financial year (B2016)

Impact of the proposal/initiative 17

Year
N

Year
N+1

Year
N+2

…………

Year
N+7

Enter as many years as necessary to show the duration of the impact (see point 1.6)

Article 120 - Custom Duties

18.465,30

……………

311

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected.

[…]

Specify the method for calculating the impact on revenue.

Duty loss has been calculated on the basis of 2015 data, the budgetary impact of which will be EUR 311 million (80% of EUR 390 million). These duty losses will be spread out over a total of 7 years. The EU will eliminate 97.7% of the EU tariff lines at the entry into force of the agreement and then gradually within 3, 5 or 7 years for an additional 1% of tariff lines for imports of goods originating in Canada.

(1) http://trade.ec.europa.eu/doclib/docs/2008/october/tradoc_141032.pdf  
(2) http://trade.ec.europa.eu/doclib/docs/2011/september/tradoc_148201.pdf  
(3) ABM: activity-based management; ABB: activity-based budgeting.
(4) As referred to in Article 54(2)(a) or (b) of the Financial Regulation.
(5) Details of management modes and references to the Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html
(6) Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.
(7) EFTA: European Free Trade Association.
(8) Candidate countries and, where applicable, potential candidate countries from the Western Balkans.
(9) Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.
(10) Year N is the year in which implementation of the proposal/initiative starts.
(11) Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).
(12) As described in point 1.4.2. ‘Specific objective(s)…’
(13) Year N is the year in which implementation of the proposal/initiative starts.
(14) Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.
(15) AC= Contract Staff; AL = Local Staff; END= Seconded National Expert; INT = agency staff; JED= Junior Experts in Delegations.
(16) Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines).
(17) As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 25 % for collection costs.
Top

Strasbourg, 5.7.2016

COM(2016) 470 final

ANNEX

to the

Proposal for a Council Decision

on the provisional application of the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part


COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA)

BETWEEN CANADA, OF THE ONE PART,

AND THE EUROPEAN UNION AND ITS MEMBER STATES,

THE KINGDOM OF BELGIUM,

THE REPUBLIC OF BULGARIA,

THE CZECH REPUBLIC,

THE KINGDOM OF DENMARK,

THE FEDERAL REPUBLIC OF GERMANY,

THE REPUBLIC OF ESTONIA,

IRELAND,

THE HELLENIC REPUBLIC,

THE KINGDOM OF SPAIN,

THE FRENCH REPUBLIC,

THE REPUBLIC OF CROATIA,

THE ITALIAN REPUBLIC,


THE REPUBLIC OF CYPRUS,

THE REPUBLIC OF LATVIA,

THE REPUBLIC OF LITHUANIA,

THE GRAND DUCHY OF LUXEMBOURG,

HUNGARY,

THE REPUBLIC OF MALTA,

THE KINGDOM OF THE NETHERLANDS,

THE REPUBLIC OF AUSTRIA,

THE REPUBLIC OF POLAND,

THE PORTUGUESE REPUBLIC,

ROMANIA,

THE REPUBLIC OF SLOVENIA,

THE SLOVAK REPUBLIC,


THE REPUBLIC OF FINLAND,

THE KINGDOM OF SWEDEN,

THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,

OF THE OTHER PART,

hereafter jointly referred to as the "Parties",

resolve to:

FURTHER strengthen their close economic relationship and build upon their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994, and other multilateral and bilateral instruments of cooperation;

CREATE an expanded and secure market for their goods and services through the reduction or elimination of barriers to trade and investment;

ESTABLISH clear, transparent, predictable and mutuallyadvantageous rules to govern their trade and investment;

AND,


REAFFIRMING their strong attachment to democracy and to fundamental rights as laid down in The Universal Declaration of Human Rights, done at Paris on 10 December 1948, and sharing the view that the proliferation of weapons of mass destruction poses a major threat to international security;

RECOGNISING the importance of international security, democracy, human rights and the rule of law for the development of international trade and economic cooperation;

RECOGNISING that the provisions of this Agreement preserve the right of the Parties to regulate within their territories and the Parties' flexibility to achieve legitimate policy objectives, such as public health, safety, environment, public morals and the promotion and protection of cultural diversity;

AFFIRMING their commitments as parties to the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions, done at Paris on 20 October 2005, and recognising that states have the right to preserve, develop and implement their cultural policies, to support their cultural industries for the purpose of strengthening the diversity of cultural expressions, and to preserve their cultural identity, including through the use of regulatory measures and financial support;

RECOGNISING that the provisions of this Agreement protect investments and investors with respect to their investments, and are intended to stimulate mutuallybeneficial business activity, without undermining the right of the Parties to regulate in the public interest within their territories;


REAFFIRMING their commitment to promote sustainable development and the development of international trade in such a way as to contribute to sustainable development in its economic, social and environmental dimensions;

ENCOURAGING enterprises operating within their territory or subject to their jurisdiction to respect internationally recognised guidelines and principles of corporate social responsibility, including the OECD Guidelines for Multinational Enterprises, and to pursue best practices of responsible business conduct;

IMPLEMENTING this Agreement in a manner consistent with the enforcement of their respective labour and environmental laws and that enhances their levels of labour and environmental protection, and building upon their international commitments on labour and environmental matters;

RECOGNISING the strong link between innovation and trade, and the importance of innovation to future economic growth, and affirming their commitment to encourage the expansion of cooperation in the area of innovation, as well as the related areas of research and development and science and technology, and to promote the involvement of relevant public and private sector entities;

HAVE AGREED AS FOLLOWS:


CHAPTER ONE

GENERAL DEFINITIONS AND INITIAL PROVISIONS

SECTION A

General definitions

ARTICLE 1.1

Definitions of general application

For the purposes of this Agreement and unless otherwise specified:

administrative ruling of general application means an administrative ruling or interpretation that applies to all persons and fact situations that fall generally within its ambit and that establishes a norm of conduct but does not include:

(a)    a determination or ruling made in an administrative or quasijudicial proceeding that applies to a particular person, good or service of the other Party in a specific case; or

(b)    a ruling that adjudicates with respect to a particular act or practice;


Agreement on Agriculture means the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement;

agricultural good means a product listed in Annex 1 to the Agreement on Agriculture;

Antidumping Agreement means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

CETA contact points means the contact points established under Article 26.5 (CETA contact points);

CETA Joint Committee means the CETA Joint Committee established under Article 26.1 (The CETA Joint Committee);

CPC means the provisional Central Product Classification as set out in Statistical Office of the United Nations, Statistical Papers, Series M, N° 77, CPC prov, 1991;

cultural industries means persons engaged in:

(a)    the publication, distribution or sale of books, magazines, periodicals or newspapers in print or machinereadable form, except when printing or typesetting any of the foregoing is the only activity;

(b)    the production, distribution, sale or exhibition of film or video recordings;


(c)    the production, distribution, sale or exhibition of audio or video music recordings;

(d)    the publication, distribution or sale of music in print or machinereadable form; or

(e)    radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television and cable broadcasting undertakings and all satellite programming and broadcast network services;

customs duty means a duty or charge of any kind imposed on or in connection with the importation of a good, including a form of surtax or surcharge imposed on or in connection with that importation, but does not include:

(a)    a charge equivalent to an internal tax imposed consistently with Article 2.3 (National treatment);

(b)    a measure applied in accordance with the provisions of Articles VI or XIX of the GATT 1994, the Antidumping Agreement, the SCM Agreement, the Safeguards Agreement, or Article 22 of the DSU; or

(c)    a fee or other charge imposed consistently with Article VIII of the GATT 1994;

Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;


days means calendar days, including weekends and holidays;

DSU means the Understanding on Rules and Procedures Governing the Settlement of Disputes, contained in Annex 2 to the WTO Agreement;

enterprise means an entity constituted or organised under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including a corporation, trust, partnership, sole proprietorship, joint venture or other association;

existing means in effect on the date of entry into force of this Agreement;

GATS means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;

GATT 1994 means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

goods of a Party means domestic products as these are understood in the GATT 1994 or such goods as the Parties may decide, and includes originating goods of that Party;

Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, Chapter Notes and subheading notes;



heading means a fourdigit number or the first four digits of a number used in the nomenclature of the HS;

measure includes a law, regulation, rule, procedure, decision, administrative action, requirement, practice or any other form of measure by a Party;

national means a natural person who is a citizen as defined in Article 1.2, or is a permanent resident of a Party;

originating means qualifying under the rules of origin set out in the Protocol on Rules of Origin and Origin Procedures;

Parties means, on the one hand, the European Union or its Member States or the European Union and its Member States within their respective areas of competence as derived from the Treaty on European Union and the Treaty on the Functionning of the European Union (hereinafter referred to as the 'EU Party'), and on the other hand, Canada;

person means a natural person or an enterprise;

person of a Party means a national or an enterprise of a Party;

preferential tariff treatment means the application of the duty rate under this Agreement to an originating good pursuant to the tariff elimination schedule;

Safeguards Agreement means the Agreement on Safeguards, contained in Annex 1A to the WTO Agreement;

sanitary or phytosanitary measure means a measure referred to in Annex A, paragraph 1 of the SPS Agreement;



SCM Agreement means the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement;

service supplier means a person that supplies or seeks to supply a service;

SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measures, contained in Annex 1A to the WTO Agreement;

state enterprise means an enterprise that is owned or controlled by a Party;

subheading means a sixdigit number or the first six digits of a number used in the nomenclature of the HS;

tariff classification means the classification of a good or material under a chapter, heading or subheading of the HS;

tariff elimination schedule means Annex 2A (Tariff elimination);

TBT Agreement means the Agreement on Technical Barriers to Trade, contained in Annex 1A to the WTO Agreement;

territory means the territory where this Agreement applies as set out under Article 1.3;



third country means a country or territory outside the geographic scope of application of this Agreement;

TRIPS Agreement means the Agreement on TradeRelated Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement;

Vienna Convention on the Law of Treaties means the Vienna Convention on the Law of Treaties, done at Vienna on 23 May 1969;

WTO means the World Trade Organization; and

WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.



ARTICLE 1.2

Partyspecific definitions

For the purposes of this Agreement, unless otherwise specified:

citizen means:

(a)    for Canada, a natural person who is a citizen of Canada under Canadian legislation;

(b)    for the EU Party, a natural person holding the nationality of a Member State; and

central government means:

(a)    for Canada, the Government of Canada; and

(b)    for the EU Party, the European Union or the national governments of its Member States;



ARTICLE 1.3

Geographical scope of application

Unless otherwise specified, this Agreement applies:

(a)    for Canada, to:

(i)    the land territory, air space, internal waters, and territorial sea of Canada;

(ii)    the exclusive economic zone of Canada, as determined by its domestic law, consistent with Part V of the United Nations Convention on the Law of the Sea, done at Montego Bay on 10 December 1982 ("UNCLOS"); and,

(iii)    the continental shelf of Canada, as determined by its domestic law, consistent with Part VI of UNCLOS;

(b)    for the European Union, to the territories in which the Treaty on European Union and the Treaty on the Functioning of the European Union are applied and under the conditions laid down in those Treaties. As regards the provisions concerning the tariff treatment of goods, this Agreement shall also apply to the areas of the European Union customs territory not covered by the first sentence of this subparagraph.



SECTION B

Initial provisions

ARTICLE 1.4

Establishment of a free trade area

The Parties hereby establish a free trade area in conformity with Article XXIV of GATT 1994 and Article V of the GATS.

ARTICLE 1.5

Relation to the WTO Agreement and other agreements

The Parties affirm their rights and obligations with respect to each other under the WTO Agreement and other agreements to which they are party.



ARTICLE 1.6

Reference to other agreements

When this Agreement refers to or incorporates by reference other agreements or legal instruments in whole or in part, those references include:

(a)    related annexes, protocols, footnotes, interpretative notes and explanatory notes; and

(b)    successor agreements to which the Parties are party or amendments that are binding on the Parties, except where the reference affirms existing rights.

ARTICLE 1.7

Reference to laws

When this Agreement refers to laws, either generally or by reference to a specific statute, regulation or directive, the reference is to the laws, as they may be amended, unless otherwise indicated.



ARTICLE 1.8

Extent of obligations

1.    Each Party is fully responsible for the observance of all provisions of this Agreement.

2.    Each Party shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance at all levels of government.

ARTICLE 1.9

Rights and obligations relating to water

1.    The Parties recognise that water in its natural state, including water in lakes, rivers, reservoirs, aquifers and water basins, is not a good or a product. Therefore, only Chapters TwentyTwo (Trade and Sustainable Development) and TwentyFour (Trade and Environment) apply to such water.

2.    Each Party has the right to protect and preserve its natural water resources. Nothing in this Agreement obliges a Party to permit the commercial use of water for any purpose, including its withdrawal, extraction or diversion for export in bulk.

3.    If a Party permits the commercial use of a specific water source, it shall do so in a manner consistent with this Agreement.



ARTICLE 1.10

Persons exercising delegated governmental authority

Unless otherwise specified in this Agreement, each Party shall ensure that a person that has been delegated regulatory, administrative or other governmental authority by a Party, at any level of government, acts in accordance with the Party's obligations as set out under this Agreement in the exercise of that authority.

CHAPTER TWO

NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

ARTICLE 2.1

Objective

The Parties shall progressively liberalise trade in goods in accordance with the provisions of this Agreement over a transitional period starting from the entry into force of this Agreement.


ARTICLE 2.2

Scope

This Chapter applies to trade in goods of a Party, as defined in Chapter 1 (General Definitions and Initial Provisions), except as otherwise provided in this Agreement.

ARTICLE 2.3

National treatment

1.    Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of the GATT 1994. To this end Article III of the GATT 1994 is incorporated into and made part of this Agreement.

2.    Paragraph 1 means, with respect to a government in Canada other than at the federal level, or a government of or in a Member State of the European Union, treatment no less favourable than that accorded by that government to like, directly competitive or substitutable goods of Canada or the Member State, respectively.



3.    This Article does not apply to a measure, including a measure's continuation, prompt renewal or amendment, in respect of Canadian excise duties on absolute alcohol, as listed under tariff item 2207.10.90 in Canada's Schedule of Concessions (Schedule V) annexed to the Marrakesh Protocol to the General Agreement on Tariffs and Trade 1994, done on 15 April 1994 (the "Marrakesh Protocol"), used in manufacturing under provisions of the Excise Act, 2001, S.C. 2002, c. 22.

ARTICLE 2.4

Reduction and elimination of customs duties on imports

1.    Each Party shall reduce or eliminate customs duties on goods originating in either Party in accordance with the tariff elimination schedules in Annex 2A. For the purposes of this Chapter, "originating" means originating in either Party under the rules of origin set out in the Protocol on rules of origin and origin procedures.

2.    For each good, the base rate of customs duties to which the successive reductions under paragraph 1 are to be applied shall be that specified in Annex 2A.

3.    For goods that are subject to tariff preferences as listed in a Party's tariff elimination schedule in Annex 2A, each Party shall apply to originating goods of the other Party the lesser of the customs duties resulting from a comparison between the rate calculated in accordance with that Party's Schedule and its applied MostFavouredNation ("MFN") rate.



4.    On the request of a Party, the Parties may consult to consider accelerating and broadening the scope of the elimination of customs duties on imports between the Parties. A decision of the CETA Joint Committee on the acceleration or elimination of a customs duty on a good shall supersede any duty rate or staging category determined pursuant to the Parties' Schedules in Annex 2A for that good when approved by each Party in accordance with its applicable legal procedures.

ARTICLE 2.5

Restriction on duty drawback, duty deferral and duty suspension programs

1.    Subject to paragraphs 2 and 3, a Party shall not refund, defer or suspend a customs duty paid or payable on a nonoriginating good imported into its territory on the express condition that the good, or an identical, equivalent or similar substitute, is used as a material in the production of another good that is subsequently exported to the territory of the other Party under preferential tariff treatment pursuant to this Agreement.

2.    Paragraph 1 does not apply to a Party's regime of tariff reduction, suspension or remission, either permanent or temporary, if the reduction, suspension or remission is not expressly conditioned on the exportation of a good.

3.    Paragraph 1 does not apply until three years after the date of entry into force of this Agreement.



ARTICLE 2.6

Duties, taxes or other fees and charges on exports

A Party may not adopt or maintain any duties, taxes or other fees and charges imposed on, or in connection with, the export of a good to the other Party, or any internal taxes or fees and charges on a good exported to the other Party, that is in excess of those that would be imposed on those goods when destined for internal sale.

ARTICLE 2.7

Standstill

1.    Upon the entry into force of this Agreement a Party may not increase a customs duty existing at entry into force, or adopt a new customs duty, on a good originating in the Parties.

2.    Notwithstanding paragraph 1, a Party may:

(a)    modify a tariff outside this Agreement on a good for which no tariff preference is claimed under this Agreement;

(b)    increase a customs duty to the level established in its Schedule in Annex 2A following a unilateral reduction; or



(c)    maintain or increase a customs duty as authorised by this Agreement or any agreement under the WTO Agreement.

3.    Notwithstanding paragraphs 1 and 2, only Canada may apply a special safeguard pursuant to Article 5 of the WTO Agreement on Agriculture. A special safeguard may only be applied with respect to goods classified in items with the notation "SSG" in Canada's Schedule included in Annex 2A. The use of this special safeguard is limited to imports not subject to tariff preference and, in the case of imports subject to a tariff rate quota, to imports over the access commitment.

ARTICLE 2.8

Temporary suspension of preferential tariff treatment

1.    A Party may temporarily suspend, in accordance with paragraphs 2 through 5, the preferential tariff treatment under this Agreement with respect to a good exported or produced by a person of the other Party if the Party:

(a)    as a result of an investigation based on objective, compelling and verifiable information, makes a finding that the person of the other Party has committed systematic breaches of customs legislation in order to obtain preferential tariff treatment under this Agreement; or



(b)    makes a finding that the other Party systematically and unjustifiably refuses to cooperate with respect to the investigation of breaches of customs legislation under Article 6.13.4 (Cooperation), and the Party requesting cooperation, based on objective, compelling and verifiable information, has reasonable grounds to conclude that the person of the other Party has committed systematic breaches of customs legislation in order to obtain preferential tariff treatment under this Agreement.

2.    A Party that has made a finding referred to in paragraph 1 shall:

(a)    notify the customs authority of the other Party and provide the information and evidence upon which the finding was based;

(b)    engage in consultations with the authorities of the other Party with a view to achieving a mutually acceptable resolution that addresses the concerns that resulted in the finding; and

(c)    provide written notice to that person of the other Party that includes the information that is the basis of the finding.

3.    If the authorities have not achieved a mutually acceptable resolution after 30 days, the Party that has made the finding shall refer the issue to the Joint Customs Cooperation Committee.



4.    If the Joint Customs Cooperation Committee has not resolved the issue after 60 days, the Party that has made the finding may temporarily suspend the preferential tariff treatment under this Agreement with respect to that good of that person of the other Party. The temporary suspension does not apply to a good that is already in transit between the Parties on the day that the temporary suspension comes into effect.

5.    The Party applying the temporary suspension under paragraph 1 shall only apply it for a period commensurate with the impact on the financial interests of that Party resulting from the situation responsible for the finding made pursuant to paragraph 1, to a maximum of 90 days. If the Party has reasonable grounds based on objective, compelling and verifiable information that the conditions that gave rise to the initial suspension have not changed after the expiry of the 90 day period, that Party may renew the suspension for a further period of no longer than 90 days. The original suspension and any renewed suspensions are subject to periodic consultations within the Joint Customs Cooperation Committee.

ARTICLE 2.9

Fees and other charges

1.    In accordance with Article VIII of GATT 1994, a Party shall not adopt or maintain a fee or charge on or in connection with importation or exportation of a good of a Party that is not commensurate with the cost of services rendered or that represents an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes.



2.    For greater certainty, paragraph 1 does not prevent a Party from imposing a customs duty or a charge set out in paragraphs (a) through (c) of the definition of customs duty under Article 1.1 (Definitions of general application).

ARTICLE 2.10

Goods reentered after repair or alteration

1.    For the purposes of this Article, repair or alteration means any processing operation undertaken on goods to remedy operating defects or material damage and entailing the reestablishment of goods to their original function or to ensure their compliance with technical requirements for their use, without which the goods could no longer be used in the normal way for the purposes for which they were intended. Repair or alteration of goods includes restoration and maintenance but does not include an operation or process that:

(a)    destroys the essential characteristics of a good or creates a new or commercially different good;

(b)    transforms an unfinished good into a finished good; or

(c)    is used to substantially change the function of a good.



2.    Except as provided in footnote 1, a Party shall not apply a customs duty to a good, regardless of its origin, that reenters its territory after that good has been temporarily exported from its territory to the territory of the other Party for repair or alteration, regardless of whether such repair or alteration could be performed in the territory of the Party from which the good was exported for repair or alteration. 1 , 2

3.    Paragraph 2 does not apply to a good imported in bond, into free trade zones, or in similar status, that is then exported for repair and is not reimported in bond, into free trade zones, or in similar status.

4.    A Party shall not apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair or alteration. 3

ARTICLE 2.11

Import and export restrictions

1.    Except as otherwise provided in this Agreement, a Party shall not adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994. To this end Article XI of the GATT 1994 is incorporated into and made a part of this Agreement.



2.    If a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a third country of a good, that Party may:

(a)    limit or prohibit the importation from the territory of the other Party of a good of that third country; or

(b)    limit or prohibit the exportation of a good to that third country through the territory of the other Party.

3.    If a Party adopts or maintains a prohibition or restriction on the importation of a good from a third country, the Parties, at the request of the other Party, shall enter into discussions with a view to avoiding undue interference with or distortion of pricing, marketing or distribution arrangements in the other Party.

4.    This Article does not apply to a measure, including that measure's continuation, prompt renewal or amendment, in respect of the following:

(a)    the export of logs of all species. If a Party ceases to require export permits for logs destined for a third country, that Party will permanently cease requiring export permits for logs destined for the other Party;

(b)    for a period of three years following the entry into force of this Agreement, the export of unprocessed fish pursuant to Newfoundland and Labrador's applicable legislation;



(c)    Canadian excise duties on absolute alcohol, as listed under tariff item 2207.10.90 in Canada's Schedule of Concessions annexed to the Marrakesh Protocol (Schedule V), used in manufacturing under the provisions of the Excise Act, 2001, S.C. 2002, c. 22; and

(d)    The importation of used vehicles into Canada that do not conform to Canada's safety and environmental requirements.

ARTICLE 2.12

Other provisions related to trade in goods

Each Party shall endeavour to ensure that a good of the other Party that has been imported into and lawfully sold or offered for sale in any place in the territory of the importing Party may also be sold or offered for sale throughout the territory of the importing Party.

ARTICLE 2.13

Committee on trade in goods

1.    The functions of the Committee on Trade in Goods established under Article 26.2.1 (a) (Specialised committees) include:

(a)    promoting trade in goods between the Parties, including through consultations on accelerating tariff elimination under this Agreement and other issues as appropriate;



(b)    recommending to the CETA Joint Committee a modification of or an addition to any provision of this Agreement related to the Harmonized System; and

(c)    promptly addressing issues related to movement of goods through the Parties' ports of entry.

2.    The Committee on Trade in Goods may present to the CETA Joint Committee draft decisions on the acceleration or elimination of a customs duty on a good.

3.    The Committee on Agriculture established under Article 26.2.1 (a) (Specialised committees) shall:

(a)    meet within 90 days of a request by a Party;

(b)    provide a forum for the Parties to discuss issues related to agricultural goods covered by this Agreement; and

(c)    refer to the Committee on Trade in Goods any unresolved issue under subparagraph (b).

4.    The Parties note the cooperation and exchange of information on agriculture issues under the annual CanadaEuropean Union Agriculture Dialogue, as established in letters exchanged on 14 July 2008. As appropriate, the Agriculture Dialogue may be used for the purpose of paragraph 3.



CHAPTER THREE

TRADE REMEDIES

SECTION A

Antidumping and countervailing measures

ARTICLE 3.1

General provisions concerning antidumping and countervailing measures

1.    The Parties reaffirm their rights and obligations under Article VI of GATT 1994, the Antidumping Agreement and the SCM Agreement.

2.    The Protocol on rules of origin and origin procedures shall not apply to antidumping and countervailing measures.



ARTICLE 3.2

Transparency

1.    Each Party shall apply antidumping and countervailing measures in accordance with the relevant WTO requirements and pursuant to a fair and transparent process.

2.    A Party shall ensure, after an imposition of provisional measures and, in any case, before a final determination is made, full and meaningful disclosure of all essential facts under consideration which form the basis for the decision whether to apply final measures. This is without prejudice to Article 6.5 of the AntiDumping Agreement and Article 12.4 of the SCM Agreement.

3.    Provided it does not unnecessarily delay the conduct of the investigation, each interested party in an antidumping or countervailing investigation 4 shall be granted a full opportunity to defend its interests.

ARTICLE 3.3

Consideration of public interest and lesser duty

1.    Each Party's authorities shall consider information provided in accordance with the Party's law as to whether imposing an antidumping or countervailing duty would not be in the public interest.



2.    After considering the information referred to in paragraph 1, the Party's authorities may consider whether the amount of the antidumping or countervailing duty to be imposed shall be the full margin of dumping or amount of subsidy or a lesser amount, in accordance with the Party's law.

SECTION B

Global safeguard measures

ARTICLE 3.4

General provisions concerning global safeguard measures

1.    The Parties reaffirm their rights and obligations concerning global safeguard measures under Article XIX of GATT 1994 and the Safeguards Agreement.

2.    The Protocol on rules of origin and origin procedures shall not apply to global safeguard measures.



ARTICLE 3.5

Transparency

1.    At the request of the exporting Party, the Party initiating a safeguard investigation or intending to adopt provisional or definitive global safeguard measures shall immediately provide:

(a)    the information referred to in Article 12.2 of the Safeguards Agreement, in the format prescribed by the WTO Committee on Safeguards;

(b)    the public version of the complaint filed by the domestic industry, where relevant; and

(c)    a public report setting forth the findings and reasoned conclusions on all pertinent issues of fact and law considered in the safeguard investigation. The public report shall include an analysis that attributes injury to the factors causing it and set out the method used in defining the global safeguard measures.

2.    When information is provided under this Article, the importing Party shall offer to hold consultations with the exporting Party in order to review the information provided.



ARTICLE 3.6

Imposition of definitive measures

1.    A Party adopting global safeguard measures shall endeavour to impose them in a way that least affects bilateral trade.

2.    The importing Party shall offer to hold consultations with the exporting Party in order to review the matter referred to in paragraph 1. The importing Party shall not adopt measures until 30 days have elapsed since the date the offer to hold consultations was made.

SECTION C

General provisions

ARTICLE 3.7

Exclusion from dispute settlement

This Chapter is not subject to Chapter TwentyNine (Dispute Settlement).



CHAPTER FOUR

TECHNICAL BARRIERS TO TRADE

ARTICLE 4.1

Scope and definitions

1.    This Chapter applies to the preparation, adoption, and application of technical regulations, standards, and conformity assessment procedures that may affect trade in goods between the Parties.

2.    This Chapter does not apply to:

(a)    purchasing specifications prepared by a governmental body for production or consumption requirements of governmental bodies; or

(b)    a sanitary or phytosanitary measure as defined in Annex A of the SPS Agreement.

3.    Except where this Agreement, including the incorporated provisions of the TBT Agreement pursuant to Article 4.2, defines or gives a meaning to a term, the general terms for standardisation and conformity assessment procedures shall normally have the meaning given to them by the definition adopted within the United Nations system and by international standardising bodies taking into account their context and in the light of the object and purpose of this Chapter.



4.    References in this Chapter to technical regulations, standards, and conformity assessment procedures include amendments thereto, and additions to the rules or the product coverage thereof, except amendments and additions of an insignificant nature.

5.    Article 1.8.2 (Extent of obligations) does not apply to Articles 3, 4, 7, 8 and 9 of the TBT Agreement, as incorporated into this Agreement.

ARTICLE 4.2

Incorporation of the TBT Agreement

1.    The following provisions of the TBT Agreement are hereby incorporated into and made part of this Agreement:

(a)    Article 2 (Preparation, Adoption and Application of Technical Regulations by Central Government Bodies);

(b)    Article 3 (Preparation, Adoption and Application of Technical Regulations by Local Government Bodies and NonGovernmental Bodies);

(c)    Article 4 (Preparation, Adoption and Application of Standards);

(d)    Article 5 (Procedures for Assessment of Conformity by Central Government Bodies);



(e)    Article 6 (Recognition of Conformity Assessment by Central Government Bodies), without limiting a Party's rights or obligations under the Protocol on the Mutual Acceptance of the Results of Conformity Assessment, and the Protocol on the Mutual Recognition of the Compliance and Enforcement Programme Regarding Good Manufacturing Practices for Pharmaceutical Products;

(f)    Article 7 (Procedures for Assessment of Conformity by Local Government Bodies);

(g)    Article 8 (Procedures for Assessment of Conformity by NonGovernmental Bodies);

(h)    Article 9 (International and Regional Systems);

(i)    Annex 1 (Terms and their Definitions for the Purpose of this Agreement); and

(j)    Annex 3 (Code of Good Practice for the Preparation, Adoption and Application of Standards).

2.    The term "Members" in the incorporated provisions shall have the same meaning in this Agreement as it has in the TBT Agreement.

3.    With respect to Articles 3, 4, 7, 8 and 9 of the TBT Agreement, Chapter TwentyNine (Dispute Settlement) can be invoked in cases where a Party considers that the other Party has not achieved satisfactory results under these Articles and its trade interests are significantly affected. In this respect, such results shall be equivalent to those as if the body in question were a Party.



ARTICLE 4.3

Cooperation

The Parties shall strengthen their cooperation in the areas of technical regulations, standards, metrology, conformity assessment procedures, market surveillance or monitoring and enforcement activities in order to facilitate trade between the Parties, as set out in Chapter TwentyOne (Regulatory Cooperation). This may include promoting and encouraging cooperation between the Parties' respective public or private organisations responsible for metrology, standardisation, testing, certification and accreditation, market surveillance or monitoring and enforcement activities; and, in particular, encouraging their accreditation and conformity assessment bodies to participate in cooperation arrangements that promote the acceptance of conformity assessment results.

ARTICLE 4.4

Technical regulations

1.    The Parties undertake to cooperate to the extent possible, to ensure that their technical regulations are compatible with one another. To this end, if a Party expresses an interest in developing a technical regulation equivalent or similar in scope to one that exists in or is being prepared by the other Party, that other Party shall, on request, provide to the Party, to the extent practicable, the relevant information, studies and data upon which it has relied in the preparation of its technical regulation, whether adopted or being developed. The Parties recognise that it may be necessary to clarify and agree on the scope of a specific request, and that confidential information may be withheld.

2.    A Party that has prepared a technical regulation that it considers to be equivalent to a technical regulation of the other Party having compatible objective and product scope may request that the other Party recognise the technical regulation as equivalent. The Party shall make the request in writing and set out detailed reasons why the technical regulation should be considered equivalent, including reasons with respect to product scope. The Party that does not agree that the technical regulation is equivalent shall provide to the other Party, upon request, the reasons for its decision.

ARTICLE 4.5

Conformity assessment

The Parties shall observe the Protocol on the mutual acceptance of the results of conformity assessment, and the Protocol on the mutual recognition of the compliance and enforcement programme regarding good manufacturing practices for pharmaceutical products.



ARTICLE 4.6

Transparency

1.    Each Party shall ensure that transparency procedures regarding the development of technical regulations and conformity assessment procedures allow interested persons of the Parties to participate at an early appropriate stage when amendments can still be introduced and comments taken into account, except where urgent problems of safety, health, environmental protection or national security arise or threaten to arise. Where a consultation process regarding the development of technical regulations or conformity assessment procedures is open to the public, each Party shall permit persons of the other Party to participate on terms no less favourable than those accorded to its own persons.

2.    The Parties shall promote closer cooperation between the standardisation bodies located within their respective territories with a view to facilitating, among other things, the exchange of information about their respective activities, as well as the harmonisation of standards based on mutual interest and reciprocity, according to modalities to be agreed by the standardisation bodies concerned.

3.    Each Party shall endeavour to allow a period of at least 60 days following its transmission to the WTO Central Registry of Notifications of proposed technical regulations and conformity assessment procedures for the other Party to provide written comments, except where urgent problems of safety, health, environmental protection or national security arise or threaten to arise. A Party shall give positive consideration to a reasonable request to extend the comment period.



4.    If a Party receives comments on its proposed technical regulation or conformity assessment procedure from the other Party, it shall reply in writing to those comments before the technical regulation or conformity assessment procedure is adopted.

5.    Each Party shall publish or otherwise make publicly available, in print or electronically, its responses or a summary of its responses, to significant comments it receives, no later than the date it publishes the adopted technical regulation or conformity assessment procedure.

6.    Each Party shall, upon request of the other Party, provide information regarding the objectives of, legal basis and rationale for, a technical regulation or conformity assessment procedure, that the Party has adopted or is proposing to adopt.

7.    A Party shall give positive consideration to a reasonable request from the other Party, received prior to the end of the comment period following the transmission of a proposed technical regulation, to establish or extend the period of time between the adoption of the technical regulation and the day upon which it is applicable, except where the delay would be ineffective in fulfilling the legitimate objectives pursued.

8.    Each Party shall ensure that its adopted technical regulations and conformity assessment procedures are publicly available on official websites.

9.    If a Party detains at a port of entry a good imported from the territory of the other Party on the grounds that the good has failed to comply with a technical regulation, it shall, without undue delay, notify the importer of the reasons for the detention of the good.



ARTICLE 4.7

Management of the Chapter

1.    The Parties shall cooperate on issues covered by this Chapter. The Parties agree that the Committee on Trade in Goods, established under Article 26.2.1(a) shall:

(a)    manage the implementation of this Chapter;

(b)    promptly address an issue that a Party raises related to the development, adoption or application of standards, technical regulations or conformity assessment procedures;

(c)    on a Party's request, facilitate discussion of the assessment of risk or hazard conducted by the other Party;

(d)    encourage cooperation between the standardisation bodies and conformity assessment bodies of the Parties;

(e)    exchange information on standards, technical regulations, or conformity assessment procedures including those of third parties or international bodies where there is a mutual interest in doing so;

(f)    review this Chapter in the light of developments before the WTO Committee on Technical Barriers to Trade or under the TBT Agreement, and, if necessary, develop recommendations to amend this Chapter for consideration by the CETA Joint Committee;



(g)    take other steps that the Parties consider will assist them to implement this Chapter and the TBT Agreement and to facilitate trade between the Parties; and

(h)    report to the CETA Joint Committee on the implementation of this Chapter, as appropriate.

2.    If the Parties are unable to resolve a matter covered under this Chapter through the Committee on Trade in Goods, upon request of a Party, the CETA Joint Committee may establish an ad hoc technical working group to identify solutions to facilitate trade. If a Party does not agree with a request from the other Party to establish a technical working group, it shall, on request, explain the reasons for its decision. The Parties shall lead the technical working group.

3.    When a Party has requested information, the other Party shall provide the information, pursuant to the provisions of this Chapter, in print or electronically within a reasonable period of time. The Party shall endeavour to respond to each request for information within 60 days.



CHAPTER FIVE

SANITARY AND PHYTOSANITARY MEASURES

ARTICLE 5.1

Definitions

1.    For the purposes of this Chapter, the following definitions apply:

(a)    the definitions in Annex A of the SPS Agreement;

(b)    the definitions adopted under the auspices of the Codex Alimentarius Commission (the "Codex");

(c)    the definitions adopted under the auspices of the World Organisation for Animal Health (the "OIE");

(d)    the definitions adopted under the auspices of the International Plant Protection Convention (the "IPPC");

(e)    protected zone for a specified regulated harmful organism means an officially defined geographical area in the European Union in which that organism is not established in spite of favourable conditions for its establishment and its presence in other parts of the European Union; and



(f)    a competent authority of a Party means an authority listed in Annex 5A.

2.    Further to paragraph 1, the definitions under the SPS Agreement prevail to the extent that there is an inconsistency between the definitions adopted under the auspices of the Codex, the OIE, the IPPC and the definitions under the SPS Agreement.

ARTICLE 5.2

Objectives

The objectives of this Chapter are to:

(a)    protect human, animal and plant life or health while facilitating trade;

(b)    ensure that the Parties' sanitary and phytosanitary ("SPS") measures do not create unjustified barriers to trade; and

(c)    further the implementation of the SPS Agreement.

ARTICLE 5.3

Scope

This Chapter applies to SPS measures that may, directly or indirectly, affect trade between the Parties.



ARTICLE 5.4

Rights and obligations

The Parties affirm their rights and obligations under the SPS Agreement.

ARTICLE 5.5

Adaptation to regional conditions

1.    With respect to an animal, animal product and animal byproduct:

(a)    the Parties recognise the concept of zoning and they have decided to apply this concept to the diseases listed in Annex 5B;

(b)    if the Parties decide on principles and guidelines to recognise regional conditions, they shall include them in Annex 5C;

(c)    for the purpose of subparagraph (a), the importing Party shall base its sanitary measure applicable to the exporting Party whose territory is affected by a disease listed in Annex 5B on the zoning decision made by the exporting Party, provided that the importing Party is satisfied that the exporting Party's zoning decision is in accordance with the principles and guidelines that the Parties set out in Annex 5C, and is based on relevant international standards, guidelines, and recommendations. The importing Party may apply any additional measure to achieve its appropriate level of sanitary protection;



(d)    if a Party considers that it has a special status with respect to a disease not listed in Annex 5B, it may request recognition of that status. The importing Party may request additional guarantees for imports of live animals, animal products, and animal byproducts appropriate to the agreed status recognised by the importing Party, including the special conditions identified in Annex 5E; and

(e)    the Parties recognise the concept of compartmentalisation and agree to cooperate on this matter.

2.    With respect to a plant and plant product:

(a)    when the importing Party establishes or maintains its phytosanitary measure, it shall take into account, among other things, the pest status of an area, such as a pestfree area, pestfree place of production, pestfree production site, an area of low pest prevalence and a protected zone that the exporting Party has established; and

(b)    if the Parties decide on principles and guidelines to recognise regional conditions, they shall include them in Annex 5C.



ARTICLE 5.6

Equivalence

1.    The importing Party shall accept the SPS measure of the exporting Party as equivalent to its own if the exporting Party objectively demonstrates to the importing Party that its measure achieves the importing Party's appropriate level of SPS protection.

2.    Annex 5D sets out principles and guidelines to determine, recognise, and maintain equivalence.

3.    Annex 5E sets out:

(a)    the area for which the importing Party recognises that an SPS measure of the exporting Party is equivalent to its own; and

(b)    the area for which the importing Party recognises that the fulfilment of the specified special condition, combined with the exporting Party's SPS measure, achieves the importing Party's appropriate level of SPS protection.

4.    For the purposes of this Chapter, Article 1.7 (Reference to laws) applies subject to this Article, Annex 5-D and the General Notes under Annex 5-E.



ARTICLE 5.7

Trade conditions

1.    The importing Party shall make available its general SPS import requirements for all commodities. If the Parties jointly identify a commodity as a priority, the importing Party shall establish specific SPS import requirements for that commodity, unless the Parties decide otherwise. In identifying which commodities are priorities, the Parties shall cooperate to ensure the efficient management of their available resources. The specific import requirements should be applicable to the total territory of the exporting Party.

2.    Pursuant to paragraph 1, the importing Party shall undertake, without undue delay, the necessary process to establish specific SPS import requirements for the commodity that is identified as a priority. Once these specific import requirements are established, the importing Party shall take the necessary steps, without undue delay, to allow trade on the basis of these import requirements.

3.    For the purpose of establishing the specific SPS import requirements, the exporting Party shall, at the request of the importing Party:

(a)    provide all relevant information required by the importing Party; and

(b)    give reasonable access to the importing Party to inspect, test, audit and perform other relevant procedures.



4.    If the importing Party maintains a list of authorised establishments or facilities for the import of a commodity, it shall approve an establishment or facility situated in the territory of the exporting Party without prior inspection of that establishment or facility if:

(a)    the exporting Party has requested such an approval for the establishment or facility, accompanied by the appropriate guarantees; and

(b)    the conditions and procedures set out in Annex 5F are fulfilled.

5.    Further to paragraph 4, the importing Party shall make its lists of authorised establishments or facilities publicly available.

6.    A Party shall normally accept a consignment of a regulated commodity without preclearance of the commodity on a consignment basis, unless the Parties decide otherwise.

7.    The importing Party may require that the relevant competent authority of the exporting Party objectively demonstrate, to the satisfaction of the importing Party, that the import requirements may be fulfilled or are fulfilled.

8.    The Parties should follow the procedure set out in Annex 5G on the specific import requirements for plant health.



ARTICLE 5.8

Audit and verification

1.    For the purpose of maintaining confidence in the implementation of this Chapter, a Party may carry out an audit or verification, or both, of all or part of the control programme of the competent authority of the other Party. The Party shall bear its own costs associated with the audit or verification.

2.    If the Parties decide on principles and guidelines to conduct an audit or verification, they shall include them in Annex 5H. If a Party conducts an audit or verification, it shall do so in accordance with any principles and guidelines in Annex 5H.

ARTICLE 5.9

Export certification

1.    When an official health certificate is required to import a consignment of live animals or animal products, and if the importing Party has accepted the SPS measure of the exporting Party as equivalent to its own with respect to such animals or animal products, the Parties shall use the model health attestation prescribed in Annex 5I for such certificate, unless the Parties decide otherwise. The Parties may also use a model attestation for other products if they so decide.



2.    Annex 5I sets out principles and guidelines for export certification, including electronic certification, withdrawal or replacement of certificates, language regimes and model attestations.

ARTICLE 5.10

Import checks and fees

1.    Annex 5J sets out principles and guidelines for import checks and fees, including the frequency rate for import checks.

2.    If import checks reveal noncompliance with the relevant import requirements, the action taken by the importing Party must be based on an assessment of the risk involved and not be more traderestrictive than required to achieve the Party's appropriate level of sanitary or phytosanitary protection.

3.    Whenever possible, the importing Party shall notify the importer of a noncompliant consignment, or its representative, of the reason for noncompliance, and provide them with an opportunity for a review of the decision. The importing Party shall consider any relevant information submitted to assist in the review.

4.    A Party may collect fees for the costs incurred to conduct frontier checks, which should not exceed the recovery of the costs.



ARTICLE 5.11

Notification and information exchange

1.    A Party shall notify the other Party without undue delay of a:

(a)    significant change to pest or disease status, such as the presence and evolution of a disease listed in Annex 5B;

(b)    finding of epidemiological importance with respect to an animal disease, which is not listed in Annex 5B, or which is a new disease; and

(c)    significant food safety issue related to a product traded between the Parties.

2.    The Parties endeavour to exchange information on other relevant issues including:

(a)    a change to a Party's SPS measure;

(b)    any significant change to the structure or organisation of a Party's competent authority;

(c)    on request, the results of a Party's official control and a report that concerns the results of the control carried out;

(d)    the results of an import check provided for in Article 5.10 in case of a rejected or a noncompliant consignment; and



(e)    on request, a risk analysis or scientific opinion that a Party has produced and that is relevant to this Chapter.

3.    Unless the Joint Management Committee decides otherwise, when the information referred to in paragraph 1 or 2 has been made available via notification to the WTO's Central Registry of Notifications or to the relevant international standardsetting body, in accordance with its relevant rules, the requirements in paragraphs 1 and 2, as they apply to that information, are fulfilled.

ARTICLE 5.12

Technical consultations

If a Party has a significant concern with respect to food safety, plant health, or animal health, or an SPS measure that the other Party has proposed or implemented, that Party may request technical consultations with the other Party. The Party that is the subject of the request should respond to the request without undue delay. Each Party shall endeavour to provide the information necessary to avoid a disruption to trade and, as the case may be, to reach a mutually acceptable solution.



ARTICLE 5.13

Emergency SPS measures

1.    A Party shall notify the other Party of an emergency SPS measure within 24 hours of its decision to implement the measure. If a Party requests technical consultations to address the emergency SPS measure, the technical consultations must be held within 10 days of the notification of the emergency SPS measure. The Parties shall consider any information provided through the technical consultations.

2.    The importing Party shall consider the information that was provided in a timely manner by the exporting Party when it makes its decision with respect to a consignment that, at the time of adoption of the emergency SPS measure, is being transported between the Parties.

ARTICLE 5.14

Joint Management Committee for Sanitary and Phytosanitary Measures

1.    The Joint Management Committee for Sanitary and Phytosanitary Measures (the "Joint Management Committee"), established under Article 26.2.1(d), comprises regulatory and trade representatives of each Party responsible for SPS measures.



2.    The functions of the Joint Management Committee include:

(a)    to monitor the implementation of this Chapter, to consider any matter related to this Chapter and to examine all matters which may arise in relation to its implementation;

(b)    to provide direction for the identification, prioritisation, management and resolution of issues;

(c)    to address any request by a Party to modify an import check;

(d)    at least once a year, to review the annexes to this Chapter, notably in the light of progress made under the consultations provided for under this Agreement. Following its review, the Joint Management Committee may decide to amend the annexes to this Chapter. The Parties may approve the Joint Management Committee's decision, in accordance with their respective procedures necessary for the entry into force of the amendment. The decision enters into force on a date agreed by the Parties;

(e)    to monitor the implementation of a decision referred to in subparagraph (d), above, as well as the operation of measures referred to under subparagraph (d) above;

(f)    to provide a regular forum to exchange information that relates to each Party's regulatory system, including the scientific and risk assessment basis for an SPS measure; and

(g)    to prepare and maintain a document that details the state of discussions between the Parties on their work on recognition of the equivalence of specific SPS measures.



3.    The Joint Management Committee may, among other things:

(a)    identify opportunities for greater bilateral engagement, including enhanced relationships, which may include an exchange of officials;

(b)    discuss at an early stage, a change to, or a proposed change to, an SPS measure being considered;

(c)    facilitate improved understanding between the Parties on the implementation of the SPS Agreement, and promote cooperation between the Parties on SPS issues under discussion in multilateral fora, including the WTO Committee on Sanitary and Phytosanitary Measures and international standardsetting bodies, as appropriate; or

(d)    identify and discuss, at an early stage, initiatives that have an SPS component, and that would benefit from cooperation.

4.    The Joint Management Committee may establish working groups comprising expertlevel representatives of the Parties, to address specific SPS issues.

5.    A Party may refer any SPS issue to the Joint Management Committee. The Joint Management Committee should consider the issue as expeditiously as possible.

6.    If the Joint Management Committee is unable to resolve an issue expeditiously, it shall, at the request of a Party, report promptly to the CETA Joint Committee.



7.    Unless the Parties decide otherwise, the Joint Management Committee shall meet and establish its work programme no later than 180 days following the entry into force of this Agreement, and its rules of procedure no later than one year after the entry into force of this Agreement.

8.    Following its initial meeting, the Joint Management Committee shall meet as required, normally on an annual basis. The Joint Management Committee may decide to meet by videoconference or teleconference, and it may also address issues out of session by correspondence.

9.    The Joint Management Committee shall report annually on its activities and work programme to the CETA Joint Committee.

10.    Upon entry into force of this Agreement, each Party shall designate and inform the other Party, in writing, of a contact point to coordinate the Joint Management Committee's agenda and to facilitate communication on SPS matters.



CHAPTER SIX

CUSTOMS AND TRADE FACILITATION

ARTICLE 6.1

Objectives and principles

1.    The Parties acknowledge the importance of customs and trade facilitation matters in the evolving global trading environment.

2.    The Parties shall, to the extent possible, cooperate and exchange information, including information on best practices, to promote the application of and compliance with the trade facilitation measures in this Agreement.

3.    Measures to facilitate trade shall not hinder mechanisms to protect a person through effective enforcement of and compliance with a Party's law.

4.    Import, export and transit requirements and procedures shall be no more administratively burdensome or trade restrictive than necessary to achieve a legitimate objective.



5.    Existing international trade and customs instruments and standards shall be the basis for import, export and transit requirements and procedures, except if these instruments and standards would be an inappropriate or ineffective means for the fulfilment of the legitimate objective pursued.

ARTICLE 6.2

Transparency

1.    Each Party shall publish or otherwise make available, including through electronic means, its legislation, regulations, judicial decisions and administrative policies relating to requirements for the import or export of goods.

2.    Each Party shall endeavour to make public, including on the internet, proposed regulations and administrative policies relating to customs matters and to provide interested persons an opportunity to comment prior to their adoption.

3.    Each Party shall designate or maintain one or more contact points to address inquiries by interested persons concerning customs matters and make available on the internet information concerning the procedures for making such inquiries.



ARTICLE 6.3

Release of goods

1.    Each Party shall adopt or maintain simplified customs procedures for the efficient release of goods in order to facilitate trade between the Parties and reduce costs for importers and exporters.

2.    Each Party shall ensure that these simplified procedures:

(a)    allow for the release of goods within a period of time no longer than that required to ensure compliance with its law;

(b)    allow goods, and to the extent possible controlled or regulated goods, to be released at the first point of arrival;

(c)    endeavour to allow for the expeditious release of goods in need of emergency clearance;

(d)    allow an importer or its agent to remove goods from customs' control prior to the final determination and payment of customs duties, taxes, and fees. Before releasing the goods, a Party may require that an importer provide sufficient guarantee in the form of a surety, a deposit, or some other appropriate instrument; and

(e)    provide for, in accordance with its law, simplified documentation requirements for the entry of lowvalue goods as determined by each Party.



3.    Each Party, in its simplified procedures, may require the submission of more extensive information through postentry accounting and verifications, as appropriate.

4.    Each Party shall allow for the expedited release of goods and, to the extent possible and if applicable, shall:

(a)    provide for advance electronic submission and processing of information before physical arrival of goods to enable their release upon arrival, if no risk has been identified or if no random checks are to be performed; and

(b)    provide for clearance of certain goods with a minimum of documentation.

5.    Each Party shall, to the extent possible, ensure that its authorities and agencies involved in border and other import and export controls cooperate and coordinate to facilitate trade by, among other things, converging import and export data and documentation requirements and establishing a single location for onetime documentary and physical verification of consignments.

6.    Each Party shall ensure, to the extent possible, that its import and export requirements for goods are coordinated to facilitate trade, regardless of whether these requirements are administered by an agency or on behalf of that agency by the customs administration.



ARTICLE 6.4

Customs valuation

1.    The Customs Valuation Agreement governs customs valuation applied to reciprocal trade between the Parties.

2.    The Parties shall cooperate with a view to reaching a common approach to issues relating to customs valuation.

ARTICLE 6.5

Classification of goods

The classification of goods in trade between the Parties under this Agreement is set out in each Party's respective tariff nomenclature in conformity with the Harmonized System.



ARTICLE 6.6

Fees and charges

Each Party shall publish or otherwise make available information on fees and charges imposed by a customs administration of that Party, including through electronic means. This information includes the applicable fees and charges, the specific reason for the fee or charge, the responsible authority, and when and how payment is to be made. A Party shall not impose new or amended fees and charges until it publishes or otherwise makes available this information.

ARTICLE 6.7

Risk management

1.    Each Party shall base its examination, release and postentry verification procedures on risk assessment principles, rather than requiring each shipment offered for entry to be examined in a comprehensive manner for compliance with import requirements.

2.    Each Party shall adopt and apply its import, export and transit requirements and procedures for goods on the basis of risk management principles and focus compliance measures on transactions that merit attention.

3.    Paragraphs 1 and 2 do not preclude a Party from conducting quality control and compliance reviews that can require more extensive examinations.



ARTICLE 6.8

Automation

1.    Each Party shall use information technologies that expedite its procedures for the release of goods in order to facilitate trade, including trade between the Parties.

2.    Each Party shall:

(a)    endeavour to make available by electronic means customs forms that are required for the import or export of goods;

(b)    allow, subject to its law, those customs forms to be submitted in electronic format; and

(c)    if possible, through its customs administration, provide for the electronic exchange of information with its trading community.

3.    Each Party shall endeavour to:

(a)    develop or maintain fully interconnected single window systems to facilitate a single, electronic submission of the information required by customs and noncustoms legislation for crossborder movements of goods; and



(b)    develop a set of data elements and processes in accordance with the World Customs Organization ("WCO") Data Model and related WCO recommendations and guidelines.

4.    The Parties shall endeavour to cooperate on the development of interoperable electronic systems, including taking account of the work at the WCO, in order to facilitate trade between the Parties.

ARTICLE 6.9

Advance rulings

1.    Each Party shall issue, upon written request, advance rulings on tariff classification in accordance with its law.

2.    Subject to confidentiality requirements, each Party shall publish, for example on the internet, information on advance rulings on tariff classification that is relevant to understand and apply tariff classification rules.

3.    To facilitate trade, the Parties shall include in their bilateral dialogue regular updates on changes in their respective laws and implementation measures regarding matters referred to in paragraphs 1 and 2.



ARTICLE 6.10

Review and appeal

1.    Each Party shall ensure that an administrative action or official decision taken in respect of the import of goods is reviewable promptly by judicial, arbitral, or administrative tribunals or through administrative procedures.

2.    The tribunal or official acting pursuant to those administrative procedures shall be independent of the official or office issuing the decision and shall have the competence to maintain, modify or reverse the determination in accordance with the Party's law.

3.    Before requiring a person to seek redress at a more formal or judicial level, each Party shall provide for an administrative level of appeal or review that is independent of the official or the office responsible for the original action or decision.

4.    Each Party shall grant substantially the same right of review and appeal of determinations of advance rulings by its customs administration that it provides to importers in its territory to a person that has received an advance ruling pursuant to Article 6.9.



ARTICLE 6.11

Penalties

Each Party shall ensure that its customs law provides that penalties imposed for breaches to it be proportionate and nondiscriminatory and that the application of these penalties does not result in unwarranted delays.

ARTICLE 6.12

Confidentiality

1.    Each Party shall, in accordance with its law, treat as strictly confidential all information obtained under this Chapter that is by its nature confidential or that is provided on a confidential basis, and shall protect that information from disclosure that could prejudice the competitive position of the person providing the information.

2.    If the Party receiving or obtaining the information referred to in paragraph 1 is required by its law to disclose the information, that Party shall notify the Party or person who provided that information.

3.    Each Party shall ensure that the confidential information collected under this Chapter shall not be used for purposes other than the administration and enforcement of customs matters, except with the permission of the Party or person that provided that confidential information.



4.    A Party may allow information collected under this Chapter to be used in administrative, judicial or quasijudicial proceedings instituted for failure to comply with customsrelated laws implementing this Chapter. A Party shall notify the Party or person that provided the information in advance of such use.

ARTICLE 6.13

Cooperation

1.    The Parties shall continue to cooperate in international fora, such as the WCO, to achieve mutuallyrecognised goals, including those set out in the WCO Framework of Standards to Secure and Facilitate Global Trade.

2.    The Parties shall regularly review relevant international initiatives on trade facilitation, including the Compendium of Trade Facilitation Recommendations developed by the United Nations Conference on Trade and Development and the United Nations Economic Commission for Europe, to identify areas where further joint action would facilitate trade between the Parties and promote shared multilateral objectives.

3.    The Parties shall cooperate in accordance with the Agreement between Canada and the European Community on Customs Cooperation and Mutual Assistance in Customs Matters, done at Ottawa on 4 December 1997 (the "CanadaEU Customs Cooperation Agreement").



4.    The Parties shall provide each other with mutual assistance in customs matters in accordance with the CanadaEU Customs Cooperation Agreement, including matters relating to a suspected breach of a Party's customs legislation, as defined in that agreement, and to the implementation of this Agreement.

ARTICLE 6.14

Joint Customs Cooperation Committee

1.    The Joint Customs Cooperation Committee, which is granted authority to act under the auspices of the CETA Joint Committee as a specialised committee pursuant to Article 26.2.1 (c) (Specialised committees), shall ensure the proper functioning of this Chapter and the Protocol on Rules of Origin and Origin Procedures, as well as Article 20.43 (Scope of border measures) and Article 2.8 (Temporary suspension of preferential tariff treatment). The Joint Customs Cooperation Committee shall examine issues arising from their application in accordance with the objectives of this Agreement.

2.    For matters covered by this Agreement, the Joint Customs Cooperation Committee shall comprise representatives of the customs, trade, or other competent authorities as each Party deems appropriate.



3.    Each Party shall ensure that its representatives in Joint Customs Cooperation Committee meetings have an expertise that corresponds to the agenda items. The Joint Customs Cooperation Committee may meet in a specific configuration of expertise to deal with rules of origin or origin procedures matters either as the Joint Customs Cooperation CommitteeRules of Origin or the Joint Customs Cooperation CommitteeOrigin Procedures.

4.    The Joint Customs Cooperation Committee may formulate resolutions, recommendations, or opinions and present draft decisions to the CETA Joint Committee that it considers necessary for the attainment of the common objectives and sound functioning of the mechanisms established in this Chapter and the Protocol on Rules of Origin and Origin Procedures, as well as Article 20.43 (Scope of border measures) and Article 2.8 (Temporary suspension of preferential tariff treatment).

CHAPTER SEVEN

SUBSIDIES

ARTICLE 7.1

Definition of a subsidy

1.    For the purposes of this Agreement, a subsidy means a measure related to trade in goods, which fulfils the conditions set out in Article 1.1 of the SCM Agreement.



2.    A subsidy is subject to this Chapter only if it is specific within the meaning of Article 2 of the SCM Agreement.

ARTICLE 7.2

Transparency

1.    Every two years, each Party shall notify the other Party of the following with respect to any subsidy granted or maintained within its territory:

(a)    the legal basis of the subsidy;

(b)    the form of the subsidy; and

(c)    the amount of the subsidy or the amount budgeted for the subsidy.

2.    Notifications provided to the WTO under Article 25.1 of the SCM Agreement are deemed to meet the requirement set out in paragraph 1.

3.    At the request of the other Party, a Party shall promptly provide information and respond to questions pertaining to particular instances of government support related to trade in services provided within its territory.



ARTICLE 7.3

Consultations on subsidies and government support
in sectors other than agriculture and fisheries

1.    If a Party considers that a subsidy, or a particular instance of government support related to trade in services, granted by the other Party is adversely affecting, or may adversely affect its interests, it may express its concerns to the other Party and request consultations on the matter. The responding Party shall accord full and sympathetic consideration to that request.

2.    During consultations, a Party may seek additional information on a subsidy or particular instance of government support related to trade in services provided by the other Party, including its policy objective, its amount, and any measures taken to limit the potential distortive effect on trade.

3.    On the basis of the consultations, the responding Party shall endeavour to eliminate or minimise any adverse effects of the subsidy, or the particular instance of government support related to trade in services, on the requesting Party's interests.

4.    This Article does not apply to subsidies related to agricultural goods and fisheries products, and is without prejudice to Articles 7.4 and 7.5.



ARTICLE 7.4

Consultations on subsidies related to agricultural
goods and fisheries products

1.    The Parties share the objective of working jointly to reach an agreement:

(a)    to further enhance multilateral disciplines and rules on agricultural trade in the WTO; and

(b)    to help develop a global, multilateral resolution to fisheries subsidies.

2.    If a Party considers that a subsidy, or the provision of government support, granted by the other Party, is adversely affecting, or may adversely affect, its interests with respect to agricultural goods or fisheries products, it may express its concerns to the other Party and request consultations on the matter.

3.    The responding Party shall accord full and sympathetic consideration to that request and will use its best endeavours to eliminate or minimise the adverse effects of the subsidy, or the provision of government support, on the requesting Party's interests with regard to agricultural goods and fisheries products.



ARTICLE 7.5

Agriculture export subsidies

1.    For the purposes of this Article:

(a)    export subsidy means an export subsidy as defined in Article 1(e) of the Agreement on Agriculture; and

(b)    full elimination of a tariff means, where tariff quotas exist, the elimination of either the inquota or overquota tariff.

2.    A Party shall not adopt or maintain an export subsidy on an agricultural good that is exported, or incorporated in a product that is exported, to the territory of the other Party after the other Party has fully eliminated the tariff, immediately or after the transitional period, on that agricultural good in accordance with Annex 2A (Tariff Elimination), including its Tariff Schedules.

ARTICLE 7.6

Confidentiality

When providing information under this Chapter, a Party is not required to disclose confidential information.



ARTICLE 7.7

Exclusion of subsidies and government support
for audio
visual services and cultural industries

Nothing in this Agreement applies to subsidies or government support with respect to audiovisual services for the European Union and to cultural industries for Canada.

ARTICLE 7.8

Relationship with the WTO Agreement

The Parties reaffirm their rights and obligations under Article VI of GATT 1994, the SCM Agreement and the Agreement on Agriculture.

ARTICLE 7.9

Dispute settlement

Articles 7.3 and 7.4 of this Chapter are not subject to the dispute settlement provisions of this Agreement.



CHAPTER EIGHT

INVESTMENT

SECTION A

Definitions and scope

ARTICLE 8.1

Definitions

For the purposes of this Chapter:

activities carried out in the exercise of governmental authority means activities carried out neither on a commercial basis nor in competition with one or more economic operators;

aircraft repair and maintenance services means activities undertaken on an aircraft or a part of an aircraft while it is withdrawn from service and do not include socalled line maintenance;



airport operation services means the operation or management, on a fee or contract basis, of airport infrastructure, including terminals, runways, taxiways and aprons, parking facilities, and intraairport transportation systems. For greater certainty, airport operation services do not include the ownership of, or investment in, airports or airport lands, or any of the functions carried out by a board of directors. Airport operation services do not include air navigation services;

attachment means the seizure of property of a disputing party to secure or ensure the satisfaction of an award;

computer reservation system services means the supply of a service by computerised systems that contain information about air carriers' schedules, availability, fares and fare rules, through which reservations can be made or tickets may be issued;

confidential or protected information means:

(a)    confidential business information; or

(b)    information which is protected against disclosure to the public;

(i)    in the case of information of the respondent, under the law of the respondent;

(ii)    in the case of other information, under a law or rules that the Tribunal determines to be applicable to the disclosure of such information;



covered investment means, with respect to a Party, an investment:

(a)    in its territory;

(b)    made in accordance with the applicable law at the time the investment is made;

(c)    directly or indirectly owned or controlled by an investor of the other Party; and

(d)    existing on the date of entry into force of this Agreement, or made or acquired thereafter;

disputing party means the investor that initiates proceedings pursuant to Section F or the respondent. For the purposes of Section F and without prejudice to Article 8.14, an investor does not include a Party;

disputing parties means both the investor and the respondent;

enjoin means an order to prohibit or restrain an action;

enterprise means an enterprise as defined in Article 1.1 (Definitions of general application) and a branch or representative office of an enterprise;



ground handling services means the supply of a service on a fee or contract basis for: ground administration and supervision, including load control and communications; passenger handling; baggage handling; cargo and mail handling; ramp handling and aircraft services; fuel and oil handling; aircraft line maintenance, flight operations and crew administration; surface transport; or catering services. Ground handling services do not include security services or the operation or management of centralised airport infrastructure, such as baggage handling systems, deicing facilities, fuel distribution systems, or intraairport transport systems;

ICSID means the International Centre for Settlement of Investment Disputes;

ICSID Additional Facility Rules means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes;

ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington on 18 March 1965;

intellectual property rights means copyright and related rights, trademark rights, rights in geographical indications, rights in industrial designs, patent rights, rights in layout designs of integrated circuits, rights in relation to protection of undisclosed information, and plant breeders' rights; and, if such rights are provided by a Party's law, utility model rights. The CETA Joint Committee may, by decision, add other categories of intellectual property to this definition;



investment means every kind of asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, which includes a certain duration and other characteristics such as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include:

(a)    an enterprise;

(b)    shares, stocks and other forms of equity participation in an enterprise;

(c)    bonds, debentures and other debt instruments of an enterprise;

(d)    a loan to an enterprise;

(e)    any other kind of interest in an enterprise;

(f)    an interest arising from:

(i)    a concession conferred pursuant to the law of a Party or under a contract, including to search for, cultivate, extract or exploit natural resources,

(ii)    a turnkey, construction, production or revenuesharing contract; or

(iii)    other similar contracts;



(g)    intellectual property rights;

(h)    other moveable property, tangible or intangible, or immovable property and related rights;

(i)    claims to money or claims to performance under a contract.

For greater certainty, claims to money does not include:

(i)    claims to money that arise solely from commercial contracts for the sale of goods or services by a natural person or enterprise in the territory of a Party to a natural person or enterprise in the territory of the other Party.

(ii)    the domestic financing of such contracts; or

(iii)    any order, judgment, or arbitral award related to sub-subparagraph (i) or (ii).

Returns that are invested shall be treated as investments. Any alteration of the form in which assets are invested or reinvested does not affect their qualification as investment;

investor means a Party, a natural person or an enterprise of a Party, other than a branch or a representative office, that seeks to make, is making or has made an investment in the territory of the other Party;



For the purposes of this definition, an enterprise of a Party is:

(a)    an enterprise that is constituted or organised under the laws of that Party and has substantial business activities in the territory of that Party; or

(b)    an enterprise that is constituted or organised under the laws of that Party and is directly or indirectly owned or controlled by a natural person of that Party or by an enterprise mentioned under paragraph (a);

locally established enterprise means a juridical person that is constituted or organised under the laws of the respondent and that an investor of the other Party owns or controls directly or indirectly;

natural person means:

(a)    in the case of Canada, a natural person who is a citizen or permanent resident of Canada; and

(b)    in the case of the EU Party, a natural person having the nationality of one of the Member States of the European Union according to their respective laws, and, for Latvia, also a natural person permanently residing in the Republic of Latvia who is not a citizen of the Republic of Latvia or any other state but who is entitled, under laws and regulations of the Republic of Latvia, to receive a noncitizen's passport.



A natural person who is a citizen of Canada and has the nationality of one of the Member States of the European Union is deemed to be exclusively a natural person of the Party of his or her dominant and effective nationality.

A natural person who has the nationality of one of the Member States of the European Union or is a citizen of Canada, and is also a permanent resident of the other Party, is deemed to be exclusively a natural person of the Party of his or her nationality or citizenship, as applicable;

New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958;

nondisputing Party means Canada, if the European Union or a Member State of the European Union is the respondent, or the European Union, if Canada is the respondent;

respondent means Canada or, in the case of the European Union, either the Member State of the European Union or the European Union pursuant to Article 8.21;

returns means all amounts yielded by an investment or reinvestment, including profits, royalties and interest or other fees and payments in kind;

selling and marketing of air transport services means opportunities for the air carrier concerned to sell and market freely its air transport services including all aspects of marketing such as market research, advertising and distribution, but does not include the pricing of air transport services or the applicable conditions;

third party funding means any funding provided by a natural or legal person who is not a disputing party but who enters into an agreement with a disputing party in order to finance part or all of the cost of the proceedings either through a donation or grant, or in return for remuneration dependent on the outcome of the dispute.

Tribunal means the tribunal established under Article 8.27;

UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law; and

UNCITRAL Transparency Rules means the UNCITRAL Rules on Transparency in Treatybased InvestorState Arbitration;



ARTICLE 8.2

Scope

1.    This Chapter applies to a measure adopted or maintained by a Party in its territory 5 relating to:

(a)    an investor of the other Party;

(b)    a covered investment; and

(c)    with respect to Article 8.5, any investments in its territory.



2.    With respect to the establishment or acquisition of a covered investment 6 , Sections B and C do not apply to a measure relating to:

(a)    air services, or related services in support of air services and other services supplied by means of air transport 7 , other than:

(i)    aircraft repair and maintenance services;

(ii)    the selling and marketing of air transport services;

(iii)    computer reservation system (CRS) services;

(iv)    ground handling services;

(v)    airport operation services; or

(b)    activities carried out in the exercise of governmental authority.

3.    For the EU Party, Sections B and C do not apply to a measure with respect to audiovisual services. For Canada, Sections B and C do not apply to a measure with respect to cultural industries.



4.    Claims may be submitted by an investor under this Chapter only in accordance with Article 8.18, and in compliance with the procedures set out in Section F. Claims in respect of an obligation set out in Section B are excluded from the scope of Section F. Claims under Section C with respect to the establishment or acquisition of a covered investment are excluded from the scope of Section F. Section D applies only to a covered investment and to investors in respect of their covered investment.

5.    This Chapter does not affect the rights and obligations of the Parties under the Agreement on Air Transport between Canada and the European Community and its Member States, done at Brussels on 17 December 2009 and Ottawa on 18 December 2009.

ARTICLE 8.3

Relation to other chapters

1.    This Chapter does not apply to measures adopted or maintained by a Party to the extent that the measures apply to investors or to their investments covered by Chapter Thirteen (Financial Services).



2.    A requirement by a Party that a service supplier of the other Party post a bond or other form of financial security as a condition for supplying a service in its territory does not of itself make this Chapter applicable to measures adopted or maintained by the Party relating to the supply of that crossborder service. This Chapter applies to measures adopted or maintained by the Party relating to the posted bond or financial security to the extent that such bond or financial security is a covered investment.

SECTION B

Establishment of investments

ARTICLE 8.4

Market access

1.    A Party shall not adopt or maintain with respect to market access through establishment by an investor of the other Party, on the basis of its entire territory or on the basis of the territory of a national, provincial, territorial, regional or local level of government, a measure that:

(a)    imposes limitations on:

(i)    the number of enterprises that may carry out a specific economic activity whether in the form of numerical quotas, monopolies, exclusive suppliers or the requirement of an economic needs test;



(ii)    the total value of transactions or assets in the form of numerical quotas or the requirement of an economic needs test;

(iii)    the total number of operations or the total quantity of output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test; 8

(iv)    the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment; or

(v)    the total number of natural persons that may be employed in a particular sector or that an enterprise may employ and who are necessary for, and directly related to, the performance of economic activity in the form of numerical quotas or the requirement of an economic needs test; or

(b)    restricts or requires specific types of legal entity or joint venture through which an enterprise may carry out an economic activity.

2.    For greater certainty, the following are consistent with paragraph 1:

(a)    a measure concerning zoning and planning regulations affecting the development or use of land, or another analogous measure;



(b)    a measure requiring the separation of the ownership of infrastructure from the ownership of the goods or services provided through that infrastructure to ensure fair competition, for example in the fields of energy, transportation and telecommunications;

(c)    a measure restricting the concentration of ownership to ensure fair competition;

(d)    a measure seeking to ensure the conservation and protection of natural resources and the environment, including a limitation on the availability, number and scope of concessions granted, and the imposition of a moratorium or ban;

(e)    a measure limiting the number of authorisations granted because of technical or physical constraints, for example telecommunications spectrum and frequencies; or

(f)    a measure requiring that a certain percentage of the shareholders, owners, partners, or directors of an enterprise be qualified or practice a certain profession such as lawyers or accountants.



ARTICLE 8.5

Performance requirements

1.    A Party shall not impose, or enforce the following requirements, or enforce a commitment or undertaking, in connection with the establishment, acquisition, expansion, conduct, operation, and management of any investments in its territory to:

(a)    export a given level or percentage of a good or service;

(b)    achieve a given level or percentage of domestic content;

(c)    purchase, use or accord a preference to a good produced or service provided in its territory, or to purchase a good or service from natural persons or enterprises in its territory;

(d)    relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment;

(e)    restrict sales of a good or service in its territory that the investment produces or provides by relating those sales to the volume or value of its exports or foreign exchange earnings;

(f)    transfer technology, a production process or other proprietary knowledge to a natural person or enterprise in its territory; or



(g)    supply exclusively from the territory of the Party a good produced or a service provided by the investment to a specific regional or world market.

2.    A Party shall not condition the receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct or operation of any investments in its territory, on compliance with any of the following requirements:

(a)    to achieve a given level or percentage of domestic content;

(b)    to purchase, use or accord a preference to a good produced in its territory, or to purchase a good from a producer in its territory;

(c)    to relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment; or

(d)    to restrict sales of a good or service in its territory that the investment produces or provides by relating those sales to the volume or value of its exports or foreign exchange earnings.

3.    Paragraph 2 does not prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development in its territory.



4.    Subparagraph 1(f) does not apply if the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy a violation of competition laws.

5.    The provisions of:

(a)    subparagraphs 1(a), (b) and (c), and 2(a) and (b), do not apply to qualification requirements for a good or service with respect to participation in export promotion and foreign aid programs;

(b)    this Article does not apply to procurement by a Party of a good or service purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is "covered procurement" within the meaning of Article 19.2 (Scope and coverage).

6.    For greater certainty, subparagraphs 2(a) and (b) do not apply to requirements imposed by an importing Party relating to the content of a good necessary to qualify for preferential tariffs or preferential quotas.

7.    This Article is without prejudice to World Trade Organization commitments of a Party.



SECTION C

Nondiscriminatory treatment

ARTICLE 8.6

National treatment

1.    Each Party shall accord to an investor of the other Party and to a covered investment, treatment no less favourable than the treatment it accords, in like situations to its own investors and to their investments with respect to the establishment, acquisition, expansion, conduct, operation, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

2.    The treatment accorded by a Party under paragraph 1 means, with respect to a government in Canada other than at the federal level, or, with respect to a government of or in a Member State of the European Union, treatment no less favourable than the most favourable treatment accorded, in like situations, by that government to investors of that Party in its territory and to investments of such investors.



ARTICLE 8.7

Mostfavourednation treatment

1.    Each Party shall accord to an investor of the other Party and to a covered investment, treatment no less favourable than the treatment it accords in like situations, to investors of a third country and to their investments with respect to the establishment, acquisition, expansion, conduct, operation, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

2.    For greater certainty, the treatment accorded by a Party under paragraph 1 means, with respect to a government in Canada other than at the federal level, or, with respect to a government of or in a Member State of the European Union, treatment accorded, in like situations, by that government to investors in its territory, and to investments of such investors, of a third country.

3    Paragraph 1 does not apply to treatment accorded by a Party providing for recognition, including through an arrangement or agreement with a third country that recognises the accreditation of testing and analysis services and service suppliers, the accreditation of repair and maintenance services and service suppliers, as well as the certification of the qualifications of or the results of or work done by those accredited services and service suppliers.



4.    For greater certainty, the "treatment" referred to in paragraphs 1 and 2 does not include procedures for the resolution of investment disputes between investors and states provided for in other international investment treaties and other trade agreements. Substantive obligations in other international investment treaties and other trade agreements do not in themselves constitute "treatment", and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Party pursuant to those obligations.

ARTICLE 8.8

Senior management and boards of directors

A Party shall not require that an enterprise of that Party, that is also a covered investment, appoint to senior management or board of director positions, natural persons of any particular nationality.



SECTION D

Investment protection

ARTICLE 8.9

Investment and regulatory measures

1.    For the purpose of this Chapter, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity.

2.    For greater certainty, the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section.



3.    For greater certainty, a Party’s decision not to issue, renew or maintain a subsidy:

(a)    in the absence of any specific commitment under law or contract to issue, renew, or maintain that subsidy; or

(b)    in accordance with any terms or conditions attached to the issuance, renewal or maintenance of the subsidy,

does not constitute a breach of the provisions of this Section.

4.    For greater certainty, nothing in this Section shall be construed as preventing a Party from discontinuing the granting of a subsidy 9 or requesting its reimbursement where such measure is necessary in order to comply with international obligations between the Parties or has been ordered by a competent court, administrative tribunal or other competent authority 10 , or requiring that Party to compensate the investor therefor.



ARTICLE 8.10

Treatment of investors and of covered investments

1.    Each Party shall accord in its territory to covered investments of the other Party and to investors with respect to their covered investments fair and equitable treatment and full protection and security in accordance with paragraphs 2 through 7.

2.    A Party breaches the obligation of fair and equitable treatment referenced in paragraph 1 if a measure or series of measures constitutes:

(a)    denial of justice in criminal, civil or administrative proceedings;

(b)    fundamental breach of due process, including a fundamental breach of transparency, in judicial and administrative proceedings;

(c)    manifest arbitrariness;

(d)    targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief;



(e)    abusive treatment of investors, such as coercion, duress and harassment; or

(f)    a breach of any further elements of the fair and equitable treatment obligation adopted by the Parties in accordance with paragraph 3 of this Article.

3.    The Parties shall regularly, or upon request of a Party, review the content of the obligation to provide fair and equitable treatment. The Committee on Services and Investment, established under Article 26.2.1(b) (Specialised committees), may develop recommendations in this regard and submit them to the CETA Joint Committee for decision.

4.    When applying the above fair and equitable treatment obligation, the Tribunal may take into account whether a Party made a specific representation to an investor to induce a covered investment, that created a legitimate expectation, and upon which the investor relied in deciding to make or maintain the covered investment, but that the Party subsequently frustrated.

5.    For greater certainty, "full protection and security" refers to the Party's obligations relating to the physical security of investors and covered investments.



6.    For greater certainty, a breach of another provision of this Agreement, or of a separate international agreement does not establish a breach of this Article.

7.    For greater certainty, the fact that a measure breaches domestic law does not, in and of itself, establish a breach of this Article. In order to ascertain whether the measure breaches this Article, the Tribunal must consider whether a Party has acted inconsistently with the obligations in paragraph 1.

ARTICLE 8.11

Compensation for losses

Notwithstanding Article 8.15.5(b), each Party shall accord to investors of the other Party, whose covered investments suffer losses owing to armed conflict, civil strife, a state of emergency or natural disaster in its territory, treatment no less favourable than that it accords to its own investors or to the investors of a third country, whichever is more favourable to the investor concerned, as regards restitution, indemnification, compensation or other settlement.



ARTICLE 8.12

Expropriation

1.    A Party shall not nationalise or expropriate a covered investment either directly, or indirectly through measures having an effect equivalent to nationalisation or expropriation ("expropriation"), except:

(a)    for a public purpose;

(b)    under due process of law;

(c)    in a nondiscriminatory manner; and

(d)    on payment of prompt, adequate and effective compensation.

For greater certainty, this paragraph shall be interpreted in accordance with Annex 8A.

2.    The compensation referred to in paragraph 1 shall amount to the fair market value of the investment at the time immediately before the expropriation or the impending expropriation became known, whichever is earlier. Valuation criteria shall include going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.



3.    The compensation shall also include interest at a normal commercial rate from the date of expropriation until the date of payment and shall, in order to be effective for the investor, be paid and made transferable, without delay, to the country designated by the investor and in the currency of the country of which the investor is a national or in any freely convertible currency accepted by the investor.

4.    The affected investor shall have the right, under the law of the expropriating Party, to a prompt review of its claim and of the valuation of its investment, by a judicial or other independent authority of that Party, in accordance with the principles set out in this Article.

5.    This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights, to the extent that such issuance is consistent with the TRIPS Agreement.

6.    For greater certainty, the revocation, limitation or creation of intellectual property rights, to the extent that these measures are consistent with the TRIPS Agreement and Chapter Twenty (Intellectual Property), do not constitute expropriation. Moreover, a determination that these measures are inconsistent with the TRIPS Agreement or Chapter Twenty (Intellectual Property) does not establish an expropriation.



ARTICLE 8.13

Transfers

1.    Each Party shall permit all transfers relating to a covered investment to be made without restriction or delay in a freely convertible currency and at the market rate of exchange applicable on the date of transfer. Such transfers include:

(a)    contributions to capital, such as principal and additional funds to maintain, develop or increase the investment;

(b)    profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, or other forms of returns or amounts derived from the covered investment;

(c)    proceeds from the sale or liquidation of the whole or a part of the covered investment;

(d)    payments made under a contract entered into by the investor or the covered investment, including payments made pursuant to a loan agreement;



(e)    payments made pursuant to Articles 8.11 and 8.12;

(f)    earnings and other remuneration of foreign personnel working in connection with an investment; and

(g)    payments of damages pursuant to an award issued under Section F.

2.    A Party shall not require its investors to transfer, or penalise its investors for failing to transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of the other Party.

3.    Nothing in this Article shall be construed to prevent a Party from applying in an equitable and nondiscriminatory manner and not in a way that would constitute a disguised restriction on transfers, its laws relating to:

(a)    bankruptcy, insolvency or the protection of the rights of creditors;

(b)    issuing, trading or dealing in securities;

(c)    criminal or penal offences;



(d)    financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; and

(e)    the satisfaction of judgments in adjudicatory proceedings.

ARTICLE 8.14

Subrogation

If a Party, or an agency of a Party, makes a payment under an indemnity, guarantee or contract of insurance that it has entered into in respect of an investment made by one of its investors in the territory of the other Party, the other Party shall recognise that the Party or its agency shall be entitled in all circumstances to the same rights as those of the investor in respect of the investment. These rights may be exercised by the Party or an agency of the Party, or by the investor if the Party or an agency of the Party thereof so authorises.



SECTION E

Reservations and exceptions

ARTICLE 8.15

Reservations and exceptions

1.    Articles 8.4 through 8.8 do not apply to:

(a)    an existing nonconforming measure that is maintained by a Party at the level of:

(i)    the European Union, as set out in its Schedule to Annex I;

(ii)    a national government, as set out by that Party in its Schedule to Annex I;

(iii)    a provincial, territorial, or regional government, as set out by that Party in its Schedule to Annex I; or

(iv)    a local government;

(b)    the continuation or prompt renewal of a nonconforming measure referred to in subparagraph (a); or



(c)    an amendment to a nonconforming 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 Articles 8.4 through 8.8.

2.    Articles 8.4 through 8.8 do not apply to a measure that a Party adopts or maintains with respect to a sector, subsector or activity, as set out in its Schedule to Annex II.

3.    Without prejudice to Articles 8.10 and 8.12, a Party shall not adopt a measure or series of measures after the date of entry into force of this Agreement and covered by its Schedule to Annex II, that require, directly or indirectly an investor of the other Party, by reason of nationality, to sell or otherwise dispose of an investment existing at the time the measure or series of measures become effective.

4.    In respect of intellectual property rights, a Party may derogate from Articles 8.5.1(f), 8.6, and 8.7 if permitted by the TRIPS Agreement, including any amendments to the TRIPS Agreement in force for both Parties, and waivers to the TRIPS Agreement adopted pursuant to Article IX of the WTO Agreement.

5.    Articles 8.4, 8.6, 8.7 and 8.8 do not apply to:

(a)    procurement by a Party of a good or service purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is "covered procurement" within the meaning of Article 19.2 (Scope and coverage); or



(b)    subsidies, or government support relating to trade in services, provided by a Party.

ARTICLE 8.16

Denial of benefits

A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of that Party and to investments of that investor if:

(a)    an investor of a third country owns or controls the enterprise; and

(b)    the denying Party adopts or maintains a measure with respect to the third country that:

(i)    relates to the maintenance of international peace and security; and

(ii)    prohibits transactions with the enterprise or would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments.



ARTICLE 8.17

Formal requirements

Notwithstanding Articles 8.6 and 8.7, a Party may require an investor of the other Party, or its covered investment, to provide routine information concerning that investment solely for informational or statistical purposes, provided that those requests are reasonable and not unduly burdensome. The Party shall protect confidential or protected information from any disclosure that would prejudice the competitive position of the investor or the covered investment. This paragraph does not prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its laws.



SECTION F

Resolution of investment disputes between investors and states

 

ARTICLE 8.18

Scope

1.    Without prejudice to the rights and obligations of the Parties under Chapter TwentyNine (Dispute Settlement), an investor of a Party may submit to the Tribunal constituted under this Section a claim that the other Party has breached an obligation under:

(a)    Section C, with respect to the expansion, conduct, operation, management, maintenance, use, enjoyment and sale or disposal of its covered investment, or

(b)    Section D,

where the investor claims to have suffered loss or damage as a result of the alleged breach.

2.    Claims under subparagraph 1(a) with respect to the expansion of a covered investment may be submitted only to the extent the measure relates to the existing business operations of a covered investment and the investor has, as a result, incurred loss or damage with respect to the covered investment.



3.    For greater certainty, an investor may not submit a claim under this Section if the investment has been made through fraudulent misrepresentation, concealment, corruption, or conduct amounting to an abuse of process.

4.    A claim with respect to restructuring of debt issued by a Party may only be submitted under this Section in accordance with Annex 8B.

5.     The Tribunal constituted under this Section shall not decide claims that fall outside of the scope of this Article.

ARTICLE 8.19

Consultations

1.    A dispute should as far as possible be settled amicably. Such a settlement may be agreed at any time, including after the claim has been submitted pursuant to Article 8.23. Unless the disputing parties agree to a longer period, consultations shall be held within 60 days of the submission of the request for consultations pursuant to paragraph 4.

2.    Unless the disputing parties agree otherwise, the place of consultation shall be:

(a)    Ottawa, if the measures challenged are measures of Canada;



(b)    Brussels, if the measures challenged include a measure of the European Union; or

(c)    the capital of the Member State of the European Union, if the measures challenged are exclusively measures of that Member State.

3.    The disputing parties may hold the consultations through videoconference or other means where appropriate, such as in the case where the investor is a small or medium-sized enterprise.

4.    The investor shall submit to the other Party a request for consultations setting out:

(a)    the name and address of the investor and, if such request is submitted on behalf of a locally established enterprise, the name, address and place of incorporation of the locally established enterprise;

(b)    if there is more than one investor, the name and address of each investor and, if there is more than one locally established enterprise, the name, address and place of incorporation of each locally established enterprise;

(c)    the provisions of this Agreement alleged to have been breached;

(d)    the legal and the factual basis for the claim, including the measures at issue; and

(e)    the relief sought and the estimated amount of damages claimed.



The request for consultations shall contain evidence establishing that the investor is an investor of the other Party and that it owns or controls the investment including, if applicable, that it owns or controls the locally established enterprise on whose behalf the request is submitted.

5.    The requirements of the request for consultations set out in paragraph 4 shall be met with sufficient specificity to allow the respondent to effectively engage in consultations and to prepare its defence.

6.    A request for consultations must be submitted within:

(a)    three years after the date on which the investor or, as applicable, the locally established enterprise, first acquired or should have first acquired, knowledge of the alleged breach and knowledge that the investor or, as applicable, the locally established enterprise, has incurred loss or damage thereby; or

(b)    two years after an investor or, as applicable, the locally established enterprise, ceases to pursue claims or proceedings before a tribunal or court under the law of a Party, or when such proceedings have otherwise ended and, in any event, no later than 10 years after the date on which the investor or, as applicable, the locally established enterprise, first acquired or should have first acquired knowledge of the alleged breach and knowledge that the investor has incurred loss or damage thereby.

7.    A request for consultations concerning an alleged breach by the European Union or a Member State of the European Union shall be sent to the European Union.



8.    In the event that the investor has not submitted a claim pursuant to Article 8.23 within 18 months of submitting the request for consultations, the investor is deemed to have withdrawn its request for consultations and, if applicable, its notice requesting a determination of the respondent, and shall not submit a claim under this Section with respect to the same measures. This period may be extended by agreement of the disputing parties.

ARTICLE 8.20

Mediation

1.    The disputing parties may at any time agree to have recourse to mediation.

2.    Recourse to mediation is without prejudice to the legal position or rights of either disputing party under this Chapter and is governed by the rules agreed to by the disputing parties including, if available, the rules for mediation adopted by the Committee on Services and Investment pursuant to Article 8.44.3(c).

3.    The mediator is appointed by agreement of the disputing parties. The disputing parties may also request that the Secretary General of ICSID appoint the mediator.



4.    The disputing parties shall endeavour to reach a resolution of the dispute within 60 days from the appointment of the mediator.

5.    If the disputing parties agree to have recourse to mediation, Articles 8.19.6 and 8.19.8 shall not apply from the date on which the disputing parties agreed to have recourse to mediation to the date on which either disputing party decides to terminate the mediation. A decision by a disputing party to terminate the mediation shall be transmitted by way of a letter to the mediator and the other disputing party.

ARTICLE 8.21

Determination of the respondent for disputes
with the European Union or its Member States

1.    If the dispute cannot be settled within 90 days of the submission of the request for consultations, the request concerns an alleged breach of this Agreement by the European Union or a Member State of the European Union and the investor intends to submit a claim pursuant to Article 8.23, the investor shall deliver to the European Union a notice requesting a determination of the respondent.

2.    The notice under paragraph 1 shall identify the measures in respect of which the investor intends to submit a claim.



3.    The European Union shall, after having made a determination, inform the investor as to whether the European Union or a Member State of the European Union shall be the respondent.

4.    In the event that the investor has not been informed of the determination within 50 days of delivering its notice requesting such determination:

(a)    if the measures identified in the notice are exclusively measures of a Member State of the European Union, the Member State shall be the respondent;

(b)    if the measures identified in the notice include measures of the European Union, the European Union shall be the respondent.

5.    The investor may submit a claim pursuant to Article 8.23  on the basis of the determination made pursuant to paragraph 3, and, if no such determination has been communicated to the investor, on the basis of the application of paragraph 4.

6.    If the European Union or a Member State of the European Union is the respondent, pursuant to paragraph 3 or 4, neither the European Union, nor the Member State of the European Union may assert the inadmissibility of the claim, lack of jurisdiction of the Tribunal or otherwise object to the claim or award on the ground that the respondent was not properly determined pursuant to paragraph 3 or identified on the basis of the application of paragraph 4.

7.    The Tribunal shall be bound by the determination made pursuant to paragraph 3 and, if no such determination has been communicated to the investor, the application of paragraph 4.



ARTICLE 8.22

Procedural and other requirements for the submission of a claim to the Tribunal

1.    An investor may only submit a claim pursuant to Article 8.23 if the investor:

(a)    delivers to the respondent, with the submission of a claim, its consent to the settlement of the dispute by the Tribunal in accordance with the procedures set out in this Section;

(b)    allows at least 180 days to elapse from the submission of the request for consultations and, if applicable, at least 90 days to elapse from the submission of the notice requesting a determination of the respondent;

(c)    has fulfilled the requirements of the notice requesting a determination of the respondent;

(d)    has fulfilled the requirements related to the request for consultations;

(e)    does not identify a measure in its claim that was not identified in its request for consultations;



(f)    withdraws or discontinues any existing proceeding before a tribunal or court under domestic or international law with respect to a measure alleged to constitute a breach referred to in its claim; and

(g)    waives its right to initiate any claim or proceeding before a tribunal or court under domestic or international law with respect to a measure alleged to constitute a breach referred to in its claim.

2.    If the claim submitted pursuant to Article 8.23 is for loss or damage to a locally established enterprise or to an interest in a locally established enterprise that the investor owns or controls directly or indirectly, the requirements in subparagraphs 1(f) and (g) apply both to the investor and the locally established enterprise.

3.    The requirements of subparagraphs 1(f) and (g) and paragraph 2 do not apply in respect of a locally established enterprise if the respondent or the investor's host state has deprived the investor of control of the locally established enterprise, or has otherwise prevented the locally established enterprise from fulfilling those requirements.



4.    Upon request of the respondent, the Tribunal shall decline jurisdiction if the investor or, as applicable, the locally established enterprise fails to fulfil any of the requirements of paragraphs 1 and 2.

5.    The waiver provided pursuant to subparagraph 1(g) or paragraph 2 as applicable shall cease to apply:

(a)    if the Tribunal rejects the claim on the basis of a failure to meet the requirements of paragraph 1 or 2 or on any other procedural or jurisdictional grounds;

(b)    if the Tribunal dismisses the claim pursuant to Article 8.32 or Article 8.33; or

(c)    if the investor withdraws its claim, in conformity with the applicable rules under Article 8.23.2, within 12 months of the constitution of the division of the Tribunal.

ARTICLE 8.23

Submission of a claim to the Tribunal

1.    If a dispute has not been resolved through consultations, a claim may be submitted under this Section by:

(a)    an investor of a Party on its own behalf; or



(b)    an investor of a Party, on behalf of a locally established enterprise which it owns or controls directly or indirectly.

2.    A claim may be submitted under the following rules:

(a)    the ICSID Convention and Rules of Procedure for Arbitration Proceedings;

(b)    the ICSID Additional Facility Rules if the conditions for proceedings pursuant to paragraph (a) do not apply;

(c)    the UNCITRAL Arbitration Rules; or

(d)    any other rules on agreement of the disputing parties.

3.    In the event that the investor proposes rules pursuant to subparagraph 2(d), the respondent shall reply to the investor's proposal within 20 days of receipt. If the disputing parties have not agreed on such rules within 30 days of receipt, the investor may submit a claim under the rules provided for in subparagraph 2(a), (b) or (c).

4.    For greater certainty, a claim submitted under subparagraph 1(b) shall satisfy the requirements of Article 25(1) of the ICSID Convention.



5.    The investor may, when submitting its claim, propose that a sole Member of the Tribunal should hear the claim. The respondent shall give sympathetic consideration to that request, in particular if the investor is a small or mediumsized enterprise or the compensation or damages claimed are relatively low.

6.    The rules applicable under paragraph 2 are those that are in effect on the date that the claim or claims are submitted to the Tribunal under this Section, subject to the specific rules set out in this Section and supplemented by rules adopted pursuant to Article 8.44.3(b).

7.    A claim is submitted for dispute settlement under this Section when:

(a)    the request under Article 36(1) of the ICSID Convention is received by the SecretaryGeneral of ICSID;

(b)    the request under Article 2 of Schedule C of the ICSID Additional Facility Rules is received by the Secretariat of ICSID;

(c)    the notice under Article 3 of the UNCITRAL Arbitration Rules is received by the respondent; or



(d)    the request or notice initiating proceedings is received by the respondent in accordance with the rules agreed upon pursuant to subparagraph 2(d).

8.    Each Party shall notify the other Party of the place of delivery of notices and other documents by the investors pursuant to this Section. Each Party shall ensure this information is made publicly available.

ARTICLE 8.24

Proceedings under another international agreement

Where a claim is brought pursuant to this Section and another international agreement and:

(a)    there is a potential for overlapping compensation; or

(b)    the other international claim could have a significant impact on the resolution of the claim brought pursuant to this Section,

the Tribunal shall, as soon as possible after hearing the disputing parties, stay its proceedings or otherwise ensure that proceedings brought pursuant to another international agreement are taken into account in its decision, order or award.



ARTICLE 8.25

Consent to the settlement of the dispute by the Tribunal

1.    The respondent consents to the settlement of the dispute by the Tribunal in accordance with the procedures set out in this Section.

2.    The consent under paragraph 1 and the submission of a claim to the Tribunal under this Section shall satisfy the requirements of:

(a)    Article 25 of the ICSID Convention and Chapter II of Schedule C of the ICSID Additional Facility Rules regarding written consent of the disputing parties; and,

(b)    Article II of the New York Convention for an agreement in writing.



ARTICLE 8.26

Third party funding

1.    Where there is third party funding, the disputing party benefiting from it shall disclose to the other disputing party and to the Tribunal the name and address of the third party funder.

2.    The disclosure shall be made at the time of the submission of a claim, or, if the financing agreement is concluded or the donation or grant is made after the submission of a claim, without delay as soon as the agreement is concluded or the donation or grant is made.

ARTICLE 8.27

Constitution of the Tribunal

1.    The Tribunal established under this Section shall decide claims submitted pursuant to Article 8.23.

2.    The CETA Joint Committee shall, upon the entry into force of this Agreement, appoint fifteen Members of the Tribunal. Five of the Members of the Tribunal shall be nationals of a Member State of the European Union, five shall be nationals of Canada 11 and five shall be nationals of third countries.



3.    The CETA Joint Committee may decide to increase or to decrease the number of the Members of the Tribunal by multiples of three. Additional appointments shall be made on the same basis as provided for in paragraph 2.

4.    The Members of the Tribunal shall possess the qualifications required in their respective countries for appointment to judicial office, or be jurists of recognised competence. They shall have demonstrated expertise in public international law. It is desirable that they have expertise in particular, in international investment law, in international trade law and the resolution of disputes arising under international investment or international trade agreements.

5.    The Members of the Tribunal appointed pursuant to this Section shall be appointed for a five-year term, renewable once. However, the terms of seven of the 15 persons appointed immediately after the entry into force of this Agreement, to be determined by lot, shall extend to six years. Vacancies shall be filled as they arise. A person appointed to replace a Member of the Tribunal whose term of office has not expired shall hold office for the remainder of the predecessor's term. In principle, a Member of the Tribunal serving on a division of the Tribunal when his or her term expires may continue to serve on the division until a final award is issued.

6.    The Tribunal shall hear cases in divisions consisting of three Members of the Tribunal, of whom one shall be a national of a Member State of the European Union, one a national of Canada and one a national of a third country. The division shall be chaired by the Member of the Tribunal who is a national of a third country.



7.    Within 90 days of the submission of a claim pursuant to Article 8.23, the President of the Tribunal shall appoint the Members of the Tribunal composing the division of the Tribunal hearing the case on a rotation basis, ensuring that the composition of the divisions is random and unpredictable, while giving equal opportunity to all Members of the Tribunal to serve.

8.    The President and Vice-President of the Tribunal shall be responsible for organisational issues and shall be appointed for a two-year term and shall be drawn by lot from among the Members of the Tribunal who are nationals of third countries. They shall serve on the basis of a rotation drawn by lot by the Chair of the CETA Joint Committee. The Vice-President shall replace the President when the President is unavailable.

9.    Notwithstanding paragraph 6, the disputing parties may agree that a case be heard by a sole Member of the Tribunal to be appointed at random from the third country nationals. The respondent shall give sympathetic consideration to a request from the claimant to have the case heard by a sole Member of the Tribunal, in particular where the claimant is a small or medium-sized enterprise or the compensation or damages claimed are relatively low. Such a request shall be made before the constitution of the division of the Tribunal.

10.    The Tribunal may draw up its own working procedures.

11.    The Members of the Tribunal shall ensure that they are available and able to perform the functions set out under this Section.



12.    In order to ensure their availability, the Members of the Tribunal shall be paid a monthly retainer fee to be determined by the CETA Joint Committee.

13.    The fees referred to in paragraph 12 shall be paid equally by both Parties into an account managed by the ICSID Secretariat. In the event that one Party fails to pay the retainer fee the other Party may elect to pay. Any such arrears by a Party shall remain payable, with appropriate interest.

14.    Unless the CETA Joint Committee adopts a decision pursuant to paragraph 15, the amount of the fees and expenses of the Members of the Tribunal on a division constituted to hear a claim, other than the fees referred to in paragraph 12, shall be those determined pursuant to Regulation 14(1) of the Administrative and Financial Regulations of the ICSID Convention in force on the date of the submission of the claim and allocated by the Tribunal among the disputing parties in accordance with Article 8.39.5.

15.    The CETA Joint Committee may, by decision, transform the retainer fee and other fees and expenses into a regular salary, and decide applicable modalities and conditions.

16.    The ICSID Secretariat shall act as Secretariat for the Tribunal and provide it with appropriate support.



17.    If the CETA Joint Committee has not made the appointments pursuant to paragraph 2 within 90 days from the date that a claim is submitted for dispute settlement, the Secretary General of ICSID shall, at the request of either disputing party appoint a division consisting of three Members of the Tribunal, unless the disputing parties have agreed that the case is to be heard by a sole Member of the Tribunal. The Secretary General of ICSID shall make the appointment by random selection from the existing nominations. The Secretary-General of ICSID may not appoint as chair a national of either Canada or a Member State of the European Union unless the disputing parties agree otherwise.

ARTICLE 8.28

Appellate Tribunal

1.    An Appellate Tribunal is hereby established to review awards rendered under this Section.

 

2.    The Appellate Tribunal may uphold, modify or reverse the Tribunal's award based on:

(a)    errors in the application or interpretation of applicable law;

(b)    manifest errors in the appreciation of the facts, including the appreciation of relevant domestic law;

(c)    the grounds set out in Article 52(1) (a) through (e) of the ICSID Convention, in so far as they are not covered by paragraphs (a) and (b).



3.    The Members of the Appellate Tribunal shall be appointed by a decision of the CETA Joint Committee at the same time as the decision referred to in paragraph 7.

4.    The Members of the Appellate Tribunal shall meet the requirements of Article 8.27.4 and comply with Article 8.30.

5.    The division of the Appellate Tribunal constituted to hear the appeal shall consist of three randomly appointed Members of the Appellate Tribunal.

6.    Articles 8.36 and 8.38 shall apply to the proceedings before the Appellate Tribunal.

7.    The CETA Joint Committee shall promptly adopt a decision setting out the following administrative and organisational matters regarding the functioning of the Appellate Tribunal:

(a)    administrative support;

(b)    procedures for the initiation and the conduct of appeals, and procedures for referring issues back to the Tribunal for adjustment of the award, as appropriate;

(c)    procedures for filling a vacancy on the Appellate Tribunal and on a division of the Appellate Tribunal constituted to hear a case;



(d)    remuneration of the Members of the Appellate Tribunal;

(e)    provisions related to the costs of appeals;

(f)    the number of Members of the Appellate Tribunal; and

(g)    any other elements it determines to be necessary for the effective functioning of the Appellate Tribunal.

8.    The Committee on Services and Investment shall periodically review the functioning of the Appellate Tribunal and may make recommendations to the CETA Joint Committee. The CETA Joint Committee may revise the decision referred to in paragraph 7, if necessary.

9.    Upon adoption of the decision referred to in paragraph 7:

(a)     a disputing party may appeal an award rendered pursuant to this Section to the Appellate Tribunal within 90 days after its issuance;

(b)    a disputing party shall not seek to review, set aside, annul, revise or initiate any other similar procedure as regards an award under this Section;

(c)    an award rendered pursuant to Article 8.39 shall not be considered final and no action for enforcement of an award may be brought until either:



(i)    90 days from the issuance of the award by the Tribunal has elapsed and no appeal has been initiated;

(ii)    an initiated appeal has been rejected or withdrawn; or

(iii)    90 days have elapsed from an award by the Appellate Tribunal and the Appellate Tribunal has not referred the matter back to the Tribunal;

(d)    a final award by the Appellate Tribunal shall be considered as a final award for the purposes of Article 8.41; and

(e)    Article 8.41.3 shall not apply.

ARTICLE 8.29

Establishment of a multilateral investment tribunal and appellate mechanism

The Parties shall pursue with other trading partners the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes. Upon establishment of such a multilateral mechanism, the CETA Joint Committee shall adopt a decision providing that investment disputes under this Section will be decided pursuant to the multilateral mechanism and make appropriate transitional arrangements.



ARTICLE 8.30

Ethics

1.    The Members of the Tribunal shall be independent. They shall not be affiliated with any government. 12 They shall not take instructions from any organisation, or government with regard to matters related to the dispute. They shall not participate in the consideration of any disputes that would create a direct or indirect conflict of interest. They shall comply with the International Bar Association Guidelines on Conflicts of Interest in International Arbitration or any supplemental rules adopted pursuant to Article 8.44.2. In addition, upon appointment, they shall refrain from acting as counsel or as party-appointed expert or witness in any pending or new investment dispute under this or any other international agreement.

2.    If a disputing party considers that a Member of the Tribunal has a conflict of interest, it may invite the President of the International Court of Justice to issue a decision on the challenge to the appointment of such Member. Any notice of challenge shall be sent to the President of the International Court of Justice within 15 days of the date on which the composition of the division of the Tribunal has been communicated to the disputing party, or within 15 days of the date on which the relevant facts came to its knowledge, if they could not have reasonably been known at the time of composition of the division. The notice of challenge shall state the grounds for the challenge.



3.    If, within 15 days from the date of the notice of challenge, the challenged Member of the Tribunal has elected not to resign from the division, the President of the International Court of Justice may, after receiving submissions from the disputing parties and after providing the Member of the Tribunal an opportunity to submit any observations, issue a decision on the challenge. The President of the International Court of Justice shall endeavour to issue the decision and to notify the disputing parties and the other Members of the division within 45 days of receipt of the notice of challenge. A vacancy resulting from the disqualification or resignation of a Member of the Tribunal shall be filled promptly.

4.    Upon a reasoned recommendation from the President of the Tribunal, or on their joint initiative, the Parties, by decision of the CETA Joint Committee, may remove a Member from the Tribunal where his or her behaviour is inconsistent with the obligations set out in paragraph 1 and incompatible with his or her continued membership of the Tribunal.

ARTICLE 8.31

Applicable law and interpretation

1.    When rendering its decision, the Tribunal established under this Section shall apply this Agreement as interpreted in accordance with the Vienna Convention on the Law of Treaties, and other rules and principles of international law applicable between the Parties.



2.    The Tribunal shall not have jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Party. For greater certainty, in determining the consistency of a measure with this Agreement, the Tribunal may consider, as appropriate, the domestic law of a Party as a matter of fact. In doing so, the Tribunal shall follow the prevailing interpretation given to the domestic law by the courts or authorities of that Party and any meaning given to domestic law by the Tribunal shall not be binding upon the courts or the authorities of that Party.

3.    Where serious concerns arise as regards matters of interpretation that may affect investment, the Committee on Services and Investment may, pursuant to Article 8.44.3(a), recommend to the CETA Joint Committee the adoption of interpretations of this Agreement. An interpretation adopted by the CETA Joint Committee shall be binding on the Tribunal established under this Section. The CETA Joint Committee may decide that an interpretation shall have binding effect from a specific date.



ARTICLE 8.32

Claims manifestly without legal merit

1.    The respondent may, no later than 30 days after the constitution of the division of the Tribunal, and in any event before its first session, file an objection that a claim is manifestly without legal merit.

2.    An objection shall not be submitted under paragraph 1 if the respondent has filed an objection pursuant to Article 8.33.

3.    The respondent shall specify as precisely as possible the basis for the objection.

4.    On receipt of an objection pursuant to this Article, the Tribunal shall suspend the proceedings on the merits and establish a schedule for considering such an objection consistent with its schedule for considering any other preliminary question.

5.    The Tribunal, after giving the disputing parties an opportunity to present their observations, shall at its first session or promptly thereafter, issue a decision or award stating the grounds therefor. In doing so, the Tribunal shall assume the alleged facts to be true.

6.    This Article shall be without prejudice to the Tribunal's authority to address other objections as a preliminary question or to the right of the respondent to object, in the course of the proceeding, that a claim lacks legal merit.



ARTICLE 8.33

Claims unfounded as a matter of law

1.    Without prejudice to the Tribunal's authority to address other objections as a preliminary question or to a respondent's right to raise any such objections at an appropriate time, the Tribunal shall address and decide as a preliminary question any objection by the respondent that, as a matter of law, a claim, or any part thereof, submitted pursuant to Article 8.23 is not a claim for which an award in favour of the claimant may be made under this Section, even if the facts alleged were assumed to be true.

2.    An objection under paragraph 1 shall be submitted to the Tribunal no later than the date the Tribunal fixes for the respondent to submit its countermemorial.

3.    If an objection has been submitted pursuant to Article 8.32, the Tribunal may, taking into account the circumstances of that objection, decline to address, under the procedures set out in this Article, an objection submitted pursuant to paragraph 1.

4.    On receipt of an objection under paragraph 1, and, if appropriate, after rendering a decision pursuant to paragraph 3, the Tribunal shall suspend any proceedings on the merits, establish a schedule for considering the objection consistent with any schedule it has established for considering any other preliminary question, and issue a decision or award on the objection stating the grounds therefor.



ARTICLE 8.34

Interim measures of protection

The Tribunal may order an interim measure of protection to preserve the rights of a disputing party or to ensure that the Tribunal's jurisdiction is made fully effective, including an order to preserve evidence in the possession or control of a disputing party or to protect the Tribunal's jurisdiction. The Tribunal shall not order attachment or enjoin the application of the measure alleged to constitute a breach referred to in Article 8.23. For the purposes of this Article, an order includes a recommendation.

ARTICLE 8.35

Discontinuance

If, following the submission of a claim under this Section, the investor fails to take any steps in the proceeding during 180 consecutive days or such period as the disputing parties may agree, the investor is deemed to have withdrawn its claim and to have discontinued the proceeding. The Tribunal shall, at the request of the respondent, and after notice to the disputing parties, in an order take note of the discontinuance. After the order has been rendered the authority of the Tribunal shall lapse.



ARTICLE 8.36

Transparency of proceedings

1.    The UNCITRAL Transparency Rules, as modified by this Chapter, shall apply in connection with proceedings under this Section.

2.    The request for consultations, the notice requesting a determination of the respondent, the notice of determination of the respondent, the agreement to mediate, the notice of intent to challenge a Member of the Tribunal, the decision on challenge to a Member of the Tribunal and the request for consolidation shall be included in the list of documents to be made available to the public under Article 3(1) of the UNCITRAL Transparency Rules.

3.    Exhibits shall be included in the list of documents to be made available to the public under Article 3(2) of the UNCITRAL Transparency Rules.

4.    Notwithstanding Article 2 of the UNCITRAL Transparency Rules, prior to the constitution of the Tribunal, Canada or the European Union as the case may be shall make publicly available in a timely manner relevant documents pursuant to paragraph 2, subject to the redaction of confidential or protected information. Such documents may be made publicly available by communication to the repository.



5.    Hearings shall be open to the public. The Tribunal shall determine, in consultation with the disputing parties, the appropriate logistical arrangements to facilitate public access to such hearings. If the Tribunal determines that there is a need to protect confidential or protected information, it shall make the appropriate arrangements to hold in private that part of the hearing requiring such protection.

6.    Nothing in this Chapter requires a respondent to withhold from the public information required to be disclosed by its laws. The respondent should apply those laws in a manner sensitive to protecting from disclosure information that has been designated as confidential or protected information.

ARTICLE 8.37

Information sharing

1.    A disputing party may disclose to other persons in connection with the proceedings, including witnesses and experts, such unredacted documents as it considers necessary in the course of proceedings under this Section. However, the disputing party shall ensure that those persons protect the confidential or protected information contained in those documents.



2.    This Agreement does not prevent a respondent from disclosing to officials of, as applicable, the European Union, Member States of the European Union and subnational governments, such unredacted documents as it considers necessary in the course of proceedings under this Section. However, the respondent shall ensure that those officials protect the confidential or protected information contained in those documents.

ARTICLE 8.38

Nondisputing Party

1.    The respondent shall, within 30 days after receipt or promptly after any dispute concerning confidential or protected information has been resolved, deliver to the nondisputing Party:

(a)    a request for consultations, a notice requesting a determination of the respondent, a notice of determination of the respondent, a claim submitted pursuant to Article 8.23, a request for consolidation, and any other documents that are appended to such documents;

(b)    on request:

(i)    pleadings, memorials, briefs, requests and other submissions made to the Tribunal by a disputing party;

(ii)    written submissions made to the Tribunal pursuant to Article 4 of the UNCITRAL Transparency Rules;



(iii)    minutes or transcripts of hearings of the Tribunal, if available; and

(iv)    orders, awards and decisions of the Tribunal; and

(c)    on request and at the cost of the nondisputing Party, all or part of the evidence that has been tendered to the Tribunal, unless the requested evidence is publicly available.

2.    The Tribunal shall accept or, after consultation with the disputing parties, may invite, oral or written submissions from the nondisputing Party regarding the interpretation of this Agreement. The nondisputing Party may attend a hearing held under this Section.

3.    The Tribunal shall not draw any inference from the absence of a submission pursuant to paragraph 2.

4.    The Tribunal shall ensure that the disputing parties are given a reasonable opportunity to present their observations on a submission by the nondisputing Party to this Agreement.

ARTICLE 8.39

Final award

1.    If the Tribunal makes a final award against the respondent, the Tribunal may only award, separately or in combination:

(a)    monetary damages and any applicable interest;



(b)    restitution of property, in which case the award shall provide that the respondent may pay monetary damages representing the fair market value of the property at the time immediately before the expropriation, or impending expropriation became known, whichever is earlier, and any applicable interest in lieu of restitution, determined in a manner consistent with Article 8.12.

2.    Subject to paragraphs 1 and 5, if a claim is made under Article 8.23.1(b):

(a)    an award of monetary damages and any applicable interest shall provide that the sum be paid to the locally established enterprise;

(b)    an award of restitution of property shall provide that restitution be made to the locally established enterprise;

(c)    an award of costs in favour of the investor shall provide that it is to be made to the investor; and

(d)    the award shall provide that it is made without prejudice to a right that a person, other than a person which has provided a waiver pursuant to Article 8.22, may have in monetary damages or property awarded under a Party's law.



3.    Monetary damages shall not be greater than the loss suffered by the investor or, as applicable, the locally established enterprise, reduced by any prior damages or compensation already provided. For the calculation of monetary damages, the Tribunal shall also reduce the damages to take into account any restitution of property or repeal or modification of the measure.

4.    The Tribunal shall not award punitive damages.

5.    The Tribunal shall order that the costs of the proceedings be borne by the unsuccessful disputing party. In exceptional circumstances, the Tribunal may apportion costs between the disputing parties if it determines that apportionment is appropriate in the circumstances of the claim. Other reasonable costs, including costs of legal representation and assistance, shall be borne by the unsuccessful disputing party, unless the Tribunal determines that such apportionment is unreasonable in the circumstances of the claim. If only parts of the claims have been successful the costs shall be adjusted, proportionately, to the number or extent of the successful parts of the claims.

6.    The CETA Joint Committee shall consider supplemental rules aimed at reducing the financial burden on claimants who are natural persons or small and medium-sized enterprises. Such supplemental rules may, in particular, take into account the financial resources of such claimants and the amount of compensation sought.



7.    The Tribunal and the disputing parties shall make every effort to ensure the dispute settlement process is carried out in a timely manner. The Tribunal shall issue its final award within 24 months of the date the claim is submitted pursuant to Article 8.23. If the Tribunal requires additional time to issue its final award, it shall provide the disputing parties the reasons for the delay.

ARTICLE 8.40

Indemnification or other compensation

A respondent shall not assert, and the Tribunal shall not accept a defence, counterclaim, right of setoff, or similar assertion, that an investor or, as applicable, a locally established enterprise, has received or will receive indemnification or other compensation pursuant to an insurance or guarantee contract in respect of all or part of the compensation sought in a dispute initiated pursuant to this Section.



ARTICLE 8.41

Enforcement of awards

1.    An award issued pursuant to this Section shall be binding between the disputing parties and in respect of that particular case.

2.    Subject to paragraph 3, a disputing party shall recognise and comply with an award without delay.

3.    A disputing party shall not seek enforcement of a final award until:

(a)    in the case of a final award issued under the ICSID Convention:

(i)    120 days have elapsed from the date the award was rendered and no disputing party has requested revision or annulment of the award; or

(ii)    enforcement of the award has been stayed and revision or annulment proceedings have been completed;



(b)    in the case of a final award under the ICSID Additional Facility Rules, the UNCITRAL Arbitration Rules, or any other rules applicable pursuant to Article 8. 23.2(d):

(i)    90 days have elapsed from the date the award was rendered and no disputing party has commenced a proceeding to revise, set aside or annul the award; or

(ii)    enforcement of the award has been stayed and a court has dismissed or allowed an application to revise, set aside or annul the award and there is no further appeal.

4.    Execution of the award shall be governed by the laws concerning the execution of judgments or awards in force where the execution is sought.

5.    A final award issued pursuant to this Section is an arbitral award that is deemed to relate to claims arising out of a commercial relationship or transaction for the purposes of Article I of the New York Convention.

6.    For greater certainty, if a claim has been submitted pursuant to Article 8.23.2(a), a final award issued pursuant to this Section shall qualify as an award under Section 6 of the ICSID Convention.



ARTICLE 8.42

Role of the Parties

1.    A Party shall not bring an international claim, in respect of a claim submitted pursuant to Article 8.23, unless the other Party has failed to abide by and comply with the award rendered in that dispute.

2.    Paragraph 1 shall not exclude the possibility of dispute settlement under Chapter TwentyNine (Dispute Settlement) in respect of a measure of general application even if that measure is alleged to have breached this Agreement as regards a specific investment in respect of which a claim has been submitted pursuant to Article 8.23 and is without prejudice to Article 8.38.

3.    Paragraph 1 does not preclude informal exchanges for the sole purpose of facilitating a settlement of the dispute.

ARTICLE 8.43

Consolidation

1.    When two or more claims that have been submitted separately pursuant to Article 8.23 have a question of law or fact in common and arise out of the same events or circumstances, a disputing party or the disputing parties, jointly, may seek the establishment of a separate division of the Tribunal pursuant to this Article and request that such division issue a consolidation order ("request for consolidation").



2.    The disputing party seeking a consolidation order shall first deliver a notice to the disputing parties it seeks to be covered by this order.

3.    If the disputing parties notified pursuant to paragraph 2 have reached an agreement on the consolidation order to be sought, they may make a joint request for the establishment of a separate division of the Tribunal and a consolidation order pursuant to this Article. If the disputing parties notified pursuant to paragraph 2 have not reached agreement on the consolidation order to be sought within 30 days of the notice, a disputing party may make a request for the establishment of a separate division of the Tribunal and a consolidation order pursuant to this Article.

4.    The request shall be delivered, in writing, to the President of the Tribunal and to all the disputing parties sought to be covered by the order, and shall specify:

(a)    the names and addresses of the disputing parties sought to be covered by the order;

(b)    the claims, or parts thereof, sought to be covered by the order; and

(c)    the grounds for the order sought.

5.    A request for consolidation involving more than one respondent shall require the agreement of all such respondents.



6.    The rules applicable to the proceedings under this Article are determined as follows:

(a)    if all of the claims for which a consolidation order is sought have been submitted to dispute settlement under the same rules pursuant to Article 8.23, these rules shall apply;

(b)    if the claims for which a consolidation order is sought have not been submitted to dispute settlement under the same rules:

(i)    the investors may collectively agree on the rules pursuant to Article 8.23.2; or

(ii)    if the investors cannot agree on the applicable rules within 30 days of the President of the Tribunal receiving the request for consolidation, the UNCITRAL Arbitration Rules shall apply.

7.    The President of the Tribunal shall, after receipt of a consolidation request and in accordance with the requirements of Article 8.27.7 constitute a new division ( “consolidating division”) of the Tribunal which shall have jurisdiction over some or all of the claims, in whole or in part, which are the subject of the joint consolidation request.

8.    If, after hearing the disputing parties, a consolidating division is satisfied that claims submitted pursuant to Article 8.23 have a question of law or fact in common and arise out of the same events or circumstances, and consolidation would best serve the interests of fair and efficient resolution of the claims including the interest of consistency of awards, the consolidating division of the Tribunal may, by order, assume jurisdiction over some or all of the claims, in whole or in part.



9.    If a consolidating division of the Tribunal has assumed jurisdiction pursuant to paragraph 8, an investor that has submitted a claim pursuant to Article 8.23 and whose claim has not been consolidated may make a written request to the Tribunal that it be included in such order provided that the request complies with the requirements set out in paragraph 4. The consolidating division of the Tribunal shall grant such order where it is satisfied that the conditions of paragraph 8 are met and that granting such a request would not unduly burden or unfairly prejudice the disputing parties or unduly disrupt the proceedings. Before consolidating division of the Tribunal issues that order, it shall consult with the disputing parties.

10.    On application of a disputing party, a consolidating division of the Tribunal established under this Article, pending its decision under paragraph 8, may order that the proceedings of the division of the Tribunal appointed under Article 8.27.7 be stayed unless the latter Tribunal has already adjourned its proceedings.

11.     The division of the Tribunal appointed under Article 8.27.7 shall cede jurisdiction in relation to the claims, or parts thereof, over which a consolidating division of the Tribunal established under this Article has assumed jurisdiction.

12.    The award of a consolidating division of the Tribunal established under this Article in relation to those claims, or parts thereof, over which it has assumed jurisdiction is binding on the division of the Tribunal appointed under Article 8.27.7 as regards those claims, or parts thereof. 



13.    An investor may withdraw a claim under this Section that is subject to consolidation and such claim shall not be resubmitted pursuant to Article 8.23. If it does so no later than 15 days after receipt of the notice of consolidation, its earlier submission of the claim shall not prevent the investor's recourse to dispute settlement other than under this Section.

14.    At the request of an investor, a consolidating division of the Tribunal may take such measures as it sees fit in order to preserve the confidential or protected information of that investor in relation to other investors. Those measures may include the submission of redacted versions of documents containing confidential or protected information to the other investors or arrangements to hold parts of the hearing in private.

ARTICLE 8.44

Committee on Services and Investment

1.    The Committee on Services and Investment shall provide a forum for the Parties to consult on issues related to this Chapter, including:

(a)    difficulties which may arise in the implementation of this Chapter;

(b)    possible improvements of this Chapter, in particular in the light of experience and developments in other international fora and under the Parties’ other agreements.



2.    The Committee on Services and Investment shall, on agreement of the Parties, and after completion of their respective internal requirements and procedures, adopt a code of conduct for the Members of the Tribunal to be applied in disputes arising out of this Chapter, which may replace or supplement the rules in application, and may address topics including:

(a)    disclosure obligations;

(b)    the independence and impartiality of the Members of the Tribunal; and

(c)    confidentiality.

The Parties shall make best efforts to ensure that the code of conduct is adopted no later than the first day of the provisional application or entry into force of this Agreement, as the case may be, and in any event no later than two years after such date.

3.    The Committee Services and Investment may, on agreement of the Parties, and after completion of their respective internal requirements and procedures:

(a)    recommend to the CETA Joint Committee the adoption of interpretations of this Agreement pursuant to Article 8.31.3;

(b)    adopt and amend rules supplementing the applicable dispute settlement rules, and amend the applicable rules on transparency. These rules and amendments are binding on the Tribunal established under this Section;



(c)    adopt rules for mediation for use by disputing parties as referred to in Article 8.20;

(d)    recommend to the CETA Joint Committee the adoption of any further elements of the fair and equitable treatment obligation pursuant to Article 8.10.3; and

(e)    make recommendations to the CETA Joint Committee on the functioning of the Appellate Tribunal pursuant to Article 8.28.8.

ARTICLE 8.45

Exclusion

The dispute settlement provisions of this Section and of Chapter TwentyNine (Dispute Settlement) do not apply to the matters referred to in Annex 8C.



CHAPTER NINE

CROSSBORDER TRADE IN SERVICES

ARTICLE 9.1

Definitions

For the purposes of this Chapter:

aircraft repair and maintenance services means activities undertaken on an aircraft or a part of an aircraft while it is withdrawn from service and do not include socalled line maintenance;

airport operation services means the operation or management, on a fee or contract basis, of airport infrastructure, including terminals, runways, taxiways and aprons, parking facilities, and intraairport transportation systems. For greater certainty, airport operation services do not include the ownership of, or investment in, airports or airport lands, or any of the functions carried out by a board of directors. Airport operation services do not include air navigation services;

computer reservation system services means the supply of a service by computerised systems that contain information about air carriers' schedules, availability, fares and fare rules, through which reservations can be made or tickets may be issued;



crossborder trade in services or crossborder supply of services means the supply of a service:

(a)    from the territory of a Party into the territory of the other Party; or

(b)    in the territory of a Party to the service consumer of the other Party,

but does not include the supply of a service in the territory of a Party by a person of the other Party;

ground handling services means the supply of a service on a fee or contract basis for: ground administration and supervision, including load control and communications; passenger handling; baggage handling; cargo and mail handling; ramp handling and aircraft services; fuel and oil handling; aircraft line maintenance, flight operations and crew administration; surface transport; or catering services. Ground handling services do not include security services or the operation or management of centralised airport infrastructure, such as baggage handling systems, deicing facilities, fuel distribution systems, or intraairport transport systems;

selling and marketing of air transport services means opportunities for the air carrier concerned to sell and market freely its air transport services including all aspects of marketing such as market research, advertising and distribution, but do not include the pricing of air transport services or the applicable conditions; and

services supplied in the exercise of governmental authority means any service that is not supplied on a commercial basis, or in competition with one or more service suppliers.



ARTICLE 9.2

Scope

1.    This Chapter applies to a measure adopted or maintained by a Party affecting crossborder trade in services by a service supplier of the other Party, including a measure affecting:

(a)    the production, distribution, marketing, sale, and delivery of a service;

(b)    the purchase of, use of, or payment for, a service; and,

(c)    the access to and use of, in connection with the supply of a service, services which are required to be offered to the public generally.

2.    This Chapter does not apply to a measure affecting:

(a)    services supplied in the exercise of governmental authority;

(b)    for the European Union, audiovisual services;

(c)    for Canada, cultural industries;

(d)    financial services as defined in Article 13.1 (Definitions);



(e)    air services, related services in support of air services and other services supplied by means of air transport 13 , other than:

(i)    aircraft repair and maintenance services;

(ii)    the selling and marketing of air transport services;

(iii)    computer reservation system (CRS) services;

(iv)    ground handling services;

(v)    airport operation services;

(f)    procurement by a Party of a good or service purchased for governmental purposes, and not with of a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is "covered procurement" within the meaning of Article 19.2.2 (Scope and coverage); or

(g)    a subsidy, or other government support relating to crossborder trade in services, provided by a Party.

3.    This Chapter does not affect the rights and obligations of the Parties under the Agreement on Air Transport between Canada and the European Community and its Member States, done at Brussels on 17 December 2009 and Ottawa on 18 December 2009.



4.    This Chapter does not impose an obligation on a Party with respect to a national of the other Party seeking access to its employment market, or employment on a permanent basis in its territory, or confer any right on that national with respect to that access or employment.

ARTICLE 9.3

National treatment

1.    Each Party shall accord to service suppliers and services of the other Party treatment no less favourable than that it accords, in like situations, to its own service suppliers and services.

2.    For greater certainty, the treatment accorded by a Party pursuant to paragraph 1 means, with respect to a government in Canada other than at the federal level, or, with respect to a government of or in a Member State of the European Union, treatment no less favourable than the most favourable treatment accorded, in like situations, by that government to its own service suppliers and services.



ARTICLE 9.4

Formal requirements

Article 9.3 does not prevent a Party from adopting or maintaining a measure that prescribes formal requirements in connection with the supply of a service, provided that such requirements are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination. These measures include requirements:

(a)    to obtain a licence, registration, certification, or authorisation in order to supply a service or as a membership requirement of a particular profession, such as requiring membership in a professional organisation or participation in collective compensation funds for members of professional organisations;

(b)    for a service supplier to have a local agent for service or maintain a local address;

(c)    to speak a national language or hold a driver's licence; or

(d)    that a service supplier:

(i)    post a bond or other form of financial security;

(ii)    establish or contribute to a trust account;

(iii)    maintain a particular type and amount of insurance;



(iv)    provide other similar guarantees; or

(v)    provide access to records.

ARTICLE 9.5

Mostfavourednation treatment

1.    Each Party shall accord to service suppliers and services of the other Party treatment no less favourable than that it accords, in like situations, to service suppliers and services of a third country.

2.    For greater certainty, the treatment accorded by a Party pursuant to paragraph 1 means, with respect to a government in Canada other than at the federal level, or, with respect to a government of or in a Member State of the European Union, the treatment accorded, in like situations, by that government in its territory to services or service suppliers of a third country.

3.    Paragraph 1 does not apply to treatment accorded by a Party under an existing or future measure providing for recognition, including through an arrangement or agreement with a third country that recognises the accreditation of testing and analysis services and service suppliers, the accreditation of repair and maintenance services and service suppliers, as well as the certification of the qualifications of, or the results of, or work done by, those accredited services and service suppliers.



ARTICLE 9.6

Market access

A Party shall not adopt or maintain, on the basis of its entire territory or on the basis of the territory of a national, provincial, territorial, regional or local level of government, a measure that imposes limitations on:

(a)    the number of service suppliers, whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirement of an economic needs test;

(b)    the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test; or

(c)    the total number of service operations or the total quantity of service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test.



ARTICLE 9.7

Reservations

1.    Articles 9.3, 9.5 and 9.6 do not apply to:

(a)    an existing nonconforming measure that is maintained by a Party at the level of:

(i)    the European Union, as set out in its Schedule to Annex I;

(ii)    a national government, as set out by that Party in its Schedule to Annex I;

(iii)    a provincial, territorial, or regional government, as set out by that Party in its Schedule to Annex I; or

(iv)    a local government.

(b)    the continuation or prompt renewal of a nonconforming measure referred to in subparagraph (a); or

(c)    an amendment to a nonconforming 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 Articles 9.3, 9.5, and 9.6.

2.    Articles 9.3, 9.5, and 9.6 do not apply to a measure that a Party adopts or maintains with respect to a sector, subsector or activity, as set out in its Schedule to Annex II.



ARTICLE 9.8

Denial of benefits

A Party may deny the benefits of this Chapter to a service supplier of the other Party that is an enterprise of that Party and to services of that service supplier if:

(a)    a service supplier of a third country owns or controls the enterprise; and

(b)    the denying Party adopts or maintains a measure with respect to the third country that:

(i)    relates to maintenance of international peace and security; and

(ii)    prohibits transactions with the enterprise or would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise.



CHAPTER TEN

TEMPORARY ENTRY AND STAY OF NATURAL PERSONS
FOR BUSINESS PURPOSES

ARTICLE 10.1

Definitions

For the purposes of this Chapter:

contractual services suppliers means natural persons employed by an enterprise of one Party that has no establishment in the territory of the other Party and that has concluded a bona fide contract (other than through an agency as defined by CPC 872) to supply a service to a consumer of the other Party that requires the presence on a temporary basis of its employees in the territory of the other Party in order to fulfil the contract to supply a service;

enterprise means an "enterprise" as defined in Article 8.1 (Definitions);



independent professionals means natural persons engaged in the supply of a service and established as selfemployed in the territory of a Party who have no establishment in the territory of the other Party and who have concluded a bona fide contract (other than through an agency as defined by CPC 872) to supply a service to a consumer of the other Party that requires the presence of the natural person on a temporary basis in the territory of the other Party in order to fulfil the contract to supply a service;

key personnel means business visitors for investment purposes, investors, or intracorporate transferees:

(a)    business visitors for investment purposes means natural persons working in a managerial or specialist position who are responsible for setting up an enterprise but who do not engage in direct transactions with the general public and do not receive remuneration from a source located within the territory of the host Party;

(b)    investors means natural persons who establish, develop, or administer the operation of an investment in a capacity that is supervisory or executive, and to which those persons or the enterprise employing those persons has committed, or is in the process of committing, a substantial amount of capital; and



(c)    intracorporate transferees means natural persons who have been employed by an enterprise of a Party or have been partners in an enterprise of a Party for at least one year and who are temporarily transferred to an enterprise (that may be a subsidiary, branch, or head company of the enterprise of a Party) in the territory of the other Party. This natural person must belong to one of the following categories:

(i)    senior personnel means natural persons working in a senior position within an enterprise who:

(A)    primarily direct the management of the enterprise or direct the enterprise, or a department or subdivision of the enterprise; and

(B)    exercise wide latitude in decision making, which may include having the authority to personally recruit and dismiss or to take other personnel actions (such as promotion or leave authorisations), and

(I)    receive only general supervision or direction principally from higher level executives, the board of directors, or stockholders of the business or their equivalent; or

(II)    supervise and control the work of other supervisory, professional or managerial employees and exercise discretionary authority over daytoday operations; or



(ii)    specialists means natural persons working in an enterprise who possess:

(A)    uncommon knowledge of the enterprise's products or services and its application in international markets; or

(B)    an advanced level of expertise or knowledge of the enterprise's processes and procedures such as its production, research equipment, techniques, or management.

In assessing such expertise or knowledge, the Parties will consider abilities that are unusual and different from those generally found in a particular industry and that cannot be easily transferred to another natural person in the shortterm. Those abilities would have been obtained through specific academic qualifications or extensive experience with the enterprise; or

(iii)    graduate trainees means natural persons who:

(A)    possess a university degree; and

(B)    are temporarily transferred to an enterprise in the territory of the other Party for career development purposes, or to obtain training in business techniques or methods; and

natural persons for business purposes means key personnel, contractual services suppliers, independent professionals, or shortterm business visitors who are citizens of a Party.



ARTICLE 10.2

Objectives and scope

1.    This Chapter reflects the preferential trading relationship between the Parties as well as the mutual objective to facilitate trade in services and investment by allowing temporary entry and stay to natural persons for business purposes and by ensuring transparency in the process.

2.    This Chapter applies to measures adopted or maintained by a Party concerning the temporary entry and stay into its territory of key personnel, contractual services suppliers, independent professionals and shortterm business visitors. This Chapter shall not apply to measures affecting natural persons seeking access to the employment market of a Party, nor shall it apply to measures regarding citizenship, residence, or employment on a permanent basis.

3.    Nothing in this Chapter shall prevent a Party from applying measures to regulate the entry of natural persons into, or their temporary stay in, its territory, including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across its borders, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to any Party under the terms of this Chapter. The sole fact of requiring a visa for natural persons of a certain country and not for those of others shall not be regarded as nullifying or impairing benefits under this Chapter.

4.    To the extent that commitments are not taken in this Chapter, all other requirements of the laws of the Parties regarding entry and stay continue to apply, including those concerning period of stay.



5.    Notwithstanding the provisions of this Chapter, all requirements of the Parties' laws regarding employment and social security measures shall continue to apply, including regulations concerning minimum wages as well as collective wage agreements.

6.    This Chapter does not apply to cases where the intent or effect of the temporary entry and stay is to interfere with or otherwise affect the outcome of a labour or management dispute or negotiation, or the employment of natural persons who are involved in such dispute or negotiation.

ARTICLE 10.3

General obligations

1.    Each Party shall allow temporary entry to natural persons for business purposes of the other Party who otherwise comply with the Party's immigration measures applicable to temporary entry, in accordance with this Chapter.

2.    Each Party shall apply its measures relating to the provisions of this Chapter in accordance with Article 10.2.1, and, in particular, shall apply those measures so as to avoid unduly impairing or delaying trade in goods or services or the conduct of investment activities under this Agreement.

3.    Each Party shall ensure that any fees for processing applications for temporary entry are reasonable and commensurate with the costs incurred.



ARTICLE 10.4

Provision of information

1.    Further to Chapter TwentySeven (Transparency), and recognising the importance to the Parties of transparency of temporary entry information, each Party shall, no later than 180 days after the date of entry into force of this Agreement, make available to the other Party explanatory material regarding the requirements for temporary entry under this Chapter that enables business persons of the other Party to be acquainted with those requirements.

2.    If a Party collects and maintains data relating to temporary entry by category of business persons under this Chapter, the Party shall make this data available to the other Party on request, in accordance with its law related to privacy and data protection.

ARTICLE 10.5

Contact points

1.    The Parties hereby establish the following contact points:

(a)    in the case of Canada:

Director

Temporary Resident Policy

Immigration Branch

Citizenship and Immigration Canada



(b)    in the case of the European Union:

DirectorGeneral

Directorate General for Trade

European Commission

(c)    in the case of the Member States of the European Union, the contact points listed in Annex10A or their respective successors.

2.    The contact points for Canada and the European Union, and as appropriate the contact points for Member States of the European Union, shall exchange information pursuant to Article 10.4 and shall meet as required to consider matters pertaining to this Chapter, such as:

(a)    the implementation and administration of this Chapter, including the practice of the Parties in allowing temporary entry;

(b)    the development and adoption of common criteria as well as interpretations for the implementation of this Chapter;

(c)    the development of measures to further facilitate temporary entry of business persons; and

(d)    recommendations to the CETA Joint Committee concerning this Chapter.


ARTICLE 10.6

Obligations in other chapters

1.    This Agreement does not impose an obligation on a Party regarding its immigration measures, except as specifically identified in this Chapter and in Chapter TwentySeven (Transparency).

2.    Without prejudice to any decision to allow temporary entry to natural persons of the other Party within the terms of this Chapter, including the length of stay permissible pursuant to such an allowance:

(a)    Articles 9.3 (National treatment) and 9.6 (Market access), subject to Articles 9.4 (Formal requirements) and 9.2 (Scope) but not Article 9.2.2(d), are incorporated into and made part of this Chapter and apply to the treatment of natural persons for business purposes present in the territory of the other Party under the categories of:

(i)    key personnel; and

(ii)    contractual services suppliers, and independent professionals for all sectors listed in Annex 10E; and



(b)    Article 9.5 (Mostfavourednation treatment), subject to Articles 9.4 (Formal requirements) and 9.2 (Scope) but not Article 9.2.2(d), is incorporated into and made part of this Chapter and applies to the treatment of natural persons for business purposes present in the territory of the other Party under the categories of:

(i)    key personnel, contractual services suppliers, and independent professionals; and

(ii)    shortterm business visitors, as set out in Article 10.9.

3.    For greater certainty, paragraph 2 applies to the treatment of natural persons for business purposes present in the territory of the other Party and falling within the relevant categories and who are supplying financial services, as defined in Article 13.1 (Definitions) of Chapter Thirteen (Financial Services). Paragraph 2 does not apply to measures relating to the granting of temporary entry to natural persons of a Party or of a third country.

4.    If a Party has set out a reservation in its Schedule to Annex I, II or III, the reservation also constitutes a reservation to paragraph 2, to the extent that the measure set out in or permitted by the reservation affects the treatment of natural persons for business purposes present in the territory of the other Party.



ARTICLE 10.7

Key personnel

1.    Each Party shall allow the temporary entry and stay of key personnel of the other Party subject to the reservations and exceptions listed in Annex 10B.

2.    Each Party shall not adopt or maintain limitations on the total number of key personnel of the other Party allowed temporary entry, in the form of a numerical restriction or an economic needs test.

3.    Each Party shall allow the temporary entry of business visitors for investment purposes without requiring a work permit or other prior approval procedure of similar intent.

4.    Each Party shall allow the temporary employment in its territory of intracorporate transferees and investors of the other Party.

5.    The permissible length of stay of key personnel is as follows:

(a)    intracorporate transferees (specialists and senior personnel): the lesser of three years or the length of the contract, with a possible extension of up to 18 months at the discretion of the Party granting the temporary entry and stay 14 ;

(b)    intracorporate transferees (graduate trainees): the lesser of one year or the length of the contract;



(c)    investors: one year, with possible extensions at the discretion of the Party granting the temporary entry and stay;

(d)    business visitors for investment purposes: 90 days within any six month period 15 .

ARTICLE 10.8

Contractual services suppliers and independent professionals

1.    In accordance with Annex 10E, each Party shall allow the temporary entry and stay of contractual services suppliers of the other Party, subject to the following conditions:

(a)    the natural persons must be engaged in the supply of a service on a temporary basis as employees of an enterprise which has obtained a service contract for a period not exceeding 12 months. If the service contract is longer than 12 months, the commitments in this Chapter only apply for the initial 12 months of the contract;

(b)    the natural persons entering the territory of the other Party must be offering those services as employees of the enterprise supplying the services for at least the year immediately preceding the date of submission of an application for entry into the territory of the other Party and must possess, at the date of the submission, at least three years of professional experience 16 in the sector of activity that is the subject of the contract;



(c)    the natural persons entering the territory of the other Party must possess,

(i)    a university degree or a qualification demonstrating knowledge of an equivalent level; 17  and

(ii)    professional qualifications, if this is required to practice an activity pursuant to the laws or requirements of the Party where the service is supplied;

(d)    the natural persons must not receive remuneration for the provision of services other than the remuneration paid by the enterprise employing the contractual services suppliers during their stay in the territory of the other Party;

(e)    the temporary entry and stay accorded under this Article relate only to the supply of a service which is the subject of the contract. Entitlement to utilise the professional title of the Party where the service is provided may be granted, as required, by the relevant authority as defined in Article 11.1 (Definitions), through a Mutual Recognition Agreement ("MRA") or otherwise; and

(f)    the service contract must comply with the laws and other legal requirements of the Party where the contract is executed. 18



2.    In accordance with Annex 10E, each Party shall allow the temporary entry and stay of independent professionals of the other Party, subject to the following conditions:

(a)    the natural persons must be engaged in the supply of a service on a temporary basis as selfemployed persons established in the other Party and must have obtained a service contract for a period not exceeding 12 months. If the service contract is longer than 12 months, the commitments in this Chapter shall only apply for the initial 12 months of the contract;

(b)    the natural persons entering the territory of the other Party must possess, at the date of submission of an application for entry into the other Party, at least six years professional experience in the sector of activity which is the subject of the contract;

(c)    the natural persons entering the territory of the other Party must possess,

(i)    a university degree or a qualification demonstrating knowledge of an equivalent level; 19 and

(ii)    professional qualifications, if this is required to practice an activity pursuant to the laws, or requirements of the Party where the service is supplied;



(d)    the temporary entry and stay accorded under the provisions of this Article relate only to the supply of a service which is the subject of the contract. Entitlement to utilise the professional title of the Party where the service is provided may be granted, as required, by the relevant authority as defined in Article 11.1 (Definitions), through an MRA or otherwise; and

(e)    the service contract must comply with the laws and other legal requirements of the Party where the contract is executed.

3.    Unless otherwise specified in Annex 10E, a Party shall not adopt or maintain a limitation on the total number of contractual services suppliers and independent professionals of the other Party allowed temporary entry, in the form of numerical restrictions or an economic needs test.

4.    The length of stay of contractual services supplier or independent professionals is for a cumulative period of not more than 12 months, with extensions possible at the discretion of the Party, in any 24 month period or for the duration of the contract, whichever is less.

ARTICLE 10.9

Shortterm business visitors

1.    In accordance with Annex 10B, a Party shall allow the temporary entry and stay of shortterm business visitors of the other Party for the purposes of carrying out the activities listed in Annex 10D, provided that the shortterm business visitors:

(a)    are not engaged in selling a good or a service to the general public;



(b)    do not on their own behalf receive remuneration from a source located within the Party where the shortterm business visitors are staying temporarily; and

(c)    are not engaged in the supply of a service in the framework of a contract concluded between an enterprise that has no commercial presence in the territory of the Party where the shortterm business visitors are staying temporarily, and a consumer in that territory, except as provided in Annex 10D.

2.    Each Party shall allow temporary entry of shortterm business visitors without the requirement of a work permit or other prior approval procedures of similar intent.

3.    The maximum length of stay of shortterm business visitors is 90 days in any sixmonth period. 20

ARTICLE 10.10

Review of commitments

Within five years following the entry into force of this Agreement, the Parties shall consider updating their respective commitments under Articles 10.7 through 10.9.



CHAPTER ELEVEN

MUTUAL RECOGNITION OF PROFESSIONAL QUALIFICATIONS

ARTICLE 11.1

Definitions

For the purposes of this Chapter:

jurisdiction means the territory of Canada, and each of its provinces and territories, or the territory of each of the Member States of the European Union, in so far as this Agreement applies in these territories in accordance with Article 1.3 (Geographical scope of application);

negotiating entity means a person or body of a Party entitled or empowered to negotiate an agreement on the mutual recognition of professional qualifications ("MRA");

professional experience means the effective and lawful practice of a service;

professional qualifications means the qualifications attested by evidence of formal qualification and/or professional experience;



relevant authority means an authority or body, designated pursuant to legislative, regulatory or administrative provisions to recognise qualifications and authorise the practice of a profession in a jurisdiction; and

regulated profession means a service, the practice of which, including the use of a title or designation, is subject to the possession of specific qualifications by virtue of legislative, regulatory or administrative provisions.

ARTICLE 11.2

Objectives and scope

1.    This Chapter establishes a framework to facilitate a fair, transparent and consistent regime for the mutual recognition of professional qualifications by the Parties and sets out the general conditions for the negotiation of MRAs.

2.    This Chapter applies to professions which are regulated in each Party, including in all or some Member States of the European Union and in all or some provinces and territories of Canada.

3.    A Party shall not accord recognition in a manner that would constitute a means of discrimination in the application of its criteria for the authorisation, licensing or certification of a service supplier, or that would constitute a disguised restriction on trade in services.



4.    An MRA adopted pursuant to this Chapter shall apply throughout the territories of the European Union and Canada.

ARTICLE 11.3

Negotiation of an MRA

1.    Each Party shall encourage its relevant authorities or professional bodies, as appropriate, to develop and provide to the Joint Committee on Mutual Recognition of Professional Qualifications ("MRA Committee") established under Article 26.2.1(b) joint recommendations on proposed MRAs.

2.    A recommendation shall provide an assessment of the potential value of an MRA, on the basis of criteria such as the existing level of market openness, industry needs, and business opportunities, for example, the number of professionals likely to benefit from the MRA, the existence of other MRAs in the sector, and expected gains in terms of economic and business development. In addition, it shall provide an assessment as to the compatibility of the licensing or qualification regimes of the Parties and the intended approach for the negotiation of an MRA.

3.    The MRA Committee shall, within a reasonable period of time, review the recommendation with a view to ensuring its consistency with the requirements of this Chapter. If these requirements are satisfied, the MRA Committee shall establish the necessary steps to negotiate and each Party shall inform its respective relevant authorities of these steps.



4.    The negotiating entities shall thereafter pursue the negotiation and submit a draft MRA text to the MRA Committee.

5.    The MRA Committee will thereafter review the draft MRA to ensure its consistency with this Agreement.

6.    If in the view of the MRA Committee the MRA is consistent with this Agreement, the MRA Committee shall adopt the MRA by means of a decision, which is conditional upon subsequent notification to the MRA Committee by each Party of the fulfilment of its respective internal requirements. The decision becomes binding on the Parties upon that notification to the MRA Committee by each Party.

ARTICLE 11.4

Recognition

1.    The recognition of professional qualifications provided by an MRA shall allow the service supplier to practice professional activities in the host jurisdiction, in accordance with the terms and conditions specified in the MRA.



2.    If the professional qualifications of a service supplier of a Party are recognised by the other Party pursuant to an MRA, the relevant authorities of the host jurisdiction shall accord to this service supplier treatment no less favourable than that accorded in like situations to a like service supplier whose professional qualifications have been certified or attested in the Party's own jurisdiction.

3.    Recognition under an MRA cannot be conditioned upon:

(a)    a service supplier meeting a citizenship or any form of residency requirement; or

(b)    a service supplier's education, experience or training having been acquired in the Party's own jurisdiction.

ARTICLE 11.5

Joint Committee on Mutual Recognition of Professional Qualifications

The MRA Committee responsible for the implementation of Article 11.3 shall:

(a)    be composed of and cochaired by representatives of Canada and the European Union, which must be different from the relevant authorities or professional bodies referred to in Article 11.3.1. A list of those representatives shall be confirmed through an exchange of letters;



(b)    meet within one year after this Agreement enters into force, and thereafter as necessary or as decided;

(c)    determine its own rules of procedure;

(d)    facilitate the exchange of information regarding laws, regulations, policies and practices concerning standards or criteria for the authorisation, licensing or certification of regulated professions;

(e)    make publicly available information regarding the negotiation and implementation of MRAs;

(f)    report to the CETA Joint Committee on the progress of the negotiation and implementation of MRAs; and

(g)    as appropriate, provide information and complement the guidelines set out in Annex 11A.

ARTICLE 11.6

Guidelines for the negotiation and conclusion of MRAs

As part of the framework to achieve mutual recognition of qualifications, the Parties set out in Annex 11A nonbinding guidelines with respect to the negotiation and conclusion of MRAs.



ARTICLE 11.7

Contact points

Each Party shall establish one or more contact points for the administration of this Chapter.

CHAPTER TWELVE

DOMESTIC REGULATION

ARTICLE 12.1

Definitions

For the purposes of this Chapter:

authorisation means the granting of permission to a person to supply a service or to pursue any other economic activity;

competent authority means any government of a Party, or nongovernmental body in the exercise of powers delegated by any government of a Party, that grants an authorisation;



licensing procedures means administrative or procedural rules, including for the amendment or renewal of a licence, that must be adhered to in order to demonstrate compliance with licensing requirements;

licensing requirements means substantive requirements, other than qualification requirements, that must be complied with in order to obtain, amend or renew an authorisation;

qualification procedures means administrative or procedural rules that must be adhered to in order to demonstrate compliance with qualification requirements; and

qualification requirements means substantive requirements relating to competency that must be complied with in order to obtain, amend or renew an authorisation.

ARTICLE 12.2

Scope

1.    This Chapter applies to a measure adopted or maintained by a Party relating to licensing requirements, licensing procedures, qualification requirements, or qualification procedures that affect:

(a)    the crossborder supply of services as defined in Article 9.1 (Definitions);



(b)    the supply of a service or pursuit of any other economic activity, through commercial presence in the territory of the other Party, including the establishment of such commercial presence; and

(c)    the supply of a service through the presence of a natural person of the other Party in the territory of the Party, in accordance with Article 10.6.2 (Obligations in other chapters).

2.    This Chapter does not apply to licensing requirements, licensing procedures, qualification requirements, or qualification procedures:

(a)    pursuant to an existing nonconforming measure maintained by a Party as set out in its Schedule to Annex I; or

(b)    relating to one of the following sectors or activities:

(i)    for Canada, cultural industries and, as set out in its Schedule to Annex II, social services, aboriginal affairs, minority affairs, gambling and betting services, and the collection, purification, and distribution of water; and

(ii)    for the EU Party, audiovisual services and, as set out in its Schedule to Annex II, health, education, and social services, gambling and betting services, 21 and the collection, purification, and distribution of water.



ARTICLE 12.3

Licensing and qualification requirements and procedures

1.    Each Party shall ensure that licensing requirements, qualification requirements, licensing procedures, or qualification procedures it adopts or maintains are based on criteria that preclude the competent authority from exercising its power of assessment in an arbitrary manner.

2.    The criteria referred to in paragraph 1 shall be:

(a)    clear and transparent;

(b)    objective; and

(c)    established in advance and made publicly accessible.

3.    The Parties recognise that the exercise of statutory discretion conferred on a minister with respect to a decision on the granting of an authorisation in the public interest is not inconsistent with subparagraph 2(c), provided that it is exercised consistently with the object of the applicable statute and not in an arbitrary manner, and that its exercise is not otherwise inconsistent with this Agreement.

4.    Paragraph 3 does not apply to licensing requirements, or qualification requirements for a professional service.



5.    Each Party shall ensure that an authorisation is granted as soon as the competent authority determines that the conditions for the authorisation have been met, and once granted, that the authorisation enters into effect without undue delay, in accordance with the terms and conditions specified therein.

6.    Each Party shall maintain or institute judicial, arbitral, or administrative tribunals or procedures that provide for, at the request of an affected investor or service supplier, as defined in Articles 8.1 (Definitions) and 1.1 (Definitions of general application), a prompt review of, and if justified, appropriate remedies for, administrative decisions affecting the supply of a service or the pursuit of any other economic activity. If such procedures are not independent of the agency entrusted with the administrative decision concerned, each Party shall ensure that the procedures are applied in a way that provides for an objective and impartial review.

7.    Each Party shall ensure that licensing procedures or qualification procedures it adopts or maintains are as simple as possible, and do not unduly complicate or delay the supply of a service, or the pursuit of any other economic activity.

8.    An authorisation fee that an applicant may incur in relation to its application for an authorisation shall be reasonable and commensurate with the costs incurred, and shall not in itself restrict the supply of a service or the pursuit of any other economic activity.



9.    Authorisation fees do not include payments for auction, the use of natural resources, royalties, tendering or other nondiscriminatory means of awarding concessions, or mandated contributions to provide a universal service.

10.    Each Party shall ensure that licensing procedures, or qualification procedures used by the competent authority and decisions of the competent authority in the authorisation process are impartial with respect to all applicants. The competent authority should reach its decisions in an independent manner and in particular should not be accountable to any person supplying a service or pursuing any other economic activity for which the authorisation is required.

11.    If specific time periods for authorising applications exist, an applicant shall be allowed a reasonable period for the submission of an application. The competent authority shall initiate the processing of an application without undue delay. If possible, applications should be accepted in electronic format under similar conditions of authenticity as paper submissions.

12.    Authenticated copies should be accepted, if considered appropriate, in place of original documents.

13.    Each Party shall ensure that the processing of an authorisation application, including reaching a final decision, is completed within a reasonable timeframe from the submission of a complete application. Each Party should establish the normal timeframe for the processing of an application.

14.    At the request of an applicant, a Party's competent authority shall provide, without undue delay, information concerning the status of the application.



15.    If an application is considered incomplete, a Party's competent authority shall, within a reasonable period of time, inform the applicant, identify the additional information required to complete the application, and provide the applicant an opportunity to correct deficiencies.

16.    If a Party's competent authority rejects an application, it shall inform the applicant in writing and without undue delay. Upon request of the applicant, the Party's competent authority shall also inform the applicant of the reasons the application was rejected and of the timeframe for an appeal or review against the decision. An applicant should be permitted, within reasonable time limits, to resubmit an application.

CHAPTER THIRTEEN

FINANCIAL SERVICES

ARTICLE 13.1

Definitions

For the purposes of this Chapter:

crossborder 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 crossborder supply of that service;



crossborder supply of financial services or crossborder trade in financial services means the supply of a financial service:

(a)    from the territory of a Party into the territory of the other Party; or

(b)    in the territory of a Party by a person of that Party to a person 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;

financial institution means a supplier that carries out one or more of the operations defined as being financial services in this Article, if the supplier is regulated or supervised in respect of the supply of those services as a financial institution under the law of the Party in whose territory it is located, including a branch in the territory of the Party of that financial service supplier whose head offices are located in the territory of the other Party;

financial institution of the other Party means a financial institution, including a branch, located in the territory of a Party that is controlled by a person of the other Party;



financial service means a service of a financial nature, including insurance and insurancerelated services, banking and other financial services (excluding insurance), and services incidental or auxiliary to a service of a financial nature. Financial services include the following activities:

(a)    insurance and insurancerelated services

(i)    direct insurance (including coinsurance):

(A)    life; or

(B)    nonlife;

(ii)    reinsurance and retrocession;

(iii)    insurance intermediation, such as brokerage and agency; or

(iv)    services auxiliary to insurance, such as consultancy, actuarial, risk assessment, and claim settlement services; and

(b)    banking and other financial services (excluding insurance):

(i)    acceptance of deposits and other repayable funds from the public;

(ii)    lending of all types, including consumer credit, mortgage credit, factoring, and financing of commercial transactions;



(iii)    financial leasing;

(iv)    all payment and money transmission services, including credit, charge and debit cards, travellers cheques, and bankers drafts;

(v)    guarantees and commitments;

(vi)    trading for own account or for account of customers, whether on an exchange, in an overthecounter market or otherwise, the following:

(A)    money market instruments (including cheques, bills or certificates of deposits);

(B)    foreign exchange;

(C)    derivative products including futures and options;

(D)    exchange rate and interest rate instruments, including products such as swaps and forward rate agreements;

(E)    transferable securities; or

(F)    other negotiable instruments and financial assets, including bullion;



(vii)    participation in issues of all kinds of securities, including underwriting and placement as agent (whether publicly or privately), and supply of services related to such issues;

(viii)    money broking;

(ix)    asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository, and trust services;

(x)    settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;

(xi)    provision and transfer of financial information, and financial data processing and related software; or

(xii)    advisory, intermediation and other auxiliary financial services on all the activities listed in subsubparagraphs (i) through (xi), including credit reference and analysis, investment and portfolio research and advice, and advice on acquisitions and on corporate restructuring and strategy;

financial service supplier means a person of a Party that is engaged in the business of supplying a financial service within the territory of that Party but does not include a public entity;



investment means "investment" as defined in Article 8.1 (Definitions), except that for the purposes of this Chapter, with respect to "loans" and "debt instruments" referred to in that Article:

(a)    a loan to or debt instrument issued by a financial institution is an investment in that financial institution only if it is treated as regulatory capital by the Party in whose territory the financial institution is located; and

(b)    a loan granted by or debt instrument owned by a financial institution, other than a loan to or debt instrument of a financial institution referred to in subparagraph (a), is not an investment;

for greater certainty,

(c)    Chapter Eight (Investment) applies to a loan or debt instrument to the extent that it is not covered in this Chapter; and

(d)    a loan granted by or a debt instrument owned by a crossborder financial service supplier, other than a loan to or debt instrument issued by a financial institution, is an investment for the purposes of Chapter Eight (Investment) if that loan or debt instrument meets the criteria for investments set out in Article 8.1 (Definitions);

investor means "investor" as defined in Article 8.1 (Definitions);



new financial service means a financial service that is not supplied in the territory of a Party but that is supplied in the territory of the other Party and includes any new form of delivery of a financial service or the sale of a financial product that is not sold in the Party's territory;

person of a Party means "person of a Party" as defined in Article 1.1 (Definitions of general application) and, for greater certainty, does not include a branch of an enterprise of a third country;

public entity means:

(a)    a government, a central bank or a monetary authority of a Party or any entity owned or controlled by a Party, that is principally engaged in carrying out governmental functions or activities for governmental purposes, but does not include an entity principally engaged in supplying financial services on commercial terms; or

(b)    a private entity that performs functions normally performed by a central bank or monetary authority when exercising those functions; and

selfregulatory organisation means a nongovernmental body, including any securities or futures exchange or market, clearing agency, other organisation or association, that exercises its own or delegated regulatory or supervisory authority over financial service suppliers or financial institutions.



ARTICLE 13.2

Scope

1.    This Chapter applies to a measure adopted or maintained by a Party relating to:

(a)    financial institutions of the other Party;

(b)    an investor of the other Party, and an investment of that investor, in a financial institution in the Party's territory; and

(c)    crossborder trade in financial services.

2.    For greater certainty, the provisions of Chapter Eight (Investment) apply to:

(a)    a measure relating to an investor of a Party, and an investment of that investor, in a financial service supplier that is not a financial institution; and

(b)    a measure, other than a measure relating to the supply of financial services, relating to an investor of a Party or an investment of that investor in a financial institution.

3.    Articles 8.10 (Treatment of investors and of covered investments), 8.11 (Compensation for losses), 8.12 (Expropriation), 8.13 (Transfers), 8.14 (Subrogation), 8.16 (Denial of benefits), and 8.17 (Formal requirements) are incorporated into and made a part of this Chapter.



4.    Section F of Chapter Eight (Resolution of investment disputes between investors and states) is incorporated into and made a part of this Chapter solely for claims that a Party has breached Article 13.3 or 13.4 with respect to the expansion, conduct, operation, management, maintenance, use, enjoyment, and sale or disposal of a financial institution or an investment in a financial institution, or Article 8.10 (Treatment of investors and of covered investments), 8.11 (Compensation for losses), 8.12 (Expropriation), 8.13 (Transfers), or 8.16 (Denial of benefits).

5.    This Chapter does not apply to a measure adopted or maintained by a Party relating to:

(a)    activities or services forming part of a public retirement plan or statutory system of social security; or

(b)    activities or services conducted for the account of the Party, with the guarantee or using the financial resources of the Party, including its public entities,

except that this Chapter applies to the extent that a Party allows activities or services referred to in subparagraph (a) or (b) to be conducted by its financial institutions in competition with a public entity or a financial institution.

6.    Chapter Twelve (Domestic Regulation) is incorporated into and made a part of this Chapter. For greater certainty, Article 12.3 (Licensing and qualification requirements and procedures) applies to the exercise of statutory discretion by the financial regulatory authorities of the Parties.



7.    The provisions of Chapter Twelve (Domestic Regulation) incorporated into this Chapter under paragraph 6 do not apply to licensing requirements, licensing procedures, qualification requirements or qualification procedures:

(a)    pursuant to a nonconforming measure maintained by Canada, as set out in its Schedule to Annex IIIA;

(b)    pursuant to a nonconforming measure maintained by the European Union, as set out in its Schedule to Annex I, to the extent that such measure relates to financial services; and

(c)    as set out in Article 12.2.2(b) (Scope), to the extent that such measure relates to financial services.

ARTICLE 13.3

National treatment

1.    Article 8.6 (National treatment) is incorporated into and made a part of this Chapter and applies to treatment of financial institutions and investors of the other Party and their investments in financial institutions.

2.    The treatment accorded by a Party to its own investors and investments of its own investors under paragraphs 1 and 2 of Article 8.6 (National treatment) means treatment accorded to its own financial institutions and investments of its own investors in financial institutions.



ARTICLE 13.4

Mostfavourednation treatment

1.    Article 8.7 (Mostfavourednation treatment) is incorporated into and made a part of this Chapter and applies to treatment of financial institutions and investors of the other Party and their investments in financial institutions.

2.    The treatment accorded by a Party to investors of a third country and investments of investors of a third country under paragraphs 1 and 2 of Article 8.7 (Mostfavourednation treatment) means treatment accorded to financial institutions of a third country and investments of investors of a third country in financial institutions.

ARTICLE 13.5

Recognition of prudential measures

1.    A Party may recognise a prudential measure of a third country in the application of a measure covered by this Chapter. That recognition may be:

(a)    accorded unilaterally;

(b)    achieved through harmonisation or other means; or



(c)    based upon an agreement or arrangement with the third country.

2.    A Party according recognition of a prudential measure 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.

3.    If a Party recognises a prudential measure under subparagraph 1(c) and the circumstances described in paragraph 2 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 13.6

Market access

1.    A Party shall not adopt or maintain, with respect to a financial institution of the other Party or with respect to market access through establishment of a financial institution by an investor of the other Party, on the basis of its entire territory or on the basis of the territory of a national, provincial, territorial, regional, or local level of government, a measure that:

(a)    imposes limitations on:

(i)    the number of financial institutions, whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirement of an economic needs test;



(ii)    the total value of financial service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;

(iii)    the total number of financial service operations or the total quantity of financial services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;

(iv)    the participation of foreign capital in terms of maximum percentage limit on foreign shareholding in financial institutions or the total value of individual or aggregate foreign investment in financial institutions; or

(v)    the total number of natural persons that may be employed in a particular financial services sector or that a financial institution may employ and who are necessary for, and directly related to, the performance of a specific financial service in the form of numerical quotas or the requirement of an economic needs test; or

(b)    restricts or requires specific types of legal entity or joint venture through which a financial institution may perform an economic activity.

2.    Article 8.4.2 (Market access) is incorporated into and made a part of this Article.

3.    For greater certainty:

(a)    a Party may impose terms, conditions, and procedures for the authorisation of the establishment and expansion of a commercial presence provided that they do not circumvent the Party's obligation under paragraph 1 and are consistent with the other provisions of this Chapter; and



(b)    this Article does not prevent a Party from requiring a financial institution to supply certain financial services through separate legal entities if, under the law of the Party, the range of financial services supplied by the financial institution may not be supplied through a single entity.

ARTICLE 13.7

Crossborder supply of financial services

1.    Articles 9.3 (National treatment), 9.4 (Formal requirements), and 9.6 (Market access) are incorporated into and made a part of this Chapter and apply to treatment of crossborder financial service suppliers supplying the financial services specified in Annex 13A.

2.    The treatment accorded by a Party to its own service suppliers and services under Article 9.3.2 (National treatment) means treatment accorded to its own financial service suppliers and financial services.

3.    The measures that a Party shall not adopt or maintain with respect to service suppliers and services of the other Party under Article 9.6 (Market access) means measures relating to crossborder financial service suppliers of the other Party supplying financial services.

4.    Article 9.5 (Mostfavourednation treatment) is incorporated into and made a part of this Chapter and applies to treatment of crossborder financial service suppliers of the other Party.



5.    The treatment accorded by a Party to service suppliers and services of a third country under Article 9.5 (Mostfavourednation treatment) means treatment accorded to financial service suppliers of a third country and financial services of a third country.

6.    Each Party shall permit a person located in its territory, and a national wherever they are located, to purchase a financial service from a crossborder financial service supplier of the other Party located in the territory of that other Party. This obligation does not require a Party to permit such suppliers to do business or solicit in its territory. Each Party may define "doing business" and "solicitation" for the purposes of this Article, in conformity with paragraph 1.

7.    For the financial services specified in Annex 13A, each Party shall permit a crossborder financial service supplier of the other Party, on request or notification to the relevant regulator, where required, to supply a financial service through any new form of delivery, or to sell a financial product that is not sold in the Party's territory where the first Party permits its own financial service suppliers to supply such a service or to sell such a product under its law in like situations.

ARTICLE 13.8

Senior management and boards of directors

A Party shall not require that a financial institution of the other Party appoint to senior management or board of director positions, natural persons of any particular nationality.



ARTICLE 13.9

Performance requirements

1.    The Parties shall negotiate disciplines on performance requirements such as those contained in Article 8.5 (Performance requirements) with respect to investments in financial institutions.

2.    If, after three years of entry into force of this Agreement, the Parties have not agreed to such disciplines, upon request of a Party, Article 8.5 (Performance requirements) shall be incorporated into and made a part of this Chapter and shall apply to investments in financial institutions. For this purpose, "investment" in Article 8.5 (Performance requirements) means "investment in a financial institution in its territory".

3.    Within 180 days following the successful negotiation by the Parties on the performance requirement disciplines pursuant to paragraph 1, or following a Party's request for incorporation of Article 8.5 (Performance requirements) into this Chapter pursuant to paragraph 2, as the case may be, each Party may amend its Schedule as required. Any amendment must be limited to the listing of reservations for existing measures that do not conform with the performance requirements obligation under this Chapter, for Canada in Section A of its Schedule to Annex III and for the European Union in its Schedule to Annex I. Article 13.10.1 shall apply to such measures with respect to the performance requirement disciplines negotiated pursuant to paragraph 1, or Article 8.5 (Performance requirements) as incorporated into this Chapter pursuant to paragraph 2, as the case may be.



ARTICLE 13.10

Reservations and exceptions

1.    Articles 13.3, 13.4, 13.6, and 13.8 do not apply to:

(a)    an existing nonconforming measure that is maintained by a Party at the level of:

(i)    the European Union, as set out in its Schedule to Annex I;

(ii)    a national government, as set out by Canada in Section A of its Schedule to Annex III or the European Union in its Schedule to Annex I;

(iii)    a provincial, territorial, or regional government, as set out by Canada in Section A of its Schedule to Annex III or the European Union in its Schedule to Annex I; or

(iv)    a local government;

(b)    the continuation or prompt renewal of a nonconforming measure referred to in subparagraph (a); or

(c)    an amendment to a nonconforming 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 Articles 13.3, 13.4, 13.6, or 13.8.



2.    Article 13.7 does not apply to:

(a)    an existing nonconforming measure that is maintained by a Party at the level of:

(i)    the European Union, as set out in its Schedule to Annex I;

(ii)    a national government, as set out by Canada in Section A of its Schedule to Annex III or the European Union in its Schedule to Annex I;

(iii)    a provincial, territorial, or regional government, as set out by Canada in Section A of its Schedule to Annex III or the European Union in its Schedule to Annex I; or

(iv)    a local government;

(b)    the continuation or prompt renewal of a nonconforming measure referred to in subparagraph (a); or

(c)    an amendment to a nonconforming 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 this Agreement, with Article 13.7.

3.    Articles 13.3, 13.4, 13.6, 13.7, and 13.8 do not apply to a measure that Canada adopts or maintains with respect to financial services as set out in Section B of its Schedule to Annex III, or to a measure that the European Union adopts or maintains with respect to financial services as set out in its Schedule to Annex II.



4.    If a Party has set out a reservation to Articles 8.4 (Market access), 8.5 (Performance requirements), 8.6 (National treatment), 8.7 (Mostfavourednation treatment), 8.8 (Senior management and boards of directors), 9.3 (National treatment), 9.5 (Mostfavourednation treatment), or 9.6 (Market access) in its Schedule to Annex I or II, the reservation also constitutes a reservation to Articles 13.3, 13.4, 13.6, 13.7, or 13.8, or to any discipline on performance requirements negotiated pursuant to Article 13.9.1 or incorporated into this Chapter pursuant to Article 13.9.2, 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.    A Party shall not adopt a measure or series of measures after the date of entry into force of this Agreement that are covered by Section B of Canada's Schedule to Annex III, or by the Schedule to Annex II of the European Union and that require, directly or indirectly, an investor of the other Party, by reason of nationality, to sell or otherwise dispose of an investment existing at the time the measure or series of measures became effective.

6.    In respect of intellectual property rights, a Party may derogate from Articles 13.3 and 13.4, and from any discipline on technology transfer in relation to performance requirements negotiated pursuant to Article 13.9.1 or incorporated into this Chapter pursuant to Article 13.9.2, as the case may be, if the derogation is permitted by the TRIPS Agreement, including waivers to the TRIPS Agreement adopted pursuant to Article IX of the WTO Agreement.



7.    Articles 13.3, 13.4, 13.6, 13.7, 13.8, and 13.9 do not apply to:

(a)    procurement by a Party of a good or service purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is "covered procurement" within the meaning of Article 19.2 (Scope and coverage); or

(b)    subsidies, or government support relating to trade in services, provided by a Party.

ARTICLE 13.11

Effective and transparent regulation

1.    Each Party shall ensure that all measures of general application to which this Chapter applies are administered in a reasonable, objective, and impartial manner.

2.    Each Party shall ensure that its laws, regulations, procedures, and administrative rulings of general application with respect to any matter covered by this Chapter are promptly published or made available in such a manner as to enable an interested person and the other Party to become acquainted with them. To the extent possible, each Party shall:

(a)    publish in advance any such measures that it proposes to adopt;



(b)    provide an interested person and the other Party a reasonable opportunity to comment on these proposed measures; and

(c)    allow reasonable time between the final publication of the measures and the date they become effective.

For the purposes of this Chapter, these requirements replace those set out in Article 27.1 (Publication).

3.    Each Party shall maintain or establish appropriate mechanisms to respond within a reasonable period of time to an inquiry from an interested person regarding measures of general application covered by this Chapter.

4.    A regulatory authority shall make an administrative decision on a completed application of an investor in a financial institution, a crossborder financial service supplier, or a financial institution of the other Party relating to the supply of a financial service within a reasonable period of time that is justified by the complexity of the application and the normal period of time established for the processing of the application. For Canada, such a reasonable time period is 120 days. The regulatory authority shall promptly notify the applicant of the decision. If it is not practicable for a decision to be made within a reasonable period of time, the regulatory authority shall promptly notify the applicant and endeavour to make the decision as soon as possible. For greater certainty, an application is not considered complete until all relevant hearings are held and the regulatory authority has received all necessary information.



ARTICLE 13.12

Selfregulatory organisations

If a Party requires a financial institution or a crossborder financial service supplier of the other Party to be a member of, participate in, or have access to, a selfregulatory organisation to supply a financial service in or into the territory of that Party, or grants a privilege or advantage when supplying a financial service through a selfregulatory organisation, then the requiring Party shall ensure that the selfregulatory organisation observes the obligations of this Chapter.

ARTICLE 13.13

Payment and clearing systems

Under terms and conditions that accord national treatment, each Party shall grant a financial service supplier of the other Party established in its territory access to payment and clearing systems operated by a Party, or by an entity exercising governmental authority delegated to it by a Party, and access to official funding and refinancing facilities available in the normal course of ordinary business. This Article does not confer access to a Party's lender of last resort facilities.



ARTICLE 13.14

New financial services

1.    Each Party shall permit a financial institution of the other Party to supply any new financial service that the first Party would permit its own financial institutions, in like situations, to supply under its law, on request or notification to the relevant regulator, if required.

2.    A Party may determine the institutional and juridical form through which the new financial service may be supplied and may require authorisation for the supply of the service. If authorisation is required, a decision shall be made within a reasonable period of time and the authorisation may only be refused for prudential reasons.

3.    This Article does not prevent a financial institution of a Party from applying to the other Party to consider authorising the supply of a financial service that is not supplied within either Party's territory. That application is subject to the law of the Party receiving the application and is not subject to the obligations of this Article.



ARTICLE 13.15

Transfer and processing of information

1.    Each Party shall permit a financial institution or a crossborder financial service supplier of the other Party to transfer information in electronic or other form, into and out of its territory, for data processing if processing is required in the ordinary course of business of the financial institution or the crossborder financial service supplier.

2.    Each Party shall maintain adequate safeguards to protect privacy, in particular with regard to the transfer of personal information. If the transfer of financial information involves personal information, such transfers shall be in accordance with the legislation governing the protection of personal information of the territory of the Party where the transfer has originated.

ARTICLE 13.16

Prudential carveout

1.    This Agreement does not prevent a Party from adopting or maintaining reasonable measures for prudential reasons, including:

(a)    the protection of investors, depositors, policyholders, or persons to whom a financial institution, crossborder financial service supplier, or financial service supplier owes a fiduciary duty;



(b)    the maintenance of the safety, soundness, integrity, or financial responsibility of a financial institution, crossborder financial service supplier, or financial service supplier; or

(c)    ensuring the integrity and stability of a Party's financial system.

2.    Without prejudice to other means of prudential regulation of crossborder trade in financial services, a Party may require the registration of crossborder financial service suppliers of the other Party and of financial instruments.

3.    Subject to Articles 13.3 and 13.4, a Party may, for prudential reasons, prohibit a particular financial service or activity. Such a prohibition shall not apply to all financial services or to a complete financial services subsector, such as banking.

ARTICLE 13.17

Specific exceptions

1.    This Agreement does not apply to measures taken by a public entity in pursuit of monetary or exchange rate policies. This paragraph does not affect a Party's obligations under Articles 8.5 (Performance requirements), 8.13 (Transfers), or 13.9.



2.    This Agreement does not require a Party to furnish or allow access to information relating to the affairs and accounts of individual consumers, crossborder financial service suppliers, financial institutions, or to any confidential information which, if disclosed, would interfere with specific regulatory, supervisory, or law enforcement matters, or would otherwise be contrary to public interest or prejudice legitimate commercial interests of particular enterprises.

ARTICLE 13.18

Financial Services Committee

1.    The Financial Services Committee established under Article 26.2.1(f) (Specialised committees) shall include representatives of authorities in charge of financial services policy with expertise in the field covered by this Chapter. For Canada, the Committee representative is an official from the Department of Finance Canada or its successor.

2.    The Financial Services Committee shall decide by mutual consent.

3.    The Financial Services Committee shall meet annually, or as it otherwise decides, and shall:

(a)    supervise the implementation of this Chapter;



(b)    carry out a dialogue on the regulation of the financial services sector with a view to improving mutual knowledge of the Parties' respective regulatory systems and to cooperate in the development of international standards as illustrated by the Understanding on the dialogue on the regulation of the financial services sector contained in Annex 13C; and

(c)    implement Article 13.21.

ARTICLE 13.19

Consultations

1.    A Party may request 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.

2.    Each Party shall ensure that when there are consultations pursuant to paragraph 1 its delegation includes officials with the relevant expertise in the area covered by this Chapter. For Canada this means officials of the Department of Finance Canada or its successor.



ARTICLE 13.20

Dispute settlement

1.    Chapter TwentyNine (Dispute Settlement) applies as modified by this Article to the settlement of disputes arising under this Chapter.

2.    If the Parties are unable to agree on the composition of the arbitration panel established for the purposes of a dispute arising under this Chapter, Article 29.7 (Composition of the arbitration panel) applies. However, all references to the list of arbitrators established under Article 29.8 (List of arbitrators) shall be understood to refer to the list of arbitrators established under this Article.

3.    The CETA Joint Committee may establish a list of at least 15 individuals, chosen on the basis of objectivity, reliability, and sound judgement, who are willing and able to serve as arbitrators. The list shall be composed of three sublists: one sublist for each Party and one sublist of individuals, who are not nationals of either Party, to act as chairpersons. Each sublist shall include at least five individuals. The CETA Joint Committee may review the list at any time and shall ensure that the list conforms with this Article.

4.    The arbitrators included on the list must have expertise or experience in financial services law or regulation or in the practice thereof, which may include the regulation of financial service suppliers. The arbitrators acting as chairpersons must also have experience as counsel, panellist, or arbitrator in dispute settlement proceedings. Arbitrators shall be independent, serve in their individual capacity, and shall not take instructions from any organisation or government. They shall comply with the Code of Conduct in Annex 29B (Code of conduct).



5.    If an arbitration panel finds that a measure is inconsistent with this Agreement and the measure affects:

(a)    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 measure in the Party's financial services sector; or

(b)    only a sector other than the financial services sector, the complaining Party shall not suspend benefits in the financial services sector.

ARTICLE 13.21

Investment disputes in financial services

1.    Section F of Chapter Eight (Resolution of investment disputes between investors and states) applies, as modified by this Article and Annex 13B, to:

(a)    investment disputes pertaining to measures to which this Chapter applies and in which an investor claims that a Party has breached Article 8.10 (Treatment of investors and of covered investments), 8.11 (Compensation for losses), 8.12 (Expropriation), 8.13 (Transfers), 8.16 (Denial of benefits), 13.3, or 13.4; or

(b)    investment disputes commenced pursuant to Section F of Chapter Eight (Resolution of investment disputes between investors and states) in which Article 13.16.1 has been invoked.



2.    In the case of an investment dispute under subparagraph 1(a), or if the respondent invokes Article 13.16.1 within 60 days of the submission of a claim to the Tribunal under Article 8.23 (Submission of a claim to the Tribunal), a division of the Tribunal shall be composed, in accordance with Article 8.27.7 (Constitution of the Tribunal) from the list established under Article 13.20.3. If the respondent invokes Article 13.16.1 within 60 days of the submission of a claim, with respect to an investment dispute other than under subparagraph 1(a), the period of time applicable to the composition of a division of the Tribunal under Article 8.27.7 (Constitution of the Tribunal) commences on the date the respondent invokes Article 13.16.1. If the CETA Joint Committee has not made the appointments pursuant to Article 8.27.2 (Constitution of the Tribunal) within the period of time provided in Article 8.27.17 (Constitution of the Tribunal), either disputing party may request that the SecretaryGeneral of the International Centre for Settlement of Investment Disputes ("ICSID") select the Members of the Tribunal from the list established under Article 13.20. If the list has not been established under Article 13.20 on the date the claim is submitted pursuant to Article 8.23 (Submission of a claim to the Tribunal), the SecretaryGeneral of ICSID shall select the Members of the Tribunal from the individuals proposed by one or both of the Parties in accordance with Article 13.20.

3.    The respondent may refer the matter in writing to the Financial Services Committee for a decision as to whether and, if so, to what extent the exception under Article 13.16.1 is a valid defence to the claim. This referral shall not be made later than the date the Tribunal fixes for the respondent to submit its countermemorial. If the respondent refers the matter to the Financial Services Committee under this paragraph the periods of time or proceedings referred to in Section F of Chapter Eight (Resolution of investment disputes between investors and states) are suspended.



4.    In a referral under paragraph 3, the Financial Services Committee or the CETA Joint Committee, as the case may be, may make a joint determination as to whether and to what extent Article 13.16.1 is a valid defence to the claim. The Financial Services Committee or the CETA Joint Committee, as the case may be, shall transmit a copy of the joint determination to the investor and the Tribunal, if constituted. If the joint determination concludes that Article 13.16.1 is a valid defence to all parts of the claim in their entirety, the investor is deemed to have withdrawn its claim and the proceedings are discontinued in accordance with Article 8.35 (Discontinuance). If the joint determination concludes that Article 13.16.1 is a valid defence to only parts of the claim, the joint determination is binding on the Tribunal with respect to those parts of the claim. The suspension of the periods of time or proceedings described in paragraph 3 then no longer applies and the investor may proceed with the remaining parts of the claim.

5.    If the CETA Joint Committee has not made a joint determination within three months of referral of the matter by the Financial Services Committee, the suspension of the periods of time or proceedings referred to in paragraph 3 no longer applies and the investor may proceed with its claim.

6.    At the request of the respondent, the Tribunal shall decide as a preliminary matter whether and to what extent Article 13.16.1 is a valid defence to the claim. Failure of the respondent to make that request is without prejudice to the right of the respondent to assert Article 13.16.1 as a defence in a later phase of the proceedings. The Tribunal shall draw no adverse inference from the fact that the Financial Services Committee or the CETA Joint Committee has not agreed on a joint determination in accordance with Annex13B.



CHAPTER FOURTEEN

INTERNATIONAL MARITIME TRANSPORT SERVICES

ARTICLE 14.1

Definitions

For the purposes of this Chapter:

customs clearance services or customs house brokers' services means the carrying out, on a fee or contract basis, of customs formalities concerning import, export or through transport of cargo, irrespective of whether these services are the main or secondary activity of the service provider;

container station and depot services means the storage, stuffing, stripping or repair of containers and making them available for shipment, whether in port areas or inland;

doortodoor or multimodal transport operation means the transport of cargo under a single transport document, that uses more than one mode of transport and involves an international sealeg;



feeder services means the pre and onward transportation by sea of international cargo, including containerised, break bulk and dry or liquid bulk cargo, between ports located in the territory of a Party. For greater certainty, in respect of Canada, feeder services may include transportation between sea and inland waters, where inland waters means those defined in the Customs Act, R.S.C. 1985, c.1 (2nd Supp.);

international cargo means cargo transported by seagoing vessels between a port of a Party and a port of the other Party or of a third country, or between a port of one Member State of the European Union and a port of another Member State of the European Union;

international maritime transport services means the transport of passengers or cargo by a seagoing vessel between a port of one Party and a port of the other Party or of a third country, or between a port of one Member State of the European Union and a port of another Member State of the European Union, as well as direct contracting with suppliers of other transport services to ensure doortodoor or multimodal transport operations, but not the supply of such other transport services;

international maritime transport service suppliers means:

(a)    an enterprise of a Party, as defined in Article 1.1 (Definitions of general application), and a branch of any such entity; or

(b)    an enterprise, as defined in Article 1.1 (Definitions of general application), of a third country owned or controlled by nationals of a Party, if its vessels are registered in accordance with the legislation of that Party and flying the flag of that Party; or



(c)    a branch of an enterprise of a third country with substantive business operations in the territory of a Party, that is engaged in the supply of international maritime transport services. For greater certainty, Chapter Eight (Investment) does not apply to such a branch;

maritime agency services means the representation, as an agent, within a given geographic area, of the business interests of one or more shipping lines or shipping companies, for the following purposes:

(a)    marketing and sales of maritime transport and related services, from quotation to invoicing, issuance of bills of lading on behalf of the companies, acquisition and resale of the necessary related services, preparation of documentation, and provision of business information; and

(b)    acting on behalf of the companies in organising the call of the vessel or taking control of cargo when required;

maritime auxiliary services means maritime cargo handling services, customs clearance services, container station and depot services, maritime agency services, maritime freight forwarding services, and storage and warehousing services;

maritime cargo handling services means the performance, organisation and supervision of:

(a)    the loading or discharging of cargo to or from a vessel,

(b)    the lashing or unlashing of cargo, and



(c)    the reception or delivery and safekeeping of cargo before shipment or after discharge,

by stevedoring or terminal operator companies, but does not include work performed by dock labour, when this workforce is organised independently of stevedoring or terminal operator companies;

maritime freight forwarding services means the organisation and monitoring of shipments on behalf of shippers, through the supply of such services as the arrangement of transport and related services, consolidation and packing of cargo, preparation of documentation and provision of business information;

storage and warehousing services means storage services of frozen or refrigerated goods, bulk storage services of liquids or gases, and other storage or warehousing services.

ARTICLE 14.2

Scope

1.    This Chapter applies to a measure adopted or maintained by a Party relating to the supply of international maritime transport services. 22  For greater certainty, such measure is also subject to Chapters Eight (Investment) and Nine (CrossBorder Trade in Services), as applicable.



2.    For greater certainty, further to Articles 8.6 (National treatment), 8.7 (Mostfavourednation treatment), 9.3 (National treatment), and 9.5 (Mostfavourednation treatment), a Party shall not adopt or maintain a measure in respect of:

(a)    a vessel supplying an international maritime transport service and flying the flag of the other Party; 23 or

(b)    an international maritime transport service supplier of the other Party,

that accords treatment that is less favourable than that accorded by that Party in like situations to its own vessels or international maritime transport service suppliers or to vessels or international maritime transport service suppliers of a third country with regard to:

(a)    access to ports;

(b)    the use of infrastructure and services of ports such as towage and pilotage;

(c)    the use of maritime auxiliary services as well as the imposition of related fees and charges;

(d)    access to customs facilities; or

(e)    the assignment of berths and facilities for loading and unloading. 24



ARTICLE 14.3

Obligations

1.    Each Party shall permit the international maritime transport service suppliers of the other Party to reposition owned or leased empty containers that are carried on a nonrevenue basis between the ports of that Party.

2.    A Party shall permit the international maritime transport service suppliers of the other Party to supply feeder services between the ports of that Party.

3.    A Party shall not adopt or maintain a cargosharing arrangement with a third country concerning any international maritime transport services, including dry and liquid bulk and liner trades.

4.    A Party shall not adopt or maintain a measure that requires all or part of any international cargo to be transported exclusively by vessels registered in that Party or owned or controlled by nationals of that Party.

5.    A Party shall not adopt or maintain a measure that prevents international maritime transport service suppliers of the other Party from directly contracting with other transport service suppliers for doortodoor or multimodal transport operations.



ARTICLE 14.4

Reservations

1.    Article 14.3 does not apply to:

(a)    an existing nonconforming measure that is maintained by a Party at the level of :

(i)    the European Union, as set out in its Schedule to Annex I;

(ii)    a national government, as set out by that Party in its Schedule to Annex I;

(iii)    a provincial, territorial or regional government, as set out by that Party in its Schedule to Annex I; or

(iv)    a local government;

(b)    the continuation or prompt renewal of a nonconforming measure referred to in subparagraph (a); or

(c)    an amendment to a nonconforming 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 Article 14.3.

2.    Article 14.3 does not apply to a measure that a Party adopts or maintains with respect to sectors, subsectors or activities, as set out in its Schedule to Annex II.



CHAPTER FIFTEEN

TELECOMMUNICATIONS

ARTICLE 15.1

Definitions

For the purposes of this Chapter:

contribution link means a link for the transmission of sound or television broadcasting signals to a programme production centre;

costoriented means based on cost and may involve different cost methodologies for different facilities or services;

enterprise means an "enterprise" as defined in Article 8.1 (Definitions);

essential facilities means facilities of a public telecommunications transport network or service that:

(a)    are exclusively or predominantly supplied by a single or a limited number of suppliers; and

(b)    cannot feasibly be economically or technically substituted in order to supply a service;



interconnection means linking suppliers providing public telecommunications transport networks or services in order to allow the users of one supplier to communicate with the users of another supplier and to access services supplied by another supplier;

intracorporate communications means telecommunications through which an enterprise communicates within the enterprise or with or among its subsidiaries, branches and, subject to a Party's law, affiliates, but does not include commercial or noncommercial services that are supplied to enterprises that are not related subsidiaries, branches or affiliates, or that are offered to customers or potential customers. For the purposes of this definition, "subsidiaries", "branches" and, where applicable, "affiliates" are as defined by each Party;

leased circuits means telecommunications facilities between two or more designated points that are set aside for the dedicated use of or availability to a particular customer or other users of the customer's choice;

major supplier means a supplier which has the ability to materially affect the terms of participation, having regard to price and supply in the relevant market for public telecommunications transport networks or services, as a result of:

(a)    control over essential facilities; or

(b)    use of its position in the market;



network termination point means the physical point at which a user is provided with access to a public telecommunications transport network;

number portability means the ability of endusers of public telecommunications transport services to retain, at the same location, the same telephone numbers without impairment of quality, reliability or convenience when switching between suppliers of like public telecommunications transport services;

public telecommunications transport network means the public telecommunications infrastructure that permits telecommunications between and among defined network termination points;

public telecommunications transport service means a telecommunications transport service that a Party requires, explicitly or in effect, to be offered to the public generally that involves the realtime transmission of customersupplied information between two or more points without any endtoend change in the form or content of the customer's information. This service may include, among other things, voice telephone services, packetswitched data transmission services, circuitswitched data transmission services, telex services, telegraph services, facsimile services, private leased circuit services and mobile and personal communications services and systems;

regulatory authority means the body responsible for the regulation of telecommunications;

telecommunications services means all services consisting of the transmission and reception of signals by any electromagnetic means but does not include the economic activity consisting of the provision of content by means of telecommunications; and



user means an enterprise or natural person using or requesting a publicly available telecommunications service.

ARTICLE 15.2

Scope

1.    This Chapter applies to a measure adopted or maintained by a Party relating to telecommunications networks or services, subject to a Party's right to restrict the supply of a service in accordance with its reservations as set out in its Schedule to Annex I or II.

2.    This Chapter does not apply to a measure of a Party affecting the transmission by any means of telecommunications, including broadcast and cable distribution, of radio or television programming intended for reception by the public. For greater certainty, this Chapter applies to a contribution link.

3.    This Chapter does not:

(a)    require a Party to authorise a service supplier of the other Party to establish, construct, acquire, lease, operate or supply telecommunications networks or services, other than as specifically provided in this Agreement; or

(b)    require a Party, or require a Party to compel a service supplier, to establish, construct, acquire, lease, operate or supply telecommunications networks or services not offered to the public generally.



ARTICLE 15.3

Access to and use of public telecommunications transport networks or services

1.    A Party shall ensure that enterprises of the other Party are accorded access to and use of public telecommunications transport networks or services on reasonable and nondiscriminatory terms and conditions, including with respect to quality, technical standards and specifications. 25 The Parties shall apply this obligation, among other things, as set out in paragraphs 2 through 6.

2.    Each Party shall ensure that enterprises of the other Party have access to and use of any public telecommunications transport network or service offered within or across its borders, including private leased circuits, and to this end shall ensure, subject to paragraphs 5 and 6, that these enterprises are permitted to:

(a)    purchase or lease, and attach terminal or other equipment which interfaces with the public telecommunications transport network;

(b)    connect private leased or owned circuits with public telecommunications transport networks and services of that Party or with circuits leased or owned by another enterprise;

(c)    use operating protocols of their choice; and

(d)    perform switching, signalling, and processing functions.



3.    Each Party shall ensure that enterprises of the other Party may use public telecommunications transport networks and services for the movement of information in its territory or across its borders, including for intracorporate communications of these enterprises, and for access to information contained in data bases or otherwise stored in machinereadable form in the territory of either Party.

4.    Further to Article 28.3 (General exceptions), and notwithstanding paragraph 3, a Party shall take appropriate measures to protect:

(a)    the security and confidentiality of public telecommunications transport services; and

(b)    the privacy of users of public telecommunications transport services,

subject to the requirement that these measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade.

5.    Each Party shall ensure that no condition is imposed on access to and use of public telecommunications transport networks or services other than as necessary to:

(a)    safeguard the public service responsibilities of suppliers of public telecommunications transport networks or services, in particular their ability to make their networks or services available to the public generally;



(b)    protect the technical integrity of public telecommunications transport networks or services; or

(c)    ensure that service suppliers of the other Party do not supply services limited by the Party's reservations as set out in its Schedule to Annex I or II.

6.    Provided that they satisfy the criteria in paragraph 5, conditions for access to and use of public telecommunications transport networks or services may include:

(a)    restrictions on resale or shared use of these services;

(b)    a requirement to use specified technical interfaces, including interface protocols, for connection with such networks or services;

(c)    requirements, where necessary, for the interoperability of these services;

(d)    type approval of terminal or other equipment that interfaces with the network and technical requirements relating to the attachment of that equipment to the networks;

(e)    restrictions on connection of private leased or owned circuits with these networks or services or with circuits leased or owned by another enterprise; and

(f)    notification, registration and licensing.



ARTICLE 15.4

Competitive safeguards on major suppliers

1.    Each Party shall maintain appropriate measures to prevent suppliers that, alone or together, are a major supplier from engaging in or continuing anticompetitive practices.

2.    The anticompetitive practices referred to in paragraph 1 include:

(a)    engaging in anticompetitive crosssubsidisation;

(b)    using information obtained from competitors with anticompetitive results; and

(c)    not making available to other service suppliers, on a timely basis, technical information about essential facilities and commercially relevant information which are necessary for them to supply services.



ARTICLE 15.5

Access to essential facilities

1.    Each Party shall ensure that a major supplier in its territory makes available its essential facilities, which may include, among other things, network elements, operational support systems or support structures, to suppliers of telecommunications services of the other Party on reasonable and nondiscriminatory terms and conditions and costoriented rates.

2.    Each Party may determine, in accordance with its laws, those essential facilities required to be made available in its territory.

ARTICLE 15.6

Interconnection

1.    Each Party shall ensure that a major supplier in its territory provides interconnection:

(a)    at any technically feasible point in the network;

(b)    under nondiscriminatory terms, conditions, including technical standards and specifications, and rates;



(c)    of a quality no less favourable than that provided for its own like services or for like services of nonaffiliated service suppliers or of its subsidiaries or other affiliates;

(e)    in a timely fashion, on terms, conditions, (including technical standards and specifications) and costoriented rates that are transparent, reasonable, having regard to economic feasibility, and sufficiently unbundled so that a supplier need not pay for network components or facilities that it does not require for the services to be supplied; and

(f)    upon request, at points in addition to the network termination points offered to the majority of users, subject to charges that reflect the cost of construction of necessary additional facilities.

2.    A supplier that is authorised to supply telecommunications services has the right to negotiate a new interconnection agreement with other suppliers of public telecommunications transport networks and services. Each Party shall ensure that major suppliers are required to establish a reference interconnection offer or negotiate interconnection agreements with other suppliers of telecommunications networks and services.

3.    Each Party shall ensure that suppliers of public telecommunications transport services that acquire information from another such supplier during the process of negotiating interconnection arrangements use that information solely for the purpose for which it was supplied and respect at all times the confidentiality of information transmitted or stored.



4.    Each Party shall ensure that the procedures applicable for interconnection to a major supplier shall be made publicly available.

5.    Each Party shall ensure that a major supplier makes publicly available either its interconnection agreements or reference interconnection offer if it is appropriate.

ARTICLE 15.7

Authorisation to supply telecommunications services

Each Party should ensure that the authorisation to supply telecommunications services, wherever possible, is based upon a simple notification procedure.

ARTICLE 15.8

Universal service

1.    Each Party has the right to define the kind of universal service obligations it wishes to maintain.



2.    Each Party shall ensure that any measure on universal service that it adopts or maintains is administered in a transparent, objective, nondiscriminatory and competitively neutral manner. Each Party shall also ensure that any universal service obligation it imposes is not more burdensome than necessary for the kind of universal service that the Party has defined.

3.    All suppliers should be eligible to ensure universal service. If a supplier is to be designated as the supplier of a universal service, a Party shall ensure that the selection is made through an efficient, transparent and nondiscriminatory mechanism.

ARTICLE 15.9

Scarce resources

1.    Each Party shall administer its procedures for the allocation and use of scarce resources, including frequencies, numbers and rights of way, in an objective, timely, transparent and nondiscriminatory manner.

2.    Notwithstanding Articles 8.4 (Market access) and 9.6 (Market access), a Party may adopt or maintain a measure that allocates and assigns spectrum and that manages frequencies. Accordingly, each Party retains the right to establish and apply its spectrum and frequency management policies that may limit the number of suppliers of public telecommunications transport services. Each Party also retains the right to allocate frequency bands taking into account present and future needs.



3.    Each Party shall make the current state of allocated frequency bands publicly available but shall not be required to provide detailed identification of frequencies allocated for specific government use.

ARTICLE 15.10

Number portability

Each Party shall ensure that suppliers of public telecommunications transport services in its territory provide number portability on reasonable terms and conditions.

ARTICLE 15.11

Regulatory authority

1.    Each Party shall ensure that its regulatory authority is legally distinct and functionally independent from any supplier of telecommunications transport networks, services or equipment, including if a Party retains ownership or control of a supplier of telecommunications transport networks or services.

2.    Each Party shall ensure that its regulatory authority's decisions and procedures are impartial with respect to all market participants and are administered in a transparent and timely manner.



3.    Each Party shall ensure that its regulatory authority is sufficiently empowered to regulate the sector, including by ensuring that it has the power to:

(a)    require suppliers of telecommunications transport networks or services to submit any information the regulatory authority considers necessary for the administration of its responsibilities; and

(b)    enforce its decisions relating to the obligations set out in Articles 15.3 through 15.6 through appropriate sanctions that may include financial penalties, corrective orders or the suspension or revocation of licences.

ARTICLE 15.12

Resolution of telecommunication disputes

Recourse to regulatory authorities

1.    Further to Articles 27.3 (Administrative proceedings) and 27.4 (Review and appeal), each Party shall ensure that:

(a)    enterprises have timely recourse to its regulatory authority to resolve disputes with suppliers of public telecommunications transport networks or services regarding the matters covered in Articles 15.3 through 15.6 and that, under the law of the Party, are within the regulatory authority's jurisdiction. As appropriate, the regulatory authority shall issue a binding decision to resolve the dispute within a reasonable period of time; and



(b)    suppliers of telecommunications networks or services of the other Party requesting access to essential facilities or interconnection with a major supplier in the Party's territory have, within a reasonable and publicly specified period of time, recourse to a regulatory authority to resolve disputes regarding the appropriate terms, conditions and rates for interconnection or access with that major supplier.

Appeal and review of regulatory authority determinations or decisions

2.    Each Party shall ensure that an enterprise whose interests are adversely affected by a determination or decision of a regulatory authority may obtain review of the determination or decision by an impartial and independent judicial, quasijudicial or administrative authority, as provided in the law of the Party. The judicial, quasijudicial or administrative authority shall provide the enterprise with written reasons supporting its determination or decision. Each Party shall ensure that these determinations or decisions, subject to appeal or further review, are implemented by the regulatory authority.

3.    An application for judicial review does not constitute grounds for noncompliance with the determination or decision of the regulatory authority unless the relevant judicial authority stays this determination or decision.



ARTICLE 15.13

Transparency

1.    Further to Articles 27.1 (Publication) and 27.2 (Provision of information), and in addition to the other provisions in this Chapter relating to the publication of information, each Party shall make publicly available:

(a)    the responsibilities of a regulatory authority in an easily accessible and clear form, in particular where those responsibilities are given to more than one body;

(b)    its measures relating to public telecommunications transport networks or services, including:

(i)    regulations of its regulatory authority, together with the basis for these regulations;

(ii)    tariffs and other terms and conditions of services;

(iii)    specifications of technical interfaces;

(iv)    conditions for attaching terminal or other equipment to the public telecommunications transport networks;

(v)    notification, permit, registration, or licensing requirements, if any; and

(c)    information on bodies responsible for preparing, amending and adopting standardsrelated measures.



ARTICLE 15.14

Forbearance

The Parties recognise the importance of a competitive market to achieve legitimate public policy objectives for telecommunications services. To this end, and to the extent provided in its law, each Party may refrain from applying a regulation to a telecommunications service when, following analysis of the market, it is determined that effective competition is achieved.

ARTICLE 15.15

Relation to other chapters

If there is any inconsistency between this Chapter and another Chapter, this Chapter prevails to the extent of the inconsistency.



CHAPTER SIXTEEN

ELECTRONIC COMMERCE

ARTICLE 16.1

Definitions

For the purposes of this Chapter:

delivery means a computer program, text, video, image, sound recording or other delivery that is digitally encoded; and

electronic commerce means commerce conducted through telecommunications, alone or in conjunction with other information and communication technologies.



ARTICLE 16.2

Objective and scope

1.    The Parties recognise that electronic commerce increases economic growth and trade opportunities in many sectors and confirm the applicability of the WTO rules to electronic commerce. They agree to promote the development of electronic commerce between them, in particular by cooperating on the issues raised by electronic commerce under the provisions of this Chapter.

2.    This Chapter does not impose an obligation on a Party to allow a delivery transmitted by electronic means except in accordance with the Party's obligations under another provision of this Agreement.

ARTICLE 16.3

Customs duties on electronic deliveries

1.    A Party shall not impose a customs duty, fee, or charge on a delivery transmitted by electronic means.

2.    For greater certainty, paragraph 1 does not prevent a Party from imposing an internal tax or other internal charge on a delivery transmitted by electronic means, provided that the tax or charge is imposed in a manner consistent with this Agreement.



ARTICLE 16.4

Trust and confidence in electronic commerce

Each Party should adopt or maintain laws, regulations or administrative measures for the protection of personal information of users engaged in electronic commerce and, when doing so, shall take into due consideration international standards of data protection of relevant international organisations of which both Parties are a member.

ARTICLE 16.5

General provisions

Considering the potential of electronic commerce as a social and economic development tool, the Parties recognise the importance of:

(a)    clarity, transparency and predictability in their domestic regulatory frameworks in facilitating, to the maximum extent possible, the development of electronic commerce;

(b)    interoperability, innovation and competition in facilitating electronic commerce; and

(c)    facilitating the use of electronic commerce by small and medium sized enterprises.



ARTICLE 16.6

Dialogue on electronic commerce

1.    Recognising the global nature of electronic commerce, the Parties agree to maintain a dialogue on issues raised by electronic commerce, which will address, among other things:

(a)    the recognition of certificates of electronic signatures issued to the public and the facilitation of crossborder certification services;

(b)    the liability of intermediary service suppliers with respect to the transmission, or the storage of information;

(c)    the treatment of unsolicited electronic commercial communications; and

(d)    the protection of personal information and the protection of consumers and businesses from fraudulent and deceptive commercial practices in the sphere of electronic commerce.

2.    The dialogue in paragraph 1 may take the form of exchange of information on the Parties' respective laws, regulations, and other measures on these issues, as well as sharing experiences on the implementation of such laws, regulations and other measures.

3.    Recognising the global nature of electronic commerce, the Parties affirm the importance of actively participating in multilateral fora to promote the development of electronic commerce.



ARTICLE 16.7

Relation to other chapters

In the event of an inconsistency between this Chapter and another chapter of this Agreement, the other chapter prevails to the extent of the inconsistency.

CHAPTER SEVENTEEN

COMPETITION POLICY

ARTICLE 17.1

Definitions

For the purposes of this Chapter:

anticompetitive business conduct means anticompetitive agreements, concerted practices or arrangements by competitors, anticompetitive practices by an enterprise that is dominant in a market, and mergers with substantial anticompetitive effects; and,



service of general economic interest means, for the European Union, a service that cannot be provided satisfactorily and under conditions, such as price, objective quality characteristics, continuity, and access to the service, consistent with the public interest, by an undertaking operating under normal market conditions. The operation of a service of general economic interest must be entrusted to one or more undertakings by the state by way of a public service assignment that defines the obligations of the undertakings in question and of the state.

ARTICLE 17.2

Competition policy

1.    The Parties recognise the importance of free and undistorted competition in their trade relations. The Parties acknowledge that anticompetitive business conduct has the potential to distort the proper functioning of markets and undermine the benefits of trade liberalisation.

2.    The Parties shall take appropriate measures to proscribe anticompetitive business conduct, recognising that such measures will enhance the fulfilment of the objectives of this Agreement.

3.    The Parties shall cooperate on matters relating to the proscription of anticompetitive business conduct in the free trade area in accordance with the Agreement between the European Communities and the Government of Canada Regarding the Application of their Competition Laws, done at Bonn on 17 June 1999.



4.    The measures referred to in paragraph 2 shall be consistent with the principles of transparency, nondiscrimination, and procedural fairness. Exclusions from the application of competition law shall be transparent. A Party shall make available to the other Party public information concerning such exclusions provided under its competition law.

ARTICLE 17.3

Application of competition policy to enterprises

1.    A Party shall ensure that the measures referred to in Article 17.2.2 apply to the Parties to the extent required by its law.

2.    For greater certainty:

(a)    in Canada, the Competition Act, R.S.C. 1985, c. C34 is binding on and applies to an agent of Her Majesty in right of Canada, or of a province, that is a corporation, in respect of commercial activities engaged in by the corporation in competition, whether actual or potential, with other persons to the extent that it would apply if the agent were not an agent of Her Majesty. Such an agent may include state enterprises, monopolies, and enterprises granted special or exclusive rights or privileges; and



(b)    in the European Union, state enterprises, monopolies, and enterprises granted special rights or privileges are subject to the European Union's rules on competition. However, enterprises entrusted with the operation of services of general economic interest or having the character of a revenueproducing monopoly are subject to these rules, in so far as the application of these rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them.

ARTICLE 17.4

Dispute settlement

Nothing in this Chapter shall be subject to any form of dispute settlement pursuant to this Agreement.



CHAPTER EIGHTEEN

STATE ENTERPRISES, MONOPOLIES,
AND ENTERPRISES GRANTED SPECIAL RIGHTS OR PRIVILEGES

ARTICLE 18.1

Definitions

For the purposes of this Chapter:

covered entity means:

(a)    a monopoly;

(b)    a supplier of a good or service, if it is one of a small number of goods or services suppliers authorised or established by a Party, formally or in effect, and the Party substantially prevents competition among those suppliers in its territory;



(c)    any entity to which a Party has granted, formally or in effect, special rights or privileges to supply a good or service, substantially affecting the ability of any other enterprise to supply the same good or service in the same geographical area under substantially equivalent conditions, and allowing the entity to escape, in whole or in part, competitive pressures or market constraints; 26  or

(d)    a state enterprise;

designate means to establish or authorise a monopoly, or to expand the scope of a monopoly to cover an additional good or service;

in accordance with commercial considerations means consistent with customary business practices of a privately held enterprise in the relevant business or industry; and

nondiscriminatory treatment means the better of national treatment and mostfavourednation treatment as set out in this Agreement.



ARTICLE 18.2

Scope

1.    The Parties confirm their rights and obligations under Articles XVII:1 through XVII:3 of the GATT 1994, the Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994, and Articles VIII:1 and VIII:2 of GATS, all of which are hereby incorporated into and made part of this Agreement.

2.    This Chapter does not apply to the procurement by a Party of a good or service purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is a "covered procurement" within the meaning of Article 19.2 (Scope and coverage).

3.    Articles 18.4 and 18.5 do not apply to the sectors set out in Article 8.2 (Scope) and Article 9.2 (Scope).

4    Articles 18.4 and 18.5 do not apply to a measure of a covered entity if a reservation of a Party, taken against a national treatment or mostfavoured nation treatment obligation, as set out in that Party's Schedule to Annex I, II, or III, would be applicable if the same measure had been adopted or maintained by that Party.



ARTICLE 18.3

State enterprises, monopolies and enterprises granted special rights or privileges

1.    Without prejudice to the Parties' rights and obligations under this Agreement, nothing in this Chapter prevents a Party from designating or maintaining a state enterprise or a monopoly or from granting an enterprise special rights or privileges.

2.    A Party shall not require or encourage a covered entity to act in a manner inconsistent with this Agreement.

ARTICLE 18.4

Nondiscriminatory treatment

1.    Each Party shall ensure that in its territory a covered entity accords nondiscriminatory treatment to a covered investment, to a good of the other Party, or to a service supplier of the other Party in the purchase or sale of a good or service.

2.    If a covered entity described in paragraphs (b) through (d) of the definition of "covered entity" in Article 18.1 acts in accordance with Article 18.5.1, the Party in whose territory the covered entity is located shall be deemed to be in compliance with the obligations set out in paragraph 1 in respect of that covered entity.



ARTICLE 18.5

Commercial considerations

1.    Each Party shall ensure that a covered entity in its territory acts in accordance with commercial considerations in the purchase or sale of goods, including with regard to price, quality, availability, marketability, transportation, and other terms and conditions of purchase or sale, as well as in the purchase or supply of services, including when such goods or services are supplied to or by an investment of an investor of the other Party.

2.    Provided that a covered entity's conduct is consistent with Article 18.4 and Chapter Seventeen (Competition Policy), the obligation contained in paragraph 1 does not apply:

(a)    in the case of a monopoly, to the fulfilment of the purpose for which the monopoly has been created or for which special rights or privileges have been granted, such as a public service obligation or regional development; or,

(b)    in the case of a state enterprise, to the fulfilment of its public mandate.



CHAPTER NINETEEN

GOVERNMENT PROCUREMENT

ARTICLE 19.1

Definitions

For the purposes of this Chapter:

commercial goods or services means goods or services of a type generally sold or offered for sale in the commercial marketplace to, and customarily purchased by, nongovernmental buyers for nongovernmental purposes;

construction service means a service that has as its objective the realisation by whatever means of civil or building works, based on Division 51 of the United Nations Provisional Central Product Classification (CPC);

electronic auction means an iterative process that involves the use of electronic means for the presentation by suppliers of either new prices, or new values for quantifiable nonprice elements of the tender related to the evaluation criteria, or both, resulting in a ranking or reranking of tenders;

in writing or written means any worded or numbered expression that can be read, reproduced and later communicated. It may include electronically transmitted and stored information;



limited tendering means a procurement method whereby the procuring entity contacts a supplier or suppliers of its choice;

measure means any law, regulation, procedure, administrative guidance or practice, or any action of a procuring entity relating to a covered procurement;

multiuse list means a list of suppliers that a procuring entity has determined satisfy the conditions for participation in that list, and that the procuring entity intends to use more than once;

notice of intended procurement means a notice published by a procuring entity inviting interested suppliers to submit a request for participation, a tender, or both;

offset means any condition or undertaking that encourages local development or improves a Party's balanceofpayments accounts, such as the use of domestic content, the licensing of technology, investment, countertrade and similar action or requirement;

open tendering means a procurement method whereby all interested suppliers may submit a tender;

person means "person" as defined in Article 1.1 (Definitions of general application);

procuring entity means an entity covered under Annexes 191, 192 or 193 of a Party's Market Access Schedule for this Chapter;



qualified supplier means a supplier that a procuring entity recognises as having satisfied the conditions for participation;

selective tendering means a procurement method whereby only qualified suppliers are invited by the procuring entity to submit a tender;

services includes construction services, unless otherwise specified;

standard means a document approved by a recognised body that provides for common and repeated use, rules, guidelines or characteristics for goods or services, or related processes and production methods, with which compliance is not mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a good, service, process or production method;

supplier means a person or group of persons that provides or could provide goods or services; and

technical specification means a tendering requirement that:

(a)    lays down the characteristics of a good or a service to be procured, including quality, performance, safety and dimensions, or the processes and methods for their production or provision; or

(b)    addresses terminology, symbols, packaging, marking or labelling requirements, as they apply to a good or a service.



ARTICLE 19.2

Scope and coverage

Application of this Chapter

1.    This Chapter applies to any measure relating to a covered procurement, whether or not it is conducted exclusively or partially by electronic means.

2.    For the purposes of this Chapter, covered procurement means procurement for governmental purposes:

(a)    of a good, a service, or any combination thereof:

(i)    as specified in each Party's Annexes to its Market Access Schedule for this Chapter; and

(ii)    not procured with a view to commercial sale or resale, or for use in the production or supply of a good or a service for commercial sale or resale;

(b)    by any contractual means, including: purchase; lease; and rental or hire purchase, with or without an option to buy;

(c)    for which the value, as estimated in accordance with paragraphs 6 through 8, equals or exceeds the relevant threshold specified in a Party's Annexes to its Market Access Schedule for this Chapter, at the time of publication of a notice in accordance with Article 19.6;



(d)    by a procuring entity; and

(e)    that is not otherwise excluded from coverage in paragraph 3 or a Party's Annexes to its Market Access Schedule for this Chapter.

3.    Except as otherwise provided in a Party's Annexes to its Market Access Schedule for this Chapter, this Chapter does not apply to:

(a)    the acquisition or rental of land, existing buildings or other immovable property or the rights thereon;

(b)    noncontractual agreements or any form of assistance that a Party provides, including cooperative agreements, grants, loans, equity infusions, guarantees and fiscal incentives;

(c)    the procurement or acquisition of fiscal agency or depository services, liquidation and management services for regulated financial institutions or services related to the sale, redemption and distribution of public debt, including loans and government bonds, notes and other securities;

(d)    public employment contracts;

(e)    procurement conducted:

(i)    for the specific purpose of providing international assistance, including development aid;



(ii)    under the particular procedure or condition of an international agreement relating to the stationing of troops or relating to the joint implementation by the signatory countries of a project; or

(iii)    under the particular procedure or condition of an international organisation, or funded by international grants, loans or other assistance if the applicable procedure or condition would be inconsistent with this Chapter.

4.    A procurement subject to this Chapter shall be all procurement covered by the Market Access Schedules of Canada and the European Union, in which each Party's commitments are set out as follows:

(a)    in Annex 191, the central government entities whose procurement is covered by this Chapter;

(b)    in Annex 192, the subcentral government entities whose procurement is covered by this Chapter;

(c)    in Annex 193, all other entities whose procurement is covered by this Chapter;

(d)    in Annex 194, the goods covered by this Chapter;

(e)    in Annex 195, the services, other than construction services, covered by this Chapter;

(f)    in Annex 196, the construction services covered by this Chapter;



(g)    in Annex 197, any General Notes; and

(h)    in Annex 198, the means of publication used for this Chapter.

5.    If a procuring entity, in the context of covered procurement, requires a person not covered under a Party's Annexes to its Market Access Schedule for this Chapter to procure in accordance with particular requirements, Article 19.4 shall apply mutatis mutandis to such requirements.

Valuation

6.    In estimating the value of a procurement for the purpose of ascertaining whether it is a covered procurement, a procuring entity shall:

(a)    neither divide a procurement into separate procurements nor select or use a particular valuation method for estimating the value of a procurement with the intention of totally or partially excluding it from the application of this Chapter; and

(b)    include the estimated maximum total value of the procurement over its entire duration, whether awarded to one or more suppliers, taking into account all forms of remuneration, including:

(i)    premiums, fees, commissions and interest; and



(ii)    if the procurement provides for the possibility of options, the total value of such options.

7.    If an individual requirement for a procurement results in the award of more than one contract, or in the award of contracts in separate parts ("recurring contracts") the calculation of the estimated maximum total value shall be based on:

(a)    the value of recurring contracts of the same type of good or service awarded during the preceding 12 months or the procuring entity's preceding fiscal year, adjusted, if possible, to take into account anticipated changes in the quantity or value of the good or service being procured over the following 12 months; or

(b)    the estimated value of recurring contracts of the same type of good or service to be awarded during the 12 months following the initial contract award or the procuring entity's fiscal year.

8.    In the case of procurement by lease, rental or hire purchase of a good or a service, or procurement for which a total price is not specified, the basis for valuation shall be:

(a)    in the case of a fixedterm contract:

(i)    if the term of the contract is 12 months or less, the total estimated maximum value for its duration; or



(ii)    if the term of the contract exceeds 12 months, the total estimated maximum value, including any estimated residual value;

(b)    if the contract is for an indefinite period, the estimated monthly instalment multiplied by 48; and

(c)    if it is not certain whether the contract is to be a fixedterm contract, subparagraph (b) shall be used.

ARTICLE 19.3

Security and general exceptions

1.    Nothing in this Chapter shall be construed to prevent a Party from taking any action or from not disclosing any information that it considers necessary for the protection of its essential security interests relating to the procurement:

(a)    of arms, ammunition 27 or war material;

(b)    or to procurement indispensable for national security; or

(c)    for national defence purposes.



2.    Subject to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail or a disguised restriction on international trade, nothing in this Chapter shall be construed to prevent a Party from imposing or enforcing measures:

(a)    necessary to protect public morals, order or safety;

(b)    necessary to protect human, animal or plant life or health;

(c)    necessary to protect intellectual property; or

(d)    relating to goods or services of persons with disabilities, of philanthropic institutions or of prison labour.



ARTICLE 19.4

General principles

NonDiscrimination

1.    With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of the other Party and to the suppliers of the other Party offering such goods or services, treatment no less favourable than the treatment the Party, including its procuring entities, accords to its own goods, services and suppliers. For greater certainty, such treatment includes:

(a)    within Canada, treatment no less favourable than that accorded by a province or territory, including its procuring entities, to goods and services of, and to suppliers located in, that province or territory; and

(b)    within the European Union, treatment no less favourable than that accorded by a Member State or a subcentral region of a Member State, including its procuring entities, to goods and services of, and suppliers located in, that Member State or subcentral region, as the case may be.



2.    With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not:

(a)    treat a locally established supplier less favourably than another locally established supplier on the basis of the degree of foreign affiliation or ownership; or

(b)    discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party.

Use of Electronic Means

3.    When conducting covered procurement by electronic means, a procuring entity shall:

(a)    ensure that the procurement is conducted using information technology systems and software, including those related to authentication and encryption of information, that are generally available and interoperable with other generally available information technology systems and software; and

(b)    maintain mechanisms that ensure the integrity of requests for participation and tenders, including establishment of the time of receipt and the prevention of inappropriate access.



Conduct of Procurement

4.    A procuring entity shall conduct covered procurement in a transparent and impartial manner that:

(a)    is consistent with this Chapter, using methods such as open tendering, selective tendering and limited tendering;

(b)    avoids conflicts of interest; and

(c)    prevents corrupt practices.

Rules of Origin

5.    For the purposes of covered procurement, a Party shall not apply rules of origin to goods or services imported from or supplied from the other Party that are different from the rules of origin the Party applies at the same time in the normal course of trade to imports or supplies of the same goods or services from the same Party.

Offsets

6.    With regard to covered procurement, a Party, including its procuring entities, shall not seek, take account of, impose or enforce any offset.



Measures Not Specific to Procurement

7.    Paragraphs 1 and 2 shall not apply to: customs duties and charges of any kind imposed on, or in connection with, importation; the method of levying such duties and charges; other import regulations or formalities and measures affecting trade in services other than measures governing covered procurement.

ARTICLE 19.5

Information on the procurement system

1.    Each Party shall:

(a)    promptly publish any law, regulation, judicial decision, administrative ruling of general application, standard contract clause mandated by law or regulation and incorporated by reference in notices or tender documentation and procedure regarding covered procurement, and any modifications thereof, in an officially designated electronic or paper medium that is widely disseminated and remains readily accessible to the public; and

(b)    provide an explanation thereof to the other Party, on request.



2.    Each Party shall list, in Annex 198 of its Market Access Schedule:

(a)    the electronic or paper media in which the Party publishes the information described in paragraph 1;

(b)    the electronic or paper media in which the Party publishes the notices required by Articles 19.6, 19.8.7 and 19.15.2; and

(c)    the website address or addresses where the Party publishes:

(i)    its procurement statistics pursuant to Article 19.15.5; or

(ii)    its notices concerning awarded contracts pursuant to Article 19.15.6.

3.    Each Party shall promptly notify the Committee on Government Procurement of any modification to the Party's information listed in Annex 198.



ARTICLE 19.6

Notices

Notice of Intended Procurement

1.    For each covered procurement a procuring entity shall publish a notice of intended procurement, except in the circumstances described in Article 19.12.

All the notices of intended procurement shall be directly accessible by electronic means free of charge through a single point of access subject to paragraph 2. The notices may also be published in an appropriate paper medium that is widely disseminated and those notices shall remain readily accessible to the public, at least until expiration of the timeperiod indicated in the notice.

The appropriate paper and electronic medium is listed by each Party in Annex 198.

2.    A Party may apply a transitional period of up to 5 years from the date of entry into force of this Agreement to entities covered by Annexes 192 and 193 that are not ready to participate in a single point of access referred to in paragraph 1. Those entities shall, during such transitional period, provide their notices of intended procurement, if accessible by electronic means, through links in a gateway electronic site that is accessible free of charge and listed in Annex 198.



3.    Except as otherwise provided in this Chapter, each notice of intended procurement shall include:

(a)    the name and address of the procuring entity and other information necessary to contact the procuring entity and obtain all relevant documents relating to the procurement, and their cost and terms of payment, if any;

(b)    a description of the procurement, including the nature and the quantity of the goods or services to be procured or, if the quantity is not known, the estimated quantity;

(c)    for recurring contracts, an estimate, if possible, of the timing of subsequent notices of intended procurement;

(d)    a description of any options;

(e)    the timeframe for delivery of goods or services or the duration of the contract;

(f)    the procurement method that will be used and whether it will involve negotiation or electronic auction;

(g)    if applicable, the address and any final date for the submission of requests for participation in the procurement;

(h)    the address and the final date for the submission of tenders;



(i)    the language or languages in which tenders or requests for participation may be submitted, if they may be submitted in a language other than an official language of the Party of the procuring entity;

(j)    a list and brief description of any conditions for participation of suppliers, including any requirements for specific documents or certifications to be provided by suppliers in connection therewith, unless such requirements are included in tender documentation that is made available to all interested suppliers at the same time as the notice of intended procurement;

(k)    if, pursuant to Article 19.8, a procuring entity intends to select a limited number of qualified suppliers to be invited to tender, the criteria that will be used to select them and, if applicable, any limitation on the number of suppliers that will be permitted to tender; and

(l)    an indication that the procurement is covered by this Chapter.

Summary Notice

4.    For each case of intended procurement, a procuring entity shall publish a summary notice that is readily accessible, at the same time as the publication of the notice of intended procurement, in English or French. The summary notice shall contain at least the following information:

(a)    the subjectmatter of the procurement;



(b)    the final date for the submission of tenders or, if applicable, any final date for the submission of requests for participation in the procurement or for inclusion on a multiuse list; and

(c)    the address from which documents relating to the procurement may be requested.

Notice of Planned Procurement

5.    Procuring entities are encouraged to publish in the appropriate electronic, and, if available, paper medium listed in Annex 198 as early as possible in each fiscal year a notice regarding their future procurement plans ("notice of planned procurement"). The notice of planned procurement shall also be published in the single point of access site listed in Annex 198, subject to paragraph 2. The notice of planned procurement should include the subjectmatter of the procurement and the planned date of the publication of the notice of intended procurement.

6.    A procuring entity covered under Annexes 192 or 193 may use a notice of planned procurement as a notice of intended procurement provided that the notice of planned procurement includes as much of the information referred to in paragraph 3 as is available to the entity and a statement that interested suppliers should express their interest in the procurement to the procuring entity.



ARTICLE 19.7

Conditions for participation

1.    A procuring entity shall limit any conditions for participation in a procurement to those that are essential to ensure that a supplier has the legal and financial capacities and the commercial and technical abilities to undertake the relevant procurement.

2.    In establishing the conditions for participation, a procuring entity:

(a)    shall not impose the condition that, in order for a supplier to participate in a procurement, the supplier has previously been awarded one or more contracts by a procuring entity of a Party;

(b)    may require relevant prior experience if essential to meet the requirements of the procurement; and

(c)    shall not require prior experience in the territory of the Party to be a condition of the procurement.

3.    In assessing whether a supplier satisfies the conditions for participation, a procuring entity:

(a)    shall evaluate the financial capacity and the commercial and technical abilities of a supplier on the basis of that supplier's business activities both inside and outside the territory of the Party of the procuring entity; and



(b)    shall base its evaluation on the conditions that the procuring entity has specified in advance in notices or tender documentation.

4.    If there is supporting evidence, a Party, including its procuring entities, may exclude a supplier on grounds such as:

(a)    bankruptcy;

(b)    false declarations;

(c)    significant or persistent deficiencies in performance of any substantive requirement or obligation under a prior contract or contracts;

(d)    final judgments in respect of serious crimes or other serious offences;

(e)    professional misconduct or acts or omissions that adversely reflect on the commercial integrity of the supplier; or

(f)    failure to pay taxes.



ARTICLE 19.8

Qualification of suppliers

Registration Systems and Qualification Procedures

1.    A Party, including its procuring entities, may maintain a supplier registration system under which interested suppliers are required to register and provide certain information.

2.    Each Party shall ensure that:

(a)    its procuring entities make efforts to minimise differences in their qualification procedures; and

(b)    if its procuring entities maintain registration systems, the entities make efforts to minimise differences in their registration systems.

3.    A Party, including its procuring entities, shall not adopt or apply a registration system or qualification procedure with the purpose or the effect of creating unnecessary obstacles to the participation of suppliers of the other Party in its procurement.



Selective Tendering

4.    If a procuring entity intends to use selective tendering, the entity shall:

(a)    include in the notice of intended procurement at least the information specified in Article 19.6.3(a), (b), (f), (g), (j), (k) and (l) and invite suppliers to submit a request for participation; and

(b)    provide, by the commencement of the timeperiod for tendering, at least the information in Article 19.6.3(c), (d), (e), (h) and (i) to the qualified suppliers that it notifies as specified in Article 19.10.3(b).

5.    A procuring entity shall allow all qualified suppliers to participate in a particular procurement, unless the procuring entity states in the notice of intended procurement any limitation on the number of suppliers that will be permitted to tender and the criteria for selecting the limited number of suppliers.

6.    If the tender documentation is not made publicly available from the date of publication of the notice referred to in paragraph 4, a procuring entity shall ensure that those documents are made available at the same time to all the qualified suppliers selected in accordance with paragraph 5.



MultiUse Lists

7.    A procuring entity may maintain a multiuse list of suppliers, provided that a notice inviting interested suppliers to apply for inclusion on the list is:

(a)    published annually; and

(b)    if published by electronic means, made available continuously,

in the appropriate medium listed in Annex 198.

8.    The notice provided for in paragraph 7 shall include:

(a)    a description of the goods or services, or categories thereof, for which the list may be used;

(b)    the conditions for participation to be satisfied by suppliers for inclusion on the list and the methods that the procuring entity will use to verify that a supplier satisfies the conditions;

(c)    the name and address of the procuring entity and other information necessary to contact the entity and obtain all relevant documents relating to the list;

(d)    the period of validity of the list and the means for its renewal or termination, or if the period of validity is not provided, an indication of the method by which notice will be given of the termination of use of the list; and



(e)    an indication that the list may be used for procurement covered by this Chapter.

9.    Notwithstanding paragraph 7, if a multiuse list will be valid for three years or less, a procuring entity may publish the notice referred to in paragraph 7 only once, at the beginning of the period of validity of the list, provided that the notice:

(a)    states the period of validity and that further notices will not be published; and

(b)    is published by electronic means and is made available continuously during the period of its validity.

10.    A procuring entity shall allow suppliers to apply at any time for inclusion on a multiuse list and shall include on the list all qualified suppliers within a reasonably short time.

11.    If a supplier that is not included on a multiuse list submits a request for participation in a procurement based on a multiuse list and all required documents, within the timeperiod provided for in Article 19.10.2, a procuring entity shall examine the request. The procuring entity shall not exclude the supplier from consideration in respect of the procurement on the grounds that the entity has insufficient time to examine the request, unless, in exceptional cases, due to the complexity of the procurement, the entity is not able to complete the examination of the request within the timeperiod allowed for the submission of tenders.



Procuring Entities of Annex 192 and Annex 193

12.    A procuring entity covered under Annexes 192 or 193 may use a notice inviting suppliers to apply for inclusion on a multiuse list as a notice of intended procurement, provided that:

(a)    the notice is published in accordance with paragraph 7 and includes the information required under paragraph 8, as much of the information required under Article 19.6.3 as is available and a statement that it constitutes a notice of intended procurement or that only the suppliers on the multiuse list will receive further notices of procurement covered by the multiuse list; and

(b)    the entity promptly provides to suppliers that have expressed an interest in a given procurement to the entity, sufficient information to permit them to assess their interest in the procurement, including all remaining information required in Article 19.6.3, to the extent such information is available.

13.    A procuring entity covered under Annexes 192 or 193 may allow a supplier that has applied for inclusion on a multiuse list in accordance with paragraph 10 to tender in a given procurement, if there is sufficient time for the procuring entity to examine whether the supplier satisfies the conditions for participation.



Information on Procuring Entity Decisions

14.    A procuring entity shall promptly inform any supplier that submits a request for participation in a procurement or application for inclusion on a multiuse list of the procuring entity's decision with respect to the request or application.

15.    If a procuring entity rejects a supplier's request for participation in a procurement or application for inclusion on a multiuse list, ceases to recognise a supplier as qualified, or removes a supplier from a multiuse list, the entity shall promptly inform the supplier and, on request of the supplier, promptly provide the supplier with a written explanation of the reasons for its decision.

ARTICLE 19.9

Technical specifications and tender documentation

Technical Specifications

1.    A procuring entity shall not prepare, adopt or apply any technical specification or prescribe any conformity assessment procedure with the purpose or the effect of creating unnecessary obstacles to international trade.



2.    In prescribing the technical specifications for the goods or services being procured, a procuring entity shall, if appropriate:

(a)    set out the technical specification in terms of performance and functional requirements, rather than design or descriptive characteristics; and

(b)    base the technical specification on international standards, if they exist; otherwise, on national technical regulations, recognised national standards or building codes.

3.    If design or descriptive characteristics are used in the technical specifications, a procuring entity should indicate, if appropriate, that it will consider tenders of equivalent goods or services that demonstrably fulfil the requirements of the procurement by including words such as "or equivalent" in the tender documentation.

4.    A procuring entity shall not prescribe technical specifications that require or refer to a particular trademark or trade name, patent, copyright, design, type, specific origin, producer or supplier, unless there is no other sufficiently precise or intelligible way of describing the procurement requirements and provided that, in such cases, the entity includes words such as "or equivalent" in the tender documentation.

5.    A procuring entity shall not seek or accept, in a manner that would have the effect of precluding competition, advice that may be used in the preparation or adoption of any technical specification for a specific procurement from a person that may have a commercial interest in the procurement.



6.    For greater certainty, a Party, including its procuring entities, may prepare, adopt or apply technical specifications to promote the conservation of natural resources or protect the environment, provided that it does so in accordance with this Article.

Tender Documentation

7.    A procuring entity shall make available to suppliers tender documentation that includes all information necessary to permit suppliers to prepare and submit responsive tenders. Unless already provided in the notice of intended procurement, such documentation shall include a complete description of:

(a)    the procurement, including the nature and the quantity of the goods or services to be procured or, if the quantity is not known, the estimated quantity and any requirements to be fulfilled, including any technical specifications, conformity assessment certification, plans, drawings or instructional materials;

(b)    any conditions for participation of suppliers, including a list of information and documents that suppliers are required to submit in connection with the conditions for participation;

(c)    all evaluation criteria the entity will apply in the awarding of the contract, and, unless price is the sole criterion, the relative importance of that criteria;



(d)    if the procuring entity will conduct the procurement by electronic means, any authentication and encryption requirements or other requirements related to the submission of information by electronic means;

(e)    if the procuring entity will hold an electronic auction, the rules, including identification of the elements of the tender related to the evaluation criteria, on which the auction will be conducted;

(f)    if there will be a public opening of tenders, the date, time and place for the opening and, if appropriate, the persons authorised to be present;

(g)    any other terms or conditions, including terms of payment and any limitation on the means by which tenders may be submitted, such as whether on paper or by electronic means; and

(h)    any dates for the delivery of goods or the supply of services.

8.    In establishing any date for the delivery of goods or the supply of services being procured, a procuring entity shall take into account such factors as the complexity of the procurement, the extent of subcontracting anticipated and the realistic time required for production, destocking and transport of goods from the point of supply or for supply of services.

9.    The evaluation criteria set out in the notice of intended procurement or tender documentation may include, among others, price and other cost factors, quality, technical merit, environmental characteristics and terms of delivery.



10.    A procuring entity shall promptly:

(a)    make available tender documentation to ensure that interested suppliers have sufficient time to submit responsive tenders;

(b)    provide, on request, the tender documentation to any interested supplier; and

(c)    reply to any reasonable request for relevant information by any interested or participating supplier, provided that such information does not give that supplier an advantage over other suppliers.

Modifications

11.    If, prior to the award of a contract, a procuring entity modifies the criteria or requirements set out in the notice of intended procurement or tender documentation provided to participating suppliers, or amends or reissues a notice or tender documentation, it shall transmit in writing all such modifications or amended or reissued notice or tender documentation:

(a)    to all suppliers that are participating at the time of the modification, amendment or reissuance, if such suppliers are known to the entity, and in all other cases, in the same manner as the original information was made available; and

(b)    in adequate time to allow such suppliers to modify and resubmit amended tenders, as appropriate.



ARTICLE 19.10

Timeperiods

General

1.    A procuring entity shall, consistent with its own reasonable needs, provide sufficient time for suppliers to prepare and submit requests for participation and responsive tenders, taking into account such factors as:

(a)    the nature and complexity of the procurement;

(b)    the extent of subcontracting anticipated; and

(c)    the time necessary for transmitting tenders by nonelectronic means from foreign as well as domestic points if electronic means are not used.

These timeperiods, including any extension of the timeperiods, shall be the same for all interested or participating suppliers.



Deadlines

2.    A procuring entity that uses selective tendering shall establish that the final date for the submission of requests for participation shall not, in principle, be less than 25 days from the date of publication of the notice of intended procurement. If a state of urgency duly substantiated by the procuring entity renders this timeperiod impracticable, the timeperiod may be reduced to not less than 10 days.

3.    Except as provided for in paragraphs 4, 5, 7 and 8, a procuring entity shall establish that the final date for the submission of tenders shall not be less than 40 days from the date on which:

(a)    in the case of open tendering, the notice of intended procurement is published; or

(b)    in the case of selective tendering, the entity notifies suppliers that they will be invited to submit tenders, whether or not it uses a multiuse list.

4.    A procuring entity may reduce the timeperiod for tendering established in accordance with paragraph 3 to not less than 10 days if:

(a)    the procuring entity has published a notice of planned procurement as described in Article 19.6.5 at least 40 days and not more than 12 months in advance of the publication of the notice of intended procurement, and the notice of planned procurement contains:

(i)    a description of the procurement;



(ii)    the approximate final dates for the submission of tenders or requests for participation;

(iii)    a statement that interested suppliers should express their interest in the procurement to the procuring entity;

(iv)    the address from which documents relating to the procurement may be obtained; and

(v)    as much of the information that is required for the notice of intended procurement under Article 19.6.3, as is available;

(b)    the procuring entity, for contracts of a recurring nature, indicates in an initial notice of intended procurement that subsequent notices will provide timeperiods for tendering based on this paragraph; or

(c)    a state of urgency duly substantiated by the procuring entity renders the timeperiod for tendering established in accordance with paragraph 3 impracticable.

5.    A procuring entity may reduce the timeperiod for tendering established in accordance with paragraph 3 by five days for each one of the following circumstances:

(a)    the notice of intended procurement is published by electronic means;

(b)    all the tender documentation is made available by electronic means from the date of the publication of the notice of intended procurement; and



(c)    the entity accepts tenders by electronic means.

6.    The use of paragraph 5, in conjunction with paragraph 4, shall in no case result in the reduction of the timeperiod for tendering established in accordance with paragraph 3 to less than 10 days from the date on which the notice of intended procurement is published.

7.    Notwithstanding any other provision in this Article, if a procuring entity purchases commercial goods or services, or any combination thereof, it may reduce the timeperiod for tendering established in accordance with paragraph 3 to not less than 13 days, provided that it publishes by electronic means, at the same time, both the notice of intended procurement and the tender documentation. In addition, if the entity accepts tenders for commercial goods or services by electronic means, it may reduce the timeperiod established in accordance with paragraph 3 to not less than 10 days.

8.    If a procuring entity covered under Annexes 192 or 193 has selected all or a limited number of qualified suppliers, the timeperiod for tendering may be fixed by mutual agreement between the procuring entity and the selected suppliers. In the absence of agreement, the period shall not be less than 10 days.



ARTICLE 19.11

Negotiation

1.    A Party may provide for its procuring entities to conduct negotiations with suppliers:

(a)    if the entity has indicated its intent to conduct negotiations in the notice of intended procurement required under Article 19.6.3; or

(b)    if it appears from the evaluation that no tender is obviously the most advantageous in terms of the specific evaluation criteria set out in the notice of intended procurement or tender documentation.

2.    A procuring entity shall:

(a)    ensure that any elimination of suppliers participating in negotiations is carried out in accordance with the evaluation criteria set out in the notice of intended procurement or tender documentation; and

(b)    if negotiations are concluded, provide a common deadline for the remaining participating suppliers to submit any new or revised tenders.



ARTICLE 19.12

Limited tendering

1.    Provided that it does not use this provision for the purpose of avoiding competition among suppliers or in a manner that discriminates against suppliers of the other Party or protects domestic suppliers, a procuring entity may use limited tendering and may choose not to apply Articles 19.6 through 19.8, paragraphs 7 through 11 of Article 19.9, and Articles 19.10, 19.11, 19.13 and 19.14 under any of the following circumstances:

(a)    if:

(i)    no tenders were submitted or no suppliers requested participation;

(ii)    no tenders that conform to the essential requirements of the tender documentation were submitted;

(iii)    no suppliers satisfied the conditions for participation; or

(iv)    the tenders submitted have been collusive,

provided that the requirements of the tender documentation are not substantially modified;



(b)    if the goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute goods or services exist for any of the following reasons:

(i)    the requirement is for a work of art;

(ii)    the protection of patents, copyrights or other exclusive rights; or

(iii)    due to an absence of competition for technical reasons;

(c)    for additional deliveries by the original supplier of goods or services that were not included in the initial procurement if a change of supplier for such additional goods or services:

(i)    cannot be made for economic or technical reasons such as requirements of interchangeability or interoperability with existing equipment, software, services or installations procured under the initial procurement; and

(ii)    would cause significant inconvenience or substantial duplication of costs for the procuring entity;

(d)    only when strictly necessary if, for reasons of extreme urgency brought about by events unforeseeable by the procuring entity, the goods or services could not be obtained in time using open tendering or selective tendering;

(e)    for goods purchased on a commodity market;



(f)    if a procuring entity procures a prototype or a first good or service that is developed at its request in the course of, and for, a particular contract for research, experiment, study or original development. Original development of a first good or service may include limited production or supply in order to incorporate the results of field testing and to demonstrate that the good or service is suitable for production or supply in quantity to acceptable quality standards, but does not include quantity production or supply to establish commercial viability or to recover research and development costs;

(g)    for purchases made under exceptionally advantageous conditions that only arise in the very short term in the case of unusual disposals such as those arising from liquidation, receivership or bankruptcy, but not for routine purchases from regular suppliers; or

(h)    if a contract is awarded to a winner of a design contest provided that:

(i)    the contest has been organised in a manner that is consistent with the principles of this Chapter, in particular relating to the publication of a notice of intended procurement; and

(ii)    the participants are judged by an independent jury with a view to a design contract being awarded to a winner.



2.    A procuring entity shall prepare a report in writing on each contract awarded under paragraph 1. The report shall include the name of the procuring entity, the value and kind of goods or services procured and a statement indicating the circumstances and conditions described in paragraph 1 that justified the use of limited tendering.

ARTICLE 19.13

Electronic auctions

If a procuring entity intends to conduct a covered procurement using an electronic auction, the entity shall provide each participant, before commencing the electronic auction, with:

(a)    the automatic evaluation method, including the mathematical formula, that is based on the evaluation criteria set out in the tender documentation and that will be used in the automatic ranking or reranking during the auction;

(b)    the results of any initial evaluation of the elements of its tender if the contract is to be awarded on the basis of the most advantageous tender; and

(c)    any other relevant information relating to the conduct of the auction.



ARTICLE 19.14

Treatment of tenders and awarding of contracts

Treatment of Tenders

1.    A procuring entity shall receive, open and treat all tenders under procedures that guarantee the fairness and impartiality of the procurement process, and the confidentiality of tenders.

2.    A procuring entity shall not penalise any supplier whose tender is received after the time specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring entity.

3.    If a procuring entity provides a supplier with an opportunity to correct unintentional errors of form between the opening of tenders and the awarding of the contract, the procuring entity shall provide the same opportunity to all participating suppliers.

Awarding of Contracts

4.    To be considered for an award, a tender shall be submitted in writing and shall, at the time of opening, comply with the essential requirements set out in the notices and tender documentation and be from a supplier that satisfies the conditions for participation.



5.    Unless a procuring entity determines that it is not in the public interest to award a contract, the entity shall award the contract to the supplier that the entity has determined to be capable of fulfilling the terms of the contract and that, based solely on the evaluation criteria specified in the notices and tender documentation, has submitted:

(a)    the most advantageous tender; or

(b)    if price is the sole criterion, the lowest price.

6.    If a procuring entity receives a tender with a price that is abnormally lower than the prices in other tenders submitted, it may verify with the supplier that it satisfies the conditions for participation and is capable of fulfilling the terms of the contract.

7.    A procuring entity shall not use options, cancel a procurement or modify awarded contracts in a manner that circumvents the obligations under this Chapter.



ARTICLE 19.15

Transparency of procurement information

Information Provided to Suppliers

1.    A procuring entity shall promptly inform participating suppliers of the entity's contract award decisions and, on the request of a supplier, shall do so in writing. Subject to Articles 19.6.2 and 19.6.3, a procuring entity shall, on request, provide an unsuccessful supplier with an explanation of the reasons why the entity did not select its tender and the relative advantages of the successful supplier's tender.

Publication of Award Information

2.    Not later than 72 days after the award of each contract covered by this Chapter, a procuring entity shall publish a notice in the appropriate paper or electronic medium listed in Annex 198. If the entity publishes the notice only in an electronic medium, the information shall remain readily accessible for a reasonable period of time. The notice shall include at least the following information:

(a)    a description of the goods or services procured;

(b)    the name and address of the procuring entity;



(c)    the name and address of the successful supplier;

(d)    the value of the successful tender or the highest and lowest offers taken into account in the award of the contract;

(e)    the date of award; and

(f)    the type of procurement method used, and in cases where limited tendering was used in accordance with Article 19.12, a description of the circumstances justifying the use of limited tendering.

Maintenance of Documentation, Reports and Electronic Traceability

3.    Each procuring entity shall, for a period of at least three years from the date it awards a contract, maintain:

(a)    the documentation and reports of tendering procedures and contract awards relating to covered procurement, including the reports required under Article 19.12; and

(b)    data that ensure the appropriate traceability of the conduct of covered procurement by electronic means.



Collection and Reporting of Statistics

4.    Each Party shall collect and report to the Committee on Government Procurement statistics on its contracts covered by this Chapter. Each report shall cover one year and be submitted within two years of the end of the reporting period, and shall contain:

(a)    for Annex 191 procuring entities:

(i)    the number and total value, for all such entities, of all contracts covered by this Chapter;

(ii)    the number and total value of all contracts covered by this Chapter awarded by each such entity, broken down by categories of goods and services according to an internationally recognised uniform classification system; and

(iii)    the number and total value of all contracts covered by this Chapter awarded by each such entity under limited tendering;

(b)    for Annexes 192 and 193 procuring entities, the number and total value of contracts covered by this Chapter awarded by all such entities, broken down by Annex; and

(c)    estimates for the data required under subparagraphs (a) and (b), with an explanation of the methodology used to develop the estimates, if it is not feasible to provide the data.



5.    If a Party publishes its statistics on an official website, in a manner that is consistent with the requirements of paragraph 4, the Party may, instead of reporting to the Committee on Government Procurement, provide a link to the website, together with any instructions necessary to access and use such statistics.

6.    If a Party requires notices concerning awarded contracts, pursuant to paragraph 2, to be published electronically and if such notices are accessible to the public through a single database in a form permitting analysis of the covered contracts, the Party may, instead of reporting to the Committee on Government Procurement, provide a link to the website, together with any instructions necessary to access and use such data.

ARTICLE 19.16

Disclosure of information

Provision of Information to Parties

1.    On request of the other Party, a Party shall provide promptly any information necessary to determine whether a procurement was conducted fairly, impartially and in accordance with this Chapter, including information on the characteristics and relative advantages of the successful tender. In cases where release of the information would prejudice competition in future tenders, the Party that receives the information shall not disclose it to any supplier, except after consulting with, and obtaining the consent of, the Party that provided the information.



NonDisclosure of Information

2.    Notwithstanding any other provision of this Chapter, a Party, including its procuring entities, shall not provide to any particular supplier information that might prejudice fair competition between suppliers.

3.    Nothing in this Chapter shall be construed to require a Party, including its procuring entities, authorities and review bodies, to disclose confidential information if disclosure:

(a)    would impede law enforcement;

(b)    might prejudice fair competition between suppliers;

(c)    would prejudice the legitimate commercial interests of particular persons, including the protection of intellectual property; or

(d)    would otherwise be contrary to the public interest.



ARTICLE 19.17

Domestic review procedures

1.    Each Party shall provide a timely, effective, transparent and nondiscriminatory administrative or judicial review procedure through which a supplier may challenge:

(a)    a breach of the Chapter; or

(b)    if the supplier does not have a right to challenge directly a breach of the Chapter under the domestic law of a Party, a failure to comply with a Party's measures implementing this Chapter,

arising in the context of a covered procurement, in which the supplier has, or has had, an interest. The procedural rules for all challenges shall be in writing and made generally available.

2.    In the event of a complaint by a supplier, arising in the context of covered procurement in which the supplier has, or has had, an interest, that there has been a breach or a failure as referred to in paragraph 1, the Party of the procuring entity conducting the procurement shall encourage the entity and the supplier to seek resolution of the complaint through consultations. The entity shall accord impartial and timely consideration to any such complaint in a manner that is not prejudicial to the supplier's participation in ongoing or future procurement or its right to seek corrective measures under the administrative or judicial review procedure.



3.    Each supplier shall be allowed a sufficient period of time to prepare and submit a challenge, which in no case shall be less than 10 days from the time when the basis of the challenge became known or reasonably should have become known to the supplier.

4.    Each Party shall establish or designate at least one impartial administrative or judicial authority that is independent of its procuring entities to receive and review a challenge by a supplier arising in the context of a covered procurement.

5.    If a body other than an authority referred to in paragraph 4 initially reviews a challenge, the Party shall ensure that the supplier may appeal the initial decision to an impartial administrative or judicial authority that is independent of the procuring entity whose procurement is the subject of the challenge.

6.    Each Party shall ensure that a review body that is not a court shall have its decision subject to judicial review or have procedures that provide that:

(a)    the procuring entity shall respond in writing to the challenge and disclose all relevant documents to the review body;

(b)    the participants to the proceedings ("participants") shall have the right to be heard prior to a decision of the review body being made on the challenge;

(c)    the participants shall have the right to be represented and accompanied;



(d)    the participants shall have access to all proceedings;

(e)    the participants shall have the right to request that the proceedings take place in public and that witnesses may be presented; and

(f)    the review body shall make its decisions or recommendations in a timely fashion, in writing, and shall include an explanation of the basis for each decision or recommendation.

7.    Each Party shall adopt or maintain procedures that provide for:

(a)    rapid interim measures to preserve the supplier's opportunity to participate in the procurement. Such interim measures may result in suspension of the procurement process. The procedures may provide that overriding adverse consequences for the interests concerned, including the public interest, may be taken into account when deciding whether such measures should be applied. Just cause for not acting shall be provided in writing; and

(b)    corrective action or compensation for the loss or damages suffered, which may be limited to either the costs for the preparation of the tender or the costs relating to the challenge, or both, if a review body determines that there has been a breach or a failure as referred to in paragraph 1.

8.    Not later than ten years after the entry into force of this Agreement, the Parties will take up negotiations to further develop the quality of remedies, including a possible commitment to introduce or maintain precontractual remedies.



ARTICLE 19.18

Modifications and rectifications to coverage

1.    A Party may modify or rectify its Annexes to this Chapter.

Modifications

2.    When a Party modifies an Annex to this Chapter, the Party shall:

(a)    notify the other Party in writing; and

(b)    include in the notification a proposal of appropriate compensatory adjustments to the other Party to maintain a level of coverage comparable to that existing prior to the modification.

3.    Notwithstanding subparagraph 2(b), a Party need not provide compensatory adjustments if:

(a)    the modification in question is negligible in its effect; or

(b)    the modification covers an entity over which the Party has effectively eliminated its control or influence.



4.    If the other Party disputes that:

(a)    an adjustment proposed under subparagraph 2(b) is adequate to maintain a comparable level of mutually agreed coverage;

(b)    the modification is negligible in its effect; or

(c)    the modification covers an entity over which the Party has effectively eliminated its control or influence under subparagraph 3(b),

it must object in writing within 45 days of receipt of the notification referred to in subparagraph 2(a) or be deemed to have accepted the adjustment or modification, including for the purposes of Chapter Twenty-Nine (Dispute Settlement).

Rectifications

5.    The following changes to a Party's Annexes shall be considered a rectification, provided that they do not affect the mutually agreed coverage provided for in this Agreement:

(a)    a change in the name of an entity;

(b)    a merger of two or more entities listed within an Annex; and



(c)    the separation of an entity listed in an Annex into two or more entities that are all added to the entities listed in the same Annex.

6.    In the case of proposed rectifications to a Party's Annexes, the Party shall notify the other Party every two years, in line with the cycle of notifications provided for under the Agreement on Government Procurement, contained in Annex 4 of the WTO Agreement, following the entry into force of this Agreement.

7.    A Party may notify the other Party of an objection to a proposed rectification within 45 days from having received the notification. If a Party submits an objection, it shall set out the reasons why it believes the proposed rectification is not a change provided for in paragraph 5 of this Article, and describe the effect of the proposed rectification on the mutually agreed coverage provided for in the Agreement. If no such objection is submitted in writing within 45 days after having received the notification, the Party shall be deemed to have agreed to the proposed rectification.

ARTICLE 19.19

Committee on Government Procurement

1.    The Committee on Government Procurement, established under Article 26.2.1(e), is to be composed of representatives from each Party and shall meet, as necessary, for the purpose of providing the Parties the opportunity to consult on any matters relating to the operation of this Chapter or the furtherance of its objectives, and to carry out other responsibilities as may be assigned to it by the Parties.



2.    The Committee on Government Procurement shall meet, upon request of a Party, to:

(a)    consider issues regarding public procurement that are referred to it by a Party;

(b)    exchange information relating to the public procurement opportunities in each Party;

(c)    discuss any other matters related to the operation of this Chapter; and

(d)    consider the promotion of coordinated activities to facilitate access for suppliers to procurement opportunities in the territory of each Party. These activities may include information sessions, in particular with a view to improving electronic access to publiclyavailable information on each Party's procurement regime, and initiatives to facilitate access for small and mediumsized enterprises.

3.    Each Party shall submit statistics relevant to the procurement covered by this Chapter, as set out in Article 19.15, annually to the Committee on Government Procurement.



CHAPTER TWENTY

INTELLECTUAL PROPERTY

SECTION A

General Provisions

ARTICLE 20.1

Objectives

The objectives of this Chapter are to:

(a)    facilitate the production and commercialisation of innovative and creative products, and the provision of services, between the Parties; and

(b)    achieve an adequate and effective level of protection and enforcement of intellectual property rights.



ARTICLE 20.2

Nature and scope of obligations

1.    The provisions of this Chapter complement the rights and obligations between the Parties under the TRIPS Agreement.

2.    Each Party shall be free to determine the appropriate method of implementing the provisions of this Agreement within its own legal system and practice.

3.    This Agreement does not create any obligation with respect to the distribution of resources as between enforcement of intellectual property rights and enforcement of law in general.

ARTICLE 20.3

Public health concerns

1.    The Parties recognise the importance of the Doha Declaration on the TRIPS Agreement and Public Health ("Doha Declaration"), adopted on 14 November 2001 by the WTO Ministerial Conference. In interpreting and implementing the rights and obligations under this Chapter, the Parties shall ensure consistency with this Declaration.



2.    The Parties shall contribute to the implementation of and respect the Decision of the WTO General Council of 30 August 2003 on Paragraph 6 of the Doha Declaration, as well as the Protocol amending the TRIPS Agreement, done at Geneva on 6 December 2005.

ARTICLE 20.4

Exhaustion

This Chapter does not affect the freedom of the Parties to determine whether and under what conditions the exhaustion of intellectual property rights applies.

ARTICLE 20.5

Disclosure of information

This Chapter does not require a Party to disclose information that would otherwise be contrary to its law or exempt from disclosure under its law concerning access to information and privacy.



SECTION B

Standards Concerning Intellectual Property Rights

ARTICLE 20.6

Definition

For the purposes of this Section:

pharmaceutical product means a product including a chemical drug, biologic drug, vaccine or radiopharmaceutical, that is manufactured, sold or represented for use in:

(a)    making a medical diagnosis, treating, mitigating or preventing disease, disorder, or abnormal physical state, or its symptoms, or

(b)    restoring, correcting, or modifying physiological functions.



Subsection A

Copyright and related rights

ARTICLE 20.7

Protection granted

1.    The Parties shall comply with the following international agreements:

(a)    Articles 2 through 20 of the Berne Convention for the Protection of Literary and Artistic Works, done at Paris on 24 July 1971;

(b)    Articles 1 through 14 of the WIPO Copyright Treaty, done at Geneva on 20 December 1996;

(c)    Articles 1 through 23 of the WIPO Performances and Phonograms Treaty, done at Geneva on 20 December 1996; and

(d)    Articles 1 through 22 of the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, done at Rome on 26 October 1961.



2.    To the extent permitted by the treaties referred to in paragraph 1, this Chapter shall not restrict each Party's ability to limit intellectual property protection that it accords to performances to those performances that are fixed in phonograms.

ARTICLE 20.8

Broadcasting and communication to the public

1.    Each Party shall provide performers the exclusive right to authorise or prohibit the broadcasting by wireless means and the communication to the public of their performances, except where the performance is itself already a broadcast performance or is made from a fixation.

2.    Each Party shall ensure that a single equitable remuneration is paid by the user if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public, and shall ensure that this remuneration is shared between the relevant performers and phonogram producers. Each Party may, in the absence of an agreement between the performers and producers of phonograms, lay down the conditions as to the sharing of this remuneration between them.



ARTICLE 20.9

Protection of technological measures

1.    For the purposes of this Article, technological measures means any technology, device, or component that, in the normal course of its operation, is designed to prevent or restrict acts, in respect of works, performances, or phonograms, that are not authorised by authors, performers or producers of phonograms, as provided for by the law of a Party. Without prejudice to the scope of copyright or related rights contained in the law of a Party, technological measures shall be deemed effective where the use of protected works, performances, or phonograms is controlled by authors, performers or producers of phonograms through the application of a relevant access control or protection process, such as encryption or scrambling, or a copy control mechanism, that achieves the objective of protection.

2.    Each Party shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors, performers or producers of phonograms in connection with the exercise of their rights in, and that restrict acts in respect of, their works, performances, and phonograms, which are not authorised by the authors, the performers or the producers of phonograms concerned or permitted by law.



3.    In order to provide the adequate legal protection and effective legal remedies referred to in paragraph 2, each Party shall provide protection against at least:

(a)    to the extent provided by its law:

(i)    the unauthorised circumvention of an effective technological measure carried out knowingly or with reasonable grounds to know; and

(ii)    the offering to the public by marketing of a device or product, including computer programs, or a service, as a means of circumventing an effective technological measure; and

(b)    the manufacture, importation, or distribution of a device or product, including computer programs, or provision of a service that:

(i)    is primarily designed or produced for the purpose of circumventing an effective technological measure; or

(ii)    has only a limited commercially significant purpose other than circumventing an effective technological measure.

4.    Under paragraph 3, the term "to the extent provided by its law" means that each Party has flexibility in implementing subparagraphs (a)(i) and (ii).



5.    In implementing paragraphs 2 and 3, a Party shall not be obliged to require that the design of, or the design and selection of parts and components for, a consumer electronics, telecommunications, or computing product provide for a response to any particular technological measure, so long as the product does not otherwise contravene that Party's measures implementing these paragraphs. The intention of this provision is that this Agreement does not require a Party to mandate interoperability in its law: there is no obligation for the information communication technology industry to design devices, products, components, or services to correspond to certain technological measures.

6.    In providing adequate legal protection and effective legal remedies pursuant to paragraph 2, a Party may adopt or maintain appropriate limitations or exceptions to measures implementing the provisions of paragraphs 2 and 3. The obligations set forth in paragraphs 2 and 3 are without prejudice to the rights, limitations, exceptions, or defences to copyright or related rights infringement under the law of a Party.

ARTICLE 20.10

Protection of rights management information

1.    For the purposes of this Article, rights management information means:

(a)    information that identifies the work, the performance, or the phonogram; the author of the work, the performer of the performance, or the producer of the phonogram; or the owner of any right in the work, performance, or phonogram;



(b)    information about the terms and conditions of use of the work, performance, or phonogram; or

(c)    any numbers or codes that represent the information described in (a) and (b) above;

when any of these items of information is attached to a copy of a work, performance, or phonogram, or appears in connection with the communication or making available of a work, performance, or phonogram to the public.

2.    To protect electronic rights management information, each Party shall provide adequate legal protection and effective legal remedies against any person knowingly performing, without authority, any of the following acts knowing, or having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any copyright or related rights:

(a)    to remove or alter any electronic rights management information; or

(b)    to distribute, import for distribution, broadcast, communicate, or make available to the public copies of works, performances, or phonograms, knowing that electronic rights management information has been removed or altered without authority.

3.    In providing adequate legal protection and effective legal remedies pursuant to paragraph 2, a Party may adopt or maintain appropriate limitations or exceptions to measures implementing paragraph 2. The obligations set forth in paragraph 2 are without prejudice to the rights, limitations, exceptions, or defences to copyright or related rights infringement under the law of a Party.



ARTICLE 20.11

Liability of intermediary service providers

1.    Subject to the other paragraphs of this Article, each Party shall provide limitations or exceptions in its law regarding the liability of service providers, when acting as intermediaries, for infringements of copyright or related rights that take place on or through communication networks, in relation to the provision or use of their services.

2.    The limitations or exceptions referred to in paragraph 1:

(a)    shall cover at least the following functions:

(i)    hosting of the information at the request of a user of the hosting services;

(ii)    caching carried out through an automated process, when the service provider:

(A)    does not modify the information other than for technical reasons;

(B)    ensures that any directions related to the caching of the information that are specified in a manner widely recognised and used by industry are complied with; and

(C)    does not interfere with the use of technology that is lawful and widely recognised and used by the industry in order to obtain data on the use of the information; and



(iii)    mere conduit, which consists of the provision of the means to transmit information provided by a user, or the means of access to a communication network; and

(b)    may also cover other functions, including providing an information location tool, by making reproductions of copyright material in an automated manner, and communicating the reproductions.

3.    The eligibility for the limitations or exceptions referred to in this Article may not be conditioned on the service provider monitoring its service, or affirmatively seeking facts indicating infringing activity.

4.    Each Party may prescribe in its domestic law, conditions for service providers to qualify for the limitations or exceptions in this Article. Without prejudice to the above, each Party may establish appropriate procedures for effective notifications of claimed infringement, and effective counternotifications by those whose material is removed or disabled through mistake or misidentification.

5.    This Article is without prejudice to the availability in the law of a Party of other defences, limitations and exceptions to the infringement of copyright or related rights. This Article shall not affect the possibility of a court or administrative authority, in accordance with the legal system of a Party, of requiring the service provider to terminate or prevent an infringement.



ARTICLE 20.12

Camcording

Each Party may provide for criminal procedures and penalties to be applied in accordance with its laws and regulations against a person who, without authorisation of the theatre manager or the holder of the copyright in a cinematographic work, makes a copy of that work or any part thereof, from a performance of the work in a motion picture exhibition facility open to the public.

Subsection B

Trademarks

ARTICLE 20.13

International agreements

Each Party shall make all reasonable efforts to comply with Articles 1 through 22 of the Singapore Treaty on the Law of Trademarks, done at Singapore on 27 March 2006, and to accede to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, done at Madrid on 27 June 1989.



ARTICLE 20.14

Registration procedure

Each Party shall provide for a system for the registration of trademarks in which reasons for the refusal to register a trademark are communicated in writing to the applicant, who will have the opportunity to contest that refusal and to appeal a final refusal to a judicial authority. Each Party shall provide for the possibility of filing oppositions either against trademark applications or against trademark registrations. Each Party shall provide a publicly available electronic database of trademark applications and trademark registrations.

ARTICLE 20.15

Exceptions to the rights conferred by a trademark

Each Party shall provide for the fair use of descriptive terms, including terms descriptive of geographical origin, as a limited exception to the rights conferred by a trademark. In determining what constitutes fair use, account shall be taken of the legitimate interests of the owner of the trademark and of third parties. Each Party may provide other limited exceptions, provided that these exceptions take account of the legitimate interests of the owner of the trademark and of third parties.



Subsection C

Geographical Indications

ARTICLE 20.16

Definitions

For the purposes of this Subsection:

geographical indication means an indication which identifies an agricultural product or foodstuff as originating in the territory of a Party, or a region or locality in that territory, where a given quality, reputation or other characteristic of the product is essentially attributable to its geographical origin; and

product class means a product class listed in Annex 20C.

ARTICLE 20.17

Scope

This Subsection applies to geographical indications identifying products falling within one of the product classes listed in Annex 20C.



ARTICLE 20.18

Listed geographical indications

For the purposes of this Subsection:

(a)    the indications listed in Part A of Annex 20A are geographical indications which identify a product as originating in the territory of the European Union or a region or locality in that territory; and

(b)    the indications listed in Part B of Annex 20A are geographical indications which identify a product as originating in the territory of Canada or a region or locality in that territory.

ARTICLE 20.19

Protection for geographical indications listed in Annex 20A

1    Having examined the geographical indications of the other Party, each Party shall protect them according to the level of protection set out in this Subsection.

2.    Each Party shall provide the legal means for interested parties to prevent:



(a)    the use of a geographical indication of the other Party listed in Annex 20A for a product that falls within the product class specified in Annex 20A for that geographical indication and that either:

(i)    does not originate in the place of origin specified in Annex 20A for that geographical indication; or

(ii)    does originate in the place of origin specified in Annex 20A for that geographical indication but was not produced or manufactured in accordance with the laws and regulations of the other Party that would apply if the product were for consumption in the other Party;

(b)    the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good; and

(c)    any other use which constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention for the Protection of Industrial Property (1967) done at Stockholm on 14 July 1967.

3.    The protection referred to in subparagraph 2(a) shall be provided even where the true origin of the product is indicated or the geographical indication is used in translation or accompanied by expressions such as "kind", "type", "style", "imitation" or the like.



4.    Each Party shall provide for enforcement by administrative action, to the extent provided for by its law, to prohibit a person from manufacturing, preparing, packaging, labelling, selling or importing or advertising a food commodity in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its origin.

5.    In accordance with paragraph 4, each Party will provide for administrative action in respect of complaints related to the labelling of products, including their presentation, in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding their origin.

6.    The registration of a trademark which contains or consists of a geographical indication of the other Party listed in Annex 20A shall be refused or invalidated, ex officio if a Party's legislation so permits or at the request of an interested party, with respect to a product that falls within the product class specified in Annex 20A for that geographical indication and that does not originate in the place of origin specified in Annex 20A for that geographical indication.

7.    There shall be no obligation under this Subsection to protect geog