EUROPEAN COMMISSION

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…).

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

•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

•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

4.BUDGETARY IMPLICATIONS

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)

•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,

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

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

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

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

1.4.3.Expected result(s) and impact

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

1.4.4.Indicators of results and impact

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

1.5.Grounds for the proposal/initiative

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

1.5.2.Added value of EU involvement

1.5.3.Lessons learned from similar experiences in the past

1.5.4.Compatibility and possible synergy with other appropriate instruments

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

2.MANAGEMENT MEASURES

2.1.Monitoring and reporting rules

Specify frequency and conditions.

2.2.Management and control system

2.2.1.Risk(s) identified

2.2.2.Information concerning the internal control system set up

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

2.3.Measures to prevent fraud and irregularities

Specify existing or envisaged prevention and protection measures.

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.

New budget lines requested

In order of multiannual financial framework headings and budget lines.

3.2.Estimated impact on expenditure

3.2.1.Summary of estimated impact on expenditure

EUR million (to three decimal places)

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

EUR million (to three decimal places)

EUR million (to three decimal places)

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)

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)

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

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:

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.

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

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)

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)

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

Specify the method for calculating the impact on revenue.

(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.

EUROPEAN COMMISSION

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 audiovisual 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;