The Contracting Parties have agreed to the following:

1. Interpretation
   1. With respect to Article I(f), an investment shall be considered to be controlled by an investor if the investor demonstrably controls, directly or indirectly, the enterprise which owns the asset.

   2. With respect to Article l(g): For the purposes of this Agreement, the term "natural person possessing the citizenship of Canada" shall include a natural person permanently residing in Canada in accordance with the laws of Canada, including the provisions of the Immigration Act of Canada or any statute replacing it in whole or in part (the "Act"), and without limiting the generality of the foregoing shall include a natural person who:
      1. has been granted landing within the meaning of the Act;

      2. has not become a Canadian citizen; and

      3. has not ceased to be a permanent resident of Canada pursuant to the provisions of the Act.

2. NAFTA, Group of Three Treaty and Exceptions
   1. Nothing in this Agreement shall be interpreted to require a Contracting Party to extend to the other Contracting Party, any investor of the other Contracting Party, or to any investment, any right, privilege, preference or treatment more favourable than required to be extended by that Contracting Party

      in the case of Canada, under the North American Free Trade Agreement (the "NAFTA") to any state, investor or investment to which the NAFTA applies;

      in the case of Venezuela, under the Free Trade Treaty of the Group of Three (the "G-3 Agreement") to any state, investor or investment to which the G-3 Agreement applies.

   2. Paragraph I alone shall not be interpreted to require a Contracting Party to extend to the other Contracting Party, or to any investor of the other Contracting Party, or to any investment, any right, privilege, preference or treatment which it extends in the case of Canada, under the NAFTA to any state, investor or investment to which the NAFTA applies; in the case of Venezuela, under G-3 Agreement to any state, investor or investment to which the G-3 Agreement applies.

   3. 1. Decisions by either Contracting Party, pursuant to measures not inconsistent with this Agreement, as to whether or not to permit an acquisition shall not be subject to the provisions of Articles XII or XIV of this Agreement.

      2. Decisions by either Contracting Party not to Permit establishment of a new business enterprise or acquisition of an existing business enterprise or a share of such enterprise by investors or prospective investors shall not be subject to the provisions of Article XII of this Agreement.

   4. Paragraph (3) of Article II and paragraphs (1) and (2) of Article III do not apply to treatment by a Contracting Party pursuant to any existing or future bilateral or multilateral agreement:
      1. negotiated within the framework of the GATT or its successor organization and liberalizing trade in services, or

      2. relating to aviation; telecommunications transport networks and telecommunications transport services; fisheries; maritime matters, including salvage; or financial services.

   5. Paragraph 3 of Article II does not apply in respect of financial services.

   6. Neither Contracting Party may impose any of the following requirements in connection with permitting the establishment or acquisition of an investment or enforce any of the following requirements in connection with the subsequent regulation of that investment:
      1. the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production;

      2. that an enterprise's purchase or use of imported products be limited to an amount related to the volume or value of local products that it exports;

      3. restrictions on the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise;

      4. restrictions on exportation or sale for export by an enterprise of products, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume of its local production; and

      5. requirements that an investor of the other Contracting Party transfer technology, a production process or other proprietary knowledge to a person in its territory unaffiliated with the transferor, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority, either to remedy an alleged violation of competition laws or acting in a manner not inconsistent with other provisions of this Agreement.

   7. 1. In respect of intellectual property rights, a Contracting Party may derogate from Articles III and IV in a manner that is consistent with the Agreement Establishing the World Trade Organization done at Marrakesh, April 1994.

      2. The provisions of Article V11 do not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the Agreement Establishing the World Trade Organization done at Marrakesh, April 1994.

   8. Articles II, III, IV and V of this Agreement and the related provisions of this Annex do not apply to:
      1. procurement by a government or state enterprise;

      2. subsidies or grants provided by a government or a state enterprise, including government-supported loans, guarantees and insurance;

      3. any measure denying investors of the other Contracting Party and their investments any rights or preferences provided to the aboriginal peoples of either country; or

      4. any current or future foreign aid program to promote economic development, whether under a bilateral agreement, or pursuant to a multilateral arrangement or agreement, such as the OECD Agreement on Export Credits.

   9. Investments in cultural industries are exempt from the provisions of this Agreement. "Cultural industries" means natural persons or enterprises engaged in any of the following activities:
      1. the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;

      2. the production, distribution, sale or exhibition of film or video recordings;

      3. the production, distribution, sale or exhibition of audio or video music recordings;

      4. the publication, distribution, sale or exhibition of music in print or machine readable form; or

      5. radiommunications in which the transmissions are intended for direct reception by the general public, and all radio, television or cable broadcasting undertakings and all satellite programming and broadcast network services.

   10. 1. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting, maintaining or enforcing any measure otherwise consistent with this Agreement that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.

       2. Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on international trade or-investment, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining measures, including environmental measures:

          1. necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;

          2. necessary to protect human, animal or plant life or health; or

          3. relating to the conservation of living or non-living exhaustible natural resources.

   11. Paragraphs (1) and (2) of Article IV. paragraph (1) of Article V, and paragraph 6 of Part II of this Amex do not apply to:

       1. 1. any existing non-conforming measures maintained within the territory of a Contracting Party; and

          2. any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition of a government's equity interests in, or the assets of, an existing state enterprise or an existing governmental entity, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationality requirements relating to senior management or members of the board of directors;

       2. the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a);

       3. an amendment to any non-conforming measure referred to in subparagraph (a), to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with those obligations;

       4. the right of each Contracting Party to make or maintain exceptions within the sectors or matters listed below:
          1. Canada reserves the right to make and maintain exceptions in the sectors or matters listed below:

             - social services (i.e. public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health and child care);

             - services in any other sector;

             - government securities - as described in SIC 8152;

             - residency requirements for ownership of oceanfront land;

             - measures implementing the Northwest Territories and the Yukon Oil and Gas Accords.

             For the purpose of this Annex, "SIC" means, with respect to Canada, Standard Industrial Classification numbers as set out in Statistics Canada, Standard Industrial Classification, fourth edition, 1980.]

          2. Venezuela reserves the right to make and maintain exceptions in the sectors or-matters listed below:

             - Social services (i.e., public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health and child care.)

             - Services in any other sector;

             - Ownership of vessels or airplanes registered in Venezuela; transportation by water or air within its territory; fishing in waters under its jurisdiction.

             Ownership of land in areas that has been declared by Venezuela security areas; ownership of land by foreign states.

             Debt-equity swaps.

             Private enterprises for protection and security that are authorized to bear arms.

             Venezuela may require that up to 90 percent of manual labourers and 90 percent of non-manual labourers employed by an enterprise in its territory be nationals of Venezuela provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.

   12. The Contracting Parties shall, within a two year period after the entry into force of this Agreement, exchange letters listing, to the extent possible, any existing measures that do not conform to the obligations in Article IV, paragraph (1) of Article V, or paragraph 6 of Section II of this Annex.

IN WITNESS WHEREOF,the undersigned, being duly authorized thereto by their respective Governments, have signed this Agreement.

EN FOI DE QUOI, les soussignés, dûment autorisés à cet effet par leurs Gouvernements respectifs, ont signé le présent Accord.

EN FE DE LO CUAL, los abajo firmantes, debidamente autorizados para ello por sus respectivos Gobiernos, firman el presente Convento(sic).

Done in two copies at Caracas this 1^st day of July 1996, in the English, French and Spanish languages, each text being equally authentic.

Fait en double exemplaire à Caracas, ce1ere jour de Juliet 1996, en langues française, anglaise et espagnole, les trois textes faisant également foi.

Hecho en doble ejemplar en Caracas, el dia 1º de Julio 1996, en español, inglés y francés, dando fé por igual cada uno de los textos.