THE DOMINICAN REPUBLIC – CENTRAL AMERICA – UNITED STATES
FREE TRADE AGREEMENT
Chapters 6-12
[ Chapters
1-5 > 13-22 >]
Chapter Six
Sanitary and Phytosanitary Measures
Objectives
The objectives of this Chapter are to protect human, animal, or plant life or
health in the Parties’ territories, enhance the Parties’ implementation of the SPS
Agreement, provide a forum for addressing sanitary and phytosanitary matters, resolve trade issues, and
thereby expand trade opportunities.
Article 6.1: Affirmation of the SPS Agreement
Further to Article 1.3 (Relation to Other Agreements), the Parties affirm
their existing rights and obligations with respect to each other under the SPS Agreement.
Article 6.2: Scope and Coverage
1. This Chapter applies to all sanitary and phytosanitary measures of a Party
that may, directly or indirectly, affect trade between the Parties.
2. No Party may have recourse to dispute settlement under this Agreement for
any matter arising under this Chapter.
Article 6.3: Committee on Sanitary and Phytosanitary Matters
1. Not later than 30 days after the date of entry into force of this
Agreement, the Parties shall establish a Committee on Sanitary and Phytosanitary Matters, comprising
representatives of each Party who have responsibility for sanitary and phytosanitary matters, as
set out in Annex 6.3.
2. The Parties shall establish the Committee through an exchange of letters
identifying the primary representative of each Party to the Committee and establishing the
Committee’s terms of reference.
3. The objectives of the Committee shall be to help each Party implement the
SPS Agreement, assist each Party to protect human, animal, or plant life or
health, enhance consultation and cooperation between the Parties on sanitary and
phytosanitary matters, and facilitate trade between the Parties.
4. The Committee shall seek to promote communication and otherwise enhance
present or future relationships between the Parties’ agencies and ministries with
responsibility for sanitary and phytosanitary matters.
5. To the extent possible, the Committee shall seek to facilitate a Party’s
response to a written request for information from another Party with minimal delay. The
Committee shall endeavor to ensure that at the earliest opportunity the responding Party
communicates to the requesting Party the steps involved in responding to the request.
6. The Committee shall provide a forum for:
(a) enhancing mutual understanding of each Party’s sanitary and phytosanitary measures and the regulatory processes that relate to those measures;
(b) consulting on matters related to the development or application of
sanitary and phytosanitary measures that affect, or may affect, trade between the Parties;
(c) addressing bilateral or plurilateral sanitary and phytosanitary matters
with a view to facilitating trade between the Parties;
(d) consulting on issues, positions, and agendas for meetings of the WTO
SPS Committee, the various Codex committees (including the Codex
Alimentarius Commission), the International Plant Protection Convention, the
International Office of Epizootics, and other international and regional fora on food
safety and human, animal, and plant health;
(e) making recommendations on technical cooperation programs on sanitary and phytosanitary matters to the Committee on Trade Capacity Building;
(f) improving the Parties’ understanding of specific issues relating to the implementation of the SPS Agreement; and
(g) reviewing progress in addressing sanitary and phytosanitary matters that
may arise between the Parties’ agencies and ministries with responsibility for
such matters.
7. Each Party shall ensure that appropriate representatives with
responsibility for the development, implementation, and enforcement of sanitary and phytosanitary
measures from its relevant trade and regulatory agencies or ministries participate in meetings
of the Committee.
8. The Committee shall meet at least once a year unless the Parties otherwise
agree.
9. The Committee shall perform its work in accordance with its terms of
reference. The Committee may revise its terms of reference and may establish procedures to
guide its operation.
10. The Committee may establish ad hoc working groups in accordance
with its terms of reference.
11. All decisions of the Committee shall be taken by consensus, unless the
Committee otherwise decides.
Annex 6.3
Committee on Sanitary and Phytosanitary Matters
The Committee on Sanitary and Phytosanitary Matters shall comprise
representatives of the following agencies and ministries:
(a) in the case of Costa Rica, the Dirección de Aplicación de Acuerdos
Comerciales Internacionales del Ministerio de Comercio Exterior, the Dirección de
Salud Animal y el Servicio de Protección Fitosanitaria del Estado del Ministerio de Agricultura y Ganadería, and the Ministerio de Salud;
(b) in the case of the Dominican Republic, the Dirección de Sanidad
Vegetal de la Secretaría de Estado de Agricultura, the Dirección de Sanidad Animal de la Dirección General de Ganadería, the Departamento de Control de Riesgo de Alimentos y Bebidas de la Secretaría de Estado de Salud Pública y Asistencia Social, the Dirección de Comercio Exterior
y Administración de Tratados Comerciales Internacionales de la Secretaría de Estado de Industria y Comercio, the Dirección General de Normas y Sistemas de Calidad de la Secretaría de Estado de Industria y Comercio, the Secretaría de Estado de Medio Ambiente y Recursos Naturales, and the Secretaría de Estado de Relaciones Exteriores;
(c) in the case of El Salvador, the Ministerio de Economía, the
Ministerio de Agricultura y Ganadería, and the Ministerio de Salud Pública y
Asistencia Social;
(d) in the case of Guatemala, the Unidad de Normas y Regulaciónes del
Ministerio de Agricultura Ganadería y Alimentación, the Departamento de Regulación y Control de Alimentos del Ministerio de Salud Pública y Asistencia Social,
and the
Ministerio de Economía;
(e) in the case of Honduras, the Dirección General de Integración
Económica y Política Comercial de la Secretaría de Estado en los Despachos de Industria y Comercio and the Dirección General del Servicio Nacional de Sanidad Agropecuaria de la Secretaría de Estado en los Despachos de Agricultura y Ganadería;
(f) in the case of Nicaragua, the Ministerio de Fomento, Industria y
Comercio, the
Ministerio Agropecuario y Forestal, and the Ministerio de Salud;
and
(g) in the case of the United States, the Office of the United States Trade Representative, the Department of State, the Department of Commerce, the Food Safety and Inspection
Service of the United States Department of Agriculture (USDA), the Foreign Agricultural Service of the USDA, the Animal and Plant Health Inspection Service of the USDA, the Environmental Protection
Agency, and the Food and Drug Administration of the Department of Health and Human Services,
or their successors.
Chapter Seven
Technical Barriers to Trade
Objectives
The objectives of this Chapter are to increase and facilitate trade through
the improvement of the implementation of the TBT Agreement, the elimination of
unnecessary technical barriers to trade, and the enhancement of bilateral cooperation.
Article 7.1: Affirmation of the TBT Agreement
Further to Article 1.3 (Relation to Other Agreements), the Parties affirm
their existing rights and obligations with respect to each other under the TBT Agreement.
Article 7.2: Scope and Coverage
1. This Chapter applies to all standards, technical regulations, and
conformity assessment procedures of central government bodies that may, directly or indirectly,
affect trade in goods between the Parties.1
2. Notwithstanding paragraph 1, this Chapter does not apply to:
(a) technical specifications prepared by governmental bodies for production
or consumption requirements of such bodies; and
(b) sanitary and phytosanitary measures.
Article 7.3: International Standards
In determining whether an international standard, guide, or recommendation
within the meaning of Articles 2 and 5, and Annex 3 of the TBT Agreement exists, each
Party shall apply the principles set out in Decisions and Recommendations adopted by the
Committee since 1 January 1995, G/TBT/1/Rev.8, 23 May 2002, Section IX (Decision of the
Committee on Principles for the Development of International Standards, Guides and
Recommendations with relation to Articles 2, 5 and Annex 3 of the Agreement) issued by the WTO
Committee on Technical Barriers to Trade.
Article 7.4: Trade Facilitation
1. The Parties shall intensify their joint work in the field of standards,
technical regulations, and conformity assessment procedures with a view to facilitating trade
between the Parties. In particular, the Parties shall seek to identify trade facilitating initiatives
regarding standards, technical regulations, and conformity assessment procedures that are
appropriate for particular issues or sectors. Such initiatives may include cooperation on regulatory
issues, such as convergence, alignment with international standards, reliance on a supplier’s
declaration of conformity, and use of accreditation to qualify conformity assessment bodies.
2. On request of another Party, a Party shall give favorable consideration to
any sectorspecific proposal the Party makes for further cooperation under this Chapter.
Article 7.5: Conformity Assessment
1. The Parties recognize that a broad range of mechanisms exists to
facilitate the acceptance in a Party’s territory of the results of conformity assessment procedures
conducted in another Party’s territory. For example:
(a) the importing Party may rely on a supplier’s declaration of conformity;
(b) conformity assessment bodies located in the territory of two or more
Parties may enter into voluntary arrangements to accept the results of each other’s
assessment procedures;
(c) a Party may agree with another Party to accept the results of conformity assessment procedures that bodies located in the other Party’s territory
conduct with respect to specific technical regulations;
(d) a Party may adopt accreditation procedures for qualifying conformity
assessment bodies located in the territory of another Party;
(e) a Party may designate conformity assessment bodies located in the
territory of another Party; and
(f) a Party may recognize the results of conformity assessment procedures
conducted in the territory of another Party.
The Parties shall intensify their exchange of information on these and other
similar mechanisms.
2. Where a Party does not accept the results of a conformity assessment
procedure conducted in the territory of another Party, it shall, on request of that
other Party, explain its reasons.
3. Each Party shall accredit, approve, license, or otherwise recognize
conformity assessment bodies in the territories of the other Parties on terms no less favorable
than those it accords to conformity assessment bodies in its territory. Where a Party accredits,
approves, licenses, or otherwise recognizes a body assessing conformity with a specific technical
regulation or standard in its territory and refuses to accredit, approve, license, or otherwise
recognize a body assessing conformity with that technical regulation or standard in the territory of
another Party, it shall, on request of that other Party, explain the reasons for its decision.
4. Where a Party declines a request from another Party to engage in
negotiations or conclude an agreement on facilitating recognition in its territory of the
results of conformity assessment procedures conducted by bodies in the other Party’s territory, it
shall, on request of that other Party, explain the reasons for its decision.
Article 7.6: Technical Regulations
1. Where a Party provides that foreign technical regulations may be accepted
as equivalent to a specific technical regulation of its own, and the Party does not accept
a technical regulation of another Party as equivalent to that technical regulation, it shall, at the
request of that other Party, explain the reasons for its decision.
2. Where a Party does not provide that foreign technical regulations may be
accepted as equivalent to its own, it may, at the request of another Party, explain its
reasons for not accepting that other Party’s technical regulations as equivalent.
Article 7.7: Transparency
1. Each Party shall allow persons of the other Parties to participate in the
development of its standards, technical regulations, and conformity assessment procedures. Each
Party shall permit persons of the other Parties to participate in the development of such
measures on terms no less favorable than those accorded to its own persons and to persons of any other
Party.
2. Each Party shall recommend that non-governmental standardizing bodies in
its territory observe paragraph 1.
3. In order to enhance the opportunity for persons to provide meaningful
comments on proposed technical regulations and conformity assessment procedures, a Party
publishing a notice under Article 2.9 or 5.6 of the TBT Agreement shall:
(a) include in the notice a statement describing the objective of the
proposed technical regulation or conformity assessment procedure and the rationale for
the approach the Party is proposing; and
(b) transmit the proposal electronically to the other Parties through the
inquiry points each Party has established under Article 10 of the TBT Agreement at the same time as it notifies WTO Members of the proposal pursuant to the TBT
Agreement.
Each Party should allow at least 60 days after it transmits a proposal under
subparagraph (b) for persons and other Parties to make comments in writing on the proposal.
4. Each Party shall publish or otherwise make available to the public, in
print or electronically, its responses to significant comments it receives from
persons or other Parties under paragraph 3 no later than the date it publishes the final technical
regulation or conformity assessment procedure.
5. Where a Party makes a notification under Article 2.10 or 5.7 of the TBT
Agreement, it shall at the same time transmit the notification electronically to the other
Parties through the inquiry points referenced in paragraph 3(b).
6. Each Party shall, on request of another Party, provide information
regarding the objective of, and rationale for, a standard, technical regulation, or conformity
assessment procedure that the Party has adopted or is proposing to adopt.
7. Where a Party detains at a port of entry a good originating in the
territory of another Party due to a perceived failure to comply with a technical regulation, it
shall immediately notify the importer of the reasons for the detention.
8. Each Party shall implement this Article as soon as is practicable and in
no event later than five years from the date of entry into force of this Agreement.
Article 7.8: Committee on Technical Barriers to Trade
1. The Parties hereby establish the Committee on Technical Barriers to Trade,
comprising representatives of each Party, as set out in Annex 7.8.
2. The Committee’s functions shall include:
(a) monitoring the implementation and administration of this Chapter;
(b) promptly addressing any issue that a Party raises related to the
development, adoption, application, or enforcement of standards, technical regulations, or conformity assessment procedures;
(c) enhancing cooperation in the development and improvement of standards, technical regulations, and conformity assessment procedures and, as
appropriate, designing and proposing mechanisms for technical assistance of the type described in Article 11 of the TBT Agreement, in coordination with the Committee on Trade Capacity Building, as appropriate;
(d) where appropriate, facilitating sectoral cooperation between governmental
and non-governmental conformity assessment bodies in the territories of two or
more Parties;
(e) exchanging information on developments in non-governmental, regional, and multilateral fora engaged in activities related to standards, technical
regulations, and conformity assessment procedures;
(f) at a Party’s request, consulting on any matter arising under this
Chapter;
(g) reviewing this Chapter in light of any developments under the TBT
Agreement, and developing recommendations for amendments to this Chapter in light of
those developments;
(h) taking any other steps the Parties consider will assist them in
implementing the TBT Agreement and in facilitating trade; and
(i) as it considers appropriate, reporting to the Commission on the
implementation of this Chapter.
3. Where two or more Parties have had recourse to consultations under
paragraph 2(f) such consultations shall, on the agreement of those Parties, constitute
consultations under Article 20.4 (Consultations).
4. The Committee shall meet at least once a year unless the Parties otherwise
agree.
5. All decisions of the Committee shall be taken by consensus unless, the
Committee otherwise decides.
Article 7.9: Information Exchange
Any information or explanation that is provided on request of a Party
pursuant to the provisions of this Chapter shall be provided in print or electronically
within a reasonable time. A Party shall endeavor to respond to each such request within 60 days.
Article 7.10: Definitions
For purposes of this Chapter:
central government body, conformity assessment procedures,
standard, and technical
regulation
shall have the meanings assigned to those terms in Annex 1 of
the TBT Agreement; and
TBT Agreement
means the WTO Agreement on Technical Barriers to Trade.
Annex 7.8
Committee on Technical Barriers to Trade
The Committee on Technical Barriers to Trade shall be coordinated by:
(a) in the case of Costa Rica, the Dirección de Aplicación de Acuerdos Comerciales Internacionales del Ministerio de Comercio Exterior with the collaboration of the Ministerio de Economía, Industria y Comercio and
the
Ministerio de Salud;
(b) in the case of the Dominican Republic, the Dirección de Comercio
Exterior y Administración de Tratados Comerciales Internacionales de la Secretaría de Estado de Industria y Comercio;
(c) in the case of El Salvador, the Ministerio de Economía through the
Dirección de Administración de Tratados Comerciales;
(d) in the case of Guatemala, the Ministerio de Economía;
(e) in the case of Honduras, the Dirección General de Integración
Económica y Política Comercial de la Secretaría de Estado en los Despachos de Industria y Comercio and the Secretaría de Estado en el Despacho de Salud;
(f) in the case of Nicaragua, the Ministerio de Fomento, Industria y
Comercio; and
(g) in the case of the United States, the Office of the United States Trade Representative,
or their successors.
Chapter Eight
Trade Remedies
Section A: Safeguards
Article 8.1: Imposition of a Safeguard Measure
1. A Party may apply a measure described in paragraph 2, during the
transition period only, if as a result of the reduction or elimination of a duty pursuant to this
Agreement, an originating good is being imported into the Party’s territory in such increased
quantities, in absolute terms or relative to domestic production, and under such conditions as to constitute a
substantial cause of serious injury, or threat thereof, to a domestic industry producing a like or
directly competitive good.
2. If the conditions in paragraph 1 are met, a Party may to the extent
necessary to prevent or remedy serious injury, or threat thereof, and facilitate adjustment:
(a) suspend the further reduction of any rate of duty provided for under this Agreement on the good; or
(b) increase the rate of duty on the good to a level not to exceed the lesser
of
(i) the most-favored-nation (MFN) applied rate of duty in effect at the time the measure is applied, and
(ii) the MFN applied rate of duty in effect on the day immediately preceding the date of entry into force of this Agreement.1
3.
(a) Except as provided in subparagraph (b), a Party shall
apply a safeguard measure to imports of an originating good that are subject to a determination under paragraph 1 irrespective of their source.
(b) A Party may exclude imports of an originating good of another Party from application of a safeguard measure if the Party accorded duty-free treatment
to imports of the good from such other Party, pursuant to an agreement between those Parties, for the three-year period preceding the date of entry into
force of this Agreement.
4. No Party may apply a safeguard measure against an originating good of
another Party as long as the exporting Party’s share of imports of the originating good in the
importing Party does not exceed three percent, provided that Parties with less than three percent
import share collectively account for not more than nine percent of total imports of such
originating good.
Article 8.2: Standards for a Safeguard Measure
1. A Party may apply a safeguard measure, including any extension thereof,
for no longer than four years. Regardless of its duration, such measure shall terminate at
the end of the transition period.
2. Subject to paragraph 1, a Party may extend the period of a safeguard
measure if the competent investigating authority determines, in conformity with the
procedures set out in Article 8.3, that the measure continues to be necessary to prevent or remedy
serious injury and to facilitate adjustment and that there is evidence that the domestic industry
is adjusting.
3. In order to facilitate adjustment in a situation where the expected
duration of a safeguard measure is over one year, the Party applying the measure shall progressively
liberalize it at regular intervals during the period of application.
4. A Party may not apply a safeguard measure more than once on the same good.
5. On the termination of a safeguard measure, the rate of duty shall be no
higher than the rate that, according to the Party’s Schedule to Annex 3.3 (Tariff
Elimination), would have been in effect one year after the imposition of the measure. Beginning on January
1 of the year following the termination of the measure, the Party that has applied the
measure shall:
(a) apply the rate of duty set out in the Party’s Schedule to Annex 3.3
(Tariff Elimination) as if the safeguard measure had never been applied; or
(b) eliminate the tariff in equal annual stages ending on the date set out in
the Party’s Schedule to Annex 3.3 (Tariff Elimination) for the elimination of the tariff.
Article 8.3: Administration of Safeguard Proceedings
1. Each Party shall ensure the consistent, impartial, and reasonable
administration of its laws, regulations, decisions, and rulings governing safeguard proceedings
under this Chapter.
2. Each Party shall entrust determinations of serious injury, or threat
thereof, in safeguard
proceedings under this Chapter to a competent investigating authority,
subject to review by judicial or administrative tribunals, to the extent provided by domestic law.
Negative injury determinations shall not be subject to modification, except by such review.
The competent investigating authority empowered under domestic law to conduct such
proceedings should be provided with the necessary resources to enable it to fulfill its duties.
3. Each Party shall adopt or maintain equitable, timely, transparent, and
effective procedures for safeguard proceedings under this Chapter, in accordance with
the requirements set out in Annex 8.3.
Article 8.4: Notification and Consultation
1. A Party shall promptly notify the other Parties, in writing, on:
(a) initiating a safeguard proceeding under this Chapter;
(b) making a finding of serious injury, or threat thereof, caused by
increased imports under Article 8.1; and
(c) taking a decision to apply or extend a safeguard measure.
2. A Party shall provide to the other Parties a copy of the public version of
the report of its competent investigating authority required under Annex 8.3.
3. On request of a Party whose good is subject to a safeguard proceeding
under this Chapter, the Party conducting that proceeding shall enter into consultations with the
requesting Party to review a notification under paragraph 1 or any public notice or report that
the competent investigating authority has issued in connection with the proceeding.
Article 8.5: Compensation
1. A Party applying a safeguard measure shall, after consultations with each
Party against whose good the measure is applied, provide to such Party or Parties mutually
agreed trade liberalizing compensation in the form of concessions having substantially
equivalent trade effects or equivalent to the value of the additional duties expected to
result from the measure. The Party shall provide an opportunity for such consultations no later than
30 days after the application of the safeguard measure.
2. If the consultations under paragraph 1 do not result in an agreement on
trade liberalizing compensation within 30 days, any Party against whose good the measure is
applied may suspend the application of substantially equivalent concessions to the trade of the
Party applying the safeguard measure.
3. A Party shall notify the Party applying the safeguard measure in writing
at least 30 days before suspending concessions under paragraph 2.
4. The obligation to provide compensation under paragraph 1 and the right to
suspend concessions under paragraph 2 shall terminate on the later of: (a) the
termination of the safeguard measure, or (b) the date on which the rate of duty returns to the
rate of duty set out in the Party’s Schedule to Annex 3.3 (Tariff Elimination).
Article 8.6: Global Actions
1. Each Party retains its rights and obligations under Article XIX of the
GATT 1994 and the Safeguards Agreement.
2. This Agreement does not confer any additional rights or obligations on the
Parties with regard to actions taken pursuant to Article XIX of the GATT 1994 and the
Safeguards Agreement, except that a Party taking such an action may exclude imports of
an originating good of another Party if such imports are not a substantial cause of serious
injury or threat thereof.
3. No Party may apply, with respect to the same good, at the same time:
(a) a safeguard measure; and
(b) a measure under Article XIX of the GATT 1994 and the Safeguards
Agreement.
Article 8.7: Definitions
For purposes of this Section:
competent investigating authority
means the “competent investigating
authority” of a Party as defined in Annex 8.7;
domestic industry
means, with respect to an imported good, the producers
as a whole of the like or directly competitive good or those producers whose collective production
of the like or directly competitive good constitutes a major proportion of the total
domestic production of such good;
safeguard measure
means a measure described in Article 8.1.2;
serious injury
means a significant overall impairment in the position of
a domestic industry;
substantial cause
means a cause which is important and not less than any
other cause;
threat of serious injury
means serious injury that, on the basis of facts
and not merely on allegation, conjecture, or remote possibility, is clearly imminent; and
transition period
means the ten-year period beginning on the date of
entry into force of this Agreement, except that for any good for which the Schedule to Annex 3.3
(Tariff Elimination) of the Party applying the measure provides for the Party to eliminate its
tariffs on the good over a period of more than ten years, transition period means the tariff
elimination period for the good set out in that Schedule.
Section B: Antidumping and Countervailing Duties
Article 8.8: Antidumping and Countervailing Duties
1. The United States shall continue to treat each other Party as a
“beneficiary country” for purposes of 19 U.S.C. §§ 1677(7)(G)(ii)(III) and 1677(7)(H) and any successor
provisions. No Party may have recourse to dispute settlement under this Agreement for any
matter arising under this paragraph.
2. Except for paragraph 1, no provision of this Agreement, including the
provisions of Chapter Twenty (Dispute Settlement), shall be construed as imposing any
rights or obligations on the Parties with respect to antidumping or countervailing duty measures.
3. Each Party retains its rights and obligations under the WTO Agreement with
regard to the application of antidumping and countervailing duties.
Annex 8.3
Administration of Safeguard Proceedings
Institution of a Proceeding
1. A safeguard proceeding under this Chapter may be instituted by a petition
or complaint by entities specified in domestic law. The entity filing the petition or
complaint shall demonstrate that it is representative of the domestic industry producing a
good like or directly competitive with the imported good.
2. A Party may direct its competent investigating authority to institute a
proceeding or the authority may institute a proceeding on its own motion.
Contents of a Petition or Complaint
3. Where the basis for an investigation is a petition or complaint filed by
an entity representative of a domestic industry, the petitioning entity shall, in its
petition or complaint, provide the following information to the extent that such information is
publicly available from governmental or other sources, or best estimates and the basis therefor if
such information is not available:
(a) product description: the name and description of the imported good
concerned, the tariff subheading under which that good is classified, its current tariff treatment and the name and description of the like or directly competitive domestic good concerned;
(b) representativeness:
(i) the names and addresses of the entities filing the petition or complaint,
and the locations of the establishments in which they produce the domestic good;
(ii) the percentage of domestic production of the like or directly
competitive good that such entities account for and the basis for claiming that they are representative of an industry; and
(iii) the names and locations of all other domestic establishments in which
the like or directly competitive good is produced;
(c) import data: import data for each of the five most recent full years that
form the basis of the claim that the good concerned is being imported in increased quantities, either in absolute terms or relative to domestic production as appropriate;
(d) domestic production data: data on total domestic production of the like
or directly competitive good for each of the five most recent full years;
(e) data showing injury: quantitative and objective data indicating the
nature and extent of injury to the concerned industry, such as data showing changes in
the level of sales, prices, production, productivity, capacity utilization,
market share, profits and losses, and employment; and
(f) cause of injury: an enumeration and description of the alleged causes of
the injury, or threat thereof, and a summary of the basis for the assertion that increased imports, either actual or relative to domestic production, of the
imported good are causing or threatening to cause serious injury, supported by
pertinent data.
4. Petitions or complaints, except to the extent that they contain
confidential business information, shall promptly be made available for public inspection on being
filed.
Notice Requirement
5. On instituting a safeguard proceeding under this Chapter, the competent
investigating authority shall publish notice of the institution of the proceeding in the
official journal of the Party. The notice shall identify the petitioner or other requester, the
imported good that is the subject of the proceeding and its tariff subheading, the nature and timing of
the determination to be made, dates of deadlines for filing briefs, statements, and other
documents, the place at which the petition and any other documents filed in the course of the proceeding
may be inspected, and the name, address, and telephone number of the office to be contacted for
more information.
6. With respect to a safeguard proceeding instituted on the basis of a
petition or complaint filed by an entity asserting that it is representative of the domestic
industry, the competent investigating authority shall not publish the notice required by paragraph 5
without first assessing carefully whether the petition or complaint meets the requirements
of paragraph 3, including representativeness.
Public Hearing
7. In the course of each proceeding, the competent investigating authority
shall:
(a) hold a public hearing, after providing reasonable notice, including
notice of the time and place of the hearing, to allow all interested parties, and any
association whose purpose is to represent the interests of consumers in the territory of
the Party instituting the proceeding, to appear in person or by counsel, to
present evidence and to be heard on the questions of serious injury, or threat
thereof, and the appropriate remedy; and
(b) provide an opportunity to all interested parties and any such association
appearing at the hearing to cross-question interested parties making presentations at
that hearing.
Confidential Information
8. The competent investigating authority shall adopt or maintain procedures
for the treatment of confidential information, protected under domestic law, that is
provided in the course of a proceeding, including a requirement that interested parties and
consumer associations providing such information furnish non-confidential written summaries
thereof, or where they indicate that the information cannot be summarized, the reasons why a summary
cannot be provided.
Evidence of Injury and Causation
9. In conducting its proceeding the competent investigating authority shall
gather, to the best of its ability, all relevant information appropriate to the
determination it must make. It shall evaluate all relevant factors of an objective and quantifiable nature having
a bearing on the situation of that industry, including the rate and amount of the increase in
imports of the good concerned, in absolute terms or relative to domestic production as
appropriate, the share of the domestic market taken by increased imports, and changes in the level of
sales, production, productivity, capacity utilization, profits and losses, and employment. In
making its determination, the competent investigating authority may also consider other
economic factors, such as changes in prices and inventories, and the ability of firms in the
industry to generate capital.
10. The competent investigating authority shall not make an affirmative
injury determination unless its investigation demonstrates, on the basis of objective evidence,
the existence of a clear causal link between increased imports of the good concerned and serious
injury, or threat thereof. Where factors other than increased imports are causing injury to the domestic
industry at the same time, such injury shall not be attributed to increased imports.
Deliberation and Report
11. The competent investigating authority, before making an affirmative
determination in a safeguard proceeding under this Chapter, shall allow sufficient time to
gather and consider the relevant information, hold a public hearing, and provide an opportunity for
all interested parties and consumer associations to prepare and submit their views.
12. The competent investigating authority shall publish promptly a report,
including a summary thereof in the official journal of the Party, setting out its
findings and reasoned conclusions on all pertinent issues of law and fact. The report shall
describe the imported good and its tariff item number, the standard applied and the finding made. The
statement of reasons shall set out the basis for the determination, including a description of:
(a) the domestic industry seriously injured or threatened with serious
injury;
(b) information supporting a finding that imports are increasing, the
domestic industry is seriously injured or threatened with serious injury, and
increasing imports are causing or threatening serious injury; and
(c) if provided for by domestic law, any finding or recommendation regarding
the appropriate remedy and the basis therefor.
13. In its report, the competent investigating authority shall not disclose
any confidential information provided pursuant to any undertaking concerning confidential
information that may have been made in the course of the proceedings.
Annex 8.7
Country-Specific Definitions
For purposes of this Chapter:
competent investigating authority
means:
(a) in the case of Costa Rica, the Oficina de Prácticas de Comercio
Desleal y de Medidas de Salvaguardia del Ministerio de Economía, Industria y Comercio
in coordination with the Dirección de Aplicación de Acuerdos Comerciales Internacionales del Ministerio de Comercio Exterior;
(b) in the case of the Dominican Republic, the Comisión Reguladora de
Prácticas Desleales de Comercio y Medidas de Salvaguardas;
(c) in the case of El Salvador, the Dirección de Administración de
Tratados Comerciales del Ministerio de Economía;
(d) in the case of Guatemala, the Ministerio de Economía;
(e) in the case of Honduras, the Dirección General de Integración
Económica y Política Comercial de la Secretaría de Estado en los Despachos de Industria y Comercio;
(f) in the case of Nicaragua; the Dirección de Integración y
Administración de Tratados del Ministerio de Fomento, Industria y Comercio; and
(g) in the case of the United States, the U.S. International Trade
Commission,
or their successors.
Chapter Nine
Government Procurement
Article 9.1: Scope and Coverage
1. This Chapter applies to any measure, including any act or guideline of a
Party, regarding covered procurement.
2. For purposes of this Chapter, covered procurement means a
procurement of goods, services, or both:
(a) by any contractual means, including purchase, rental, or lease, with or
without an option to buy, build-operate-transfer contracts, and public works concession contracts;
(b) listed and subject to the conditions specified in:
(i) Annex 9.1.2(b)(i), which shall apply between the United States and each other Party; and
(ii) Annex 9.1.2(b)(ii), which shall apply between the Central American Parties;
(c) that is conducted by a procuring entity; and
(d) that is not excluded from coverage.
3. This Chapter does not apply to:
(a) non-contractual agreements or any form of assistance that a Party or a
state enterprise provides, including grants, loans, equity infusions, fiscal
incentives, subsidies, guarantees, cooperative agreements, government provision of goods and services to persons or to state, regional, or local governments, and
purchases for the direct purpose of providing foreign assistance;
(b) purchases funded by loans or grants made to a Party, including an entity
of a Party by a person, international entities, associations, or another Party or a
non-Party, to the extent that the conditions of such assistance are inconsistent with this
Chapter;
(c) acquisition of fiscal agency or depository services, liquidation, and
management services for regulated financial institutions, and sale and distribution
services for government debt;
(d) hiring of government employees and related employment measures;
(e) any good or service component of any contract that a procuring entity
that is not listed in Sections A through C of Annex 9.1.2(b)(i) awards; and
(f) purchases made under exceptionally advantageous conditions that only
arise in the very short term, such as unusual disposals by companies that normally are not suppliers, or disposals of assets of businesses in liquidation or
receivership.
4. Each Party shall ensure that its procuring entities comply with this
Chapter in conducting any covered procurement.
5. Where a procuring entity awards a contract in a procurement that is not
covered by this Chapter, nothing in this Chapter shall be construed to cover any good or
service component of that contract.
6. No procuring entity may prepare, design, or otherwise structure or divide
any procurement in order to avoid the obligations of this Chapter.
7. Nothing in this Chapter shall prevent a Party from developing new
procurement policies, procedures, or contractual means, provided they are not inconsistent with
this Chapter.
Article 9.2: General Principles
1. With respect to any measure covered by this Chapter, each Party shall
accord to the goods and services of another Party, and to the suppliers of another Party of such
goods and services, treatment no less favorable than the most favorable treatment the Party or
procuring entity accords to its own goods, services, and suppliers.
2. With respect to any measure covered by this Chapter, no Party may:
(a) treat a locally established supplier less favorably than another locally
established supplier on the basis of degree of foreign affiliation or ownership; or
(b) discriminate against a locally established supplier on the basis that the
goods or services offered by that supplier for a particular procurement are goods or
services of another Party.
3. For purposes of paragraphs 1 and 2, determination of the origin of goods
shall be made in a manner consistent with Chapter Four (Rules of Origin and Origin
Procedures).
4. With respect to covered procurement, a procuring entity shall not seek,
take account of, or impose offsets in any stage of a procurement.
5. Paragraphs 1 and 2 do not apply to measures respecting customs duties or
other charges of any kind imposed on or in connection with importation, the method of
levying such duties or charges, other import regulations, including restrictions and formalities, or
measures affecting trade in services other than measures specifically governing procurement
covered by this Chapter.
Article 9.3: Publication of Procurement Measures
Each Party shall promptly:
(a) publish any law or regulation, and any modification thereof, relating to procurement;
(b) make publicly available any procedure, judicial decision, or
administrative ruling of general application, relating to procurement; and
(c) on request of a Party, provide to that Party a copy of a procedure,
judicial decision, or administrative ruling of general application, relating to
procurement.
Article 9.4: Publication of Notice of Intended Procurement
1. Subject to Article 9.9.2, a procuring entity shall publish in advance a
notice inviting interested suppliers to submit tenders for each covered procurement.
2. The information in each such notice shall include, at a minimum, an
indication that the procurement is covered by this Chapter, a description of the intended
procurement, any conditions that suppliers must fulfill to participate in the procurement, the
name of the procuring entity, the address where all documents relating to the procurement may be
obtained, if applicable, any sum payable for the tender documentation, the time limits and
address for submission of tenders, and the time for delivery of the goods or services
being procured.
3. Each Party shall encourage its procuring entities to publish information
regarding their future procurement plans as early as possible in each Party’s fiscal year.
Article 9.5: Time Limits for the Tendering Process
1. A procuring entity shall provide suppliers sufficient time to prepare and
submit responsive tenders, taking into account the nature and complexity of the
procurement. In no case shall a procuring entity provide less than 40 days from the date of
publication of a notice of intended procurement to the final date for submission of tenders.
2. Notwithstanding paragraph 1, where there are no qualification requirements
for suppliers, a procuring entity may establish a period for tendering that is less than 40
days, but in no case less than 10 days, in the following circumstances:
(a) where the procuring entity published a separate notice containing a
description of the procurement, the approximate time limits for the submission of tenders
or, where appropriate, conditions for participation in a procurement, and the
address from which documents relating to the procurement may be obtained, at least 40 days and not more than 12 months before the final date for the submission of tenders;
(b) where an entity procures commercial goods and services that are sold or
offered for sale to, and customarily purchased and used by, non-governmental buyers
for non-governmental purposes; or
(c) where an unforeseen state of urgency that is duly substantiated by the
procuring entity renders impracticable the time provided in paragraph 1.
Article 9.6: Tender Documentation
1. A procuring entity shall provide to interested suppliers tender
documentation that includes all information necessary to permit suppliers to prepare and submit
responsive tenders. The documentation shall include all criteria that the procuring entity will
consider in awarding the contract, including all cost factors, and the weights or, where
appropriate, the relative values, that the entity will assign to these criteria in evaluating tenders.
2. A procuring entity may satisfy paragraph 1 by publishing the documentation
by electronic means accessible to all interested suppliers. Where a procuring entity does
not publish tender documentation by electronic means accessible to all interested suppliers, the
entity shall, on request of any supplier, promptly make the documentation available in written
form to the supplier.
3. Where a procuring entity, in the course of a procurement, modifies the
criteria referred to in paragraph 1,1 it shall transmit all such
modifications in writing:
(a) to all suppliers that are participating in the procurement at the time
the criteria are modified, if the identities of such suppliers are known, and in cases where
the identities of suppliers participating are not known, in the same manner as
the original information was transmitted; and
(b) in adequate time to allow the suppliers to modify and re-submit their
tenders, as appropriate.
Article 9.7: Technical Specifications
1. A procuring entity shall not prepare, adopt, or apply any technical
specification with the purpose or the effect of creating unnecessary obstacles to trade between the
Parties.
2. A procuring entity shall prescribe any technical specifications, where
appropriate:
(a) in terms of performance requirements rather than design or descriptive characteristics; and
(b) based on international standards, where applicable, otherwise on
recognized national standards.
3. A procuring entity shall not prescribe technical specifications that
require or refer to a particular trademark or trade name, patent, design or type, specific origin
or producer or supplier, unless there is no other sufficiently precise or intelligible way of
describing the procurement requirements and provided that, in such cases, words such as “or equivalent”
are included in the tender documentation.
4. A procuring entity shall not seek or accept, in a manner that would have
the effect of precluding competition, advice that may be used in the preparation or
adoption of any technical specification for a specific procurement from a person that may have a
commercial interest in that procurement.
5. For greater certainty, this Article is not intended to preclude a
procuring entity from preparing, adopting, or applying technical specifications to promote the
conservation of natural resources.
Article 9.8: Requirements and Conditions for Participating in Procurement
1. Where a procuring entity requires suppliers to satisfy registration,
qualification, or any other requirements or conditions for participation (“conditions for
participation”) in order to participate in a procurement, the procuring entity shall publish a notice
inviting suppliers to apply for registration or qualification, or to satisfy any other conditions for
participation. The procuring entity shall publish the notice sufficiently in advance to provide
interested suppliers sufficient time to prepare and submit applications and for the entity to
evaluate and make its determinations based on such applications.
2. Each procuring entity shall:
(a) limit any conditions for participation in a procurement to those that are
essential to ensure that the supplier has the legal, technical, and financial abilities
to fulfill the requirements and technical specifications of the procurement;
(b) recognize as qualified all suppliers of another Party that have met the
requisite conditions for participation; and
(c) base qualification determinations solely on the conditions for
participation that have been specified in advance in notices or tender documentation.
3. Procuring entities may establish publicly available lists of suppliers
qualified to participate in procurements. Where a procuring entity requires suppliers to
qualify for such a list as a condition for participation in a procurement, and a supplier that has
not yet qualified applies for inclusion in the list, the procuring entity shall promptly start the
qualification procedures and shall allow the supplier to submit a tender, if it is determined to be a
qualifying supplier, provided there is sufficient time to fulfill the conditions for participation
within the time period established for tendering.
4. No procuring entity may make it a condition for participation in a
procurement that a supplier has previously been awarded one or more contracts by a procuring
entity or that the supplier has prior work experience in the territory of a Party. A procuring
entity shall evaluate the financial and technical abilities of a supplier on the basis of that
supplier’s business activity outside the territory of the Party of the procuring entity, as well as
activity, if any, in the territory of the Party of the procuring entity.
5. A procuring entity shall promptly communicate to any supplier that has
applied for qualification its decision on whether that supplier is qualified. Where a
procuring entity rejects an application for qualification or ceases to recognize a supplier as
qualified, that entity shall, on request of the supplier, promptly provide a written explanation of the
reasons for its action.
6. Nothing in this Article shall preclude a procuring entity from prohibiting
a supplier from participating in a procurement on grounds such as bankruptcy or false
declarations.
Article 9.9: Tendering Procedures
1. Subject to paragraph 2, a procuring entity shall award contracts by means
of open tendering procedures.
2. Provided that the tendering procedure is not used to avoid competition or
to protect domestic suppliers, a procuring entity may award contracts by means other
than an open tendering procedure in the following circumstances:
(a) in the absence of tenders that conform to the essential requirements in
the tender documentation provided in a prior notice of intended procurement or
invitation to participate, including any conditions for participation, provided that the requirements of the initial notice or invitation are not substantially
modified;
(b) where, for works of art, or for reasons connected with the protection of
exclusive intellectual property rights, such as patents or copyrights, or proprietary information, or where there is an absence of competition for technical
reasons, the goods or services can be supplied only by a particular supplier and no
reasonable alternative or substitute exists;
(c) for additional deliveries by the original supplier that are intended
either as replacement parts, extensions, or continuing services for existing equipment, software, services, or installations, where a change of supplier would compel
the entity to procure goods or services not meeting requirements of
interchangeability with existing equipment, software, services, or installations;
(d) for goods purchased on a commodity market;
(e) where a procuring entity procures a prototype or a first good or service
that is developed at its request in the course of, and for, a particular contract for
research, experiment, study, or original development. When such contracts have been fulfilled, subsequent procurements of goods or services shall be subject to
this Chapter;
(f) where additional construction services that were not included in the
initial contract but that were within the objectives of the original tender
documentation have, due to unforeseeable circumstances, become necessary to complete the construction services described therein. However, the total value of
contracts awarded for additional construction services may not exceed 50 percent of the amount of the initial contract; or
(g) in so far as is strictly necessary where, for reasons of urgency brought
about by events unforeseeable by the procuring entity, the goods or services could not
be obtained in time by means of an open tendering procedure and the use of an
open tendering procedure would result in serious injury to the procuring entity,
the entity’s program responsibilities, or the Party.
3. A procuring entity shall maintain records or prepare written reports
providing specific justification for any contract awarded under paragraph 2, in a manner
consistent with Article 9.11.3.
Article 9.10: Awarding of Contracts
1. A procuring entity shall require that, in order to be considered for
award, a tender must be submitted in writing and must, at the time it is submitted, conform to the
essential requirements of the tender documentation that the procuring entity provided in advance to
all participating suppliers, and be from a supplier that has complied with any conditions for
participation that the procuring entity has communicated in advance to all participating suppliers.
2. Unless a procuring entity determines that it is not in the public interest
to award a contract, the procuring entity shall award the contract to a supplier that
the procuring entity has determined to be fully capable of undertaking the contract and whose tender
is determined to be the most advantageous in terms of the requirements and evaluation criteria
set out in the tender documentation.
3. No procuring entity may cancel a procurement, or terminate or modify a
contract it has awarded, in order to avoid the obligations of this Chapter.
Article 9.11: Information on Contract Awards
1. A procuring entity shall promptly inform participating suppliers of
decisions on contract awards. A procuring entity shall, on request, provide a supplier whose tender
was not selected for award the reasons for not selecting its tender and the relative
advantages of the tender selected.
2. Promptly after awarding a contract in a covered procurement, a procuring
entity shall publish a notice that includes at least the following information about the
contract award:
(a) the name of the entity;
(b) a description of the goods or services included in the contract;
(c) the name of the supplier awarded the contract;
(d) the value of the contract award; and
(e) where the entity did not use an open tendering procedure, an indication
of the circumstances justifying the procedure used.
3. A procuring entity shall maintain records and reports relating to
tendering procedures and contract awards in procurements covered by this Chapter, including the
records and reports provided for in Article 9.9.3, for at least three years after the date a
contract is awarded.
Article 9.12: Non-Disclosure of Information
1. A Party, its procuring entities, and its review authorities shall not
disclose confidential information the disclosure of which would prejudice legitimate commercial
interests of a particular person or might prejudice fair competition between suppliers,
without the formal authorization of the person that provided the information to the Party.
2. Nothing in this Chapter shall prevent a Party or its procuring entities
from withholding the release of information where release might:
(a) impede law enforcement;
(b) prejudice fair competition between suppliers;
(c) prejudice the legitimate commercial interests of particular suppliers or
entities, including the protection of intellectual property; or
(d) otherwise be contrary to the public interest.
Article 9.13: Ensuring Integrity in Procurement Practices
Further to Article 18.8 (Anti-Corruption Measures), each Party shall adopt or
maintain procedures to declare ineligible for participation in the Party’s
procurements, either indefinitely or for a specified time, suppliers that the Party has determined to have
engaged in fraudulent or other illegal actions in relation to procurement. On request of another
Party, a Party shall identify the suppliers determined to be ineligible under these procedures,
and, where appropriate, exchange information regarding those suppliers or the fraudulent or illegal
action.
Article 9.14: Exceptions
1. Provided that such measures are not applied in a manner that would
constitute a means of arbitrary or unjustifiable discrimination between Parties where the same
conditions prevail or a disguised restriction on trade between the Parties, nothing in this Chapter
shall be construed to prevent a Party from adopting or maintaining measures:
(a) necessary to protect public morals, order, or safety;
(b) necessary to protect human, animal, or plant life or health;
(c) necessary to protect intellectual property; or
(d) relating to goods or services of handicapped persons, of philanthropic
institutions, or of prison labor.
2. The Parties understand that paragraph 1(b) includes environmental measures
necessary to protect human, animal, or plant life or health.
Article 9.15: Domestic Review of Supplier Challenges
1. Each Party shall establish or designate at least one impartial
administrative or judicial authority, which shall be independent from its procuring entities, to receive
and review challenges that suppliers submit relating to the obligations of the Party and
its entities under this Chapter and to make appropriate findings and recommendations. In the event
that a body other than such an impartial authority initially reviews a supplier’s challenge,
the Party shall ensure that the supplier may appeal the initial decision to an impartial
administrative or judicial authority that is independent from the procuring entity that is the subject
of the challenge.
2. Each Party shall provide that an authority established or designated under
paragraph 1 may take prompt interim measures, pending the resolution of a challenge, to
preserve the opportunity to correct potential breaches of this Chapter, including the
suspension of the award of a contract or the performance of a contract already awarded.
3. Each Party shall ensure that its review procedures are publicly available
in writing, and are timely, transparent, effective, and consistent with the principle of due
process.
4. Each Party shall ensure that all documents related to a challenge to a
procurement are available to any impartial authority established or designated under
paragraph 1.
5. A procuring entity shall respond in writing to a supplier’s complaint.
6. Each Party shall ensure that an impartial authority it establishes or
designates under paragraph 1 provides to suppliers the following:
(a) a sufficient period to prepare and submit written challenges, which in no
case shall be less than 10 days from the time when the basis of the complaint
became known or reasonably should have become known to the supplier;
(b) an opportunity to review relevant documents and to be heard by the
authority in a timely manner;
(c) an opportunity to reply to the procuring entity’s response to the
supplier’s complaint; and
(d) prompt delivery in writing of its findings and recommendations relating
to the challenge, with an explanation of the grounds for each decision.
7. Each Party shall ensure that a supplier’s submission of a challenge does
not prejudice the supplier’s participation in ongoing or future procurements.
Article 9.16: Modifications and Rectifications to Coverage
1. A Party may make technical rectifications of a purely formal nature to its
coverage under this Chapter, or minor amendments to its Schedules to Section A through C of
Annexes 9.1.2(b)(i) and 9.1.2(b)(ii), provided that it notifies the other Parties in
writing and no other Party objects in writing within 30 days after the notification. A Party that makes
such a rectification or minor amendment shall not be required to provide compensatory adjustments to
the other Parties.
2. A Party may modify its coverage under this Chapter provided that it:
(a) notifies the other Parties in writing and no other Party objects in
writing within 30 days after the notification; and
(b) except as provided in paragraph 3, offers within 30 days after notifying
the other Parties acceptable compensatory adjustments to the other Parties to maintain
a level of coverage comparable to that existing before the modification.
3. A Party need not provide compensatory adjustments in those circumstances
where the proposed modification covers one or more procuring entities on which the
Parties agree that government control or influence has been effectively eliminated. Where the
Parties do not agree that such government control or influence has been effectively eliminated,
the objecting Party or Parties may request further information or consultations with a view to
clarifying the nature of any government control or influence and reaching agreement on the procuring
entity’s continued coverage under this Chapter.
4. The Commission shall modify the relevant section of Annexes 9.1.2(b)(i)
and 9.1.2(b)(ii) to reflect any agreed modification, technical rectification, or minor
amendment.
Article 9.17: Definitions
For purposes of this Chapter:
build-operate-transfer contract
and public works concession contract
mean any contractual arrangements, the primary purpose of which is to provide for the construction
or rehabilitation of physical infrastructure, plants, buildings, facilities, or other
government-owned works and under which, as consideration for a supplier’s execution of a contract, a procuring
entity grants to the supplier, for a specified period, temporary ownership, if the
Party permits
such ownership, or a right to control and operate, and demand payment for the use of, such works
for the duration of the contract;
in writing
or written means any worded or numbered expression that
can be read, reproduced, and later communicated, and includes electronically transmitted and stored
information;
offsets
means conditions or undertakings imposed or considered by a
procuring entity that encourage local development or improve a Party’s balance of payments accounts
by means of requirements of local content, licensing of technology, investment,
counter-trade, or similar requirements;
open tendering procedure
means any type of procurement method of a Party,
except direct purchasing methods as specified in Article 9.9.2, provided these methods are
consistent with this Chapter;
procuring entity
means an entity listed in Annexes 9.1.2(b)(i) and
9.1.2(b)(ii);
publish
means to disseminate information in an electronic or paper medium
that is distributed widely and is readily accessible to the general public;
services
includes construction services, unless otherwise specified;
supplier
means a person that has provided, provides, or could provide
goods or services to a procuring entity; and
technical specification
means a specification that sets out the
characteristics of goods to be procured or their related processes and production methods, or the
characteristics of services to be procured or their related operating methods, including the applicable
administrative provisions, and requirements relating to conformity assessment procedures
that an entity prescribes. A technical specification may also include or deal exclusively
with terminology, symbols, packaging, or marking or labeling requirements, as they apply to a
good, process, service, or production or operating method.
Chapter Ten
Investment
Section A: Investment
Article 10.1: Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party
relating to:
(a) investors of another Party;
(b) covered investments; and
(c) with respect to Articles 10.9 and 10.11, all investments in the
territory of the Party.
2. A Party’s obligations under this Section shall apply to a state
enterprise or other person when it exercises any regulatory, administrative,
or other governmental authority delegated to it by that Party.
3. For greater certainty, this Chapter does not bind any Party in relation
to any act or factthat took place or any situation that ceased to exist before
the date of entry into force of this Agreement.
Article 10.2: Relation to Other Chapters
1. In the event of any inconsistency between this Chapter and another
Chapter, the other Chapter shall prevail to the extent of the inconsistency.
2. A requirement by a Party that a service supplier of another Party post a
bond or other form of financial security as a condition of the cross-border
supply of a service does not of itself make this Chapter applicable to
measures adopted or maintained by the Party relating to such cross-border
supply of the 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 orfinancial security is a covered investment.
3. This Chapter does not apply to measures adopted or maintained by a Party
to the extent that they are covered by Chapter Twelve (Financial Services).
Article 10.3: National Treatment
1. Each Party shall accord to investors of another Party treatment no less
favorable than that it accords, in like circumstances, to its own investors with
respect to the establishment, acquisition, expansion, management, conduct,
operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favorable
than that it accords, in like circumstances, to investments in its territory of its own
investors with respect to the establishment, acquisition, expansion, management, conduct, operation,
and sale or other disposition of investments.
3. The treatment to be accorded by a Party under paragraphs 1 and 2 means,
with respect to a regional level of government, treatment no less favorable than the most
favorable treatment accorded, in like circumstances, by that regional level of government to
investors, and to investments of investors, of the Party of which it forms a part.
Article 10.4: Most-Favored-Nation Treatment
1. Each Party shall accord to investors of another Party treatment no less
favorable than that it accords, in like circumstances, to investors of any other Party or of any
non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation,
and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favorable
than that it accords, in like circumstances, to investments in its territory of investors
of any other Party or of any non-Party with respect to the establishment, acquisition, expansion,
management, conduct, operation, and sale or other disposition of investments.
Article 10.5: Minimum Standard of Treatment1
1. Each Party shall accord to covered investments treatment in accordance
with customary international law, including fair and equitable treatment and full protection
and security.
2. For greater certainty, paragraph 1 prescribes the customary international
law minimum standard of treatment of aliens as the minimum standard of treatment to be
afforded to covered investments. The concepts of “fair and equitable treatment” and “full
protection and security” do not require treatment in addition to or beyond that which is required by that
standard, and do not create additional substantive rights. The obligation in paragraph 1 to
provide:
(a) “fair and equitable treatment” includes the obligation not to deny
justice in criminal, civil, or administrative adjudicatory proceedings in accordance
with the principle of due process embodied in the principal legal systems of the
world; and
(b) “full protection and security” requires each Party to provide the level
of police protection required under customary international law.
3. A determination that there has been a breach of another provision of this
Agreement, or of a separate international agreement, does not establish that there has been
a breach of this Article.
Article 10.6: Treatment in Case of Strife
1. Notwithstanding Article 10.13.5(b), each Party shall accord to investors
of another Party, and to covered investments, non-discriminatory treatment with respect to
measures it adopts or maintains relating to losses suffered by investments in its territory owing
to armed conflict or civil strife.
2. Notwithstanding paragraph 1, if an investor of a Party, in the situations
referred to in paragraph 1, suffers a loss in the territory of another Party resulting from:
(a) requisitioning of its covered investment or part thereof by the latter’s
forces or authorities; or
(b) destruction of its covered investment or part thereof by the latter’s
forces or authorities, which was not required by the necessity of the situation,
the latter Party shall provide the investor restitution or compensation,
which in either case shall be in accordance with customary international law and, with respect to
compensation, shall be in accordance with Article 10.7.2 through 10.7.4.2
3. Paragraph 1 does not apply to existing measures relating to subsidies or
grants that would be inconsistent with Article 10.3 but for Article 10.13.5(b).
Article 10.7: Expropriation and Compensation3
1. No Party may expropriate or nationalize a covered investment either
directly or indirectly through measures equivalent to expropriation or nationalization
(“expropriation”), except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate, and effective compensation in accordance
with paragraphs 2 through 4; and
(d) in accordance with due process of law and Article 10.5.
2. Compensation shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment
immediately before the expropriation took place (“the date of expropriation”);
(c) not reflect any change in value occurring because the intended
expropriation had become known earlier; and
(d) be fully realizable and freely transferable.
3. If the fair market value is denominated in a freely usable currency, the
compensation paid shall be no less than the fair market value on the date of expropriation,
plus interest at a commercially reasonable rate for that currency, accrued from the date of
expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not freely
usable, the compensation paid – converted into the currency of payment at the market rate
of exchange prevailing on the date of payment – shall be no less than:
(a) the fair market value on the date of expropriation, converted into a
freely usable currency at the market rate of exchange prevailing on that date, plus
(b) interest, at a commercially reasonable rate for that freely usable
currency, accrued from the date of expropriation until the date of payment.
5. This Article does not apply to the issuance of compulsory licenses granted
in relation to intellectual property rights in accordance with the TRIPS Agreement, or to
the revocation, limitation, or creation of intellectual property rights, to the extent that
such issuance, revocation, limitation, or creation is consistent with Chapter Fifteen (Intellectual
Property Rights).4
Article 10.8: Transfers
1. Each Party shall permit all transfers relating to a covered investment to
be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital;
(b) profits, dividends, capital gains, and proceeds from the sale of all or
any part of the covered investment or from the partial or complete liquidation of the
covered investment;
(c) interest, royalty payments, management fees, and technical assistance and
other fees;
(d) payments made under a contract, including a loan agreement;
(e) payments made pursuant to Article 10.6.1 and 10.6.2 and Article 10.7; and
(f) payments arising out of a dispute.
2. Each Party shall permit transfers relating to a covered investment to be
made in a freely usable currency at the market rate of exchange prevailing at the time of
transfer.
3. Each Party shall permit returns in kind relating to a covered investment
to be made as authorized or specified in a written agreement between the Party and a
covered investment or an investor of another Party.
4. Notwithstanding paragraphs 1 through 3, a Party may prevent a transfer
through the equitable, nondiscriminatory, and good faith application of its laws relating
to:
(a) bankruptcy, insolvency, or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities, futures, options, or
derivatives;
(c) criminal or penal offenses;
(d) financial reporting or record keeping of transfers when necessary to
assist law enforcement or financial regulatory authorities; or
(e) ensuring compliance with orders or judgments in judicial or
administrative proceedings.
Article 10.9: Performance Requirements
1. No Party may, in connection with the establishment, acquisition,
expansion, management, conduct, operation, or sale or other disposition of an investment
of an investor of a Party or of a non-Party in its territory, impose or enforce any of the
following requirements, or enforce any commitment or undertaking:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use, or accord a preference to goods produced in its
territory, or to purchase goods from persons in its territory;
(d) to relate in any way the volume or value of imports to the volume or
value of exports or to the amount of foreign exchange inflows associated with such investment;
(e) to restrict sales of goods or services in its territory that such
investment produces or supplies by relating such sales in any way to the volume or value of its
exports or foreign exchange earnings;
(f) to transfer a particular technology, a production process, or other
proprietary knowledge to a person in its territory; or
(g) to supply exclusively from the territory of the Party the goods that such investment produces or the services that it supplies to a specific regional
market or to the world market.
2. No Party may condition the receipt or continued receipt of an advantage,
in connection with the establishment, acquisition, expansion, management, conduct,
operation, or sale or other disposition of an investment in its territory of an investor of a Party or of
a non-Party, 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 goods produced in its
territory, or to purchase goods from persons in its territory;
(c) to relate in any way the volume or value of imports to the volume or
value of exports or to the amount of foreign exchange inflows associated with such investment; or
(d) to restrict sales of goods or services in its territory that such
investment produces or supplies by relating such sales in any way to the volume or value of its
exports or foreign exchange earnings.
3.
(a) Nothing in paragraph 2 shall be construed to prevent a Party from
conditioning the receipt or continued receipt of an advantage, in connection with an
investment in its territory of an investor of a Party or of a non-Party, on compliance
with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and
development, in its territory.
(b) Paragraph 1(f) does not apply:
(i) when a Party authorizes use of an intellectual property right in
accordance with Article 31 of the TRIPS Agreement, or to measures requiring the disclosure of proprietary information that fall within the scope of, and are consistent with, Article 39 of the TRIPS Agreement;5 or
(ii) when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal, or competition authority to remedy a practice determined after judicial or administrative process to be anticompetitive under the Party’s competition laws.6
(c) Provided that such measures are not applied in an arbitrary or
unjustifiable manner, and provided that such measures do not constitute a disguised
restriction on international trade or investment, paragraphs 1(b), (c), and (f), and 2(a)
and
(b), shall not be construed to prevent a Party from adopting or maintaining measures, including environmental measures:
(i) necessary to secure compliance with laws and regulations that are not inconsistent with this Agreement;
(ii) necessary to protect human, animal, or plant life or health; or
(iii) related to the conservation of living or non-living exhaustible natural resources.
(d) Paragraphs 1(a), (b), and (c), and 2(a) and (b), do not apply to
qualification requirements for goods or services with respect to export promotion and
foreign aid programs.
(e) Paragraphs 1(b), (c), (f), and (g), and 2(a) and (b), do not apply to
procurement.
(f) Paragraphs 2(a) and (b) do not apply to requirements imposed by an
importing Party relating to the content of goods necessary to qualify for preferential
tariffs or preferential quotas.
4. For greater certainty, paragraphs 1 and 2 do not apply to any requirement
other than the requirements set out in those paragraphs.
5. This Article does not preclude enforcement of any commitment, undertaking,
or requirement between private parties, where a Party did not impose or require
the commitment, undertaking, or requirement.
Article 10.10: Senior Management and Boards of Directors
1. No Party may require that an enterprise of that Party that is a covered
investment appoint to senior management positions natural persons of any particular nationality.
2. A Party may require that a majority of the board of directors, or any
committee thereof, of an enterprise of that Party that is a covered investment, be of a
particular nationality, or resident in the territory of the Party, provided that the requirement does
not materially impair the ability of the investor to exercise control over its investment.
Article 10.11: Investment and Environment
Nothing in this Chapter shall be construed to prevent a Party from adopting,
maintaining, or enforcing any measure otherwise consistent with this Chapter that it
considers appropriate to ensure that investment activity in its territory is undertaken in a manner
sensitive to environmental concerns.
Article 10.12: Denial of Benefits
1. A Party may deny the benefits of this Chapter to an investor of another
Party that is an enterprise of such other Party and to investments of that investor if persons
of a non-Party own or control the enterprise and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party or a person of
the non- Party that prohibit transactions with the enterprise or that would be
violated or circumvented if the benefits of this Chapter were accorded to the enterprise
or to its investments.
2. Subject to Articles 18.3 (Notification and Provision of Information) and
20.4 (Consultations), a Party may deny the benefits of this Chapter to an investor
of another Party that is an enterprise of such other Party and to investments of that investor if
the enterprise has no substantial business activities in the territory of any Party, other than the
denying Party, and persons of a non-Party, or of the denying Party, own or control the
enterprise.
Article 10.13: Non-Conforming Measures
1. Articles 10.3, 10.4, 10.9, and 10.10 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government, as set out by that Party in its Schedule
to Annex I,
(ii) a regional level of government, as set out by that Party in its Schedule
to Annex I, or
(iii) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred
to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph
(a) to the extent that the amendment does not decrease the conformity of the
measure, as it existed immediately before the amendment, with Article 10.3, 10.4, 10.9,
or 10.10.
2. Articles 10.3, 10.4, 10.9, and 10.10 do not apply to any measure that a
Party adopts or maintains with respect to sectors, subsectors, or activities, as set out in
its Schedule to Annex II.
3. No Party may, under any measure adopted after the date of entry into force
of this Agreement and covered by its Schedule to Annex II, require an investor of
another Party, by reason of its nationality, to sell or otherwise dispose of an investment
existing at the time the measure becomes effective.
4. Articles 10.3 and 10.4 do not apply to any measure that is an exception
to, or derogation from, the obligations under Article 15.1.8 (General Provisions) as
specifically provided in that Article.
5. Articles 10.3, 10.4, and 10.10 do not apply to:
(a) procurement; or
(b) subsidies or grants provided by a Party, including government-supported
loans, guarantees, and insurance.
Article 10.14: Special Formalities and Information Requirements
1. Nothing in Article 10.3 shall be construed to prevent a Party from
adopting or maintaining a measure that prescribes special formalities in connection with
covered investments, such as a requirement that investors be residents of the Party
or that covered investments be legally constituted under the laws or regulations of the
Party, provided that such formalities do not materially impair the protections afforded by a Party to
investors of another Party and covered investments pursuant to this Chapter.
2. Notwithstanding Articles 10.3 and 10.4, a Party may require an investor of
another Party, or a covered investment, to provide information concerning that investment
solely for informational or statistical purposes. The Party shall protect any
confidential business information from any disclosure that would prejudice the competitive position
of the investor or the covered investment. Nothing in this paragraph shall be construed to
prevent a Party from otherwise obtaining or disclosing information in connection with the
equitable and good faith application of its law.
Section B: Investor-State Dispute Settlement
Article 10.15: Consultation and Negotiation
In the event of an investment dispute, the claimant and the respondent should
initially seek to resolve the dispute through consultation and negotiation, which may
include the use of non-binding, third-party procedures such as conciliation and mediation.
Article 10.16: Submission of a Claim to Arbitration
1. In the event that a disputing party considers that an investment dispute
cannot be settled by consultation and negotiation:
(a) the claimant, on its own behalf, may submit to arbitration under this
Section a claim
(i) that the respondent has breached
(A) an obligation under Section A,
(B) an investment authorization, or
(C) an investment agreement;
and
(ii) that the claimant has incurred loss or damage by reason of, or arising
out of, that breach; and
(b) the claimant, on behalf of an enterprise of the respondent that is a
juridical person that the claimant owns or controls directly or indirectly, may submit to
arbitration under this Section a claim
(i) that the respondent has breached
(A) an obligation under Section A,
(B) an investment authorization, or
(C) an investment agreement;
and
(ii) that the enterprise has incurred loss or damage by reason of, or arising
out of, that breach.
2. At least 90 days before submitting any claim to arbitration under this
Section, a claimant shall deliver to the respondent a written notice of its intention to submit
the claim to arbitration (“notice of intent”). The notice shall specify:
(a) the name and address of the claimant and, where a claim is submitted on
behalf of an enterprise, the name, address, and place of incorporation of the
enterprise;
(b) for each claim, the provision of this Agreement, investment
authorization, or investment agreement alleged to have been breached and any other relevant provisions;
(c) the legal and factual basis for each claim; and
(d) the relief sought and the approximate amount of damages claimed.
3. Provided that six months have elapsed since the events giving rise to the
claim, a claimant may submit a claim referred to in paragraph 1:
(a) under the ICSID Convention and the ICSID Rules of Procedures for
Arbitration Proceedings, provided that both the respondent and the Party of the claimant
are parties to the ICSID Convention;
(b) under the ICSID Additional Facility Rules, provided that either the
respondent or the Party of the claimant is a party to the ICSID Convention; or
(c) under the UNCITRAL Arbitration Rules.
4. A claim shall be deemed submitted to arbitration under this Section when
the claimant’s notice of or request for arbitration (“notice of arbitration”):
(a) referred to in paragraph 1 of Article 36 of the ICSID Convention is
received by the Secretary-General;
(b) referred to in Article 2 of Schedule C of the ICSID Additional Facility
Rules is received by the Secretary-General; or
(c) referred to in Article 3 of the UNCITRAL Arbitration Rules, together with
the statement of claim referred to in Article 18 of the UNCITRAL Arbitration
Rules, are received by the respondent.
A claim asserted for the first time after such notice of arbitration is
submitted shall be deemed submitted to arbitration under this Section on the date of its receipt under
the applicable arbitral rules.
5. The arbitration rules applicable under paragraph 3, and in effect on the
date the claim or claims were submitted to arbitration under this Section, shall govern the
arbitration except to the extent modified by this Agreement.
6. The claimant shall provide with the notice of arbitration:
(a) the name of the arbitrator that the claimant appoints; or
(b) the claimant’s written consent for the Secretary-General to appoint such arbitrator.
Article 10.17: Consent of Each Party to Arbitration
1. Each Party consents to the submission of a claim to arbitration under this
Section in accordance with this Agreement.
2. The consent under paragraph 1 and the submission of a claim to arbitration
under this Section shall satisfy the requirements of:
(a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the
ICSID Additional Facility Rules for written consent of the parties to the dispute;
(b) Article II of the New York Convention for an “agreement in writing;” and
(c) Article I of the Inter-American Convention for an “agreement.”
Article 10.18: Conditions and Limitations on Consent of Each Party
1. No claim may be submitted to arbitration under this Section if more than
three years have elapsed from the date on which the claimant first acquired, or should have
first acquired, knowledge of the breach alleged under Article 10.16.1 and knowledge that the
claimant (for claims brought under Article 10.16.1(a)) or the enterprise (for claims
brought under Article 10.16.1(b)) has incurred loss or damage.
2. No claim may be submitted to arbitration under this Section unless:
(a) the claimant consents in writing to arbitration in accordance with the
procedures set out in this Agreement; and
(b) the notice of arbitration is accompanied,
(i) for claims submitted to arbitration under Article 10.16.1(a), by the claimant’s written waiver, and
(ii) for claims submitted to arbitration under Article 10.16.1(b), by the claimant’s and the enterprise’s written waivers
of any right to initiate or continue before any administrative tribunal or
court under the law of any Party, or other dispute settlement procedures, any
proceeding with respect to any measure alleged to constitute a breach referred to in
Article 10.16.
3. Notwithstanding paragraph 2(b), the claimant (for claims brought under
Article 10.16.1(a)) and the claimant or the enterprise (for claims brought under Article
10.16.1(b)) may initiate or continue an action that seeks interim injunctive relief and does not involve
the payment of monetary damages before a judicial or administrative tribunal of the
respondent, provided that the action is brought for the sole purpose of preserving the claimant’s or
the enterprise’s rights and interests during the pendency of the arbitration.
4. No claim may be submitted to arbitration:
(a) for breach of an investment authorization under Article 10.16.1(a)(i)(B)
or Article 10.16.1(b)(i)(B), or
(b) for breach of an investment agreement under Article 10.16.1(a)(i)(C) or
Article 10.16.1(b)(i)(C),
if the claimant (for claims brought under Article 10.16.1(a)) or the claimant
or the enterprise (for claims brought under Article 10.16.1(b)) has previously submitted the same
alleged breach to an administrative tribunal or court of the respondent, or to any other binding
dispute settlement procedure, for adjudication or resolution.
Article 10.19: Selection of Arbitrators
1. Unless the disputing parties otherwise agree, the tribunal shall comprise
three arbitrators, one arbitrator appointed by each of the disputing parties and the third, who
shall be the presiding arbitrator, appointed by agreement of the disputing parties.
2. The Secretary-General shall serve as appointing authority for an
arbitration under this Section.
3. If a tribunal has not been constituted within 75 days from the date that a
claim is submitted to arbitration under this Section, the Secretary-General, on the
request of a disputing party, shall appoint, in his or her discretion, the arbitrator or arbitrators
not yet appointed.
4. For purposes of Article 39 of the ICSID Convention and Article 7 of
Schedule C to the ICSID Additional Facility Rules, and without prejudice to an objection to an
arbitrator on a ground other than nationality:
(a) the respondent agrees to the appointment of each individual member of a
tribunal established under the ICSID Convention or the ICSID Additional Facility
Rules;
(b) a claimant referred to in Article 10.16.1(a) may submit a claim to
arbitration under this Section, or continue a claim, under the ICSID Convention or the
ICSID Additional Facility Rules, only on condition that the claimant agrees in
writing to the appointment of each individual member of the tribunal; and
(c) a claimant referred to in Article 10.16.1(b) may submit a claim to
arbitration under this Section, or continue a claim, under the ICSID Convention or the
ICSID Additional Facility Rules, only on condition that the claimant and the
enterprise agree in writing to the appointment of each individual member of the
tribunal.
Article 10.20: Conduct of the Arbitration
1. The disputing parties may agree on the legal place of any arbitration
under the arbitral rules applicable under Article 10.16.3. If the disputing parties fail to
reach agreement, the tribunal shall determine the place in accordance with the applicable arbitral
rules, provided that the place shall be in the territory of a State that is a party to the New
York Convention.
2. A non-disputing Party may make oral and written submissions to the
tribunal regarding the interpretation of this Agreement.
3. The tribunal shall have the authority to accept and consider amicus
curiae submissions from a person or entity that is not a disputing party.
4. Without prejudice to a tribunal’s authority to address other objections as
a preliminary question, a tribunal shall address and decide as a preliminary question any
objection by the respondent that, as a matter of law, a claim submitted is not a claim for
which an award in favor of the claimant may be made under Article 10.26.
(a) Such objection shall be submitted to the tribunal as soon as possible
after the tribunal is constituted, and in no event later than the date the tribunal
fixes for the respondent to submit its counter-memorial (or, in the case of an amendment to
the notice of arbitration, the date the tribunal fixes for the respondent to
submit its response to the amendment).
(b) On receipt of an objection under this paragraph, the tribunal shall
suspend any proceedings on the merits, establish a schedule for considering the objection consistent with any schedule it has established for considering any other preliminary question, and issue a decision or award on the objection, stating
the grounds therefor.
(c) In deciding an objection under this paragraph, the tribunal shall assume
to be true claimant’s factual allegations in support of any claim in the notice of
arbitration (or any amendment thereof) and, in disputes brought under the UNCITRAL Arbitration Rules, the statement of claim referred to in Article 18 of the UNCITRAL Arbitration Rules. The tribunal may also consider any relevant facts not in dispute.
(d) The respondent does not waive any objection as to competence or any
argument on the merits merely because the respondent did or did not raise an objection under this paragraph or make use of the expedited procedure set out in
paragraph 5.
5. In the event that the respondent so requests within 45 days after the
tribunal is constituted, the tribunal shall decide on an expedited basis an objection
under paragraph 4 and any objection that the dispute is not within the tribunal’s competence. The
tribunal shall suspend any proceedings on the merits and issue a decision or award on the
objection(s), stating the grounds therefor, no later than 150 days after the date of the request.
However, if a disputing party requests a hearing, the tribunal may take an additional 30 days to
issue the decision or award. Regardless of whether a hearing is requested, a tribunal may, on a
showing of extraordinary cause, delay issuing its decision or award by an additional
brief period, which may not exceed 30 days.
6. When it decides a respondent’s objection under paragraph 4 or 5, the
tribunal may, if warranted, award to the prevailing disputing party reasonable costs and
attorney’s fees incurred in submitting or opposing the objection. In determining whether such an award
is warranted, the tribunal shall consider whether either the claimant’s claim or the
respondent’s objection was frivolous, and shall provide the disputing parties a reasonable opportunity
to comment.
7. A respondent may not assert as a defense, counterclaim, right of set-off,
or for any other reason that the claimant has received or will receive indemnification or
other compensation for all or part of the alleged damages pursuant to an insurance or guarantee
contract.
8. A tribunal may order an interim measure of protection to preserve the
rights of a disputing party, or to ensure that the tribunal’s jurisdiction is made fully
effective, including an order to preserve evidence in the possession or control of a disputing party
or to protect the tribunal’s jurisdiction. A tribunal may not order attachment or enjoin the
application of a measure alleged to constitute a breach referred to in Article 10.16. For
purposes of this paragraph, an order includes a recommendation.
9.
(a) In any arbitration conducted under this Section, at the
request of a disputing party, a tribunal shall, before issuing a decision or award on liability, transmit
its proposed decision or award to the disputing parties and to the non-disputing Parties. Within 60 days after the tribunal transmits its proposed decision or award, the disputing parties may submit written comments to the tribunal concerning any aspect of its proposed decision or award. The tribunal shall consider any such comments and issue its decision or award not later than 45
days after the expiration of the 60-day comment period.
(b) Subparagraph (a) shall not apply in any arbitration conducted pursuant to
this Section for which an appeal has been made available pursuant to paragraph 10
or Annex 10-F.
10. If a separate multilateral agreement enters into force as between the
Parties that establishes an appellate body for purposes of reviewing awards rendered by
tribunals constituted pursuant to international trade or investment arrangements to hear investment
disputes, the Parties shall strive to reach an agreement that would have such appellate
body review awards rendered under Article 10.26 in arbitrations commenced after the multilateral
agreement enters into force as between the Parties.
Article 10.21: Transparency of Arbitral Proceedings
1. Subject to paragraphs 2 and 4, the respondent shall, after receiving the
following documents, promptly transmit them to the non-disputing Parties and make them
available to the public:
(a) the notice of intent;
(b) the notice of arbitration;
(c) pleadings, memorials, and briefs submitted to the tribunal by a disputing
party and any written submissions submitted pursuant to Article 10.20.2 and 10.20.3 and Article 10.25;
(d) minutes or transcripts of hearings of the tribunal, where available; and
(e) orders, awards, and decisions of the tribunal.
2. The tribunal shall conduct hearings open to the public and shall
determine, in consultation with the disputing parties, the appropriate logistical
arrangements. However, any disputing party that intends to use information designated as protected
information in a hearing shall so advise the tribunal. The tribunal shall make appropriate
arrangements to protect the information from disclosure.
3. Nothing in this Section requires a respondent to disclose protected
information or to furnish or allow access to information that it may withhold in accordance
with Article 21.2 (Essential Security) or Article 21.5 (Disclosure of Information).
4. Any protected information that is submitted to the tribunal shall be
protected from disclosure in accordance with the following procedures:
(a) Subject to subparagraph (d), neither the disputing parties nor the
tribunal shall disclose to any non-disputing Party or to the public any protected
information where the disputing party that provided the information clearly designates it
in accordance with subparagraph (b);
(b) Any disputing party claiming that certain information constitutes
protected information shall clearly designate the information at the time it is
submitted to the tribunal;
(c) A disputing party shall, at the same time that it submits a document
containing information claimed to be protected information, submit a redacted version of
the document that does not contain the information. Only the redacted version
shall be provided to the non-disputing Parties and made public in accordance with paragraph 1; and
(d) The tribunal shall decide any objection regarding the designation of
information claimed to be protected information. If the tribunal determines that such information was not properly designated, the disputing party that submitted
the information may (i) withdraw all or part of its submission containing such information, or (ii) agree to resubmit complete and redacted documents with corrected designations in accordance with the tribunal’s determination and subparagraph (c). In either case, the other disputing party shall, whenever necessary, resubmit complete and redacted documents which either remove the information withdrawn under (i) by the disputing party that first submitted
the information or redesignate the information consistent with the designation
under (ii) of the disputing party that first submitted the information.
5. Nothing in this Section requires a respondent to withhold from the public
information required to be disclosed by its laws.
Article 10.22: Governing Law
1. Subject to paragraph 3, when a claim is submitted under Article
10.16.1(a)(i)(A) or Article 10.16.1(b)(i)(A), the tribunal shall decide the issues in dispute in
accordance with this Agreement and applicable rules of international law.
2. Subject to paragraph 3 and the other terms of this Section, when a claim
is submitted under Article 10.16.1(a)(i)(B) or (C), or Article 10.16.1(b)(i)(B) or (C),
the tribunal shall apply:
(a) the rules of law specified in the pertinent investment agreement or
investment authorization, or as the disputing parties may otherwise agree; or
(b) if the rules of law have not been specified or otherwise agreed:
(i) the law of the respondent, including its rules on the conflict of laws;7 and
(ii) such rules of international law as may be applicable.
3. A decision of the Commission declaring its interpretation of a provision
of this Agreement under Article 19.1.3(c) (The Free Trade Commission) shall be
binding on a tribunal established under this Section, and any decision or award issued by the
tribunal must be consistent with that decision.
Article 10.23: Interpretation of Annexes
1. Where a respondent asserts as a defense that the measure alleged to be a
breach is within the scope of Annex I or Annex II, the tribunal shall, on
request of the respondent, request the interpretation of the Commission on the
issue. The Commission shall submit in writing any decision declaring its interpretation under Article 19.1.3(c) (The Free Trade
Commission) to the tribunal within 60 days of delivery of the request.
2. A decision issued by the Commission under paragraph 1 shall be binding on
the tribunal, and any decision or award issued by the tribunal must be consistent with that
decision. If the Commission fails to issue such a decision within 60 days, the tribunal shall
decide the issue.
Article 10.24: Expert Reports
Without prejudice to the appointment of other kinds of experts where
authorized by the applicable arbitration rules, a tribunal, at the request of a disputing party
or, unless the disputing parties disapprove, on its own initiative, may appoint one or more experts to
report to it in writing on any factual issue concerning environmental, health, safety, or
other scientific matters raised by a disputing party in a proceeding, subject to such terms and
conditions as the disputing parties may agree.
Article 10.25: Consolidation
1. Where two or more claims have been submitted separately to arbitration
under Article 10.16.1 and the claims have a question of law or fact in common and arise out
of the same events or circumstances, any disputing party may seek a consolidation order in
accordance with the agreement of all the disputing parties sought to be covered by the order or
the terms of paragraphs 2 through 10.
2. A disputing party that seeks a consolidation order under this Article
shall deliver, in writing, a request to the Secretary-General and to all the disputing parties
sought to be covered by the order and shall specify in the request:
(a) the names and addresses of all the disputing parties sought to be covered
by the order;
(b) the nature of the order sought; and
(c) the grounds on which the order is sought.
3. Unless the Secretary-General finds within 30 days after receiving a
request under paragraph 2 that the request is manifestly unfounded, a tribunal shall be
established under this Article.
4. Unless all the disputing parties sought to be covered by the order
otherwise agree, a tribunal established under this Article shall comprise three arbitrators:
(a) one arbitrator appointed by agreement of the claimants;
(b) one arbitrator appointed by the respondent; and
(c) the presiding arbitrator appointed by the Secretary-General, provided,
however, that the presiding arbitrator shall not be a national of any Party.
5. If, within 60 days after the Secretary-General receives a request made
under paragraph 2, the respondent fails or the claimants fail to appoint an arbitrator in
accordance with paragraph 4, the Secretary-General, on the request of any disputing party sought to be
covered by the order, shall appoint the arbitrator or arbitrators not yet appointed. If the
respondent fails to appoint an arbitrator, the Secretary-General shall appoint a national of the disputing
Party, and if the claimants fail to appoint an arbitrator, the Secretary-General shall appoint
a national of a Party of the claimants.
6. Where a tribunal established under this Article is satisfied that two or
more claims that have been submitted to arbitration under Article 10.16.1 have a question of
law or fact in common, and arise out of the same events or circumstances, the tribunal may,
in the interest of fair and efficient resolution of the claims, and after hearing the disputing
parties, by order:
(a) assume jurisdiction over, and hear and determine together, all or part of
the claims;
(b) assume jurisdiction over, and hear and determine one or more of the
claims, the determination of which it believes would assist in the resolution of the
others; or
(c) instruct a tribunal previously established under Article 10.19 to assume jurisdiction over, and hear and determine together, all or part of the
claims, provided that
(i) that tribunal, at the request of any claimant not previously a disputing party before that tribunal, shall be reconstituted with its original members, except that the arbitrator for the claimants shall be appointed pursuant to paragraphs 4(a) and 5; and
(ii) that tribunal shall decide whether any prior hearing shall be repeated.
7. Where a tribunal has been established under this Article, a claimant that
has submitted a claim to arbitration under Article 10.16.1 and that has not been
named in a request made under paragraph 2 may make a written request to the tribunal that it be
included in any order made under paragraph 6, and shall specify in the request:
(a) the name and address of the claimant;
(b) the nature of the order sought; and
(c) the grounds on which the order is sought.
The claimant shall deliver a copy of its request to the Secretary-General.
8. A tribunal established under this Article shall conduct its proceedings in
accordance with the UNCITRAL Arbitration Rules, except as modified by this Section.
9. A tribunal established under Article 10.19 shall not have jurisdiction to
decide a claim, or a part of a claim, over which a tribunal established or instructed under this
Article has assumed jurisdiction.
10. On application of a disputing party, a tribunal established under this
Article, pending its decision under paragraph 6, may order that the proceedings of a tribunal
established under Article 10.19 be stayed, unless the latter tribunal has already adjourned its
proceedings.
Article 10.26: Awards
1. Where a tribunal makes a final award against a respondent, the tribunal
may award, separately or in combination, only:
(a) monetary damages and any applicable interest;
(b) restitution of property, in which case the award shall provide that the
respondent may pay monetary damages and any applicable interest in lieu of restitution.
A tribunal may also award costs and attorney’s fees in accordance with this
Section and the applicable arbitration rules.
2. Subject to paragraph 1, where a claim is submitted to arbitration under
Article 10.16.1(b):
(a) an award of restitution of property shall provide that restitution be
made to the enterprise;
(b) an award of monetary damages and any applicable interest shall provide
that the sum be paid to the enterprise; and
(c) the award shall provide that it is made without prejudice to any right
that any person may have in the relief under applicable domestic law.
3. A tribunal is not authorized to award punitive damages.
4. An award made by a tribunal shall have no binding force except between the
disputing parties and in respect of the particular case.
5. Subject to paragraph 6 and the applicable review procedure for an interim
award, a disputing party shall abide by and comply with an award without delay.
6. A disputing party may not seek enforcement of a final award until:
(a) in the case of a final award made under the ICSID Convention
(i) 120 days have elapsed from the date the award was rendered and no disputing party has requested revision or annulment of the award; or
(ii) revision or annulment proceedings have been completed; and
(b) in the case of a final award under the ICSID Additional Facility Rules or
the UNCITRAL Arbitration Rules
(i) 90 days have elapsed from the date the award was rendered and no disputing party has commenced a proceeding to revise, set aside, or annul the award; or
(ii) a court has dismissed or allowed an application to revise, set aside, or annul the award and there is no further appeal.
7. Each Party shall provide for the enforcement of an award in its territory.
8. If the respondent fails to abide by or comply with a final award, on
delivery of a request by the Party of the claimant, a panel shall be established under Article 20.6
(Request for an Arbitral Panel). The requesting Party may seek in such proceedings:
(a) a determination that the failure to abide by or comply with the final
award is inconsistent with the obligations of this Agreement; and
(b) in accordance with Article 20.13 (Initial Report), a recommendation that
the respondent abide by or comply with the final award.
9. A disputing party may seek enforcement of an arbitration award under the
ICSID Convention, the New York Convention, or the Inter-American Convention
regardless of whether proceedings have been taken under paragraph 8.
10. A claim that is submitted to arbitration under this Section shall be
considered to arise out of a commercial relationship or transaction for purposes of Article I of the
New York Convention and Article I of the Inter-American Convention.
Article 10.27: Service of Documents
Delivery of notice and other documents on a Party shall be made to the place
named for that Party in Annex 10-G.
Section C: Definitions
Article 10.28: Definitions
For purposes of this Chapter:
Centre means the International Centre for Settlement of Investment
Disputes (“ICSID”) established by the ICSID Convention;
claimant
means an investor of a Party that is a party to an investment
dispute with another Party;
disputing parties
means the claimant and the respondent;
disputing party
means either the claimant or the respondent;
enterprise
means an enterprise as defined in Article 2.1 (Definitions of
General Application), and a branch of an enterprise;
enterprise of a Party
means an enterprise constituted or organized under
the law of a Party, and a branch located in the territory of a Party and carrying out business
activities there;
freely usable currency
means “freely usable currency” as determined by
the International Monetary Fund under its Articles of Agreement;
ICSID Additional Facility Rules
means the Rules Governing the
Additional Facility for the Administration of Proceeding 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, March 18, 1965;
Inter-American Convention
means the Inter-American Convention on
International Commercial Arbitration, done at Panama, January 30, 1975;
investment
means every asset that an investor owns or controls, directly
or indirectly, that has the characteristics of an investment, including such characteristics 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, stock, and other forms of equity participation in an enterprise;
(c) bonds, debentures, other debt instruments, and loans;8
9
(d) futures, options, and other derivatives;
(e) turnkey, construction, management, production, concession,
revenue-sharing, and other similar contracts;
(f) intellectual property rights;
(g) licenses, authorizations, permits, and similar rights conferred pursuant
to domestic law;10
11 and
(h) other tangible or intangible, movable or immovable property, and related
property rights, such as leases, mortgages, liens, and pledges;
investment agreement
means a written agreement12
that takes effect on or after the date of entry into force of this Agreement between a national authority13
of a Party and a covered investment or an investor of another Party that grants the covered investment or
investor rights:
(a) with respect to natural resources or other assets that a national
authority controls;
and
(b) upon which the covered investment or the investor relies in establishing
or acquiring a covered investment other than the written agreement itself;
investment authorization14 means an authorization
that the foreign investment authority of a Party grants to a covered investment or an investor of another Party;
investor of a non-Party
means, with respect to a Party, an investor that
attempts to make, is making, or has made an investment in the territory of that Party, that is not
an investor of a Party;
investor of a Party
means a Party or state enterprise thereof, or a
national or an enterprise of a Party, that attempts to make, is making, or has made an investment in the
territory of another Party; provided, however, that a natural person who is a dual national shall
be deemed to be exclusively a national of the State of his or her dominant and effective
nationality;
national
means a natural person who has the nationality of a Party
according to Annex 2.1 (Country-Specific Definitions);
New York Convention
means the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958;
non-disputing Party
means a Party that is not a party to an investment
dispute;
protected information
means confidential business information or
information that is privileged or otherwise protected from disclosure under a Party’s law;
respondent
means the Party that is a party to an investment dispute;
Secretary-General
means the Secretary-General of ICSID;
tribunal
means an arbitration tribunal established under Article 10.19 or
10.25; and
UNCITRAL Arbitration Rules
means the arbitration rules of the United
Nations Commission on International Trade Law.
Annex 10-A
Public Debt
The rescheduling of the debts of a Central American Party or the Dominican
Republic, or
of such Party’s institutions owned or controlled through ownership interests
by such Party, owed
to the United States and the rescheduling of any of such Party’s debts owed
to creditors in
general are not subject to any provision of Section A other than Articles
10.3 and 10.4.
Annex 10-B
Customary International Law
The Parties confirm their shared understanding that “customary international
law”
generally and as specifically referenced in Articles 10.5, 10.6, and Annex
10-C results from a
general and consistent practice of States that they follow from a sense of
legal obligation. With
regard to Article 10.5, the customary international law minimum standard of
treatment of aliens
refers to all customary international law principles that protect the
economic rights and interests
of aliens.
Annex 10-C
Expropriation
The Parties confirm their shared understanding that:
1. Article 10.7.1 is intended to reflect customary international law
concerning the obligation
of States with respect to expropriation.
2. An action or a series of actions by a Party cannot constitute an
expropriation unless it
interferes with a tangible or intangible property right or property interest
in an investment.
3. Article 10.7.1 addresses two situations. The first is direct
expropriation, where an
investment is nationalized or otherwise directly expropriated through formal
transfer of title or
outright seizure.
4. The second situation addressed by Article 10.7.1 is indirect
expropriation, where an
action or series of actions by a Party has an effect equivalent to direct
expropriation without
formal transfer of title or outright seizure.
(a) The determination of whether an action or series of actions by a Party,
in a
specific fact situation, constitutes an indirect expropriation, requires a
case-bycase,
fact-based inquiry that considers, among other factors:
(i) the economic impact of the government action, although the fact that an
action or series of actions by a Party has an adverse effect on the economic
value of an investment, standing alone, does not establish that an indirect
expropriation has occurred;
(ii) the extent to which the government action interferes with distinct,
reasonable investment-backed expectations; and
(iii) the character of the government action.
(b) Except in rare circumstances, nondiscriminatory regulatory actions by a
Party that
are designed and applied to protect legitimate public welfare objectives,
such as
public health, safety, and the environment, do not constitute indirect
expropriations.
Annex 10-D
Treatment in Case of Strife
1. No investor may submit to arbitration under Section B a claim alleging
that Guatemala
has breached Article 10.6.2 as a result of an armed movement or civil
disturbance and that the
investor or the investor’s enterprise has incurred loss or damage by reason
of or arising out of
such movement or disturbance.
2. No investor of Guatemala may submit to arbitration under Section B a claim
alleging that
any other Party has breached Article 10.6.2(b).
3. The limitation set out in paragraph 1 is without prejudice to other
limitations existing in
Guatemala’s law with respect to an investor’s claim that Guatemala has
breached Article 10.6.2.
Annex 10-E
Submission of a Claim to Arbitration
1. An investor of the United States may not submit to arbitration under
Section B a claim
that a Central American Party or the Dominican Republic has breached an
obligation under
Section A either:
(a) on its own behalf under Article 10.16.1(a), or
(b) on behalf of an enterprise of a Central American Party or the Dominican
Republic
that is a juridical person that the investor owns or controls directly or
indirectly
under Article 10.16.1(b),
if the investor or the enterprise, respectively, has alleged that breach of
an obligation under
Section A in proceedings before a court or administrative tribunal of a
Central American Party or
the Dominican Republic.
2. For greater certainty, if an investor of the United States elects to
submit a claim of the
type described in paragraph 1 to a court or administrative tribunal of a
Central American Party or
the Dominican Republic, that election shall be definitive, and the investor
may not thereafter
submit the claim to arbitration under Section B.
3. Notwithstanding Article 10.18, an investor of the United States may not
submit to
arbitration under Section B a claim relating to an investment in sovereign
debt instruments with a
maturity of less than one year unless one year has elapsed from the date of
the events giving rise
to the claim.
Annex 10-F
Appellate Body or Similar Mechanism
1. Within three months of the date of entry into force of this Agreement, the
Commission
shall establish a Negotiating Group to develop an appellate body or similar
mechanism to review
awards rendered by tribunals under this Chapter. Such appellate body or
similar mechanism
shall be designed to provide coherence to the interpretation of investment
provisions in the
Agreement. The Commission shall direct the Negotiating Group to take into
account the
following issues, among others:
(a) the nature and composition of an appellate body or similar mechanism;
(b) the applicable scope and standard of review;
(c) transparency of proceedings of an appellate body or similar mechanism;
(d) the effect of decisions by an appellate body or similar mechanism;
(e) the relationship of review by an appellate body or similar mechanism to
the
arbitral rules that may be selected under Articles 10.16 and 10.25; and
(f) the relationship of review by an appellate body or similar mechanism to
existing
domestic laws and international law on the enforcement of arbitral awards.
2. The Commission shall direct the Negotiating Group to provide to the
Commission, within
one year of establishment of the Negotiating Group, a draft amendment to the
Agreement that
establishes an appellate body or similar mechanism. On approval of the draft
amendment by the
Parties, in accordance with Article 22.2 (Amendments), the Agreement shall be
so amended.
Annex 10-G
Service of Documents on a Party Under Section B
Costa Rica
Notices and other documents in disputes under Section B shall be served on
Costa Rica
by delivery to:
Dirección de Aplicación de Acuerdos
Comerciales Internacionales
Ministerio de Comercio Exterior
San José, Costa Rica
The Dominican Republic
Notices and other documents in disputes under Section B shall be served on
the
Dominican Republic by delivery to:
Dirección de Comercio Exterior y Administración de Tratados Comerciales
Internacionales
Secretaría de Estado de Industria y Comercio
Santo Domingo, República Dominicana
El Salvador
Notices and other documents in disputes under Section B shall be served on El
Salvador
by delivery to:
Dirección de Administración de Tratados Comerciales
Ministerio de Economía
Alameda Juan Pablo II y Calle Guadalupe
Edificio C1-C2, Plan Maestro Centro de Gobierno
San Salvador, El Salvador
Guatemala
Notices and other documents in disputes under Section B shall be served on
Guatemala
by delivery to:
Ministerio de Economía
Ciudad de Guatemala, Guatemala
Honduras
Notices and other documents in disputes under Section B shall be served on
Honduras by
delivery to:
Dirección General de Integración Económica y Política Comercial
Secretaría de Estado en los Despachos de Industria y Comercio
Boulevard José Cecilio del Valle
Edificio San José, antiguo edificio de Fenaduanah
Tegucigalpa, Honduras
Nicaragua
Notices and other documents in disputes under Section B shall be served on
Nicaragua by
delivery to:
Dirección de Integración y Administración de Tratados, or its successor
Ministerio de Fomento, Industria y Comercio
Managua, Nicaragua
United States
Notices and other documents in disputes under Section B shall be served on
the United
States by delivery to:
Executive Director (L/EX)
Office of the Legal Adviser
Department of State
Washington, D.C. 20520
United States of America
Chapter Eleven
Cross-Border Trade in Services
Article 11.1: Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party
affecting cross-border trade in services by service suppliers of another Party. Such measures
include measures affecting:
(a) the production, distribution, marketing, sale, and delivery of a service;
(b) the purchase or use of, or payment for, a service;
(c) the access to and use of distribution, transport, or telecommunications
networks and services in connection with the supply of a service;
(d) the presence in its territory of a service supplier of another Party; and
(e) the provision of a bond or other form of financial security as a
condition for the supply of a service.
2. For purposes of this Chapter, “measures adopted or maintained by a Party”
means measures adopted or maintained by:
(a) central, regional, or local governments and authorities; and
(b) non-governmental bodies in the exercise of powers delegated by central,
regional, or local governments or authorities.
3. Articles 11.4, 11.7, and 11.8 also apply to measures by a Party affecting
the supply of a service in its territory by an investor of another Party as defined in
Article 10.28 (Definitions) or a covered investment.1
4. This Chapter does not apply to:
(a) financial services, as defined in Article 12.20 (Definitions), except as
provided in paragraph 3;
(b) air services, including domestic and international air transportation
services, whether scheduled or non-scheduled, and related services in support of air services, other than:
(i) aircraft repair and maintenance services during which an aircraft is withdrawn from service, and
(ii) specialty air services;
(c) procurement; or
(d) subsidies or grants provided by a Party, including government-supported
loans, guarantees and insurance.
5. This Chapter does not impose any obligation on a Party with respect to a
national of another Party seeking access to its employment market, or employed on a
permanent basis in its territory, and does not confer any right on that national with respect to
that access or employment.
6. This Chapter does not apply to services supplied in the exercise of
governmental authority. A “service supplied in the exercise of governmental authority”
means any service that is supplied neither on a commercial basis, nor in competition with one or
more service suppliers.
Article 11.2: National Treatment
1. Each Party shall accord to service suppliers of another Party treatment no
less favorable than that it accords, in like circumstances, to its own service suppliers.
2. The treatment to be accorded by a Party under paragraph 1 means, with
respect to a regional level of government, treatment no less favorable than the most
favorable treatment accorded, in like circumstances, by that regional level of government to
service suppliers of the Party of which it forms a part.
Article 11.3: Most-Favored-Nation Treatment
Each Party shall accord to service suppliers of another Party treatment no
less favorable than that it accords, in like circumstances, to service suppliers of any
other Party or a non-Party.
Article 11.4: Market Access
No Party may adopt or maintain, either on the basis of a regional subdivision
or on the basis of its entire territory, measures that:
(a) impose limitations on:
(i) the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers, or the requirement of an economic needs test,
(ii) the total value of service transactions or assets in form of numerical
quotas or the requirement of an economic needs test,
(iii) the total number of service operations or on the total quantity of
services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test,2
or
(iv) the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in
the form of numerical quotas or the requirement of an economic needs test; or
(b) restrict or require specific types of legal entity or joint venture
through which a service supplier may supply a service.
Article 11.5: Local Presence
No Party may require a service supplier of another Party to establish or
maintain a representative office or any form of enterprise, or to be resident, in its
territory as a condition for the cross-border supply of a service.
Article 11.6: Non-conforming Measures
1. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government, as set out by that Party in its Schedule
to Annex I;
(ii) a regional level of government, as set out by that Party in its Schedule
to Annex I; or
(iii) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred
to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph
(a) to the extent that the amendment does not decrease the conformity of the
measure, as it existed immediately before the amendment, with Articles 11.2, 11.3, 11.4,
and 11.5.
2. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to any measure that a
Party adopts or maintains with respect to sectors, sub-sectors or activities as set out in
its Schedule to Annex II.
Article 11.7: Transparency in Developing and Applying Regulations3
Further to Chapter Eighteen (Transparency):
(a) each Party shall maintain or establish appropriate mechanisms for
responding to inquiries from interested persons regarding its regulations relating to the
subject matter of this Chapter;
(b) at the time it adopts final regulations relating to the subject matter of
this Chapter, each Party shall, to the extent possible, including on request, address in
writing substantive comments received from interested persons with respect to the proposed regulations; and
(c) to the extent possible, each Party shall allow a reasonable time between publication of final regulations and their effective date.
Article 11.8: Domestic Regulation
1. Where a Party requires authorization for the supply of a service, the
Party’s competent authorities shall, within a reasonable time after the submission of an
application considered complete under its laws and regulations, inform the applicant of the decision
concerning the application. At the request of the applicant, the Party’s competent
authorities shall provide, without undue delay, information concerning the status of the application.
This obligation shall not apply to authorization requirements that are within the scope of Article
11.6.2.
2. With a view to ensuring that measures relating to qualification
requirements and procedures, technical standards, and licensing requirements do not constitute
unnecessary barriers to trade in services, each Party shall endeavor to ensure, as
appropriate for individual sectors, that any such measures that it adopts or maintains are:
(a) based on objective and transparent criteria, such as competence and the
ability to supply the service;
(b) not more burdensome than necessary to ensure the quality of the service;
and
(c) in the case of licensing procedures, not in themselves a restriction on
the supply of the service.
3. If the results of the negotiations related to Article VI:4 of the GATS (or
the results of any similar negotiations undertaken in other multilateral fora in which the
Parties participate) enter into effect for each Party, this Article shall be amended, as appropriate,
after consultations between the Parties, to bring those results into effect under this Agreement.
The Parties will coordinate on such negotiations as appropriate.
Article 11.9: Mutual Recognition
1. For the purposes of the fulfillment, in whole or in part, of its standards
or criteria for the authorization, licensing, or certification of services suppliers, and subject
to the requirements of paragraph 4, a Party may recognize the education or experience obtained,
requirements met, or licenses or certifications granted in a particular country, including another
Party and a non-Party. Such recognition, which may be achieved through harmonization or otherwise,
may be based upon an agreement or arrangement with the country concerned or may be
accorded autonomously.
2. Where a Party recognizes, autonomously or by agreement or arrangement, the
education or experience obtained, requirements met, or licenses or certifications
granted in the territory of another Party or a non-Party, nothing in Article 11.3 shall be construed to
require the Party to accord such recognition to the education or experience obtained, requirements
met, or licenses or certifications granted in the territory of any other Party.
3. A Party that is a party to an agreement or arrangement of the type
referred to in paragraph 1, whether existing or future, shall afford adequate opportunity for another
Party, if that other Party is interested, to negotiate its accession to such an agreement or
arrangement or to negotiate a comparable one with it. Where a Party accords recognition autonomously, it
shall afford adequate opportunity for another Party to demonstrate that education,
experience, licenses, or certifications obtained or requirements met in that other Party’s territory
should be recognized.
4. No Party may accord recognition in a manner that would constitute a means
of discrimination between countries in the application of its standards or
criteria for the authorization, licensing, or certification of services suppliers, or a
disguised restriction on trade in services.
5. Annex 11.9 applies to measures adopted or maintained by a Party relating
to the licensing or certification of professional service suppliers as set out in that Annex.
Article 11.10: Transfers and Payments
1. Each Party shall permit all transfers and payments relating to the
cross-border supply of services to be made freely and without delay into and out of its territory.
2. Each Party shall permit such transfers and payments relating to the
cross-border supply of services to be made in a freely usable currency at the market rate of
exchange prevailing at the time of transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer or
payment through the equitable, non-discriminatory, and good faith application of its laws
relating to:
(a) bankruptcy, insolvency, or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities, futures, options, or
derivatives;
(c) financial reporting or record keeping of transfers when necessary to
assist law
enforcement or financial regulatory authorities;
(d) criminal or penal offenses; or
(e) ensuring compliance with orders or judgments in judicial or
administrative proceedings.
Article 11.11: Implementation
The Parties shall consult annually, or as otherwise agreed, to review the
implementation of this Chapter and consider other issues of mutual interest.
Article 11.12: Denial of Benefits
1. A Party may deny the benefits of this Chapter to a service supplier of
another Party if the service is being supplied by an enterprise owned or controlled by persons of
a non-Party, and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if
the benefits of this Chapter were accorded to the enterprise.
2. Subject to Articles 18.3 (Notification and Provision of Information) and
20.4 (Consultations), a Party may deny the benefits of this Chapter to a service
supplier of another Party that is an enterprise of such other Party if the enterprise has no
substantial business activities in the territory of any Party, other than the denying Party, and
persons of a non-Party, or the denying Party, own or control the enterprise.
Article 11.13: Specific Commitments
1. Express Delivery Services:
(a) The Parties affirm that measures affecting express delivery services are
subject to this Agreement.
(b) For purposes of this Agreement, express delivery services means the
collection, transport, and delivery, of documents, printed matter, parcels, goods, or
other items on an expedited basis, while tracking and maintaining control of these
items throughout the supply of the service. Express delivery services do not
include (i) air transport services, (ii) services supplied in the exercise of
governmental authority, or (iii) maritime transport services.4
(c) The Parties express their desire to maintain at least the level of market
openness they provided for express delivery services existing on the date this
Agreement is signed.
(d) Neither a Central American Party nor the Dominican Republic may adopt or maintain any restriction on express delivery services that is not in
existence on the date this Agreement is signed. Each such Party confirms that it does not
intend to direct revenues from its postal monopoly to benefit express delivery services
as defined in subparagraph (b). Under title 39 of the United States Code, an independent government agency determines whether postal rates meet the requirement that each class of mail or type of mail service bear the direct
and indirect postal costs attributable to that class or type plus that portion of
all other costs of the U.S. Postal Service reasonably assignable to such class or type.
(e) Each Party shall ensure that, where its monopoly supplier of postal
services competes, either directly or through an affiliated company, in the supply of express delivery services outside the scope of its monopoly rights, such a
supplier does not abuse its monopoly position to act in its territory in a manner inconsistent with the Party’s obligations under Articles 11.2, 11.3, 11.4,
10.3 (National Treatment), or 10.4 (Most-Favored-Nation Treatment). The Parties
also reaffirm their obligations under Article VIII of the GATS.5
2. A Party’s Section of Annex 11.13 sets out specific commitments by that
Party.
Article 11.14: Definitions
For purposes of this Chapter:
cross-border trade in services
or cross-border supply of services
means the supply of a service:
(a) from the territory of one Party into the territory of another Party;
(b) in the territory of one Party by a person of that Party to a person of
another Party; or
(c) by a national of a Party in the territory of another Party;
but does not include the supply of a service in the territory of a Party by
an investor of another Party as defined in Article 10.28 (Definitions) or a covered investment;
enterprise
means an “enterprise” as defined in Article 2.1 (Definitions
of General Application), and a branch of an enterprise;
enterprise of a Party
means an enterprise constituted or organized under
the laws of that Party, and a branch located in the territory of that Party and carrying out business
activities there;
professional services
means services, the provision of which requires
specialized postsecondary education, or equivalent training or experience, and for which the right to
practice is granted or restricted by a Party, but does not include services provided by
trades-persons or vessel and aircraft crew members;
service supplier of a Party
means a person of a Party that seeks to
supply or supplies a service;6 and
specialty air services
means any non-transportation air services, such as
aerial fire-fighting, sightseeing, spraying, surveying, mapping, photography, parachute jumping,
glider towing, and helicopter-lift for logging and construction, and other airborne
agricultural, industrial, and inspection services.
Annex 11.9
Professional Services
Development of Professional Standards
1. The Parties shall encourage the relevant bodies in their respective
territories to develop mutually acceptable standards and criteria for licensing and certification of
professional service suppliers and to provide recommendations on mutual recognition to the
Commission.
2. The standards and criteria referred to in paragraph 1 may be developed
with regard to the following matters:
(a) education – accreditation of schools or academic programs;
(b) examinations – qualifying examinations for licensing, including
alternative methods of assessment such as oral examinations and interviews;
(c) experience – length and nature of experience required for licensing;
(d) conduct and ethics – standards of professional conduct and the nature of disciplinary action for non-conformity with those standards;
(e) professional development and re-certification – continuing education and
ongoing requirements to maintain professional certification;
(f) scope of practice – extent of, or limitations on, permissible activities;
(g) local knowledge – requirements for knowledge of such matters as local
laws, regulations, language, geography, or climate; and
(h) consumer protection – alternatives to residency requirements, including
bonding, professional liability insurance, and client restitution funds, to provide
for the protection of consumers.
3. On receipt of a recommendation referred to in paragraph 1, the Commission
shall review the recommendation within a reasonable time to determine whether it is
consistent with this Agreement. Based on the Commission’s review, each Party shall encourage its
respective competent authorities, where appropriate, to implement the recommendation
within a mutually agreed time.
Temporary licensing
4. Where the Parties agree, each Party shall encourage the relevant bodies in
its territory to develop procedures for the temporary licensing of professional service
suppliers of another Party.
Review
5. The Commission shall review the implementation of this Annex at least once
every three years.
Annex 11.13
Specific Commitments
Section A: Costa Rica
1. Costa Rica shall repeal articles 2 and 9 of Law No. 6209, entitled Ley
de Protección al Representante de Casas Extranjeras, dated 9 March 1978, and its
regulation, and item b) of article 361 of the Código de Comercio, Law No. 3284 of 24 April 1964,
effective on the date of entry into force of this Agreement.
2. Subject to paragraph 1, Costa Rica shall enact a new legal regime that
shall become applicable to contracts of representation, distribution, or production, and:
(a) shall apply principles of general contract law to such contracts;
(b) shall be consistent with the obligations of this Agreement and the
principle of freedom of contract;
(c) shall treat such contracts as establishing an exclusive relationship only
if the contract explicitly states that the relationship is exclusive;
(d) shall provide that the termination of such contracts either on their
termination dates or in the circumstances described in subparagraph (e) is just cause for
a goods or service supplier of another Party to terminate the contract or allow
the contract to expire without renewal; and
(e) will allow contracts with no termination date to be terminated by any of
the parties by giving ten months advance termination notice.
3. The absence of an express provision for settlement of disputes in a
contract of representation, distribution, or production shall give rise to a presumption
that the parties intended to settle any disputes through binding arbitration. Such arbitration
may take place in Costa Rica. However, the presumption of an intent to submit to arbitration
shall not apply where any of the parties objects to arbitration.
4. The United States and Costa Rica shall encourage parties to existing
contracts of representation, distribution, or production to renegotiate such contracts so
as to make them subject to the new legal regime enacted in accordance with paragraph 2.
5. In any case, the repeal of articles 2 and 9 of Law No. 6209 shall not
impair any vested right, when applicable, derived from that legislation and recognized under
Article 34 of the
Constitución Política de la República de Costa Rica.
6. Costa Rica shall, to the maximum extent possible, encourage and facilitate
the use of arbitration for the settlement of disputes in contracts of representation,
distribution, or production. To this end, Costa Rica shall endeavor to facilitate the
operation of arbitration centers and other effective means of alternative resolution of claims arising
pursuant to Law No. 6209 or the new legal regime enacted in accordance with paragraph 2, and
shall encourage the development of rules for such arbitrations that provide, to the greatest
extent possible, for the prompt, low-cost, and fair resolution of such claims.
7. For purposes of this Section:
(a) contract of representation, distribution, or production has the
same meaning as under Law No. 6209; and
(b) termination date means the date provided in the contract for the
contract to end, or the end of a contract extension period agreed upon by the parties to the contract.
Section B: The Dominican Republic
1. The Dominican Republic shall not apply Law No. 173 to any covered contract
signed after the date of entry into force of this Agreement unless the contract
explicitly provides for the application of Law No. 173 and in place of Law No. 173 shall:
(a) apply principles of the Código Civil of the Dominican Republic to
the covered contract;
(b) treat the covered contract in a manner consistent with the obligations of
this Agreement and the principle of freedom of contract;
(c) treat the termination of the covered contract, either on its termination
date or pursuant to subparagraph (d), as just cause for a goods or service supplier
to terminate the contract or allow the contract to expire without renewal;
(d) if the covered contract has no termination date, allow it to be
terminated by any of the parties by giving six months advance termination notice;
(e) provide that after the termination of the covered contract or the
decision not to renew it:
(i) if the covered contract contains an indemnification provision, including
a provision providing for no indemnification, the indemnification shall be based on such provision;
(ii) if the covered contract contains no such provision, any indemnification shall be based on actual economic damages and not on a statutory formula;
(iii) the principal shall honor any pending warranties; and
(iv) the principal shall compensate the distributor for the value of any inventory that the distributor is unable to sell by reason of the termination or decision not to renew the contract. The value of inventory shall include any customs duties, surcharges, freight expenses, internal movement costs, and inventory carrying costs paid by the distributor;
(f) allow disputes arising from the covered contract to be resolved through
binding arbitration; and
(g) allow the parties to the covered contract to establish in the contract
the mechanisms and forums that will be available in the case of disputes.
Nothing in subparagraph (c) shall prevent parties from demanding
indemnification, when appropriate, in the form, type, and amount agreed in the contract.
2. If Law No. 173 applies to a covered contract, either because the contract
was signed before the entry into force of this Agreement or the contract explicitly
provides for the application of Law No. 173, and the contract is registered with the Banco
Central in accordance with Article 10 of Law No. 173, the Dominican Republic shall provide,
consistent with articles 46 and 47 of the Constitución de la República Dominicana, that:
(a) the amount of an indemnity for termination of a covered contract based on
the factors listed in Article 3 of Law No. 173 shall be no greater than would be available to the claimant under the Código Civil of the Dominican
Republic;
(b) during or after the conciliation process under Article 7 of Law No. 173,
the parties to a contract may agree to resolve the dispute through binding arbitration;
and
(c) the Government of the Dominican Republic and the conciliation authorities
shall take all appropriate steps to encourage the resolution of disputes arising
under covered contracts through binding arbitration.
3. For all covered contracts,
(a) a goods or service supplier shall not be required to pay damages or an
indemnity for terminating a covered contract for just cause or allowing such a contract
to expire without renewal for just cause; and
(b) a contract shall be interpreted as establishing an exclusive
distributorship only to the extent that the terms of the contract explicitly state that the
distributor has exclusive rights to distribute a product or service.
4. The requirement that the parties to a contract seek a negotiated
settlement of any dispute through conciliation, and all other provisions of Law No. 173, shall retain
all their validity and force for all contractual relations not subject to paragraph 1.
5. For purposes of this Section:
(a) covered contract means a concession contract, as defined in Law
No. 173, to which a goods or service supplier of the United States or any enterprise
controlled by such supplier is a party;
(b) Law No. 173 means Law No. 173, entitled “Ley sobre Protección a
los Agentes Importadores de Mercancías y Productos,” dated April 6, 1966, and its modifications; and
(c) termination date means the date provided in the contract, or the
end of a period of extension of a contract agreed upon by the parties to the contract.
Section C: El Salvador
1. Articles 394 through 399-B of the Código de Comercio shall apply
only to contracts that were entered into after such Articles entered into force.
2. Articles 394 through 399-B of the Código de Comercio shall not
apply to any distribution contract that a person of the United States enters into after the date of
entry into force of this Agreement, as long as the contract so provides.
3. Parties to a distribution contract shall be permitted to establish in the
contract the mechanisms and forums that will be available in the case of disputes.
4. If a distribution contract makes specific provision for indemnification,
including a provision providing for no indemnification, Article 397 of the Código de
Comercio shall not apply to that contract.
5. Under Salvadoran law, a distribution contract shall be treated as
exclusive only if the contract states so expressly.
6. El Salvador shall encourage parties to distribution contracts made after
the date of entry into force of this Agreement to include provisions providing for binding
arbitration of disputes and specifying methods for determining any indemnity.
7. For purposes of this Section, distribution contract has the same
meaning as under Articles 394 through 399-B of the Código de Comercio.
Section D: Guatemala
1. The Parties recognize that Guatemala, through Decree 8-98 of the
Congreso de la República, which reformed the Código de Comercio de Guatemala,
repealed Decree 78-71, which regulated contracts of agency, distribution, or representation, and
created a new regime for agents of commerce, distributors, and representatives.
2. During the year following the date of entry into force of this Agreement,
the United States and Guatemala shall encourage parties to contracts without a fixed
termination date that remain subject to Decree 78-71 to renegotiate such contracts. The new
contracts shall be based on the terms and conditions established by mutual agreement of the parties
and on the provisions of the Código de Comercio de Guatemala, which shall regulate the
activities of agents of commerce, distributors, and representatives. The United States and Guatemala
shall also encourage parties to other contracts of agency, distribution, or
representation that remain subject to Decree 78-71 to renegotiate such contracts so as to make them subject to
the new regime referenced in paragraph 1.
3. The absence of an express provision for settlement of disputes in a
contract of agency, distribution, or representation shall, to the extent consistent with the
Constitución Política de la República de Guatemala, give rise to a rebuttable presumption that the
parties intended to settle any disputes through binding arbitration.
4. The United States and Guatemala shall encourage the parties to contracts
of agency, distribution, or representation to settle any disputes through binding
arbitration. In particular, if the amount and form of any indemnification payment is not established in the
contract and a party wishes to terminate the contract, the parties may agree to arbitration
to establish the amount, if any, of the indemnity.
5. For purposes of this Section:
(a) termination date means the date provided in the contract for the
contract to end, or the end of a contract extension period agreed upon by the parties to the contract; and
(b) contract of agency, distribution, or representation has the same
meaning as under Decree 78-71.
Section E: Honduras
1. The obligations set out in paragraphs 2, 3, and 4 shall not apply to:
(a) express conditions included in a contract of representation,
distribution, or agency; or
(b) to contractual relations entered into before the date of entry into force
of this Agreement.
2. Honduras may not require a goods or service supplier of another Party:
(a) to supply such goods or services in Honduras by means of a
representative, agent, or distributor, except as otherwise provided by law for reasons of health,
safety, or consumer protection;
(b) to offer or introduce goods or services in the territory of Honduras
through existing concessionaires for such goods or services unless a contract between them requires an exclusive relationship; or
(d) to pay damages or an indemnity for terminating a contract of
representation, or agency for just cause or allowing such a contract to expire without renewal
for just cause.
3. Honduras may not require that a representative, agent, or distributor be a
national of Honduras or an enterprise controlled by nationals of Honduras;
4. Honduras shall provide that:
(a) the fact that a contract of representation, distribution, or agency has
reached its termination date shall be considered just cause for a goods or service
supplier of another Party to terminate the contract or allow the contract to expire
without renewal; and
(b) any damages or indemnity for terminating a contract of representation, distribution, or agency, or allowing it to expire without renewal, without
just cause shall be based on the general law of contracts.
Nothing in subparagraph (b) shall be construed to require Honduras to adopt
any measure that affects the right of the parties to demand indemnification, when appropriate,
in the form, type, and amount agreed in the contract.
5. Honduras shall provide that:
(a) if the amount and form of any indemnification payment is not established
in a contract of representation, distribution, or agency and a party wishes to
terminate the contract;
(i) the parties may agree to resolve any dispute regarding such payment in
the Center for Conciliation and Arbitration of Honduras, or if the parties agree otherwise, to another arbitration center; and
(ii) in such proceeding general principles of contract law will be applied;
(b) Decree Law No. 549 shall apply to a contract only if:
(i) the representative, distributor, or agent has registered with the Secretaría de Estado en los Despachos de Industria y Comercio, which shall be possible only if it is party to a written contract of representation, distribution, or agency; and
(ii) the contract was entered into while such law was in effect; and
(c) in any decision awarding an indemnity calculated under Article 14 of
Decree Law No. 549, the amount shall be calculated as of the date of entry into force of
this Agreement, expressed in terms of Honduran lempiras as of that date, and converted into U.S. dollars at the exchange rate in effect on the date of the decision.
6. Under Honduran law, a contract of representation, distribution, or agency
is exclusive only if the contract states so expressly.
7. For purposes of this Section:
(a) termination date means the date provided in the contract for the
contract to end, at 12:00 p.m. on that day, or the end of a contract extension period agreed
upon by the parties to the contract; and
(b) contract of representation, distribution, or agency has the same
meaning as under Decree Law No. 549.
Chapter Twelve
Financial Services
Article 12.1: Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party relating
to:
(a) financial institutions of another Party;
(b) investors of another Party, and investments of such investors, in
financial institutions in the Party’s territory; and
(c) cross-border trade in financial services.
2. Chapters Ten (Investment) and Eleven (Cross-Border Trade in Services)
apply to measures described in paragraph 1 only to the extent that such Chapters or
Articles of such Chapters are incorporated into this Chapter.
(a) Articles 10.7 (Expropriation and Compensation), 10.8 (Transfers), 10.11 (Investment and Environment), 10.12 (Denial of Benefits), 10.14 (Special Formalities and Information Requirements), and 11.12 (Denial of Benefits) are hereby incorporated into and made a part of this Chapter.
(b) Section B of Chapter Ten (Investor-State Dispute Settlement) is hereby incorporated into and made a part of this Chapter solely for claims that a
Party has breached Article 10.7, 10.8, 10.12, or 10.14, as incorporated into this
Chapter.
(c) Article 11.10 (Transfers and Payments) is incorporated into and made a
part of this Chapter to the extent that cross-border trade in financial services is
subject to obligations pursuant to Article 12.5.
3. This Chapter does not apply to measures adopted or maintained by a Party
relating to:
(a) activities or services forming part of a public retirement plan or
statutory system of social security; or
(b) activities or services conducted for the account or with the guarantee or
using the financial resources of the Party, including its public entities,
except that this Chapter shall apply if a Party allows any of the activities
or services referred to in subparagraph (a) or (b) to be conducted by its financial institutions in
competition with a public entity or a financial institution.
4.
(a) Subject to subparagraph (c), for two years beginning on
the date of entry into force of this Agreement, this Chapter shall not apply to:
(i) measures adopted or maintained by the Dominican Republic relating to financial institutions of Costa Rica, El Salvador, Honduras, or Nicaragua to the extent they supply banking services; investors of Costa Rica, El Salvador, Honduras, or Nicaragua, and investments of such investors, in such financial institutions in the territory of the Dominican Republic; or cross-border trade in financial services between the Dominican Republic and Costa Rica, El Salvador, Honduras, or Nicaragua; or
(ii) measures adopted or maintained by Costa Rica, El Salvador, Honduras, or Nicaragua relating to financial institutions of the Dominican Republic to the extent they supply banking services; investors of the Dominican Republic, and investments of such investors, in such financial institutions in the territory of Costa Rica, El Salvador, Honduras, or Nicaragua; or cross-border trade in financial services between Costa Rica, El Salvador, Honduras, or Nicaragua and the Dominican Republic;
(iii) measures adopted or maintained by the Dominican Republic relating to financial institutions of Guatemala; investors of Guatemala, and investments of such investors, in such financial institutions in the
territory of the Dominican Republic; or cross-border trade in financial services between the Dominican Republic and Guatemala; or
(iv) measures adopted or maintained by Guatemala relating to financial institutions of the Dominican Republic; investors of the Dominican Republic, and investments of such investors, in such financial institutions in the territory of Guatemala; or cross-border trade in financial services between Guatemala and the Dominican Republic.
(b) During the two-year period referred to in subparagraph (a), the Dominican Republic and each Central American Party shall seek to agree on those
measures described in subparagraph (a) that shall be considered non-conforming
measures pursuant to Article 12.9 and that shall be reflected in their respective
Schedules to Annex III for purposes of modifying their rights and obligations with respect
to each other under this Chapter.
(c) If the Commission approves any such agreement during this period, each
relevant Party’s schedule shall be modified accordingly. Subparagraph (a) shall cease
to apply as between the Dominican Republic and the relevant Central American Party on the date the modification takes effect.
Article 12.2: National Treatment
1. Each Party shall accord to investors of another Party treatment no less
favorable than that it accords to its own investors, in like circumstances, with respect to the
establishment, acquisition, expansion, management, conduct, operation, and sale or other
disposition of financial institutions and investments in financial institutions in its
territory.
2. Each Party shall accord to financial institutions of another Party and to
investments of investors of another Party in financial institutions treatment no less
favorable than that it accords to its own financial institutions, and to investments of its own investors in
financial institutions, in like circumstances, with respect to the establishment, acquisition,
expansion, management, conduct, operation, and sale or other disposition of financial institutions
and investments.
3. For purposes of the national treatment obligations in Article 12.5.1, a
Party shall accord to cross-border financial service suppliers of another Party treatment no
less favorable than that it accords to its own financial service suppliers, in like circumstances, with
respect to the supply of the relevant service.
Article 12.3: Most-Favored-Nation Treatment
1. Each Party shall accord to investors of another Party, financial
institutions of another Party, investments of investors in financial institutions, and cross-border
financial service suppliers of another Party treatment no less favorable than that it accords
to the investors, financial institutions, investments of investors in financial institutions,
and cross-border financial service suppliers of any other Party or of a non-Party, in like
circumstances.
2. A Party may recognize prudential measures of another Party or of a
non-Party in the application of measures covered by this Chapter. Such recognition may be:
(a) accorded unilaterally;
(b) achieved through harmonization or other means; or
(c) based upon an agreement or arrangement with another Party or a non-Party.
3. A Party according recognition of prudential measures under paragraph 2
shall provide adequate opportunity to another Party to demonstrate that circumstances exist
in which there are or would be equivalent regulation, oversight, implementation of regulation,
and, if appropriate, procedures concerning the sharing of information between the relevant
Parties.
4. Where a Party accords recognition of prudential measures under paragraph
2(c) and the circumstances set out in paragraph 3 exist, the Party shall provide adequate
opportunity to another Party to negotiate accession to the agreement or arrangement, or to
negotiate a comparable agreement or arrangement.
Article 12.4: Market Access for Financial Institutions
No Party may adopt or maintain, with respect to financial institutions of
another Party, either on the basis of a regional subdivision or on the basis of its entire
territory, measures that:
(a) impose limitations on:
(i) the number of financial institutions whether in the form of numerical quotas, monopolies, exclusive service suppliers, or the requirements of an economic needs test;
(ii) the total value of financial service transactions or assets in the form
of numerical quotas or the requirement of an economic needs test;
(iii) the total number of financial service operations or on the total
quantity of financial services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test; or
(iv) the total number of natural persons that may be employed in a particular financial service sector or that a financial institution may employ and who are necessary for, and directly related to, the supply of a specific
financial service in the form of numerical quotas or the requirement of an economic needs test; or
(b) restrict or require specific types of legal entity or joint venture
through which a financial institution may supply a service.
For purposes of this Article, “financial institutions of another Party”
includes financial institutions that investors of another Party seek to establish in the
territory of the Party.
Article 12.5: Cross-Border Trade
1. Each Party shall permit, under terms and conditions that accord national
treatment, crossborder financial service suppliers of another Party to supply the services specified
in Annex 12.5.1.
2. Each Party shall permit persons located in its territory, and its
nationals wherever located, to purchase financial services from cross-border financial service suppliers
of another Party located in the territory of that other Party or of any other Party. This
obligation does not require a Party to permit such suppliers to do business or solicit in its territory.
Each Party may define “doing business” and “solicitation” for purposes of this obligation, provided
that those definitions are not inconsistent with paragraph 1.
3. Without prejudice to other means of prudential regulation of cross-border
trade in financial services, a Party may require the registration of cross-border
financial service suppliers of another Party and of financial instruments.
Article 12.6: New Financial Services1
Each Party shall permit a financial institution of another Party to supply
any new financial service that the Party would permit its own financial institutions,
in like circumstances, to supply without additional legislative action by the Party. Notwithstanding
Article 12.4(b), a Party may determine the institutional and juridical form through which the
new financial service may be supplied and may require authorization for the supply of the service.
Where a Party requires authorization to supply a new financial service, a decision shall be
made within a reasonable time and the authorization may only be refused for prudential
reasons.
Article 12.7: Treatment of Certain Information
Nothing in this Chapter requires a Party to furnish or allow access to:
(a) information related to the financial affairs and accounts of individual
customers of financial institutions or cross-border financial service suppliers; or
(b) any confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice
legitimate commercial interests of particular enterprises.
Article 12.8: Senior Management and Boards of Directors
1. No Party may require financial institutions of another Party to engage
individuals of any particular nationality as senior managerial or other essential personnel.
2. No Party may require that more than a minority of the board of directors
of a financial institution of another Party be composed of nationals of the Party, persons
residing in the territory of the Party, or a combination thereof.
Article 12.9: Non-Conforming Measures
1. Articles 12.2 through 12.5 and 12.8 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party at
(i) the central level of government, as set out by that Party in its Schedule
to Annex III,
(ii) a regional level of government, as set out by that Party in its Schedule
to Annex III, or
(iii) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred
to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph
(a) to the extent that the amendment does not decrease the conformity of the
measure, as it existed immediately before the amendment, with Article 12.2, 12.3, 12.4,
or 12.8.2
2. Annex 12.9.2 sets out certain specific commitments by each Party.
3. Annex 12.9.3 sets out, solely for purposes of transparency, supplementary
information regarding certain aspects of financial services measures of a Party that the
Party considers are not inconsistent with its obligations under this Chapter.
4. Articles 12.2 through 12.5 and 12.8 do not apply to any measure that a
Party adopts or maintains with respect to sectors, subsectors, or activities, as set out in
its Schedule to Annex III.
5. A non-conforming measure set out in a Party’s Schedule to Annex I or II as
a measure to which Article 10.3 (National Treatment), 10.4 (Most-Favored-Nation
Treatment), 11.2 (National Treatment), 11.3 (Most-Favored-Nation Treatment), or 11.4 (Market Access)
does not apply shall be treated as a non-conforming measure to which Article 12.2, 12.3, or
12.4, as the case may be, does not apply, to the extent that the measure, sector, subsector, or
activity set out in the Schedule is covered by this Chapter.
Article 12.10: Exceptions
1. Notwithstanding any other provision of this Chapter or Chapters Ten
(Investment), Thirteen (Telecommunications), including specifically Article 13.16
(Relationship to Other Chapters), or Fourteen (Electronic Commerce), and Article 11.1.3 (Scope and
Coverage) with respect to the supply of financial services in the territory of a Party by an
investor of another Party or a covered investment, a Party shall not be prevented from adopting
or maintaining measures for prudential reasons,3 including for the
protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial
institution or cross-border financial service supplier, or to ensure the integrity and stability of the
financial system. Where such measures do not conform with the provisions of this Agreement referred
to in this paragraph, they shall not be used as a means of avoiding the Party’s
commitments or obligations under such provisions.
2. Nothing in this Chapter or Chapters Ten (Investment), Thirteen
(Telecommunications), including specifically Article 13.16 (Relationship to Other Chapters), or
Fourteen (Electronic Commerce), and Article 11.1.3 (Scope and Coverage) with respect to the supply
of financial services in the territory of a Party by an investor of another Party or a
covered investment, applies to non-discriminatory measures of general application taken by any
public entity in pursuit of monetary and related credit policies or exchange rate policies.
This paragraph shall not affect a Party’s obligations under Article 10.9 (Performance
Requirements) with respect to measures covered by Chapter Ten (Investment) or under Article 10.8
(Transfers) or 11.10 (Transfers and Payments).
3. Notwithstanding Articles 10.8 (Transfers) and 11.10 (Transfers and
Payments), as incorporated into this Chapter, a Party may prevent or limit transfers by a
financial institution or cross-border financial service supplier to, or for the benefit of, an
affiliate of or person related to such institution or supplier, through the equitable, non-discriminatory, and
good faith application of measures relating to maintenance of the safety, soundness, integrity, or
financial responsibility of financial institutions or cross-border financial service suppliers. This
paragraph does not prejudice any other provision of this Agreement that permits a Party to
restrict transfers.
4. For greater certainty, nothing in this Chapter shall be construed to
prevent the adoption or enforcement by any Party of measures necessary to secure compliance with laws
or regulations that are not inconsistent with this Chapter, including those relating to the
prevention of deceptive and fraudulent practices or to deal with the effects of a default on
financial services contracts, subject to the requirement that such measures are not applied in a manner
which would constitute a means of arbitrary or unjustifiable discrimination between countries where
like conditions prevail, or a disguised restriction on investment in financial institutions
or cross-border trade in financial services.
Article 12.11: Transparency
1. The Parties recognize that transparent regulations and policies governing
the activities of financial institutions and cross-border financial service suppliers are
important in facilitating both access of foreign financial institutions and foreign cross-border
financial service suppliers to, and their operations in, each other’s markets. Each Party commits to
promote regulatory transparency in financial services.
2. In lieu of Article 18.2.2 (Publication), each Party shall, to the extent
practicable:
(a) publish in advance any regulations of general application relating to the
subject matter of this Chapter that it proposes to adopt; and
(b) provide interested persons and Parties a reasonable opportunity to
comment on the proposed regulations.
3. At the time it adopts final regulations, a Party should, to the extent
practicable, address in writing substantive comments received from interested persons with respect to
the proposed regulations.
4. To the extent practicable, each Party should allow reasonable time between
publication of final regulations and their effective date.
5. Each Party shall ensure that the rules of general application adopted or
maintained by self-regulatory organizations of the Party are promptly published or
otherwise made available in such a manner as to enable interested persons to become acquainted with them.
6. Each Party shall maintain or establish appropriate mechanisms that will
respond to inquiries from interested persons regarding measures of general application
covered by this Chapter.
7. Each Party’s regulatory authorities shall make available to interested
persons the requirements, including any documentation required, for completing
applications relating to the supply of financial services.
8. On the request of an applicant, a Party’s regulatory authority shall
inform the applicant of the status of its application. If the authority requires additional
information from the applicant, it shall notify the applicant without undue delay.
9. A Party’s regulatory authority shall make an administrative decision on a
completed application of an investor in a financial institution, a financial
institution, or a cross-border financial service supplier of another Party relating to the supply of a
financial service within 120 days, and shall promptly notify the applicant of the decision. An application
shall not be considered complete until all relevant hearings are held and all necessary
information is received. Where it is not practicable for a decision to be made within 120 days, the
regulatory authority shall notify the applicant without undue delay and shall endeavor to make the
decision within a reasonable time thereafter.
Article 12.12: Self-Regulatory Organizations
Where a Party requires a financial institution or a cross-border financial
service supplier of another Party to be a member of, participate in, or have access to, a
self-regulatory organization to provide a financial service in or into the territory of that
Party, the Party shall ensure observance of the obligations of Articles 12.2 and 12.3 by such
self-regulatory organization.
Article 12.13: Payment and Clearing Systems
Under terms and conditions that accord national treatment, each Party shall
grant financial institutions of another Party established in its territory access
to payment and clearing systems operated by public entities, and to official funding and refinancing
facilities available in the normal course of ordinary business. This paragraph is not intended to
confer access to the Party’s lender of last resort facilities.
Article 12.14: Domestic Regulation
Except with respect to non-conforming measures listed in its Schedule to
Annex III, each Party shall ensure that all measures of general application to which this
Chapter applies are administered in a reasonable, objective, and impartial manner.
Article 12.15: Expedited Availability of Insurance Services
The Parties recognize the importance of maintaining and developing regulatory procedures to expedite the offering of insurance services by licensed
suppliers.
Article 12.16: Financial Services Committee
1. The Parties hereby establish a Financial Services Committee. The principal representative of each Party shall be an official of the Party’s authority
responsible for financial services set out in Annex 12.16.1.
2. The Committee shall:
(a) supervise the implementation of this Chapter and its further elaboration;
(b) consider issues regarding financial services that are referred to it by a
Party; and
(c) participate in the dispute settlement procedures in accordance with
Article 12.19.
All decisions of the Committee shall be taken by consensus, unless the
Committee otherwise decides.
3. The Committee shall meet annually, or as otherwise agreed, to assess the
functioning of this Agreement as it applies to financial services. The Committee shall
inform the Commission of the results of each meeting.
Article 12.17: Consultations
1. A Party may request consultations with another Party regarding any matter
arising under this Agreement that affects financial services. The other Party shall give
sympathetic consideration to the request. The consulting Parties shall report the results
of their consultations to the Committee.
2. Consultations under this Article shall include officials of the
authorities specified in Annex 12.16.1.
3. Nothing in this Article shall be construed to require regulatory
authorities participating in consultations under paragraph 1 to disclose information or take any action
that would interfere with specific regulatory, supervisory, administrative, or enforcement
matters.
4. Nothing in this Article shall be construed to require a Party to derogate
from its relevant law regarding sharing of information among financial regulators or the
requirements of an agreement or arrangement between financial authorities of two or more
Parties.
Article 12.18: Dispute Settlement
1. Section A of Chapter Twenty (Dispute Settlement) applies as modified by
this Article to the settlement of disputes arising under this Chapter.
2. The Parties shall establish within six months after the date of entry into
force of this Agreement and maintain a roster of up to 28 individuals who are willing and
able to serve as financial services panelists. Unless the Parties otherwise agree, the roster
shall include up to three individuals who are nationals of each Party and up to seven individuals
who are not nationals of any Party. The roster members shall be appointed by consensus
and may be reappointed. Once established, a roster shall remain in effect for a minimum
of three years, and shall remain in effect thereafter until the Parties constitute a new roster.
The Parties may appoint a replacement where a roster member is no longer available to serve.
3. Financial services roster members, as well as financial services
panelists, shall:
(a) have expertise or experience in financial services law or practice, which
may include the regulation of financial institutions;
(b) be chosen strictly on the basis of objectivity, reliability, and sound
judgment;
(c) be independent of, and not be affiliated with or take instructions from,
any Party; and
(d) comply with a code of conduct to be established by the Commission.
4. When a Party claims that a dispute arises under this Chapter, Article 20.9
(Panel Selection) shall apply, except that:
(a) where the disputing Parties so agree, the panel shall be composed
entirely of panelists meeting the qualifications in paragraph 3; and
(b) in any other case,
(i) each disputing Party may select panelists meeting the qualifications set
out in paragraph 3 or in Article 20.8 (Qualifications of Panelists), and
(ii) if the Party complained against invokes Article 12.10, the chair of the panel shall meet the qualifications set out in paragraph 3, unless the disputing Parties otherwise agree.
5. Notwithstanding Article 20.16 (Non-Implementation – Suspension of
Benefits), where a panel finds a measure to be inconsistent with this Agreement and the measure
under dispute affects:
(a) only the financial services sector, the complaining Party may suspend
benefits only in the financial services sector;
(b) the financial services sector and any other sector, the complaining Party
may suspend benefits in the financial services sector that have an effect
equivalent to the effect of the measure in the Party’s financial services sector; or
(c) only a sector other than the financial services sector, the complaining
Party may not suspend benefits in the financial services sector.
Article 12.19: Investment Disputes in Financial Services
1. Where an investor of a Party submits a claim under Section B of Chapter
Ten (Investment) against another Party and the respondent invokes Article 12.10,
on request of the respondent, the tribunal shall refer the matter in writing to the Financial
Services Committee for a decision. The tribunal may not proceed pending receipt of a decision or
report under this Article.
2. In a referral pursuant to paragraph 1, the Financial Services Committee
shall decide the issue of whether and to what extent Article 12.10 is a valid defense to the
claim of the investor. The Committee shall transmit a copy of its decision to the tribunal and to
the Commission. The decision shall be binding on the tribunal.
3. Where the Financial Services Committee has not decided the issue within 60
days of the receipt of the referral under paragraph 1, the respondent or the Party of the
claimant may request the establishment of an arbitral panel under Article 20.6 (Request for an
Arbitral Panel). The panel shall be constituted in accordance with Article 12.18. The panel shall
transmit its final report to the Committee and to the tribunal. The report shall be binding on
the tribunal.
4. The Financial Services Committee may decide that, for purposes of a
referral pursuant to paragraph 1, the financial services authorities of the relevant Parties shall
make the decision described in paragraph 2 and transmit that decision to the tribunal and the
Commission. In that case, a request may be made under paragraph 3 if the relevant Parties have
not made the decision described in paragraph 2 within 60 days of their receipt of the referral
under paragraph 1.
5. Where no request for the establishment of a panel pursuant to paragraph 3
has been made within ten days of the expiration of the 60-day period referred to in
paragraph 3, the tribunal may proceed to decide the matter.
6. For purposes of this Article, tribunal means a tribunal established
under Article 10.19 (Selection of Arbitrators).
Article 12.20: Definitions
For purposes of this Chapter:
cross-border financial service supplier of a Party
means a person of a
Party that is engaged in the business of supplying a financial service within the territory of the
Party and that seeks to supply or supplies a financial service through the cross-border supply of
such services;
cross-border trade in financial services
or cross-border supply of
financial services means the supply of a financial service:
(a) from the territory of one Party into the territory of another Party,
(b) in the territory of one Party by a person of that Party to a person of
another Party, or
(c) by a national of one Party in the territory of another Party, but does not include the supply of a financial service in the territory of a
Party by an investment in that territory;
financial institution
means any financial intermediary or other
enterprise that is authorized to do business and regulated or supervised as a financial institution under the law
of the Party in whose territory it is located;
financial institution of another Party
means a financial institution,
including a branch, located in the territory of a Party that is controlled by persons of another Party;
financial service
means any service of a financial nature. Financial
services include all insurance and insurance-related services, and all banking and other financial
services (excluding insurance), as well as services incidental or auxiliary to a service of a
financial nature. Financial services include the following activities:
Insurance and insurance-related services
(a) Direct insurance (including co-insurance):
(i) life,
(ii) non-life;
(b) Reinsurance and retrocession;
(c) Insurance intermediation, such as brokerage and agency; and
(d) Services auxiliary to insurance, such as consultancy, actuarial, risk
assessment, and claim settlement services.
Banking and other financial services (excluding insurance)
(e) Acceptance of deposits and other repayable funds from the public;
(f) Lending of all types, including consumer credit, mortgage credit,
factoring and financing of commercial transactions;
(g) Financial leasing;
(h) All payment and money transmission services, including credit, charge,
and debit cards, travelers checks, and bankers drafts;
(i) Guarantees and commitments;
(j) Trading for own account or for account of customers, whether on an
exchange, in an over-the-counter market, or otherwise, the following:
(i) money market instruments (including checks, bills, and certificates of deposits);
(ii) foreign exchange;
(iii) derivative products including, but not limited to, futures and options;
(iv) exchange rate and interest rate instruments, including products such as swaps, forward rate agreements;
(v) transferable securities,
(vi) other negotiable instruments and financial assets, including bullion;
(k) Participation in issues of all kinds of securities, including
underwriting and placement as agent (whether publicly or privately) and provision of services related to such issues;
(l) Money broking;
(m) Asset management, such as cash or portfolio management, all forms of
collective investment management, pension fund management, custodial, depository, and trust services;
(n) Settlement and clearing services for financial assets, including
securities, derivative products, and other negotiable instruments;
(o) Provision and transfer of financial information, and financial data
processing and related software by suppliers of other financial services; and
(p) Advisory, intermediation, and other auxiliary financial services on all
the activities listed in subparagraphs (e) through (o), including credit
reference and analysis, investment and portfolio research and advice, advice on
acquisitions and on corporate restructuring and strategy;
financial service supplier of a Party
means a person of a Party that is
engaged in the business of supplying a financial service within the territory of that Party;
investment
means “investment” as defined in Article 10.28 (Definitions),
except that, with respect to “loans” and “debt instruments” referred to in that Article:
(a) a loan to or debt instrument issued by a financial institution is an
investment only where it is treated as regulatory capital by the Party in whose territory thefinancial institution is located; and
(b) a loan granted by or debt instrument owned by a financial institution,
other than a loan to or debt instrument of a financial institution referred to in
subparagraph (a), is not an investment;
for greater certainty, a loan granted by or debt instrument owned by a
cross-border financial service supplier, other than a loan to or debt instrument issued by a
financial institution, is an investment if such loan or debt instrument meets the criteria for investments
set out in Article 10.28;
investor of a Party
means a Party or state enterprise thereof, or a
person of a Party, that attempts to make, is making, or has made an investment in the territory of another
Party; provided, however, that a natural person who is a dual national shall be deemed to be
exclusively a national of the State of his or her dominant and effective nationality;
new financial service
means a financial service not supplied in the
Party’s territory that is supplied within the territory of another Party, and includes any new form of
delivery of a financial service or the sale of a financial product that is not sold in the
Party’s territory;
person of a Party
means “person of a Party” as defined in Article 2.1
(Definitions of General Application) and, for greater certainty, does not include a branch of an
enterprise of a non-Party;
public entity
means a central bank or monetary authority of a Party, or
any financial institution owned or controlled by a Party; and
self-regulatory organization
means any non-governmental body, including
any securities or futures exchange or market, clearing agency, or other organization or
association, that exercises its own or delegated regulatory or supervisory authority over financial
service suppliers or financial institutions.
Annex 12.5.1
Cross-Border Trade
Section A: Costa Rica
Banking and Other Financial Services (Excluding Insurance)
1. For Costa Rica, Article 12.5.1 applies with respect to the provision and
transfer of financial information and financial data processing and related software as
referred to in subparagraph (o) of the definition of financial service, and advisory and
other auxiliary services, excluding intermediation, relating to banking and other financial services as
referred to in subparagraph (p) of the definition of financial service.4
Section B: The Dominican Republic
Insurance and Insurance-Related Services
1. For the Dominican Republic, Article 12.5.1 applies to the cross-border
supply of or trade in financial services as defined in subparagraph (a) of the definition of
cross-border supply of financial services with respect to:
(a) insurance of risk relating to:
(i) maritime shipping and commercial aviation and space launching and freight (including satellites), with such insurance to cover any or all of
the following: the goods being transported, the vehicle transporting the goods and any liability arising therefrom; and
(ii) goods in international transit;
(b) reinsurance and retrocession;
(c) brokerage of insurance risks relating to paragraphs (a) and (b); and
(d) consultancy, risk assessment, actuarial, and claims settlement services.
2. For the Dominican Republic, Article 12.5.1 applies to the cross-border
supply of or trade in financial services as defined in subparagraph (c) of the definition of
cross-border supply of financial services with respect to insurance services.5
Banking and Other Financial Services (Excluding Insurance)
3. For the Dominican Republic, Article 12.5.1 applies with respect to the
provision and transfer of financial information and financial data processing and related
software as referred to in subparagraph (o) of the definition of financial service, and advisory and
other auxiliary services, excluding intermediation, relating to banking and other financial
services as referred to in subparagraph (p) of the definition of financial service.6
Section C: El Salvador
Insurance and Insurance-Related Services
1. For El Salvador, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (a) of the definition of cross-border
supply of financial services with respect to:
(a) insurance of risk relating to:
(i) maritime shipping and commercial aviation and space launching and freight (including satellites), with such insurance to cover any or all of
the following: the goods being transported, the vehicle transporting the goods, and any liability arising therefrom, and
(ii) goods in international transit;
(b) reinsurance and retrocession;
(c) brokerage of insurance risks relating to paragraphs (a) and (b); and
(d) consultancy, risk assessment, actuarial, and claims settlement services.
2. For El Salvador, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (c) of the definition of cross-border
supply of financial services with respect to insurance services.7
Banking and Other Financial Services (Excluding Insurance)
3. For El Salvador, Article 12.5.1 applies with respect to:
(a) provision and transfer of financial information as described in
subparagraph (o) of the definition of financial service;
(b) financial data processing as described in subparagraph (o) of the
definition of financial service, subject to prior authorization from the relevant
regulator, when it is required;8 and
(c) advisory and other auxiliary financial services, excluding
intermediation, relating to banking and other financial services as described in subparagraph (p) of
the definition of financial service.9
Section D: Guatemala
Insurance and Insurance-Related Services
1. For Guatemala, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (a) of the definition of cross-border
supply of financial services with respect to:
(a) insurance of risk relating to:
(i) maritime shipping and commercial aviation and space launching and freight (including satellites), with such insurance to cover any or all of
the following: the goods being transported, the vehicle transporting the goods, and any liability arising therefrom, and
(ii) goods in international transit;
(b) reinsurance and retrocession;
(c) insurance intermediation such as brokerage and agency only for the
services indicated in paragraphs (a) and (b); and
(d) services auxiliary to insurance as referred to in subparagraph (d) of the
definition of financial service.
2. For Guatemala, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (c) of the definition of cross-border
supply of financial services with respect to insurance services.10
Banking and Other Financial Services (Excluding Insurance)
3. For Guatemala, Article 12.5.1 applies with respect to the provision and
transfer of financial information and financial data processing and related software as
referred to in subparagraph (o) of the definition of financial service, and advisory and
other auxiliary services, excluding intermediation, relating to banking and other financial services as
referred to in subparagraph (p) of the definition of financial service.11
Section E: Honduras
Insurance and Insurance-Related Services
1. For Honduras, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (a) of the definition of cross-border
supply of financial services with respect to:
(a) insurance of risk relating to:
(i) maritime shipping and commercial aviation and space launching and freight (including satellites), with such insurance to cover any or all of
the following: the goods being transported, the vehicle transporting the goods, and any liability arising therefrom, and
(ii) goods in international transit;
(b) reinsurance and retrocession;
(c) insurance intermediation such as brokerage and agency only for the
services indicated in paragraphs (a) and (b); and
(d) services auxiliary to insurance as referred to in subparagraph (d) of the
definition of financial service.
2. For Honduras, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (c) of the definition of cross-border
supply of financial services with respect to insurance services.12
Banking and Other Financial Services (Excluding Insurance)
3. For Honduras, Article 12.5.1 applies with respect to the provision and
transfer of financial information and financial data processing and related software as
referred to in subparagraph (o) of the definition of financial service, and advisory and
other auxiliary services, excluding intermediation, relating to banking and other financial services as
referred to in subparagraph (p) of the definition of financial service.13
Section F: Nicaragua
Insurance and Insurance-Related Services
1. For Nicaragua, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (a) of the definition of cross-border
supply of financial services with respect to:
(a) insurance of risk relating to:
(i) maritime shipping and commercial aviation and space launching and freight (including satellites), with such insurance to cover any or all of
the following: the goods being transported, the vehicle transporting the goods, and any liability arising therefrom, and
(ii) goods in international transit;
(b) reinsurance and retrocession;
(c) brokerage of insurance risks relating to paragraphs (a)(i) and (a)(ii);
and
(d) services auxiliary to insurance as referred to in subparagraph (d) of the
definition of financial services.14
2. For Nicaragua, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (c) of the definition of cross-border
supply of financial services with respect to insurance services.15
Banking and Other Financial Services (Excluding Insurance)
3. For Nicaragua, Article 12.5.1 applies with respect to:
(a) the provision and transfer of financial information as described in
subparagraph (o) of the definition of financial service;
(b) financial data processing as described in subparagraph (o) of the
definition of financial service, subject to prior authorization from the relevant
regulator, as required;16 and
(c) advisory and other auxiliary financial services, excluding intermediation
and credit reference and analysis, relating to banking and other financial
services as described in subparagraph (p) of the definition of financial service.17
Section G: United States
Insurance and Insurance-Related Services
1. For the United States, Article 12.5.1 applies to the cross-border supply
of or trade in financial services as defined in subparagraph (a) of the definition of
cross-border supply of financial services with respect to:
(a) insurance of risks relating to:
(i) maritime shipping and commercial aviation and space launching and freight (including satellites), with such insurance to cover any or all of
the following: the goods being transported, the vehicle transporting the goods, and any liability arising therefrom, and
(ii) goods in international transit; and
(b) reinsurance and retrocession, services auxiliary to insurance as referred
to in subparagraph (d) of the definition of financial service, and insurance intermediation such as brokerage and agency as referred to in subparagraph
(c) of the definition of financial service.
2. For the United States, Article 12.5.1 applies to the cross-border supply
of or trade in financial services as defined in subparagraph (c) of the definition of
cross-border supply of financial services with respect to insurance services.
Banking and Other Financial Services (Excluding Insurance)
3. For the United States, Article 12.5.1 applies with respect to the
provision and transfer of financial information and financial data processing and related software as
referred to in subparagraph (o) of the definition of financial service, and advisory and
other auxiliary services, excluding intermediation, relating to banking and other financial services as
referred to in subparagraph (p) of the definition of financial service.18
Annex 12.9.2
Specific Commitments
Section A: Costa Rica
Portfolio Management
1. Costa Rica shall allow a financial institution (other than a trust
company) organized outside its territory to provide investment advice and portfolio management
services, excluding (a) custodial services, (b) trustee services, and (c) execution services that
are not related to managing a collective investment scheme, to a collective investment scheme
located in its territory. This commitment is subject to Article 12.1 and to Article 12.5.3.
2. Notwithstanding paragraph 1, Costa Rica may require that the ultimate
responsibility for the management of a collective investment scheme be borne by a
“sociedad administradora de fondos de inversión” constituted according to the
Ley Reguladora del Mercado de Valores ,
No. 7732 of December 17, 1997 in the case of investment funds or an
“operadora de pensiones”
constituted according to the Ley de
Protección al Trabajador , No. 7983 of February 18, 2000 in the case of pension funds and complementary pension funds.
3. For purposes of paragraphs 1 and 2, collective investment scheme
means an investment fund constituted according to the
Ley Reguladora del Mercado de Valores , No. 7732 of December 17, 1997, or a pension fund or a complementary pension fund
constituted according to the Ley de Protección al Trabajador ,
No. 7983 of February 18, 2000.
Expedited Availability of Insurance
4. Costa Rica should endeavor to consider policies or procedures such as: not
requiring product approval for insurance other than insurance sold to individuals or
compulsory insurance; allowing introduction of products unless those products are disapproved
within a reasonable period of time; and not imposing limitations on the number or frequency of
product introductions.
Section B: The Dominican Republic
Portfolio Management
1. The Dominican Republic shall allow a financial institution (other than a
trust company), organized outside its territory, to provide investment advice and portfolio
management services, excluding (a) custodial services, (b) trustee services, and (c) execution
services that are not related to managing a collective investment scheme, to a collective
investment scheme located in it territory. This commitment is subject to Articles 12.1 and 12.5.3.
2. The Parties recognize that the Dominican Republic does not currently have
legislation regulating collective investment schemes. Notwithstanding paragraph 1, and no
later than four years after the date of entry into force of this Agreement, the Dominican
Republic shall implement paragraph 1 by adopting a Special Law regulating collective
investment schemes, which shall contain a definition of collective investment scheme as specified
in paragraph 3.
3. For purposes of paragraphs 1 and 2, collective investment scheme
will have the meaning provided under the Special Law that the Dominican Republic adopts pursuant to
paragraph 2.
Expedited Availability of Insurance
4. It is understood that the Dominican Republic requires prior product
approval before the introduction of a new insurance product. The Dominican Republic shall provide
that once an enterprise seeking approval for such a product files information with the
Dominican Republic’s regulatory authority, the regulator shall grant approval or issue disapproval
in accordance with the Dominican Republic’s law for the sale of the new product within 30 days.
It is understood that the Dominican Republic does not maintain any limitations on the number
or frequency of new product introductions.
Section C: El Salvador
Portfolio Management
1. El Salvador shall allow a financial institution (other than a trust
company), organized outside its territory, to provide investment advice and portfolio management
services, excluding (a) custodial services, (b) trustee services, and (c) execution services that
are not related to managing a collective investment scheme, to a collective investment scheme
located in the territory of El Salvador. This commitment is subject to Article 12.1 and to
Article 12.5.3.
2. The Parties recognize that El Salvador does not currently have legislation
regulating collective investment schemes. Notwithstanding paragraph 1, and no later than
four years after the date of entry into force of this Agreement, El Salvador will implement
paragraph 1 by adopting a Special Law regulating collective investment schemes, which shall
contain a definition of collective investment scheme as specified in paragraph 3.
3. For purposes of paragraphs 1 and 2, collective investment scheme
will have the meaning provided under the Special Law that El Salvador adopts pursuant to paragraph
2.
Foreign Banking
4. El Salvador shall allow banks organized under the laws of El Salvador to
establish branches in the United States, subject to their compliance with relevant U.S.
law. The Salvadoran regulatory agency will develop and issue prudential and other
requirements that such banks must meet in order for them to obtain authorization to apply for the
establishment of branches in the United States.
Expedited Availability of Insurance
5. It is understood that El Salvador requires prior product approval before
the introduction of a new insurance product. El Salvador shall provide that once an enterprise
seeking approval for such a product files information with El Salvador’s supervisory
authority, the regulator shall grant approval or issue disapproval in accordance with El Salvador’s law for
the sale of the new product within 60 days. It is understood that El Salvador does not maintain
any limitations on the number or frequency of new product introductions.
Section D: Guatemala
Portfolio Management
1. Guatemala shall allow a financial institution (other than a trust
company), organized outside its territory, to provide investment advice and portfolio management
services, excluding (a) custodial services, (b) trustee services, and (c) execution services not
related to managing a collective investment scheme, to a collective investment scheme located in
its territory. This commitment is subject to Article 12.1 and to Article 12.5.3.
2. The Parties recognize that Guatemala does not currently allow insurance
companies to manage collective investment schemes. At such time as Guatemala allows
insurance companies to manage collective investment schemes, Guatemala shall comply with
paragraph 1 with regard to management of such schemes by insurance companies.
3. For purposes of paragraphs 1 and 2, collective investment scheme
means an investment made in accordance with Articles 74, 75, 76, 77, and 79 of the
Ley del Mercado de Valores y Mercancías , Decree No. 34-96 of the
Congreso de la República .
Expedited Availability of Insurance
4. It is understood that Guatemala requires prior product approval before the
introduction of a new insurance product. Guatemala shall provide that once an enterprise
seeking approval for such a product files the information with Guatemala’s supervisory authority,
the authority shall grant approval or issue disapproval in accordance with Guatemala’s law for
the sale of the new product within 60 days. It is understood that Guatemala does not maintain any
limitations on the number or frequency of product introductions.
Section E: Honduras
Portfolio Management
1. Honduras shall allow a financial institution (other than a trust company),
organized outside its territory, to provide investment advice and portfolio management
services, excluding (a) custodial services, (b) trustee services, and (c) execution services that
are not related to managing a collective investment scheme, to a collective investment scheme
located in its territory. This commitment is subject to Article 12.1 and to Article 12.5.3.
2. Notwithstanding paragraph 1, Honduras may require a collective investment
scheme located in its territory to retain ultimate responsibility for the management
of such collective investment scheme or the funds that it manages.
3. For purposes of paragraphs 1 and 2, collective investment scheme
will have the meaning set out in any future laws, regulations, or guidance defining “collective
investment scheme.”
Expedited Availability of Insurance
4. It is understood that Honduras requires prior product approval before the
introduction of a new insurance product. Honduras shall provide that once an enterprise
seeking approval for such a product files the information with the
Comisión Nacional de Bancos y Seguros ,
the Commission shall grant approval according to its law or issue disapproval for
the sale of the new product within 30 days. It is understood that Honduras does not maintain any
limitations on the number or frequency of product introductions.
Section F: Nicaragua
Portfolio Management
1. Nicaragua shall allow a financial institution (other than a trust
company), organized outside its territory, to provide investment advice and portfolio management
services, excluding' (a) custodial services, (b) trustee services, and (c) execution services that
are not related to managing a collective investment scheme or pension fund, to managers of a
collective investment scheme or pension fund located in its territory. This commitment
is subject to Article 12.1 and to Article 12.5.3.
2. Notwithstanding paragraph 1, Nicaragua may require that the ultimate
responsibility for the management of collective investment schemes and pension funds be borne,
respectively, by the managers of such schemes and funds established in its territory.
3. The Parties recognize that Nicaragua does not currently have legislation
establishing collective investment schemes and that its legislation relating to pension
funds is not fully implemented. Notwithstanding paragraph 1, at such time as Nicaragua adopts
legislation, regulations, or administrative guidance establishing collective investment
schemes, Nicaragua shall comply with paragraph 1 with respect to collective investment schemes
and provide a definition of collective investment scheme to be added to paragraph 5.
Notwithstanding paragraph 1, at such time as Nicaragua undertakes further implementation
relating to pension funds, Nicaragua shall comply with the obligations of paragraph 1 of this
provision with respect to pension funds.
4. The Parties recognize that Nicaragua does not currently allow insurance
companies to manage collective investment schemes. Notwithstanding paragraph 1, at such
time as Nicaragua allows insurance companies to manage a collective investment scheme,
Nicaragua shall comply with paragraph 1 with regard to management of collective investment schemes
by insurance companies.
5. For purposes of paragraphs 1 through 3, pension fund has the
meaning established in the
Ley del Sistema de Ahorro para Pensiones , Law No. 340 (published
in La Gaceta ,
Diario Oficial , No. 72 of 11 April 2000) and its implementing
regulations.
Expedited Availability of Insurance
6. Nicaragua should endeavor to maintain existing opportunities or may wish
to consider policies or procedures such as: not requiring product approval for insurance
other than sold to individuals or compulsory insurance; allowing introduction of products unless
those products are disapproved within a reasonable period of time; and not imposing limitations
on the number or frequency of product introductions.
Insurance Branching
7. Notwithstanding the nonconforming measures of Nicaragua in Annex III,
Section B, referring to insurance market access, excluding any portion of those
non-conforming measures referring to financial conglomerates and social services, no later than four
years after the date of entry into force of this Agreement, Nicaragua shall allow U.S. insurance
suppliers to establish in its territory through branches. Nicaragua may choose how to regulate
branches, including their characteristics, structure, relationship to their parent company, capital
requirements, technical reserves, and obligations regarding risk capital and their investments.
Section G: United States
Portfolio Management
1. The United States shall allow a financial institution (other than a trust
company), organized outside its territory, to provide investment advice and portfolio
management services, excluding (a) custodial services, (b) trustee services, and (c) execution
services that are not related to managing a collective investment scheme, to a collective
investment scheme located in its territory. This commitment is subject to Article 12.1 and to Article
12.5.3.
2. For purposes of paragraph 1, collective investment scheme means an
investment company registered with the Securities and Exchange Commission under the
Investment Company Act of 1940
Expedited Availability of Insurance
3. The United States should endeavor to maintain existing opportunities or
may wish to consider policies or procedures such as: not requiring product approval for
insurance other than insurance sold to individuals or compulsory insurance; allowing introduction
of products unless those products are disapproved within a reasonable period of time; and not
imposing limitations on the number or frequency of product introductions.
Section H: Specific Commitments of Costa Rica on Insurance Services
I. Preamble
The Government of the Republic of Costa Rica:
reaffirming its decision to ensure that the process of opening its insurance
services sector must be based on its Constitution;
emphasizing that such process shall be to the benefit of the consumer and
shall be accomplished gradually and based on prudential regulation;
recognizing its commitment to modernize the
Instituto Nacional de Seguros (INS) and the Costa Rican legal framework in the insurance sector;
undertakes through this Annex the following specific commitments on insurance
services.
II. Modernization of INS and the Costa Rican Legal Framework in the Insurance Sector
By no later than January 1, 2007, Costa Rica shall establish an independent
insurance regulatory authority which shall be separate from and not accountable to any
supplier of insurance services. The decisions and the procedures used by the regulatory
authority shall be impartial with respect to all market participants. The insurance regulatory
authority shall have adequate powers, legal protection, and financial resources to exercise its
functions and powers,19
and treat confidential information appropriately.
III. Gradual Market Access Opening Commitments
1. Cross-Border Commitments
Costa Rica shall allow insurance service providers of any Party, on a
non-discriminatory basis, to effectively compete to supply directly to the consumer insurance
services on a crossborder basis as provided below:
A. By no later than the date of entry into force of this Agreement, Costa
Rica shall permit the following:
(i) pursuant to Article 12.5.2, persons located in its territory, and its
nationals wherever located, to purchase any and all lines of insurance (except compulsory automobile insurance20 and occupational risk
insurance 21)22
from cross-border insurance service suppliers of another Party located in the territory of that other Party or of another Party. This obligation will not require Costa Rica to permit such suppliers to do business or solicit in its territory. Costa Rica may define “doing business” and “solicitation” for purposes of this obligation, as long as such definitions are not inconsistent with Article 12.5.1; and
(ii) pursuant to Article 12.5.1, the cross-border supply of or trade in
financial services as defined in subparagraph (a) of the definition of cross-border supply of financial services in Article 12.20 with respect to:
(a) insurance risk relating to:
(i) space launching of freight (including satellite), maritime shipping and commercial aviation, with such insurance to cover any or all of the following: the goods being transported, the vehicle transporting the goods and any liability arising therefrom; and
(ii) goods in international transit;
(b) retrocession and reinsurance;
(c) services necessary to support global accounts;23
(d) services auxiliary to insurance as referred to in subparagraph (d) of the definition of financial service;24 and
(e) insurance intermediation, provided by brokers and agents outside Costa Rica, such as brokerage and agency as referred to in subparagraph (c) of the definition of financial
services.25
B. By July 1, 2007:
(a) Costa Rica shall permit the establishment of representative offices; and
(b) Article 12.5.1 shall apply to the cross-border supply of or trade in
financial services as defined in subparagraph (a) of the definition of cross-border supply of financial services in Article 12.20 with respect to:
(i) services auxiliary to insurance as referred to in subparagraph (d) of the definition of financial service;26
(ii) insurance intermediation such as brokerage and agency as referred to in subparagraph (c) of the definition of financial services;27
and
(iii) surplus lines.28
C. For Costa Rica, Article 12.5.1 applies to the cross-border supply of or
trade in financial services as defined in subparagraph (c) of the definition of
cross-border supply of financial services in Article 12.20 with respect to insurance
services.
2. Right of Establishment for Insurance Providers
Costa Rica shall, on a non-discriminatory basis, allow insurance service
suppliers of any Party, to establish and effectively compete to supply directly to the
consumer insurance services in its territory as provided below:
(a) any and all lines of insurance29 (except compulsory
automobile and occupational risk insurance), no later than January 1, 2008; and
(b) any and all lines of insurance, no later than January 1, 2011.
For purposes of this commitment Costa Rica shall allow insurance service
suppliers to be established through any juridical form, as provided in Article 12.4(b). It is
understood that Costa Rica may establish prudential solvency and integrity requirements, which
shall be in line with comparable international regulatory practice.
Annex 12.9.3
Additional Information Regarding Financial Services Measures
Each Party indicated below has provided the following descriptive and
explanatory information regarding certain aspects of its financial services measures
solely for purposes of transparency.
Section A: Costa Rica
Administrators of pension funds can invest up to 25 per cent of the equity of
the fund in securities issued by foreign financial institutions. This limit can be
increased up to 50 per cent, provided that real yields of investments of the complementary pension regime
are equivalent or lower than international yields.
Section B: The Dominican Republic
Banking Services and Other Financial Services (Insurance Excluded)
1. Multipurpose Banks and Credit Entities
(a) In conformity with the Ley
Monetaria y Financiera, No. 183-02, November 21, 2002, authorization for the operation of multipurpose banks (commercial
banks) and credit entities (savings and credit banks and credit corporations)
requires the presentation before the Junta
Monetaria of an opinion of the
Superintendencia de Bancos based on documents presented by the applicant entity. The
Junta Monetaria may authorize the establishment of subsidiaries as well
as branch offices, provided there is adequate coordination and exchange of information
with the supervising authorities of the country of origin.
(b) Under no circumstances shall preferred shares grant their holders a
greater voting right than common shares, nor shall holders of preferred shares collect
dividends in advance of or independently from the results of the business year.
(c) For the purposes of opening a new entity, documentation establishing the existence and origin of the amount contributed shall be presented before the
Superintendencia de Bancos . Such amount shall be temporarily
deposited in the
Banco Central for the execution of the initial investment plan and
may be used to pay for the acquisition of fixed assets and the necessary expenses of
facilities and initiation of operations.
(d) Multipurpose banks (commercial banks) and credit entities are not allowed
to decrease their paid-up capital without previous authorization of the
Superintendencia de Bancos . The payment of dividends is subject to
compliance with the requirements established by the
Junta Monetaria .
(e) Savings and Credit Banks may only contract obligations abroad and grant
loans in foreign currency with the prior authorization of the
Junta Monetaria .
(f) Representative offices of foreign banks not located in the territory of
the Dominican Republic may not perform financial intermediation activities.
2. Exchange Agents
A prior authorization from the Junta
Monetaria is needed to act as an Exchange Agent.
3. Securities and Goods Exchanges
(a) All commodities exchanges must receive prior approval from the
Consejo Nacional de Valores .
(b) Securities intermediaries must be authorized to operate by the
Superintendencia de Valores.
(c) Securities Exchanges shall be represented in securities negotiations by
natural persons known as securities brokers who are holders of a credential granted
by the corresponding exchange and registered in the securities market. To register
in the
Registro del Mercado de Valores , securities and individuals must
comply with Law No. 19-00. Exchanges shall be allowed to sell or rent the right to
operate in an exchange, with the previous approval of the corresponding exchange and the
Superintendencia de Valores .
(d) Securities intermediaries existing before Law No. 19-00 went into effect,
that are members of commodities exchanges and engage solely in the trading of commodities (securities representatives for commodities), must comply with
the requirements of the law no later than five years from the date it went into
effect.
Services of Insurance and Reinsurance
4. According to Ley sobre Seguros y
Fianzas en la República Dominicana , No.146-02, July 22, 2001, a foreign enterprise that wishes to or has the intention of
operating in the insurance business, the reinsurance business, or both, within the Dominican Republic
must formulate its request to the Superintendencia de
Seguros , expressing the fields in which it intends to operate in the Dominican Republic, attaching the following documents:
(a) certification regarding the enterprise’s domiciles, that of its head
office, and the domicile in the Dominican Republic, which must be previously established;
(b) the profit and loss general statement of its operations during the past
five years, duly approved according to the insurance legislation of the country of
origin;
(c) certification of the names and nationalities of the senior managers or
directors;
(d) copy of the proxy given to the legal representative in the Dominican
Republic;
(e) certification of the State or Government entity in charge of the
operations performed by the insurance enterprise or enterprises in which their head
office or head offices are located; and
(f) certification of the agreement or agreements taken by the competent
authority of the enterprise stating the decision to extend its business to the Dominican Republic, and that it shall be responsible for its obligations, whether
derived from its operations in the Dominican Republic or from the law, with both the goods
it owns in the territory of the Dominican Republic, and also with the goods it
has in other countries as far as the laws of such countries allow; and that it will
submit to the laws and courts of the Dominican Republic, expressly renouncing all
rights that might oppose them. This certification must be translated into Spanish
and be duly processed so that it is fully valid in the Dominican Republic.
5. Applications for insurance, policies, certificates, provisional warrants,
modifications or endorsements, renewal certificates, and other documents related to insurance
contracts, as well as performance bonds, should be written in plain and simple Spanish for ease of
understanding.
Reinsurance Located in the Territory of Another Party
6. The Superintendencia de Seguros
will communicate to the applicant within a period not to exceed 30 days, its decision with regard to the required authorization.
If, after this period, the
Superintendencia de Seguros has not reached a decision to this
effect, it will be understood that no objection exists to consider the applicant entity as an accepted
reinsurer.
Pensions
7. In conformity with Ley que Crea
el Sistema Dominicano de Seguridad Social , No. 87-01 May 9, 2001, the resources of the pension funds must be invested exclusively
in the territory of the Dominican Republic. Foreign investments in this sector are subject to
special rules issued by the Consejo Nacional de Seguridad
Social .
Section C: El Salvador
With regard to banking:
(a) Holding companies and other foreign financial institutions are subject to consolidated supervision in accordance with relevant international practice.
The
Superintendencia del Sistema Financiero , subject to the opinion of
the Banco Central , shall issue instructions for determining eligible
institutions.
(b) Banks and other foreign financial institutions must satisfy requirements
of prudential regulation and supervision in their countries of origin in
accordance with relevant international practice.
(c) To be authorized to establish a branch in El Salvador, a foreign bank
must meet the following criteria:
(i) Establishment : To
obtain the authorization to establish a branch, a foreign bank must:
(A) prove that its head office is legally established in accordance with the laws of the country where it is constituted, that such country subjects the bank to prudential regulation and surveillance in accordance with international usage on the issue, and that it is classified as a first-rate bank by an internationally recognized risk rating company;
(B) prove that under the laws of the country where it is constituted and its own regulations, it can approve the establishment of branches, agencies, and offices that satisfy the requirements established by the Ley de Bancos and
that both the head office and the government authority in charge of oversight of this entity in such country have appropriately authorized the entity’s operation in El Salvador;
(C) agree to maintain permanently in El Salvador at least one representative with full powers to perform all activities and contracts to be entered into and executed in El Salvador. The power must be granted clearly and precisely so as to bind the represented entity, so that it is wholly responsible in the country and internationally for all actions taken and contracts signed in El Salvador and so that it satisfies all the requirements established under the laws of El Salvador and the laws of the country where the foreign entity is constituted;
(D) agree to locate and maintain in El Salvador the amount of capital and capital reserves that the Ley de
Bancos requires of El Salvador banks;
(E) certify that it has been in operation for at least five years and that the results of its operations have been satisfactory, based on reports of the oversight entity in the country where the foreign bank is constituted and of internationally recognized risk rating companies; and
(F) expressly submit to the laws, courts, and authorities of El Salvador, with regard to the acts it performs and the contracts it signs, or those that have effect in El Salvador.
(ii) In such cases, the
Superintendencia del Sistema Financiero shall sign cooperation memoranda with the regulatory agency of the country where the investing entity is established.
(iii) Foreign banks authorized to operate in El Salvador shall be subject to inspection and oversight by the
Superintendencia del Sistema Financiero , shall enjoy the same rights and privileges, and will be subject to the same laws and standards that apply to domestic banks.
Section D: Honduras
1. Banking and savings and loan associations may not provide credits to
natural persons or juridical persons domiciled abroad unless the
Banco Central de Honduras
authorizes the credits.
2. A branch of a foreign bank is not required to have its own Board of
Directors or Administrative Council, but must have at least two representatives domiciled
in Honduras. Such representatives are responsible for the general direction and administration
of the business and have the legal authority to act in Honduras and to execute and to be
responsible for the branch’s own operations.
3. The founding members of financial institutions organized under the laws of
Honduras must be natural persons.
4. The operation, function, servicing, and issuance of any new financial
product with a direct and immediate relation to banking or lending must have the approval of
the Comisión Nacional de Bancos y Seguros .
5. Shares in a foreign investment fund may be marketed in the territory of
Honduras only if there is a reciprocity agreement at the government level or at the level of
the relevant supervisory authorities of the country of origin of the investment fund and the country
in which its shares are marketed.
6. Corporations that classify risk and choose to organize under Honduran law
must be constituted as sociedades anónimas
and must have in Honduras a permanent legal representative with a power of attorney sufficiently broad to undertake any legal act needed
for the supply of risk classification services in Honduras.
Section E: Nicaragua
1. Nicaragua reserves the right to deny an operating license to a financial
institution or group (other than an insurance financial institution or group) in the event
that another Party has denied or cancelled an operating license to such financial institution or
group.
2. To maintain a branch in Nicaragua, a bank constituted and organized in a
foreign country must:
(a) be legally authorized and allowed by its bylaws to operate in that
foreign country and to establish branches in other foreign countries;
(b) prior to establishing such branch, present a certification issued by the
supervising authority of the country in which the bank is constituted and organized,
indicating that authority’s concurrence that the bank may establish a branch in
Nicaragua; and
(c) assign the branch capital that meets minimum requirements. Such a branch must have its domicile in Nicaragua.
3. To maintain a branch in Nicaragua, a non-banking financial institution
organized and constituted under the laws of a foreign country must:
(a) be legally authorized and allowed by its bylaws to operate in the country
in which it is organized and constituted and to establish branches abroad;
(b) prior to establishing such branch, present a certification issued by the
supervising authority of the country in which such institution is constituted and
organized, indicating that authority’s concurrence with the establishment of a branch in Nicaragua by such institution;
(c) assign such branch capital meeting the minimum requirements; and
(d) in the case of a FONCITUR, the capital and all of the funds of the
FONCITUR must be invested in Nicaragua, in projects registered with the
Instituto Nicarag u ense
de Turismo .
Such a branch must have its domicile in Nicaragua.
4. For purposes of this paragraph and paragraph 3:
(a) non-banking financial institution means an institution that
operates as a recipient of deposits from the public, as a stock exchange or institution
related to a stock exchange; as Almacenes
Generales de Depósitos con carácter financiero ; as leasing entities; and as FONCITURs; and
(b) FONCITUR means a Fondo de
Capital de Inversión Turística .
5. A representative office of a foreign bank may place funds in Nicaragua in
the form of loans and investments, and act as information centers for their clients, but
is prohibited from accepting deposits from the public in Nicaragua.
6. The administrator of a pension fund may invest abroad a maximum of 30
percent of the assets of the fund. However, the
Superintendencia de Pensiones reserves the right to vary the investment limits applicable to pension funds administrators at the foreign
and national level.
Annex 12.16.1
Financial Services Committee
The authority of each Party responsible for financial services is:
(a) in the case of Costa Rica, the Consejo Nacional de Supervisión del Sistema
Financiero (CONASSIF) and the
Ministerio de Comercio Exterior
for banking
and other financial services and for insurance;
(b) in the case of the Dominican Republic, the
Banco Central de la República
Dominicana in consultation with the
Superintendencia de Bancos ,
the
Superintendencia de Seguros , the
Superintendencia de Valores ,
and the
Superintendencia de Pensiones , as appropiate,
(c) in the case of El Salvador, the Ministerio de Economía , in consultation with the
corresponding competent authority ( Superintendencia
del Sistema Financiero,
Superintendencia de Valores, Superintendencia de Pensiones and the
Banco
Central de Reserva);
(d) in the case of Guatemala, the Superintendencia de Bancos for banking and other
financial services, the Ministerio
de Economía for insurance and securities, and
any other institutions approved by those authorities to participate within
the
Financial Services Committee;
(e) in the case of Honduras, the Banco Central de Honduras , the
Comisión Nacional
de Bancos y Seguros , and the
Secretaría de Estado en los Despachos de Industria
y Comercio ;
(f) in the case of Nicaragua, the Ministerio de Fomento, Industria y Comercio , the
Superintendencia de Bancos y otras Instituciones Financieras , the
Superintendencia de Pensiones , and the
Ministerio de Hacienda y Crédito
Público , for banking and other financial services and for
insurance; and
(g) in the case of the United States, the Department of Treasury for banking
and other
financial services and the Office of the United States Trade Representative,
in
coordination with the Department of Commerce and other agencies, for
insurance,
or their successors.
Return to
Index
Chapter Seven
1
For greater certainty, the Parties understand that any reference in this
Chapter to a standard, technical regulation, or conformity assessment procedure
includes those related to metrology.
Chapter Eight
1 The Parties understand that
neither tariff rate quotas nor quantitative restrictions would be a permissible
form of
safeguard measure.
Chapter Nine
1 Costa Rica, El Salvador, Guatemala, Honduras, and
Nicaragua may make such modifications before tenders are opened. The United
States may make such modifications before awarding the contract.
Chapter Ten 1 Article 10.5 shall be interpreted in accordance with Annex
10-B. 2 The limitations set out in Annex 10-D apply to the submission to arbitration
under Section B of a claim alleging a
breach of this paragraph. 3 Article 10.7 shall be interpreted in accordance with Annexes 10-B and 10-C.
4 For greater certainty, the reference to “the TRIPS Agreement” in paragraph 5
includes any waiver in force
between the Parties of any provision of that Agreement granted by WTO Members in
accordance with the WTO
Agreement. 5 For greater certainty, the references to “the TRIPS Agreement” in paragraph
3(b)(i) include any waiver in force
between the Parties of any provision of that Agreement granted by WTO Members in
accordance with the WTOAgreement.
6 The Parties recognize that a patent does not necessarily confer market power.
7 The “law of the respondent” means the law that a domestic court or tribunal of
proper jurisdiction would apply in
the same case.
8 Some forms of debt, such as bonds, debentures, and long-term notes, are more
likely to have the characteristics of
an investment, while other forms of debt are less likely to have such
characteristics. 9 For purposes of this Agreement, claims to payment that are immediately due and
result from the sale of goods or services are not investments.
10 Whether a particular type of license, authorization, permit, or similar
instrument (including a concession, to the
extent that it has the nature of such an instrument) has the characteristics of
an investment depends on such factors
as the nature and extent of the rights that the holder has under the law of the
Party. Among the licenses, uthorizations, permits, and similar instruments that do not have the
characteristics of an investment are those that
do not create any rights protected under domestic law. For greater certainty,
the foregoing is without prejudice towhether any asset associated with the license, authorization, permit, or similar
instrument has the characteristics of
an investment.
11 The term “investment” does not include an order or judgment entered in a
judicial or administrative action.
12 “Written agreement” refers to an agreement in writing, executed by both
parties, that creates an exchange of
rights and obligations, binding on both parties under the law applicable under
Article 10.22.2. For greater certainty,
(a) a unilateral act of an administrative or judicial authority, such as a
permit, license, or authorization issued by a
Party solely in its regulatory capacity or a decree, order, or judgment; and (b)
an administrative or judicial consent
decree or order, shall not be considered a written agreement.
13 For purposes of this definition, “national authority” means an authority at
the central level of government.
14 For greater certainty, actions taken by a Party to enforce laws of general
application, such as competition laws,
are not encompassed within this definition.
Chapter Eleven 1 The Parties understand that nothing in this Chapter, including this
paragraph, is subject to investor-state dispute
settlement pursuant to Section B of Chapter Ten (Investment).
2 This clause does not cover measures of a Party that limit inputs for the
supply of services.
3 For greater certainty, “regulations” includes regulations establishing or
applying to licensing authorization or
criteria.
4 For greater certainty, for the United States, express delivery services do not
include delivery of letters subject to
the Private Express Statutes (18 U.S.C. § 1693 et seq., 39 U.S.C. § 601 et
seq.), but do include delivery of letters
subject to the exceptions to, or suspensions promulgated under, those statutes,
which permit private delivery of
extremely urgent letters.
5 For greater certainty, the Parties reaffirm that nothing in this Article is
subject to investor-state dispute settlement
pursuant to Section B of Chapter Ten (Investment).
6 The Parties understand that for purposes of Articles 11.2 and 11.3, “service
suppliers” has the same meaning as
“services and service suppliers” in the GATS.
Chapter Twelve 1 The Parties understand that nothing in Article 12.6
prevents a financial institution of a Party from applying to
another Party to request it to consider authorizing the supply of a financial
service that is not supplied in the territory of any Party. The application shall be subject to the law of the Party to which
the application is made and, for greater certainty, shall not be subject to the obligations of Article 12.6. 2 For greater certainty, Article 12.5 does not apply to 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 on the date of entry into force of this Agreement, with Article 12.5. 3 It is understood that the term “prudential reasons” includes the maintenance
of the safety, soundness, integrity, or
financial responsibility of individual financial institutions or cross-border
financial service suppliers. 4 It is understood that advisory services includes portfolio management advice
but not other services related to portfolio management, and that auxiliary services does not include those
services referred to in subparagraphs (e) through (o) of the definition of financial service. 5 It is understood that the commitment for cross-border movement of persons is
limited to those insurance and insurance-related services listed in paragraph 1. 6 It is understood that advisory services includes portfolio management advice
but not other services related to portfolio management, and that auxiliary services does not include those
services referred to in subparagraphs (e) through (o) of the definition of financial service. 7 It is understood that the commitment for cross-border movement of persons is
limited to those insurance and insurance-related services listed in paragraph 1. 8 It is understood that where the financial information or financial data
referred to in subparagraphs (a) and (b) involve personal data, the treatment of such personal data shall be in
accordance with El Salvador’s law regulating the protection of such data. 9 It is understood that advisory services includes portfolio management advice
but not other services related to portfolio management, and that auxiliary services does not include those
services referred to in subparagraphs (e) through (o) of the definition of financial service. 10 It is understood that the commitment for cross-border movement of persons is
limited to those insurance and insurance-related services listed in paragraph 1. 11 It is understood that advisory services includes portfolio management advice
but not other services related to portfolio management, and that auxiliary services does not include those
services referred to in subparagraphs (e) through (o) of the definition of financial service. 12 It is understood that the commitment for cross-border movement of persons is
limited to those insurance and insurance-related services listed in paragraph 1. 13 It is understood that advisory services includes portfolio management advice
but not other services related to portfolio management, and that auxiliary services does not include those
services referred to in subparagraphs (e) through (o) of the definition of financial service. 14 For greater certainty, it is understood that these auxiliary services will only be
provided to an insurance supplier. 15 It is understood that the commitment for cross-border movement of persons is limited to those insurance and insurance-related services listed in paragraph 1.
16 It is understood that Nicaragua’s law regulating protection of information applies where the financial information or financial data processing referred to in subparagraphs (a) and (b) involves such protected information. Protected information includes, but is not limited to, information regulated under the concept of banking secrecy and personal information.
17 It is understood that advisory services includes portfolio management advice but not other services related to portfolio management, and that auxiliary services does not include those services referred to in subparagraphs (e) through (o) of the definition of financial service.
18 It is understood that advisory services includes portfolio management advice
but not other services related to portfolio management, and that auxiliary services does not include those
services referred to in subparagraphs (e) through (o) of the definition of financial service. 19 The regulatory authority shall act consistently with the core principles of
the International Association of Insurance Supervisors. 20 For purposes of this commitment, “compulsory automobile insurance” has the
meaning given to that term in Article 48 of the Ley de Tránsito por Vias Publicas Terrestres, Law No. 7331 of
13 April 1993. 21 As referred to in the last paragraph of Article 73 of the Constitución
Política de la República de Costa Rica. Occupational risk insurance is a compulsory insurance that covers workers under
a subordinate labor relationship for accidents or illnesses occurring as a consequence of their occupation, as well
as the direct, immediate, and evident effects of such accidents and illnesses. 22 For greater certainty, Costa Rica is not required to modify its regulation of
compulsory automobile insurance and occupational risk insurance, provided that such regulation is consistent with
the obligations undertaken in this Agreement, including this Annex. 23 For purposes of this subclause,
(a) services necessary to support global accounts means that the coverage of a
master (global) insurance policy written in a territory other than Costa Rica for a multinational client
by an insurer of a Party extends to the operations of the multinational client in Costa Rica; and (b) a multinational client is any foreign enterprise majority owned by a foreign
manufacturer or service provider doing business in Costa Rica.
24 This clause applies only to the lines of insurance set out in
III.1.A.(ii)(a), (b), and (c). 25 This clause applies only to the lines of insurance set out in
III.1.A.(ii)(a), (b), and (c). 26 This clause applies to all lines of insurance.
27 This clause applies to all lines of insurance.
28 Surplus lines of insurance means lines of insurance (products covering
specific sets of risks with specific characteristics, features, and services) that meet the following criteria:
(a) lines of insurance other than those that INS supplies as of the date of
signature of this Agreement, or lines of insurance that are substantially the same as such lines; and (b) that are sold either (i) to customers with premiums in excess of 10,000 U.S.
dollars per year, or (ii) to enterprises, or (iii) to customers with a particular net worth or revenues of a
particular size or number of employees.
As of January 1, 2008, surplus lines shall be defined as insurance coverage not
available from an admitted company in the regular market. 29 For greater certainty, social security services referred to in the first,
second, and third paragraphs of article 73 of the Constitución Política de la República de Costa Rica and provided by the Caja
Costarricense de Seguro Social as of the date of signature of this Agreement are not subject to any commitment
included in this Annex.
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