OAS

esp

Agreement Between Japan and The Republic of Chile for a Strategic Economic Partnership

Preamble

Japan and the Republic of Chile (hereinafter referred to as “Chile”), 

Conscious of their longstanding friendship and strong economic and political ties that have developed through many years of fruitful and mutually beneficial cooperation between the Parties; 

Recognizing that creating a clearly established and  secured trade and investment framework through mutually  advantageous rules to govern trade and investment between  the Parties would enhance the competitiveness of their  economies, make their markets more efficient, and ensure  predictable commercial environment for further expansion of  trade and investment between them; 

Recognizing that an adequate protection of  intellectual property and the effective enforcement of  competition laws will encourage trade and investment  between the Parties;

Believing that a strategic economic partnership  between the Parties will bring economic and social  benefits, create new and better opportunities for  employment, improve the living standards of peoples, and  provide a catalyst for the liberalization of trade and  investment in the Asia-Pacific region and broader  cooperation at international fora;

Convinced that economic development, social  development and environmental protection are interdependent  and mutually reinforcing pillars of sustainable development  and that the strategic economic partnership can play an  important role in promoting sustainable development; 

Recognizing the rights of the Parties to regulate in  order to meet national policy objectives; and 

Determined to establish a legal framework for  promoting and developing the strategic economic partnership  on the basis of the rights and obligations of the Parties  under the Marrakesh Agreement Establishing the World Trade  Organization, done at Marrakesh, April 15, 1994 and other  international agreements to which both Parties are parties; 

HAVE AGREED as follows: 

Chapter 1 
General Provisions 

Article 1 
Establishment of a Free-Trade Area 

The Parties hereby establish a free-trade area. 

Article 2 
Objectives 

The objectives of this Agreement are to: 

(a) liberalize trade in goods between the Parties, in  conformity with Article XXIV of the GATT 1994; 

(b) liberalize trade in services between the Parties,  in conformity with Article V of the GATS; 

(c) increase investment opportunities and strengthen  protection for investments and investment  activities in the Parties; 

(d) enhance opportunities for suppliers of the  Parties to participate in government procurement  in the Parties; 

(e) provide an adequate protection of intellectual  property and promote cooperation in the field  thereof; 

(f) promote cooperation and coordination for the  effective enforcement of competition laws and  regulations in each Party; 

(g) improve business environment in the Parties; and 

(h) create effective procedures to prevent and  resolve disputes. 

Article 3 
Relation to Other Agreements 

The Parties reaffirm their rights and obligations  under the WTO Agreement or any other agreements to which  both Parties are parties. 

Article 4 
Publication 

1. Each Party shall ensure that its laws, regulations and  administrative rulings of general application with respect  to any matter covered by this Agreement are promptly  published or otherwise made publicly available in such a  manner as to enable interested persons and the other Party  to become acquainted with them. 

2. Each Party shall, upon the request by the other Party,  within a reasonable period of time, respond to specific  questions from, and provide information to, the other Party  with respect to matters referred to in paragraph 1, through  contact points referred to in Article 10. 

Article 5 
Notification 

Where a Party considers that any measure that it  proposes to take might materially affect the implementation  and operation of this Agreement or otherwise substantially  affect the other Party’s interests under this Agreement,  the former Party shall notify the other Party, to the  extent practicable, of such measure, through contact points  referred to in Article 10. 

Article 6 
Public Comment 

To the extent practicable, each Party shall, in  accordance with its laws and regulations: 

(a) make public in advance administrative regulations  of general application that it proposes to adopt  and that affect any matter covered by this  Agreement; and 

(b) provide a reasonable opportunity for comments by  the public before adoption of such regulations. 

Article 7 
Administrative Procedures 

Where administrative decisions which pertain to or  affect the implementation and operation of this Agreement  are taken by the competent authorities of a Party, the  competent authorities shall, in accordance with the laws  and regulations of the Party

(a) inform the applicant of the decision within a  reasonable period of time after the submission of  the application considered complete under the  laws and regulations of the Party; 

(b) provide, within a reasonable period of time,  information concerning the status of the  application, at the request of the applicant; and 

(c) afford the applicant a reasonable opportunity to  present facts and arguments in support of its  positions prior to any final administrative  decisions, when time, the nature of the  proceeding, and the public interest permit. 

Article 8 
Review and Appeal 

1. Each Party shall establish or maintain judicial or  administrative tribunals or procedures for the purpose of  the prompt review and, where warranted, correction of  administrative actions regarding matters covered by this  Agreement. Such tribunals or procedures shall be impartial  and independent of the office or authority entrusted with  administrative enforcement of such actions and shall not  have any substantial interest in the outcome of the matter. 

2. Each Party shall ensure that, in any such tribunals or  procedures, the parties to the proceedings are provided  with the right to: 

(a) a reasonable opportunity to support or defend  their respective positions; and 

(b) a decision based on the evidence and submissions  of record. 

3. Each Party shall ensure, subject to appeal or further  review as provided in its laws and regulations, that such  decision is implemented by the offices or authorities with  respect to the administrative action at issue. 

Article 9 
Confidential Information 

1. Each Party shall, in accordance with its laws and  regulations, maintain the confidentiality of information  provided in confidence by the other Party pursuant to this  Agreement

2. Nothing in this Agreement shall require a Party to  provide confidential information, the disclosure of which  would impede the enforcement of its laws and regulations,  or otherwise be contrary to the public interest, or which  would prejudice legitimate commercial interests of  particular enterprises, public or private. 

Article 10 
Contact Points 

Each Party shall designate a contact point to  facilitate communications between the Parties on any matter  covered by this Agreement. 

Chapter 2 
General Definitions 

Article 11 
General Definitions 

For the purposes of this Agreement, unless otherwise  specified: 

(a) the term “Agreement on Customs Valuation” means  the Agreement on Implementation of Article VII of  the General Agreement on Tariffs and Trade 1994  in Annex 1A to the WTO Agreement; 

(b) the term “Area” means: 

(i) with respect to Japan, the territory of  Japan, and all the area beyond its  territorial sea, including the sea-bed and  subsoil thereof, over which Japan exercises  sovereign rights or jurisdiction in  accordance with international law and the  laws and regulations of Japan; and 

(ii) with respect to Chile, the land, maritime  and air space under its sovereignty, and the  exclusive economic zone and the continental  shelf within which it exercises sovereign  rights and jurisdiction in accordance with  international law and its domestic law; 

Note: Nothing in subparagraph (b) shall affect  the rights and obligations of the Parties  under international law, including those  under the United Nations Convention on the  Law of the Sea.

(c) the term “Commission” means the Commission  established under Article 189; 

(d) the term “customs authority” means the authority  that, according to the legislation of each Party  or non-Parties, is responsible for the  administration and enforcement of customs laws  and regulations: 

(i) with respect to Japan, the Ministry of  Finance; and 

(ii) with respect to Chile, the National Customs  Service (Servicio Nacional de Aduanas); 

(e) the term “days” means calendar days, including  weekends and holidays; 

(f) the term “enterprise” means any corporation,  company, association, partnership, trust, joint  venture, sole-proprietorship or other entity  constituted or organized under applicable law,  whether for profit or otherwise, and whether  privately-owned or controlled or governmentallyowned  or controlled; 

(g) the term “enterprise of a Party” means an  enterprise constituted or organized under the law  of a Party; 

(h) the term “existing” means in effect on the date  of entry into force of this Agreement; 

(i) the term “GATS” means the General Agreement on  Trade in Services in Annex 1B to the WTO  Agreement; 

(j) the term “GATT 1994” means the General Agreement  on Tariffs and Trade 1994 in Annex 1A to the WTO  Agreement. For the purposes of this Agreement,  references to articles in the GATT 1994 include  the interpretative notes; 

(k) the term “Harmonized System” or “HS” means the  Harmonized Commodity Description and Coding  System set out in the Annex to the International  Convention on the Harmonized Commodity  Description and Coding System, and adopted and  implemented by the Parties in their respective  laws; 

(l) the term “measure” means any measure by a Party,  whether in the form of a law, regulation, rule,  procedure, practice, decision, administrative  action or any other form; 

(m) the term “natural person of a Party” means a  natural person who, under the laws and  regulations of a Party: 

(i) with respect to Japan, is a national of  Japan; and 

(ii) with respect to Chile, is a national of  Chile or a permanent resident in Chile; 

(n) the term “originating good” means a good which  qualifies as an originating good under the  provisions of Chapter 4; 

(o) the term “Parties” means Japan and Chile and the  term ”Party” means either Japan or Chile; 

(p) the term “person” means a natural person or an  enterprise; 

(q) the term “SPS Agreement” means the Agreement on  the Application of Sanitary and Phytosanitary  Measures in Annex 1A to the WTO Agreement; 

(r) the term “state enterprise” means an enterprise  owned or controlled by a Party; 

(s) the term “TRIPS Agreement” means the Agreement on  Trade-Related Aspects of Intellectual Property  Rights in Annex 1C to the WTO Agreement; and 

(t) the term “WTO Agreement” means the Marrakesh  Agreement Establishing the World Trade  Organization, done at Marrakesh, April 15, 1994. 

Chapter 3 
Trade in Goods 

Section 1 
General Rules 

Article 12 
Classification of Goods 

The classification of goods in trade between the  Parties shall be in conformity with the Harmonized System.  8 

Article 13 
National Treatment

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

Article 14 
Elimination of Customs Duties 

1. Except as otherwise provided for in this Agreement,  each Party shall eliminate or reduce its customs duties on  originating goods of the other Party designated for such  purposes in its Schedule in Annex 1, in accordance with the  terms and conditions set out in such Schedule. 

2. Except as otherwise provided for in this Agreement,  neither Party shall increase any customs duty on  originating goods of the other Party from the rate to be  applied in accordance with its Schedule in Annex 1. 

3. Upon the request of either Party, the Parties shall  negotiate on issues such as improving market access  conditions on originating goods designated for negotiation  in the Schedule in Annex 1, in accordance with the terms  and conditions set out in such Schedule. 

Article 15 
Customs Valuation 

For the purposes of determining the customs value of  goods traded between the Parties, provisions of Part I of  the Agreement on Customs Valuation shall apply mutatis  mutandis. 

Article 16 
Export Duties 

Neither Party shall introduce or maintain any duties,  or fees or other charges of any kind imposed on a good  exported from the Party into the other Party, unless such  duties, or fees or other charges are not in excess of those  imposed on the like good destined for domestic consumption. 

Note: The term “fees or other charges of any kind” shall  not include any fees or other charges commensurate  with the cost of services rendered, which are  consistent with the WTO Agreement. 

Article 17 
Agricultural Export Subsidies 

Taking full account of the objectives of eliminating  export subsidies on any agricultural good within the  framework of the World Trade Organization, neither Party  shall introduce or maintain any export subsidies on any  agricultural good which is listed in Annex 1 to the  Agreement on Agriculture. 

Article 18 
Import and Export Restrictions 

Except as otherwise provided for in this Agreement,  each Party shall not introduce or maintain any prohibition  or restriction other than customs duties on the importation  of any good of the other Party or on the exportation or  sale for export of any good destined to the other Party,  which is inconsistent with its obligations under Article XI  of the GATT 1994 and its relevant provisions under the WTO  Agreement. 

Article 19 
Restrictions to Safeguard the Balance of Payments 

1. Nothing in this Section shall be construed to prevent  a Party from taking any measure for balance-of-payments  purposes. A Party taking such measure shall do so in  accordance with the conditions established under Article  XII of the GATT 1994 and the Understanding on the Balanceof-  Payments Provisions of the General Agreement on Tariffs  and Trade 1994 in Annex 1A to the WTO Agreement. 

2. Nothing in this Section shall preclude the use by a  Party of exchange controls or exchange restrictions in  accordance with the Articles of Agreement of the  International Monetary Fund. 

Section 2 
Bilateral Safeguard Measures 

Article 20 
Bilateral Safeguard Measures 

1. Subject to the provisions of this Section, a Party may  take a bilateral safeguard measure, to the minimum extent  necessary to prevent or remedy the serious injury to a  domestic industry of that Party and to facilitate  adjustment, if an originating good of the other Party, as a  result of the elimination or reduction of a customs duty in  accordance with Article 14, is being imported into the  former Party in such increased quantities, in absolute  terms, and under such conditions that the imports of that  originating good constitute a substantial cause of serious  injury, or threat thereof. 

2. A Party may, as a bilateral safeguard measure: 

(a) suspend the further reduction of any rate of  customs duty on the originating good provided for  in Section 1; or 

(b) increase the rate of customs duty on the  originating good to a level not to exceed the  lesser of: 

(i) the most-favored-nation applied rate of  customs duty in effect when the bilateral  safeguard measure is taken; and 

(ii) the most-favored-nation applied rate of  customs duty in effect on the day  immediately preceding the date of entry into  force of this Agreement. 

Article 21 
Investigation Procedures 

1. A Party may take a bilateral safeguard measure only  after an investigation has been carried out by the  competent authorities of that Party in accordance with the  same procedures as those provided for in Article 3 and  subparagraph 2(c) of Article 4 of the Agreement on  Safeguards. 

2. The investigation referred to in paragraph 1 shall in  all cases be completed within one year following its date  of initiation. 

3. In the investigation referred to in paragraph 1 to  determine whether increased imports of an originating good  have caused or are threatening to cause serious injury to a  domestic industry under the terms of this Section, the  competent authorities of the Party who carry out the  investigation shall evaluate all relevant factors of an  objective and quantifiable nature having a bearing on the  situation of that domestic industry, in particular, the  rate and amount of the increase in imports of the  originating good in absolute terms, the share of the  domestic market taken by the increased imports of the  originating good, and the changes in the level of sales,  production, productivity, capacity utilization, profits and  losses, and employment. 

4. The determination that increased imports of an  originating good have caused or are threatening to cause  serious injury to a domestic industry shall not be made  unless the investigation referred to in paragraph 1  demonstrates, on the basis of objective evidence, the  existence of the causal link between increased imports of  the originating good and serious injury or threat thereof.  When factors other than the increased imports of the  originating good are causing injury to the domestic  industry at the same time, such injury shall not be  attributed to the increased imports of the originating  good. 

Article 22 
Conditions and Limitations 

The following conditions and limitations shall apply  with regard to a bilateral safeguard measure: 

(a) no bilateral safeguard measure shall be  maintained except to the extent and for such time  as may be necessary to prevent or remedy serious  injury and to facilitate adjustment, provided  that such time shall not exceed a period of three  years. However, in very exceptional  circumstances, a bilateral safeguard measure may  be extended, provided that the total period of  the bilateral safeguard measure, including such  extensions, shall not exceed four years; 

(b) in order to facilitate adjustment in a situation  where the expected duration of a bilateral  safeguard measure is over one year, the Party  maintaining the bilateral safeguard measure shall  progressively liberalize the bilateral safeguard  measure at regular intervals during the period of  application; 

(c) no bilateral safeguard measure shall be applied  again to the import of a particular originating  good which has been subject to such a bilateral  safeguard measure, for a period of time equal to  the duration of the previous bilateral safeguard  measure or one year, whichever is longer; 

(d) nothing in this Section shall prevent a Party  from applying safeguard measures to an  originating good of the other Party in accordance  with: 

(i) Article XIX of the GATT 1994 and the  Agreement on Safeguards; or 

(ii) Article 5 of the Agreement on Agriculture; 

(e) no bilateral safeguard measure shall be applied  to the import of a particular originating good  which has been en route from a Party to the other  Party at the time when the other Party notifies  the former Party of the decision to apply such a  bilateral safeguard measure pursuant to  subparagraph 1(b) of Article 23; and 

(f) upon the termination of a bilateral safeguard  measure, the rate of customs duty shall be the  rate which would have been in effect if the  bilateral safeguard measure had never been  applied. 

Article 23 
Notification 

1. A Party shall immediately deliver a written notice to  the other Party upon: 

(a) taking a decision to initiate an investigation  referred to in paragraph 1 of Article 21 relating  to serious injury or threat thereof, and the  reasons for it; and 

(b) taking a decision to apply, extend or liberalize  a bilateral safeguard measure. 

2. The Party making the written notice referred to in  paragraph 1 shall provide the other Party with all  pertinent information, which shall include: 

(a) in the written notice referred to in subparagraph  1(a), the reason for the initiation of the  investigation, a precise description of the  originating good subject to the investigation and  its subheading of the Harmonized System, the  period subject to the investigation and the date  of initiation of the investigation; and 

(b) in the written notice referred to in subparagraph  1(b), evidence of serious injury or threat  thereof caused by the increased imports of the  originating good, a precise description of the  originating good subject to the proposed  bilateral safeguard measure and its subheading of  the Harmonized System, a precise description of  the bilateral safeguard measure, and the proposed  date of its introduction and its expected  duration. 

Article 24 
Consultations and Compensation 

1. A Party proposing to apply or extend a bilateral  safeguard measure shall provide adequate opportunity for  prior consultations with the other Party with a view to  reviewing the information arising from the investigation  referred to in paragraph 1 of Article 21, exchanging views  on the bilateral safeguard measure and reaching an  agreement on compensation set out in this Article. 

2. A Party proposing to apply or extend a bilateral  safeguard measure shall provide to the other Party mutually  agreed adequate means of trade compensation in the form of  concessions of customs duties whose levels are  substantially equivalent to the value of the additional  customs duties expected to result from the bilateral  safeguard measure. 

3. If the Parties are unable to agree on the compensation  within 30 days after the commencement of the consultation  pursuant to paragraph 1, the Party against whose  originating good the bilateral safeguard measure is taken  shall be free to suspend the application of concessions of  customs duties under this Agreement, which are  substantially equivalent to the bilateral safeguard  measure, after giving written notice of such suspension,  together with the information regarding concessions to be  suspended, to the other Party. The Party exercising the  right of suspension may suspend the application of  concessions of customs duties only for the minimum period  necessary to achieve the substantially equivalent effects  and only while the bilateral safeguard measure is  maintained. 

Article 25 
Provisional Bilateral Safeguard Measures 

1. In critical circumstances, where delay would cause  damage which it would be difficult to repair, a Party may  take a provisional bilateral safeguard measure, which shall  take the form of the measure set out in subparagraph 2(a)  or (b) of Article 20 pursuant to a preliminary  determination that there is clear evidence that increased  imports of an originating good of the other Party have  caused or are threatening to cause serious injury to a  domestic industry. 

2. A Party shall deliver a written notice to the other  Party prior to applying a provisional bilateral safeguard  measure. Consultations between the Parties on the  application of the provisional bilateral safeguard measure  shall be initiated immediately after the provisional  bilateral safeguard measure is taken. 

3. The duration of a provisional bilateral safeguard  measure shall not exceed 200 days. During that period, the  pertinent requirements of Article 21 shall be met. The  duration of the provisional bilateral safeguard measure  shall be counted as a part of the period referred to in  subparagraph (a) of Article 22. 

4. Subparagraph (f) of Article 22 and paragraphs 1 and 2  of Article 26 shall be applied mutatis mutandis to a  provisional bilateral safeguard measure. The customs duty  imposed as a result of a provisional bilateral safeguard  measure shall be refunded if the subsequent investigation  referred to in paragraph 1 of Article 21 does not determine  that increased imports of an originating good of the other  Party have caused or threatened to cause serious injury to  a domestic industry. 

Article 26 
Miscellaneous 

1. Each Party shall ensure the consistent, impartial and  reasonable administration of its laws and regulations  relating to bilateral safeguard measure. 

2. Each Party shall adopt or maintain equitable, timely,  transparent and effective procedures relating to bilateral  safeguard measure. 

3. The written notice referred to in paragraph 1 of  Article 23, paragraph 3 of Article 24 and paragraph 2 of  Article 25 and any other communication between the Parties  shall be done in the English language.  15 

4. The Parties shall review the provisions of this  Section, if necessary, after 10 years of the date of entry  into force of this Agreement. 

Section 3 
Other Provisions 

Article 27 
Committee on Trade in Goods 

1. For the purposes of the effective implementation and  operation of this Chapter and Chapter 4, the Parties hereby  establish a Committee on Trade in Goods (hereinafter  referred to in this Article as “Committee”). 

2. The functions of the Committee shall be: 

(a) reviewing and monitoring: 

(i) the implementation and operation of this  Chapter and Chapter 4; 

(ii) any amendments to Annexes 2 and 4, proposed  by either Party; and 

(iii) the Operational Procedures referred to in  Article 52; 

(b) discussing any issues related to this Chapter and  Chapter 4; 

(c) reporting the findings and the outcome of  discussions of the Committee to the Commission;  and 

(d) carrying out other functions as may be delegated  by the Commission in accordance with Article 190. 

3. The Committee shall be composed of government  officials of the Parties. 

4. The Committee shall meet at such venues and times as  may be agreed by the Parties. 

5. A Working Group on Fish and Fishery Products shall be  established under the Committee. Details of the Working  Group shall be set forth in a separate agreement to be  concluded between the Governments of the Parties for the  implementation of this Agreement (hereinafter referred to  as “the Implementing Agreement”). 

Note: In the case of Chile, the Implementing  Agreement shall be implemented as an Executive  Agreement (Acuerdo de Ejecución) in accordance  with the Political Constitution of the Republic  of Chile (Constitución Política de la República  de Chile). 

Article 28 
Definitions 

For the purposes of this Chapter: 

(a) the term “Agreement on Agriculture” means the  Agreement on Agriculture in Annex 1A to the WTO  Agreement; 

(b) the term “Agreement on Safeguards” means the  Agreement on Safeguards in Annex 1A to the WTO  Agreement; 

(c) the term “bilateral safeguard measure” means a  bilateral safeguard measure provided for in  paragraph 2 of Article 20; 

(d) the term “customs duty” means any customs or  import duty and a charge of any kind, including  any form of surtax or surcharge, imposed in  connection with the importation of a good, but  does not include any: 

(i) charge equivalent to an internal tax imposed  consistently with the provisions of  paragraph 2 of Article III of the GATT 1994,  in respect of the like goods or, directly  competitive or substitutable goods of the  Party or in respect of goods from which the  imported goods have been manufactured or  produced in whole or in part; 

(ii) anti-dumping or countervailing duty applied  pursuant to a Party’s law and applied  consistently with the provisions of Article  VI of the GATT 1994, the Agreement on  Implementation of Article VI of the General  Agreement on Tariffs and Trade 1994, and the  Agreement on Subsidies and Countervailing  Measures in Annex 1A to the WTO Agreement;  or 

(iii) fees or other charges commensurate with the  cost of services rendered; 

(e) the term “customs value of goods” means the value  of goods for the purposes of levying ad valorem  customs duties on imported goods; 

(f) the term “domestic industry” means the producers  as a whole of the like or directly competitive  goods operating in a Party, or those whose  collective output of the like or directly  competitive goods constitutes a major proportion  of the total domestic production of those goods; 

(g) the term “export subsidies” means export  subsidies described in subparagraph (e) of  Article 1 of the Agreement on Agriculture; 

(h) the term “provisional bilateral safeguard  measure” means a provisional bilateral safeguard  measure provided for in paragraph 1 of Article  25; 

(i) the term “serious injury” means a significant  overall impairment in the position of a domestic  industry; and 

(j) the term “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. 

Chapter 4 
Rules of Origin 

Section 1 
Rules of Origin 

Article 29 
Originating Goods 

1. Except as otherwise provided for in this Chapter, a  good shall qualify as an originating good of a Party where: 

(a) the good is wholly obtained or produced entirely  in the Party, as defined in paragraph 2;

(b) the good is produced entirely in the Party  exclusively from originating materials of the  Party; 

(c) the good is produced entirely in the Party using  non-originating materials, provided that the good  satisfies the product specific rules set out in  Annex 2, as well as all other applicable  requirements of this Chapter; or  18 

(d) except for a good provided for in Chapters 61  through 63 of the Harmonized System, the good is  produced entirely in the Party, but one or more  of the non-originating materials that are used in  the production of the good do not undergo an  applicable change in tariff classification  because: 

(i) the good is imported into the Party in an  unassembled or disassembled form but is  classified as an assembled good pursuant to  Rule 2(a) of the General Rules for the  Interpretation of the Harmonized System; or 

(ii) the heading for the good provides for and  specifically describes both the good itself  and its parts and is not further subdivided  into subheadings, or the subheading for the  good provides for and specifically describes  both the good itself and its parts, 

provided that the qualifying value content of the good,  determined in accordance with Article 30, is not less than  45 percent when the method referred to in subparagraph 1(a)  of Article 30 is used or 30 percent when the method  referred to in subparagraph 1(b) of Article 30 is used,  unless otherwise provided for in Annex 2, and that the good  satisfies all other applicable requirements of this  Chapter. 

2. For the purposes of subparagraph 1(a), the following  goods shall be considered as being wholly obtained or  produced entirely in a Party: 

(a) mineral goods extracted in the Party; 

(b) vegetable goods harvested in the Party; 

(c) live animals born and raised in the Party; 

(d) goods obtained from hunting, trapping or fishing  in the Party; 

(e) goods obtained from live animals in the Party; 

(f) fish, shellfish and other marine species taken  from the sea beyond the territorial seas of the  Parties by vessels: 

(i) which are registered or recorded in the  Party; 

(ii) which sail under the flag of the Party; 

(iii) which are owned to an extent of at least 50  percent by nationals of the Party, or by an  enterprise with its head office in the  Party, of which the representatives,  chairman of the board of directors, and the  majority of the members of such board are  nationals of the Party, and of which at  least 50 percent of the equity interest is  owned by nationals or enterprises of the  Party; 

(iv) of which the master and officers are all  nationals of the Party; and 

(v) of which at least 75 percent of the crew are  nationals of the Party; 

Note 1: Without prejudice to the rights and  obligations of the Parties under  international law, including those under  the United Nations Convention on the Law  of the Sea, subparagraph (f) shall not  apply to fish, shellfish and other  marine species taken from the exclusive  economic zone of the other Party by the  vessels referred to in that  subparagraph. 

Note 2: The requirements of subparagraphs  (f)(iii) through (v) shall not apply to  vessels registered or recorded in Chile  prior to June 30, 1991, provided for in  Transitional Article 10 of the  consolidated text of the Law 18.892,  General Law on Fisheries and Aquiculture  (Artículo 10 Transitorio del texto  refundido, coordinado y sistematizado de  la Ley 18.892, Ley General de Pesca y  Acuicultura), and their successor  vessels registered or recorded in  accordance with that Law and other  relevant provisions of Chilean law. 

(g) goods produced from the goods referred to in  subparagraph (f) on board factory ships: 

(i) which are registered or recorded in the  Party; 

(ii) which sail under the flag of the Party; 

(iii) which are owned to an extent of at least 50  percent by nationals of the Party, or by an  enterprise with its head office in the  Party, of which the representatives,  chairman of the board of directors, and the  majority of the members of such board are  nationals of the Party, and of which at  least 50 percent of the equity interest is  owned by nationals or enterprises of the  Party; 

(iv) of which the master and officers are all  nationals of the Party; and 

(v) of which at least 75 percent of the crew are  nationals of the Party; 

Note: The requirements of subparagraphs (g)(iii)  through (v) shall not apply to factory  ships registered or recorded in Chile  prior to June 30, 1991, provided for in  Transitional Article 10 of the  consolidated text of the Law 18.892,  General Law on Fisheries and Aquiculture  (Artículo 10 Transitorio del texto  refundido, coordinado y sistematizado de  la Ley 18.892, Ley General de Pesca y  Acuicultura), and their successor vessels  registered or recorded in accordance with  that Law and other relevant provisions of  Chilean law. 

(h) goods taken by the Party or a natural person or  enterprise of the Party from the seabed or  subsoil beneath the seabed outside the  territorial sea of the Party, provided that the  Party has rights to exploit such seabed or  subsoil; 

(i) waste and scrap derived from: 

(i) production in the Party; or 

(ii) used goods collected in the Party, provided  that such goods are fit only for the  recovery of raw materials; and  

(j) goods produced in the Party exclusively from the  goods referred to in subparagraphs (a) through  (i), or from their derivatives, at any stage of  production. 

3. For the purposes of subparagraph 1(c), the product  specific rules set out in Annex 2 requiring that the  materials used undergo a change in tariff classification or  a specific manufacturing or processing operation shall  apply only to non-originating materials. 

Article 30 
Qualifying Value Content 

1. For the purposes of subparagraph 1(c) of Article 29,  the qualifying value content of a good shall be calculated  on the basis of one or the other of the following methods: 

(a) Method based on value of non-originating  materials (“Build-down method”) 

TV - VNM 
QVC = ---------- x 100 
TV 

(b) Method based on value of originating materials  (“Build-up method”) 

VOM 
QVC = ------ x 100 
TV 

Where: 

QVC is the qualifying value content of the good,  expressed as a percentage; 

TV is the transaction value of the good adjusted  to F.O.B. basis, except as provided for in  paragraph 2; 

VNM is the value of non-originating materials  used by the producer in the production of the  good determined pursuant to Article 31; and 

VOM is the value of originating materials used by  the producer in the production of the good  determined pursuant to Article 31. 

2. In the event that there is no transaction value or the  transaction value of the good is unacceptable under Article  1 of the Agreement on Customs Valuation, the value of the  good shall be determined in accordance with Articles 2  through 7 of the Agreement on Customs Valuation. 

Article 31 
Value of Materials 

1. The value of a material: 

(a) shall be the transaction value of the material;  or 

(b) in the event that there is no transaction value  or the transaction value of the material is  unacceptable under Article 1 of the Agreement on  Customs Valuation, shall be determined in  accordance with Articles 2 through 7 of the  Agreement on Customs Valuation. 

2. The value of a material referred to in paragraph 1: 

(a) shall include freight, insurance, packing and all  other costs incurred in transporting the material  to the importation port in the Party where the  producer of the good is located; and 

(b) may include the cost of waste and spoilage  resulting from the use of the material in the  production of the good, less the value of  reusable scrap or by-product. 

3. The value of a non-originating material shall not  include, where the producer acquires the material in the  Party where the producer is located, freight, insurance,  packing and all other costs incurred in transporting the  material from the warehouse of the supplier of the material  to the place where the producer is located; as well as any  other known and ascertainable cost incurred in the Party. 

Article 32 
De Minimis 

Non-originating materials used in the production of a  good that do not undergo an applicable change in tariff  classification shall be disregarded in determining whether  the good qualifies as an originating good of a Party,  provided that the totality of such materials does not  exceed specific percentages in value, weight or volume of  the good as set out in Annex 2. 

Article 33 
Accumulation 

For the purposes of determining whether a good  qualifies as an originating good of a Party, an originating  good of the other Party which is used as a material in the  production of the good in the former Party may be  considered as an originating material of the former Party. 

Article 34 
Fungible Goods and Materials 

1. For the purposes of determining whether a good  qualifies as an originating good of a Party, where fungible  materials consisting of originating materials of the Party  and non-originating materials that are commingled in an  inventory are used in the production of the good, the  origin of the materials may be determined pursuant to an  inventory management method recognized in the Generally  Accepted Accounting Principles in the Party. 

2. Where fungible goods consisting of originating goods  of a Party and non-originating goods are commingled in an  inventory and, prior to exportation do not undergo any  production process or any operation in the Party where they  were commingled other than unloading, reloading and any  other operation to preserve them in good condition, the  origin of the good may be determined pursuant to an  inventory management method recognized in the Generally  Accepted Accounting Principles in the Party. 

Article 35 
Sets, Kits or Composite Goods 

1. Sets, kits and composite goods classified pursuant to  Rule 3 of the General Rules for the Interpretation of the  Harmonized System shall qualify as originating goods of the  exporting Party, where every good contained in the sets,  kits or composite goods satisfies the applicable rule of  origin for each of them under this Chapter. 

2. Paragraph 1 shall prevail over the product specific  rules set out in Annex 2. 

Article 36 
Indirect Materials 

Indirect materials shall be, without regard to where  they are produced, considered to be originating materials  of the Party where the good is produced. 

Article 37 
Accessories, Spare Parts and Tools 

Accessories, spare parts or tools delivered with a  good that form part of the good’s standard accessories,  spare parts or tools, shall be disregarded in determining  whether the good qualifies as an originating good of a  Party, provided that: 

(a) the accessories, spare parts or tools are not  invoiced separately from the good, without regard  of whether they are separately described in the  invoice; and 

(b) the quantities and value of the accessories,  spare parts or tools are customary for the good. 

Article 38 
Packaging Materials and Containers for Retail Sale 

Packaging materials and containers in which a good is  packaged for retail sale shall, if classified with the good  pursuant to Rule 5 of the General Rules for the  Interpretation of the Harmonized System, be disregarded in  determining whether the good qualifies as an originating  good of a Party. 

Article 39 
Packing Materials and Containers for Shipment 

Packing materials and containers for shipment shall be  disregarded in determining whether the good qualifies as an  originating good of a Party. 

Article 40 
Non-Qualifying Operations 

1. A good shall not be considered to be an originating  good of the exporting Party merely by reason of: 

(a) operations to ensure the preservation of products  in good condition during transport and storage; 

(b) changes of packaging and breaking up and assembly  of packages; 

(c) disassembly; 

(d) placing in bottles, cases, boxes and other simple  packaging operations; 

(e) collection of parts and components classified as  a good pursuant to Rule 2(a) of the General Rules  for the Interpretation of the Harmonized System; 

(f) mere making-up of sets of articles; or 

(g) any combination of operations referred to in  subparagraphs (a) through (f). 

2. Paragraph 1 shall prevail over the product specific  rules set out in Annex 2. 

Article 41 
Consignment Criteria 

1. An originating good of a Party shall be deemed to meet  the consignment criteria when it is: 

(a) transported directly from the Party to the other  Party; or 

(b) transported through one or more non-Parties for  the purpose of transit or temporary storage in  warehouses in such non-Parties, provided that it  does not undergo operations other than unloading,  reloading and any other operation to preserve it  in good condition. 

2. If an originating good of a Party does not meet the  consignment criteria referred to in paragraph 1, that good  shall not be considered as an originating good of the  Party. 

Article 42 
Exhibitions 

Notwithstanding Article 41, an originating good of a  Party imported into the other Party after an exhibition in  a non-Party shall continue to qualify as an originating  good of the former Party when it: 

(a) remained under the control of the customs  authority of the non-Party while it was in the  non-Party; and 

(b) was transported: 

(i) directly to and from the non-Party; or 

(ii) through other non-Parties for the purpose of  transit or temporary storage in warehouses  in such other non-Parties, provided that it  did not undergo operations other than  unloading, reloading and any other operation  to preserve it in good condition. 

Section 2
Certificate of Origin and Related Procedures 

Article 43 
Claim for Preferential Tariff Treatment 

1. The customs authority of the importing Party shall  require a certificate of origin for an originating good of  the exporting Party from importers who claim the  preferential tariff treatment for the good. 

2. Notwithstanding paragraph 1, the customs authority of  the importing Party shall not require a certificate of  origin from importers for: 

(a) an importation of originating goods of the  exporting Party whose total customs value does  not exceed 1000 United States of America dollars  or its equivalent amount in the Party’s currency,  or such higher amount as it may establish; or 

(b) an importation of originating goods of the  exporting Party, for which the customs authority  of the importing Party has waived the requirement  for a certificate of origin, 

provided that the importation does not form part of one or  more importations that may reasonably be considered to have  been undertaken or arranged for the purpose of avoiding the  certification requirements of this Article and Article 46. 

3. In the case where an originating good of the exporting  Party is imported after an exhibition in a non-Party, the  customs authority of the importing Party may require  importers, who claim the preferential tariff treatment for  the good, to submit: 

(a) a certificate or any other information given by  the customs authority of that non-Party or other  relevant entities, which evidences that the good  meets the requirements of subparagraph (a) of  Article 42; and 

(b)

(i) a copy of through bill of lading; or 

(ii) if the good was transported through other  non-Parties, a certificate or any other  information given by the customs authorities  of such other non-Parties or other relevant  entities, which evidences that the good has  not undergone operations other than  unloading, reloading and any other operation  to preserve it in good condition in those  other non-Parties. 

4. Where an originating good of the exporting Party is  imported through one or more non-Parties except for the  case referred to in paragraph 3, the customs authority of  the importing Party may require importers, who claim the  preferential tariff treatment for the good, to submit: 

(a) a copy of through bill of lading; or 

(b) a certificate or any other information given by  the customs authorities of such non-Parties or  other relevant entities, which evidences that the  good has not undergone operations other than  unloading, reloading and any other operation to  preserve it in good condition in those non-  Parties. 

Article 44 
Certificate of Origin 

1. A certificate of origin shall be issued by the  competent authority specified in Annex 3(hereinafter  referred to in this Chapter as “competent authority”) of  the exporting Party on request having been made in writing  by the exporter. 

2. For the purposes of this Article, the competent  authority of the exporting Party may designate public or  private entities or bodies to be responsible for the  issuance of certificate of origin in accordance with the  applicable laws and regulations of the exporting Party. 

3. Where the competent authority of the exporting Party  designates public or private entities or bodies to carry  out the issuance of certificate of origin, the exporting  Party shall notify in writing the other Party of its  designees. 

4. For the purposes of this Chapter, upon the entry into  force of this Agreement, a format of certificate of origin  shall be established in the English language in the  Operational Procedures referred to in Article 52. A  certificate of origin shall include minimum data specified  in Annex 4. 

5. A certificate of origin shall be completed in the  English language. 

6. An issued certificate of origin shall be applicable to  an importation of originating goods of the exporting Party  into the importing Party and be valid for one year from the  date of issuance. 

7. Where the exporter of a good is not the producer of  the good in the exporting Party, the exporter may request a  certificate of origin on the basis of: 

(a) a declaration provided by the exporter to the  competent authority of the exporting Party or its  designees based on the information provided by  the producer of the good to that exporter; or 

(b) a declaration voluntarily provided by the  producer of the good directly to the competent  authority of the exporting Party or its designees  by the request of the exporter. 

8. A certificate of origin shall be issued only after the  exporter who requests the certificate of origin, or the  producer of a good in the exporting Party referred to in  subparagraph 7(b), proves to the competent authority of the  exporting Party or its designees that the good to be  exported qualifies as an originating good of the exporting  Party. The competent authority of the exporting Party or  its designees may, in accordance with the applicable laws  and regulations of the exporting Party, require such  exporter or producer to provide information relating to the  origin of the good. 

9. The competent authority of the exporting Party shall  provide the importing Party with impressions of stamps used  by the competent authority of the exporting Party or its  designees. 

10. Each Party shall ensure that the competent authority  of the exporting Party or its designees shall keep a record  of issued certificates of origin for a period of five years  after the date on which the certificate of origin was  issued. Such record will include all antecedents, which  were presented to prove the qualification as an originating  good of the exporting Party. 

Article 45 
Obligations regarding Exportations 

Each Party shall, in accordance with its laws and  regulations, ensure that the exporter to whom a certificate  of origin has been issued, or the producer of a good in the  exporting Party referred to in subparagraph 7(b) of Article  44: 

(a) shall notify in writing the competent authority  of the exporting Party or its designees without  delay when such exporter or producer knows that  such good does not qualify as an originating good  of the exporting Party; and 

(b) shall keep the records relating to the origin of  the good for five years after the date on which  the certificate of origin was issued. 

Article 46 
Obligations regarding Importations 

1. Except as otherwise provided for in this Chapter, the  customs authority of the importing Party shall require an  importer who claims preferential tariff treatment for a  good imported from the other Party to: 

(a) make a written declaration, based on a valid  certificate of origin, that the good qualifies as  an originating good of the exporting Party; 

(b) have the certificate of origin in its possession  at the time the declaration is made; 

(c) provide the certificate of origin on the request  of the customs authority of the importing Party;  and 

(d) promptly make a corrected declaration and pay any  duties owing where the importer has reason to  believe that the certificate of origin on which a  declaration was based contains information that  is not correct. 

2. Each Party shall ensure that, in the case in which the  importer at the time of importation does not have a  certificate of origin in its possession, the importer may,  in accordance with the laws and regulations of the  importing Party, provide the customs authority of the  importing Party with the certificate of origin issued in  accordance with paragraph 1 of Article 44 and, if required,  such other documentation relating to the importation of the  good, within a period not exceeding one year after the time  of importation. 

Note: In the case of importation into Chile, any  excess customs duties shall be refunded to the  importer referred to in paragraph 2. 

Article 47 
Request for Checking of Certificate of Origin 

1. For the purposes of determining whether a good  imported from the exporting Party under preferential tariff  treatment qualifies as an originating good of the exporting  Party, the customs authority of the importing Party may  request information relating to the origin of the good from  the competent authority of the exporting Party on the basis  of a certificate of origin, where it has reasonable doubt  as to the authenticity of the certificate of origin or the  accuracy of the information included in the certificate of  origin. 

2. For the purposes of paragraph 1, the competent  authority of the exporting Party shall, in accordance with  the laws and regulations of the exporting Party, provide  the information requested within a period of three months  from the date of receipt of the request. If the customs  authority of the importing Party considers necessary, it  may require additional information relating to the origin  of the good. If additional information is requested by the  customs authority of the importing Party, the competent  authority of the exporting Party shall, in accordance with  the laws and regulations of the exporting Party, provide  the information requested within a period of two months  from the date of receipt of the request. 

3. For the purposes of paragraph 2, the competent  authority of the exporting Party may request the exporter  to whom the certificate of origin has been issued, or the  producer of the good in the exporting Party referred to in  subparagraph 7(b) of Article 44, to provide the former with  the information requested. 

4. The request of information in accordance with  paragraph 1 shall not preclude the use of the verification  method provided for in Article 48. 

Article 48 
Verification Visit 

1. The customs authority of the importing Party may  request the competent authority of the exporting Party to: 

(a) collect and provide information relating to the  origin of a good and check, for that purpose, the  facilities used in the production of the good,  through a visit by the competent authority of the  exporting Party along with the customs authority  of the importing Party to the premises of the  exporter to whom the certificate of origin has  been issued, or the producer of the good in the  exporting Party referred to in subparagraph 7(b)  of Article 44; and 

(b) provide information relating to the origin of the  good in the possession of the competent authority  of the exporting Party or its designees during  the visit pursuant to subparagraph (a). 

2. When requesting the competent authority of the  exporting Party to conduct a visit pursuant to paragraph 1,  the customs authority of the importing Party shall deliver  a written communication with such request to the competent  authority of the exporting Party at least 40 days in  advance of the proposed date of the visit, the receipt of  which is to be confirmed by the competent authority of the  exporting Party. The competent authority of the exporting  Party shall request the written consent of the exporter, or  the producer of the good in the exporting Party whose  premises are to be visited. 

3. The communication referred to in paragraph 2 shall  include: 

(a) the identity of the customs authority issuing the  communication; 

(b) the name of the exporter, or the producer of the  good in the exporting Party whose premises are  requested to be visited; 

(c) the proposed date and place of the visit; 

(d) the objective and scope of the proposed visit,  including specific reference to the good subject  of the verification referred to in the  certificate of origin; and 

(e) the names and titles of the officials of the  customs authority of the importing Party to be  present during the visit. 

4. The competent authority of the exporting Party shall  respond in writing to the customs authority of the  importing Party, within 30 days of the receipt of the  communication referred to in paragraph 2, if it accepts or  refuses to conduct the visit requested pursuant to  paragraph 1. 

5. The competent authority of the exporting Party shall,  in accordance with the laws and regulations of the  exporting Party, provide within 45 days or any other  mutually agreed period from the last day of the visit, to  the customs authority of the importing Party the  information obtained pursuant to paragraph 1. 

Article 49 
Determination of Origin  and Preferential Tariff Treatment 

1. The customs authority of the importing Party may deny  preferential tariff treatment to a good for which an  importer claims preferential tariff treatment where the  good does not qualify as an originating good of the  exporting Party or where the importer fails to comply with  any of the relevant requirements of this Chapter. 

2. The competent authority of the exporting Party shall,  when it cancels the decision to issue the certificate of  origin, promptly notify the cancellation to the exporter to  whom the certificate of origin has been issued, and to the  customs authority of the importing Party except where the  certificate of origin has been returned to the competent  authority of the exporting Party. The customs authority of  the importing Party may determine that the good does not  qualify as an originating good of the exporting Party and  may deny preferential tariff treatment when it receives the  notification. 

3. The customs authority of the importing Party may  determine that a good does not qualify as an originating  good of the exporting Party and may deny preferential  tariff treatment, and a written determination thereof shall  be sent to the competent authority of the exporting Party: 

(a) where the competent authority of the exporting  Party fails to respond to the request within the  period referred to in paragraph 2 of Article 47  or paragraph 5 of Article 48; 

(b) where the competent authority of the exporting  Party refuses to conduct a visit, or fails to  respond to the communication referred to in  paragraph 2 of Article 48 within the period  referred to in paragraph 4 of Article 48; or 

(c) where the information provided to the customs  authority of the importing Party pursuant to  Article 47 or 48, is not sufficient to prove that  the good qualifies as an originating good of the  exporting Party. 

4. After carrying out the procedures outlined in Article  47 or 48 as the case may be, the customs authority of the  importing Party shall provide the competent authority of  the exporting Party with a written determination of whether  or not the good qualifies as an originating good of the  exporting Party, including findings of fact and the legal  basis for the determination, within 45 days from the date  of receipt of the information provided by the competent  authority of the exporting Party pursuant to Article 47 or  48. The competent authority of the exporting Party shall  inform such determination by the customs authority of the  importing Party to the exporter, or the producer of the  good in the exporting Party, whose premises were subject to  the visit referred to in Article 48. 

Article 50 
Penalties and Measures against False Declaration 

1. Each Party shall establish or maintain, in accordance  with its laws and regulations, appropriate penalties or  other sanctions against its exporters to whom a certificate  of origin has been issued and the producers of a good in  the exporting Party referred to in subparagraph 7(b) of  Article 44, for providing false declaration or documents to  the competent authority of the exporting Party or its  designees prior to the issuance of certificate of origin. 

2. Each Party shall, in accordance with its laws and  regulations, take measures which it considers appropriate  against its exporters to whom a certificate of origin has  been issued and the producers of a good in the exporting  Party referred to in subparagraph 7(b) of Article 44, for  failing to notify in writing to the competent authority of  the exporting Party or its designees without delay after  having known, after the issuance of certificate of origin,  that such good does not qualify as an originating good of  the exporting Party. 

Article 51 
Transitional Provision for Goods in Transit or Storage 

An importer may not claim preferential tariff  treatment for a good which, on the date of entry into force  of this Agreement, is in transport from the exporting Party  to the importing Party or in temporary storage in  warehouses, except that: 

(a) the good otherwise satisfies all applicable  requirements of this Chapter; and 

(b) the importer provides, in accordance with the  laws and regulations of the importing Party, the  customs authority of the importing Party with the  certificate of origin issued retrospectively and,  if required, such other documentation relating to  the importation of the good, within a period not  exceeding four months after the entry into force  of this Agreement. 

Section 3 
Other Provisions 

Article 52 
Operational Procedures 

Upon the date of entry into force of this Agreement,  the Commission shall adopt the Operational Procedures that  provide detailed regulations pursuant to which the customs  authorities, the competent authorities and other relevant  authorities of the Parties shall implement their functions  under this Chapter and Chapter 3. 

Article 53 
Miscellaneous 

1. Communications between the importing Party and the  exporting Party shall be conducted in the English language. 

2. For the application of the relevant product specific  rules set out in Annex 2 and the determination of origin,  the Generally Accepted Accounting Principles in the  exporting Party shall be applied. 

Article 54 
Definitions 

For the purposes of this Chapter: 

(a) the term “exporter” means a person located in an  exporting Party who exports goods from the  exporting Party; 

(b) the term “F.O.B.” means free on board, regardless  of the mode of transportation, at the point of  direct shipment by the seller to the buyer; 

(c) the term “fungible goods” or “fungible materials”  respectively means goods or materials that are  interchangeable for commercial purposes, whose  properties are essentially identical; 

(d) the term “Generally Accepted Accounting  Principles” means the recognized consensus or  substantial authoritative support within a Party  at a particular time as to which economic  resources and obligations should be recorded as  assets and liabilities, which changes in assets  and liabilities should be recorded, how the  assets and liabilities and changes in them should  be measured, what information should be disclosed  and how it should be disclosed, and which  financial statements should be prepared. These  standards may be broad guidelines of general  application as well as detailed practices and  procedures; 

(e) the term “importer” means a person who imports  goods into the importing Party;  (f) the term “indirect materials” means goods used in  the production, testing or inspection of another  good but not physically incorporated into the  good, or goods used in the maintenance of  buildings or the operation of equipment  associated with the production of another good,  including: 

(i) fuel and energy; 

(ii) tools, dies and moulds; 
(iii) spare parts and goods used in the  maintenance of equipment and buildings; 

(iv) lubricants, greases, compounding materials  and other goods used in production or used  to operate equipment and buildings; 

(v) gloves, glasses, footwear, clothing, safety  equipment and supplies; 

(vi) equipment, devices and supplies used for  testing or inspection; 

(vii) catalysts and solvents; and 

(viii) any other goods that are not incorporated  into another good but whose use in the  production of the good can reasonably be  demonstrated to be a part of that  production; 

(g) the term “material” means a good that is used in  the production of another good; 

(h) the term “originating material of a Party” means  an originating good of a Party which is used in  the production of another good in the Party,  including that which is considered as an  originating material of the Party pursuant to  Article 33; 

(i) the term “packing materials and containers for  shipment” means goods that are used to protect a  good during its transportation, other than  packaging materials and containers for retail  sale referred to in Article 38; 

(j) the term “preferential tariff treatment” means  the rate of customs duties applicable to an  originating good of the exporting Party in  accordance with paragraph 1 of Article 14; 

(k) the term “producer” means a person who engages in  the production of goods or materials; 

(l) the term “production” means methods of obtaining  goods including manufacturing, assembling,  processing, raising, growing, breeding, mining,  extracting, harvesting, fishing, trapping,  gathering, collecting, hunting and capturing; 

(m) the term “transaction value of a good” means the  price actually paid or payable for a good with  respect to a transaction of the producer of the  good, pursuant to the principles of Article 1 of  the Agreement on Customs Valuation, adjusted in  accordance with the principles of paragraphs 1, 3  and 4 of Article 8 of the Agreement on Customs  Valuation, regardless of whether the good is sold  for export. For the purposes of this definition,  the seller referred to in the Agreement on  Customs Valuation shall be the producer of the  good; and 

(n) the term “transaction value of a material” means  the price actually paid or payable for a material  with respect to a transaction of the producer of  the good, pursuant to the principles of Article 1  of the Agreement on Customs Valuation, adjusted  in accordance with the principles of paragraphs  1, 3 and 4 of Article 8 of the Agreement on  Customs Valuation, regardless of whether the  material is sold for export. For the purposes of  this definition, the seller referred to in the  Agreement on Customs Valuation shall be the  supplier of the material, and the buyer referred  to in the Agreement on Customs Valuation shall be  the producer of the good. 

Chapter 5 
Customs Procedures 

Article 55 
Scope 

1. This Chapter shall apply to customs procedures  required for the clearance of goods traded between the  Parties. 

2. This Chapter shall be implemented by the Parties in  accordance with the laws and regulations of each Party and  within the available resources of their respective customs  authorities. 

Article 56 
Transparency 

1. Each Party shall ensure that all relevant information  of general application pertaining to its customs laws and  administrative procedures is readily available to any  interested person, with maximum use of information and  communications technology. 

2. When information that has been made available must be  revised due to changes in its customs laws, each Party  shall, whenever possible, make the revised information  publicly available sufficiently in advance of the entry  into force of the changes. 

3. Each Party shall endeavor to provide the other Party  with advance notice of any significant modification of its  policy with regard to customs procedures that is likely to  substantially affect the implementation and operation of  this Agreement. 

4. At the request of any interested person of the  Parties, each Party shall endeavor to provide, as quickly  and as accurately as possible, information relating to the  specific customs matters raised by the interested person  and pertaining to its customs laws. 

5. Each Party shall designate one or more enquiry points  to answer reasonable enquiries from any interested person  of the Parties concerning customs matters, and shall make  publicly available, including through the Internet, the  names and addresses of such enquiry points. 

Article 57 
Customs Clearance 

1. Both Parties shall apply their respective customs  procedures in a predictable, consistent and transparent  manner. 

2. To expedite customs clearance, while ensuring  effective enforcement against illicit trafficking of goods,  each Party shall: 

(a) endeavor to make use of information and  communications technology, taking into account  international standards; 

(b) adopt or maintain accessible information and  communications technology systems, allowing the  authorized or registered person to send  declarations to its customs authority; 

(c) adopt or maintain simplified customs procedures; 

(d) harmonize its customs procedures, as far as  possible, with relevant international standards  and recommended practices such as those made  under the auspices of the Customs Co-operation  Council; and 

(e) promote cooperation, wherever appropriate,  between its customs authority and: 

(i) other national authorities of the Party; 

(ii) the trading communities of the Party; and 

(iii) the customs authorities of non-Parties. 

Article 58 
Cooperation 

1. The Parties shall cooperate with each other in the  field of customs procedures. 

2. Such cooperation shall be implemented as provided for  in the Implementing Agreement. 

Article 59  
Penalties 

Each Party shall adopt or maintain appropriate  sanctions or other measures against violations of its  customs laws. 

Article 60 
Committee on Customs Procedures 

1. For the purposes of the effective implementation and  operation of this Chapter, the Parties hereby establish a  Committee on Customs Procedures (hereinafter referred to in  this Article as “Committee”). 

2. The functions of the Committee shall be: 

(a) reviewing the implementation and operation of  this Chapter; 

(b) reporting the findings of the Committee to the  Commission; 

(c) identifying areas, relating to this Chapter, to  be improved for facilitating trade in goods  between the Parties; and 

(d) carrying out other functions as may be delegated  by the Commission in accordance with Article 190. 

3. The Committee shall meet at such venues and times as  may be agreed by the Parties. 

4. The composition of the Committee shall be specified in  the Implementing Agreement. 

Article 61 
Definition 

For the purposes of this Chapter, the term “customs  laws” of a Party means the laws and regulations of a Party  relating to the importation, exportation, transit or  storage of goods, and any other related matters, falling  under the competence of the customs authority of the Party. 

Chapter 6 
Sanitary and Phytosanitary Measures 

Article 62 
Scope 

This Chapter shall apply to all sanitary and  phytosanitary (hereinafter referred to in this Chapter as  "SPS") measures of the Parties under the SPS Agreement,  that may, directly or indirectly, affect trade in goods  between the Parties. 

Article 63 
Reaffirmation of Rights and Obligations

 The Parties reaffirm their rights and obligations  relating to SPS measures under the SPS Agreement. 

Article 64 
Enquiry Points 

Each Party shall designate an enquiry point which is  able to answer all reasonable enquiries from the other  Party regarding SPS measures and, if appropriate, to  provide their relevant information. 

Article 65 
Working Group on SPS Measures 

1. For the purposes of the effective implementation and  operation of this Chapter, the Parties hereby establish a  Working Group on SPS measures (hereinafter referred to in  this Article as “Working Group”). 

2. The functions of the Working Group shall be: 

(a) exchange of information on such matters as  occurrences of SPS incidents in the Parties and  non-Parties, and change or introduction of SPSrelated  regulations and standards of the Parties,  which may, directly or indirectly, affect trade  in goods between the Parties; 

(b) science-based consultations to identify and  address specific issues that may arise from the  application of SPS measures; 

(c) consulting cooperative efforts between the  Parties in international fora in relation to SPS  measures; and 

(d) discussing technical cooperation between the  Parties on SPS measures. 

3. The Working Group shall be composed of government  officials of the Parties with responsibility for SPS  measures. 

4. The Working Group shall meet at such venues and times  as may be agreed by the Parties. 

Article 66 
Non-Application of Chapter 16 

The dispute settlement procedures provided for in  Chapter 16 shall not apply to this Chapter. 

Chapter 7 
Technical Regulations, Standards and  Conformity Assessment Procedures 

Article 67 
Scope 

1. This Chapter shall apply to technical regulations,  standards and conformity assessment procedures as defined  in the Agreement on Technical Barriers to Trade in Annex 1A  to the WTO Agreement (hereinafter referred to in this  Chapter as “TBT Agreement”). 

2. This Chapter shall not apply to purchasing  specifications prepared by governmental bodies for  production or consumption requirements of governmental  bodies and sanitary and phytosanitary measures as defined  in the SPS Agreement. 

Article 68 
Reaffirmation of Rights and Obligations 

The Parties reaffirm their rights and obligations  relating to technical regulations, standards and conformity  assessment procedures under the TBT Agreement. 

Article 69 
Cooperation 

1. For the purposes of ensuring that technical  regulations, standards and conformity assessment procedures  do not create unnecessary obstacles to trade in goods  between the Parties, the Parties shall, where possible,  cooperate in the field of technical regulations, standards  and conformity assessment procedures. 

2. The forms of cooperation pursuant to paragraph 1 may  include the following: 

(a) conducting joint studies and holding seminars, in  order to enhance mutual understanding of  technical regulations, standards and conformity  assessment procedures in the Parties; 

(b) exchanging information on technical regulations,  standards and conformity assessment procedures;  and 

(c) contributing, where appropriate, jointly to the  activities related to technical regulations,  standards and conformity assessment procedures in  international and regional fora. 

3. The implementation of this Article shall be subject to  the availability of appropriated funds and the applicable  laws and regulations of each Party. 

Article 70 
Committee on Technical Regulations, Standards and  Conformity Assessment Procedures 

1. For the purposes of the effective implementation and  operation of this Chapter, the Parties hereby establish a  Committee on Technical Regulations, Standards and  Conformity Assessment Procedures (hereinafter referred to  in this Article as “Committee”). 

2. The functions of the Committee shall be: 

(a) coordinating cooperation pursuant to Article 69; 

(b) reviewing the implementation and operation of  this Chapter; 

(c) discussing any issues related to this Chapter  with the objective of obtaining mutually  acceptable solutions; 

(d) reporting, where appropriate, the findings of the  Committee to the Commission; and 

(e) carrying out other functions as may be delegated  by the Commission in accordance with Article 190. 

3. The Committee shall be composed of government  officials of the Parties. 

4. The Committee shall meet at such venues and times as  may be agreed by the Parties. 

Article 71 
Non-Application of Chapter 16 

The dispute settlement procedures provided for in  Chapter 16 shall not apply to this Chapter. 

Chapter 8 
Investment 

Section 1 
Investment 

Article 72 
Scope 

1. This Chapter shall apply to measures adopted or  maintained by a Party relating to: 

(a) investors of the other Party; 

(b) investments of investors of the other Party in  the Area of the former Party; and 

(c) with respect to Articles 77 and 87, all  investments in the Area of the former Party. 

2. In the event of any inconsistency between this Chapter  and another Chapter, the other Chapter shall prevail to the  extent of the inconsistency. 

3. This Chapter shall not apply to measures adopted or  maintained by a Party to the extent that they are covered  by Chapter 10. 

4. This Chapter is subject to Annex 5. 

Article 73 
National Treatment 

Each Party shall accord to investors of the other  Party and to their investments made in the Area of the  former Party, treatment no less favorable than that it  accords, in like circumstances, to its own investors and to  their investments with respect to investment activities in  its Area. 

Article 74 
Most-Favored-Nation Treatment 

Each Party shall accord to investors of the other  Party and to their investments made in the Area of the  former Party, treatment no less favorable than that it  accords, in like circumstances, to investors of a non-Party  and to their investments with respect to investment  activities in its Area. 

Article 75 
General Treatment 

Each Party shall accord to investments made in its  Area by investors of the other Party, treatment in  accordance with customary international law, including fair  and equitable treatment and full protection and security. 

Note 1: Article 75 prescribes the customary international  law minimum standard of treatment of aliens as the  minimum standard of treatment to be afforded to  investments made in the Area of a Party by  investors of the other Party. 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. 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 the customary  international law minimum standard of treatment of  aliens. 

Note 2: 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 Article  75. 

Note 3: Each Party shall accord to investors of the other  Party, non-discriminatory treatment with regard to  access to the courts of justice and administrative  tribunals and agencies of the former Party in  pursuit and in defense of rights of such  investors. 

Article 76 
Protection from Strife 

1. Each Party shall accord to investors of the other  Party that have suffered loss relating to their investments  made in the Area of the former Party due to armed conflict,  revolution, insurrection, civil disturbance or any other  similar event, treatment, as regards restitution,  indemnification, compensation or any other settlement, that  is no less favorable than that it accords to its own  investors or to investors of a non-Party. 

2. Any payments as a means of settlement referred to in  paragraph 1 shall be fully realizable, freely transferable  and freely convertible at the market exchange rate into the  currency of the Party of the investors concerned and freely  usable currencies. 

3. Paragraphs 1 and 2 shall not apply to any subsidies  including grants, government supported loans, guarantees  and insurance as provided for in subparagraph 5(b) of  Article 79. 

Article 77 
Performance Requirements 

1. Neither Party may impose or enforce any of the  following requirements, or enforce any commitment or  undertaking, in connection with investment activities of an  investor of a Party or of a non-Party in its Area: 

(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 or services supplied in its Area, or to  purchase goods or services from persons in its  Area; 

(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 investments of the investor; 

(e) to restrict sales of goods or services in its  Area that investments of the investor produce or  supply by relating such sales in any way to the  volume or value of its exports or foreign  exchange earnings; 

(f) to transfer technology, a production process or  other proprietary knowledge to a person in its  Area except when: 

(i) the requirement is imposed or the commitment  or undertaking is enforced by a court of  justice, administrative tribunal or  competition authority to remedy a practice  determined after judicial or administrative  process to be anti-competitive under its  competition laws and regulations; or 

(ii) the requirement concerns the transfer of  intellectual property rights which is  undertaken in a manner not inconsistent with  the TRIPS Agreement; or 

(g) to supply to a specific region or the world  market exclusively from its Area, the goods that  the investor produces or the services that the  investor supplies. 

2. Neither Party may condition the receipt or continued  receipt of an advantage, in connection with investment  activities of an investor of a Party or of a non-Party in  its Area, 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 Area, or to purchase goods from  persons in its Area; 

(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 investments of the investor; or  47 

(d) to restrict sales of goods or services in its  Area that investments of the investor produce or  supply 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 investment activities of an investor of a  Party or of a non-Party in its Area, 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 Area. 

(b) Subparagraphs 1(a), 1(b), 1(c), 2(a) and 2(b)  shall not apply to qualification requirements for  goods or services with respect to export  promotion and foreign aid programs. 

(c) Subparagraphs 1(b), 1(c), 1(f), 1(g), 2(a) and  2(b) shall not apply to government procurement. 

(d) Subparagraphs 2(a) and 2(b) shall 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. Paragraphs 1 and 2 shall not apply to any requirement  other than the requirements set out in those paragraphs. 

Article 78 
Senior Management and Boards of Directors 

1. Neither Party may require that an enterprise of that  Party that is an investment made in its Area by an investor  of the other Party appoint, to senior management positions,  individuals 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 an investment made in its Area by an  investor of the other Party, be of a particular  nationality, or resident in the former Party, provided that  the requirement does not materially impair the ability of  the investor to exercise control over its investment. 

Article 79 
Non-Conforming Measures 

1. Articles 73, 74, 77 and 78 shall not apply to: 

(a) any existing non-conforming measure that is  maintained by: 

(i) with respect to Chile: 

(A) the national government, as set out in  its Schedule in Annex 6; or 

(B) a local government; and  Note: “The national government” includes  regional governments. 

(ii) with respect to Japan: 

(A) the central government or a prefecture,  as set out in its Schedule in Annex 6;  or 

(B) a local government other than  prefectures; 

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

(c) an amendment or a modification to any nonconforming  measure referred to in subparagraph  (a), to the extent that the amendment or  modification does not decrease the conformity of  the measure, as it existed immediately before the  amendment or modification, with Articles 73, 74,  77 and 78. 

2. Articles 73, 74, 77 and 78 shall 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 in Annex 7. 

3. Neither Party may, under any measure adopted after the  date of entry into force of this Agreement and covered by  its Schedule in Annex 7, require an investor of the other  Party, by reason of its nationality, to sell or otherwise  dispose of an investment that exists at the time the  measure becomes effective. 

4. Articles 73 and 74 shall not apply to any measure that  is an exception to, or derogation from, the obligations  under the TRIPS Agreement. 

5. Articles 73, 74 and 78 shall not apply to: 

(a) government procurement; or 

(b) subsidies provided by a Party or a state  enterprise, including grants, governmentsupported  loans, guarantees and insurance. 

Article 80 
Notification 

1. In the case where a Party makes an amendment or a  modification to any existing non-conforming measure as set  out in its Schedule in Annex 6, the Party shall notify the  other Party, as soon as possible, of such amendment or  modification. 

2. In the case where a Party adopts any measure after the  entry into force of this Agreement, with respect to  sectors, sub-sectors or activities as set out in its  Schedule in Annex 7, the Party shall, to the extent  possible, notify the other Party of such measure. 

Article 81 
Transfers 

1. Each Party shall allow all transfers relating to  investments made in its Area by an investor of the other  Party to be made freely and without delay into and out of  its Area. Such transfers shall include: 

(a) the initial capital and additional amounts to  maintain or increase such investments; 

(b) profits, dividends, interest, capital gains,  royalty payments, management fees, technical  assistance fees and other fees; 

(c) proceeds from the sale or liquidation of all or  any part of such investments; 

(d) payments made under a contract, including  payments made pursuant to a loan agreement; 

(e) payments made pursuant to paragraphs 1 and 2 of  Article 76 and Article 82; and 

(f) payments arising under Section 2. 

2. Each Party shall allow transfers referred to in  paragraph 1 to be made in a freely usable currency at the  market rate of exchange prevailing on the date of each  transfer. 

3. Notwithstanding paragraphs 1 and 2, a Party may delay  or 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 or  derivatives; 

(c) criminal or penal offenses; 

(d) reports or record keeping of transfers of  currency or other monetary instruments; or 

(e) ensuring compliance with orders or judgments in  judicial or administrative proceedings. 

4. This Article is subject to Annex 8. 

Article 82 
Expropriation and Compensation 

1. Neither Party may expropriate or nationalize  investments made in its Area by investors of the other  Party either directly or indirectly through measures  equivalent to expropriation or nationalization (hereinafter  referred to as “expropriation”), except: 

(a) for a public purpose; 

(b) on a non-discriminatory basis; 

(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  75. 

2. The compensation shall be equivalent to the fair  market value of the expropriated investments at the time  when the expropriation was officially announced or when the  expropriation occurred, whichever is the earlier. The fair  market value shall not reflect any change in market value  occurring because the expropriation had become publicly  known prior to such official announcement or occurrence of  the expropriation. The compensation shall be paid without  delay and be fully realizable and freely transferable. 

3. If payment is made in a freely usable currency, the  compensation paid shall include interest, at a commercially  reasonable rate for that currency, accrued from the date of  expropriation until the date of payment. 

4. If a Party elects to pay in a currency other than a  freely usable currency, 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  the sum of the following: 

(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; and 

(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 shall not apply with respect to the grant  of compulsory licenses concerning intellectual property  rights in accordance with the TRIPS Agreement. 

Note: For greater certainty, Article 82 shall be  interpreted in accordance with Annex 9. 

Article 83 
Subrogation 

1. If a Party or its designated agency makes a payment to  any of its investors pursuant to an indemnity, guarantee or  insurance contract, pertaining to an investment made by  that investor within the Area of the other Party, the other  Party shall: 

(a) recognize the assignment, to the former Party or  its designated agency, of any right of the  investor that formed the basis of such payment;  and 

(b) recognize the right of the former Party or its  designated agency to exercise by virtue of  subrogation such right to the same extent as the  original right of the investor. 

2. For greater certainty, the investor shall continue to  be entitled to exercise its rights that have not been  subrogated pursuant to paragraph 1. 

Article 84 
Special Formalities and Information Requirements 

1. Nothing in Article 73 shall be construed to prevent a  Party from adopting or maintaining a measure that  prescribes special formalities in connection with  investment activities of investors of the other Party and  their investments made in the Area of the former Party,  such as the compliance with registration requirements, or  requirements that investors be residents of the Party or  that investments be legally constituted under the laws and  regulations of the Party, provided that such formalities do  not materially impair the protections afforded by the Party  to investors of the other Party and their investments  pursuant to this Chapter. 

2. Notwithstanding Articles 73 and 74, a Party may  require investors of the other Party, or their investments  made in its Area, to provide information concerning those  investments solely for informational or statistical  purposes. The Party shall protect such information that is  confidential from any disclosure that would prejudice the  competitive position of the investors or their investments.  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. 

Article 85 
Temporary Safeguard Measures 

1. A Party may adopt or maintain measures not conforming  with its obligations under Articles 73 and 81, regarding  payments and transfers related to an investment: 

(a) in the event of serious balance-of-payments and  external financial difficulties or threat  thereof; or 

(b) in cases where, in exceptional circumstances,  movements of capital cause or threaten to cause  serious difficulties for macroeconomic  management, in particular, monetary and exchange  rate policies. 

2. Measures referred to in paragraph 1: 

(a) shall be consistent with the Articles of  Agreement of the International Monetary Fund; 

(b) shall not exceed those necessary to deal with the  circumstances set out in paragraph 1; 

(c) shall be temporary and eliminated as soon as  conditions permit; 

(d) shall be promptly notified to the other Party;  and

(e) shall avoid unnecessary damages to the  commercial, economic and financial interests of  the other Party. 

3. Nothing in this Article shall be regarded as altering  the rights enjoyed and obligations undertaken by a Party as  a party to the Articles of Agreement of the International  Monetary Fund. 

Article 86 
Denial of Benefits 

1. A Party may deny the benefits of this Chapter to an  investor of the other Party that is an enterprise of the  other Party and to its investments if the enterprise is  owned or controlled by an investor 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 or to its investments. 

2. A Party may deny the benefits of this Chapter to an  investor of the other Party that is an enterprise of the  other Party and to its investments if the enterprise is  owned or controlled by an investor of a non-Party or of the  denying Party and the enterprise has no substantial  business activities in the Area of the other Party, subject  to prior notification to and consultation with the other  Party. 

Article 87 
Environmental Measures 

Each Party recognizes that it is inappropriate to  encourage investments by investors of the other Party by  relaxing its environmental measures. To this effect each  Party should not waive or otherwise derogate from such  environmental measures as an encouragement for  establishment, acquisition or expansion of investments in  its Area. 

Section 2 
Settlement of Investment Disputes  between a Party and an Investor of the Other Party 

Article 88 
Consultation and Negotiation 

In the event of an investment dispute between a Party  and an investor of the other Party, they should initially  seek to resolve the dispute through consultation and  negotiation, which may include the use of non-binding,  third-party procedures. 

Article 89 
Submission of a Claim to Arbitration 

1. In the event that an investment dispute cannot be  settled by consultation and negotiation: 

(a) the investor of a Party, on its own behalf, may  submit to arbitration under this Section a claim: 

(i) that the other Party has breached an  obligation under Section 1; and 

(ii) that the investor has incurred loss or  damage by reason of, or arising out of, that  breach; and 

(b) the investor of a Party, on behalf of an  enterprise of the other Party that is a juridical  person that such investor owns or controls  directly or indirectly, may submit to arbitration  under this Section a claim: 

(i) that the other Party has breached an  obligation under Section 1; and 

(ii) that the enterprise has incurred loss or  damage by reason of, or arising out of, that  breach. 

2. An investment made by an investor of a Party may not  submit a claim to arbitration under this Section. 

3. For greater certainty: 

(a) no claim may be submitted to arbitration under  this Section that alleges a violation of any  provision of this Agreement other than an  obligation under Section 1; and 

(b) an investor of a Party may not submit a claim to  arbitration under this Section in relation to any  act or fact that took place or any situation that  ceased to exist before the date of entry into  force of this Agreement. 

4. At least 90 days before submitting any claim to  arbitration under this Section, an investor of a Party  shall deliver to the other Party a written notice of its  intention to submit the claim to arbitration (hereinafter  referred to as “notice of intent”). The notice of intent  shall specify: 

(a) the name and address of the investor and, in the  case of subparagraph 1 (b), the name, address, and  place of incorporation of the enterprise; 

(b) the provision of Section 1 alleged to have been  breached; 

(c) the legal and factual basis for that claim; and 

(d) the relief sought and the approximate amount of  damages claimed. 

5. Provided that six months have elapsed since the events  giving rise to the claim, an investor of a Party may submit  a claim referred to in paragraph 1: 

(a) under the ICSID Convention, provided that both  Parties are parties to the ICSID Convention; 

(b) under the ICSID Additional Facility Rules,  provided that either Party, but not both, is a  party to the ICSID Convention; 

(c) under the UNCITRAL Arbitration Rules; or 

(d) if the disputing parties agree, to any other  arbitration institution or under any other  arbitration rules. 

6. A claim shall be deemed submitted to arbitration under  this Section when the claimant’s notice of or request for  arbitration (hereinafter referred to in this Section as  “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; 

(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, is received by the respondent;  or 

(d) under any other arbitration institution or  arbitration rules selected under subparagraph  5(d) is received by the respondent, unless  otherwise specified by such institution or in  such rules. 

7. 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 the claimant’s arbitrator. 

8. The arbitration rules applicable under paragraph 5,  which are in effect on the date the claim is submitted to  arbitration under this Section, shall govern the  arbitration except to the extent modified by this Section. 

Article 90 
Consent to Arbitration 

1. Each Party consents to the submission of a claim to  arbitration in accordance with the procedures set out in  this Section. 

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 and the ICSID  Additional Facility Rules for written consent of  the parties; and 

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

Article 91 
Conditions and Limitations on Consent 

1. No claim may be submitted to arbitration under this  Section if more than three years have elapsed from the date  on which the investor in the case of subparagraph 1(a) of  Article 89 or the enterprise in the case of subparagraph  1(b) of Article 89 first acquired, or should have first  acquired, knowledge of the breach alleged under paragraph 1  of Article 89 and knowledge that such investor or  enterprise had incurred loss or damage. 

2. No claim may be submitted to arbitration under this  Section unless: 

(a) in the case of subparagraph 1(a) of Article 89: 

(i) the claimant consents in writing to  arbitration in accordance with the  procedures set out in this Section; 

(ii) the claimant waives in writing any right to  initiate before any administrative tribunal  or court under the law of either Party, or  other dispute settlement procedures, any  proceedings with respect to any measure  alleged to constitute a breach referred to  in paragraph 1 of Article 89; and 

(iii) the claimant has not initiated any  proceedings before any administrative  tribunal or court referred to in  subparagraph (ii). For greater certainty,  if the investor elects to initiate such  proceedings, that election shall be  definitive and the investor may not  thereafter submit the claim to arbitration  under this Section; and 

(b) in the case of subparagraph 1(b) of Article 89: 

(i) both the claimant and the enterprise consent  in writing to arbitration in accordance with  the procedures set out in this Section; 

(ii) both the claimant and the enterprise waive  in writing any right to initiate before any  administrative tribunal or court under the  law of either Party, or other dispute  settlement procedures, any proceedings with  respect to any measure alleged to constitute  a breach referred to in paragraph 1 of  Article 89; and 

(iii) the claimant or the enterprise referred to  in subparagraph (ii) has not initiated any  proceedings before any administrative  tribunal or court referred to in  subparagraph (ii). For greater certainty,  if the investor or the enterprise elects to  initiate such proceedings, that election  shall be definitive and neither the investor  nor the enterprise may thereafter submit the  claim to arbitration under this Section. 

3. Notwithstanding subparagraphs 2(a)(ii), 2(a)(iii),  2(b)(ii) and 2(b)(iii), the claimant or the enterprise  referred to in subparagraphs 2(b)(ii) and 2(b)(iii) may  initiate or continue an action that seeks interim  injunctive relief that does not involve the payment of  monetary damages before an administrative tribunal or court  under the law of the respondent. 

Article 92 
Establishment of a Tribunal 

1. Unless the disputing parties otherwise agree, a  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. If an arbitrator or arbitrators are not appointed  pursuant to paragraph 1 within 75 days from the date on  which the claim was submitted to arbitration, the  Secretary-General may be requested by either disputing  party to appoint the arbitrator or arbitrators not yet  appointed from the ICSID Panel of Arbitrators subject to  the requirements of paragraph 3. 

3. Unless the disputing parties agree otherwise, the  presiding arbitrator shall not be a national of either  Party, nor have his or her usual place of residence in  either Party, nor be employed by either disputing party,  nor have dealt with the claim in any capacity. 

4. The date of establishment of a Tribunal shall be the  date on which all the arbitrators have been appointed and  accepted such appointment. 

Article 93 
Governing Law 

1. Subject to paragraph 2, when a claim is submitted to  arbitration under this Section, a Tribunal shall decide the  issues in dispute in accordance with this Agreement and  applicable rules of international law. 

2. An interpretation of a provision of this Agreement  adopted by the Commission shall be binding on a Tribunal,  and any award must be consistent with that interpretation.  Such interpretation shall be made publicly available  through the means that each Party considers appropriate. 

Article 94 
Interpretation of Annexes 

1. Where a respondent asserts as a defense that the  measure alleged to be a breach is within the scope of a  non-conforming measure set out in Annex 6 or 7, the  Tribunal shall, on request of the respondent, request the  Commission to adopt an interpretation on the issue. The  Commission shall adopt and submit in writing its  interpretation to the Tribunal within 60 days of delivery  of the request. 

2. The interpretation adopted and submitted by the  Commission under paragraph 1 shall be binding on the  Tribunal, and any award must be consistent with that  interpretation. If the Commission fails to submit an  interpretation within the aforementioned 60 days period,  the Tribunal shall decide the issue. 

Article 95
Participation in Arbitration 

1. On written notice to the disputing parties, the Party  other than the respondent may make submissions to the  Tribunal on a question of interpretation of this Agreement. 

2. The Party other than the respondent shall be entitled  to receive from the respondent, a copy of: 

(a) the evidence that has been tendered to the  Tribunal; and 

(b) the written argument of the disputing parties. 

Article 96 
Place of Arbitration 

Unless the disputing parties agree otherwise, a  Tribunal shall hold an arbitration in a country that is a  party to the New York Convention. 

Article 97 
Preliminary Questions 

1.

(a) A Tribunal shall address and decide as a  preliminary question any objection by the  respondent that, as a matter of law, the Tribunal  may not make an award against the respondent in  accordance with Article 103, provided that the  respondent so requests as soon as possible after  the Tribunal is established, and in no event  later than the date the Tribunal fixes for the  respondent to submit its counter-memorial. In  deciding such objection, the Tribunal shall  assume to be true the factual allegations of the  claimant in support of any claim in the notice of  arbitration. The Tribunal may also consider any  relevant facts not in dispute. 

(b) Subparagraph (a) shall not prejudice the  authority of the Tribunal to address as a  preliminary question any objection other than the  objection referred to in subparagraph (a), such  as an objection that the dispute is not within  the competence of the Tribunal. 

(c) On receipt of the objection referred to in  subparagraph (a), 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. 

2. In the event that the respondent so requests within 45  days after the date of establishment of the Tribunal, the  Tribunal shall address and decide on an expedited basis the  objection referred to in subparagraph 1(a) or any objection  that the dispute is not within the competence of the  Tribunal. The Tribunal shall suspend any proceedings on  the merits and issue a decision or award on the objection,  stating the grounds therefor, no later than 150 days, or  180 days if a hearing is held or under extraordinary  circumstances, after the date of the request. 

3. When it decides a respondent’s objection pursuant to  paragraph 1 or 2, the Tribunal may, if warranted, award to  the prevailing disputing party reasonable costs including  attorneys’ fees incurred in submitting or opposing the  objection. In determining whether such an award is  warranted, the Tribunal shall consider whether the  claimant’s claim was frivolous or whether the respondent’s  objection was frivolous, and shall provide the disputing  parties a reasonable opportunity to comment. 

4. The respondent does not waive its right to make any  objection or argument on the merits merely because the  respondent did or did not make a request pursuant to  paragraph 1 or 2. 

Article 98 
Insurance or Guarantee Contracts 

In an arbitration under this Section, the respondent  may not assert, as a defense, counterclaim, right of setoff  or otherwise, 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. 

Article 99
Interim Measures of Protection 

A Tribunal may order an interim measure of protection  to preserve the rights of a disputing party, or to  facilitate the conduct of arbitral proceedings, including  an order to preserve evidence in the possession or control  of a disputing party. A Tribunal may not order attachment  or enjoin the application of the measure alleged to  constitute a breach referred to in paragraph 1 of Article  89. 

Article 100 
Expert Report 

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,  except as the disputing parties agree otherwise, on its own  initiative, may appoint one or more experts in the fields  of environmental, health, safety or other scientific  matters to report to it in writing on any factual issue  concerning matters of their expertise raised by a disputing  party in a proceeding, subject to such terms and conditions  as the disputing parties may agree. 

Article 101 
Consolidation of Multiple Claims 

1. When a disputing party considers that two or more  claims submitted to arbitration under paragraph 1 of  Article 89 have a question of law or fact in common and  arise out of the same events or circumstances, the  disputing party may seek a consolidation order in  accordance with 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 to establish a Tribunal under this  Article. The request shall specify: 

(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 60 days  after receiving a request under paragraph 2 that the claims  do not satisfy the requirements set out in paragraph 1, 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  either Party, nor have his or her usual place of  residence in either Party, nor be employed by any  disputing party, nor have dealt with the claims  in any capacity. 

5. If, within 60 days after the Secretary-General  receives a request under paragraph 2, the respondent fails  or the claimants fail to appoint an arbitrator in  accordance with paragraph 4, the Secretary-General may be  requested by any disputing party sought to be covered by  the order, to appoint the arbitrator or arbitrators not yet  appointed. If the respondent fails to appoint an  arbitrator, the arbitrator to be appointed by the  Secretary-General shall be a national of the respondent,  and if the claimants fail to appoint an arbitrator, the  arbitrator to be appointed by the Secretary-General shall  be a national of the Party other than the respondent. 

6. Where a claimant that has submitted a claim to  arbitration under paragraph 1 of Article 89 considers that  such a claim raises a question of law or fact in common to,  and arises out of the same events or circumstances as,  claims upon which the consolidation under paragraph 2 has  been requested, but has not been named in such request, the  claimant may make a written request to the Tribunal  established under this Article that the claimant be covered  by any order made under paragraph 7, 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. 

7. Where a Tribunal established under this Article is  satisfied that two or more claims that have been submitted  to arbitration under paragraph 1 of Article 89 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; or 

(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. 

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 92 shall not have  jurisdiction to decide a claim, or a part of a claim, over  which a Tribunal established under this Article has assumed  jurisdiction. 

10. On application of a disputing party, a Tribunal  established under this Article, pending its decision as to  whether to make an order under paragraph 7, may order the  adjourning of the proceedings of a Tribunal established  under Article 92. 

11. For greater certainty, the provisions of this Section  other than this Article shall apply with respect to a  Tribunal established under this Article except to the  extent modified by this Article. 

Article 102 
Proposed Award 

A Tribunal shall, at the request of a disputing party,  submit to the disputing parties a proposed award, before  making an award, except an award issued pursuant to Article  97. The disputing parties may submit to the Tribunal  written comments on the proposed award within 60 days after  the date of submission of the proposed award. The Tribunal  shall consider such comments and make an award within 105  days of the date of submission of the proposed award. 

Article 103 
Award 

1. Where a Tribunal makes an award against the  respondent, the Tribunal may award, separately or in  combination, only: 

(a) monetary damages and any applicable interest; and 

(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 including attorneys’  fees in accordance with this Section and the applicable  arbitration rules. 

2. Subject to paragraph 1, in the case of subparagraph  1(b) of Article 89: 

(a) an award of monetary damages and any applicable  interest shall provide that the sum be paid to  the enterprise; and  65 

(b) an award of restitution of property shall provide  that restitution be made to the enterprise. 

3. A Tribunal may not 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 7, a disputing party shall abide  by and comply with an award without delay. 

6. If the respondent fails to abide by or comply with an  award, the Party other than the respondent may request the  establishment of an arbitral tribunal pursuant to Article  178. The requesting Party may seek in such proceedings: 

(a) a determination that the failure to abide by or  comply with the award is inconsistent with the  obligations of this Agreement; and 

(b) a recommendation that the respondent abide by or  comply with the award. 

7. A disputing party may not seek enforcement of an award  until such award becomes final. An award becomes final  when: 

(a) in the case of an award under the ICSID  Convention: 

(i) 120 days have elapsed from the date the  award was made 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 an award under the ICSID  Additional Facility Rules, the UNCITRAL  Arbitration Rules, or the rules selected pursuant  to subparagraph 5(d) of Article 89: 

(i) 90 days have elapsed from the date the award  was made and no disputing party has  commenced a proceeding to revise or annul  the award; or 

(ii) an application to revise or annul the award  has been dismissed or allowed and there is  no further appeal.

8. Each Party shall provide for the enforcement of an  award in its Area in accordance with its relevant laws and  regulations. 

Article 104 
Service of Documents 

1. Notices and other documents relating to arbitration  under this Section shall be served on a Party by delivery  to: 

(a) with respect to Japan, the Ministry of Foreign  Affairs; and 

(b) with respect to Chile, the Ministry of Foreign  Affaires, Legal Affaires Directorate (Dirección  de Asuntos Jurídicos del Ministerio de Relaciones  Exteriores de la República de Chile). 

2. The Commission shall make publicly available the  addresses of the authorities referred to in paragraph 1. 

Section 3 
Definitions 

Article 105 
Definitions 

1. For the purposes of this Chapter: 

(a) the term “claimant” means an investor of a Party  that submits a claim to arbitration under Section  2; 

(b) the term “disputing parties” means the claimant  and the respondent; 

(c) the term “disputing party” means either the  claimant or the respondent; 

(d) the term “freely usable currency” means freely  usable currency as defined under the Articles of  Agreement of the International Monetary Fund; 

(e) the term “ICSID” means the International Centre  for Settlement of Investment Disputes; 

(f) the term “ICSID Additional Facility Rules” means  the Rules Governing the Additional Facility for  the Administration of Proceedings by the  Secretariat of the International Centre for  Settlement of Investment Disputes; 

(g) the term “ICSID Convention” means the Convention  on the Settlement of Investment Disputes between  States and Nationals of other States, done at  Washington, March 18, 1965; 

(h) the term “investment” means every kind of asset  that an investor owns or controls, directly or  indirectly, which has the characteristics of an  investment. Forms that an investment may take  include: 

Note 1: The characteristics of an investment  include the commitment of capital or  other resources, the expectation of gain  or profit, or the assumption of risk. 

Note 2: An investment does not include an order  or judgment entered in a judicial or  administrative action. 

(i) an enterprise and a branch of an enterprise; 

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

(iii) bonds, debentures, loans and other debt  instruments, but do not include a debt  instrument of a Party or of a state  enterprise; 

(iv) futures, options and other derivatives; 

(v) rights under contracts, including turnkey,  construction, management, production or  revenue-sharing contracts; 

(vi) intellectual property rights; 

(vii) rights conferred pursuant to domestic law,  such as concessions, licenses,  authorizations and permits; and 

(viii) other tangible or intangible, movable or  immovable property, and any related property  rights, such as leases, mortgages, liens and  pledges; 

(i) the term “investment activities” means  establishment, acquisition, expansion,  management, conduct, operation, maintenance, use,  enjoyment and sale or other disposition of  investments; 

(j) the term “investor of a Party” means a natural  person or an enterprise of a Party, or the Party  or state enterprise thereof, that attempts to  make, is making, or has made investments in the  Area of the other Party; 

(k) the term “New York Convention” means the United  Nations Convention on the Recognition and  Enforcement of Foreign Arbitral Awards, done at  New York, June 10, 1958; 

(l) the term “respondent” means a Party against which  a claim is submitted to arbitration under Section  2; 

(m) the term “Secretary-General” means the Secretary-  General of ICSID; 

(n) the term “Tribunal” means an arbitration tribunal  established under Article 92 or 101; and 

(o) the term “UNCITRAL Arbitration Rules” means the  arbitration rules of the United Nations  Commission on International Trade Law, approved  by the United Nations General Assembly on  December 15, 1976. 

2. For the purposes of this Chapter, an enterprise is: 

(a) “owned” by an investor if more than 50 percent of  the equity interests in it is beneficially owned  by the investor; and 

(b) “controlled” by an investor if the investor has  the power to name a majority of its directors or  otherwise to legally direct its actions in  accordance with the laws and regulations of a  Party. 

Chapter 9 
Cross-Border Trade in Services 

Article 106 
Scope 

1. This Chapter shall apply to measures adopted or  maintained by a Party affecting cross-border trade in  services by service suppliers of the other Party. Such  measures include measures affecting: 

(a) the supply of a service;  69 
Note: The measures affecting the supply of a  service include those affecting the  provision of any financial security as a  condition for the supply of a service. 

(b) the purchase or use of, or payment for, a  service; 

(c) the access to and the use of services offered to  the public generally, including distribution,  transport or telecommunications networks, in  connection with the supply of a service; and 

(d) the presence in its Area of a service supplier of  the other Party. 

2. This Chapter shall not apply to: 

(a) cabotage in maritime transport services; 

(b) financial services, as defined in Article 128; 

(c) in respect of air transport services, measures  affecting traffic rights, however granted; or  measures affecting services directly related to  the exercise of traffic rights, other than  measures affecting: 

(i) aircraft repair and maintenance services; 

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

(iii) computer reservation system services; 

(d) government procurement; 

(e) subsidies provided by a Party or a state  enterprise, including grants, governmentsupported  loans, guarantees and insurance; 

(f) measures affecting natural persons of a Party  seeking access to the employment market of the  other Party, or measures regarding nationality or  citizenship, or residence or employment on a  permanent basis; and 

(g) services supplied in the exercise of governmental  authority. 

Article 107 
National Treatment 

Each Party shall accord to services and service  suppliers of the other Party treatment no less favorable  than that it accords, in like circumstances, to its own  services and service suppliers. 

Note: For greater certainty, nothing in this Article shall  be construed to require either Party to compensate  for any inherent competitive disadvantages which  result from the foreign character of the relevant  services or service suppliers. 

Article 108 
Most-Favored-Nation Treatment 

Each Party shall accord to services and service  suppliers of the other Party treatment no less favorable  than that it accords, in like circumstances, to services  and service suppliers of any non-Party. 

Article 109 
Local Presence 

Neither Party shall require a service supplier of the  other Party to establish or maintain a representative  office or any form of enterprise, or to be resident, in its  Area as a condition for the cross-border supply of a  service. 

Note: The term “cross-border supply of a service” has the  same meaning as the term “cross-border trade in  services”. 

Article 110 
Non-Conforming Measures 

1. Articles 107, 108 and 109 shall not apply to: 

(a) any existing non-conforming measure that is  maintained by: 

(i) with respect to Chile: 

(A) the national government, as set out in  its Schedule in Annex 6; or 

(B) a local government; and 

Note: “The national government” includes  regional governments. 

(ii) with respect to Japan: 

(A) the central government or a prefecture,  as set out in its Schedule in Annex 6;  or 

(B) a local government other than  prefectures; 

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

(c) an amendment or a modification to any nonconforming  measure referred to in subparagraph  (a), to the extent that the amendment or  modification does not decrease the conformity of  the measure, as it existed immediately before the  amendment or modification, with Articles 107, 108  and 109. 

2. Articles 107, 108 and 109 shall 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 in Annex 7. 

Article 111 
Notification 

1. In the case where a Party makes an amendment or a  modification to any existing non-conforming measure as set  out in its Schedule in Annex 6, the Party shall notify the  other Party, as soon as possible, of such amendment or  modification. 

2. In the case where a Party adopts any measure after the  entry into force of this Agreement, with respect to  sectors, sub-sectors or activities as set out in its  Schedule in Annex 7, the Party shall, to the extent  possible, notify the other Party of such measure. 

Article 112 
Authorization, Qualification, Technical Standard and  Licensing 

With a view to ensuring that any measure adopted or  maintained by a Party in any services sector relating to  the authorization, qualification requirements and  procedures, technical standards and licensing requirements  of service suppliers of the other Party does not constitute  an unnecessary barrier to cross-border trade in services,  each Party shall endeavor to ensure that such measure: 

(a) is based on objective and transparent criteria,  such as the competence and ability to supply the  service; 

(b) is not more burdensome than necessary to ensure  the quality of the service; and 

(c) does not constitute a disguised restriction on  the supply of the service. 

Article 113 
Mutual Recognition 

1. A Party may recognize the education or experience  obtained, requirements met, or licenses or certifications  granted in the other Party for the purposes of the  fulfillment, in whole or in part, of its standards or  criteria for the authorization, licensing or certification  of service suppliers of the other Party. 

2. Recognition referred to in paragraph 1, which may be  achieved through harmonization or otherwise, may be based  upon an agreement or arrangement between the Parties or may  be accorded unilaterally. 

3. Where a Party recognizes, by agreement or arrangement  between the Party and a non-Party or unilaterally, the  education or experience obtained, requirements met, or  licenses or certifications granted in the non-Party: 

(a) nothing in Article 108 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 other Party; and 

(b) the Party shall accord the other Party an  adequate opportunity to demonstrate that the  education or experience obtained, requirements  met, or licenses or certifications granted in the  other Party should also be recognized. 

Article 114 
Restrictions to Safeguard the Balance of Payments 

1. In the event of serious balance-of-payments and  external financial difficulties or threat thereof, a Party  may adopt or maintain restrictions on cross-border trade in  services, including on payments or transfers for  transactions. 

2. The restrictions referred to in paragraph 1: 

(a) shall be applied on the basis of national  treatment and most-favored-nation treatment; 

(b) shall be consistent with the Articles of  Agreement of the International Monetary Fund; 

(c) shall avoid unnecessary damage to the commercial,  economic and financial interests of the other  Party; 

(d) shall not exceed those necessary to deal with the  circumstances described in paragraph 1; and 

(e) shall be temporary and be phased out  progressively as the situation specified in  paragraph 1 improves. 

3. In determining the incidence of such restrictions, a  Party may give priority to the cross-border supply of  services which are more essential to its economic or  development programs. However, such restrictions shall not  be adopted or maintained for the purposes of protecting a  particular service sector. 

4. Any restrictions adopted or maintained under paragraph  1, or any changes therein, shall be promptly notified to  the other Party. 

Article 115 
Denial of Benefits 

1. A Party may deny the benefits of this Chapter to a  service supplier of the other Party that is an enterprise  of the other Party, where the former Party establishes that  the enterprise is owned or controlled by persons of a non-  Party, and the former 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 prior notification and consultation, a  Party may deny the benefits of this Chapter to a service  supplier of the other Party that is an enterprise of the  other Party where the former Party establishes that the  enterprise is owned or controlled by persons of a non-Party  and has no substantial business activities in the Area of  the other Party. 

Article 116 
Definitions 

1. For the purposes of this Chapter: 

(a) the term “aircraft repair and maintenance  services” means such activities when undertaken  on an aircraft or a part thereof while it is  withdrawn from services and does not include socalled  line maintenance; 

(b) the term “computer reservation system services”  means services provided by computerized systems  that contain information about air carriers’  schedules, availability, fares and fare rules,  through which reservations may be made or tickets  may be issued; 

(c) the term “cross-border trade in services” means  the supply of a service: 

(i) from the Area of a Party into the Area of  the other Party; 

(ii) in the Area of a Party by a natural person  or an enterprise of that Party to a natural  person or an enterprise of the other Party;  and 

(iii) by a natural person of a Party in the Area  of the other Party, 

but does not include the supply of services by an  investment of an investor of a Party, as defined  in Article 105, in the Area of the other Party; 

(d) the term “measure adopted or maintained by a  Party” means any measure adopted or maintained  by: 

(i) any level of government or authority of a  Party; and  75 

(ii) non-governmental bodies in the exercise of  powers delegated by any level of government  or authority of a Party; 

(e) the term “service supplied in the exercise of  governmental authority” means any service which  is supplied neither on a commercial basis nor in  competition with one or more service suppliers; 

(f) the term “service supplier” means a person that  seeks to supply or supplies a service; 

(g) the term “supply of a service” includes the  production, distribution, marketing, sale and  delivery of a service; 

(h) the term “the selling and marketing of air  transport services” means opportunities for the  air carrier concerned to sell and market freely  its air transport services including all aspects  of marketing such as market research, advertising  and distribution. These activities do not  include the pricing of air transport services nor  the applicable conditions; and 

(i) the term “traffic rights” means the rights for  scheduled and non-scheduled services to operate  and/or to carry passengers, cargo and mail for  remuneration or hire from, to, within, or over a  Party, including points to be served, routes to  be operated, types of traffic to be carried,  capacity to be provided, tariffs to be charged  and their conditions, and criteria for  designation of airlines, including such criteria  as number, ownership and control. 

2. For the purposes of this Chapter, an enterprise is: 

(a) “owned” by a person if more than 50 percent of  the equity interests in it is beneficially owned  by the person; and 

(b) “controlled” by a person if the person has the  power to name a majority of its directors or  otherwise to legally direct its actions in  accordance with the laws and regulations of a  Party. 

Chapter 10 
Financial Services 

Article 117 
Scope  1.

This Chapter shall apply to measures adopted or  maintained by a Party relating to: 

(a) financial institutions of the other Party; 

(b) investors of the other Party, and investments of  such investors, in financial institutions in the  Area of the former Party; and 

(c) cross-border trade in financial services. 

2. Articles 81 through 86, 114 and 115 shall apply to  measures described in paragraph 1, mutatis mutandis. For  greater certainty, no other provision of Chapter 8 or 9  shall apply to measures described in paragraph 1. 

3. This Chapter is subject to Annex 5. 

4. This Chapter shall not apply to: 

(a) measures adopted or maintained by a Party  relating to: 

(i) activities conducted by the central bank or  monetary authority of the Party or by any  other public entity in pursuit of monetary  or exchange rate policies; 

(ii) activities or services forming part of a  public retirement plan or statutory system  of social security, unless the Party allows  any of such activities or services to be  conducted by its financial institutions in  competition with a public entity or a  financial institution; or 

(iii) activities or services conducted for the  account or with the guarantee or using the  financial resources of the Party, including  its public entities, unless the Party allows  any of such activities or services to be  conducted by its financial institutions in  competition with a public entity or a  financial institution; 

(b) government procurement; 

(c) subsidies provided by a Party or a state  enterprise thereof, including grants, governmentsupported  loans, guarantees and insurance; and 

(d) measures affecting natural persons of a Party  seeking access to the employment market of the  other Party, or measures regarding nationality or  citizenship, or residence or employment on a  permanent basis. 

Article 118 
National Treatment 

1. In the sectors inscribed in its Schedule in Annex 10,  subject to any conditions and qualifications set out  therein, each Party shall accord to investors of the other  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, maintenance, use, enjoyment and sale or  other disposition of financial institutions and investments  in financial institutions in its Area. 

2. In the sectors inscribed in its Schedule in Annex 10,  subject to any conditions and qualifications set out  therein, each Party shall accord to financial institutions  of the other Party and to investments of investors of the  other Party in financial institutions treatment no less  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, maintenance, use, enjoyment and sale or  other disposition of financial institutions and  investments. 

Article 119 
Market Access for Financial Institutions 

1. With respect to market access for financial  institutions, each Party shall accord to financial  institutions of the other Party and investors of the other  Party who seek to establish financial institutions in the  Area of the former Party treatment no less favorable than  that provided for under the terms, limitations and  conditions specified in its Schedule in Annex 10. 

2. In sectors where market-access commitments are  undertaken, the measures which a Party shall not maintain  or adopt either on the basis of a regional subdivision or  on the basis of its entire Area, unless otherwise specified  in its Schedule in Annex 10, are defined as: 

(a) limitations on the number of financial  institutions whether in the form of numerical  quotas, monopolies, exclusive financial  institutions or the requirements of an economic  needs test; 

(b) limitations on the total value of financial  service transactions or assets in the form of  numerical quotas or the requirement of an  economic needs test; 

(c) limitations on the total number of financial  service operations or on the total quantity of  financial service output expressed in terms of  designated numerical units in the form of quotas  or the requirement of an economic needs test; 

Note: Subparagraph (c) does not cover measures  of a Party which limit inputs for the  supply of financial services. 

(d) limitations on 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; and 

(e) measures which restrict or require specific types  of legal entity or joint venture through which a  financial institution may supply a financial  service. 

Article 120 
Cross-Border Trade 

1. Each Party shall permit, under terms and conditions  that accord national treatment, cross-border financial  service suppliers of the other Party to supply the  financial services specified in its Schedule in Annex 11,  subject to any terms and conditions set out therein. 

2. Each Party shall permit persons located in its Area,  and its natural persons in the Area of the other Party, to  purchase the financial services specified in its Schedule  in Annex 12, subject to any terms and conditions set out  therein, from cross-border financial service suppliers of  the other Party located in the Area of the other Party.  This obligation does not require a Party to permit crossborder  financial service suppliers of the other Party to do  business or solicit in the Area of the former Party. The  former Party may define “doing business” and “solicitation”  for the purposes of this Article as long as such  definitions are not inconsistent with its obligations under  paragraph 1. 

3. A Party may require the registration of cross-border  financial service suppliers of the other Party and of their  financial instruments. 

Article 121 
New Financial Services 

1. Each Party shall permit financial institutions of the  other Party to offer in its Area any new financial service  in sectors or sub-sectors where commitments are undertaken  in its Schedule in Annex 10 and subject to the terms,  limitations, conditions and qualifications set out in that  Schedule and provided that the introduction of this new  financial service does not require the former Party to  adopt a new law or modify an existing law. 
2. Each Party may determine the legal form through which  the new financial service may be supplied and may require  authorization for the supply of the new financial service. 

Article 122 
Treatment of Certain Information 

Nothing in this Chapter shall be construed to require  a Party to disclose information relating to the affairs and  accounts of individual customers or any confidential or  proprietary information in the possession of public  entities. 

Article 123 
Exceptions 

Notwithstanding any other provision of this Chapter  and Chapters 8 and 9, a Party shall not be prevented from  adopting or maintaining measures for prudential reasons,  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, they shall  not be used as a means of avoiding the Party’s commitments  or obligations under this Agreement. 

Article 124 
Self-Regulatory Organizations 

Where a Party requires a financial institution of the  other Party to be a member of, participate in, or have  access to, a self-regulatory organization to supply a  financial service in the Area of the former Party, the  former Party shall ensure that such organization accords  national treatment to the financial institution of the  other Party. 

Article 125 
Payment and Clearing Systems 

Under terms and conditions that accord national  treatment, each Party shall grant to financial institutions  of the other Party established in its Area 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  Article is not intended to confer access to the Party’s  lender of last resort facilities. 

Article 126 
Committee on Financial Services 

1. For the purposes of the effective implementation and  operation of this Chapter, the Parties hereby establish a  Committee on Financial Services (hereinafter referred to in  this Article as “Committee”). 

2. The functions of the Committee shall be: 

(a) reviewing and monitoring the implementation and  operation of this Chapter; 

(b) discussing any issues related to this Chapter; 

(c) reporting the findings of the Committee to the  Commission; and 

(d) carrying out other functions as may be delegated  by the Commission in accordance with Article 190. 

3. The Committee shall be composed of: 

(a) with respect to Japan, officials from the  Ministry of Foreign Affairs and the Financial  Services Agency; and 

(b) with respect to Chile, officials from the  Ministry of Finance (Ministerio de Hacienda). 

4. The Committee shall meet at such venues and times as  may be agreed by the Parties. 

Article 127 
Dispute Settlement 

1. The consultations under Article 177 on prudential  issues and other financial matters shall be participated in  by: 

(a) with respect to Japan, officials from the  Ministry of Foreign Affairs and the Financial  Services Agency; and 

(b) with respect to Chile, officials from the  Ministry of Finance (Ministerio de Hacienda). 

2. A Party shall not be required to disclose information  or refrain from taking any action with respect to specific  regulatory, supervisory, administrative or enforcement  matters, solely by reason of the consultations under  Article 177. 

3. The arbitral tribunal established under Article 178  for disputes arising under this Chapter shall be composed  entirely of arbitrators who have expertise or experience in  financial services law or practice, which may include the  laws and regulations of financial institutions. 

Article 128 
Definitions 

For the purposes of this Chapter: 

(a) the term “cross-border financial service supplier  of a Party” means a person of a Party that is  engaged in the business of supplying financial  services within the Area of the Party and that  seeks to supply or supplies financial services  through the cross-border supply of financial  services; 

Note: The term “cross-border supply of financial  services” has the same meaning as the term  “cross-border trade in financial  services”. 

(b) the term “cross-border trade in financial  services” means the supply of a financial  service: 

(i) from the Area of a Party into the Area of  the other Party; 

(ii) in the Area of a Party by a person of that  Party to a person of the other Party; and 

(iii) by a natural person of a Party in the Area  of the other Party,  but does not include the supply of a financial  service by an investment of an investor of a  Party, in the Area of the other Party; 

(c) the term “financial institution” means any  enterprise that is authorized to do business and  regulated or supervised as a financial  institution under the law of the Party in which  it is located; 

(d) the term “financial institution of the other  Party” means a financial institution located in a  Party that is owned or controlled by persons of  the other Party; 

(e) the term “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). Financial services  include the following activities: 

(i) Insurance and Insurance-Related Services 

(A) direct insurance (including coinsurance): 

(AA) life; and 

(BB) 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; and 

(ii) Banking and Other Financial Services  (Excluding Insurance) 

(A) acceptance of deposits and other  repayable funds from the public; 

(B) lending of all types, including  consumer credit, mortgage credit,  factoring and financing of commercial  transactions; 

(C) financial leasing; 

(D) all payment and money transmission  services, including credit, charge and  debit cards, travelers checks and  bankers drafts; 

(E) guarantees and commitments; 

(F) trading for own account or for account  of customers, whether on an exchange,  in an over-the-counter market or  otherwise, the following: 

(AA) money market instruments  (including checks, bills,  certificates of deposits); 

(BB) foreign exchange; 

(CC) derivative products including,  but not limited to, futures and  options; 

(DD) exchange rate and interest rate  instruments, including products  such as swaps, forward rate  agreements; 

(EE) transferable securities; and 

(FF) other negotiable instruments and  financial assets, including  bullion; 

(G) 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; 

(H) money broking; 

(I) asset management, such as cash or  portfolio management, all forms of  collective investment management,  pension fund management, custodial,  depository and trust services; 

(J) settlement and clearing services for  financial assets, including securities,  derivative products, and other  negotiable instruments; 

(K) provision and transfer of financial  information, and financial data  processing and related software by  suppliers of other financial services;  and 

(L) advisory, intermediation, and other  auxiliary financial services on all the  activities listed in subparagraphs (A)  through (K), including credit reference  and analysis, investment and portfolio  research and advice, advice on  acquisitions and on corporate  restructuring and strategy; 

(f) the term “investment” means an investment as  defined in subparagraph 1(h) of Article 105,  except that, with respect to loans and debt  instruments referred to in that subparagraph: 

(i) 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 which the financial institution  is located; and 

(ii) 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 (i),  is not an investment;  for greater certainty, 

(iii) a loan to, or a debt instrument issued by, a  Party or a state enterprise thereof is not  an investment; and 

(iv) 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  referred to in subparagraph (i), is an  investment under Chapter 8 if such loan or  debt instrument meets the criteria for  investments set out in subparagraph 1

(h) of  Article 105; 

(g) the term “investor of a Party” means an investor  of a Party as defined in subparagraph 1(j) of  Article 105; 

(h) the term “new financial service” means a service  of a financial nature, including services related  to existing and new products or the manner in  which a product is delivered, that is not  supplied by any financial service supplier in the  Area of a Party but which is supplied in the Area  of the other Party; 

(i) the term “person of a Party” means a natural  person or an enterprise of a Party and, for  greater certainty, does not include a branch of  an enterprise of a non-Party; 

(j) the term “public entity” means the Government,  the central bank or monetary authority of a  Party, or any entity owned or controlled by a  Party, that is principally engaged in carrying  out governmental functions or activities for  governmental purposes, not including an entity  principally engaged in supplying financial  services on commercial terms or a private entity,  performing functions normally performed by a  central bank or monetary authority, when  exercising those functions; and 

 (k) the term “self-regulatory organization” means any  non-governmental body, including any securities  or futures exchange or market, clearing agency,  or any other organization or association, that  exercises its own or delegated regulatory or  supervisory authority over financial  institutions. 

Chapter 11 
Entry and Temporary Stay of Nationals for Business Purposes 

Article 129 
General Principles 

1. This Chapter reflects the preferential trading  relationship between the Parties, the mutual desire of the  Parties to facilitate entry and temporary stay of nationals  for business purposes on a reciprocal basis and to  establish transparent criteria and procedures for entry and  temporary stay, and the need to ensure border security and  to protect the domestic labor force and permanent  employment in either Party. 

2. Each Party shall apply its measures relating to the  provisions of this Chapter in accordance with paragraph 1,  and, in particular, shall apply expeditiously those  measures so as to avoid unduly impairing or delaying trade  in goods or services or conduct of investment activities  under this Agreement. 

Article 130 
Scope 

1. This Chapter shall apply to measures affecting the  entry and temporary stay of nationals of a Party who enter  the other Party for business purposes. 

2. This Chapter shall not apply to measures affecting  nationals of a Party seeking access to the employment  market of the other Party, nor shall it apply to measures  regarding nationality or citizenship, or residence or  employment on a permanent basis. 

3. This Chapter shall not prevent a Party from applying  measures to regulate the entry of nationals of the other  Party into, or their temporary stay in, the former Party,  including those measures necessary to protect the integrity  of, and to ensure the orderly movement of natural persons  across, its borders, provided that such measures are not  applied in such a manner as to nullify or impair the  benefits accruing to the other Party under the terms of the  categories set out in Annex 13.

Note: The sole fact of requiring a visa for natural  persons of a certain nationality and not for  those of others shall not be regarded as  nullifying or impairing benefits under the  terms of a specific category. 

Article 131 
Grant of Entry and Temporary Stay 

Each Party shall grant entry and temporary stay to  nationals of the other Party in accordance with this  Chapter including the provisions of Annex 13. 

Article 132 
Provision of Information  Each Party shall: 

(a) provide to the other Party such materials as will  enable that other Party to become acquainted with  its measures relating to this Chapter; 

(b) make publicly available in the Parties,  explanatory material in a consolidated document  regarding the requirements for entry and  temporary stay under this Chapter, no later than  one year after the date of entry into force of  this Agreement; and 

(c) to the extent possible, upon request by the other  Party, make available to the other Party, in  accordance with its laws and regulations, data  respecting the granting of entry and temporary  stay under this Chapter to nationals of the other  Party. 

Article 133 
Dispute Settlement 

1. The dispute settlement procedures provided for in  Chapter 16 shall not apply to this Chapter unless: 

(a) the matter involves a pattern of practice; and 

(b) the nationals of a Party concerned have exhausted  the administrative remedies, where available,  regarding the particular matter. 

2. The remedies referred to in subparagraph 1(b) shall be  deemed to be exhausted if a final determination in the  matter has not been issued by the competent authority of  the other Party within one year after the date of the  institution of the administrative remedy, and the failure  to issue such determination is not attributable to delay  caused by the nationals. 

Article 134 
Measures pursuant to Immigration Laws and Regulations 

Except for this Chapter and Chapters 1, 2, 16, 17, 18  and 19, nothing in this Agreement shall impose any  obligation on either Party regarding measures pursuant to  immigration laws and regulations. 

Article 135 
Definitions 

For the purposes of this Chapter: 

(a) the term “entry and temporary stay” means entry  into and stay in a Party by a national of the  other Party without the intent to establish  permanent residence; and 

(b) the term “immigration laws and regulations” means  any laws and regulations affecting the entry and  temporary stay of nationals.  

Chapter 12 
Government Procurement 

Article 136 
Scope 

1. This Chapter shall apply to any measures adopted or  maintained by a Party relating to government procurement,  by any contractual means, including through such methods as  purchase or as lease, rental or hire purchase, with or  without an option to buy: 

(a) by entities specified in Part 1 of Annex 14; 

(b) of goods specified in Part 2 of Annex 14,  services specified in Part 3 of Annex 14, or  construction services specified in Part 4 of  Annex 14; and  

(c) where the value of the contracts to be awarded is  estimated to be not less than the thresholds  specified in Part 5 of Annex 14 at the time of  publication of a notice of procurement. 

2. Paragraph 1 is subject to the General Notes set out in  Part 6 of Annex 14. 

3. Neither Party shall prepare, design or otherwise  structure any government procurement contract in order to  avoid the obligations under this Chapter. 

Article 137 
National Treatment and Non-Discrimination  

1. With respect to any laws, regulations, procedures and  practices regarding government procurement covered by this  Chapter, each Party shall provide immediately and  unconditionally to the goods, services and suppliers of the  other Party, treatment no less favorable than that it  accords to its own goods, services and suppliers. 

2. With respect to any laws, regulations, procedures and  practices regarding government procurement covered by this  Chapter, each Party shall ensure: 

(a) that its entities do not treat a locallyestablished  supplier less favorably than another  locally-established supplier on the basis of the  degree of affiliation to, or ownership by, a  natural person or an enterprise of the other  Party; and 

(b) that its entities do not discriminate against a  locally-established supplier on the basis that  the goods or services offered by that supplier  for a particular procurement are goods or  services of the other Party. 

3. This Article shall not apply to customs duties and  charges of any kind imposed on or in connection with  importation, the method of levying such duties and charges,  other import regulations, including restrictions and  formalities, nor to measures affecting trade in services  other than laws, regulations, procedures and practices  regarding government procurement covered by this Chapter. 

Article 138 
Valuation of Contracts 

In determining the value of contracts for the purposes  of implementing this Chapter: 

(a) valuation shall take into account all forms of  remuneration, including any premiums, fees,  commissions and interest receivable; 

(b) the selection of the valuation method by an  entity shall not be used, nor shall any  procurement requirement be divided, with the  intention of avoiding the application of this  Chapter; and 

(c) in cases where an intended procurement specifies  the need for option clauses, the basis for  valuation shall be the total value of the maximum  permissible procurement, inclusive of optional  purchases. 

Article 139 
Prohibition of Offsets 

Each Party shall ensure that its entities do not, in  the qualification and selection of suppliers, goods or  services, or in the evaluation of tenders and award of  contracts, impose, seek or consider offsets. For the  purposes of this Article, offsets means conditions  considered, sought or imposed by an entity prior to or in  the course of its procurement process that encourage local  development or improve its Party’s balance of payments  accounts, by means of requirements of local content,  licensing of technology, investment, counter-trade or  similar requirements. 

Article 140 
Technical Specifications 

1. Technical specifications laying down the  characteristics of the goods or services to be procured,  such as quality, performance, safety and dimensions,  symbols, terminology, packaging, marking and labeling, or  the processes and methods for their production and  requirements relating to conformity assessment procedures  prescribed by procuring entities, shall not be prepared,  adopted or applied with a view to, or with the effect of,  creating unnecessary obstacles to trade. 

2. Any technical specifications prescribed by procuring  entities shall, where appropriate: 

(a) be specified in terms of performance rather than  design or descriptive characteristics; and 

(b) be based on international standards, where such  exist; otherwise, on national technical  regulations, recognized national standards, or  building codes. 

3. Each Party shall ensure that its entities do 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 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. Each Party shall ensure that its entities do not seek  or accept, in a manner which would have the effect of  precluding fair competition, advice which may be used in  the preparation or adoption of any technical specifications  for a specific procurement from a person that may have a  commercial interest in the procurement. 

Article 141 
Tendering Procedures 

1. Each Party shall ensure that the tendering procedures  of its entities are applied in a non-discriminatory manner  and in compliance with this Chapter. 

2. Each Party shall ensure that its entities do not  provide to any supplier information with regard to a  specific procurement in a manner which would have the  effect of precluding competition. 

Article 142 
Qualification of Suppliers 

1. In the process of qualifying suppliers, each Party  shall ensure that its entities do not discriminate against  suppliers of the other Party. Qualification procedures  shall be consistent with the following: 

(a) any conditions for participation in tendering  procedures shall be published in adequate time to  enable interested suppliers to initiate and, to  the extent that it is compatible with efficient  operation of the procurement process, complete  the qualification procedures; 

(b) any conditions for participation in tendering  procedures shall be limited to those which are  essential to ensure the potential supplier’s  capability to fulfill the contract in question; 

(c) the process of, and the time required for,  qualifying suppliers shall not be used in order  to keep suppliers of the other Party off a  suppliers’ list or from being considered for a  particular intended procurement. Entities shall  recognize as qualified suppliers such suppliers  of the other Party who meet the conditions for  participation in a particular intended  procurement. Suppliers requesting to participate  in a particular intended procurement who may not  yet be qualified shall also be considered,  provided there is sufficient time to complete the  qualification procedure; 

(d) entities may maintain permanent lists of  qualified suppliers. The entities shall ensure: 

(i) that suppliers may apply for qualification  at any time; and 

(ii) that all qualified suppliers so requesting  are included in the lists within a  reasonably short time; 

(e) if, after publication of the notice of  procurement under paragraph 1 of Article 143, a  supplier not yet qualified requests to  participate in an intended procurement, the  entity shall promptly start procedures for  qualification; and 

(f) any supplier having requested to become a  qualified supplier shall be advised by the  entities concerned of the decision in this  regard. 

2. Nothing in paragraph 1 shall preclude the exclusion of  any supplier on grounds such as bankruptcy, liquidation or  insolvency, or false declarations relating to a  procurement, provided that such an action is consistent  with the national treatment and non-discrimination  provisions of this Chapter. 

Article 143 
Notice of Procurement 

1. For each case of intended procurement, each Party  shall ensure that its entities make publicly available in  advance in the appropriate publication listed in Part 7 of  Annex 14, a notice of procurement inviting interested  suppliers to participate in that procurement, except as  provided for in Article 147. 

2. The information in each notice of procurement shall  include a description of the intended procurement, any  conditions that suppliers must fulfill to participate in  the procurement, the name of the entity, the address where  all documents relating to the procurement may be obtained  and the time-limits for submission of tenders. 

3. Each Party shall endeavor to ensure that its entities  make publicly available notices of procurement in a timely  manner through means which offer the widest possible and  non-discriminatory access to interested suppliers. These  means may be accessible free of charge, through a single  electronic point of access. 

4. If, after making publicly available a notice of  procurement in any case of intended procurement, but before  the time set for opening or receipt of tenders as specified  in the notice or the tender documentation, it becomes  necessary to amend or re-issue the notice, the amendment or  the re-issued notice shall be made publicly available in  the same manner as the original notice. Any significant  information given to one supplier with respect to a  particular intended procurement shall be given  simultaneously to all other suppliers concerned in adequate  time to permit the suppliers to consider such information  and to respond to it. 

Article 144 
Time-Limits for Tendering 

Each Party shall ensure that: 

(a) any prescribed time-limit is adequate to allow  suppliers of the other Party as well as domestic  suppliers to prepare and submit tenders before  the closing of the tendering procedures; and 

(b) in determining any such time-limit, its entities,  consistent with their own reasonable needs, take  into account such factors as the complexity of  the intended procurement, the extent of  subcontracting anticipated, the normal time for  transmitting tenders by mail from foreign as well  as domestic points and the delays of making  publicly available notices of procurement. 

Article 145 
Tender Documentation 

1. Tender documentation provided to suppliers shall  contain all information necessary to permit them to submit  responsive tenders. 

2. Each Party shall ensure that its entities make tender  documentation accessible, or, upon request, forward the  tender documentation, to any supplier participating in the  tendering procedure, and reply promptly to any reasonable  request for explanations relating thereto. 

3. Each Party shall endeavor to ensure that its entities  reply promptly to any reasonable request for relevant  information submitted by a supplier participating in the  tendering procedure, on condition that such information  does not give that supplier an advantage over its  competitors in the procedure for the award of the contract.  The information provided to a supplier may be provided to  any other suppliers that are invited to tender. 

Article 146 
Awarding of Contracts 

1. To be considered for award, a tender must, at the time  of opening, conform to the essential requirements of the  notice of procurement or tender documentation and be from a  supplier which complies with the conditions for  participation. If an entity has received a tender  abnormally lower or otherwise exceptionally more  advantageous than other tenders submitted, it may enquire  with the tenderer to ensure that the tenderer can comply  with the conditions of participation and be capable of  fulfilling the terms of the contract. 

2. Unless in the public interest an entity decides not to  issue the contract, the entity shall make the award to the  tenderer who has been determined to be fully capable of  undertaking the contract and whose tender is either the  lowest tender or determined to be the most advantageous in  terms of the specific evaluation criteria set forth in the  notice of procurement or tender documentation. 

Article 147 
Other Tendering Procedures 

1. Articles 141 through 146 need not apply in the  following conditions, provided that the tendering under  this Article is not used by entities of a Party with a view  to avoiding maximum possible competition or in a manner  which would constitute a means of discrimination against  the suppliers of the other Party or protection to domestic  producers or suppliers: 

(a) in the absence of tenders in response to the  tender pursuant to Articles 141 through 146, or  when the tenders submitted have been collusive in  accordance with the laws and regulations of the  former Party, or not in conformity with the  essential requirements in the tender, or from  suppliers who do not comply with the conditions  for participation provided for in accordance with  this Chapter, on condition that the requirements  of the initial tender are not substantially  modified in the contract as awarded; 

(b) when, for works of art or for reasons connected  with the protection of exclusive rights, such as  patents or copyrights, or in the 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) in so far as is strictly necessary when, for  reasons of extreme urgency brought about by  events unforeseeable by the entity, the goods or  services could not be obtained in time by means  of the tendering procedures pursuant to Articles  141 through 146; 

(d) for additional deliveries by the original  supplier that are intended either as parts  replacement for existing supplies, or  installations, or as the extension of existing  supplies, 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;

(e) when an entity procures prototypes or a first  good or service which are developed at its  request in the course of, and for, a particular  contract for research, experiment, study or  original development; 

Note: Original development of a first good or  service may include limited production or  supply in order to incorporate the results  of field testing and to demonstrate that  the good or service is suitable for  production or supply in quantity to  acceptable quality standards. It does not  extend to quantity production or supply to  establish commercial viability or to  recover research and development costs. 

(f) when additional construction services which were  not included in the initial contract but which  were within the objectives of the original tender  documentation have, due to unforeseeable  circumstances, become necessary to complete the  construction services described therein, provided  that the total value of contracts awarded for  additional construction services may not exceed  50 percent of the amount of the initial contract; 

(g) for new construction services consisting of the  repetition of similar construction services which  conform to a basic project for which an initial  contract was awarded in accordance with Articles  141 through 146 and for which the entity has  indicated in the notice of procurement concerning  the initial construction service, that the  tendering procedures under this Article might be  used in awarding contracts for such new  construction services; 

(h) for goods purchased on a commodity market; 

(i) for purchases made under exceptionally  advantageous conditions which only arise in the  very short term. This provision is intended to  cover unusual disposals by enterprises which are  not normally suppliers, or disposal of assets of  businesses in liquidation or receivership. It is  not intended to cover routine purchases from  regular suppliers; and 

(j) in the case of contracts awarded to the winner of  design contest provided that the contest has been  organized in a manner which is consistent with  the principles of this Chapter and that the  contest is judged by an independent jury with a  view to design contracts being awarded to the  winners. 

2. Each Party shall ensure that, whenever it is necessary  for its entities to resort to the tendering procedures  under paragraph 1, the entities maintain a record or  prepare a written report providing specific justification  for such procedures. 

Article 148 
Post-Award Information 

1. Each Party shall ensure that its entities make  publicly available, in an appropriate publication listed in  Part 7 of Annex 14, after the award of each contract,  information such as: 

(a) the nature and quantity of goods or services in  the contract award; 

(b) the name and address of the entity awarding the  contract; 

(c) the date of award; 

(d) the name and address of the winning tenderer; 

(e) the value of the winning award; and 

(f) the type of procedure used. 

2. Each Party shall ensure that its entities, on request  from a supplier of a Party, promptly provide information  including: 

(a) pertinent information concerning the reasons why  the supplier’s application to qualify was  rejected, why its existing qualification was  brought to an end and why it was not selected;  and 

(b) when the supplier is an unsuccessful tenderer,  pertinent information concerning the reasons why  its tender was not selected and on the  characteristics and relative advantages of the  tender selected as well as the name of the  winning tenderer. 

3. Where a supplier of a Party is an unsuccessful  tenderer, the Party may seek, without prejudice to the  provisions under Chapter 16, such additional information on  the contract award, as may be necessary to ensure that the  procurement was made fairly and impartially. The other  Party shall provide information on both the characteristics  and relative advantages of the winning tender and the  contract price. Normally this latter information may be  disclosed by the former Party provided it exercises this  right with discretion. In cases where release of this  information would prejudice competition in future tenders,  this information shall be confidential and not be disclosed  except after consultation with and agreement of the other  Party. 

Article 149 
Challenge Procedures

1. In the event of a complaint by a supplier that there  has been a breach of this Chapter in the context of a  government procurement, the procuring entity shall accord  impartial and timely consideration to any such complaint,  in a manner that is not prejudicial to obtaining corrective  measures under the challenge system. 

2. Each Party shall provide non-discriminatory, timely,  transparent and effective procedures enabling suppliers to  challenge alleged breaches of this Chapter arising in the  context of procurements in which they have, or have had, an  interest. 

3. Each Party shall provide its challenge procedures in  writing and make them generally available. 

4. Each Party shall ensure that documentation relating to  all aspects of the process concerning government  procurement covered by this Chapter shall be retained at  least for three years. 

5. The interested supplier may be required to initiate a  challenge procedure and notify the procuring entity within  specified time-limits from the time when the basis of the  complaint is known or reasonably should have been known,  but in no case within a period of less than 10 days. 

6. Challenges shall be heard by an impartial and  independent reviewing authority with no interest in the  outcome of the government procurement and the members of  which are secure from external influence during the term of  appointment. A reviewing authority which is not a court  shall either be subject to judicial review or shall have  procedures which provide at least the following:

(a) participants can be heard before an opinion is  given or a decision is reached; 

(b) participants can be represented and accompanied; 

(c) participants shall have access to all  proceedings; 

(d) proceedings can take place in public; 

(e) opinions or decisions are given in writing with a  statement describing the basis for the opinions  or decisions; 

(f) witnesses can be presented; and 

(g) documents are disclosed to the reviewing  authority. 

7. Challenge procedures shall provide for: 

(a) rapid interim measures to correct breaches of  this Chapter and to preserve commercial  opportunities. Such action may result in  suspension of the procurement process. However,  procedures may provide that overriding adverse  consequences for the interests concerned,  including the public interest, may be taken into  account in deciding whether such measures should  be applied; 

(b) an assessment and, where appropriate, a decision  on the justification of the challenge; and 

(c) where appropriate, correction of breaches of this  Chapter or compensation for the loss or damages  suffered, which may be limited to costs for  tender preparation or protest. 

8. With a view to the preservation of the commercial and  other interests involved, the challenge procedure shall  normally be completed within a reasonable time. 

Article 150 
Use of Electronic Communications in Procurement 

1. The Parties shall seek to provide opportunities for  government procurement to be undertaken through the  Internet or a comparable computer-based telecommunications  network. 

2. In order to facilitate commercial opportunities for  its suppliers under this Chapter, each Party shall endeavor  to adopt or maintain a single electronic portal for access  to comprehensive information on government procurement  supply opportunities in its Area, and information on  measures relating to government procurement shall be  available. 

3. The Parties shall encourage, to the extent possible,  the use of electronic means for the provision of tender  documents and the receipt of tenders. 

4. The Parties shall endeavor to ensure the adoption of  policies and procedures for the use of electronic means in  government procurement that: 

(a) protect documentation from unauthorized and  undetected alteration; and 

(b) provide appropriate levels of security for data  on, and passing through, the procuring entity’s  network. 

Article 151 
Exceptions 

Subject to the requirement that such measures are not  applied in a manner that would constitute a means of  arbitrary or unjustifiable discrimination between the  Parties where the same conditions prevail, or a disguised  restriction on trade, nothing in this Chapter shall be  construed to prevent a Party from imposing, enforcing 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. 

Article 152 
Rectifications or Modifications 

1. A Party shall notify the other Party of its  rectifications, or in exceptional cases, other  modifications relating to Annex 14 along with the  information as to the likely consequences of the change for  the mutually agreed coverage provided in this Chapter. 

2. If the rectifications or other modifications are of a  purely formal or minor nature, notwithstanding Article 197,  they shall become effective provided that no objection from  the other Party has been raised within 30 days. In other  cases, both Parties shall consult the proposal and any  claim for compensatory adjustments with a view to  maintaining a balance of rights and obligations and a  comparable level of mutually agreed coverage provided in  this Chapter prior to such rectification or other  modification. 

3. In the event of an agreement between the Parties not  being reached, the Party which has received such  notification may have recourse to the dispute settlement  procedure under Chapter 16. 

Note: Notwithstanding any other provision of this Chapter,  a Party may undertake reorganizations of its  entities, including programs through which the  procurement of such entities is decentralized or the  corresponding government functions cease to be  performed by any government entity, whether or not  subject to this Chapter. In cases of  reorganizations, compensation need not be proposed.  Neither Party shall undertake such reorganizations  to avoid the obligations of this Chapter. 

Article 153 
Privatization of Entities 

When government control at the central or national  government level over an entity specified in Part 1 of  Annex 14 has been effectively eliminated, notwithstanding  that the government may possess holding thereof or appoint  member of the board of directors thereto, this Chapter  shall no longer apply to that entity and compensation need  not be proposed. A Party shall notify the other Party of  the name of such entity before elimination of government  control or as soon thereafter as possible. 

Article 154 
Denial of Benefits 

1. A Party may deny the benefits of this Chapter to an  enterprise of the other Party if the enterprise is owned or  controlled by persons of a non-Party and the former 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 prior notification and consultation, a  Party may deny the benefits of this Chapter to a supplier  of the other Party that is an enterprise of the other Party  where the denying Party establishes that the enterprise is  owned or controlled by persons of a non-Party and has no  substantial business activities in the Area of the other  Party. 

Article 155 
Further Negotiations 

In the event that after the entry into force of this  Agreement a Party offers a non-Party additional advantages  of access to its government procurement market beyond what  the other Party has been provided with under this Chapter,  the former Party shall, upon request of the other Party,  enter into negotiations with the other Party with a view to  extending those advantages to the other Party on a  reciprocal basis. 

Article 156 
Committee on Government Procurement 

1. For the purposes of the effective implementation and  operation of this Chapter, the Parties hereby establish a  Committee on Government Procurement (hereinafter referred  to in this Article as “Committee”). 

2. The functions of the Committee shall be: 

(a) reviewing and monitoring the implementation and  operation of this Chapter; 

(b) analyzing available information on each Party’s  government procurement market; 

(c) reporting the findings of the Committee to the  Commission; and 

(d) carrying out other functions as may be delegated  by the Commission in accordance with Article 190. 

3. The Committee shall be composed of government  officials of the Parties. 

4. The Committee shall meet at such venues and times as  may be agreed by the Parties. 

Article 157 
Definition 

For the purposes of this Chapter, the term “supplier”  means a person that provides or could provide goods or  services to an entity. 

Chapter 13 
Intellectual Property 

Article 158 
General Provisions 

1. The Parties shall ensure adequate, effective and nondiscriminatory  protection of intellectual property, promote  efficiency and transparency in administration of  intellectual property protection system, and provide for  measures for adequate and effective enforcement of  intellectual property rights against infringement,  counterfeiting and piracy, in accordance with the  provisions of this Chapter and the international agreements  to which both Parties are parties. 

2. The Parties may take appropriate measures to prevent  the abuse of intellectual property rights by right holders  or the resort to practices which unreasonably restrain  trade or adversely affect the international transfer of  technology, provided that such measures are consistent with  the provisions of this Agreement and the TRIPS Agreement. 

3. The Parties affirm their existing rights and  obligations under the TRIPS Agreement and other  multilateral agreements relating to intellectual property  to which both Parties are parties. Nothing in this Chapter  shall derogate from existing rights and obligations that  the Parties have under the TRIPS Agreement or other  multilateral agreements relating to intellectual property  to which both Parties are parties. 

4. For the purposes of this Chapter, intellectual  property refers to all categories of intellectual property: 

(a) that are subject of Articles 161 through 163;  and/or 

(b) that are under the TRIPS Agreement and/or the  relevant international agreements referred to in  the TRIPS Agreement. 

Article 159 
Streamlining of Procedural Matters 

1. For the purposes of providing efficient administration  of intellectual property system, each Party shall take  measures to streamline its administrative procedures  concerning intellectual property. 

2. Each Party shall use a classification for patents and  utility models in accordance with the Strasbourg Agreement  Concerning the International Patent Classification, of  March 24, 1971, as amended. Each Party shall use a  classification of goods and services in accordance with the  Nice Agreement Concerning the International Classification  of Goods and Services for the Purposes of the Registration  of Marks, of June 15, 1957, as amended. 

Article 160 
Transparency 

For the purposes of further promoting transparency in  administration of intellectual property system, each Party  shall, in accordance with its laws and regulations, take  appropriate measures to make available to the public  information on its efforts to provide effective enforcement  of intellectual property rights and other information with  regard to intellectual property system. 

Article 161 
Trademarks 

Each Party shall afford an opportunity for interested  parties to oppose to an application for registration of or  a registration of, and to request the cancellation of the  registration of, a trademark, in accordance with its laws  and regulations. 

Article 162 
New Varieties of Plants 

Each Party shall become a party, if it is not a party,  to the 1991 Act of International Convention for the  Protection of New Varieties of Plants, by January 1, 2009. 

Article 163 
Geographical Indications 

1. The Parties agree that indications for wines and  spirits listed in Annex 15 are geographical indications  referred to in paragraph 1 of Article 22 of the TRIPS  Agreement, and shall abide by the obligations under the  relevant provisions of the TRIPS Agreement with respect to  the protection of geographical indications. 

2. Notwithstanding paragraph 2 of Article 197,  modifications to Annex 15 proposed by both Parties may be  adopted by the Commission pursuant to subparagraph 1(d)(i)  of Article 190. The adopted modifications shall be  confirmed by an exchange of diplomatic notes. 

Article 164 
Enforcement 

1. Each Party shall provide for procedures concerning the  suspension by its customs authority of the release of the  goods infringing patents, utility models, industrial  designs, trademarks, or copyrights or related rights, which  are destined for importation into, or exportation from, the  Party. 

2. Each Party shall ensure that its judicial authorities  have the authority to order the infringer to pay the right  holder damages adequate to compensate for the injury the  right holder has suffered because of an infringement of  that person’s intellectual property right by an infringer  who knowingly, or with reasonable grounds to know, engaged  in infringing activity. 

3. Each Party shall provide for criminal procedures and  penalties to be applied in cases of trademark  counterfeiting or copyright piracy, committed willfully and  on a commercial scale. Remedies available shall include  imprisonment and/or monetary fines sufficient to provide a  deterrent, consistently with the level of penalties applied  for crimes of a corresponding gravity. 

Article 165 
Committee on Intellectual Property 

1. For the purposes of the effective implementation and  operation of this Chapter, the Parties hereby establish a  Committee on Intellectual Property (hereinafter referred to  in this Article as “Committee”). 

2. The functions of the Committee shall be: 

(a) reviewing and monitoring the implementation and  operation of this Chapter;

(b) discussing any issues related to intellectual  property, such as: 

(i) areas and forms of cooperation in the field  of intellectual property; 

(ii) enforcement of intellectual property rights; 

(iii) geographical indications; and 

(iv) public awareness concerning protection of  intellectual property; 

(c) reporting the findings of the Committee to the  Commission; and 

(d) carrying out other functions as may be delegated  by the Commission in accordance with Article 190. 

3. The Committee shall be composed of government  officials of the Parties. 

4. The Committee shall meet at such venues and times as  may be agreed by the Parties. 

Chapter 14 
Competition 

Article 166 
General Provision 

Each Party shall, in accordance with its laws and  regulations and in a manner consistent with this Chapter,  take measures which it considers appropriate against anticompetitive  activities so as to avoid that the benefits of  the liberalization of trade and investment may be  diminished or nullified by such activities. 

Article 167 
Cooperation on Controlling Anti-competitive Activities 

The Parties shall, in accordance with their respective  laws and regulations, cooperate in the field of controlling  anti-competitive activities subject to their respective  available resources. 

Article 168 
Non-Discrimination 

Each Party shall apply its competition laws and  regulations in a manner which does not discriminate between  persons in like circumstances on the basis of their  nationality. 

Article 169 
Procedural Fairness 

Each Party shall implement administrative and judicial  procedures in a fair manner to control anti-competitive  activities, pursuant to its relevant laws and regulations. 

Article 170
Transparency 

Each Party shall promote transparency of the  implementation of its competition laws and regulations and  its competition policy. 

Article 171 
Non-Application of Chapter 16 

The dispute settlement procedures provided for in  Chapter 16 shall not apply to this Chapter. 

Chapter 15 
Improvement of Business Environment 

Article 172 
Consultations for the Improvement of Business Environment 

The Parties, confirming their interest in creating a  more favorable business environment with a view to  promoting trade and investment activities by their private  enterprises, shall from time to time have consultations in  order to address issues concerning the improvement of  business environment in the Parties. 

Article 173 
Committee on Improvement of Business Environment 

1. For the purposes of the effective implementation and  operation of this Chapter, the Parties hereby establish a  Committee on Improvement of Business Environment  (hereinafter referred to in this Article as “Committee”). 

2. The functions of the Committee shall be: 

(a) discussing ways and means to improve business  environment in the Parties; 

(b) making, as needed, recommendations to the Parties  on appropriate measures to be taken by the  Parties; 

(c) receiving information on the implementation of  such recommendations from the relevant  authorities of the Governments of the Parties; 

(d) making public, as needed, such recommendations in  an appropriate manner; 

(e) reporting the findings of the Committee to the  Commission; and  

(f) carrying out other functions as may be delegated  by the Commission in accordance with Article 190. 

3. The Committee shall be composed of government  officials of the Parties. 

4. The Committee may, by consensus, invite  representatives of relevant entities other than the  governmental agencies of the Parties with the necessary  expertise related to the issues to be discussed. 

5. The Committee shall meet at such venues and times as  may be agreed by the Parties. 

6. The Committee shall cooperate with other relevant  committees or working groups with a view to avoiding  unnecessary overlap with the works of such committees or  working groups. 

Article 174 
Non-Application of Chapter 16 

The dispute settlement procedure provided for in  Chapter 16 shall not apply to this Chapter. 

Chapter 16 
Dispute Settlement 

Article 175 
Scope 

Unless otherwise provided for in this Agreement, this  Chapter shall apply with respect to the avoidance or  settlement of disputes between the Parties concerning the  implementation, interpretation or operation of this  Agreement. 

Article 176 
Choice of Dispute Settlement Procedure 

1. Where a dispute regarding any matter arises under both  this Agreement and the WTO Agreement, the complaining Party  may select the dispute settlement procedure in which to  settle the dispute. 

2. Notwithstanding paragraph 1, once the complaining  Party has requested the establishment of an arbitral  tribunal under this Chapter or a panel under Article 6 of  the Understanding on Rules and Procedures Governing the  Settlement of Disputes in Annex 2 to the WTO Agreement with  respect to a particular dispute, the arbitral tribunal or  panel selected shall be used to the exclusion of the other  procedure for that particular dispute. 

Article 177 
Consultations 

1. Either Party may request in writing consultations with  the other Party concerning any matter on the  implementation, interpretation or operation of this  Agreement, including a matter relating to a measure that  the other Party proposes to take (hereinafter referred to  in this Chapter as “proposed measure”). 

2. The requesting Party shall set out the reasons for the  request, including identification of the measure at issue  and an indication of the legal basis for the complaint, and  provide sufficient information to enable a full examination  of the matter. 

3. The Parties shall make every effort to arrive at a  mutually satisfactory resolution of the matter through  consultations under this Article. 

4. The consultations under this Article shall be  confidential and without prejudice to the rights of either  Party in any further proceedings. 

Article 178 
Establishment of Arbitral Tribunals 

1. The complaining Party that requested consultations  under Article 177 may request in writing the establishment  of an arbitral tribunal, if the Parties fail to resolve the  matter within: 

(a) 45 days after the date of receipt of the request  for consultations; or 

(b) 30 days after the date of receipt of the request  for consultations in cases of urgency, including  those which concern perishable goods, 

provided that the complaining Party considers that any  benefits accruing to it directly or indirectly under this  Agreement are being nullified or impaired as a result of  the failure of the Party complained against to carry out  its obligations under this Agreement, or as a result of the  application by the Party complained against of measures  which are in conflict with its obligations under this  Agreement. 

2. The request of the establishment of an arbitral  tribunal referred to in paragraph 1 may also be made in  case where the complaining Party considers that any  benefits accruing to it directly or indirectly under  Chapters 3 and 4 are being nullified or impaired as a  result of the application by the Party complained against  of measures which are not in conflict with its obligations  under those Chapters. 

3. Notwithstanding paragraphs 1 and 2, the establishment  of an arbitral tribunal shall not be requested on any  matter relating to a proposed measure. 

4. Any request to establish an arbitral tribunal pursuant  to this Article shall identify: 

(a) the specific measure at issue; 

(b) the legal basis of the complaint including the  provisions of this Agreement alleged to have been  breached and any other relevant provisions; and 

(c) the factual basis for the complaint. 

5. The date of the establishment of an arbitral tribunal  shall be the date on which the chair is appointed. 

Article 179 
Terms of Reference of Arbitral Tribunals

Unless the Parties otherwise agree within 20 days from  the date of receipt of the request for the establishment of  the arbitral tribunal, the terms of reference of the  arbitral tribunal shall be:

“To examine, in the light of the relevant provisions  of this Agreement, the matter referred to in the request  for the establishment of an arbitral tribunal pursuant to  Article 178, to make findings of law and fact together with  the reasons therefor and to issue an award for the  resolution of the dispute.” 

Article 180 
Composition of Arbitral Tribunals 

1. An arbitral tribunal shall comprise three arbitrators. 

2. Each Party shall, within 30 days after the date of  receipt of the request for the establishment of an arbitral  tribunal, appoint one arbitrator who may be its national  and propose up to three candidates to serve as the third  arbitrator who shall be the chair of the arbitral tribunal.  The third arbitrator shall not be a national of either  Party, nor have his or her usual place of residence in  either Party, nor be employed by either Party, nor have  dealt with the dispute in any capacity. 

3. The Parties shall agree on and appoint the third  arbitrator within 45 days after the date of receipt of the  request for the establishment of an arbitral tribunal,  taking into account the candidates proposed pursuant to  paragraph 2. 

4. If a Party has not appointed an arbitrator pursuant to  paragraph 2 or if the Parties fail to agree on and appoint  the third arbitrator pursuant to paragraph 3, the  arbitrator or arbitrators not yet appointed shall be chosen  within seven days by lot from the candidates proposed  pursuant to paragraph 2. 

5. All arbitrators shall: 

(a) have expertise or experience in law,  international trade or other matters covered by  this Agreement; 

(b) be chosen strictly on the basis of objectivity,  reliability and sound judgment; 

(c) be independent of, and not be affiliated with or  receives instructions from, the Government of  either Party; and 

(d) comply with a code of conduct, to be provided in  the Rules of Procedures referred to in Article  187. 

6. If an arbitrator appointed under this Article dies,  becomes unable to act or resigns, a successor shall be  appointed within 15 days in accordance with the appointment  procedure provided for in paragraphs 2, 3 and 4, which  shall be applied, respectively, mutatis mutandis. The  successor shall have all the powers and duties of the  original arbitrator. The work of the arbitral tribunal  shall be suspended for a period beginning on the date the  original arbitrator dies, becomes unable to act or resigns  and ending on the date the successor is appointed. 

Article 181 
Functions of Arbitral Tribunals 

1. The function of an arbitral tribunal is to make an  objective assessment of the dispute before it, including an  examination of the facts of the case and the applicability  of and conformity with this Agreement, and make such other  findings and rulings necessary for the resolution of the  dispute. 

2. The arbitral tribunal should consult with the Parties  as appropriate and provide adequate opportunities for the  development of a mutually satisfactory resolution. 

Article 182 
Proceedings of Arbitral Tribunals 

1. The arbitral tribunal shall meet in closed session. 

2. The Parties shall be given the opportunity to attend  any of the presentations, statements or rebuttals in the  proceedings. Any information or written submissions  submitted by a Party to the arbitral tribunal, including  any comments on the draft award and responses to questions  put by the arbitral tribunal, shall be made available to  the other Party. 

3. The arbitral tribunal shall make its decisions,  including its award, by consensus but may also make its  decisions, including its award, by majority vote. 

4. The arbitral tribunal may seek information from any  relevant source and may consult experts to obtain their  opinion on certain aspects of the matter. 

5. The deliberations of the arbitral tribunal and the  documents submitted to it shall be kept confidential. 

6. Notwithstanding paragraph 5, either Party may make  public statements as to its views regarding the dispute,  but shall treat as confidential, information and written  submissions submitted by the other Party to the arbitral  tribunal which that other Party has designated as  confidential. Where a Party has provided information or  written submissions designated to be confidential, that  Party shall, upon request of the other Party, provide a  non-confidential summary of the information or written  submissions which may be disclosed publicly. 

7. Each Party shall bear the cost of its appointed  arbitrator and its own expenses. The cost of the chair of  an arbitral tribunal and other expenses associated with the  conduct of the proceedings shall be borne by the Parties in  equal shares. 

Article 183 
Suspension or Termination of Proceedings 

1. The Parties may agree that the arbitral tribunal  suspends its work at any time for a period not exceeding 12  months from the date of such agreement. In the event of  such a suspension, the time-frames set out in paragraphs 2,  5 and 7 of Article 184 and paragraph 7 of Article 186 shall  be extended by the amount of time that the work was  suspended. If the work of the arbitral tribunal has been  suspended for more than 12 months, the authority for  establishment of the arbitral tribunal shall lapse unless  the Parties agree otherwise. 

2. The Parties may agree to terminate the proceedings of  the arbitral tribunal by jointly so notifying the chair of  the arbitral tribunal at any time before the issuance of  the award to the Parties. 

Article 184 
Award 

1. The award of the arbitral tribunal shall be drafted  without the presence of the Parties, and in the light of  the information provided and the statements made, and the  relevant provisions of this Agreement. 

2. The arbitral tribunal shall, within 120 days, or  within 60 days in cases of urgency, including those which  concern perishable goods, after the date of its  establishment, submit to the Parties its draft award. 

3. The draft award shall contain both the descriptive  part and the findings, conclusions and decisions of the  arbitral tribunal, for the purposes of enabling the Parties  to review precise aspects of the draft award. 

4. When the arbitral tribunal considers that it cannot  submit its draft award within the aforementioned 120 days  or 60 days period, it may extend that period with the  consent of the Parties. 

5. A Party may provide written comments to the arbitral  tribunal on its draft award within 15 days after the date  of submission of the draft award. 

6. After considering any written comments on the draft  award, the arbitral tribunal may reconsider its draft award  and make any further examination it considers appropriate. 

7. The arbitral tribunal shall issue its award, within 30  days after the date of submission of the draft award. 

8. The award of the arbitral tribunal shall be available  to the public within 15 days after the date of issuance,  subject to the requirement to protect confidential  information. 

9. The award of the arbitral tribunal shall be final and  binding on the Parties. 

Article 185 
Implementation of Award 

1. Unless the Parties agree otherwise, the Party  complained against shall comply with the award of the  arbitral tribunal referred to in Article 184 immediately.  If this is not practicable, the Party complained against  shall comply with the award within a reasonable period of  time. 

2. The reasonable period of time referred to in paragraph  1 shall be mutually determined by the Parties. Where the  Parties fail to agree on the reasonable period of time  within 45 days after the date of issuance of the award of  the arbitral tribunal referred to in Article 184, either  Party may refer the matter to an arbitral tribunal, which  shall determine the reasonable period of time. 

3. Where there is disagreement between the Parties as to  whether the Party complained against has complied with the  award of the arbitral tribunal referred to in Article 184  within the reasonable period of time as determined pursuant  to paragraph 2, either Party may refer the matter to an  arbitral tribunal. 

Article 186 
Non-Implementation - Compensation and Suspension of Concessions  or Other Obligations 

1. If the Party complained against notifies the  complaining Party that it is impracticable, or the arbitral  tribunal to which the matter is referred pursuant to  paragraph 3 of Article 185 confirms that the Party  complained against has failed, to comply with the award  within the reasonable period of time as determined pursuant  to paragraph 2 of Article 185, the Party complained against  shall, if so requested, enter into negotiations with the  complaining Party with a view to reaching a mutually  satisfactory compensation. 

2. If there is no agreement on satisfactory compensation  within 20 days after the date of receipt of the request  mentioned in paragraph 1, the complaining Party may suspend  the application to the Party complained against of  concessions or other obligations under this Agreement,  after giving notification of such suspension 30 days in  advance. 

3. The compensation referred to in paragraph 1 and the  suspension referred to in paragraph 2 shall be temporary  measures. Neither compensation nor suspension is preferred  to full compliance with the award. The suspension shall  only be applied until such time as the award is fully  complied with, or a mutually satisfactory solution is  reached. 

4. In considering what concessions or other obligations  to suspend pursuant to paragraph 2: 

(a) the complaining Party should first seek to  suspend concessions or other obligations with  respect to the same sector(s) as that in which  the arbitral tribunal referred to in Article 184  has found a failure to comply with the  obligations under this Agreement, or  nullification or impairment of benefits in the  sense of paragraph 2 of Article 178; and 

(b) if the complaining Party considers that it is not  practicable or effective to suspend concessions  or other obligations with respect to the same  sector(s), it may suspend concessions or other  obligations with respect to other sectors. The  notification of such suspension pursuant to  paragraph 2 shall indicate the reasons on which  it is based. 

5. The level of suspension referred to in paragraph 2  shall be equivalent to the level of the nullification or  impairment. 

6. If the Party complained against considers that the  requirements for the suspension of concessions or other  obligations by the complaining Party set out in paragraph  2, 3, 4 or 5 have not been met, it may refer the matter to  an arbitral tribunal. 

7. The arbitral tribunal that is established for the  purposes of this Article or Article 185 shall, wherever  possible, have, as its arbitrators, the arbitrators of the  original arbitral tribunal. If this is not possible, then  the arbitrators to the arbitral tribunal that is  established for the purposes of this Article or Article 185  shall be appointed pursuant to Article 180. The arbitral  tribunal established under this Article or Article 185  shall issue its award within 60 days after the date when  the matter is referred to it. When the arbitral tribunal  considers that it cannot issue its award within the  aforementioned 60 days period, it may extend that period  for a maximum of 30 days with the consent of the Parties.  The award shall be available to the public within 15 days  after the date of issuance, subject to the requirement to  protect confidential information. The award shall be final  and binding on the Parties. 

Article 187 
Rules of Procedures 

The Commission shall adopt the Rules of Procedures  which provide for the details of the rules and procedures  of arbitral tribunals established under this Chapter, upon  the entry into force of this Agreement. 

Article 188 
Modification of Rules and Procedures 

Any time period, or other rules and procedures for  arbitral tribunals, provided for in this Chapter, including  the Rules of Procedures referred to in Article 187, may be  modified by mutual consent of the Parties. 

Chapter 17 
Commission 

Article 189 
Establishment of the Commission 

The Parties hereby establish a Commission which shall  be co-chaired by Ministers or senior officials of the  Parties. 

Article 190  
Functions of the Commission 

1. The Commission shall: 

(a) review and monitor, and consider any matters  relating to, the implementation, interpretation  and operation of this Agreement; 

(b) consider and recommend to the Parties any  amendments to this Agreement; 

(c) supervise and coordinate the work of all  committees and working groups established under  this Agreement; 

(d) adopt: 

(i) modifications to Annex 15; 

(ii) the Operational Procedures referred to in  Article 52; 

(iii) an interpretation of a provision of this  Agreement referred to in Articles 93 and 94; 

(iv) the Rules of Procedures referred to in  Article 187; and 

(v) any necessary decisions; and 

(e) carry out other functions as the Parties may  agree. 

2. The Commission may establish committees and working  groups, refer matters to any committee or working group for  advice, delegate its responsibilities to any committee or  working group, and consider matters raised by any committee  or working group. 

Article 191 
Rules and Procedures of the Commission 

1. The Commission shall establish its rules and  procedures. 

2. Decisions of the Commission shall be taken by mutual  agreement. 

3. The Commission shall meet at such venues and times as  may be agreed by the Parties. 

Chapter 18 
Exceptions 

Article 192 
General Exceptions 

1. For the purposes of Chapters 3, 4, 5, 6, 7 and 8 other  than Article 76, Article XX of the GATT 1994 is  incorporated into and made part of this Agreement, mutatis  mutandis. 

2. For the purposes of Chapters 8 other than Article 76,  9, 10 and 11, Article XIV of the GATS, including its  footnotes, is incorporated into and made part of this  Agreement, mutatis mutandis. 

Article 193 
Security Exceptions 

Nothing in this Agreement other than Article 76 shall  be construed: 

(a) to require a Party to furnish any information the  disclosure of which it considers contrary to its  essential security interests; 

(b) to prevent a Party from taking any actions which  it considers necessary for the protection of its  essential security interests: 

(i) relating to the traffic in arms, ammunition  and implements of war and to such traffic in  other goods and materials, or such supply of  services, as is carried on directly or  indirectly for the purpose of supplying or  provisioning a military establishment; 

(ii) taken in time of war or other emergency in  international relations; or 

(iii) relating to fissionable and fusionable  materials or the materials from which they  are derived; or 

(c) to prevent a Party from taking any action in  pursuance of its obligations under the United  Nations Charter for the maintenance of  international peace and security. 

Article 194 
Taxation 

1. Except as otherwise provided for in this Article,  nothing in this Agreement shall apply to taxation measures. 

Note: The term “taxation measures” shall not include: 

(a) a customs duty as defined in subparagraph (d) of  Article 28; 

(b) an anti-dumping or countervailing duty referred  to in subparagraph (d)(ii) of Article 28; and 

(c) fees or charges referred to in subparagraph  (d)(iii) of Article 28. 

2. Nothing in this Agreement shall affect the rights and  obligations of either Party under the provisions relating  to any taxation measures in any other international  agreements to which both Parties are parties. 

3. Article 13 shall apply to taxation measures to the  same extent as Article III of the GATT 1994. 

4. Articles 107 and 108 shall apply to taxation measures  to the same extent as covered by the GATS. 

5.

(a) Article 82 shall apply to taxation measures  except that no investor may invoke Article 82 as  the basis for a claim under Article 89, where it  has been determined pursuant to subparagraph (b)  that the measure is not an expropriation.  120 

(b) The investor shall refer the issue, at the time  that it delivers the notice of intent under  Article 89, to the competent authorities of both  Parties, through the contact points referred to  in Article 10, to determine whether such measure  is not an expropriation. If the competent  authorities of both Parties do not consider the  issue or, having considered it, fail to determine  that the measure is not an expropriation within a  period of 180 days of such referral, the investor  may submit its claim to arbitration under Article  89. 

(c) For the purposes of subparagraph (b), the term  “competent authorities” means: 

(i) with respect to Japan, the Minister of  Finance or his or her authorized  representative, who shall consider the issue  in consultation with the Minister of Foreign  Affairs or his or her authorized  representative; and 

(ii) with respect to Chile, the Director of the  Internal Revenue Service, Ministry of  Finance (Director del Servicio de Impuestos  Internos, Ministerio de Hacienda). 

Chapter 19 
Final Provisions 

Article 195 
Annexes and Notes 

The Annexes and Notes to this Agreement shall  constitute an integral part of this Agreement. 

Article 196 
Headings 

The headings of the Chapters, Sections and Articles of  this Agreement are inserted for convenience of reference  only and shall not affect the interpretation of this  Agreement. 

Article 197 
Amendments 

1. This Agreement may be amended by agreement between the  Parties. 

2. Any amendment shall be approved by the Parties in  accordance with their respective legal procedures. Such  amendment shall enter into force on the date to be agreed  upon by the Parties. 

3. Notwithstanding paragraph 2, amendments relating only  to Annex 2 or 4 may be made by exchange of diplomatic  notes. 

Note: In the case of Chile, the amendments under  paragraph 3 shall be made as an Executive  Agreement (Acuerdo de Ejecución) in accordance  with the Political Constitution of the Republic  of Chile (Constitución Política de la República  de Chile). 

Article 198 
Entry into Force 

This Agreement shall enter into force on the thirtieth  day after the date of exchange of diplomatic notes  informing each other that their respective legal procedures  necessary for entry into force of this Agreement have been  completed. It shall remain in force unless terminated as  provided for in Article 199. 

Article 199 
Termination 

Either Party may terminate this Agreement by giving  one year’s advance notice in writing to the other Party. 

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

DONE at Tokyo, on this twenty-seventh day of March in  the year 2007 in duplicate in the English language. 

 

For Japan:

For the Republic of Chile