III. TREATMENT OF INVESTORS AND INVESTMENTS

NATIONAL TREATMENT AND MOST FAVOURED NATION TREATMENT

2. Each Contracting Party shall accord to investors of another Contracting Party and to their investments, treatment no less favourable than the treatment it accords [in like circumstances] to investors of any other Contracting Party or of a non-Contracting Party, and to the investments of investors of any other Contracting Party or of a non-Contracting Party, with respect to the establishment, acquisition, expansion, operation, management, maintenance, use, enjoyment, and sale or other disposition of investments.

3. Each Contracting Party shall accord to investors of another Contracting Party and to their investments the better of the treatment required by Articles 1.1 and 1.2, whichever is the more favourable to those investors or investments.

TRANSPARENCY

2. Each Contracting Party shall promptly respond to specific questions and provide, upon request, information to other Contracting Parties on matters referred to in Article 2.1.

3 . Nothing in this Agreement shall prevent a Contracting Party from requiring an investor of another Contracting Party, or its investment, to provide routine information concerning that investment solely for information or statistical purposes. No Contracting Party shall be required to fumish or allow access to.information concerning particular investors or investments the disclosure of which would impede law enforcement or would be contrary to its laws [policies, or practices]² protecting confidentiality.

SPECIAL TOPICS

1. Subject to the application of Contracting Parties' national laws, regulations and procedures affecting the entry, stay and work of natural persons

(a) Each Contracting Party shall grant temporary entry, stay and authorisation to work⁴ and provide any necessary confirming documentation to a natural person of another Contracting Party who is:

(i) an investor who seeks to establish, develop, administer or provide advice or essential technical services to the operation of an enterprise⁵ to which the investor has committed, or is in the process of committing, a substantial amount of capital, or


(ii) an employee employed by an enterprise referred to in (i) above, or by an investor, [for a period of not less than one year,] in a capacity of executive, manager or specialist and who is essential to the enterprise;

so long as that person continues to meet the requirements of this Article.⁶


(b)

(i) Each Contracting Party shall grant temporary entry and stay and provide any necessary confirming documentation to the spouse and minor children of a natural person who has been granted temporary entry, stay and authorisation to work in accordance with this Article. The spouse and minor children shall be admitted for the period of the stay of that person.


(ii) Each Contracting Party is encouraged⁷ to grant authorisation to work to the spouse of the person who has been granted temporary entry, stay, and authorisation to work in accordance with this Article.

2. No Contracting Party may deny entry and stay as provided for by this Article, or authorisation to work as provided for by paragraph 1(a) of this Article, for reasons relating to labour market or other economic needs tests or numerical restrictions in national laws, regulations, and procedures.

3 . For the purposes of this Article:

Natural person of another Contracting Party means a natural person having the nationality of [or who is permanently residing in] another Contracting Party in accordance with its applicable law;⁸


Executive means a natural person who primarily directs the management of an enterprise or establishes goals and policies for the enterprise or a major component or function of the enterprise, exercises wide latitude in decision-making and receives only general supervision or direction from higher-level executives, the board of directors, or stockholders of the enterprise;


Manager means a natural person who directs the management of an enterprise, or department, or subdivision of the enterprise, supervises and controls the work of other supervisory, professional or managerial employees, has the authority to hire and fire or recommend hiring, firing, or other personnel actions and exercises discretionary authority over day-to-day operations at a senior level; and


Specialist means a natural person who possesses knowledge at an advanced level of expertise and who may be required to possess specific or proprietary knowledge of the enterprise's product, service, research equipment, techniques, or management.

SENIOR MANAGEMENT [AND MEMBERSHIP ON BOARDS OF DIRECTORS ⁹]

No Party may require that an enterprise of that Party that is an investment of an investor of another Party appoint to senior management positions [and membership on boards of directors]¹⁰ individuals of any particular nationality.

EMPLOYMENT REQUIREMENTS ¹¹

A Contracting Party shall permit investors of another Contracting Party and their investments to employ any natural person of the investor's or the investment's choice regardless of nationality and citizenship provided that such person is holding a valid permit of sejour and work delivered by the competent authorities of the former Contracting Party and that the employment concerned conforms to the terms, conditions and time limits of the permission granted to such person.

PERFORMANCE REQUIREMENTS ¹²

1. A Contracting Party shall not, in connection with the establishment, acquisition, expansion, management, operation or conduct¹³ of an investment in its territory of an investor of a Contracting Party or of a non-Contracting Party, impose, enforce or maintain any of the following requirements, or enforce any commitment or undertaking¹⁴:

(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 services¹⁵ provided in its territory, or to purchase goods or services from persons in its territory;


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

(e) to restrict sales of goods or services in its territory that such investment produces or provides by relating such sales 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 natural or legal person in its territory, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy an alleged violation of competition laws¹⁶ [or to act in a manner not inconsistent with articles... of the TRIPS Agreement];


(g) to locate its headquarters for a specific region or the world market in the territory of that Contracting Party;¹⁷


(h) to supply one or more of the goods that it produces or the services that it provides to a specific region or the world market exclusively from the territory of that Contracting Party;


[(i) to achieve a given level or value of production, investment, sales, employment, or research and development in its territory;]¹⁸


[(j) to hire a given level of [local personnel] [nationals];¹⁹


(k) to establish a joint venture;²⁰ or


[(l) to achieve a minimum level of local equity participation.]

2. A Contracting Party is not precluded by paragraph 1 from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory of a Contracting Party or of a non-Contracting Party, on compliance with any of the requirements, commitments or undertakings set forth in paragraphs [1(a) and] 1(f) through 1(l).²¹

3. Nothing in paragraphs [1(a),] 1(b), 1(c), 1(d), and 1(e)²² shall be construed to prevent a Contracting Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of a Contracting Party or of a non-Contracting Party, on compliance with a requirement, commitment or undertaking to locate production, provide particular services, train or employ [workers] [employees]²³, construct or expand particular facilities, or carry out research and development in its territory.

4. [Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on investment, nothing in paragraphs 1(b) and 1(c) shall be construed to prevent any Contracting Party from adopting or maintaining measures, including environmental measures:

(a) necessary to secure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;


(b) necessary to protect human, animal or plant life or health;


(c) necessary for the conservation of living or non-living exhaustible natural resources.]²⁴

5.²⁵

(a) Paragraphs 1(a), 1(b), and 1(c) do not apply to qualification requirements for goods or services with respect to export promotion [and foreign aid ] programmes²⁶;


[(b)paragraphs 1(b), 1(c), 1(f), and 1(h) do not apply to procurement by a Contracting Party or a state enterprise²⁷; and]²⁸


(c) Paragraphs 1(b) and 1(c) do not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas;²⁹


[(d)paragraph 1(i) does not apply to requirements imposed by a Contracting Party as a part of privatisation operations.]³⁰

PRIVATISATION ³¹

Paragraph 1 (Application of National Treatment/MFN)

1 . The obligation on a Contracting Party to accord National Treatment and MFN treatment as defined in Paragraph XX (NT/MFN) applies to:

a) all kinds of privatisation, irrespective of the method of privatisation (whether by public offering, direct sale or other method)³²; and


b) subsequent transactions involving a privatised asset³³.

[Paragraph 1a (voucher schemes)

2. Notwithstanding paragraph 1, arrangements under which natural persons of a Contracting Party are granted exclusive rights as regards the initial privatisation are acceptable as a method of privatisation under this Agreement provided that the exclusive right as regards the initial privatisation is limited to natural persons only and provided that there is no restriction on subsequent sales]³⁴.

Paragraph 2 (Right to privatise)

3. Nothing in this Agreement shall be construed as imposing an obligation on a Contracting Party to privatise³⁵.

Paragraph 3 (Special share arrangements)³⁶

Alternative 1

4. Contracting Parties acknowledge that special share arrangements are compatible with Paragraph 1, unless they explicitly or intentionally favour investors or investments of a Contracting Party or discriminate against investors or investments of another Contracting Party on the grounds of their nationality or permanent residency.³⁷

Alternative 2 ³⁸

5. [Special share holding arrangements including, inter alia, a) the retention of "golden shares" by Contracting Parties, b) stable shareholder groups assembled by a Contracting Party, c) management/employee buyouts, and d) voucher schemes for members of the public, hold strong potential for discrimination against foreign investors and are, in fact, inconsistent with National Treatment and MFN treatment obligations in many instances.]

Alternative 3 ³⁹

Footnote to paragraph 1

6. Special share arrangements which explicitly discriminate (i.e. dejure) against foreign investors and their investment are contrary to obligations on National Treatment/MFN treatment. It is also understood that when, in their application, special share arrangements lead to defacto discrimination they are also contrary to National Treatment/MFN treatment.

[Alternative 4 ⁴⁰

7. Nothing in this Agreement shall prevent Contracting Parties from using special methods of privatisation or having special rules as regards ownership, management or control of privatised assets such as:

-- a Contracting Party or any person designated by the Contracting Party maintaining special shareholder rights to influence or veto any decision concerning such assets after the privatisation,


-- arrangements under which managers or other employees of an enterprise are granted special treatment as regards the acquisition of shares of that enterprise,


-- arrangements under which shareholders are required to maintain their share in the capital of the enterprise during a certain period of time,


-- arrangements under which locals of a certain community are granted special treatment as regards the acquisition of this community's property,

unless they explicitly or intentionally favour investors or investments of a Contracting Party or discriminate against investors or investments of another Contracting Party on the grounds of their nationality or permanent residency.]

paragraph 4 (Transparency)

8. For the purposes of this Article, each Contracting Party⁴¹ or its designated agency shall promptly publish or otherwise make publicly available the essential features and procedures for participation in each prospective privatisation⁴².*

Footnote

*Alternative 1

This footnote confirms the application of the Transparency Article YY. Specifically, the obligations to accord National Treatment and MFN Treatment prohibit discrimination against investors and investments of other Contracting Parties with respect to all arrangements for making public information about a privatisation operation. [A Contracting Party that gives to its investors and investments access to information concerning the fact of privatisation must at the same time give that access to investors and investments of other Contracting Parties. Any information relevant to the privatisation available to investors of a Contracting Party must be available to investors and investments of other Contracting Parties, e.g. a Contracting Party must provide financial statements on request. A Contracting Party would violate National Treatment if, in order to benefit its investors and their investments, it refrains from making information publicly available, either about the fact of privatisation or about the enterprise or entity to be privatised.]⁴³ [It is understood that in the case of small scale privatisations, there can be some variance in the methods used to make information available.]

*Alternative 2 ⁴⁴

This footnote confirms the application of the Transparency Article YY. Specifically, the obligations to accord National Treatment and MFN Treatment prohibit discrimination against investors and investments of other Contracting Parties with respect to all arrangements for making public information about a privatisation operation. [A Contracting Party that gives to its domestic investors access to information concerning the fact of privatisation, the enterprise or entity to be privatised, and details of the privatisation process must at the same time give that access to foreign investors. A Contracting Party would violate National Treatment if it refrains from making information publicly available, either about the fact of privatisation, the entity to be privatised, or the details of the privatisation. It is understood that in the case of small scale privatisations, there can be some variance in the methods used to make information available.]

Paragraph 5 (Definition)

9. "Privatisation means the sale or other disposal by a Contracting Party, in part or in full, of its equity interest in, or the assets of, a (state] enterprise or government entity.** ⁴⁵

** This article is not meant to cover transactions between different levels or entities of the same
Contracting Party.

MONOPOLIES / STATE ENTERPRISES / CONCESSIONS ⁴⁶

A. Article on Monopolies⁴⁷

[1. Nothing in this Agreement shall be construed to prevent a Contracting Party from maintaining, designating or eliminating a monopoly.]⁴⁸


2. Each Contracting Party shall [endeavour to]⁴⁹ accord nondiscriminatory treatment when designating a monopoly.

Paragraph 3, chapeau:

3. Each Contracting Party shall ensure that any privately-owned monopoly that its national [or subnational] governments [maintain]⁵⁰ or designate and any public monopoly that its national [or subnational] governments maintain or designate:

Subparagraph a)⁵¹

a) acts in a manner that is not inconsistent with the Contracting Party's obligations under this Agreement wherever such a monopoly exercises any regulatory, administrative or other governmental authority that the Contracting Party has delegated to it in connection with the monopoly good or service;

Subparagraph b)

b) provides nondiscriminatory treatment to investments of investors of another Contracting Party in its sale of the monopoly good or service (in the relevant market]

Subparagraph c)

c) provides non-discriminatory treatment to investments of investors of another Contracting Party in its purchase of the monopoly good or service [in the relevant market]. This paragraph does not apply to procurement by governmental agencies of goods or services for government purposes and not with a view to commercial resale or with a view to use in the production of goods or services for commercial sale;⁵²

Subparagraph d)


Alternative 1 ⁵³

[d) does not use its monopoly position, in a non-monopolised market in its territory, to engage, either directly or indirectly, including through its dealing with its parent company, its subsidiary or other enterprise with common ownership, in anti-competitive practices that [might]⁵⁴ adversely affect an investment by an investor of another Contracting Party, including through the discriminatory provision of the monopoly good or service, cross-subsidisation or predatory conduct]⁵⁵;

Alternative 2 ⁵⁶

[d) which competes, either directly or indirectly, or through an affiliated company, in an economic activity outside the scope of its monopoly rights does not abuse its monopoly position in that activity to act in a manner inconsistent with the obligations of this Agreement;]

Alternative 3: zero option⁵⁷¹

[Subparagraph e)⁵⁸

e) Except to comply with any terms of its designation that are not inconsistent with subparagraph (b) (c) or (d), acts solely in accordance with commercial considerations in its purchase or sale of the monopoly good or service in the relevant market, including with regard to price, quality, availability, marketability, transportation and other terms and conditions of purchase or sale.

Nothing in Article A shall be construed to prevent a monopoly from charging different prices in different geographic markets, where such differences are based on normal commercial considerations, such as taking account of supply and demand conditions in those markets.


Article A, paragraph 3 (e) differences in pricing between classes of customers, between affiliated and non-affiliated firms, and cross-subsidisation are not in themselves inconsistent with this provision; rather, they are subject to this subparagraph when they are used as instruments of anti-competitive behaviour by the monopoly firm].

[Paragraph 4 ⁵⁹


4. Each Contracting Party is allowed to lodge reservation to the Agreement concerning an activity previously monopolised at the moment of the elimination of the monopoly.]


Paragraph 5


5. Each Contracting Party shall notify⁶⁰ to the Parties Group any existing designated monopoly within [60]⁶¹ days after the entry into force of the Agreement, any newly designated monopoly within [60] days after its creation, and any elimination of a designated monopoly [and related new reservation to the Agreement]⁶² within [60] days after its elimination.


Paragraph 6


[6. Neither investors of another Contracting Party nor their investments may have recourse to investor-state arbitration for any matter arising out of paragraph 3 (b), (c), (d) or (e) of this Article.]⁶³

[B. Article on [state enterprises] [entities with which a Government has a specific relationship]

Option 1: zero option⁶⁴

Option 2

i) Draft text for an anti-circumvention clause⁶⁵


Alternative 1


1. Each Contracting Party shall ensure that any state enterprise that it maintains or establishes acts in a manner that is not inconsistent with the Contracting Party's obligations under this Agreement wherever such enterprise exercises any regulatory, administrative or other governmental authority that the Contracting Party has delegated to it.


Alternative 2


1. Each Contracting Party shall ensure that any entity to which a national or subnational
government authority has delegated a regulatory, administrative or other governmental authority acts in a manner that is not inconsistent with the Contracting Party's obligations under this Agreement wherever such entity exercises that authority.


ii) Additional provisions


a. No additional provisions.


b. Proposal by two delegations⁶⁶

[2. Each Contracting Party shall ensure that any state enterprise that it maintains or establishes accords non-discriminatory treatment in the sale, in the Contracting Party's territory, of its goods or services to investors of another Contracting Party and their investments.


3. Neither investors of another Contracting Party nor their investments may have recourse to investor-state arbitration for any matter arising out of paragraph 2 of this Article.⁶⁷]


c. Proposal by one delegation⁶⁸


[2. Each Contracting Party shall ensure that any entity that a national or a subnational government owns or controls through ownership interest or which a national or subnational governments authority has a relationship with through any specific legislative, regulatory or administrative act, any contracts, or any practices related to some of its activities acts in a manner that is not inconsistent with the Contracting Party's obligations tmder this Agreement.]

C. Definitions Related to Articles on Monopolies [and State Enterprises]

Paragraph 1


1. "Delegation" means a legislative grant, and a government order, directive or other act transferring to the monopoly or state enterprise, or authorising the exercise by the monopoly or state enterprise of, governmental authority.


Paragraph 2


Alternative 1


[2. "Designate" means to establish, designate or authorise, or to expand the scope of a monopoly to cover an additional good or service, after the date of entry into force of this agreement.]


Alternative 2


2. "Designate a monopoly" means to establish or authorise a monopoly, or to expand the scope of a monopoly.


Paragraph 3


Alternative 1


3. ["Monopoly" means an entity, including a consortium or government agency, that in any
relevant market in the territory of a Contracting Party is designated as the sole provider or purchaser of a good or service, but does not include an entity that has been granted an exclusive intellectual property right solely by reason of such grant.]⁶⁹


Alternative 2


3. "Monopoly" means any person or group of persons, public or private, whatever its legal nature, designated by a national [or local] government authority as the sole supplier or buyer of a commercial good or service in a market in the territory or part of the territory of a Contracting party, [for an indefinite period of time .]⁷⁰ [possible carve out for IPR]


Alternative 3 ⁷¹


[3. "Monopoly" means any person [or entity], public or private, including a consortium or
government agency, designated by a national [or local] government authority as the sole supplier or buyer of a good or service in a relevant [economic] market in the territory of a Contracting Party, but does not include a person or entity that has been granted an exclusive intellectual property right solely by reason of such grant.]


Paragraph 4


Alternative 1


[4. "Relevant market" means the geographic and commercial market for a good or service.]


Alternative 2


[4. "Relevant [economic] market" means the geographic and product market for a good or service in the territory of the Contracting Party.]


Paragraph 5


5. "Non-discriminatory treatment' means the better of national treatment and most favoured nation treatment, as set out in the relevant provisions of this Agreement.⁷²


Paragraph 6


[6. "State enterprises" means, [subject to Annex ..., ] an enterprise owned, or controlled through ownership interest, by a Contracting Parry.]⁷³

[D. Article on Concessions^{74, 75}

Transparency

1. Any concession shall abide by the following principles:

a) the conditions of participation in awarding procedures shall be published in due time so as to enable the candidates to engage and, in so far as it remains compatible with an efficient operation of the mechanism of attribution of concessions, to accomplish the formalities required by qualifying evaluations;⁷⁶


b) the procedures of awarding are written, at least, in one of the official languages of the OECD. If, for an awarding procedure, any entity authorises propositions to be submitted in more than one language, one of them shall be one of the two official languages of the OECD.⁷⁷

2. This article applies to the delegations covering an amount equal or superior to XX (amount to be decided).


3. This article does not apply to delegations which confer a monopoly as defined in A to the beneficiary of this delegation.

Definition⁷⁸

1. A concession is any delegation, direct or indirect, which entails a transferring of operation of activities, carried out by a governmental authority, national or subnational, or any public or paragraph-public authority.


2. The delegation shall be realised either by any laws, regulations, administrative rulings, or established policies, or by any private or public contract. The aim of the delegation is to entrust to a distinct legal body with the operation of networks or infrastructures, or the exploitation of natural resources, and if needed with the construction of all or part of networks or infrastructures.


3. [if necessary: The legal act of delegation includes the modes of payment to the investor. These rnodes of payment can consist of any price paid by consumers, any royalty, tax licence, subsidy or contribution from the delegatory authority, or any combination of these modes.]

INVESTMENT INCENTIVES

Provisions

Alternative 1

Several delegations believe that no additional text is necessary. They consider that the current draft articles in the MAI are sufficient to cover investment incentives at this time.

Alternative 2

Many delegations, however, would favour specific provisions on incentives in the MAI although they hold different views as to their nature and scope. Some proposed a built-in agenda for future work. Discussion of possible provisions focused on the following draft article which is regarded as a compromise text by those who would still prefer more far-reaching disciplines.

Article⁷⁹

1. The Contracting Parties confirm that Article XX (on NT and MFN) and Article XX (Transparency) applies to [the granting of]⁸⁰ investment incentives.⁸¹


2. [The Contracting Parties acknowledge that[, in certain circumstances,] even if applied on a non-discriminatory basis, investment incentives may have distorting effects on the flow of capital and investment decisions.⁸² [Any Contracting Party which considers that its investors or their investments are adversely affected by an investment incentive adopted by another Contracting Party and having a distorting effect, may request consultations with that Contracting Party.] [The former Contracting Party may also bring the incentive before the Parties Group for its consideration.]]^83,84


3.⁸⁵ [In order to further avoid and minimise such distorting effects and to avoid undue competition between Contracting Parties in order to attract or retain investments, the Contracting Parties [shall] enter into negotiations with a view to establishing additional MAI disciplines [within three years] after the signature of this Agreement.⁸⁶ These negotiations shall recognise the role of investment incentives with regard to the aims of policies, such as regional, structural, social, environmental or R&D policies of the Contracting Parties, and other work of a similar nature undertaken in other fora. These negotiations shall, in particular, address the issues of positive discrimination,⁸⁷ [transparency⁸⁸], standstill and rollback⁸⁹.]


4. [For the purpose of this Article, an "investment incentive" means:


The grant of a specific advantage arising from public expenditure [a financial contribution] in connection with the establishment, acquisition, expansion, management, operation or conduct of an investment of a Contracting Party or a non-Contracting Party in its territory].

CORPORATE PRACTICES ⁹⁰

TECHNOLOGY R&D ⁹¹

INTELLECTUAL PROPERTY ⁹²

PUBLIC DEBT ⁹³

The [rescheduling] of the debts [loans] of a Contracting Party or its appropriate institutions [owed to another Contracting Party or its appropriate institutions and the related [rescheduling] of its debts [loans) owed to [private] investors] will not be subject to [the provisions of this Agreement].

NOT LOWERING STANDARDS ⁹⁴

[Alternative 1

The Parties recognise that it is inappropriate to encourage investment by lowering [domestic] health, safety or environmental [standards] [measures]⁹⁵ or relaxing [domestic] [core]⁹⁶ labour standards. ⁹⁷ Accordingly, a Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such [standards] [measures] as an encouragement for the establishment, acquisition, expansion or retention of an investment in its territory of an investment or an investor. If a Party considers that another Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding any such encouragement.

Alternative 2

A Contracting Party [shall] [should]⁹⁸ not waive or otherwise derogate from, or offer to waive or otherwise derogate from [domestic] health, safety or environmental [measures] [standards] or [domestic] [core] labour standards as an encouragement for the establishment, acquisition, expansion or retention of an investment or an investor.]