VII. FINANCIAL SERVICES^{1, 2}

PRUDENTIAL MEASURES

2. Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Contracting Party's commitments or obligations under the Agreement.

RECOGNITION ARRANGEMENTS

2. A Contracting Party that is a party to such an agreement or arrangement referred to in paragraph 1, whether future or existing, shall afford adequate opportunity for other interested Contracting Parties to negotiate their accession to such agreements or arrangements, or to negotiate comparable ones with it, under circumstances in which there would be equivalent regulation, oversight, implementation of such regulation, and, if appropriate, procedures concerning the sharing of information between the parties to the agreement or arrangement. Where a Contracting Party accords recognition autonomously, it shall afford adequate opportunity for any other Contracting Party to demonstrate that such circumstances exist.

AUTHORISATION PROCEDURES

2. On the request of an applicant, the regulatory authority shall inform the applicant of the status of its application. If such authority requires additional information from the applicant, it shall notify the applicant without undue delay.

3. A regulatory authority shall make an administrative decision on a completed application of an investor in a financial services enterprise or a financial services enterprise that is an investment of an investor of another Contracting Party within [120][180] days, and shall promptly notify the applicant of the decision. An application shall not be considered complete until [all relevant hearings are held and] all necessary information is received. Where it is not practicable for a decision to be made within [120][180] days, the regulatory authority shall notify the applicant without undue delay and shall endeavour to make the decision within a reasonable time thereafter.

TRANSPARENCY ³

a) information related to the financial affairs and accounts of individual customers of financial services enterprises; or


b) any confidential or proprietary information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice legitimate commercial interests of particular enterprises.

INFORMATION TRANSFER AND DATA PROCESSING

a) necessary for the conduct of the ordinary business of a financial services enterprise located in a Contracting Party that is the investment of an investor of another Contracting Party; or


b) in connection with the purchase or sale by a financial services enterprise located in a Contracting Party that is the investment of an investor of another Contracting Party of:


i) financial data processing services; or
ii) financial information, including information provided to or by third parties.

2. Nothing in paragraph 1:

a) affects the financial service enterprise's obligation to comply with any record keeping and reporting requirements; or


b) restricts the right of a Contracting Party to protect privacy, including the protection of personal data and the confidentiality of individual records and accounts, so long as such right is not used to circumvent the provisions of the Agreement.

MEMBERSHIP OF SELF-REGULATORY BODIES AND ASSOCIATIONS

PAYMENTS AND CLEARING SYSTEMS/LENDER OF LAST RESORT ⁴

2. The provisions of this Agreement are not intended to confer access to the Contracting Party's lender of last resort facilities.

DISPUTE SETTLEMENT

The following text was considered in informal consultations on financial matters⁵:

"1. Where an investor of a Contracting Party submits a claim under Article D (Investor-State Procedures) against another Contracting Party and the disputing Contracting Party invokes Article xx (Prudential Measures) [Article xx (Temporary Safeguards)] [Article xx (Role of Monetary Authorities)], on request of the disputing Contracting Party, the Tribunal shall refer the matter in writing to [the authority responsible for financial services in each of] the Contracting Parties involved in the dispute for a decision. The Tribunal may not proceed pending receipt of a decision or report under this Article.


2. In a referral pursuant to paragraph 1, the [authorities referred to in paragraph 1] [Contracting Parties] shall consult with each other to decide the issue of whether and to what extent Article xx (Prudential Measures) [Article xx (Temporary Safeguards)] [Article xx (Role of Monetary Authorities)], is a valid defence to the claim of the investor. The [authorities] [Contracting Parties] shall transmt a copy of their decision to the Tribunal [and to the Parties Group]. The decision shall be binding on the Tribunal.


3. Where the [authorities] [Contracting Parties] have not decided the issue within 60 days of the receipt of the referral under paragraph 1, the disputing Contracting Party or the Contracting Party of the investor may request the establishment of an arbitral panel under Article xx (Request for a State to State Arbitral Tribunal) to detemiine whether, and to what extent, Article xx (Prudential Measures) [Article xx (Temporary Safeguards)] [Article xx (Role of Monetary Authorities)], is a valid defence to the claim of the investor. The Tribunal shall be constituted in accordance with [Article xx (see section A above on Composition of Dispute Settlement Panels in Financial Services Disputes)]. Further to Article xx (Final Report), the panel shall transmit its final report to the [authorities] [Contracting Parties] and to the Investor-State Tribunal. The report shall be binding on the Tribunal.


4. Where no request for the establishment of a State to State Tribunal pursuant to paragraph 3 has been made within 10 days of the expiration of the 60-day period referred to in paragraph 3, the Investor-State Tribunal may proceed to decide the matter."

COMPOSITION OF DISPUTE SETTLEMENT PANELS IN FINANCIAL SERVICES DISPUTES

The following proposals for text were considered in informal consultations on financial matters:

Proposal 1


"Panels for disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial services under dispute."


Proposal 2


"Selection of the Panel


1. Where a Party claims that a dispute involves financial [services] matters, Articles C.2 and D.7 as applicable (Panel Formation) shall apply, except that:


(a) where the disputing Parties so agree, the tribunal panel shall be composed entirely of panellists meeting the qualifications in paragraph 2; and


(b) where the disputing Parties do not agree that the panel be composed in accordance with (a),


(i) each disputing Party may select panellists meeting the qualifications set out in paragraph 2, or in Article C.2.c or D.7.c as applicable (Qualifications of Panellists), and
(ii) if the Party complained against invokes Article xx (Prudential Measures) [Article xx (Temporary Safeguards)] [Article xx (Role of Monetary Authorities)], the chair of the panel shall meet the qualifications set out in paragraph 2.

2 . Financial services experts shall:


(a) have expertise or experience in financial services law or practice, which may include the
regulation of financial institutions;
(b) be chosen strictly on the basis of objectivity, reliability and sound judgement; and
(c) be independent of, and not be affiliated with or take instructions from, any Party."

DEFINITION OF FINANCIAL SERVICES

Insurance and insurance-related services

(i) Direct insurance (including co-insurance):

(A) life
(B) non-life

(ii) Reinsurance and retrocession;
(iii) Insurance intermediation, such as brokerage and agency;
(iv) Services auxiliary to insurance, such as consultancy, actuarial, risk assessment and claim settlement services.


Banking and other financial services (excluding insurance)


(v) Acceptance of deposits and other repayable funds from the public;
(vi) Lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transaction;
(vii) Financial leasing;
(viii) All payment and money transmission services, including credit, charge and debit cards, travellers cheques and bankers drafts;
(ix) Guarantees and commitments;
(x) Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:

(A) money market instruments (including cheques, bills, certificates of deposits);
(B) foreign exchange;
(C) derivative products including, but not limited to, futures and options;
(D) exchange rate and interest rate instruments, including products such as swaps, forward rate agreements;
(E) transferable securities;
(F) other negotiable instruments and financial assets, including bullion.

(xi) 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;
(xii) Money broking;
(xiii) Asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services;
(xiv) Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;
(xv) Provision and transfer of financial information, and financial data processing and related software by suppliers of other financial services;
(xvi) Advisory, intermediation and other auxiliary financial services on all the activities listed in subparagraphs (v) through (xv), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy.

VIII. TAXATION ¹

2. Article ... (Expropriation) shall apply to taxation measures.

Interpretive Note: "When considering the issue of whether a taxation measure effects an expropriation, the following elements should be borne in mind:

a) The imposition of taxes does not generally constitute expropriation. The introduction of a new taxation measure, taxation by more than one jurisdiction in respect to an investment, or a claim of excessive burden imposed by a taxation measure are not in themselves indicative of an expropriation.


b) A taxation measure will not be considered to constitute expropriation where it is generally within the bounds of internationally recognized tax policies and practices. When considering whether a taxation measure satisfies this principle, an analysis should include whether and to what extent taxation measures of a similar type and level are used around the world.


c) While expropriation may be constituted even by measures applying generally (eg, to all taxpayers), such a general application is in practice less likely to suggest an expropriation than more specific measures aimed at particular nationalities or individual taxpayers. A taxation measure would not be expropriatory if it was in force and was transparent when the investment was undertaken.


d) Taxation measures may constitute an outright expropriation, or while not directly expropriatory they may have the equivalent effect of an expropriation (so-called "creeping expropriation"). Where a taxation measure by itself does not constitute expropriation it would be extremely unlikely to be an element of a creeping expropriation."

3. Article ... (Transparency) shall apply to taxation measures, except that nothing in this Agreement shall require a Contracting Party to furnish or allow access to information covered by tax secrecy or any other provision or administrative practice protecting confidentiality in domestic laws or international agreements, and including information:

a) contained in or exchanged pursuant to any agreement or arrangement relating to taxation between governments and investors;


b) pursuant to any agreement with a foreign government concerning the application or interpretation of an international agreement relating to taxation in the case of an investor, including exchange of information between governments;


c) concerning the identity of an investor or other information which would disclose any trade, business, industrial, commercial or professional secret or trade process;


d) pertaining to the negotiation of tax treaties or of any other international agreement relating partly or wholly to taxation or the participation by a government in the work of international organisations; or


e) the disclosure of which would affect the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, taxation, or any information the disclosure of which would aid or assist in the avoidance or evasion of taxes; [or]


[f) the disclosure of which would be contrary to the general administrative practice of the Contracting Party.]

4. ³ [a) The provisions of Article [C] (State to State Dispute Settlement) and Article [D] (Investor to State Dispute Settlement), except for paragraph 1b of Article [D], shall apply to disputes under this Article with regard to taxation measures [to the extent that they fall outside the scope of mutual agreement procedures provided for in double taxation agreements.] However, the issue of whether the measure complained of falls within the definition of taxation measures at paragraph [ ] below shall be decided first.

b) Article [D] (Investor to State Dispute Settlement) shall apply to disputes under this Article with regard to taxation measures subject to subparagraph a) above and to the following provisions:

i) at the request of the Contracting Party to the dispute, any issue referred to in subparagraph (a) above, or any claim that a taxation measure constitutes an expropriation shall be referred to the Competent Tax Authorities of the Contracting Party of the Investor and the Contracting Party to the dispute, and the proceedings regarding those issues under Article [D] shall be suspended; and
ii) notwithstanding paragraph 1(b) of Article [C], if the Competent Tax Authorities determine that the measure does fall within the definition of taxation measures at paragraph [ ] below this Article shall apply, and if the Competent Tax Authorities determine that the measure does not involve an expropriation, the proceedings regarding that issue under Article [D] shall be terminated. If the Competent Tax Authorities concerned do not so determine within [9] months, it may be submitted for resolution [by agreement of] [at the request of either of] the Contracting Parties concerned by arbitration pursuant to Article [C], and any award of a Tribunal pursuant to Article [C] shall be binding upon the Tribunal constituted under Article [D].

c) Any Tribunal under Article C or D shall, at the request of either Party to the dispute, convene a technical review board of taxation experts, as provided in Articles [C.5] and [D.13], to consider a taxation matter and shall take its views into account.⁴]

5. For the purposes of this Article:

a) A Competent Tax Authority means the minister or ministry responsible for taxes or their authorised representatives.


b) "Taxation measures" include


i) any provision relating to taxes of the law of the Contracting Party or of a political subdivision thereof or a local authority therein, or any administrative practices of the Contracting Party relating to taxes; and
ii) any provision relating to taxes of any convention for the avoidance of double taxation or of any other international agreement or arrangement by which the Contracting Party is bound.

Alternative A

[For greater certainty "taxes" for the purposes of this Article shall be taken to include [social security measures/contributions] [and customs duties].

Alternative B

Taxes shall be taken for this purpose to include direct taxes, indirect taxes and [social security measures/contributions] [ and customs duties].

Interpretative Note: For greater certainty, Article XX (most favoured nation treatment) shall not be invoked to avoid the provisions of paragraph ... (dispute settlement) of this Article.⁵

IX. RESERVATIONS

LODGING OF COUNTRY SPECIFIC RESERVATIONS ¹

(a) any existing non-conforming measure that is maintained by a Contracting Party as set out in its Schedule to Annex A of the Agreement;


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


(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles X (National Treatment), Article Y (Most Favoured Nation), [Article Z, ..., and Article ...].

[B. ³ Articles X, Y, [Z,..., and Article ...] do not apply to any measure that Contracting Party [adopts] or [maintains] with respect to sectors, subsectors or activities, as set out in Annex ... of the Agreement.]

X. RELATIONSHIP TO OTHER INTERNATIONAL AGREEMENTS

OBLIGATIONS UNDER THE ARTICLES OF AGREEMENT OF THE INTERNATIONAL MONETARY FUND

THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES

1. The OECD Guidelines for Multinational Enterprises are set out in Annex (xx).


2. The Contracting Parties at the invitation of the Organisation for Economic Co-operation and Development are encouraged to participate in the Guidelines work of the Organisation in order to promote co-operation on the application, clarification, interpretation and revision of the Guidelines and to facilitate the maintenance of consensus among the Contracting Parties and the members of the Organisation on the matters addressed in the Guidelines.


3. The Contracting Parties [shall] [are encouraged to] set up National Contact Points for undertaking promotional activities, handling enquiries and for discussions with the parties concerned on all matters related to the Guidelines so that they can contribute to the solution of problems which may arise in this connection. The business community, employee organisations and other interested parties should be informed of the availability of such facilities.


4. Annexation of the Guidelines shall not bear on the interpretation or application of the Agreement, including for the purpose of dispute settlement; nor change their non-binding character.

2. Several delegations proposed that the following additional text be added to the list of powers given to the Parties Group under Section XI of the Consolidated Text, paragraph 2:

(e) consider revision of the Guidelines referred to in Article (xx) of the [Agreement] [Final Act] by adoption of any revised Guidelines developed in the OECD.

3. Finally, delegations developed draft text that would be placed in an annex³ immediately before the Guidelines, as follows:

The following Guidelines for Multinational Enterprises are a joint recommendation by participating Governments to multinational enterprises operating in their territory. Their purpose is to help multinational enterprises ensure that their operations are in harrnony with the national policies of the countries in which they operate. The Guidelines include recommendations on general policies, disclosure of information, competition, financing, taxation, employment and industrial relations, environmental protection and science and technology. The Guidelines are part of the OECD Declaration on International Investment and Multinational Enterprises of 21 June 1976 as amended. Background and official clarifications are found in the publication "The OECD Guidelines for Multinational Enterprises".

[The text of the preamble to the Declaration on International Investment and Multinational Enterprises, Part I of the Declaration, and the full Annex 1 text of the Guidelines would be set out verbatim]

XI. IMPLEMENTATION AND OPERATION

THE PREPARATORY GROUP

1. There shall be a Preparatory Group comprised of the Signatories to the Final Act and the Signatories to the Agreement. A Signatory to the Final Act shall cease to be a member if it fails to become a Signatory to the Agreement by the closing date for signature of the Agreement.

2. The Preparatory Group shall:

(a) prepare for entry into force of the Agreement and the establishment of the Parties Group;
(b) conduct discussions with non-signatories to the Final Act;
(c) conduct negotiations with interested non-signatories to the Final Act and make decisions on their eligibility to become a Signatory to the Agreement; and
(d) ... ¹

3. The Preparatory Group shall elect a Chair, who shall serve in a personal capacity. Meetings shall be held at intervals to be determined by the Preparatory Group. The Preparatory Group shall establish its rules and procedures.

4. The Preparatory Group shall make decisions by consensus. Such decisions may include a decision to adopt a different voting rule for a particular question or category of questions. A Signatory may abstain and express a differing view without barring consensus.

5. [However, except as otherwise provided, where a decision cannot be made by consensus, the decision shall be made by a majority comprising [two thirds] of the Signatories.]²

THE PARTIES GROUP

2. The Parties Group shall facilitate the operation of this Agreement. To this end, it shall:

(a) carry out the functions assigned to it under this Agreement;
(b) [at the request of a Contracting Party, clarify [by consensus] the interpretation or application of this Agreement]³;
(c) consider any matter that may affect the operation of this Agreement; and
(d) take such other actions as it deems necessary to fulfil its mandate.

3. In carrying out the functions specified in paragraph 2, the Parties Group may consult governmental and non-governmental organisations or persons.

4. The Parties Group shall elect a Chair, who shall serve in a personal capacity. Meetings shall be held at intervals to be determined by the Parties Group. The Parties Group shall establish its rules and procedures.

5. The Parties Group shall make decisions by consensus. Such decisions may include a decision to adopt a different voting rule for a particular question or category of questions. A Contracting Party may abstain and express a differing view without barring consensus.

6. [However, except as otherwise provided, where a decision cannot be reached by consensus, the decision shall be made by a majority comprising [two thirds] of the Contracting Parties.]⁴

7. The Parties Group shall be assisted by a Secretariat.

8. [Parties Group and Secretariat costs shall be borne by the Contracting Parties as approved and apportioned by the Parties Group.]⁵

XII. FINAL PROVISIONS

SIGNATURE

ACCEPTANCE AND ENTRY INTO FORCE

1. The Signatories to this Final Act agree to submit the Agreement for the consideration of their respective competent authorities with a view to seeking approval of the Agreement in accordance with their procedures.

2. The Signatories to this Final Act agree on the desirability of acceptance of the Agreement by all signatories with a view to its entry into force by [date] or as early as possible thereafter.

In the MAI

3. Not later than [date], the Signatories to this Agreement will meet to determine the date for entry into force and related matters². Decisions shall be made by [consensus] [a [two-thirds] majority³ of the Signatories].

4. This Agreement shall enter into force on the date determined by the Signatories to this Agreement in accordance with paragraph 3 for the Signatories that have accepted this Agreement as of that date. An acceptance following the entry into force of this Agreement shall enter into force on the 30th day following the deposit of its instrument of acceptance.

ACCESSION

2. Decisions on accession shall be taken by the Parties Group.⁵

3. Accession shall take effect on the thirtieth day following the deposit of the instruments of accession with the Depositary.

NON-APPLICABILITY

REVIEW

AMENDMENT

WITHDRAWAL

2. Any such withdrawal shall take effect on the expiry of six months from the date of the receipt of the notice by the Depositary, or on such later date as may be specified in the notice of withdrawal. If a Contracting Party withdraws, the Agreement shall remain in force for the remaining Contracting Parties.

3 . The provisions of this Agreement shall continue to apply for a period of fifteen years from the date of notification of withdrawal to an investment existing at that date.

DEPOSITARY

STATUS OF ANNEXES

AUTHENTIC TEXTS

DENIAL OF BENEFITS

a. [Subject to prior notification to and consultation with the Contracting Party of the investor,] a Contracting Party may deny the benefits of the Agreement to an investor [as defined in 1 (ii)] and to its investments if investors of a non-Party own or control the first mentioned investor and that investor has no substantial business activities in the territory of the Contracting Party under whose law it is constituted or organised.


or


b. [Subject to prior notification and consultation in accordance with Articles XXX (Transparency) and XXX (Consultations), a Contracting Party may deny the benefits of this Agreement to an investor of another Contracting Party that is an enterprise of such Contracting Party and to investments of such investors if investors of a non-Contmcting Party own or control the enterprise and the enterprise has no substantial business activities in the territory of the Contracting Party under whose law it is constituted or organised.]⁹