Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**

**Interinstitutional File:**

**2023/0258(NLE)**

**PROPOSAL**

**Brussels, 5 July 2023**
**(OR. en)**

**11505/23**
**ADD 2**

**POLCOM 151**
**SERVICES 29**
**FDI 17**
**COLAC 83**

From: Secretary-General of the European Commission, signed by Ms Martine
DEPREZ, Director

date of receipt: 5 July 2023

To: Ms Thérèse BLANCHET, Secretary-General of the Council of the
European Union

No. Cion doc.: COM(2023) 434 final - ANNEX 1 - PART 2/3

Subject: ANNEX to the Proposal for a Council Decision on the signing, on behalf
of the European Union, of the Interim Agreement on Trade between the
European Union and the Republic of Chile

Delegations will find attached document COM(2023) 434 final - ANNEX 1 - PART 2/3.

Encl.: COM(2023) 434 final - ANNEX 1 - PART 2/3

11505/23 ADD 2 CP/hp
## COMPET.3 EN

EUROPEAN

COMMISSION

**ANNEX**

_**to the**_

Brussels, 5.7.2023
COM(2023) 434 final

ANNEX 1 – PART 2/3

**Proposal for a Council Decision**

**on the signing, on behalf of the European Union, of the Interim Agreement on Trade**

**between the European Union and the Republic of Chile**

# **EN EN**

CHAPTER 10

INVESTMENT LIBERALISATION

ARTICLE 10.1

Scope

1. This Chapter applies to measures adopted or maintained by a Party affecting the establishment

of an enterprise or the operation of a covered enterprise in all economic activities by an investor of

the other Party in its territory.

2. This Chapter does not apply to:

(a) audio-visual services;

(b) national maritime cabotage **[1]** ; or

**1** Without prejudice to the scope of activities which may be considered as cabotage under the
relevant national legislation, national maritime cabotage under this Chapter covers
transportation of passengers or goods between a port or point located in Chile or a Member
State and another port or point located in Chile or that same Member State, including on its
continental shelf, as provided in the UN Convention on the Law of the Sea, and traffic
originating and terminating in the same port or point located in Chile or a Member State.

& /en 1

(c) domestic and international air services or related services in support of air services **[1]**, whether

scheduled or non-scheduled, and services directly related to the exercise of traffic rights, other

than:

(i) aircraft repair and maintenance services during which an aircraft is withdrawn from

service;

(ii) selling and marketing of air transport services;

(iii) computer reservation system (CRS) services; and

(iv) ground handling services.

3. This Chapter does not apply to measures adopted or maintained by a Party relating to

financial institutions of the other Party, investors of the other Party and to the investments of such

investors in financial institutions in the territory of that Party, as defined in Article 18.2;

4. Articles 10.5, 10.6, 10.8, 10.9 and 10.10 do not apply with respect to public procurement.

**1** For greater certainty, air services or related services in support of air services include the
following services: air transportation; services provided by using an aircraft whose primary
purpose is not the transportation of goods or passengers, such as aerial fire-fighting flight
training, sightseeing, spraying, surveying, mapping, photography, parachute jumping, glider
towing, helicopter-lift for logging and construction, and other airborne agricultural, industrial
and inspection services; the rental of aircraft with crew; and airport operation services.

& /en 2

5. Articles 10.5, 10.6, 10.8 and 10.10 do not apply with respect to subsidies granted by a Party,

including government-supported loans, guarantees and insurances.

ARTICLE 10.2

Definitions

1. For purposes of this Chapter and Annexes 10-A, 10-B and 10-C:

(a) "activities performed in the exercise of governmental authority" means activities performed,

including services supplied, neither on a commercial basis nor in competition with one or

more economic operators;

(b) "aircraft repair and maintenance services" means such activities when undertaken on an

aircraft or a part thereof while it is withdrawn from service and do not include so-called line

maintenance;

(c) "computer reservation system (CRS) services" means services provided by computerised

systems that contain information about air carriers' schedules, availability, fares and fare

rules, through which reservations can be made or tickets may be issued;

& /en 3

(d) "covered enterprise" means an enterprise which is established in accordance with

subparagraph (h) by an investor of a Party in the territory of the other Party, in accordance

with the applicable law, and which is in existence at the date of entry into force of this

Agreement or is established thereafter;

(e) "cross-border supply of services" means the supply of a service:

(i) from the territory of a Party into the territory of the other Party; or

(ii) in the territory of a Party to the service consumer of the other Party;

(f) "economic activities" means activities of an industrial, commercial or professional character

or activities of craftsmen, including the supply of services, except for activities performed in

the exercise of governmental authority;

(g) "enterprise" means a juridical person, branch or representative office set up through

establishment;

(h) "establishment" means the setting up, including the acquisition **[1]**, of an enterprise by an

investor of a Party in the territory of the other Party;

**1** The term "acquisition" is understood as including capital participation in a juridical person
with a view to establishing or maintaining lasting economic links.

& /en 4

(i) "ground handling services" means the supply at an airport, on a fee or contract basis, of the

following services: airline representation, administration and supervision; passenger handling;

baggage handling; ramp services; catering, except the preparation of the food; air cargo and

mail handling; fuelling of an aircraft, aircraft servicing and cleaning; surface transport; and

flight operation, crew administration and flight planning; ground handling services do not

include: self-handling; security; line maintenance; aircraft repair and maintenance; or

management or operation of essential centralised airport infrastructure, such as de-icing

facilities, fuel distribution systems, baggage handling systems and fixed intra-airport transport

systems;

(j) "investor of a Party" means a natural or juridical person of a Party, that seeks to establish, is

establishing or has established an enterprise in accordance with subparagraph (h);

& /en 5

(k) "juridical person of a Party" means **[1]** :

(i) for the European Union:

(A) a juridical person constituted or organised under the law of the European Union or

of at least one of its Member States and engaged in substantive business

operations **[2]** in the territory of the European Union; and

(B) shipping companies established outside the European Union, and controlled by

natural persons of a Member State, whose vessels are registered in, and fly the

flag of, a Member State;

(ii) for Chile:

(A) a juridical person constituted or organised under the law of Chile and engaged in

substantive business operations in the territory of Chile; and

(B) shipping companies established outside Chile, and controlled by natural persons

of Chile, whose vessels are registered in, and fly the flag of, Chile;

**1** For greater certainty, the shipping companies referred to in this definition are only considered
as juridical persons of a Party with respect to their activities relating to the supply of maritime
transport services.
**2** In line with its notification of the Treaty establishing the European Community to the WTO
(WT/REG39/1), the European Union understands that the concept of "effective and
continuous link" with the economy of a Member State enshrined in Article 54 of the TFEU is
equivalent to the concept of "substantive business operations".

& /en 6

(l) "operation" means the conduct, management, maintenance, use, enjoyment, sale or other form

of disposal of an enterprise by an investor of a Party, in the territory of the other Party;

(m) "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

(n) "service" means any service in any sector except for services supplied in the exercise of

governmental authority.

ARTICLE 10.3

Right to regulate

The Parties affirm the right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public health, social services, education, safety, the

environment, including climate change, public morals, social or consumer protection, privacy and

data protection, or the promotion and protection of cultural diversity.

& /en 7

ARTICLE 10.4

Relation to other chapters

1. In the event of inconsistency between this Chapter and Chapter 18, the latter shall prevail to

the extent of the inconsistency.

2. A requirement of a Party that a service supplier of the other Party posts a bond or other form

of financial security as a condition for the cross-border supply of a service in its territory, does not

in itself make this Chapter applicable to such cross-border supply of that service. This Chapter

applies to measures adopted or maintained by a Party relating to the bond or financial security, if

such bond or financial security constitutes a covered enterprise.

& /en 8

ARTICLE 10.5

Market access

1. In the sectors or subsectors where market access commitments are undertaken, a Party shall

not adopt or maintain, with respect to market access through establishment or operation by investors

of the other Party or by covered enterprises, either on the basis of its entire territory or on the basis

of a territorial sub-division, a measure that:

(a) limits the number of enterprises that may carry out a specific economic activity, whether in

the form of numerical quotas, monopolies, exclusive rights or the requirement of an economic

needs test;

(b) limits the total value of transactions or assets in the form of numerical quotas or the

requirement of an economic needs test;

(c) limits the total number of operations or the total quantity of output expressed in terms of

designated numerical units in the form of quotas or the requirement of an economic needs

test; **[1]**

(d) restricts or requires specific types of legal entity or joint venture through which an investor of

the other Party may carry out an economic activity; or

**1** Subparagraphs (a), (b) and (c) of paragraph 1 do not cover measures taken in order to limit the
production of an agricultural or fishery product.

& /en 9

(e) limits the total number of natural persons that may be employed in a particular sector or that

an enterprise may employ and who are necessary for, and directly related to, the performance

of economic activity in the form of numerical quotas or the requirement of an economic needs

test.

ARTICLE 10.6

National treatment

1. Each Party shall accord to investors of the other Party and to covered enterprises, with respect

to the establishment, treatment no less favourable than the treatment it accords, in like situations **[1]**, to

its own investors and to their enterprises.

2. Each Party shall accord to investors of the other Party and to covered enterprises, with respect

to the operation, treatment no less favourable than the treatment it accords, in like situations **[1]**, to its

own investors and to their enterprises.

**1** For greater certainty, whether treatment is accorded in "like situations" requires a case-bycase, fact-based analysis and depends on the totality of the situations.

& /en 10

3. The treatment accorded by a Party under paragraphs 1 and 2 means:

(a) with respect to a regional or local government of Chile, treatment no less favourable than the

most favourable treatment accorded, in like situations, by that level of government to

investors of Chile and to their enterprises in its territory;

(b) with respect to a government of, or in, a Member State, treatment no less favourable than the

most favourable treatment accorded, in like situations, by that government to investors of that

Member State and to their enterprises in its territory **[1]** .

ARTICLE 10.7

Public procurement

1. Each Party shall ensure that covered enterprises are accorded treatment no less favourable

than that accorded, in like situations, to its own enterprises with respect to any measure regarding

the purchase of goods or services by a procuring entity for governmental purposes.

2. The application of the national treatment obligation provided for in this Article remains

subject to security and general exceptions as set out in Article 21.3.

**1** For greater certainty, the treatment accorded by a government of, or in, a Member State
includes the regional and local level of government, when applicable.

& /en 11

ARTICLE 10.8

Most-favoured-nation treatment

1. Each Party shall accord to investors of the other Party and to covered enterprises, with respect

to the establishment, treatment no less favourable than the treatment it accords, in like situations **[1]**, to

investors of a third country and to their enterprises.

2. Each Party shall accord to investors of the other Party and to covered enterprises with respect

to the operation, treatment no less favourable than the treatment it accords, in like situations **[1]**, to

investors of a third country and to their enterprises.

3. Paragraphs 1 and 2 shall not be construed to oblige a Party to extend to investors of the other

Party or to covered enterprises the benefit of any treatment resulting from measures providing for

the recognition of the standards, including of the standards or criteria for the authorisation, licencing

or certification of a natural person or enterprise to carry out an economic activity, or of prudential

measures.

**1** For greater certainty, whether treatment is accorded in "like situations" requires a case-bycase, fact-based analysis and depends on the totality of the situations.

& /en 12

4. For greater certainty the treatment referred to in paragraphs 1 and 2 does not include

investment dispute resolution procedures or mechanisms provided for in other international

investment treaties and other trade agreements. The substantive provisions in other international

investment treaties or trade agreements do not in themselves constitute "treatment" as referred to in

paragraphs 1 and 2, and thus cannot give rise to a breach of this Article, absent measures adopted or

maintained by a Party. Measures of a Party applied pursuant to such substantive provisions may

constitute "treatment" under this Article and thus give rise to a breach of this Article.

ARTICLE 10.9

Performance requirements

1. A Party shall not, in connection with the establishment or operation of any enterprise of a

Party or of a third country in its territory, impose or enforce any requirement, or enforce any

commitment or undertaking to:

(a) export a given level or percentage of goods or services;

(b) achieve a given level or percentage of domestic content;

(c) purchase, use or accord a preference to goods produced or services provided in its territory, or

purchase goods or services from natural persons or enterprises in its territory;

& /en 13

(d) 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 enterprise;

(e) restrict sales of goods or services in its territory that such enterprise produces or provides by

relating such sales in any way to the volume or value of its exports or foreign exchange

earnings;

(f) transfer technology, a production process or other proprietary knowledge to a natural person

or an enterprise in its territory;

(g) supply exclusively from the territory of that Party the goods it produces or the services it

supplies to a specific regional or world market;

(h) locate the headquarters of that investor for a specific region of the world, which is broader

than the territory of the Party, or the world market in its territory;

(i) hire a given number or percentage of its nationals;

(j) restrict the exportation or sale for export; or

& /en 14

(k) with regard to any licence contract in existence at the time the requirement is imposed or

enforced, or any commitment or undertaking is enforced, or any future licence contract freely

entered into between the investor and a natural or juridical person or any other entity in its

territory, provided that the requirement is imposed or the commitment or undertaking is

enforced, in a manner that constitutes a direct interference with that licence contract by an

exercise of non-judicial governmental authority of a Party, to adopt:

(i) a given rate or amount of royalty below a certain level under a licence contract; or

(ii) a given duration of the term of a licence contract,

2. For greater certainty, subparagraph (k) does not apply when the licence contract is concluded

between the investor and a Party.

3. A Party shall not condition the receipt or continued receipt of an advantage, in connection

with the establishment or the operation of an enterprise in its territory, of a Party or of a third

country, 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 or services provided in its territory,

or to purchase goods or services from natural persons or enterprises in its territory;

& /en 15

(c) to relate in any way the volume or value of imports to the volume or value of exports or to the

amount of foreign exchange inflows associated with such enterprise;

(d) to restrict sales of goods or services in its territory that such enterprise produces or provides

by relating such sales in any way to the volume or value of its exports or foreign exchange

earnings; or

(e) to restrict the exportation or sale for export.

4. Paragraph 3 shall not be construed as preventing a Party from conditioning the receipt or

continued receipt of an advantage, in connection with the establishment or the operation of an

enterprise in its territory by an investor of a Party or a third country, on compliance with a

requirement to locate production, provide a service, train or employ workers, construct or expand

particular facilities, or carry out research and development in its territory.

5. Subparagraphs (f) and (k) of paragraph 1 do not apply if:

(a) a Party authorises use of an intellectual property right in accordance with Article 31 or 31 _bis_

of the TRIPS Agreement or adopts or maintains measures requiring the disclosure of data or

proprietary information that fall within the scope of, and are consistent with, paragraph 3 of

Article 39 of the TRIPS Agreement; or

& /en 16

(b) the requirement is imposed or the commitment or undertaking is enforced by a court,

administrative tribunal, or competition authority in order to remedy a practice determined

after judicial or administrative process to be a violation of the Party's competition law.

6. Subparagraphs (a), (b) and (c) of paragraph 1 and subparagraphs (a) and (b) of paragraph 3 do

not apply to qualification requirements for goods or services with respect to participation in export

promotion and foreign aid programmes.

7. Subparagraphs (a) and (b) of paragraph 3 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.

8. For greater certainty, this Article shall not be construed as requiring a Party to permit a

particular service to be supplied on a cross-border basis where that Party adopts or maintains

restrictions or prohibitions on such provision of services which are consistent with the reservations,

conditions or qualifications specified with respect to a sector, subsector or activity listed in

Annexes 10-A, 10-B and 10-C.

9. This Article is without prejudice to commitments of a Party made under the WTO Agreement.

& /en 17

ARTICLE 10.10

Senior management and boards of directors

A Party shall not require that a covered enterprise appoints natural persons of a particular

nationality as members of boards of directors, or to a senior management position, such as

executives or managers.

ARTICLE 10.11

Non-conforming measures

1. Articles 10.6, 10.8, 10.9 and 10.10 do not apply to:

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

(i) for the European Union:

(A) the European Union, as set out in Appendix 10-A-1;

(B) the central government of a Member State, as set out in Appendix 10-A-1;

& /en 18

(C) a regional level of government of a Member State, as set out in Appendix 10-A-1;

or

(D) a local level of government; and

(ii) for Chile:

(A) the central government, as set out in Appendix 10-A-2;

(B) a regional level of government, as set out in Appendix 10-A-2; or

(C) a local level of government;

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

subparagraph (a); or

(c) a modification to any non-conforming measure referred to in subparagraph (a) of this

paragraph, to the extent that the modification does not decrease the conformity of the

measure, as it existed immediately before the modification, with Article 10.6, 10.8, 10.9 or

10.10.

2. Articles 10.6, 10.8, 10.9 and 10.10 do not apply to measures of a Party with respect to sectors,

sub-sectors or activities, as set out in its schedule to Annex 10-B (future measures).

& /en 19

3. A Party shall not, under any measure adopted after the date of entry into force of this

Agreement and covered by its reservation listed in Annex 10-B, require an investor of the other

Party, by reason of its nationality, to sell or otherwise dispose of a covered enterprise existing at the

time the measure becomes effective.

4. Article 10.5 does not apply to any measure of a Party which is consistent with commitments

set out in Annex 10-C.

5. Articles 10.6 and 10.8 do not apply to any measure of a Party that constitutes an exception to,

or derogation from, Article 3 or 4 of the TRIPS Agreement, as specifically provided for in

Articles 3 to 5 of that Agreement.

6. For greater certainty, Articles 10.6 and 10.8 shall not be construed as preventing a Party from

prescribing information requirements, including for statistical purposes, in connection with the

establishment or operation of investors of the other Party or of covered enterprises, provided that it

does not constitute a means to circumvent that Party's obligations under those Articles.

& /en 20

ARTICLE 10.12

Denial of benefits

A Party may deny the benefits of this Chapter to an investor of the other Party or to a covered

enterprise if the denying Party adopts or maintains measures related to the maintenance of

international peace and security, including the protection of human rights, which:

(a) prohibit transactions with that investor or covered enterprise; or

(b) would be violated or circumvented if the benefits of this Chapter were accorded to that

investor or covered enterprise, including where the measures prohibit transactions with a

natural or juridical person who owns or controls either of them.

ARTICLE 10.13

Sub-Committee on Services and Investment

The Sub-Committee on Services and Investment ("Sub-Committee") is established pursuant to

Article 33.4(1). When addressing matters related to investment, the Sub-Committee shall monitor

and ensure proper implementation of this Chapter and of Annexes 10-A, 10-B and 10-C.

& /en 21

CHAPTER 11

CROSS-BORDER TRADE IN SERVICES

ARTICLE 11.1

Scope

1. This Chapter applies to measures of a Party affecting cross-border trade in services supplied

by service suppliers of the other Party. Such measures include measures that affect:

(a) the production, distribution, marketing, sale and delivery of a service;

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

(c) the access to and use of, in connection with the supply of a service, services which are

required by a Party to be offered to the public generally, including distribution, transport or

telecommunications networks; and

(d) the provision of a bond or other form of financial security, as a condition for the supply of a

service.

& /en 22

2. This Chapter does not apply to:

(a) financial services, as defined in Article 18.2;

(b) audio-visual services;

(c) national maritime cabotage **[1]** ;

(d) domestic and international air services or related services in support of air services **[2]**, whether

scheduled or non-scheduled, and services directly related to the exercise of traffic rights, other

than:

(i) aircraft repair and maintenance services during which an aircraft is withdrawn from

service;

**1** Without prejudice to the scope of activities which may be considered as cabotage under the
relevant national legislation, national maritime cabotage under this Chapter covers
transportation of passengers or goods between a port or point located in Chile or a Member
State and another port or point located in Chile or that same Member State, including on its
continental shelf, as provided in the UN Convention on the Law of the Sea, and traffic
originating and terminating in the same port or point located in Chile or a Member State.
**2** For greater certainty, air services or related services in support of air services include the
following services: air transportation; services provided by using an aircraft whose primary
purpose is not the transportation of goods or passengers, such as aerial fire-fighting flight
training, sightseeing, spraying, surveying, mapping, photography, parachute jumping, glider
towing, helicopter-lift for logging and construction, and other airborne agricultural, industrial
and inspection services; the rental of aircraft with crew; and airport operation services.

& /en 23

(ii) selling and marketing of air transport services;

(iii) computer reservation system (CRS) services; and

(iv) ground handling services;

(e) public procurement; and

(f) subsidies or grants provided by a Party or a state-owned enterprise including government

supported loans, guarantees and insurance.

ARTICLE 11.2

Definitions

For the purposes of this Chapter and Annexes 10-A, 10-B and 10-C:

(a) "aircraft repair and maintenance services" means such activities when undertaken on an

aircraft or a part thereof while it is withdrawn from service and do not include so-called line

maintenance;

& /en 24

(b) "computer reservation system (CRS) services" means services provided by computerised

systems that contain information about air carriers' schedules, availability, fares and fare

rules, through which reservations can be made or tickets may be issued;

(c) "cross-border trade in services" or "cross-border supply of services" means the supply of a

service:

(i) from the territory of a Party into the territory of the other Party; or

(ii) in the territory of a Party, to the service consumer of the other Party;

(d) "enterprise" means a juridical person, branch or representative office set up through

establishment;

(e) "ground handling services" means the supply at an airport, on a fee or contract basis, of the

following services: airline representation, administration and supervision; passenger handling;

baggage handling; ramp services; catering, except the preparation of the food; air cargo and

mail handling; fuelling of an aircraft; aircraft servicing and cleaning; surface transport; and

flight operation, crew administration and flight planning; ground handling services do not

include: self-handling; security; line maintenance; aircraft repair and maintenance; or

management or operation of essential centralised airport infrastructure, such as de-icing

facilities, fuel distribution systems, baggage handling systems and fixed intra-airport transport

systems;

& /en 25

(f) "juridical person of a Party" means **[1]** :

(i) for the European Union:

(A) a juridical person constituted or organised under the law of the European Union or

of at least one of its Member States and engaged in substantive business

operations **[2]** in the territory of the European Union; and

(B) shipping companies established outside the European Union, and controlled by

natural persons of a Member State, whose vessels are registered in, and fly the

flag of, a Member State;

(ii) for Chile:

(A) a juridical person constituted or organised under the law of Chile and engaged in

substantive business operations in the territory of Chile; and

**1** For greater certainty, the shipping companies referred to in this definition are only considered
as juridical persons of a Party with respect to their activities relating to the supply of maritime
transport services.
**2** In line with its notification of the Treaty establishing the European Community to the WTO
(WT/REG39/1), the European Union understands that the concept of "effective and
continuous link" with the economy of a Member State enshrined in Article 54 of the Treaty on
the Functioning of the European Union is equivalent to the concept of "substantive business
operations".

& /en 26

(B) shipping companies established outside Chile, and controlled by natural persons

of Chile, whose vessels are registered in, and fly the flag of, Chile;

(g) "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 or the applicable conditions;

(h) "service" means any service in any sector except services supplied in the exercise of

governmental authority;

(i) "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;

and

(j) "service supplier of a Party" means any natural or juridical person of a Party that seeks to

supply or supplies a service.

& /en 27

ARTICLE 11.3

Right to regulate

The Parties reaffirm the right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public health, social services, education, safety, the

environment, including climate change, public morals, social or consumer protection, privacy and

data protection, or the promotion and protection of cultural diversity.

ARTICLE 11.4

National treatment

1. Each Party shall accord to services and service suppliers of the other Party treatment no less

favourable than the treatment it accords, in like situations, to its own services and service suppliers.

2. The treatment accorded by a Party under paragraph 1 means:

(a) with respect to a regional or local government of Chile, treatment no less favourable than the

most favourable treatment accorded, in like situations, by that level of government to its own

services and service suppliers;

& /en 28

(b) with respect to a government of, or in, a Member State, treatment no less favourable than the

most favourable treatment accorded, in like situations, by that government to its own services

and service suppliers.

3. A Party may meet the requirement of paragraph 1 by according to services and service

suppliers of the other Party either formally identical treatment or formally different treatment to that

it accords to its own services and service suppliers.

4. Formally identical or formally different treatment shall be considered to be less favourable if

it modifies the conditions of competition in favour of services or service suppliers of a Party

compared to service suppliers of the other Party.

5. Nothing in this Article shall be construed to require a Party to compensate for inherent

competitive disadvantages which result from the foreign character of the relevant services or

services suppliers.

ARTICLE 11. 5

Most-favoured-nation treatment

1. Each Party shall accord to services and service suppliers of the other Party treatment no less

favourable than the treatment it accords, in like situations, to services and service suppliers of a

third country.

& /en 29

2. Paragraph 1 shall not be construed to oblige a Party to extend to services and service suppliers

of the other Party the benefit of any treatment resulting from measures providing for the recognition

of the standards, including of the standards or criteria for the authorisation, licencing or certification

of a natural person or enterprise to carry out an economic activity, or of prudential measures.

3. For greater certainty the treatment referred to in paragraph 1 does not include dispute

resolution procedures or mechanisms provided for in other international treaties or trade

agreements. The substantive provisions in other international treaties or trade agreements do not in

themselves constitute treatment referred to in paragraph 1, and thus cannot give rise to a breach of

this Article, absent measures adopted or maintained by a Party. Measures of a Party applied

pursuant to such substantive provisions may constitute "treatment" under this Article and thus give

rise to a breach of this Article.

ARTICLE 11.6

Local presence

A Party shall not require a service supplier of the other Party to establish or maintain an enterprise

or to be resident in its territory as a condition for the cross-border supply of a service.

& /en 30

ARTICLE 11.7

Market access

In the sectors or subsectors where market access commitments are undertaken, a Party shall not

adopt or maintain, either on the basis of its entire territory or on the basis of a regional subdivision,

measures that:

(a) impose limitations on:

(i) the number of service suppliers, whether in the form of numerical quotas, monopolies,

exclusive service suppliers or the requirement of an economic needs test;

(ii) the total value of service transactions or assets in the form of numerical quotas or the

requirement of an economic needs test;

(iii) the total number of service operations or the total quantity of services output, expressed

in terms of designated numerical units, in the form of quotas or the requirement of an

economic needs test **[1]** ; or

**1** This subparagraph does not cover the measures of a Party that limit inputs for the supply of
services.

& /en 31

(iv) the total number of natural persons that may be employed in a particular service sector

or that a service supplier may employ and who are necessary for, and directly related to,

the supply of a specific service in the form of numerical quotas or the requirement of an

economic needs test; or

(b) restrict or require specific types of legal entity or joint venture through which a service

supplier may supply a service.

ARTICLE 11.8

Non-conforming measures

1. Articles 11.4, 11.5 and 11.6 do not apply to:

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

(i) for the European Union:

(A) the European Union, as set out in Appendix 10-A-1;

(B) the central government of a Member State, as set out in Appendix 10-A-1;

& /en 32

(C) a regional level of government of a Member State, as set out in Appendix 10-A-1;

or

(D) a local level of government; and

(ii) for Chile:

(A) the central government, as set out in Appendix 10-A-2;

(B) a regional level of government, as set out in Appendix 10-A-2; or

(C) a local level of government;

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

subparagraph (a); or

(c) an amendment to any non-conforming measure referred to in subparagraph (a) of this

paragraph, to the extent that the amendment does not decrease the conformity of the measure,

as it existed immediately before the amendment, with Articles 11.4, 11.5 and 11.6.

2. Articles 11.4, 11.5 and 11.6 do not apply to any measure of a Party with respect to sectors,

sub-sectors or activities, as set out in Annex 10-B.

& /en 33

3. Article 11.7 does not apply to any measure of a Party which is consistent with commitments

set out in Annex 10-C.

ARTICLE 11.9

Denial of benefits

A Party may deny the benefits of this Chapter to a service supplier of the other Party if the denying

Party adopts or maintains measures related to the maintenance of international peace and security,

including the protection of human rights, which:

(a) prohibit transactions with that service supplier, or with a person who owns or controls either

of them; or

(b) would be violated or circumvented if the benefits of this Chapter were accorded to that service

supplier.

& /en 34

ARTICLE 11.10

Sub-Committee on Services and Investment

The Sub-Committee on Services and Investment ("Sub-Committee") is established pursuant to

Article 33.4(1). When addressing matters related to services, the Sub-Committee shall monitor and

ensure proper implementation of Chapters 11, 12, 13, 14, 15, 16, 17 and 19 and Annexes 10-A, 10

B, 10-C, 12-A, 12-B, 12-C,14-A and 14-B.

CHAPTER 12

TEMPORARY PRESENCE OF NATURAL PERSONS FOR BUSINESS PURPOSES

ARTICLE 12.1

Scope

1. This Chapter applies to measures of a Party concerning the performance of economic

activities through the entry and temporary stay in its territory of natural persons of the other Party

who are business visitors for establishment purposes, investors, intra-corporate transferees,

short-term business visitors, contractual service suppliers and independent professionals.

& /en 35

2. This Chapter does not apply to the sectors referred to in subparagraphs (b), (c) and (d) of

Article 11.1(2).

3. This Chapter does not apply to measures of a Party affecting natural persons of the other Party

seeking access to its employment market, or to measures regarding citizenship, nationality,

residence or employment on a permanent basis.

4. Nothing in this Agreement shall prevent a Party from applying measures regulating the entry

of natural persons of the other Party into, or their temporary stay in, its territory, including measures

necessary to protect the integrity of, and to ensure the orderly movement of natural persons across,

its border, provided that those measures are not applied in a manner as to nullify or impair the

benefits accruing to the other Party under this Agreement.

5. The sole fact that a Party requires persons of the other Party to obtain a visa shall not be

regarded as nullifying or impairing the benefits accruing to the other Party under this Agreement.

6. To the extent that commitments are not undertaken in this Chapter, all requirements provided

for in the law of a Party regarding the entry and temporary stay of natural persons shall continue to

apply, including laws and regulations concerning the period of stay.

7. Notwithstanding this Chapter, all requirements provided for in the law of a Party regarding

work and social security measures shall continue to apply, including laws and regulations

concerning minimum wages and collective wage agreements.

& /en 36

8. Commitments under this Chapter on the entry and temporary stay of natural persons for

business purposes do not apply in cases where the intent or effect of the entry and temporary stay is

to interfere with or otherwise affect the outcome of any labour or management dispute or

negotiation, or the employment of any natural person who is involved in that dispute.

ARTICLE 12.2

Definitions

1. The definitions in Articles 10.2 and 11.2 apply to this Chapter and to Annexes 12-A, 12-B

and 12-C, with the exception of the definition of investor in subparagraph (j) of Article 10.2 (1).

2. For the purposes of this Chapter and Annexes 12-A, 12-B and 12-C:

(a) “business sellers” means short-term business visitors who:

(i) are representatives of a services or goods supplier of a Party for the purpose of

negotiating the sale of services or goods, or entering into agreements to sell services or

goods for that supplier, including **:** attending meetings or conferences; engaging in

consultations with business colleagues, taking orders or negotiating contracts with an

enterprise located in the territory of the other Party;

(ii) are not engaged in the supply of a service in the framework of a contract

concluded between an enterprise that has no commercial presence in the territory of the

Party where the short-term business visitors are staying temporarily, and a consumer in

that territory; and

(iii) are not commission agents; and

(b) "business visitors for establishment purposes" means natural persons working in a senior

position within a juridical person of a Party who are responsible for establishing an enterprise

of such juridical person in the territory of the other Party, who do not offer or provide services

& /en 37

or engage in any other economic activity than required for establishment purposes and who do

not receive remuneration from a source located within the other Party;

(c) "contractual services suppliers" means natural persons, employed by a juridical person of a

Party which is not itself established in the territory of the other Party and is not an agency for

placement and supply services of personnel or acting through such an agency and which has

concluded a _bona fide_ contract with a final consumer in the other Party to supply services in

the other Party, requiring the presence on a temporary basis of its employees in that other

Party, in order to fulfil the contract to supply services **[1]** ;

(d) "independent professionals" means natural persons engaged in the supply of a service and

established as self-employed in the territory of a Party, but not in the territory of the other

Party, who have concluded a _bona fide_ contract, other than through an agency for placement

and supply services of personnel, with a final consumer to supply services in the other Party,

requiring their presence on a temporary basis in that other Party **[1]** ;

(e) “installers and maintainers” means short-term business visitors possessing specialised

knowledge essential to a seller's or lessor's contractual obligation, performing services or

training workers to perform services, pursuant to a warranty or other service contract

incidental to the sale or lease of commercial or industrial equipment or machinery, including

computer and related services, purchased or leased from an enterprise located outside the

territory of the Party into which entry and temporary stay is sought, throughout the duration of

the warranty or service contract.

(f) "intra-corporate transferees" means natural persons who have been employed by, or partners

in, a juridical person of a Party for at least one year, who are temporarily transferred to an

enterprise of that juridical person in the territory of the other Party, and who belong to one of

the following categories:

(i) managers;

**1** The service contract referred to under subparagraphs (b) and (c) shall comply with the
requirements of the law of the Party where the contract is executed.

& /en 38

(ii) specialists;

(iii) trainee employees;

(g) “investor” means a natural person who establishes in the territory of the other Party an

enterprise to which that natural person or the juridical person employing that natural person

has committed, or is in the process of committing, a substantial amount of capital, and who

develops or administers the operation of that enterprise in a capacity that is supervisory or

executive;

(h) "managers" means natural persons working in a senior position within a juridical person of a

Party, who primarily direct the management of the enterprise in the territory of the other

Party **[1]**, receiving general supervision or direction principally from higher level executives, the

board of directors or from stockholders of the business or their equivalent and whose

responsibilities include:

(i) directing the enterprise or a department or subdivision thereof;

(ii) supervising and controlling the work of other supervisory, professional or managerial

employees; and

(iii) having the personal authority to recruit and dismiss or to recommend recruitment,

dismissal or other personnel-related actions;

(i) “short-term business visitors” means natural persons who are seeking entry and temporary

stay in the territory of the other Party, who do not engage in making direct sales to the general

public, do not receive remuneration from a source located within the other Party, and belong

to one of the following categories:

(i) business sellers;

**1** For greater certainty, this definition does not exclude managers who, while not directly
performing tasks concerning the actual supply of the services, perform tasks, in the course of
executing their duties as described in this definition, that are necessary for the provision of

& /en 39

(ii) installers and maintainers;

(j) "specialists" means natural persons working within a juridical person of a Party possessing

specialised knowledge essential to the areas of activity, techniques or management of the

enterprise; in assessing such knowledge, account shall be taken not only of knowledge

specific to the enterprise, but also of whether the person has a high level of qualification,

including adequate professional experience, referring to a type of work or activity requiring

specific technical knowledge, including possible membership of an accredited profession;

(k) "trainee employees" means natural persons who possess a university degree and are

temporarily transferred for career development purposes or to obtain training in business

techniques or methods **[1]** .

ARTICLE 12.3

Intra-corporate transferees, business visitors for establishment purposes and investors

1. Subject to the relevant conditions and qualifications specified in Annex 12-A, each Party:

(a) shall allow the entry and temporary stay of intra-corporate transferees, business visitors for

establishment purposes and investors of the other Party;

(b) shall allow the employment in its territory of intra-corporate transferees of the other Party;

the services.
**1** The recipient enterprise may be required to submit a training programme covering the
duration of the stay for prior approval, demonstrating that the purpose of the stay is for
training. For AT, CZ, DE, FR, ES, HU and LT, training must be link[ed] to the university
degree which has been obtained.

& /en 40

(c) shall not maintain or adopt limitations in the form of numerical quotas or economic needs

tests on the total number of natural persons that, in a specific sector, are allowed entry as

business visitors for establishment purposes or investors, or that may be employed as intra

corporate transferees, either on the basis of a territorial subdivision or on the basis of its entire

territory; and

(d) shall accord to intra-corporate transferees, business visitors for establishment purposes and

investors of the other Party, with regard to their temporary stay in its territory, treatment no

less favourable than that it accords, in like situations, to its own natural persons.

2. The permissible length of stay shall be:

(a) for Chile, a period of up to two years which may be extended, without a requirement to apply

for permanent residence, provided that the conditions on which the stay is based remain

present; and

(b) for the European Union, a period of up to three years for managers and specialists; up to one

year for trainee employees and investors; and up to 90 days within any six-month period for

business visitors for establishment purposes.

& /en 41

ARTICLE 12.4

Short-term business visitors

1. Subject to the scope exclusions set out in Article 10.1(2) and subject to the relevant conditions

and qualifications specified in Annex 12-A, a Party shall allow entry and temporary stay of short

term business visitors without the requirement of a work permit, economic needs test or other prior

approval procedures of similar intent.

2. If short-term business visitors of a Party are engaged in the supply of a service to a consumer

in the territory of the Party where they are staying temporarily, that Party shall accord to them, with

regard to the supply of that service, treatment no less favourable than that it accords, in like

situations, to its own service suppliers.

3. The permissible length of stay shall be a period of up to 90 days in any 12-month period.

& /en 42

ARTICLE 12.5

Contractual services suppliers and independent professionals

1. Each Party shall allow the entry and temporary stay of contractual services suppliers of the

other Party in its territory, in the sectors, subsectors and activities specified in Annex 12-B, subject

to the relevant conditions and qualifications specified therein, and provided that:

(a) the natural persons are engaged in the supply of a service as employees of a juridical person,

which has obtained a service contract not exceeding 12 months;

(b) the natural persons entering the other Party have been engaged as employees of the juridical

person referred to in subparagraph (a) for at least one year immediately preceding the date of

submission of an application for entry into the other Party and possess, on the date of

application for entry, at least three years of professional experience, obtained after having

reached the age of majority, in the sector of activity subject of the contract;

(c) the natural persons entering the other Party shall possess:

(i) a university degree or a qualification demonstrating knowledge of an equivalent level **[1]** ;

and

**1** If the degree or qualification has not been obtained in the Party where the service is supplied,
that Party may evaluate whether this is equivalent to a university degree required in its
territory.

& /en 43

(ii) professional qualifications, if required to exercise an activity pursuant to the laws and

regulations of the Party where the service is supplied;

(d) the natural person does not receive remuneration for the provision of services in the territory

of the other Party, other than the remuneration paid by the juridical person employing the

natural person; and

(e) access accorded pursuant to this Article relates only to the service activity which is the subject

of the contract and does not confer entitlement to use the professional title of the Party where

the service is provided.

2. Each Party shall allow the entry and temporary stay of independent professionals of the other

Party in its territory in the sectors, subsectors and activities specified in Annex 12-B, subject to the

relevant conditions and qualifications specified therein, and provided that:

(a) the contract concluded does not exceed a period of 12 months;

(b) the natural persons possess, on the date of application for entry and temporary stay, at least

six years of professional experience in the sector of activity which is the subject of the

contract.

& /en 44

(c) the natural persons entering into the territory of the other Party possess:

(i) a university degree or a qualification demonstrating knowledge of an equivalent level **[1]** ;

and

(ii) professional qualifications, if these are required to exercise an activity pursuant to the

laws and regulations of the Party where the service is supplied;

(d) access accorded pursuant to this Article relates only to the service activity which is the subject

of the contract; it does not confer entitlement to use the professional title of the Party where

the service is provided.

3. A Party shall not adopt or maintain limitations on the total number of contractual services

suppliers or independent professionals of the other Party who are allowed for entry and temporary

stay, in the form of numerical quotas or an economic needs test.

4. A Party shall accord to contractual services suppliers and independent professionals of the

other Party, with regard to the supply of their services in its territory, treatment no less favourable

than that it accords, in like situations, to its own service suppliers.

**1** If the degree or qualification has not been obtained in the Party where the service is supplied,
that Party may evaluate whether this is equivalent to a university degree required in its
territory.

& /en 45

5. The permissible length of stay shall be:

(a) for the European Union, a cumulative period of not more than six months in any 12-month

period or for the duration of the contract, whichever is less; and

(b) for Chile, a period up to one year which may be extended for subsequent periods, provided

that the conditions on which the stay is based remain in effect.

ARTICLE 12.6

Non-conforming measures

To the extent that the relevant measure affects the entry or temporary stay of natural persons for

business purposes, subparagraphs (c) and (d) of Article 12.3(1) and Article 12.5(3) and (4) do not

apply to:

(a) any existing non-conforming measure of a Party at the level of:

(i) for the European Union:

(A) the European Union, as specified in Appendix 10-A-1;

& /en 46

(B) the central government of a Member State, as specified in Appendix 10-A-1;

(C) a regional government of a Member State, as specified in Appendix 10-A-1; or

(D) a local government, other than that referred to in subparagraph (C); and

(ii) for Chile:

(A) the central government, as specified in Appendix 10-A-2;

(B) a regional subdivision, as specified in Appendix 10-A-2; or

(C) a local government;

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

subparagraph (a);

(c) a modification of any non-conforming measure referred to in subparagraphs (a) and (b) of this

Article to the extent that it does not decrease the conformity of the measure as it existed

immediately before the modification, with subparagraphs (c) and (d) of Article 12.3(1) and

Article 12.5(3) and (4); or

& /en 47

(d) any measure of a Party consistent with a condition or qualification specified in Annex 10-B.

ARTICLE 12.7

Transparency

1. A Party shall make publicly available information relating to the entry and temporary

stay of natural persons of the other Party, referred to in Article 12.1(1).

2. The information referred to in paragraph 1 of this Article shall include, if applicable, the

following information:

(a) categories of visa, permits or any similar type of authorisation regarding the entry and

temporary stay;

(b) documentation required and conditions to be met;

(c) method of filing an application and options on where to file, such as consular offices or

online;

(d) application fees and an indicative timeframe of the processing of an application;

& /en 48

(e) the maximum length of stay under each type of authorisation referred to in subparagraph (a)

of this paragraph;

(f) conditions for any available extension or renewal;

(g) rules regarding accompanying dependents;

(h) available review or appeal procedures; and

(i) relevant laws of general application pertaining to the entry and temporary stay of natural

persons.

3. With respect to the information referred to in paragraphs 1 and 2 of this Article, a Party shall

endeavour to promptly inform the other Party of the introduction of any new requirements or

procedures, or of any changes in requirements or procedures, which affect the effective application

for the grant of entry into, temporary stay in and, if applicable, permission to work in the former

Party.

ARTICLE 12.8

Non-application of dispute settlement

Chapter 31 does not apply regarding a refusal to grant entry and temporary stay unless the matter

involves a pattern of practice.

& /en 49

CHAPTER 13

DOMESTIC REGULATION

ARTICLE 13.1

Scope and definitions

1. This Chapter applies to measures by the Parties relating to licensing requirements and

procedures, qualification requirements and procedures, and technical standards **[1]** that affect:

(a) cross-border supply of services;

(b) the supply of a service or pursuit of any other economic activity through the establishment of

an enterprise or operation of a covered investment; or

(c) the supply of a service through the temporary stay of categories of natural persons of a Party

in the territory of the other Party, as defined in Article 12.1.

2. This Chapter only applies to sectors for which a Party has undertaken specific commitments

under Chapters 10, 11 and 12 and to the extent that these specific commitments apply.

**1** For greater certainty, as far as measures relating to technical standards are concerned, this
Chapter applies only to those measures affecting trade in services.

& /en 50

3. Notwithstanding paragraph 2, this Chapter does not apply to licensing requirements and

procedures, qualification requirements and procedures, and technical standards relating to:

(a) manufacturing of basic chemicals and other chemical products;

(b) manufacturing of rubber products;

(c) manufacturing of plastics products;

(d) manufacturing of electric motors, generators and transformers;

(e) manufacturing of accumulators, primary cells and primary batteries; and

(f) recycling of metal and non-metal waste and scrap.

4. Notwithstanding paragraph 1, this Chapter does not apply to measures of a Party to the extent

that they constitute limitations subject to scheduling pursuant to Articles 10.5, 10.6, 10.11(1),

10.11(2), 11.4, 11.6, 11.7, 11.8(1), 11.8(2), 12.3(1), 12.4(2), 12.5(1) and 12.6.

& /en 51

5. For the purposes of this Chapter:

(a) "authorisation" means a permission to carry out any of the activities referred to in

subparagraphs (a), (b) and (c) of paragraph 1 resulting from a procedure to which an applicant

must adhere in order to demonstrate compliance with licencing requirements, qualification

requirements or technical standards;

(b) "competent authority" means a central, regional or local government or authority, or a non

governmental body in the exercise of powers delegated by central, regional or local

governments or authorities, which is empowered to take a decision concerning the

authorisation to supply a service, including through establishment of an enterprise, or

concerning the authorisation to pursue any other economic activity;

(c) "licensing procedures" means administrative or procedural rules to which a natural or a

juridical person seeking an authorisation, including an amendment or renewal of an

authorisation, must adhere in order to demonstrate compliance with licencing requirements;

(d) "licensing requirements" means substantive requirements, other than qualification

requirements, with which a natural or a juridical person is required to comply in order to

obtain, amend or renew an authorisation;

& /en 52

(e) "qualification procedures" means administrative or procedural rules to which a natural person

must adhere in order to demonstrate compliance with qualification requirements, for the

purposes of obtaining an authorisation; and

(f) "qualification requirements" means substantive requirements relating to the competence of a

natural person to supply a service, and with which a natural person is required to comply in

order to obtain, amend or renew an authorisation.

6. For the purposes of this Chapter, the definitions set out in Articles 10.2 and 11.2 also apply.

ARTICLE 13.2

Conditions for licensing and qualification

1. Each Party shall ensure that measures relating to licencing requirements, licencing

procedures, and qualification requirements and qualification procedures are based on criteria which

preclude the competent authorities from exercising their power of assessment in an arbitrary

manner.

2. The criteria referred to in paragraph 1 shall be:

(a) clear;

& /en 53

(b) objective and transparent **[1]** ; and

(c) accessible to the public and interested persons in advance.

3. When adopting technical standards, each Party shall encourage its competent authorities to

adopt technical standards developed through open and transparent processes, and shall encourage

bodies, including relevant international organisations **[2]**, designated to develop technical standards to

use open and transparent processes.

4. An authorisation shall, subject to availability, be granted as soon as it is established, in the

light of an appropriate examination, that the conditions for obtaining an authorisation have been

met.

5. Where the number of licences available for a given activity is limited because of the scarcity

of available natural resources or technical capacity, each Party shall apply a selection procedure to

potential candidates which provides full guarantees of impartiality and transparency, including, in

particular, adequate publicity about the launch, conduct and completion of the procedure.

**1** For greater certainty, these criteria may include, _inter alia_, competence and the ability to
supply a service or pursuit any other economic activity, including to do so in a manner
consistent with a Party's regulatory requirements, such as health and environmental
requirements. Competent authorities may assess the weight to be given to each criterion.
**2** The term "relevant international organisations" refers to international bodies whose
membership is open to the relevant bodies of both Parties.

& /en 54

6. Subject to paragraph 5, in establishing the rules for the selection procedure, each Party may

take into account legitimate policy objectives, including considerations of health, safety, the

protection of the environment and the preservation of cultural heritage.

ARTICLE 13.3

Licensing and qualification procedures

1. Licensing and qualification procedures and formalities shall be clear, made public in advance,

and shall not in themselves constitute a restriction on the supply of a service or the pursuit of any

other economic activity. Each Party shall endeavour to make such procedures and formalities as

simple as possible and shall not unduly complicate or delay the supply of the service or the pursuit

of any other economic activity.

2. If authorisation is required, each Party shall promptly publish or otherwise make publicly

available the information necessary for the applicant to comply with the requirements and

procedures for obtaining, maintaining, amending and renewing such authorisation. Such

information shall include at least the following, to the extent it exists:

(a) the requirements and procedures;

(b) contact information of relevant competent authorities;

& /en 55

(c) fees;

(d) technical standards;

(e) procedures for appeal or review of decisions concerning applications;

(f) procedures for monitoring or enforcing compliance with the terms and conditions of licenses

and qualifications;

(g) opportunities for public involvement, such as through hearings or comments; and

(h) indicative timeframes for processing an application.

3. Any authorisation fee **[1]** which the applicants may incur shall be reasonable, transparent, and

not, in itself, restrict the supply of the relevant service or the pursuit of the relevant economic

activity.

**1** Authorisation fees do not include fees for the use of natural resources, payments for auction,
tendering or other non-discriminatory means of awarding concessions, or mandated
contributions to universal service provision.

& /en 56

4. Each Party shall ensure that the procedures used by, and the decisions of, the competent

authority in the authorisation process are impartial with respect to all applicants. The competent

authority shall reach its decision in an independent manner and not be accountable to any person

supplying the services or carrying out the economic activities for which the authorisation is

required.

5. If specific time limits for applications apply, an applicant shall be allowed a reasonable period

for the submission of an application. If possible, the competent authority should accept applications

in electronic format under the same conditions of authenticity as paper submissions.

6. The competent authority shall start processing an application without undue delay after

submission. Each Party shall endeavour to establish the indicative timeframe for the processing of

an application and shall, at the request of the applicant and without undue delay, ensure that the

competent authority provides information concerning the status of the application. Each Party shall

ensure that the processing of an application, including reaching a final decision, is completed within

a reasonable period of time after the date of submission of a complete application.

7. The competent authority shall, within a reasonable period of time after the receipt of an

application which it considers incomplete, inform the applicant, identify, to the extent feasible, the

additional information required to complete the application, and provide the applicant with the

opportunity to correct deficiencies.

& /en 57

8. The competent authority shall accept copies of documents that are authenticated in

accordance with the Party's law, instead of original documents, unless the competent authority

requires original documents to protect the integrity of the authorisation process.

9. If an application is rejected by the competent authority, the applicant shall be informed, either

at its own request or upon the competent authority's initiative, in writing and without undue delay.

In principle, the applicant shall be informed of the reasons for rejection of the application and of the

timeframe for an appeal against this decision must be submitted. An applicant shall be permitted,

within reasonable time limits, to resubmit an application.

10. Each Party shall ensure that an authorisation, once granted, enters into effect without undue

delay and in accordance with the terms and conditions specified therein.

11. Where examinations are required for an authorisation, the competent authority shall ensure

such examinations at reasonably frequent intervals and provide a reasonable period of time to

enable applicants to request to take the examination.

& /en 58

ARTICLE 13.4

Review

If the results of the negotiations related to paragraph 4 of Article V of GATS enter into force, the

Parties shall jointly review such results. Where the joint review assesses that the incorporation of

such results into this Agreement would improve the disciplines contained herein, the Parties shall

jointly determine whether to incorporate such results into this Agreement.

ARTICLE 13.5

Administration of measures of general application

Each Party shall ensure that all measures of general application affecting trade in services are

administered in a reasonable, objective and impartial manner.

& /en 59

ARTICLE 13.6

Appeal of administrative decisions

Each Party shall maintain or institute judicial, arbitral or administrative tribunals or procedures

which provide, at the request of an affected investor or service supplier, a prompt review of, and

where justified, appropriate remedies for administrative decisions affecting establishment, cross

border supply of services or temporary presence of natural persons for business purposes. If such

procedures are not independent of the agency entrusted with the administrative decision concerned,

each Party shall ensure that the procedures provide for an objective and impartial review.

& /en 60

CHAPTER 14

MUTUAL RECOGNITION OF PROFESSIONAL QUALIFICATIONS

ARTICLE 14.1

Mutual recognition of professional qualifications

1. Nothing in this Chapter shall prevent a Party from requiring that natural persons possess the

necessary qualifications and professional experience specified in the territory where the activity is

performed, for the sector of activity concerned.

2. Each Party shall encourage relevant professional bodies or authorities for the sector of activity

concerned, in its territory, to develop and provide joint recommendations on mutual recognition of

professional qualifications to the Sub-Committee on Services and Investment referred to in

Article 11.10. Such joint recommendations shall be supported by an evidence-based assessment of:

(a) the economic value of an envisaged arrangement on mutual recognition of professional

qualifications ("mutual recognition arrangement"); and

& /en 61

(b) the compatibility of the respective regimes, that is, the extent to which the requirements

applied by each Party for the authorisation, licensing, operation and certification are

compatible.

3. Upon receipt of a joint recommendation, the Sub-Committee on Services and Investment shall

review its consistency with this Agreement within a reasonable period of time. The Sub-Committee

may, following such review, develop and recommend to the Trade Council to adopt, pursuant to

subparagraph (a) of Article 33.1(6), a decision on mutual recognition arrangement in order to

determine or amend mutual recognition arrangements set out in Annex 14-B **[1]** .

4. An arrangement as referred to in paragraph 3 of this Article shall provide for the conditions

for recognition of professional qualifications acquired in the European Union and professional

qualifications acquired in Chile relating to an activity covered by Chapters 10, 11, 12 and 19.

5. The guidelines for arrangements on the recognition of professional qualifications set out in

Annex 14-A shall be taken into account in the development of the joint recommendations referred

to in paragraph 2 and by the Trade Council when assessing whether to adopt the arrangement

referred to in paragraph 3.

**1** For greater certainty, mutual recognition arrangements shall not lead to the automatic
recognition of professional qualifications but shall set, in the mutual interest of the Parties, the
conditions for the competent authorities granting recognition of such qualifications.

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CHAPTER 15

DELIVERY SERVICES

ARTICLE 15.1

Scope and definitions

1. This Chapter sets out the principles of the regulatory framework for all delivery services.

2. For the purposes of this Chapter:

(a) "delivery services" means postal and courier or express services, including activities of the

collection, sorting, transport, and delivery of postal items;

(b) "express delivery services" means the collection, sorting, transport and delivery of postal

items at accelerated speed and reliability, and may include value added elements such as

collection from point of origin, personal delivery to the addressee, tracing, possibility of

changing the destination and addressee in transit or confirmation of receipt;

& /en 63

(c) "express mail services" means international express delivery services supplied through the

Express Mail Service Cooperative (EMS Cooperative), which is the voluntary association of

designated postal operators under the Universal Postal Union (UPU);

(d) "licence" means an authorisation, granted to an individual supplier of delivery services by a

competent regulatory authority, setting out procedures, obligations and requirements specific

to the delivery services sector;

(e) "postal item" means an item up to 31,5 kg addressed in the final form in which it is to be

carried by any type of supplier of delivery services, whether public or private, and may

include items such as a letter, parcel, newspaper or catalogue;

(f) "postal monopoly" means the exclusive right to supply specified delivery services in the

territory of a Party pursuant to pursuant to laws of that Party; and

(g) "universal service" means the permanent supply of a delivery service of a specified quality at

all points in the territory of a Party at affordable prices for all users.

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ARTICLE 15.2

Universal service

1. Each Party has the right to define the kind of universal service obligation it wishes to

maintain. Each Party that maintains a universal service obligation shall administer it in a

transparent, non-discriminatory and neutral manner with regard to all suppliers of delivery services

subject to the obligation.

2. If a Party requires inbound express mail services to be supplied on a universal service basis, it

shall not accord preferential treatment to those services over other international express delivery

services.

ARTICLE 15.3

Prevention of market distortive practices

Each Party shall ensure that a supplier of delivery services that is subject to a universal service

obligation or a postal monopoly does not engage in market distortive practices such as:

(a) using revenues derived from the supply of a service subject to a universal service obligation

or a postal monopoly to cross-subsidise the supply of an express delivery service or any non

universal delivery service; or

& /en 65

(b) unjustifiably differentiating among customers such as businesses, large volume mailers or

consolidators with respect to tariffs or other terms and conditions for the supply of a service

subject to a universal service obligation or a postal monopoly.

ARTICLE 15.4

Licences

1. If a Party requires a licence for the provision of delivery services, it shall make publicly

available:

(a) all licensing requirements and the period of time normally required to reach a decision

concerning an application for a licence; and

(b) the terms and conditions of the licence.

2. The procedures, obligations and requirements of a license shall be transparent, non

discriminatory and based on objective criteria.

3. If an application for a licence is rejected by the competent regulatory authority, it shall inform

the applicant of the reasons for the rejection in writing. Each Party shall establish or maintain an

appeal procedure through a body that is independent from the parties involved in the licence

application procedure. This body may be a tribunal or court.

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ARTICLE 15.5

Independence of the regulatory authorities

1. Each Party shall ensure that any authority responsible for regulating delivery services is not

accountable to any supplier of delivery services, and that the decisions and procedures that the

regulatory authority adopts are impartial, non-discriminatory and transparent with respect to all

market participants in its territory.

2. Each Party shall ensure that the authority responsible for regulating delivery services

performs its tasks in a timely manner and has adequate financial and human resources.

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CHAPTER 16

TELECOMMUNICATIONS SERVICES

ARTICLE 16.1

Scope

1. This Chapter sets out principles of the regulatory framework for the provision of

telecommunications networks and services, liberalised pursuant to Chapters 10 and 11.

2. This Chapter does not apply to services providing, or exercising editorial control over, content

transmitted using telecommunications networks and services.

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ARTICLE 16.2

Definitions

For the purposes of this Chapter:

(a) "associated facilities" means services, physical infrastructures and other facilities associated

with a telecommunications network or service, which enable or support the provision of

services through that network or service or have the potential to do so, and may include

buildings or entries to buildings, building wiring, antennas, towers and other supporting

constructions, ducts, conduits, masts, manholes and cabinets;

(b) "essential facilities" means facilities of a public telecommunications network or service that:

(i) are exclusively or predominantly provided by a single or limited number of suppliers;

and

(ii) cannot feasibly be economically or technically substituted in order to provide a service;

(c) "interconnection" means the linking of public telecommunications networks used by the same

or different suppliers of telecommunications networks or services in order to allow the users

of one supplier to communicate with users of the same or another supplier or to access

services provided by another suppliers, irrespective of whether those services are provided by

the suppliers involved or by any other supplier who has access to the network;

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(d) "internet access services" means public telecommunications services that provide access to

the internet in the territory of a Party, and thereby provide connectivity to virtually all end

points of the internet, irrespective of the network technology and terminal equipment used;

(e) "leased circuits" mean telecommunications services or facilities between two or more

designated points, including those of a virtual nature, that set aside capacity for the dedicated

use of, or availability to, a user;

(f) "major supplier" means a supplier of telecommunications networks or services which has the

ability to materially affect the terms of participation (having regard to price and supply) in a

relevant market for telecommunications networks or services as a result of its control over

essential facilities or the use of its position in that market;

(g) "network elements" means facilities or equipment used in supplying a public

telecommunications service, including features, functions and capabilities provided by means

of those facilities or equipment;

(h) "number portability" means:

(i) for the European Union, the ability of a subscriber who so requests to retain the existing

telephone number, at the same location in the case of fixed line subscribers, when

switching between the same category of suppliers of public telecommunications

services, without impairment of quality, reliability or convenience; and

& /en 70

(ii) for Chile, the ability of an end-user to retain, upon request, the existing telephone

number when switching between suppliers of public telecommunications services,

without impairment of quality, reliability or convenience;

(i) "public telecommunications network" means any telecommunications network used wholly or

mainly for the provision of public telecommunications services between network termination

points;

(j) "public telecommunications service" means any telecommunications service that is offered to

the public generally;

(k) "subscriber" means any natural or juridical person that is party to a contract with a supplier of

public telecommunications services for the supply of such services;

(l) "telecommunications" means the transmission and reception of signals by any

electromagnetic means;

(m) "telecommunications network" means transmission systems and, if applicable, switching or

routing equipment and other resources, including network elements which are not active,

which permit the transmission and reception of signals by wire, radio, optical or other

electromagnetic means;

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(n) "telecommunications regulatory authority" means the body or bodies charged by a Party with

the regulation of telecommunications networks and services covered by this Chapter **[1]** ;

(o) "telecommunications service" means a service which consists wholly or mainly in the

transmission and reception of signals, including of broadcasting signals, via

telecommunications networks, including via networks used for broadcasting;

(p) "universal service" means the minimum set of services of specified quality that must be made

available to all users in the territory of a Party, regardless of their geographical location and at

an affordable price; and

(q) "user" means any natural or juridical person using a public telecommunications network or

service.

ARTICLE 16.3

Telecommunications regulatory authority

1. Each Party shall ensure that its telecommunications regulatory authority is legally distinct and

functionally independent from any supplier of telecommunications networks, services or equipment,

and that the decisions adopted by, and the procedures used by, its telecommunications regulatory

authority are impartial with respect to all market participants.

**1** For greater certainty, telecommunications regulatory authority includes any authority charged
by a Party with the enforcement of the obligations set out in this Chapter.

& /en 72

2. A Party that retains ownership or control of suppliers of telecommunications networks,

services or equipment shall ensure the effective structural separation of the telecommunications

regulatory function from activities associated with that ownership or control.

3. With a view to ensuring the independence and impartiality of telecommunications regulatory

authorities, each Party shall ensure that its telecommunications regulatory authority does not hold a

financial interest or maintain an operating or management role in any supplier of

telecommunications networks, services or equipment.

4. Each Party shall ensure that suppliers of telecommunications networks, services or equipment

do not influence the decisions and procedures of the telecommunications regulatory authority.

5. Each Party shall provide its telecommunications regulatory authority with the regulatory and

supervisory power, as well as adequate financial and human resources, to carry out the tasks

assigned to it in order to enforce the obligations set out in this Chapter. Such power shall be

exercised transparently and in a timely manner. Those tasks shall be made public in an easily

accessible and clear form, in particular when those tasks are assigned to more than one body.

6. Each Party shall provide its telecommunications regulatory authority with the power to ensure

that suppliers of telecommunications networks or services provide it, promptly upon request, with

all the information, including financial information, which is necessary to enable the

telecommunications regulatory authority to carry out its tasks in accordance with this Chapter. Any

Information provided shall be treated in accordance with the requirements of confidentiality.

& /en 73

7. Each Party shall ensure that a user or supplier of telecommunications networks or services

affected by a decision issued by its telecommunications regulatory authority has a right to appeal

against that decision to an appeal body that is independent of the telecommunications regulatory

authority and of other parties affected by the decision. Pending the outcome of the appeal, the

decision issued by the telecommunications regulatory authority shall stand, unless interim measures

are granted in accordance with the law of the Party.

ARTICLE 16.4

Authorisation to provide telecommunications networks or services

1. If a Party requires an authorisation for the provision of telecommunications networks or

services, it shall state a reasonable period of time normally required for the telecommunications

regulatory authority to decide on the authorisation request, communicate that period of time to the

applicant in a transparent manner and shall endeavour to decide on the request within the

communicated period of time **[1]** .

**1** For greater certainty, this Article does not preclude a Party from authorising the provision of
telecommunications networks or services upon simple notification without having to wait for
a decision by the telecommunications regulatory authority.

& /en 74

2. Any authorisation criteria and applicable procedures shall be as simple as possible, objective,

transparent, non-discriminatory and proportionate. Any obligations and conditions imposed on or

associated with an authorisation shall be non-discriminatory, transparent, proportionate and related

to the services provided.

3. Each Party shall ensure that an applicant receives in writing the reasons for the denial or the

revocation of an authorisation, or for the imposition of supplier-specific conditions. In case of such

denial, revocation or imposition, an applicant shall be able to seek recourse before an appeal body.

4. Administrative fees imposed on suppliers, if any, shall be objective, transparent,

non-discriminatory and commensurate with the administrative costs reasonably incurred in the

management, control and enforcement of the obligations set out in this Chapter **[1]** .

**1** Administrative fees do not include payments for rights to use scarce resources and mandated
contributions to universal service provision.

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ARTICLE 16.5

Interconnection

Without prejudice to Article 16.9, each Party shall ensure that a supplier of public

telecommunications networks or services in its territory has the right and, on request of another

supplier of public telecommunications networks or services in its territory, the obligation to

negotiate interconnection for the purpose of providing public telecommunications networks or

services within its territory.

ARTICLE 16.6

Access and use

1. Each Party shall ensure that any service supplier of the other Party is accorded access to and

use of any public telecommunications networks or services on reasonable and non-discriminatory **[1]**

terms and conditions. This obligation shall be applied, _inter alia_, through paragraphs 2 through 5.

**1** For the purposes of this Article, "non-discriminatory" means most-favoured-nation and
national treatment as defined in Articles 10.6, 10.8, 11.4 and 11.5, as well as under terms and
conditions no less favourable than those accorded to any other user of like public
telecommunications networks or services in like situations.

& /en 76

2. Each Party shall ensure that any service supplier of the other Party has access to and use of

any public telecommunications service offered within or across the border of that Party, including

private leased circuits, and to this end shall ensure, subject to paragraph 5, that such supplier is

permitted to:

(a) purchase or lease and attach terminal or other equipment which interfaces with the network

and which is necessary to provide its services;

(b) interconnect private leased or owned circuits with public telecommunications networks or

with circuits leased or owned by another supplier of telecommunications services; and

(c) use operating protocols of its choice in the supply of any service, other than as necessary to

ensure the availability of telecommunications services to the public generally.

3. Each Party shall ensure that a service supplier of the other Party may use public

telecommunications networks or services for the movement of information within and across the

border of that Party, including for intra-corporate communications of such service supplier, and for

access to information contained in data bases or otherwise stored in machine-readable form in the

territory of either Party.

4. Notwithstanding paragraph 3, a Party may take such measures as are necessary to ensure the

security and confidentiality of communications, subject to the requirement that such measures are

not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination

or a disguised restriction on trade in services.

& /en 77

5. Each Party shall ensure that no condition is imposed on access to and use of public

telecommunications networks or services in its territory other than as necessary to:

(a) safeguard the public service responsibilities of suppliers of public telecommunications

networks or services, in particular their ability to make their services available to the public

generally; or

(b) protect the technical integrity of public telecommunications networks or services.

ARTICLE 16.7

Resolution of telecommunications disputes

1. Each Party shall ensure that, in the event of a dispute arising between suppliers of

telecommunications networks or services in connection with rights or obligations that arise from

this Chapter, and on request of either disputing party, the telecommunications regulatory authority

issues a binding decision within a reasonable period of time to resolve the dispute.

2. Each Party shall ensure that the decision issued by the telecommunications regulatory

authority is made available to the public, subject to the requirements of business confidentiality

under its laws and regulations. The telecommunications regulatory authority shall provide the

disputing parties with a full statement of the reasons on which the decision is based. The disputing

parties shall have the right to appeal that decision, in accordance with Article 16.3(7).

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3. Each Party shall ensure that the procedure referred to in paragraphs 1 and 2 does not preclude

either disputing party from bringing an action before a judicial authority, in accordance with the

laws and regulations of the Party.

ARTICLE 16.8

Competitive safeguards on major suppliers

Each Party shall adopt or maintain appropriate measures for the purpose of preventing suppliers of

telecommunications networks or services who, alone or together, are a major supplier, from

engaging in or continuing anti-competitive practices, including:

(a) engaging in anti-competitive cross-subsidisation;

(b) using information obtained from competitors with anti-competitive results; and

(c) not making available to other services suppliers on a timely basis technical information about

essential facilities and commercially relevant information which are necessary for them to

provide services.

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ARTICLE 16.9

Interconnection with major suppliers

1. Each Party shall ensure that major suppliers of public telecommunications networks or

services provide interconnection at any technically feasible point in the network. Major suppliers

shall provide such interconnection:

(a) under non-discriminatory terms and conditions, including in regard to rates, technical

standards, specifications, quality and maintenance, and of a quality no less favourable than

that provided for their own like services, or for like services of their subsidiaries or other

affiliates;

(b) in a timely fashion, on terms and conditions, including in relation to rates, technical standards,

specifications, quality and maintenance, that are transparent, reasonable, having regard to

economic feasibility, and sufficiently unbundled so that the supplier need not pay for network

components or facilities that it does not require for the service to be provided; and

(c) upon request, at points in addition to the network termination points offered to the majority of

users, subject to charges that reflect the cost of construction of necessary additional facilities.

2. Each Party shall make publicly available the procedures applicable for interconnection with a

major supplier.

& /en 80

3. Each Party shall ensure that major suppliers make publicly available either their

interconnection agreements or their reference interconnection offers, as appropriate.

ARTICLE 16.10

Access to the essential facilities of major suppliers

Each Party shall provide its telecommunications regulatory authority with the power to require that

a major supplier in its territory makes its essential facilities available to suppliers of

telecommunications networks or services on reasonable and non-discriminatory terms and

conditions for the purpose of providing telecommunications network or services, except if this is

not necessary to achieve effective competition on the basis of the facts collected and the assessment

of the market conducted by the telecommunications regulatory authority. The essential facilities of a

major supplier may include network elements, leased circuits services and associated facilities.

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ARTICLE 16.11

Scarce resources

1. Each Party shall ensure that the allocation and granting of rights of use of scarce resources,

including radio spectrum, numbers and rights of way, is carried out in an open, objective, timely,

transparent, non-discriminatory and proportionate manner and in pursuit of general interest

objectives. Procedures, conditions and obligations attached to rights of use, shall be based on

objective, transparent, non-discriminatory and proportionate criteria.

2. Each Party shall make the current use of allocated frequency bands publicly available, but

detailed identification of radio spectrum allocated for specific government uses is not required.

3. The measures of a Party allocating and assigning spectrum and managing frequency are not

measures that are _per se_ inconsistent with Articles 10.5 and 11.7 Accordingly, each Party retains the

right to establish and apply spectrum and frequency management measures that may have the effect

of limiting the number of suppliers of telecommunications services, provided that it does so in a

manner consistent with this Agreement. This includes the ability to allocate frequency bands taking

into account current and future needs and spectrum availability.

& /en 82

ARTICLE16.12

Number portability

Each Party shall ensure that suppliers of public telecommunications services in its territory provide

number portability, on a timely basis, and on reasonable terms and conditions.

ARTICLE 16.13

Universal service

1. Each Party has the right to define the kind of universal service obligations it wishes to

maintain, and to decide on their scope and implementation.

2. Universal service obligations will not be regarded as anti-competitive _per se_, provided that

they are administered in a proportionate, transparent, objective and non-discriminatory manner. The

administration of such obligations shall be neutral with respect to competition and not be more

burdensome than necessary for the kind of universal service defined by the Party.

3. Each Party shall ensure that procedures for the designation of universal service suppliers are

open to all suppliers of public telecommunications networks or services and shall designate

universal service suppliers through an efficient, transparent and non-discriminatory mechanism.

& /en 83

4. If a Party decides to fund the provision of universal service by a supplier, it shall ensure that

such funding does not exceed the net cost caused by the universal service obligation.

ARTICLE 16.14

Confidentiality of information

1. Each Party shall ensure that suppliers of telecommunications networks or services that acquire

confidential information from another supplier of telecommunications networks or services in the

process of negotiating arrangements pursuant to Articles 16.5, 16.6, 16.9 and 16.10, use that

information solely for the purposes for which it was supplied and respect at all times the

confidentiality of such information.

2. Each Party shall ensure the confidentiality of telecommunications and related traffic data

transmitted in the use of public telecommunications networks or services, provided that any

measures it takes to that end are not applied in a manner which would constitute a means of

arbitrary or unjustifiable discrimination or a disguised restriction on trade in services.

& /en 84

ARTICLE 16.15

Foreign shareholding

With regard to the provision of telecommunications networks or services, other than public radio

broadcasting, through commercial presence, a Party shall not impose joint venture requirements or

limit the participation of foreign capital in terms of maximum percentage limits on foreign

shareholding or the total value of individual or aggregate foreign investment.

ARTICLE 16.16

Open and non-discriminatory internet access

1. Each Party shall adopt or maintain measures to ensure that suppliers of internet access

services enable users of those services to access and distribute information, content and services of

their choice.

2. Paragraph 1 is without prejudice to the laws and regulations of a Party related to the

lawfulness of the information, content or services referred to in that paragraph.

& /en 85

3. Notwithstanding paragraph 1, suppliers of internet access services may implement non

discriminatory **[1]**, reasonable, transparent and proportionate network management measures which

are consistent with the laws and regulations of a Party.

4. Each Party shall adopt or maintain measures to ensure that suppliers of internet access

services enable users of those services to use devices of their choice, provided that such devices do

not harm the security of other devices, the network or services provided over the network.

ARTICLE 16.17

International mobile roaming

1. The Parties shall endeavour to cooperate on promoting transparent and reasonable rates for

international mobile roaming services in ways that can help promote the growth of trade among the

Parties and enhance consumer welfare.

2. Each Party may take steps to enhance transparency and competition with respect to

international mobile roaming rates and technological alternatives to roaming services, such as:

(a) ensuring that information regarding retail rates is easily accessible to the public; and

**1** Subject to the exceptions provided in the laws and regulations of a Party.

& /en 86

(b) minimising impediments to the use of technological alternatives to roaming, whereby users

visiting the territory of a Party from the territory of the other Party can access

telecommunications services using the device of their choice.

CHAPTER 17

INTERNATIONAL MARITIME TRANSPORT SERVICES

ARTICLE 17.1

Scope, definitions and principles

1. This Chapter sets out the principles regarding the liberalisation of international maritime

transport services pursuant to Chapters 10, 11 and 12.

2. For the purpose of this Chapter, and Chapters 10, 11 and 12 and of Annexes 10-A, 10-B

and 10-C:

(a) "container station and depot services" means activities consisting in storing containers,

whether in port areas or inland, with a view to their stuffing or stripping, repairing and

making them available for shipments;

& /en 87

(b) customs clearance services" or "customs house brokers' services" means activities consisting

in carrying out on behalf of another party customs formalities concerning import, export or

through transport of cargoes, whether this service is the main activity of the service provider

or a usual complement of its main activity;

(c) "door-to-door or multimodal transport operations" means the transport of cargo using more

than one mode of transport, involving an international sea-leg, under a single transport

document;

(d) "feeder services" means the pre- and on-ward transportation by sea, between ports located in a

Party, of international cargo, notably containerised, _en route_ to a destination outside the

territory of that Party;

(e) "freight forwarding services" means the activity consisting of organising and monitoring

shipment operations on behalf of shippers, through the acquisition of transport and related

services, preparation of documentation and provision of business information;

(f) "international cargo" means cargo transported between a port of one Party and a port of the

other Party or of a third country, or between a port of one Member State and a port of another

Member State;

& /en 88

(g) "international maritime transport services" means the transport of passengers or cargo by sea

going vessels between a port of one Party and a port of the other Party or of a third country,

including the direct contracting with providers of other transport services, with a view to

cover door-to-door or multimodal transport operations under a single transport document, but

not the right to provide such other transport services;

(h) "maritime agency services" means activities consisting in representing, within a given

geographic area, as an agent the business interests of one or more shipping lines or shipping

companies, for the following purposes:

(i) marketing and sales of maritime transport and related services, from quotation to

invoicing, and issuance of bills of lading on behalf of the companies, acquisition and

resale of the necessary related services, preparation of documentation, and provision of

business information; or

(ii) acting on behalf of the companies organising the call of the ship or taking over cargoes

when required;

(i) "maritime auxiliary services" means maritime cargo handling services, customs clearance

services, container station and depot services, maritime agency services and maritime freight

forwarding services; and

& /en 89

(j) "maritime cargo handling services" means activities exercised by stevedore companies,

including terminal operators but not including the direct activities of dockers, when this

workforce is organised independently of the stevedoring or terminal operator companies; the

activities covered include the organisation and supervision of:

(i) the loading or discharging of cargo to or from a ship;

(ii) the lashing or unlashing of cargo; and

(iii) the reception or delivery and safekeeping of cargoes before shipment or after discharge.

3. In view of the existing levels of liberalisation between the Parties in international maritime

transport, the following principles apply:

(a) the Parties shall apply effectively the principle of unrestricted access to the international

maritime markets and trades on a commercial and non-discriminatory basis; and

(b) each Party shall grant to ships flying the flag of the other Party or operated by service

suppliers of the other Party treatment no less favourable than that accorded to its own ships,

including with regard to access to ports, use of infrastructure and services of ports, and use of

maritime auxiliary services, as well as related fees and charges, customs facilities and

assignment of berths and facilities for loading and unloading.

& /en 90

4. In applying the principles referred to in paragraph 3, each Party shall:

(a) not introduce cargo-sharing arrangements in future agreements with third countries

concerning maritime transport services, including dry and liquid bulk and liner trade, and

terminate, within a reasonable period of time, such cargo-sharing arrangements in case they

exist in previous agreements; and

(b) as from the date of entry into force of this Agreement, abolish and abstain from introducing

any unilateral measures or administrative, technical or other obstacles which could constitute

a disguised restriction or have discriminatory effects on the free supply of services in

international maritime transport.

5. Each Party shall permit international maritime transport service suppliers of the other Party to

have an enterprise established and operating in its territory in accordance with the conditions

provided for in its schedule of specific commitments in Annexes 10-A, 10-B and 10-C,

respectively.

6. Each Party shall make available to international maritime transport suppliers of the other

Party on reasonable and non-discriminatory terms and conditions the following services at the port:

pilotage, towing and tug assistance, provisioning, fuelling and watering, garbage collecting and

ballast waste disposal, port captain's services, navigation aids, shore-based operational services

essential to ship operations, including communications, water and electrical supplies, emergency

repair facilities, anchorage, berth and berthing services.

& /en 91

7. Each Party shall permit the international maritime transport service suppliers of the other

Party to re-position owned or leased empty containers which are not being carried as cargo against

payment, between ports of Chile or between ports of a Member State.

CHAPTER 18

FINANCIAL SERVICES

ARTICLE 18.1

Scope

1. This Chapter applies to a measure adopted or maintained by a Party relating to:

(a) financial institutions of the other Party;

(b) investors of the other Party and financial institutions of such investors in the territory of the

Party; or

(c) cross-border trade in financial services.

& /en 92

2. For greater certainty, Chapter 10 applies to a measure:

(a) relating to an investor of a Party in a covered enterprise as defined in subparagraph (d) of

Article 10.2(1) that is not a financial institution but is supplying a financial service in the

territory of the other Party, or to such covered enterprise; and

(b) other than a measure relating to the supply of financial services, relating to an investor of a

Party, or a covered enterprise established by that investor in the territory of the other Party

that is a financial institution.

3. The provisions of Chapters 10 and 11 apply to measures within the scope of this Chapter only

to the extent that those provisions are incorporated into and made part of this Chapter.

4. Articles 10.12 and 11.9 are incorporated into and made part of this Chapter.

5. This Chapter does not apply to a measure adopted or maintained by a Party relating to:

(a) activities conducted by a central bank or monetary authority or by any other public entity in

pursuit of monetary or exchange rate policies;

(b) activities or services forming part of a public retirement plan or statutory system of social

security; or

& /en 93

(c) activities or services conducted for the account of the Party, with the guarantee or using the

financial resources of the Party, including its public entities.

6. Notwithstanding paragraph 5, this Chapter applies to the extent that a Party allows any of the

activities or services referred to in subparagraph (b) or (c) of paragraph 5 to be conducted by its

financial institutions in competition with a public entity or a financial institution.

7. Articles 18.3, 18.5, 18.6, 18.7, 18.8 and 18.9 do not apply with respect to public procurement.

8. Articles 18.3, 18.5, 18.6, 18.7 and 18.8 do not apply with respect to subsidies granted by a

Party, including government-supported loans, guarantees and insurances.

ARTICLE 18.2

Definitions

For the purposes of this Chapter and Annex 18:

(a) "cross-border financial service supplier of a Party" means a person of a Party that is engaged

in the business of supplying a financial service within the territory of the Party and that seeks

to supply, or supplies, a financial service through the cross-border supply of such service;

& /en 94

(b) "cross-border supply of financial services" or "cross-border trade in financial services" means

the supply of a financial service:

(i) from the territory of a Party into the territory of the other Party; or

(ii) in the territory of a Party by a person of that Party to a services consumer of the other

Party;

(c) "financial institution" means a supplier of one or more financial services which is regulated or

supervised in respect of the supply of those services as a financial institution under the law of

the Party in whose territory it is located, including a branch in the territory of the Party of that

financial service supplier whose head offices are located in the territory of the other Party;

(d) "financial service" means a service of a financial nature, including insurance and insurance

related services, banking and other financial services (excluding insurance). Financial services

include the following activities:

(i) insurance and insurance-related services:

(A) direct insurance (including co-insurance):

(1) life; and

& /en 95

(2) non-life;

(B) reinsurance and retrocession;

(C) insurance inter-mediation, 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, travellers cheques and bankers drafts;

(E) guarantees and commitments;

& /en 96

(F) trading for own account or for account of customers, whether on an exchange, in

an over-the-counter market or otherwise, the following:

(1) money market instruments (including cheques, bills, certificates of

deposits);

(2) foreign exchange;

(3) derivative products including futures and options;

(4) exchange rate and interest rate instruments, including products such as

swaps and forward rate agreements;

(5) transferable securities; or

(6) 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;

& /en 97

(I) asset management, such as cash or portfolio management, all forms of collective

investment management, pension fund management, and 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; and

(L) advisory, intermediation and other auxiliary financial services on all the activities

listed in subparagraphs (A) to (K), including credit reference and analysis,

investment and portfolio research and advice, and advice on acquisitions and on

corporate restructuring and strategy;

(e) "financial service supplier of a Party" means a natural or juridical person of a Party that seeks

to supply, or supplies, a financial service, but does not include a public entity;

(f) "investor of a Party" means a natural or juridical person of a Party that seeks to establish, is

establishing or has established a financial institution in the territory of the other Party;

& /en 98

(g) "juridical person of a Party" means:

(i) for the European Union:

a juridical person constituted or organised under the law of the European Union or of at least

one of its Member States and engaged in substantive business operations **[1]** in the territory of

the European Union; and

(ii) for Chile:

a juridical person constituted or organised under the law of Chile and engaged in substantive

business operations in the territory of Chile;

(h) "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 territory of a Party but which is supplied in the

territory of the other Party;

**1** In line with its notification of the Treaty establishing the European Community to the WTO
(WT/REG39/1), the European Union understands that the concept of "effective and
continuous link" with the economy of a Member State of the European Union enshrined in
Article 54 of the TFEU is equivalent to the concept of "substantive business operations".

& /en 99

(i) "public entity" means:

(i) a government, a central bank or a 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, but does not include an entity principally

engaged in supplying financial services on commercial terms; or

(ii) a private entity, that performs functions normally performed by a central bank or

monetary authority, when exercising those functions; and

(j) "self-regulatory organisation" means a non-governmental body, including a securities or

futures exchange or market, clearing agency or other organisation or association, that

exercises regulatory or supervisory authority over financial service suppliers or financial

institutions by statute or delegation from central, regional or local governments or authorities,

where applicable.

& /en 100

ARTICLE 18.3

National treatment

1. Each Party shall accord to investors in financial institutions of the other Party and to covered

enterprises that are financial institutions, with respect to the establishment, treatment no less

favourable than the treatment it accords, in like situations **[1]**, to its own investors in financial

institutions and to their enterprises that are financial institutions.

2. Each Party shall accord to investors in financial institutions of the other Party and to covered

enterprises that are financial institutions, with respect to the operation, treatment no less favourable

than the treatment it accords, in like situations **[1]**, to its own investors in financial institutions and to

their enterprises that are financial institutions.

3. The treatment accorded by a Party under paragraphs 1 and 2 means:

(a) with respect to a regional or local government of Chile, treatment no less favourable than the

most favourable treatment accorded, in like situations, by that level of government to

investors in financial institutions of Chile and to their enterprises that are financial institutions

in its territory;

**1** For greater certainty, whether treatment is accorded in "like situations" requires a case-bycase, fact-based analysis and depends on the totality of the situations.

& /en 101

(b) with respect to a government of, or in, a Member State, treatment no less favourable than the

most favourable treatment accorded, in like situations, by that government to investors in

financial institutions of that Member State and to their enterprises that are financial

institutions in its territory **[1]** .

ARTICLE 18.4

Public procurement

1. Each Party shall ensure that financial institutions of the other Party established in its territory

are accorded treatment no less favourable than that accorded, in like situations, to its own financial

institutions with respect to any measure regarding the purchase of goods or services by a procuring

entity for governmental purposes.

2. The application of the national treatment obligation provided for in this Article remains

subject to security and general exceptions as set out in Article 21.3.

**1** For greater certainty, the treatment accorded by a government of, or in, a Member State
includes the regional and local level of government, when applicable.

& /en 102

ARTICLE 18.5

Most-favoured-nation treatment

1. Each Party shall accord to investors in financial institutions of the other Party and to covered

enterprises that are financial institutions, with respect to the establishment, treatment no less

favourable than the treatment it accords, in like situations **[1]**, to investors in financial institutions of a

third country and to their enterprises that are financial institutions.

2. Each Party shall accord to investors in financial institutions of the other Party and to covered

enterprises that are financial institutions with respect to the operation, treatment no less favourable

than the treatment it accords, in like situations **[1]**, to investors in financial institutions of a third

country and to their enterprises that are financial institutions.

3. Paragraphs 1 and 2 shall not be construed to oblige a Party to extend to investors in financial

institutions of the other Party or to covered enterprises that are financial institutions the benefit of

any treatment resulting from measures providing for the recognition of the standards, including of

the standards or criteria for the authorisation, licencing or certification of a natural person or

enterprise to carry out an economic activity, or of prudential measures.

**1** For greater certainty, whether treatment is accorded in "like situations" requires a case-bycase, fact-based analysis and depends on the totality of the situations.

& /en 103

4. For greater certainty, the treatment referred to in paragraphs 1 and 2 does not include

investment dispute resolution procedures or mechanisms provided for in other international

investment treaties and other trade agreements. The substantive provisions in other international

investment treaties or trade agreements do not in themselves constitute "treatment" as referred to in

paragraphs 1 and 2, and thus cannot give rise to a breach of this Article, absent measures adopted or

maintained by a Party. Measures of a Party applied pursuant to such substantive provisions may

constitute "treatment" under this Article and thus give rise to a breach of this Article.

ARTICLE 18.6

Market access

1. In the sectors or subsectors listed in Sections B of Appendices 18-1 and 18-2 where market

access commitments are undertaken, a Party shall not adopt or maintain, with respect to market

access through establishment or operation of financial institutions by investors of the other Party,

either on the basis of its entire territory or on the basis of a regional subdivision, a measure that:

(a) limits the number of financial institutions, whether in the form of numerical quotas,

monopolies, exclusive service suppliers or the requirement of an economic needs test;

(b) limits the total value of financial service transactions or assets in the form of numerical quotas

or the requirement of an economic needs test;

& /en 104

(c) limits the total number of financial service operations or the total quantity of financial

services output expressed in terms of designated numerical units in the form of quotas or the

requirement of an economic needs test;

(d) limits the total number of natural persons that may be employed in a particular financial

services sector or that a financial institution may employ and who are necessary for, and

directly related to, the supply of a specific financial service, in the form of numerical quotas

or the requirement of an economic needs test; or

(e) restricts or requires specific types of legal entity or joint venture through which a financial

institution may supply a service.

2. For greater certainty, this Article does not prevent a Party from requiring a financial

institution to supply certain financial services through separate legal entities if, under the law of that

Party, the range of financial services supplied by the financial institution may not be supplied

through a single entity.

& /en 105

ARTICLE 18.7

Cross-border supply of financial services

1. Articles 11.4, 11.5, 11.6 and 11.7 are incorporated into and made part of this Chapter and

apply to measures affecting cross-border financial service suppliers supplying the financial services

specified in Sections A of Appendices 18-1 and 18-2.

2. A Party shall permit persons located in its territory, and its natural persons wherever located,

to purchase financial services from cross-border financial service suppliers of the other Party

located in the territory of the other Party. This obligation does not require a Party to permit those

suppliers to do business or solicit in its territory. A Party may define "do business" and "solicit" for

the purposes of this obligation, provided that those definitions are not inconsistent with paragraph 1

of this Article.

3. Without prejudice to other means of prudential regulation of cross-border trade in financial

services, a Party may require the registration or authorisation of cross-border financial service

suppliers of the other Party and of financial instruments.

& /en 106

ARTICLE 18.8

Senior management and boards of directors

A Party shall not require that a financial institution of the other Party, which is established in its

territory, appoints natural persons of a particular nationality as members of boards of directors or to

a senior management position, such as executives or managers.

ARTICLE 18.9

Performance requirements

1. A Party shall not, in connection with the establishment or operation of any financial

institution of a Party or of a third country in its territory, impose or enforce any requirement or

enforce any commitment or undertaking to:

(a) export a given level or percentage of goods or services;

(b) achieve a given level or percentage of domestic content;

(c) purchase, use or accord a preference to goods produced or services provided in its territory, or

to purchase goods or services from natural persons or enterprises in its territory;

& /en 107

(d) 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 financial institution;

(e) restrict sales of goods or services in its territory that such financial institution produces or

provides by relating such sales in any way to the volume or value of its exports or foreign

exchange earnings;

(f) transfer technology, a production process or other proprietary knowledge to a natural person

or an enterprise in its territory;

(g) supply exclusively from the territory of the Party the goods it produces or the services it

supplies to a specific regional or world market;

(h) locate the headquarters of that financial institution for a specific region of the world, which is

broader than the territory of the Party, or the world market in its territory;

(i) hire a given number or percentage of its nationals; or

(j) restrict the exportation or sale for export.

& /en 108

2. A Party shall not condition the receipt or continued receipt of an advantage, in connection

with the establishment or the operation of any financial institution of a Party or of a third country in

its territory, 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 or services provided in its territory,

or to purchase goods or services from natural persons or enterprises in its territory;

(c) to relate in any way the volume or value of imports to the volume or value of exports or to the

amount of foreign exchange inflows associated with such financial institution;

(d) to restrict sales of goods or services in its territory that such financial institution produces or

provides by relating such sales in any way to the volume or value of its exports or foreign

exchange earnings; or

(e) to restrict the exportation or sale for export.

3. Paragraph 2 shall not be construed as preventing a Party from conditioning the receipt or

continued receipt of an advantage, in connection with the establishment or the operation of financial

institutions in its territory by an investor of a Party or a third country, on compliance with a

requirement to locate production, provide a service, train or employ workers, construct or expand

particular facilities, or carry out research and development, in its territory.

& /en 109

4. Subparagraph (f) of paragraph 1 does not apply if:

(a) a Party authorises use of an intellectual property right in accordance with Article 31 or 31 _bis_

of the TRIPS Agreement or adopts or maintains measures requiring the disclosure of data or

proprietary information that falls within the scope of, and are consistent with, paragraph 3 of

Article 39 of the TRIPS Agreement; or

(b) the requirement is imposed or the commitment or undertaking is enforced by a court,

administrative tribunal, or competition authority in order to remedy a practice determined

after judicial or administrative process to be a violation of the competition laws of the Party.

6. Subparagraphs (a), (b) and (c) of paragraph 1 and subparagraphs (a) and (b) of paragraph 2 do

not apply to qualification requirements for goods or services with respect to participation in export

promotion and foreign aid programmes.

7. Subparagraphs (a) and (b) of paragraph 2 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.

8. For greater certainty, this Article shall not be construed as requiring a Party to permit a

particular service to be supplied on a cross-border basis where that Party adopts or maintains

restrictions or prohibitions on such provision of services which are consistent with the reservations,

conditions or qualifications specified with respect to a sector, subsector or activity listed in

Annex 18.

& /en 110

9. This Article is without prejudice to commitments of a Party made under the WTO Agreement.

ARTICLE 18.10

Non-conforming measures

1. Articles 18.3, 18.5, 18.7, 18.8 and 18.9 do not apply to:

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

(i) for the European Union:

(A) the European Union, as set out in Section C of Appendix 18-1;

(B) the central government of a Member State, as set out in Section C of

Appendix 18-1;

(C) a regional level of government of a Member State, as set out in Section C of

Appendix 18-1; or

(D) a local level of government; and

& /en 111

(ii) for Chile:

(A) the central government, as set out in Section C of Appendix 18-2;

(B) a regional level of government, as set out in Section C of Appendix 18-2; or

(C) a local level of government;

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

subparagraph (a); or

(c) a modification to any non-conforming measure referred to in subparagraph (a) of this

paragraph to the extent that the modification does not decrease the conformity of the measure

as it existed immediately before the modification, with Articles 18.3, 18.5, 18.7, 18.8 or 18.9.

2. Articles 18.3, 18.5, 18.7, 18.8 and 18.9 do not apply to any measure of a Party with respect to

sectors, subsectors or activities, as set out by that Party in Section D of Appendices 18-1 and 18-2,

respectively.

3. A Party shall not, under any measure adopted after the date of entry into force of this

Agreement and covered by Section D of Appendices 18-1 and 18-2, respectively, require an

investor of the other Party, by reason of its nationality, to sell or otherwise dispose of its financial

institution existing at the time the measure becomes effective.

& /en 112

4. Article 18.6 does not apply to any measure of a Party with respect to sectors, subsectors or

activities as set out by that Party in Section B of Appendices 18-1 and 18-2, respectively.

5. Where a Party has set out a reservation to Articles 10.6, 10.8, 10.9, 10.10, 11.4 or 11.5 in

Annex 10-A or 10-B, the reservation also constitutes a reservation to Articles 18.3, 18.5, 18.7, 18.8

or 18.9, as the case may be, to the extent that the measure, sector, sub-sector or activity set out in

the reservation is covered by this Chapter.

ARTICLE 18.11

Prudential carve-out

1. Nothing in this Agreement shall prevent a Party from adopting or maintaining measures for

prudential reasons, such as:

(a) for the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty

is owed by a financial service supplier; or

(b) to ensure the integrity and stability of the financial system of a Party.

2. Where such measures do not conform with the provisions of this Agreement, they shall not be

used as a means of avoiding the commitments or obligations of the Party under this Agreement.

& /en 113

ARTICLE 18.12

Treatment of information

Nothing in this Agreement 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 18.13

Domestic regulation and transparency

1. Chapter 13, with the exception of subparagraphs (c) to (f) of Article 13.1(5), and Chapter 29

do not apply to measures of a Party within the scope of this Chapter.

2. To the extent practicable and in a manner consistent with its legal system for adopting

measures, each Party shall:

(a) publish in advance:

(i) the laws and regulations of general application it proposes to adopt in relation to matters

falling within the scope of this Chapter; or

& /en 114

(ii) documents that provide sufficient details about such possible new laws and regulations

to allow interested persons and the other Party to assess whether and how their interests

might be significantly affected;

(b) provide interested persons and the other Party a reasonable opportunity to submit comments

on any proposed laws and regulations or documents published pursuant to subparagraph (a);

(c) consider any comments submitted in accordance with subparagraph (b); and

(d) allow a reasonable time between the publication of any laws and regulations pursuant to

subparagraph (a)(i) and the date on which financial service suppliers must comply with them.

3. This Article applies to measures of a Party relating to licensing requirements and procedures,

and qualification requirements and procedures, and it applies only in sectors for which the Party has

undertaken specific commitments under this Chapter, and to the extent that those specific

commitments apply.

4. If a Party adopts or maintains measures relating to the authorisation for the supply of a

financial service, it shall ensure that:

(a) those measures are based on objective and transparent criteria **[1]** ;

**1** Such criteria may include, _inter alia_, competence and the ability to supply a service, including
the ability to do so in a manner consistent with the regulatory requirements of a Party.
Competent authorities may assess the weight to be given to each criterion.

& /en 115

(b) the authorisation procedures are impartial, and adequate for applicants to demonstrate whether

they meet the requirements, if such requirements exist; and

(c) the authorisation procedures do not in themselves unjustifiably prevent fulfilment of the

requirements.

5. If a Party requires authorisation **[1]** for the supply of a financial service it shall promptly publish

or otherwise make publicly available the information necessary for the applicant to comply with the

requirements and procedures for obtaining, maintaining, amending and renewing such

authorisation. Such information shall include, _inter alia_, where available:

(a) the requirements and procedures for obtaining, maintaining, amending and renewing such

authorisation;

(b) contact information of relevant competent authorities;

(c) procedures for appeal or review of decisions concerning applications;

(d) procedures for monitoring or enforcing compliance with the terms and conditions of licenses

and qualifications; and

**1** For the purposes of this Chapter, "authorisation" means the permission to supply a financial
service, resulting from a procedure to which an applicant must adhere in order to demonstrate
compliance with licensing requirements or qualification requirements.

& /en 116

(e) opportunities for public involvement, such as through hearings or comments.

6. If a Party requires authorisation for the supply of a financial service, the competent authorities

of that Party shall:

(a) to the extent practicable, permit an applicant to submit an application at any time throughout

the year **[1]** ;

(b) allow a reasonable period of time for the submission of an application if specific time periods

for applications exist;

(c) initiate the processing of the application without undue delay;

(d) endeavour to accept applications in electronic format under the same conditions of

authenticity as paper submissions; and

(e) accept copies of documents, which are authenticated in accordance with the law of the Party,

in place of original documents, unless they require original documents to protect the integrity

of the authorisation process.

7. Each Party shall endeavour to make authorisation procedures and formalities as simple as

possible and shall not unduly complicate or delay the provision of the financial service.

**1** For greater certainty, competent authorities are not required to start considering applications
outside of their official working hours and working days.

& /en 117

8. Each Party shall endeavour to establish the indicative timeframe for processing an application

and shall, upon request of the applicant and without undue delay, provide information concerning

the status of the application.

9. If a competent authority considers an application incomplete for processing under the laws

and regulations of the Party, it shall, within a reasonable period of time, and to the extent

practicable:

(a) inform the applicant that the application is incomplete;

(b) at the request of the applicant, identify the additional information required to complete the

application, or otherwise provide guidance on why the application is considered incomplete;

and

(c) provide the applicant with the opportunity **[1]** to submit the additional information required to

complete the application;

10. If none of the actions set out in subparagraphs (a), (b) or (c) of paragraph 9 is practicable, the

competent authorities shall nevertheless, if the application is rejected due to incompleteness, ensure

that they inform the applicant thereof within a reasonable period of time.

**1** Such opportunity does not require a competent authority to provide extensions of deadlines.

& /en 118

11. Each Party shall ensure that its competent authorities, with respect to authorisation fees **[1]** that

they charge, provide applicants with a schedule of fees or information on how fee amounts are

determined, and do not use the fees as a means of avoiding the commitments or obligations of the

Party.

12. A competent authority shall take its decision in an independent manner and not be

accountable to any person supplying the services for which the licence or authorisation is required.

13. Each Party shall ensure that the processing of an application, including reaching a final

decision, is completed within a reasonable timeframe after the date of submission of a complete

application and that the applicant is informed of the decision concerning the application, to the

extent possible, in writing.

12. If an application is rejected by the competent authority, the applicant shall be informed, either

at its own request or upon the initiative of the competent authority, in writing and without undue

delay. To the extent practicable, the applicant shall be informed of the reasons for the decision to

reject the application and of the timeframe for an appeal against that decision. An applicant should

be permitted, within reasonable time limits, to resubmit an application.

15. If examinations are required for an authorisation, the competent authority shall ensure that

such examinations are organised at reasonably frequent intervals and provide a reasonable period of

time to enable applicants to request to take the examination.

**1** Authorisation fees do not include fees for the use of natural resources, payments for auction,
tendering or other non-discriminatory means of awarding concessions, or mandated
contributions to universal service provision.

& /en 119

16. Each Party shall ensure that an authorisation, once granted, enters into effect without undue

delay in accordance with the terms and conditions specified therein.

ARTICLE 18.14

Financial services new to the territory of a Party

1. A Party shall permit a financial institution of the other Party, other than a branch, to supply

any new financial service that the former Party would permit its own financial institutions to supply

in accordance with its law, in like situations, provided that the introduction of the new financial

services does not require new laws or regulations or the modification of existing laws or

regulations.

2. A Party may determine the institutional and juridical form through which the new financial

service may be supplied and may require authorisation for the supply of the service. If such

authorisation is required, a decision shall be made within a reasonable period of time and the

authorisation may only be refused for prudential reasons.

3. This Article does not prevent a financial institution of a Party from applying to the other Party

to consider authorising the supply of a financial service that is not supplied within the territory of

either Party. Such application is subject to the law of the Party receiving the application and is not

subject to the obligations of this Article.

& /en 120

ARTICLE 18.15

Self-regulatory organisations

When a Party requires a financial institution or a cross-border financial service supplier of the other

Party to be a member of, participate in, or have access to, a self-regulatory organisation in order to

provide a financial service in or into the territory of the former Party, it shall ensure that the

self-regulatory organisation observes the obligations set out in Articles 10.6, 10.8, 11.4 and 11.5.

ARTICLE 18.16

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 territory access to payment and clearing systems

operated by public entities, and to official funding and refinancing facilities available in the normal

course of ordinary business. This Article is not intended to confer access to the lender of last resort

facilities of the Party.

& /en 121

ARTICLE 18.17

Sub-Committee on Financial Services

1. The Sub-Committee on Financial Services ("Sub-Committee"), established pursuant to

Article 33.4(1), shall be composed of representatives of the Parties responsible for financial

services.

2. The Sub-Committee shall:

(a) supervise the implementation of this Chapter;

(b) consider issues regarding financial services that are referred to it by a Party; and

(c) carry out a dialogue on the regulation of the financial services sector with a view to improving

mutual knowledge of the respective regulatory systems of the Parties and to cooperate in the

development of international standards.

& /en 122

ARTICLE 18.18

Technical discussions and consultations

1. A Party may request technical discussions and consultations with the other Party regarding

any matter arising under this Agreement that affects financial services. The other Party shall give

sympathetic consideration to that request. The Parties shall report the results of their discussions

and consultations to the Sub-Committee.

2. Each Party shall ensure that in those technical discussions and consultations, its delegation

includes officials with the relevant expertise in financial services.

3. For greater certainty, nothing in this Article shall be construed as requiring a Party to:

(a) derogate from its relevant laws and regulations regarding the sharing of information among

financial regulators or from the requirements of an agreement or arrangement between

financial authorities of the Parties; or

(b) require regulatory authorities to take any action that would interfere with specific regulatory,

supervisory, administrative, or enforcement matters.

& /en 123

4. Nothing in this Article shall be construed as impeding a Party that requires information for

supervisory purposes concerning a financial institution located in the territory of the other Party or a

cross-border financial service supplier of the other Party, from approaching the competent

regulatory authority of the other Party to seek the information.

5. For greater certainty, this Article is without prejudice to either Party's rights and obligations

under Chapter 31.

ARTICLE 18.19

Dispute settlement

1. Chapter 31, including Annexes 31-A and 31-B, applies as modified by this Article to the

settlement of disputes concerning the application or interpretation of this Chapter.

2. In addition to the requirements set out in Article 31.9, panellists shall have expertise or

experience in financial services law or practice, which may include the regulation of financial

institutions, unless the Parties agree otherwise.

& /en 124

3. The Sub-Committee shall recommend the Trade Committee the establishment of a list of at

least 15 individuals, fulfilling the requirements referred to in paragraph 2, who are willing and able

to serve as panellists. The Trade Committee shall establish such list no later than one year after the

date of entry into force of this Agreement. The list shall be composed of three sub-lists:

(a) one sub-list of individuals established on the basis of proposals by the European Union;

(b) one sub-list of individuals established on the basis of proposals by Chile; and

(c) one sub-list of individuals that are not nationals of either Party and who shall serve as

chairperson to the panel.

4. Each sub-list shall include at least five individuals. The Trade Committee shall ensure that the

list is always maintained at this minimum number of individuals.

5. For the purposes of this Chapter, the list referred to in paragraph 3 of this Article shall, after

establishment, replace the list established pursuant to Article 31.8(1).

& /en 125

CHAPTER 19

DIGITAL TRADE

SECTION A

GENERAL PROVISIONS

ARTICLE 19.1

Scope

1. This Chapter applies to trade enabled by electronic means.

2. This Chapter does not apply to audio-visual services.

ARTICLE 19.2

Definitions

1. The definitions in Articles 10.2 and 11.2 apply to this Chapter.

& /en 126

2. For the purposes of this Chapter:

(a) "consumer" means any natural person, or juridical person if provided for in the laws and

regulations of a Party, using or requesting a public telecommunications service for purposes

outside its trade, business or profession;

(b) "direct marketing communication" means any form of commercial advertising by which a

natural or juridical person communicates marketing messages directly to end-users via a

public telecommunications service and covers at least electronic mail and text and multimedia

messages;

(c) "electronic authentication" means a process that enables to confirm:

(i) the electronic identification of a natural or juridical person; or

(ii) the origin and integrity of data in electronic form;

(d) "electronic seal" means data in electronic form used by a juridical person which is attached to,

or logically associated with, other data in electronic form to ensure the origin and integrity of

that other data;

& /en 127

(e) "electronic signature" means data in electronic form which is attached to, or logically

associated with, other data in electronic form, and fulfils the following requirements:

(i) it is used by a natural person to agree on the data in electronic form to which it relates;

and

(ii) it is linked to the data in electronic form to which it relates in such a way that any

subsequent alteration in the data in electronic form is detectable;

(f) "electronic trust services" means an electronic service consisting of the creation, verification,

and validation of electronic signatures, electronic seals, electronic time stamps, electronic

registered delivery, website authentication and certificates related to that service;

(g) "end-user" means any natural or juridical person using or requesting a public

telecommunications service, either as a consumer or, if provided for in the laws and

regulations of a Party, for trade, business or professional purposes;

(h) "personal data" means personal data as defined in subparagraph (u) of Article 1.3; and

(i) "public telecommunications service" means public telecommunications service as defined in

subparagraph (j) of Article 16.2.

& /en 128

ARTICLE 19.3

Right to regulate

The Parties reaffirm the right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public health, social services, education, safety, the

environment, including climate change, public morals, social or consumer protection, privacy and

data protection, or the promotion and protection of cultural diversity.

ARTICLE 19.4

Exceptions

Nothing in this Chapter prevents the Parties from adopting or maintaining measures in accordance

with Articles 18.11, 32.1 and 32.2 for the public interest reasons set out therein.

& /en 129

SECTION B

DATA FLOWS AND PERSONAL DATA PROTECTION

ARTICLE 19.5

Cross-border data flows

The Parties are committed to ensuring cross-border data flows to facilitate digital trade. To that end,

a Party shall not restrict cross-border data flows between the Parties by:

(a) requiring the use of computing facilities or network elements in the territory of that Party for

processing, including by imposing the use of computing facilities or network elements that are

certified or approved in the territory of that Party;

(b) requiring the localisation of data in the territory of that Party for storage or processing;

(c) prohibiting storage or processing in the territory of the other Party; or

(d) making the cross-border transfer of data contingent upon the use of computing facilities or

network elements in the territory of that Party or upon localisation requirements in the

territory of that Party.

& /en 130

ARTICLE 19.6

Protection of personal data and privacy

1. Each Party recognises that the protection of personal data and privacy is a fundamental right

and that high standards in this regard contribute to trust in the digital economy and to the

development of trade.

2. Each Party may adopt and maintain the measures it deems appropriate to ensure the protection

of personal data and privacy, including the adoption and application of rules for the cross-border

transfer of personal data. Nothing in this Agreement shall affect the protection of personal data and

privacy afforded by the measures of a Party.

SECTION C

SPECIFIC PROVISIONS

ARTICLE 19.7

Customs duties on electronic transmissions

A Party shall not impose customs duties on electronic transmissions between a person of that Party

and a person of the other Party.

& /en 131

ARTICLE 19.8

No prior authorisation

1. A Party shall not require prior authorisation solely on the ground that a service is provided

online **[1]**, or adopt or maintain any other requirement having equivalent effect.

2. Paragraph 1 does not apply to telecommunications services, broadcasting services, gambling

services, legal representation services, or to services of notaries or equivalent professions to the

extent that they involve a direct and specific connection with the exercise of public authority.

ARTICLE 19.9

Conclusion of contracts by electronic means

1. Each Party shall ensure that its laws and regulations allow contracts to be concluded by

electronic means and that the legal requirements for contractual processes do not create obstacles

for the use of contracts concluded by electronic means or result in such contracts being deprived of

legal effect and validity for having been concluded by electronic means.

**1** A service is provided online when it is provided by electronic means and without the persons
being simultaneously present.

& /en 132

2. Paragraph 1 does not apply to:

(a) broadcasting services, gambling services and legal representation services;

(b) services of notaries or equivalent professions involving a direct and specific connection with

the exercise of public authority; and

(c) contracts that establish or transfer rights in real estate, contracts requiring by law the

involvement of courts, public authorities or professions exercising public authority, contracts

of suretyship granted and or collateral securities furnished by persons acting for purposes

outside their trade, business or profession and contracts governed by family law or by the law

of succession.

ARTICLE 19.10

Electronic trust services and electronic authentication

1. A Party shall not deny the legal effect and admissibility as evidence in judicial or

administrative proceedings of an electronic trust service and an electronic authentication on the

basis that it is in electronic form.

& /en 133

2. A Party shall not adopt or maintain measures that would:

(a) prohibit parties to an electronic transaction from mutually determining the appropriate method

of electronic authentication for their transaction; or

(b) prevent parties to an electronic transaction from having the opportunity to prove to judicial or

administrative authorities that their electronic transaction complies with any legal

requirements with respect to electronic trust services and electronic authentication.

3. Notwithstanding paragraph 2, a Party may require that for a particular category of electronic

transactions, the method of electronic authentication or electronic trust service:

(a) is certified by an authority accredited in accordance with its law; or

(b) meets certain performance standards which shall be objective, transparent and non

discriminatory and only relate to the specific characteristics of the category of electronic

transactions concerned.

& /en 134

ARTICLE 19.11

Online consumer trust

1. The Parties recognise the importance of enhancing consumer trust in digital trade. Each Party

shall adopt or maintain measures to ensure the effective protection of consumers engaging in

electronic commerce transactions, including measures that:

(a) proscribe fraudulent and deceptive commercial practices;

(b) require suppliers of goods and services to act in good faith and abide by fair commercial

practices, including through the prohibition of charging consumers for unsolicited goods and

services;

(c) require suppliers of goods or services to provide consumers with clear and thorough

information regarding their identity and contact details **[1]**, as well as regarding the goods or

services, the transaction and the applicable consumer rights; and

(d) grant consumers access to redress to claim their rights, including a right to remedies in cases

where goods or services are paid and not delivered or provided as agreed.

**1** In the case of intermediary service suppliers, this also includes the identity and contact details
of the actual supplier of the good or the service.

& /en 135

2. The Parties recognise the importance of cooperation between their respective national

consumer protection agencies or other relevant bodies on activities related to electronic commerce

in order to enhance consumer trust.

ARTICLE 19.12

Unsolicited direct marketing communications

1. Each Party shall ensure that end-users are effectively protected against unsolicited direct

marketing communications.

2. Each Party shall adopt or maintain effective measures regarding unsolicited direct marketing

communications that:

(a) require suppliers of unsolicited direct marketing communications to ensure that recipients are

able to prevent ongoing reception of those communications; or

(b) require the consent, as specified according to its laws and regulations, of recipients to receive

direct marketing communications.

& /en 136

3. Each Party shall ensure that direct marketing communications are clearly identifiable as such,

clearly disclose on whose behalf they are made and contain the necessary information to enable

end-users to request cessation free of charge and at any moment.

ARTICLE 19.13

Prohibition of mandatory transfer of or access to source code

1. A Party shall not require the transfer of, or access to, source code of software owned by a

natural or juridical person of the other Party. This paragraph does not apply to the voluntary transfer

of, or granting of access to, source code on a commercial basis by a person of the other Party, for

instance in the context of a public procurement transaction or a freely negotiated contract. Nothing

in this paragraph prevents a person of a Party from licencing its software on a free and open-source

basis.

2. For greater certainty, Articles 18.11, 32.1 and 32.2 can apply to measures of a Party adopted

or maintained in the context of a certification procedure.

3. Nothing in this Article shall affect:

(a) requirements by a court, administrative tribunal or competition authority to remedy a

violation of competition law;

& /en 137

(b) protection and enforcement of intellectual property rights; or

(c) the right of a Party to take measures in accordance with Article 21.3.

ARTICLE 19.14

Cooperation on regulatory issues with regard to digital trade

1. The Parties shall cooperate by exchanging information on their respective law, as well as on

the implementation of that law, related to regulatory issues arising from digital trade, including:

(a) the recognition and facilitation of interoperable cross-border electronic trust and electronic

authentication;

(b) the treatment of direct marketing communications;

(c) the protection of consumers online; and

(d) any other regulatory issue relevant for the development of digital trade.

2. The Parties shall maintain a dialogue based on the exchange of information referred to in

paragraph 1.

& /en 138

3. This Article does not apply to the rules and measures of a Party for the protection of personal

data and privacy, including on cross-border transfer of personal data.

ARTICLE 19.15

Review

Upon request of either Party, the Sub-Committee on Services and Investment referred to in

Article 11.10 shall review the implementation of this Chapter, particularly in light of relevant

changes affecting digital trade that might arise from new business models or technologies. The

Sub-Committee on Services and Investment shall report its findings and may make any necessary

recommendations to the Trade Committee.

& /en 139

CHAPTER 20

CAPITAL MOVEMENTS, PAYMENTS AND TRANSFERS

AND TEMPORARY SAFEGUARD MEASURES

ARTICLE 20.1

Objective and scope

The objective of this Chapter is to enable the free movement of capital and payments related to

transactions liberalised under this Agreement. **[1]**

ARTICLE 20.2

Current account

Without prejudice to other provisions of this Agreement, each Party shall allow, in freely

convertible currency and in accordance with the Articles of the Agreement of the International

Monetary Fund adopted in Bretton Woods, New Hampshire on 22 July 1944, any payments and

transfers with regard to transactions on the current account of the balance of payments that fall

within the scope of this Agreement.

**1** For greater certainty, this Chapter is subject to Annex 20.

& /en 140

ARTICLE 20.3

Capital movements

Without prejudice to other provisions of this Agreement, each Party shall allow, with regard to

transactions on the capital and financial account of the balance of payments, the free movement of

capital for the purpose of liberalisation of investment and other transactions as provided for in

Chapter 10, 11 and 18.

ARTICLE 20.4

Application of laws and regulations relating to capital movements, payments or transfers

1. Articles 20.2 and 20.3 shall not be construed as preventing a Party from applying its laws and

regulations relating to:

(a) bankruptcy, insolvency or the protection of the rights of creditors;

(b) issuing, trading or dealing in financial instruments such as securities, futures or derivatives;

(c) financial reporting or record keeping of capital movements, payments or transfers if necessary

to assist law enforcement or financial regulatory authorities;

& /en 141

(d) criminal or penal offenses, deceptive or fraudulent practices;

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

(f) social security, public retirement or compulsory savings schemes.

2. The laws and regulations referred to in paragraph 1 of this Article shall be applied in an

equitable and non-discriminatory manner, and not in a way that would constitute a disguised

restriction on capital movements, payments or transfers.

ARTICLE 20.5

Temporary safeguard measures

In exceptional circumstances of serious difficulties for the operation of the economic and monetary

union of the European Union, or threat thereof, the European Union may adopt or maintain

safeguard measures with regard to capital movements, payments or transfers for a period not

exceeding six months. Those measures shall be limited to the extent that is strictly necessary.

& /en 142

ARTICLE 20.6

Restrictions in case of balance of payments and external financial difficulties

1. If a Party experiences serious balance of payments or external financial difficulties, or threat

thereof, it may adopt or maintain restrictive measures with regard to capital movements, payments

or transfers **[1]** .

2. The measures referred to in paragraph 1 of this Article shall:

(a) be consistent with the Articles of the Agreement of the International Monetary Fund, as

applicable;

(b) not exceed those necessary to deal with the situation specified in paragraph 1 of this Article;

(c) be temporary and shall be phased out progressively as the situation specified in paragraph 1 of

this Article improves;

(d) avoid unnecessary damage to the commercial, economic and financial interests of the other

Party; and

**1** For greater certainty, serious balance of payments or external financial difficulties, or threat
thereof, may be caused among other factors by serious difficulties related to monetary or
exchange rate policies, or threat thereof.

& /en 143

(e) be non-discriminatory as compared to third countries in like situations.

3. In the case of trade in goods, a Party may adopt or maintain restrictive measures in order to

safeguard its external financial position or its balance of payments. These measures shall be in

accordance with GATT 1994 and the Understanding on the Balance-of-Payments Provisions of the

General Agreement on Tariffs and Trade 1994.

4. In the case of trade in services, a Party may adopt or maintain restrictive measures in order to

safeguard its external financial position or its balance of payments. These measures shall be in

accordance with Article XII of GATS.

5. A Party that adopts or maintains measures referred to in paragraphs 1 and 2 of this Article

shall promptly notify them to the other Party.

6. If restrictive measures are adopted or maintained under this Article, the Parties shall promptly

hold consultations in the Sub-Committee on Services and Investment, unless such consultations are

held in other fora to which both Parties are members. The consultations shall assess the balance of

payments or external financial difficulties that led to the respective measures, taking into account,

_inter alia_, such factors as:

(a) the nature and extent of the difficulties;

& /en 144

(b) the external economic and trading environment; and

(c) alternative corrective measures which may be available.

7. The consultations held pursuant to paragraph 6 shall address the compliance of the restrictive

measures with paragraphs 1 and 2 of this Article. Those consultations shall be based on all relevant

findings of statistical or factual nature presented by the International Monetary Fund ("IMF"),

where available, and their conclusions shall take into account the assessment by the IMF of the

balance of payments and the external financial situation of the Party concerned.

& /en 145

CHAPTER 21

PUBLIC PROCUREMENT

ARTICLE 21.1

Definitions

For the purposes of this Chapter and Annexes 21-A and 21-B:

(a) "commercial goods or services" means goods or services of a type generally sold or offered

for sale in the commercial marketplace to, and customarily purchased by, non-governmental

buyers for non-governmental purposes;

(b) "construction service" means a service that has as its objective the realisation by whatever

means of civil or building works, based on Division 51 of the CPC;

(c) "electronic auction" means an iterative process that involves the use of electronic means for

the presentation by suppliers of either new prices, or new values for quantifiable non-price

elements of the tender related to the evaluation criteria, or both, resulting in a ranking or re

ranking of tenders;

& /en 146

(d) "in writing" or "written" means any worded or numbered expression that can be read,

reproduced and later communicated; it may include electronically transmitted and stored

information;

(e) "limited tendering" means a procurement method whereby the procuring entity contacts a

supplier or suppliers of its choice;

(f) "measure" means any law, regulation, procedure, administrative guidance or practice, or any

action of a procuring entity relating to a covered procurement;

(g) "multi-use list" means a list of suppliers that a procuring entity has determined satisfy the

conditions for participation in that list, and that the procuring entity intends to use more than

once;

(h) "notice of intended procurement" means a notice published by a procuring entity inviting

interested suppliers to submit a request for participation, a tender, or both;

(i) "offset" means any condition or undertaking that encourages local development or improves a

Party's balance-of-payments accounts, such as the use of domestic content, the licensing of

technology, investment, counter-trade and similar action or requirement;

(j) "open tendering" means a procurement method whereby all interested suppliers may submit a

tender;

& /en 147

(k) "procuring entity" means an entity covered under Section A, B or C of Annex 21-A or 21-B;

(l) "qualified supplier" means a supplier that a procuring entity recognises as having satisfied the

conditions for participation;

(m) "selective tendering" means a procurement method whereby only qualified suppliers are

invited by the procuring entity to submit a tender;

(n) "services" includes construction services, unless otherwise specified;

(o) "standard" means a document approved by a recognised body that provides for common and

repeated use, rules, guidelines or characteristics for goods or services, or related processes and

production methods, with which compliance is not mandatory; it may also include or deal

exclusively with terminology, symbols, packaging, marking or labelling requirements as they

apply to a good, service, process or production method;

(p) "supplier" means a person or group of persons that provides or could provide goods or

services; and

& /en 148

(q) "technical specification" means a tendering requirement that:

(i) sets out the characteristics of:

(A) goods to be procured, including quality, performance, safety and dimensions, or

the processes and methods for their production; or

(B) services to be procured, including quality, performance, safety or the processes or

methods for their provision; or

(ii) addresses terminology, symbols, packaging, marking or labelling requirements, as they

apply to a good or service.

ARTICLE 21.2

Scope and coverage

1. This Chapter applies to any measure regarding covered procurement, whether or not it is

conducted exclusively or partially by electronic means.

& /en 149

2. For the purposes of this Chapter, "covered procurement" means procurement for

governmental purposes:

(a) of a good, a service, or any combination thereof:

(i) as specified in Annex 21-A or 21-B; and

(ii) not procured with a view to commercial sale or resale, or for use in the production or

supply of a good or a service for commercial sale or resale;

(b) by any contractual means, including purchase, lease and rental or hire purchase, with or

without an option to buy;

(c) for which the value, as estimated in accordance with paragraphs 6 to 8, equals or exceeds the

relevant threshold specified in Annex 21-A or 21-B, at the time of publication of a notice in

accordance with Article 21.6;

(d) by a procuring entity; and

(e) that is not otherwise excluded from coverage pursuant to paragraph 3 of this Article or in

Annex 21-A or 21-B.

& /en 150

3. Except where provided otherwise in Annex 21-A or 21-B, this Chapter does not apply to:

(a) the acquisition or rental of land, existing buildings or other immovable property or the rights

thereon;

(b) non-contractual agreements or any form of assistance that a Party provides, including

cooperative agreements, grants, loans, subsidies, equity infusions, guarantees and fiscal

incentives;

(c) the procurement or acquisition of fiscal agency or depository services, liquidation and

management services for regulated financial institutions or services related to the sale,

redemption and distribution of public debt, including loans and government bonds, notes and

other securities;

(d) public employment contracts;

(e) procurement conducted:

(i) for the specific purpose of providing international assistance, including development

aid;

& /en 151

(ii) under the particular procedure or condition of an international agreement relating to the

stationing of troops or relating to the joint implementation by the signatory countries of

a project; or

(iii) under the particular procedure or condition of an international organisation, or funded

by international grants, loans or other assistance if the applicable procedure or condition

would be inconsistent with this Chapter; or

(f) financial services.

4. A procurement subject to this Chapter shall be all procurement covered by Annex 21-A

or 21-B, in which each Party's commitments are set out as follows:

(a) in Section A of Annexes 21-A and 21-B, the central government entities whose procurement

is covered by this Chapter;

(b) in Section B of Annexes 21-A and 21-B, the sub-central government entities whose

procurement is covered by this Chapter;

(c) in Section C of Annexes 21-A and 21-B, all other entities whose procurement is covered by

this Chapter;

(d) in Section D of Annexes 21-A and 21-B, the goods covered by this Chapter;

& /en 152

(e) in Section E of Annexes 21-A and 21-B, the services, other than construction services,

covered by this Chapter;

(f) in Section F of Annexes 21-A and 21-B, the construction services covered by this Chapter;

(g) in Section G of Annexes 21-A and 21-B, public works concessions covered by this Chapter;

(h) in Section H of Annexes 21-A and 21-B, any General Notes;

(i) in Section I of Annexes 21-A and 21-B, the media in which the Party publishes its

procurement notices, award notices, and other information related to its public procurement

system as set out in this Chapter;

(j) in Section J of Annex 21-B, the conversion rate to be used for the threshold values.

5. If a procuring entity, in the context of covered procurement, requires persons not covered

under Annex 21-A or 21-B to procure in accordance with particular requirements, Article 21.4 shall

apply _mutatis mutandis_ to such requirements.

6. In estimating the value of a procurement for the purpose of ascertaining whether it is a

covered procurement, a procuring entity:

(a) shall not divide a procurement into separate procurements or select or use a particular

valuation method for estimating the value of a procurement with the intention of totally or

partially excluding it from the application of this Chapter; and

& /en 153

(b) shall include the estimated maximum total value of the procurement over its entire duration,

whether awarded to one or more suppliers, taking into account all forms of remuneration,

including:

(i) premiums, fees, commissions and interest; and

(ii) if the procurement provides for the possibility of options, the total value of such

options.

7. If an individual requirement for a procurement results in the award of more than one contract,

or in the award of contracts in separate parts ("recurring contracts") the calculation of the estimated

maximum total value shall be based on:

(a) the value of recurring contracts of the same type of good or service awarded during the

preceding 12 months or the procuring entity's preceding fiscal year, adjusted, if possible, to

take into account anticipated changes in the quantity or value of the good or service being

procured over the following 12 months; or

(b) the estimated value of recurring contracts of the same type of good or service to be awarded

during the 12 months following the initial contract award or the procuring entity's fiscal year.

& /en 154

8. In the case of procurement by lease, rental or hire purchase of goods or services, or

procurement for which a total price is not specified, the basis for valuation shall be:

(a) in case of a fixed-term contract:

(i) if the term of the contract is 12 months or less, the total estimated maximum value for

its duration;

(ii) if the term of the contract exceeds 12 months, the total estimated maximum value,

including any estimated residual value;

(b) if the contract is for an indefinite period, the estimated monthly instalment multiplied by 48;

(c) if it is not certain whether the contract is to be a fixed-term contract, subparagraph (b) shall

apply.

ARTICLE 21.3

Security and general exceptions

1. Nothing in this Chapter shall be construed to prevent a Party from taking any action or not

disclosing any information that it considers necessary for the protection of its essential security

interests relating to the procurement of arms, ammunition or war materials, or to procurement

indispensable for national security or for national defence purposes.

& /en 155

2. Subject to the requirement that such measures are not applied in a manner that would

constitute a means of arbitrary or unjustifiable discrimination between Parties where the same

conditions prevail, or a disguised restriction on international trade, nothing in this Chapter shall be

construed to prevent a Party from imposing or enforcing 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 persons with disabilities, of philanthropic institutions or of

prison labour.

3. The Parties understand that subparagraph (b) of paragraph 2 includes environmental measures

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

& /en 156

ARTICLE 21.4

General principles

Non-discrimination

1. With respect to any measure regarding covered procurement, each Party, including its

procuring entities, shall accord immediately and unconditionally to the goods and services of the

other Party and to the suppliers of the other Party offering goods or services of either Party,

treatment no less favourable than the treatment that the Party, including its procuring entities,

accords to its own goods, services and suppliers.

2. With respect to any measure regarding covered procurement, a Party, including its procuring

entities, shall not:

(a) treat a locally established supplier less favourably than another locally established supplier on

the basis of the degree of foreign affiliation or ownership; or

(b) discriminate against a locally established supplier on the basis that the goods or services

offered by that supplier for a particular procurement are goods or services of the other Party.

& /en 157

Use of electronic means

3. The Parties shall ensure that all communication and information exchange for covered

procurement are performed using electronic means, including for the publication of procurement

information, notices and tender documentation, and for the receipt of tenders. When conducting

covered procurement by electronic means, a procuring entity shall:

(a) ensure that the procurement is conducted using information technology systems and software,

including those related to authentication and encryption of information, that are generally

available and interoperable with other generally available information technology systems and

software;

(b) establish and maintain mechanisms that ensure the integrity of requests for participation and

tenders, including establishment of the time of receipt and the prevention of inappropriate

access; and

(c) use electronic means of information and communication for the publication of notices and

tender documentation in procurement procedures and to the widest extent practicable for the

submission of tenders.

& /en 158

Conduct of procurement

4. A procuring entity shall conduct covered procurement in a transparent and impartial manner

that:

(a) is consistent with this Chapter, using methods such as open tendering, selective tendering and

limited tendering; and

(b) prevents conflicts of interest and corrupt practices, in accordance with relevant laws.

Rules of origin

5. For the purposes of public procurement covered by this Chapter, a Party shall not apply rules

of origin to goods imported from the other Party that are different from the rules of origin which

that Party applies in the normal course of trade to imports of the same goods.

Offsets

6. With regard to covered procurement, a Party, including its procuring entities, shall not seek,

take account of, impose or enforce any offset at any stage of a procurement.

& /en 159

Measures not specific to procurement

7. Paragraphs 1 and 2 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 or formalities and measures affecting trade in services other than measures governing

covered procurement.

Anti-corruption measures

8. Each Party shall ensure that it has appropriate measures in place to address and prevent

corruption in their public procurement. Such measures may include procedures to render ineligible

for participation in the Party's procurements, either indefinitely or for a stated period of time,

suppliers that the judicial authorities of the Party have determined by final decision to have engaged

in bribery, fraud or other illegal actions in relation to public procurement in the territory of that

Party. Each Party shall also ensure that it has in place policies and procedures to eliminate to the

extent possible or manage any potential conflict of interest on the part of those engaged in or having

influence over procurement.

& /en 160

ARTICLE 21.5

Information on the procurement system

1. Each Party shall:

(a) promptly publish any law, regulation, judicial decision, administrative ruling of general

application, standard contract clause mandated by law or regulation and incorporated by

reference in notices or tender documentation and procedure regarding covered procurement,

and any modifications thereof, in the relevant electronic or paper media officially designated

at national level, which shall be widely disseminated and remain readily accessible to the

public; and

(b) provide an explanation thereof to the other Party, upon request.

2. Each Party shall list, in Section I of Annex 21-A or 21-B, respectively:

(a) the electronic or paper media in which the Party publishes the information set out in

paragraph 1;

(b) the electronic or paper media in which the Party publishes the notices required by

Articles 21.6, 21.8(9) and 21.17(2) ; and

& /en 161

(c) the website address or addresses where the Party publishes:

(i) its procurement statistics pursuant to Article 21.17(4); or

(ii) its notices concerning awarded contracts pursuant to Article 21.17(5).

3. Each Party shall promptly notify the Sub-Committee referred to in Article 21.21 of any

modification to the Party's information listed in Section I of Annex 21-A or 21- B, respectively.

ARTICLE 21.6

Notices

Notice of intended procurement

1. For each covered procurement, a procuring entity shall publish a notice of intended

procurement, except in the circumstances described in Article 21.14.

& /en 162

2. Except as otherwise provided in this Chapter, each notice of intended procurement shall

include:

(a) the name and address of the procuring entity and other information necessary to contact the

procuring entity and obtain all relevant documents relating to the procurement, and their cost

and terms of payment, if any;

(b) a description of the procurement, including the nature and the quantity of the goods or

services to be procured or, where the quantity is not known, the estimated quantity;

(c) for recurring contracts, an estimate, if possible, of the timing of subsequent notices of

intended procurement;

(d) a description of any options;

(e) the time-frame for delivery of goods or services or the duration of the contract;

(f) the procurement method that will be used and whether it will involve negotiation or electronic

auction mechanism;

(g) where applicable, the address and any final date for the submission of requests for

participation in the procurement;

& /en 163

(h) the address and the final date for the submission of tenders;

(i) the language or languages in which tenders or requests for participation may be submitted, if

they may be submitted in a language other than an official language of the Party of the

procuring entity;

(j) a list and brief description of any conditions for participation of suppliers, including any

requirements for specific documents or certifications to be provided by suppliers in

connection therewith, unless such requirements are included in tender documentation that is

made available to all interested suppliers at the same time as the notice of intended

procurement;

(k) where, pursuant to Article 21.8, a procuring entity intends to select a limited number of

qualified suppliers to be invited to tender, the criteria that will be used to select them and,

where applicable, any limitation on the number of suppliers that will be permitted to tender;

and

(l) an indication that the procurement is covered by this Chapter.

& /en 164

Summary notice

3. For each case of intended procurement, a procuring entity shall publish a summary notice that

is readily accessible, at the same time as the publication of the notice of intended procurement, in

one of the WTO official languages **[1]** . The summary notice shall contain at least the following

information:

(a) the subject-matter of the procurement;

(b) the final date for the submission of tenders or, where applicable, any final date for the

submission of requests for participation in the procurement or for inclusion on a multi-use list;

and

(c) the address from which documents relating to the procurement may be requested.

Notice of planned procurement

4. Procuring entities are encouraged to publish as early as possible in each fiscal year a notice

regarding their future procurement plans ("notice of planned procurement"). The notice of planned

procurement should include the subject-matter of the procurement and the planned date of the

publication of the notice of intended procurement.

**1** For greater certainty, WTO official languages are English, Spanish and French.

& /en 165

5. A procuring entity covered under Sections B or C of Annex 21-A or 21-B may use a notice of

planned procurement as a notice of intended procurement provided that the notice of planned

procurement includes as much of the information referred to in paragraph 2 of this Article as is

available to the entity and a statement that interested suppliers should express their interest in the

procurement to the procuring entity.

Rules common to notices

6. The notice of intended procurement, summary notice and notice of planned procurement,

shall be directly accessible by electronic means, free of charge, through a single point of access on

the internet. In addition, the notices may also be published in an appropriate paper medium, which

shall be widely disseminated and shall remain readily accessible to the public, at least until

expiration of the time period indicated in the notice.

The appropriate paper and electronic medium is listed by each Party in Section I of Annex 21-A or

21-B respectively.

& /en 166

7. Notwithstanding the requirements set out in paragraph 6 regarding the accessibility of the

notices of intended procurement, summary notices and notices of planned procurement, by

electronic means free of charge through a single point of access, Chile shall, from the date of entry

into force of this Agreement and for the transition period of three years until the single point of

access is fully operational, establish a gateway site, as a temporary alternative to a single point of

access, which should be accessible free of charge and should provide links to the platforms or

websites on which the notices are published. The gateway shall contain links to a maximum of four

websites, that are:

(a) _Mercado público_ ;

(b) _Ministerio de Obras Públicas_ ;

(c) _Dirección General de Concesiones_ ; and

(d) _Diario Oficial_ .

8. The Parties shall foresee a periodical review of paragraph 7 of this Article, including a

discussion within the Sub-Committee referred to in Article 21.21, in particular on the status of

implementation of the single point of access.

& /en 167

ARTICLE 21.7

Conditions for participation

1. A procuring entity shall limit any conditions for participation in a procurement to those that

are essential to ensure that a supplier has the legal and financial capacities and the commercial and

technical abilities to undertake the relevant procurement.

2. In establishing the conditions for participation, a procuring entity:

(a) shall not impose the condition that, in order for a supplier to participate in a procurement, that

supplier has previously been awarded one or more contracts by a procuring entity of a Party;

(b) may require relevant prior experience, where essential to meet the requirements of the

procurement; and

(c) shall not require prior experience in the territory of the Party to be a condition of the

procurement.

& /en 168

3. In assessing whether a supplier satisfies the conditions for participation, a procuring entity:

(a) shall evaluate the financial capacity and the commercial and technical abilities of a supplier

on the basis of that supplier's business activities both inside and outside the territory of the

Party of the procuring entity; and

(b) shall base its evaluation on the conditions that the procuring entity has specified in advance in

notices or tender documentation.

4. Where there is supporting evidence, and provided that this is not applied in a manner that

would constitute a means of arbitrary or unjustifiable discrimination between the Parties, a Party,

including its procuring entities, may exclude a supplier on grounds such as:

(a) bankruptcy;

(b) false declarations;

(c) significant or persistent deficiencies in performance of any substantive requirement or

obligation under a prior contract or contracts;

(d) final judgments in respect of serious crimes or other serious offences;

& /en 169

(e) grave professional misconduct or acts or omissions that adversely reflect on the commercial

integrity of the supplier; or

(f) failure to pay taxes.

ARTICLE 21.8

Qualification of suppliers

Registration systems and qualification procedures

1. A Party, including its procuring entities, may maintain a supplier registration system under

which interested suppliers are required to register and provide certain information. In this case, the

Party shall ensure that interested suppliers have access to information on the registration system

through electronic means and that they may request registration at any time. The competent

authority shall inform them within a reasonable period of time of the decision to grant or reject this

request. If the request is rejected, the decision must be duly motivated.

2. Each Party shall ensure that:

(a) its procuring entities make efforts to minimise differences in their qualification procedures;

and

& /en 170

(b) if its procuring entities maintain registration systems, the entities make efforts to minimise

differences in their registration systems.

3. A Party, including its procuring entities, shall not adopt or apply a registration system or

qualification procedure with the purpose or the effect of creating unnecessary obstacles to the

participation of suppliers of the other Party in its procurement.

Selective tendering

4. If a procuring entity intends to use selective tendering, it shall:

(a) include in the notice of intended procurement at least the information specified in

subparagraphs (a), (b), (f), (g), (j), (k) and (l) of Article 21.6(2) and invite suppliers to submit

a request for participation; and

(b) provide, by the commencement of the time period for tendering, at least the information in

subparagraphs (c), (d), (e), (h) and (i) of Article 21.6(2) to the qualified suppliers that it

notifies as specified in subparagraph (b) of Article 21.12(3).

5. A procuring entity shall allow all qualified suppliers to participate in a particular procurement,

unless the procuring entity states in the notice of intended procurement any limitation on the

number of suppliers that will be permitted to tender and the criteria or justification for selecting the

limited number of suppliers. An invitation to submit a tender shall be addressed to a number of

suppliers that is necessary to ensure competition.

& /en 171

6. Where the tender documentation is not made publicly available from the date of publication

of the notice referred to in paragraph 4, a procuring entity shall ensure that those documents are

made available at the same time to all the qualified suppliers selected in accordance with

paragraph 5.

Multi-use lists

7. A procuring entity may maintain a multi-use list of suppliers, provided that a notice inviting

interested suppliers to apply for inclusion on the list is:

(a) published annually; and

(b) if published by electronic means, made available continuously, in the appropriate medium

listed in Section I of Annexes 21-A and 21-B.

8. The notice provided for in paragraph 7 shall include:

(a) a description of the goods or services, or categories thereof, for which the list may be used;

(b) the conditions for participation that the suppliers shall satisfy to be included in the list, and the

methods that the procuring entity will use to verify that a supplier satisfies the conditions;

(c) the name and address of the procuring entity and other information necessary to contact the

entity and obtain all relevant documents relating to the list;

& /en 172

(d) the period of validity of the list and the means for its renewal or termination or, if the period

of validity is not provided, an indication of the method by which notice of the termination of

use of the list will be given; and

(e) an indication that the list may be used for procurement covered by this Chapter.

9. Notwithstanding paragraph 7, if a multi-use list is valid for three years or less, a procuring

entity may publish the notice referred to in paragraph 7 only once, at the beginning of the period of

validity of the list, provided that the notice:

(a) states the period of validity and that further notices will not be published; and

(b) is published by electronic means and is made available continuously during the period of its

validity.

10. A procuring entity shall allow suppliers to apply at any time for inclusion on a multi-use list

and shall include on the list all qualified suppliers within a reasonably short time.

& /en 173

11. Where a supplier that is not included on a multi-use list submits a request for participation in a

procurement based on a multi-use list and all required documents, within the time period provided

for in Article 21.10(2), a procuring entity shall examine the request. The procuring entity shall not

exclude the supplier from consideration in respect of the procurement on the grounds that the entity

has insufficient time to examine the request, unless, in exceptional cases, due to the complexity of

the procurement, the entity is not able to complete the examination of the request within the time

period allowed for the submission of tenders.

Entities in Sections B and C of Annex 21-A or 21-B

12. A procuring entity covered under Section B or C of Annex 21-A or 21-B may use a notice

inviting suppliers to apply for inclusion on a multi-use list as a notice of intended procurement,

provided that:

(a) the notice is published in accordance with paragraph of this Article 7 and includes the

information required under paragraph 8 of this Article, as much of the information required

under Article 21.6.2(2) as is available, and a statement that it constitutes a notice of intended

procurement or that only the suppliers on the multi-use list will receive further notices of

procurement covered by the multi-use list; and

(b) the entity promptly provides to suppliers that have expressed an interest in a given

procurement to the entity, sufficient information to permit them to assess their interest in the

procurement, including all remaining information required in Article 21.6.2(2), to the extent

such information is available.

& /en 174

13. A procuring entity covered under Section B or C of Annex 21-A or 21-B may allow a supplier

that has applied for inclusion on a multi-use list in accordance with paragraph 10 of this Article to

tender in a given procurement, where there is sufficient time for the procuring entity to examine

whether the supplier satisfies the conditions for participation.

Information on procuring entity decisions

14. A procuring entity shall promptly inform any supplier that submits a request for participation

in a procurement or application for inclusion on a multi-use list of the procuring entity's decision

with respect to the request or application.

15. If a procuring entity rejects a supplier's request for participation in a procurement or

application for inclusion on a multi-use list, ceases to recognise a supplier as qualified, or removes a

supplier from a multi-use list, the entity shall promptly inform the supplier and, on request of the

supplier, promptly provide the supplier with a written explanation of the reasons for its decision.

ARTICLE 21.9

Technical specifications

1. A procuring entity shall not prepare, adopt or apply any technical specification or prescribe

any conformity assessment procedure with the purpose or the effect of creating unnecessary

obstacles to international trade.

& /en 175

2. In prescribing the technical specifications for the goods or services being procured, a

procuring entity shall, if appropriate:

(a) set out the technical specification in terms of performance and functional requirements, rather

than design or descriptive characteristics; and

(b) base the technical specification on international standards, if such exist; otherwise, on national

technical regulations, recognised national standards or building codes.

3. If design or descriptive characteristics are used in the technical specifications, a procuring

entity should indicate, if appropriate, that it will consider tenders of equivalent goods or services

that demonstrably fulfil the requirements of the procurement by including words such as "or

equivalent" in the tender documentation.

4. A procuring entity shall not prescribe technical specifications that require or refer to a

particular trademark or trade name, patent, copyright, design, type, specific origin, producer or

supplier, unless there is no other sufficiently precise or intelligible way of describing the

procurement requirements and provided that, in such cases, the entity includes words such as "or

equivalent" in the tender documentation.

5. A procuring entity shall not seek or accept, in a manner that would have the effect of

precluding competition, advice that may be used in the preparation or adoption of any technical

specification for a specific procurement from a person that may have a commercial interest in the

procurement.

& /en 176

6. For greater certainty, a Party, including its procuring entities, may, in accordance with this

Article, prepare, adopt or apply technical specifications to promote the conservation of natural

resources or protect the environment.

ARTICLE 21.10

Tender Documentation

1. A procuring entity shall make available to suppliers tender documentation that include all

information necessary to permit suppliers to prepare and submit responsive tenders. Unless already

provided in the notice of intended procurement, such documentation shall include a complete

description of:

(a) the procurement, including the nature and the quantity of the goods or services to be procured

or, where the quantity is not known, the estimated quantity and any requirements to be

fulfilled, including any technical specifications, conformity assessment certification, plans,

drawings or instructional materials;

(b) any conditions for participation of suppliers, including a list of information and documents

that suppliers are required to submit in connection with the conditions for participation;

(c) all evaluation criteria the entity will apply in the awarding of the contract and, unless price is

the sole criterion, the relative importance of that criteria;

& /en 177

(d) if the procuring entity will conduct the procurement by electronic means, any authentication

and encryption requirements or other requirements related to the submission of information

by electronic means;

(e) if the procuring entity will hold an electronic auction, the rules, including identification of the

elements of the tender related to the evaluation criteria, on which the auction will be

conducted;

(f) if there will be a public opening of tenders, the date, time and place for the opening and, if

appropriate, the persons authorised to be present;

(g) any other terms or conditions, including terms of payment and any limitation on the means by

which tenders may be submitted, such as whether on paper or by electronic means; and

(h) any dates for the delivery of goods or the supply of services.

2. In establishing any date for the delivery of goods or the supply of services being procured, a

procuring entity shall take into account such factors as the complexity of the procurement, the

extent of subcontracting anticipated, and the realistic time required for production, de-stocking and

transport of goods from the point of supply or for supply of services.

3. The evaluation criteria set out in the notice of intended procurement or tender documentation

may include, among others, price and other cost factors, quality, technical merit, environmental

characteristics and terms of delivery.

& /en 178

4. A procuring entity shall promptly:

(a) make available tender documentation to ensure that interested suppliers have sufficient time

to submit responsive tenders;

(b) provide, on request, the tender documentation to any interested supplier; and

(c) reply to any reasonable request for relevant information by any interested or participating

supplier within the time period established in each Party's legislation, provided that such

information does not give that supplier an advantage over other suppliers.

Modifications

5. If a procuring entity modifies the criteria or requirements set out in the notice of intended

procurement or tender documentation provided to participating suppliers, or amends or reissues a

notice or tender documentation, it shall transmit in writing all such modifications or the amended or

re-issued notice or tender documentation:

(a) to all suppliers that are participating at the time of the modification, amendment or re

issuance, if such suppliers are known to the entity, and in all other cases, in the same manner

as the original information was made available; and

(b) in adequate time, considering the nature and complexity of the procurement, to allow such

suppliers to modify and re-submit modified tenders, as appropriate.

& /en 179

ARTICLE 21.11

Environmental and social considerations

1. A Party may allow its procuring entities to use environmental and social considerations

throughout the procurement procedure provided that they are not discriminatory, they are consistent

with the prohibition of offsets in Article 21.4(6), and they are linked to the subject matter of the

contract.

2. For greater certainty, environmental and social considerations shall not be prepared, adopted

or applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination between

the Parties or a disguised restriction of trade between the Parties.

ARTICLE 21.12

Time periods

1. A procuring entity shall, consistent with its own reasonable needs, provide sufficient time for

suppliers to prepare and submit requests for participation and responsive tenders, taking into

account factors such as:

(a) the nature and complexity of the procurement;

& /en 180

(b) the extent of subcontracting anticipated; and

(c) the necessary time for transmitting tenders by non-electronic means from foreign, as well as

domestic points where electronic means are not used.

Such time periods, including any extensions thereof, shall be the same for all interested or

participating suppliers.

2. A procuring entity which uses selective tendering shall establish that the final date for the

submission of requests for participation shall not, in principle, be earlier than 25 days from the date

of publication of the notice of intended procurement. If a state of urgency duly substantiated by the

procuring entity renders such time period impracticable, the time period may be reduced to no less

than 10 days.

3. Except as provided for in paragraphs 4, 5, 7 and 8, a procuring entity shall establish that the

final date for the submission of tenders is not earlier than 40 days from the date on which:

(a) in the case of open tendering, the notice of intended procurement is published; or

(b) in the case of selective tendering, the entity notifies suppliers that they will be invited to

submit tenders, whether or not it uses a multi-use list, in the case of selective tendering.

& /en 181

4. A procuring entity may reduce the time period for tendering established in accordance with

paragraph 3 to no less than 10 days if:

(a) the procuring entity has published a notice of planned procurement as described in

Article 21.6(4) at least 40 days and not more than 12 months in advance of the publication of

the notice of intended procurement, and the notice of planned procurement contains:

(i) a description of the procurement;

(ii) the approximate final dates for the submission of tenders or requests for participation;

(iii) a statement that interested suppliers should express their interest in the procurement to

the procuring entity;

(iv) the address from which documents relating to the procurement may be obtained; and

(v) as much of the information that is required for the notice of intended procurement under

Article 21.6(2), as is available;

(b) the procuring entity, for contracts of a recurring nature, indicates in an initial notice of

intended procurement that subsequent notices will establish time periods for tendering based

on this paragraph; or

& /en 182

(c) a state of urgency duly substantiated by the procuring entity renders the time period for

tendering established in accordance with paragraph 3 impracticable.

5. A procuring entity may reduce the time period for tendering established in accordance with

paragraph 3 by five days for each of the following circumstances:

(a) the notice of intended procurement is published by electronic means;

(b) all the tender documentation is made available by electronic means from the date of the

publication of the notice of intended procurement; and

(c) the entity accepts tenders by electronic means.

6. The application of paragraph 5, in conjunction with paragraph 4, shall in no case result in the

reduction of the time period for tendering established in accordance with paragraph 3 to less than

10 days from the date on which the notice of intended procurement is published.

7. Notwithstanding any other provision in this Article, if a procuring entity purchases

commercial goods or services, or any combination thereof, it may reduce the time period for

tendering established in accordance with paragraph 3 to no less than 13 days, provided that it

publishes by electronic means, at the same time, both the notice of intended procurement and the

tender documentation. In addition, i the entity accepts tenders for commercial goods or services by

electronic means, it may reduce the time period established in accordance with paragraph 3 to no

less than 10 days.

& /en 183

8. If a procuring entity covered under Section B or C of Annex 21-A or 21-B has selected all or

a limited number of qualified suppliers, the time period for tendering may be fixed by mutual

agreement between the procuring entity and the selected suppliers. In the absence of agreement, the

period shall not be less than 10 days.

ARTICLE 21.13

Negotiation

1. A Party may provide for its procuring entities to conduct negotiations with suppliers in the

context of covered procurement:

(a) if the entity has indicated its intent to conduct negotiations in the notice of intended

procurement required under Article 21.6(2); or

(b) if it appears from the evaluation that no tender is obviously the most advantageous in terms of

the specific evaluation criteria set out in the notice of intended procurement or tender

documentation.

& /en 184

2. A procuring entity shall:

(a) ensure that any elimination of suppliers participating in negotiations is carried out in

accordance with the evaluation criteria set out in the notice of intended procurement or tender

documentation; and

(b) if negotiations are concluded, provide a common deadline for the remaining participating

suppliers to submit any new or revised tenders.

ARTICLE 21.14

Limited tendering

1. Provided that it does not use this provision for the purpose of avoiding competition among

suppliers or in a manner that discriminates against suppliers of the other Party or protects domestic

suppliers, a procuring entity may use limited tendering and may choose not to apply Article 21.6,

Article 21.7, Article 21.8, Article 21.10, and Articles 21.12, 21.13, 21.15 and 21.16 under any of the

following circumstances:

(a) if:

(i) tenders were not submitted or suppliers did not request participation;

& /en 185

(ii) none of the submitted tenders conform to the essential requirements of the tender

documentation;

(iii) none of the suppliers satisfied the conditions for participation; or

(iv) the tenders submitted have been declared collusive by the competent authority provided

that the requirements of the tender documentation are not substantially modified;

(b) if the goods or services can be supplied only by a particular supplier and no reasonable

alternative or substitute goods or services exist for any of the following reasons:

(i) the requirement is for a work of art;

(ii) the protection granted by patents, copyrights or other exclusive rights; or

(iii) an absence of competition for technical reasons;

(c) for additional deliveries by the original supplier of goods or services that were not included in

the initial procurement if a change of supplier for such additional goods or services:

(i) cannot be made for economic or technical reasons such as requirements of

interchangeability or interoperability with existing equipment, software, services or

installations procured under the initial procurement; and

& /en 186

(ii) would cause significant inconvenience or substantial duplication of costs for the

procuring entity;

(d) insofar as is strictly necessary where, for reasons of extreme urgency brought about by events

unforeseeable by the procuring entity, the goods or services could not be obtained in time

using open tendering or selective tendering;

(e) for goods purchased on a commodity market;

(f) where a procuring entity procures a prototype or a first good or service that is developed at its

request in the course of, and for, a particular contract for research, experiment, study or

original development; 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, but does not include quantity production or supply to establish commercial viability

or to recover research and development costs;

(g) for purchases made under exceptionally advantageous conditions that only arise in the very

short term in case of unusual disposals such as those arising from liquidation, receivership or

bankruptcy, but not for routine purchases from regular suppliers; or

& /en 187

(h) where a contract is awarded to a winner of a design contest, provided that:

(i) the contest has been organised in a manner that is consistent with the principles of this

Chapter, in particular relating to the publication of a notice of intended procurement;

and

(ii) the participants are judged by an independent jury with a view to a design contract

being awarded to a winner.

2. A procuring entity shall prepare a report in writing on each contract awarded under

paragraph 1. The report shall include the name of the procuring entity, the value and kind of goods

or services procured and a statement indicating the circumstances and conditions set out in

paragraph 1 that justified the use of limited tendering.

& /en 188

ARTICLE 21.15

Electronic auctions

Where a procuring entity intends to conduct a covered procurement using an electronic auction, the

entity shall provide each participant, before commencing the electronic auction, with:

(a) the automatic evaluation method, including the mathematical formula, that is based on the

evaluation criteria set out in the tender documentation and that will be used in the automatic

ranking or re-ranking during the auction;

(b) the results of any initial evaluation of the elements of its tender where the contract is to be

awarded on the basis of the most advantageous tender; and

(c) any other relevant information relating to the conduct of the auction.

& /en 189

ARTICLE 21.16

Treatment of tenders and awarding of contracts

Treatment of Tenders

1. A procuring entity shall receive, open and treat all tenders under procedures that guarantee the

fairness and impartiality of the procurement process, and the confidentiality of tenders.

2. A procuring entity shall not penalise any supplier whose tender is received after the deadline

specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring

entity.

3. If a procuring entity provides a supplier with an opportunity to correct unintentional errors of

form between the opening of tenders and the awarding of the contract, the procuring entity shall

provide the same opportunity to all participating suppliers.

Awarding of Contracts

4. To be considered for an award, a tender shall be submitted in writing and shall, at the time of

opening, comply with the essential requirements set out in the notices and tender documentation,

and be from a supplier that satisfies the conditions for participation.

& /en 190

5. Unless a procuring entity determines that it is not in the public interest to award a contract, the

entity shall award the contract to the supplier that the entity has determined to be capable of

fulfilling the terms of the contract and that, based solely on the evaluation criteria specified in the

notices and tender documentation, has submitted:

(a) the most advantageous tender; or

(b) the lowest price, if price is the sole criterion.

6. Where a procuring entity receives a tender with a price that is abnormally lower than the

prices in other tenders submitted, it may verify with the supplier that it satisfies the conditions for

participation and is capable of fulfilling the terms of the contract.

7. A procuring entity shall not use options, cancel a procurement or modify awarded contracts in

a manner that circumvents the obligations under this Chapter.

8. Each Party shall make its best efforts to provide, as a general rule, a standstill period between

the award and the conclusion of a contract, in order to give sufficient time to unsuccessful bidders

to review and challenge the award decision.

& /en 191

ARTICLE 21.17

Transparency of procurement information

Information provided to suppliers

1. A procuring entity shall promptly inform participating suppliers of the entity's contract award

decisions and, on request of a supplier, shall do so in writing. Subject to Article 21.18(2) and (3) a

procuring entity shall, upon request, provide an unsuccessful supplier with an explanation of the

reasons why the entity did not select its tender, and the relative advantages of the successful

supplier's tender.

Publication of Award Information

2. Not later than 72 days after the award of each contract covered by this Chapter, a procuring

entity shall publish a notice in the appropriate paper or electronic medium listed in Section I of

Annex 21-A and 21-B. Where the entity publishes the notice only in an electronic medium, the

information shall remain readily accessible for a reasonable period of time. The notice shall include

at least the following information:

(a) a description of the goods or services procured;

(b) the name and address of the procuring entity;

& /en 192

(c) the name of the successful supplier;

(d) the value of the successful tender or the highest and lowest offers taken into account in the

award of the contract;

(e) the date of award; and

(f) the type of procurement method used, and, in cases where limited tendering was used in

accordance with Article 21.14, a description of the circumstances justifying the use of limited

tendering.

Maintenance of Documentation, Reports and Electronic Traceability

3. Each procuring entity shall, for a period of at least three years from the date it awards a

contract, maintain:

(a) the documentation and reports of tendering procedures and contract awards relating to

covered procurement, including the reports required under Article 21.14; and

(b) data that ensures the appropriate traceability of the conduct of covered procurement by

electronic means.

& /en 193

Exchange of Statistics

4. On request of the other Party, and with a view to the discussions in the Sub-Committee

referred to in Article 21.21, each Party shall make available to the other Party statistics on covered

procurement of goods, services and construction services, including, to the maximum extent

possible, statistics on works concessions. In accordance with Article 21.23, the Parties shall

cooperate to achieve a better understanding of each other's public procurement statistics.

5. If a Party requires notices concerning awarded contracts, pursuant to paragraph 2, to be

published electronically and if such notices are accessible to the public through a single database in

a form permitting analysis of the covered contracts, the Party may, instead of reporting to the Sub

Committee referred to in Article 21.21, provide a link to the website, together with any instructions

necessary to access and use such data.

& /en 194

ARTICLE 21.18

Disclosure of information

Provision of information to Parties

1. On request of the other Party, a Party shall promptly provide any information necessary to

determine whether a procurement was conducted fairly, impartially and in accordance with this

Chapter, including information on the characteristics and relative advantages of the successful

tender. In cases where release of the information would prejudice competition in future tenders, the

Party that receives the information shall not disclose it to any supplier, except after consulting with,

and obtaining the consent of, the Party that provided the information.

Non-disclosure of information

2. Notwithstanding any other provision of this Chapter, a Party, including its procuring entities,

shall not, except to the extent required by law or with the written authorisation of the supplier that

provided the information, disclose information that would prejudice legitimate commercial interests

of a particular supplier or that might prejudice fair competition between suppliers.

& /en 195

3. Nothing in this Chapter shall be construed to require a Party, including its procuring entities,

authorities and review bodies, to disclose confidential information if disclosure:

(a) would impede law enforcement;

(b) might prejudice fair competition between suppliers;

(c) would prejudice the legitimate commercial interests of particular persons, including the

protection of intellectual property; or

(d) would otherwise be contrary to the public interest.

ARTICLE 21.19

Domestic review procedures

1. Each Party shall provide a timely, effective, transparent and non-discriminatory

administrative or judicial review procedure through which a supplier may challenge the following,

arising in the context of a covered procurement in which the supplier has, or has had, an interest:

(a) a breach of this Chapter; or

& /en 196

(b) a failure to comply with a Party's measures implementing this Chapter, where the supplier

does not have the right to challenge directly a breach of this Chapter under the laws of a Party.

The procedural rules for all challenges shall be in writing and made generally available.

2. In the event of a complaint by a supplier, arising in the context of covered procurement in

which the supplier has, or has had, an interest, that there has been a breach or a failure as referred to

in paragraph 1, the Party of the procuring entity conducting the procurement shall encourage the

entity and the supplier to seek resolution of the complaint through consultations. The entity shall

accord impartial and timely consideration to any such complaint in a manner that is not prejudicial

to the supplier's participation in ongoing or future procurement or its right to seek corrective

measures under the administrative or judicial review procedure.

3. Each supplier shall be allowed a sufficient period of time to prepare and submit a challenge,

which in no case shall be less than 10 days from the time when the basis of the challenge became

known or should have reasonably become known to the supplier.

4. Each Party shall establish or designate at least one impartial administrative or judicial

authority that is independent of its procuring entities to receive and review a challenge by a supplier

arising in the context of a covered procurement.

& /en 197

5. Where a body other than an authority referred to in paragraph 4 initially reviews a challenge,

the Party shall ensure that the supplier has the right to appeal the initial decision to an impartial

administrative or judicial authority that is independent of the procuring entity whose procurement is

the subject of the challenge.

6. Each Party shall ensure that a review body that is not a court shall have its decision subject to

judicial review or have procedures that provide that:

(a) the procuring entity shall respond in writing to the challenge and disclose all relevant

documents to the review body;

(b) the participants to the proceedings ("the participants") shall have the right to be heard prior to

a decision of the review body being made on the challenge;

(c) the participants shall have the right to be represented and accompanied;

(d) the participants shall have access to all proceedings;

(e) the participants shall have the right to request that the proceedings take place in public and

that witnesses may be presented; and

(f) the review body shall make its decisions or recommendations in a timely fashion, in writing,

and shall include an explanation of the basis for each decision or recommendation.

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7. Each Party shall adopt or maintain procedures that provide for:

(a) rapid interim measures to preserve the supplier's opportunity to participate in the

procurement; such interim measures may result in suspension of the procurement process; the

procedures may provide that overriding adverse consequences for the interests concerned,

including the public interest, may be taken into account when deciding whether such

measures should be applied; just cause for not acting shall be provided in writing; and

(b) when a review body has determined that there has been a breach or a failure as referred to in

paragraph 1, corrective action or compensation for the loss or damages suffered which may be

limited to either the costs for the preparation of the tender or the costs relating to the

challenge, or both.

ARTICLE 21.20

Modifications and rectifications to coverage

1. The European Union may modify or rectify Annex 21-A and Chile may modify or rectify

Annex 21-B.

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Modifications

2. If a Party intends to modify its Annex as referred to in paragraph 1, that Party shall:

(a) notify the other Party in writing; and

(b) include in the notification a proposal for appropriate compensatory adjustments to the other

Party to maintain a level of coverage comparable to that existing prior to the modification.

3. Notwithstanding subparagraph (b) of paragraph 2 of this Article, a Party does not need to

provide compensatory adjustments if the modification covers an entity over which the Party has

effectively eliminated its control or influence. Government control or influence over the covered

procurement of entities listed in Sections A, B or C of Annex 21-A or 21-B is presumed to be

effectively eliminated, insofar as the entity's procurement is concerned, where the entity is exposed

to competition on markets to which access is not restricted.

4. If a Party notifies the other Party under paragraph 2 of an intended modification of its Annex,

the other Party shall object in writing if it disputes that:

(a) an adjustment proposed under subparagraph (b) of paragraph 2 is adequate to maintain a

comparable level of mutually agreed coverage; or

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(b) the modification covers an entity over which the Party's control or influence has effectively

ended in accordance with paragraph 3.

The other Party shall submit any written objection under this paragraph within 45 days of receipt of

the notification referred to in subparagraph (a) of paragraph 2, or be deemed to have accepted the

adjustment or modification, including for the purposes of Chapter 31.

Rectifications

5. The Parties shall consider the following changes to Annex 21-A or 21-B, respectively, as a

rectification of a purely formal nature, provided that they do not affect the mutually agreed

coverage provided for in this Chapter:

(a) a change in the name of an entity;

(b) a merger of two or more entities listed within Sections A, B and C of Annex 21-A or 21-B;

(c) the separation of an entity listed in Sections A, B and C of Annex 21-A or 21-B into two or

more entities that are all added to the entities listed in the same Section of Annex 21-A or 21

B.

6. If a Party proposes a rectification of Annex 21-A or 21-B respectively, that Party shall notify

the other Party every two years following the date of entry into force of this Agreement.

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7. A Party may notify the other Party of an objection to a proposed rectification within 45 days

after having received the notification. If a Party submits an objection, it shall set out the reasons

why it believes the proposed rectification is not a change provided for in paragraph 5, and describe

the effect of the proposed rectification on the mutually agreed coverage provided for in this

Chapter. If no such objection is submitted in writing within 45 days after having received the

notification, the Party shall be deemed to have agreed to the proposed rectification.

Consultations and dispute resolution

8. If the other Party objects to the proposed modification or rectification within 45 days, the

Parties shall seek to resolve the issue through consultations after having received the notification. If

the Parties do not reach an agreement within 60 days of receipt of the objection, the Party seeking to

modify or rectify its Annex may refer the matter to dispute settlement procedure under this

Agreement. The proposed modification or rectification will take effect only when both Parties have

agreed or on the basis of a final decision pursuant to the procedure provided for in chapter 31.

9. Failure to reach an agreement in the consultation procedure under paragraph 8 of this Article

does not exempt the Parties from the obligation to carry out consultations under Chapter 31.

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ARTICLE 21.21

Sub-Committee on Public Procurement

On request of a Party, the Sub-Committee on Public Procurement ("Sub-Committee") established

pursuant to Article 33.4(1), shall meet to address matters related to the implementation and

operation of this Chapter, including the following:

(a) issues regarding public procurement that are referred to it by a Party;

(b) monitoring the cooperation activities undertaken by the Parties as provided by Article 21.23;

(c) facilitation of participation of small and medium-sized enterprises in covered procurement as

provided in Article 21.22; and

(d) discussion on status of implementation of the single point of access under Article 21.6 (7).

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ARTICLE 21.22

Facilitation of participation by small and medium-sized enterprises

1. The Parties recognise the important contribution that small and medium-sized enterprises

("SMEs") can make to economic growth and employment, and the importance of facilitating the

participation of SMEs in public procurement.

2. The Parties recognise the importance of electronic procurement in facilitating the participation

of SMEs in procurement procedures by ensuring transparency.

3. The Parties also recognise the importance of business alliances between suppliers of each

Party, and in particular between SMEs, including the joint participation in tendering procedures.

4. The Parties may:

(a) provide information related to their measures used in order to contribute, promote, encourage

or facilitate SMEs' participation in public procurement;

(b) cooperate in the elaboration of mechanisms to provide information to SMEs of the means for

participating in covered procurement under this Chapter.

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5. To facilitate participation of SMEs in covered procurement, each Party shall, to the extent

possible:

(a) provide a definition of SMEs in an electronic portal;

(b) endeavour to make all tender documentation available free of charge;

(c) take any other measure designed to facilitate the participation of SMEs in public procurement

covered by this Chapter, provided that such measures are not discriminatory against the other

Party's enterprises.

ARTICLE 21.23

Cooperation

1. The Parties shall make their best efforts to develop cooperation activities with a view to

achieving a better understanding of their respective public procurement systems, as well as better

access to their respective markets, in matters such as:

(a) exchanging experiences and information, such as regulatory frameworks, best practices and

statistics;

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(b) facilitating participation by suppliers in covered procurement, in particular with respect to

SMEs;

(c) developing and expanding the use of electronic means in public procurement systems;

(d) building capability by fostering mutual learning of government officials and staff of procuring

entities with a view to fulfilling the provisions of this Chapter.

2. The Parties shall inform the Sub-Committee referred to in Article 21.21 of any of such

activities.

ARTICLE 21.24

Further negotiations

The Sub-Committee on Public Procurement referred to in Article 21.21 shall review the operation

of this Chapter and, no later than four years after the date of entry into force of this Agreement, may

propose to the Trade Committee to recommend the Parties to hold further negotiations with a view

to achieving additional market access opening.

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