Consolidated CETA Text

32. Exceptions

Article X.01: Definitions

For purposes of this Chapter:

competition authority means:

  • (a) for Canada, the Commissioner of Competition or a successor notified to the other party through the Coordinators; and
  • (b) for the European Union,the Commission of the European Union as to its responsibilities pursuant to the competition laws of the European Union.

competition laws means:

  • (a) for Canada, the Competition Act; and
  • (b) for the European Union, Articles 101, 102 and 106 of the Treaty on the Functioning of the European Union ("TFEU"), Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, and their implementing regulations or amendments.

cultural industries means a person engaged in:

  • (a) the publication, distribution or sale of books, magazines, periodicals or newspapers in print or machine-readable form, except when printing or typesetting any of the foregoing is the only activity;
  • (b) the production, distribution, sale or exhibition of film or video recordings;
  • (a) the production, distribution, sale or exhibition of audio or video music recordings;
  • (b) the publication, distribution or sale of music in print or machine-readable form; or
  • (c) radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television and cable broadcasting undertakings and all satellite programming and broadcast network services.

information protected under its competition laws means:

  • (a) for Canada, information within the scope of Section 29 of the Competition Act, R.S. 1985, c.34, or any successor provision; and
  • (b) for the European Union this means information within the scope of Article 28 of Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty or Article 17 of Council Regulation No 139/2004 on the control of concentrations between undertakings, or any successor provisions.

residence means residence for tax purposes;

tax convention means a convention for the avoidance of double taxation or other international taxation agreement or arrangement; and

tax and taxation measure includes an excise duty, but does not include:

  • (a) a “customs duty”, or
  • (b) a measure listed in exceptions (b), (c), or (d) in the definition of “customs duty” in Article 1.01 (Initial Provisions and General Definitions – Definitions of General Application).

Article X.02: General Exceptions

1. For the purposes of Chapters X through Y and Chapter Z (National Treatment and Market Access for Goods, Rules of Origin, Origin Procedures, Customs and Trade Facilitation, Wines and Spirits, Sanitary and Phytosanitary Measures, Investment Section 2 (Establishment of Investments) and Investment Section 3 (Non-discriminatory Treatment)), GATT 1994 Article XX is incorporated into and made part of this Agreement. The Parties understand that the measures referred to in GATT 1994 Article XX (b) include environmental measures necessary to protect human, animal or plant life or health. The Parties further understand that GATT 1994 Article XX (g) applies to measures for the conservation of living and non-living exhaustible natural resources.

2. For the purposes of Chapters X, Y, and Z (Cross-Border Trade in Services, Telecommunications, and Temporary Entry and Stay of Natural Persons for Business Purposes,Investment Section 2 (Establishment of Investments) and Investment Section 3 (Non-Discriminatory Treatment), a Party may adopt or enforce a measure necessary:

  • (a) to protect public security or public morals or to maintain public order ( x );
  • (b) to protect human, animal or plant life or health;
  • (c) to secure compliance with laws or regulations which are not inconsistent with the provisions of this Chapter including those relating to:
    • (i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on contracts;
    • (ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts;
    • (iii) safety;
    • (x) The public security and public order exceptions may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.

Article X.03: Temporary safeguard measures with regard to capital movements and payments

Where, in exceptional circumstances, capital movements and payments, including transfers, cause or threaten to cause serious difficulties for the operation of the economic and monetary union of the European Union, safeguard measures that are strictly necessary and do not constitute a means of arbitrary or unjustified discrimination between a Party and a non-Party may be taken by the European Union with regard to capital movements and payments, including transfers, for a period not exceeding six months. The European Union shall inform Canada forthwith and present, as soon as possible, a time schedule for the removal of such measures.

Article X.04: Restrictions in Case of Balance of Payments and External Financial Difficulties

1. Where Canada or a Member State of the European Union that is not a member of the European Monetary Union experiences serious balance-of-payments or external financial difficulties, or threat thereof, it may adopt or maintain restrictive measures with regard to capital movements or payments, including transfers.

2. Measures referred to in paragraph 1 shall:

  • a) not treat a Party less favourably than a non-Party in like situations;
  • b) be consistent with the Articles of the Agreement of the International Monetary Fund, as applicable;
  • c) avoid unnecessary damage to the commercial, economic and financial interests of any other Party;
  • d) be temporary and phased out progressively as the situation specified in paragraph 1 improves and not exceed six months; however, if extremely exceptional circumstances arise such that a Party seeks to extend such measures beyond a period of six months , it will consult in advance with the other Party concerning the implementation of any proposed extension.

3. In the case of trade in goods, a Party may adopt restrictive measures in order to safeguard its balance-of-payments or external financial position. Such measures shall be in accordance with the General Agreement on Tariffs and Trade (GATT) and the Understanding on Balance of Payment Provisions of the GATT 1994.

4. In the case of trade in services, a Party may adopt restrictive measures in order to safeguard its balance-of-payments or external financial position. Such measures shall be in accordance with the General Agreement on Trade in Services (GATS).

5. Any Party maintaining or having adopted measures referred to in paragraph 1 or 2 shall promptly notify the other Party of them and present, as soon as possible, a time schedule for their removal.

6. Where the restrictions are adopted or maintained under this Article, consultations shall be held promptly in the Trade Committee, if such consultations are not otherwise taking place outside of this Agreement. The consultations shall assess the balance-of-payments or external financial difficulty that led to the respective measures, taking into account, inter alia, such factors as:

  • (a) the nature and extent of the difficulties;
  • (b) the external economic and trading environment; or
  • (c) alternative corrective measures which may be available.

The consultations shall address the compliance of any restrictive measures with paragraphs 1 to 4. All findings of statistical and other facts presented by the IMF relating to foreign exchange, monetary reserves and balance-of-payments shall be accepted and conclusions shall be based on the assessment by the IMF of the balance-of-payments and the external financial situation of the Party concerned.

Article X.05: National Security

This Agreement does not:

  • (a) require a Party to furnish or allow access to information if that Party determines that the disclosure of this information would be contrary to its essential security interests;
  • (b) prevent a Party from taking an action that it considers necessary to protect its essential security interests:
    • (i) connected to the production of or traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods and materials, services and technology undertaken, and to economic activities, carried out directly or indirectly for the purpose of supplying a military or other security establishment Footnote 1;
    • (ii) taken in time of war or other emergency in international relations; or
    • (iii) relating to fissionable and fusionable materials or the materials from which they are derived; or
  • (c) to prevent a Party from taking any action in order to carry out its international obligations for the purpose of maintaining international peace and security.

Article X.06: Taxation

1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining any taxation measure that distinguishes between persons who are not in the same situation, in particular with regard to their place of residence or with regard to the place where their capital is invested.

2. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining any taxation measure aimed at preventing the avoidance or evasion of taxes pursuant to its tax laws or tax conventions.

3. This Agreement does not affect the rights and obligations of a Party under a tax convention. In the event of inconsistency between this Agreement and a tax convention, that convention prevails to the extent of the inconsistency.

4. Nothing in this Agreement or in any arrangement adopted under this Agreement shall apply:

  • (a) to a taxation measure of a Party that provides a more favourable tax treatment to a corporation, or to a shareholder of a corporation, on the basis that the corporation is wholly or partly owned or controlled, directly or indirectly, by one or more investors who are residents of that Party;
  • (b) to a taxation measure of a Party that provides an advantage relating to the contributions made to, or income of, an arrangement providing for the deferral of, or exemption from, tax for pension, retirement, savings, education, health, disability or other similar purposes, conditional on a requirement that that Party maintains continuous jurisdiction over such arrangement;
  • (c) to a taxation measure of a Party that provides an advantage relating to the purchase or consumption of a particular service, conditional on a requirement that the service be provided in the territory of that Party;
  • (d) to a taxation measure of a Party that is aimed at ensuring the equitable and effective imposition or collection of taxes, including a measure that is taken by a Party in order to ensure compliance with the Party’s taxation system;
  • (e) to a taxation measure that provides an advantage to a government, a part of a government, or a person that is directly or indirectly owned, controlled or established by a government;
  • (f) to an existing non-conforming taxation measure not otherwise covered in paragraphs 1, 2, 4(a) to (e), to the continuation or prompt renewal of such a measure, or an amendment of such a measure, provided that the amendment does not decrease its conformity with the provisions of this Agreement as it existed immediately before the amendment.

5. For greater certainty, the fact that a taxation measure constitutes a significant amendment to an existing taxation measure, takes immediate effect as of its announcement, clarifies the intended application of an existing taxation measure, or has an unexpected impact on an investor or covered investment, does not, in and of itself, constitute a violation of Article X.9 (Treatment of Investors and of Covered Investments).

6. Article x ( Investment - Most-Favoured Nation obligation), Article x (CBTS - Most-Favoured Nation obligation) and Article X (Financial Services- Most-Favoured Nation obligation) do not apply to an advantage accorded by a Party pursuant to a tax convention.

7.

(1) Where an investor submits a request for consultations pursuant to Article x-4 (Consultations - ISDS) claiming that a taxation measure breaches an obligation under Section 3 (Non-discriminatory Treatment) or Section 4 (Investment Protection) of Chapter x (Investment Rules), the respondent may refer the matter for consultation and joint determination by the Parties as to whether:

  • (a) the measure is a taxation measure;
  • (b) the measure, if it is found to be a taxation measure, breaches an obligation under Section 3 (Non-discriminatory Treatment) or Section 4 (Investment Protection);
  • (c) there is an inconsistency between the obligations in this Agreement that are alleged to have been breached and those of a tax convention.

(2) A referral pursuant to paragraph 1 cannot be made later than the date the Tribunal fixes for the respondent to submit its counter-memorial. Where the respondent makes such a referral the time periods or proceedings specified in Section 6 of Chapter X (Investor-to-State Dispute Settlement) shall be suspended. If within 180 days from the referral the Parties do not agree to consider the issue, or fail to make a joint determination, the suspension of the time periods or proceedings shall no longer apply and the investor may proceed with its claim.

(3) A joint determination by the Parties pursuant to paragraph 1 shall be binding on the Tribunal.

(4) Each Party shall ensure that its delegation for the consultations to be conducted pursuant to paragraph 1 shall include persons with relevant expertise on the issues covered by this Article, including representatives from the relevant tax authorities of each Party. For Canada this means officials from the Department of Finance.

8. For greater certainty,

  • (a) taxation measure of a Party means a taxation measure adopted at any level of government of a Party.
  • (b) For measures of a sub-national government, resident of a Party, means either resident of that sub-national jurisdiction or resident of the Party of which it forms part.

Article X.07: Disclosure of Information

1. This Agreement does not require a Party to furnish or allow access to information which if disclosed would impede law enforcement or the disclosure of which is prohibited or restricted under its law.

2. In the course of a dispute settlement procedure under this Agreement:

  • (a) a Party is not required to furnish or allow access to information protected under its competition laws;
  • (b) a competition authority of a Party is not required to furnish or allow access to information that is privileged or otherwise protected from disclosure.

Article X.08: Cultural Industries

The parties recall the exceptions applicable to culture as set out in the relevant provisions of Chapters X, Y and Z (Cross-Border Trade in Services, Domestic Regulation, Government Procurement, Investment, Subsidies).

Article X.09: World Trade Organization Waivers

If a right or obligation in this Agreement duplicates one under the WTO Agreement, the Parties agree that a measure adopted by a Party in conformity with a waiver decision adopted by the WTO pursuant to Article IX of the WTO Agreement is deemed to be also in conformity with the present Agreement.

Footnotes

Footnote 1

The expression "traffic in arms, ammunition and implements of war” in this Article is considered equivalent to the expression" trade in arms, munitions and war material".

Return to footnote 1 referrer

Disclaimer:

The complete text of the CETA agreement is presented here for information purposes. The text presented in this document is as it stands at the end of the negotiations between Canada and the EU. It will be subject to legal review, a process that will also involve formatting. Subsequent to the legal review and formatting, the complete text will become binding upon the completion of the ratification process by both Canada and the EU.