Agreement to Amend the Free Trade Agreement Between the Government of Canada and the Government of the Republic of Chile

Appendix I

Chapter H bis – Financial Services

Article H bis-01: Scope and Coverage

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

  • a. financial institutions of the other Party;
  • b. investors of the other Party, and investments of such investors, in financial institutions in the Party’s territory; and
  • c. cross-border trade in financial services.

2. Articles G-09 (Investment – Transfers), G-10 (Investment – Expropriation and Compensation), G-11 (Investment – Special Formalities and Information Requirements), G-13 (Investment – Denial of Benefits), G-14 (Investment – Environmental Measures) and H-11 (Cross-Border Trade in Services – Denial of Benefits), including any Annex relevant to their interpretation and application, are hereby incorporated into and made a part of this Chapter. Section II of Chapter G (Investment) is hereby incorporated into and made a part of this Chapter solely for breaches by a Party of Articles G-09 (Investment –Transfers), G-10 (Investment – Expropriation and Compensation), G 11 (Investment – Special Formalities and Information Requirements) and G-13 (Investment – Denial of Benefits) as incorporated into this Chapter. No other provision of Chapter G (Investment) or H (Cross – Border Trade in Services) shall apply to a measure described in paragraph 1.

3. Nothing in this Chapter shall be construed to prevent a Party, including its public entities, from exclusively conducting or providing in its territory:

  • a. activities or services forming part of a public retirement plan or statutory system of social security; or
  • b. activities or services for the account or with the guarantee or using the financial resources of the Party, including its public entities.

Article H bis-02: National Treatment

1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords to its own investors, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments in financial institutions in its territory.

2. Each Party shall accord to financial institutions of the other Party and to investments of investors of the other Party in financial institutions treatment no less favourable than that it accords to its own financial institutions and to investments of its own investors in financial institutions, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments.

3. For purposes of the national treatment obligations in Article H bis-05(1), a Party shall accord to cross-border financial service suppliers of the other Party treatment no less favourable than that it accords to its own financial service suppliers, in like circumstances, with respect to the supply of the relevant service.

4. The treatment that a Party is required to accord under paragraphs 1, 2 and 3 means, with respect to measures adopted or maintained by a government of a Province, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that subnational government to investors in financial institutions, financial institutions, investments of investors in financial institutions and financial service suppliers of the Party of which it forms a part.

5. Differences in market share, profitability or size do not in themselves establish a breach of any of the obligations under this Article.

Article H bis-03: Most-Favoured-Nation Treatment

1. Each Party shall accord to investors of the other Party, financial institutions of the other Party, investments of investors of the other Party in financial institutions and cross border financial service suppliers of the other Party treatment no less favourable than that it accords to the investors, financial institutions, investments of investors in financial institutions and cross-border financial service suppliers of a non-Party, in like circumstances.

2. A Party may recognize prudential measures of a non-Party in the application of measures covered by this Chapter. Such recognition may be:

  • a. accorded unilaterally;
  • b. achieved through harmonization or other means; or
  • c. based upon an agreement or arrangement with the non-Party.

3. A Party according recognition of prudential measures under paragraph 2 shall provide adequate opportunity to the other Party to demonstrate that circumstances exist in which there are or will be equivalent regulation, oversight, implementation of regulation, and, if appropriate, procedures concerning the sharing of information between the Parties.

4. Where a Party accords recognition of prudential measures under paragraph 2(c) and the circumstances set out in paragraph 3 exist, the Party shall provide adequate opportunity to the other Party to negotiate accession to the agreement or arrangement or to negotiate a comparable agreement or arrangement.

Article H bis-04: Right of Establishment

1. A Party shall permit an investor of the other Party that does not own or control a financial institution in the Party’s territory to establish a financial institution permitted to supply financial services that such an institution may supply under the domestic law of the Party at the time of establishment, without the imposition of numerical restrictions or requirements to take a specific juridical form. The obligation not to impose requirements to take a specific juridical form does not prevent a Party from imposing conditions or requirements in connection with the establishment of a particular type of entity chosen by an investor of the other Party.

2. A Party shall permit an investor of the other Party that owns or controls a financial institution in the Party’s territory to establish such additional financial institutions as may be necessary for the supply of the full range of financial services allowed under the domestic law of the Party at the time of establishment of the additional financial institutions. Subject to Article H bis-02, a Party may impose terms and conditions on the establishment of additional financial institutions and determine the institutional and juridical form that shall be used for the supply of specified financial services or the carrying out of specified activities.

3. The right of establishment under paragraphs 1 and 2 shall include the acquisition of entities which already exist.

4. Subject to Article H bis-02, a Party may prohibit a particular financial service or activity. Such a prohibition may not apply to all financial services or to a complete financial services sub-sector such as banking.

5. For the purposes of this Article:

  • a. investor of the other Party means an investor of the other Party engaged in the business of providing financial services in the territory of that Party; and
  • b. numerical restrictions means limitations imposed, either on the basis of a regional subdivision or on the basis of the entire territory of a Party, on the number of financial institutions whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test.

Article H bis-05: Cross-Border Trade

1. Each Party shall permit, under terms and conditions that accord national treatment, cross-border financial service suppliers of the other Party to supply the financial services specified in Annex H bis-05.

2. Each Party shall permit persons located in its territory, and its nationals 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 such suppliers to do business or solicit in its territory. Subject to paragraph 1, each Party may define “doing business” and “solicitation” for purposes of this obligation.

3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration of cross-border financial service suppliers of the other Party and of financial instruments.

Article H bis-06: New Financial Services

1. Each Party shall permit a financial institution of the other Party, on request or notification to the relevant regulator, where required, to supply any new financial service that the first Party would permit its own financial institutions, in like circumstances, to supply under its domestic law, provided that the introduction of the financial service does not require the Party to adopt a new statute or modify an existing one.

2. A Party may determine the institutional and juridical form through which the new financial service may be supplied and may require authorization for the supply of the service. Where such authorization is required, the decision shall be made within a reasonable time and authorization may only be refused for prudential reasons.

3. Nothing in this Article shall be construed to prevent a financial institution of a Party from applying to the other Party to consider authorizing the supply of a financial service that is not supplied within either Party’s territory. Such application shall be subject to the domestic law of the Party to which the application is made and shall not be subject to the obligations of this Article.

Article H bis-07: Treatment of Certain Information

Nothing in this Chapter requires a Party to furnish or allow access to:

  • a. information related to the financial affairs and accounts of individual customers of financial institutions or cross-border financial service suppliers; or
  • b. any confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice legitimate commercial interests of particular enterprises.

Article H bis-08: Senior Management and Boards of Directors

1. A Party may not require financial institutions of the other Party to engage individuals of any particular nationality as senior managerial or other essential personnel.

2. A Party may not require that more than a simple majority of the board of directors of a financial institution of the other Party be composed of nationals of the Party, persons residing in the territory of the Party, or a combination thereof.

Article H bis-09: Non-Conforming Measures and Certain Specific Commitments

1. Articles H bis-02, H bis-03 and H bis-08 do not apply to:

  • a. any existing non-conforming measure that is maintained by:
    • i. a Party at the national level, as set out in Section I of its Schedule to Annex VI, or
    • ii. a province or local 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) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with

2. Articles H bis-04 and H bis-05 do not apply to:

  • a. any existing non-conforming measure that is maintained by:
    • i. a Party at the national level, as set out in Section I of its Schedule to Annex VI, or
    • ii. a province or local 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) to the extent that the amendment does not decrease the conformity of the measure, as it existed upon the entry into force of the Amending Agreement, with Articles H bis-04 and H bis-05.

3. Articles H bis-02, H bis-03, H bis-04, H bis-05 and H bis-08 do not apply to any non-conforming measure that a Party adopts or maintains in accordance with Section II of its Schedule to Annex VI.

4. Where a Party has set out a reservation to Article G-02 (Investment – National Treatment), G-03 (Investment – Most Favoured Nation Treatment), H-02 (Cross-Border Trade in Services – National Treatment) or H-03 (Cross-Border Trade in Services – Most Favoured-Nation-Treatment) in its Schedule to Annex I, II, or III, the reservation also constitutes a reservation to Article H bis-02 or H bis-03, as the case may be, to the extent that the measure, sector, subsector or activity set out in the reservation is covered by this Chapter.

5. Annex H bis-09 sets out certain specific commitments by each Party.

Article H bis-10: Exceptions

1. Nothing in this Chapter or Chapters G (Investment), H (Cross-Border Trade in Services), I (Telecommunications), J (Competition Policy, Monopolies and State Enterprises) or K (Temporary Entry for Business Persons) of this Agreement shall be construed to prevent a Party from adopting or maintaining measures for prudential reasons, including for the protection of investors, depositors, policy holders, persons to whom a fiduciary duty is owed by a financial institution or cross-border financial service supplier, or to ensure the integrity and stability of the financial system Footnote 1. Where such measures do not conform with the provisions of this Chapter or of Chapters G (Investment), H (Cross-Border Trade in Services), I (Telecommunications), J (Competition Policy, Monopolies and State Enterprises) or K (Temporary Entry for Business Persons) of this Agreement, they shall not be used as a means of avoiding the Party’s obligations under such provisions 2.

2. Nothing in this Chapter or Chapters G (Investment), H (Cross-Border Trade in Services), I (Telecommunications), J (Competition Policy, Monopolies and State Enterprises) or K (Temporary Entry for Business Persons) of this Agreement applies to non-discriminatory measures of general application taken by any public entity in pursuit of monetary and related credit policies or exchange rate policies. This paragraph shall not affect a Party’s obligations under Article G-06 (Investment – Performance Requirements) with respect to measures covered by Chapter G (Investment) or Article G-09 (Investment – Transfers).

3. Notwithstanding Article G-09 (Investment – Transfers), as incorporated into this Chapter, a Party may prevent or limit transfers by a financial institution or cross-border financial service supplier to, or for the benefit of, an affiliate of or person related to such institution or supplier, through the equitable, non-discriminatory and good faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service suppliers. This paragraph does not prejudice any other provision of this Agreement that permits a Party to restrict transfers.

4. For greater certainty, nothing in this Chapter shall be construed to prevent the adoption or enforcement by a Party of measures necessary to secure compliance with laws or regulations that are not inconsistent with this Chapter, including those relating to the prevention of deceptive and fraudulent practices or to deal with the effects of a default on financial services contracts, subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on investment in financial institutions or cross-border trade in financial services as covered in this Chapter.

Article H bis-11: Transparency

1. The Parties recognize that transparent regulations and policies governing the activities of financial institutions and financial service suppliers, as well as the reasonable, objective, and impartial administration of such regulations and policies are important in facilitating both access of financial institutions and financial service suppliers to, and their operations in, each other’s markets. Each Party commits to promoting regulatory transparency in financial services.

2. In lieu of Article L-02 (Publication, Notification and Administration of Laws – Publication) each Party shall, to the extent practicable:

  • a. publish in advance any regulations of general application relating to the subject matter of this Chapter that it proposes to adopt;
  • b. provide interested persons and the other Party a reasonable opportunity to comment on such proposed regulations; and
  • c. allow reasonable time between publication of final regulations and their effective date.

3. Each Party’s regulatory authorities shall make available to interested persons their requirements, including any documentation required, for completing applications relating to the supply of financial services.

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

5. A regulatory authority shall make an administrative decision on a completed application of an investor in a financial institution, a financial institution or a cross-border financial service supplier of the other Party relating to the supply of a financial service within 120 days, and shall promptly notify the applicant of the decision. An application shall not be considered complete until all relevant hearings are held and all necessary information is received. Where it is not practicable for a decision to be made within 120 days, the regulatory authority shall notify the applicant without undue delay and shall endeavour to make the decision within a reasonable time thereafter.

6. Each Party shall maintain or establish appropriate mechanisms that will, as soon as practicable, respond to inquiries from interested persons regarding measures of general application covered by this Chapter.

Article H bis-12: Self-Regulatory Organizations

Where 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 organization to provide a financial service in or into the territory of that Party, the Party shall ensure observance of the obligations of this Chapter by such a self regulatory organization.

Article H bis-13: 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, or to payment and clearing systems operated by any entity pursuant to governmental authority delegated to it by a Party, as well as to official funding and refinancing facilities available in the normal course of ordinary business. This Article is not intended to confer access to the Party’s lender of last resort facilities.

Article H bis-14: State Enterprises

Each Party shall ensure, through regulatory control, administrative supervision or the application of other measures, that any state enterprise that it maintains or establishes, whenever such enterprise exercises any regulatory, administrative or other governmental authority that the Party has delegated to it, acts in a manner that is not inconsistent with the Party’s obligations under this Chapter.

Article H bis-15: Financial Services Committee

1. The Parties hereby establish the Financial Services Committee (the “Committee”). The principal representative of each Party shall be an official of the Party’s authority responsible for financial services set out in Annex H bis-15.

2. In accordance with Article N-01(2)(d) (Institutional Arrangements and Dispute Settlement Procedures – the Free Trade Commission) the Committee shall:

  • a. supervise the implementation of this Chapter and its further elaboration;
  • b. consider issues regarding financial services that are referred to it by a Party; and
  • c. participate in the dispute settlement procedures in accordance with Article H bis-18.

3. The Committee shall meet annually, or as otherwise agreed, to assess the functioning of this Agreement as it applies to financial services. The Committee shall inform the Commission of the results of each meeting.

Article H bis-16: Consultations

1. A Party may request in writing consultations with the other Party regarding any matter arising under this Agreement that affects financial services. The other Party shall give sympathetic consideration to the request. The Parties shall report the results of their consultations to the Committee.

2. Officials from the authorities specified in Annex H bis-15 shall participate in the consultations under this Article.

3. A Party may request that regulatory authorities of the other Party participate in consultations under this Article regarding that other Party’s measures of general application which may affect the operations of financial institutions or cross-border financial service suppliers in the requesting Party’s territory.

4. Nothing in this Article shall be construed to require regulatory authorities participating in consultations to disclose information or take any action that would interfere with specific regulatory, supervisory, administrative or enforcement matters.

5. Where a Party requires information for supervisory purposes concerning a financial institution in the other Party’s territory or a cross-border financial service supplier in the other Party’s territory, the Party may approach the competent regulatory authority in the other Party’s territory to seek the information.

6.Nothing in this Article shall be construed to require a Party to derogate from its domestic law regarding the sharing of information among financial regulators or the requirements of an agreement or arrangement between financial authorities of the Parties.

Article H bis-17: Dispute Settlement

1. Section II of Chapter N (Institutional Arrangements and Dispute Settlement Procedures), as modified by this Article, applies to the settlement of disputes arising under this Chapter.

2. Consultations held pursuant to Article H bis-16 with respect to a measure or matter constitute consultations under Article N-06 (Institutional Arrangements and Dispute Settlement Procedures – Consultations), unless the Parties otherwise agree. Upon initiation of consultations, the Parties shall provide information and give confidential treatment to the information exchanged in accordance with Article N-06(4)(b). If the matter has not been resolved within 45 days after commencing consultations under Article H bis-16 or 90 days after the delivery of the request for consultations under Article H bis-16, whichever is earlier, the complaining Party may request in writing the establishment of an arbitral panel.

3. The following procedures shall replace Article N-09 (Institutional Arrangements and Dispute Settlement Procedures – Panel Selection):

  • a. the panel shall be composed of three members;
  • b. each Party shall, within 30 days of the delivery of the request for the establishment of the panel, appoint a panelist who may be a national of that Party and notify the other Party in writing of the appointment. If a Party fails to appoint a panelist within 30 days, the other Party may request the Appointing Authority to appoint, in the discretion of the Appointing Authority, and subject to paragraph 4, the panelist not yet appointed;
  • c. the Parties shall endeavour to agree on the appointment of the third panelist who shall chair the panel and, unless the Parties agree otherwise, shall not be a national of either Party. If the chair of the panel has not been appointed within 30 days of the most recent appointment under subparagraph (b), either Party may request the Appointing Authority to appoint, in the discretion of the Appointing Authority, and subject to paragraph 4, the chair of the panel, who shall not be a national of either Party; and
  • d. subparagraphs (b) and (c) shall apply mutatis mutandis where a panelist or the chair of the panel withdraws, is removed or becomes unable to serve on the panel. In such a case, any time period applicable to the panel proceeding shall be suspended for a period beginning on the date the panelist ceases to serve and ending on the date the replacement is appointed.

4. Each panelist on panels constituted for disputes arising under this Chapter shall have the qualifications required by Article N-10 (Institutional Arrangements and Dispute Settlement Procedures – Qualifications of Panelists). In addition, each panelist shall have expertise or experience in financial services law or practice, which may include the regulation of financial institutions.

5. In any dispute where a panel finds a measure to be inconsistent with the obligations of this Agreement and the measure affects:

  • a. only the financial services sector, the complaining Party may suspend benefits only in the financial services sector;
  • b. the financial services sector and any other sector, the complaining Party may suspend benefits in the financial services sector that have an effect equivalent to the effect of the measures in the Party’s financial services sector; or
  • c. only a sector other than the financial services sector, the complaining Party may not suspend benefits in the financial services sector.

Article H bis-18: Investment Disputes in Financial Services

1. Where an investor of a Party submits a claim under Article G-17 (Investment – Claim by an Investor of a Party on Its Own Behalf) or G-18 (Investment – Claim by an Investor of a Party on Behalf of an Enterprise) to arbitration under Section II of Chapter G (Investment) and the respondent Party invokes Article H bis-10, on request of the respondent Party the Tribunal shall refer the matter in writing to the Committee for a decision. The Tribunal may not proceed pending receipt of a decision or report under this Article.

2. In a referral pursuant to paragraph 1, the Committee shall decide the issue of whether and to what extent Article H bis-10 is a valid defence to the claim of the investor. The Committee shall transmit a copy of its decision to the Tribunal and to the Commission. The decision shall be binding on the Tribunal.

3. Where the Committee has not decided the issue within 60 days of the receipt of the referral under paragraph 1, either Party may request the establishment of an arbitral panel under Article N-08 (Institutional Arrangements and Dispute Settlement Procedures – Request for an Arbitral Panel) to decide the issue. The panel shall be constituted in accordance with Article H bis-17. Further to Article N-15 (Institutional Arrangements and Dispute Settlement Procedures – Final Report), the panel shall transmit its final report to the Committee and to the Tribunal. The report shall be binding on the Tribunal.

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

Article H bis-19: Definitions

For purposes of this Chapter:

Amending Agreement means the Agreement to Amend the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, done at Santiago on 5 December 1996, as amended, between the Government of Canada and the Government of the Republic of Chile;

Appointing Authority means the President, the Vice-President or next senior Judge of the International Court of Justice, who is not a national of either Party;

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 services;

cross-border trade in financial services or cross-border supply of financial services means the supply of a financial service:

  • 1. from the territory of one Party into the territory of the other Party;
  • 2. in the territory of a Party by a person of that Party to a person of the other Party; or
  • 3. by a national of a Party in the territory of the other Party;

but does not include the supply of a service in the territory of a Party by an investment in that territory;

existing means in effect on the date of entry into force of the Amending Agreement;

financial institution means any financial intermediary or other enterprise that is authorized to do business and regulated or supervised as a financial institution under the law of the Party in whose territory it is located;
financial institution of the other Party means a financial institution, including a branch, located in the territory of a Party that is controlled by persons of the other Party;

financial service means any service of a financial nature. Financial services include all insurance and insurance-related services, and all banking and other financial services (excluding insurance), as well as services incidental or auxiliary to a service of a financial nature. Financial services include the following activities:

Insurance and insurance-related services

1. Direct insurance (including co-insurance):

  • Life,
  • Non-life;

2. Reinsurance and retrocession;

3. Insurance intermediation, such as brokerage and agency;

4. Services auxiliary to insurance, such as consultancy, actuarial, risk assessment, and claim settlement services.

Banking and other financial services (excluding insurance)

5. Acceptance of deposits and other repayable funds from the public;

6. Lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transactions;

7. Financial leasing;

8. All payment and money transmission services, including credit, charge and debit cards, travelers checks, and bankers drafts;

9. Guarantees and commitments;

10. Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market, or otherwise, the following:

  • a. money market instruments (including checks, bills, certificates of deposits),
  • b. foreign exchange,
  • c. derivative products including, futures and options,
  • d. exchange rate and interest rate instruments, including products such as swaps, forward rate agreements,
  • e. transferable securities, or
  • f. other negotiable instruments and financial assets, including bullion;

11. 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;

12. Money broking;

13. Asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository, and trust services;

14. Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments;

15. Provision and transfer of financial information, and financial data processing and related software by suppliers of other financial services;

16. Advisory, intermediation, and other auxiliary financial services on all the activities listed in subparagraphs (e) through (o), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy;

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 that Party;

investment means “investment” as defined in Article G-40 (Investment – Definitions), except that, with respect to “loans” and “debt securities” referred to in that Article:

  • 1. a loan to or debt security issued by a financial institution is an investment only where it is treated as regulatory capital by the Party in whose territory the financial institution is located; and
  • 2. a loan granted by or debt security owned by a financial institution, other than a loan to or debt security of a financial institution referred to in subparagraph (a), is not an investment;

for greater certainty a loan to, or debt security issued by, a Party or a state enterprise thereof is not an investment; and a loan granted by or debt security owned by a cross border financial service supplier, other than a loan to or debt security issued by a financial institution, is an investment if such loan or debt security meets the criteria for investments set out in Article G-40 (Investment – Definitions);

investor of a Party means a Party or state enterprise thereof, or a person of that Party, that seeks to make, is making, or has made an investment;

new financial service means a financial service not supplied in the Party’s territory that is supplied within the territory of the other Party, and includes any new form of delivery of a financial service or the sale of a financial product that is not sold in the Party’s territory;

person of a Party means “person of a Party” as defined in Article B-01 (Definitions of General Application) and, for greater certainty, does not include a branch of an enterprise of a non-Party;

public entity means a central bank or monetary authority of a Party, or any financial institution owned or controlled by a Party; and

self-regulatory organization means any non-governmental body, including any securities or futures exchange or market, clearing agency, other organization or association, that exercises its own or delegated regulatory or supervisory authority over financial service suppliers or financial institutions.

Annex H bis–05

Cross-Border Trade
Canada
Insurance and Insurance-Related Services

1. Article H bis-05(1) applies to cross-border trade in financial services with respect to:

  • a. insurance of risks relating to:
    • i. maritime transport, commercial aviation and space launching and freight (including satellites), with such insurance to cover any or all of the following: the goods being transported, the vehicle transporting the goods, and any liability deriving therefrom, and
    • ii. goods in international transit; and
    • iii. reinsurance and retrocession, services auxiliary to insurance as described in subparagraph (d) of the definition of financial service, and insurance intermediation such as brokerage and agency as described in subparagraph (c) of the definition of financial service.

2. Paragraph 1 applies only where a Chilean entity is not in itself or through an agent insuring in Canada a risk.

Banking and Other Financial Services (excluding insurance)

3. Article H bis-05(1) applies to cross-border trade in financial services with respect to:

  • a. the provision and transfer of financial information and financial data processing as described in subparagraph (o) of the definition of financial service; 3 and
  • b. advisory and other auxiliary financial services, and credit reference and analysis, excluding intermediation, relating to banking and other financial services as described in subparagraph (p) of the definition of financial service.

4. Paragraph 3 applies only if neither the foreign bank nor one of its affiliates, if subject to the Bank Act, S.C. 1991, c. 46, maintains a financial establishment in Canada.

Chile
Insurance and insurance-related services

1. Article H bis-05 applies to cross-border trade in financial services with respect to:

  • a. insurance of risk relating to:
    • i. international maritime transport and international commercial aviation, with such insurance to cover any or all of the following: the goods being transported, the vehicle transporting the goods, and any liability deriving therefrom, and
    • ii. goods in international transit;
  • b. brokerage of insurance of risks relating to subparagraphs (a)(i) and (a)(ii); and
  • c. reinsurance and retrocession; reinsurance brokerage; and consultancy, actuarial, and risk assessment.
Banking and other financial services (excluding insurance)

2. Article H bis-05 applies to cross-border trade in financial services with respect to:

  • a. provision and transfer of financial information as described in subparagraph (o) of the definition of financial service;
  • b. financial data processing as described in subparagraph (o) of the definition of financial service, subject to prior authorization from the relevant regulator, as required; 4> and
  • c. advisory and other auxiliary financial services, excluding intermediation and credit reference and analysis, relating to banking and other financial services as described in subparagraph (p) of the definition of financial service.

    Notwithstanding subparagraph (c), in the event that after the date of entry into force of the Amending Agreement Chile allows credit reference and analysis to be supplied by cross-border financial service suppliers, it shall accord national treatment (as specified in Article H bis-02(3)) to cross-border financial service suppliers of Canada. Nothing in this commitment shall be construed to prevent Chile from subsequently restricting or prohibiting the supply of credit reference and analysis services by cross-border financial service suppliers.

3. It is understood that Chile’s commitments on cross-border advisory services shall not, in and of themselves, be construed to require Chile to permit the public offering of securities (as defined under its relevant law) in the territory of Chile by cross-border suppliers of Canada who supply or seek to supply such advisory services. Chile may subject the cross-border suppliers of advisory services to regulatory and registration requirements.

Annex H bis-09

Certain Specific Commitments
Canada
A. Portfolio Management

1. Subject to paragraph 2, Canada shall allow a financial institution organized outside its territory to provide the following services to a collective investment scheme located in its territory:

  • a. investment advice, and
  • b. portfolio management services, excluding:
    • i. custodial services, unless they are related to managing a collective investment scheme,
    • ii. trustee services, but not excluding the holding in trust of investments by a collective investment scheme established as a trust, and
    • iii. execution services, unless they are related to managing a collective investment scheme.

2. This commitment is subject to Article H bis-01, Article H bis-05(3) and the Appendix to this Section.

3. Notwithstanding paragraph 1, Canada may require a collective investment scheme located in Canada to retain ultimate responsibility for the management of the collective investment scheme or the funds that it manages.

4. For purposes of this commitment, in Canada collective investment scheme means investment funds or fund management companies regulated or registered under provincial securities laws and regulations.

Appendix H bis-09

1. Canada’s commitment in Annex H bis-09, section (A) (Portfolio Management) applies at the sub-national level only to the following provinces or territories and subject to paragraph 2:

  • Ontario; and
  • Manitoba.

2. The commitment in respect of any of the provinces or territories listed in paragraph 1 does not apply to any existing non-conforming measure of any of those provinces or territories, the continuation or prompt renewal of any such measure or any amendment to any such measure to the extent that the amendment does not decrease the conformity of the measure, as it existed upon the entry into force of this Amending Agreement, with the commitment.

3. Not later than four (4) years after the entry into force of the Amending Agreement, the Parties shall consult on the liberalization of cross-border trade in portfolio management services, further to that set out in this specific commitment. In such consultations, the Parties shall determine whether Canada’s specific commitment shall be maintained or further liberalized.

Chile
Section A: Voluntary Savings Plans; Non-Discriminatory Treatment of Canadian Investors

1. Notwithstanding the inclusion of the non-conforming measures of Chile in Annex VI, Section II, referring to social services, with respect to voluntary savings pension plans established under Ley 19.768, Chile shall extend the obligations of Article H bis-03 and of paragraphs 1 and 2 of Article H bis-02 to financial institutions of Canada, investors of Canada, and investments of such investors in financial institutions established in Chile.

2. Notwithstanding the inclusion of the nonconforming measures of Chile in Annex VI, Section II, referring to social services, Chile, as required by its domestic law, shall not establish arbitrary differences with respect to Canadian investors in Administradoras de Fondos de Pensiones under Decreto Ley 3.500.

Section B: Portfolio Management

1. Chile shall allow a financial institution (other than a trust company or insurance company), organized outside its territory, to provide investment advice and portfolio management services, excluding (1) custodial services, (2) trustee services, and (3) execution services that are not related to managing a collective investment scheme, to a collective investment scheme located in Chile’s territory. This commitment is subject to Article H bis-01 and to the provisions of Article H bis-05(3) regarding the right to require registration, without prejudice to other means of prudential regulation.

2. Notwithstanding paragraph 1, Chile may require the collective investment scheme located in Chile’s territory to retain ultimate responsibility for the management of the collective investment scheme or the funds that it manages.

3. For purposes of paragraphs 1 and 2, collective investment scheme means in Chile, the following fund management companies subject to supervision by the Superintendencia de Valores y Seguros:

  • a. Compañías Administradoras de Fondos Mutuos (Decreto Ley 1.328 de 1976);
  • b. Compañías Administradoras de Fondos de Inversión (Ley 18.815 de 1989);
  • c. Compañías Administradoras de Fondos de Inversión de Capital Extranjero (Ley 18.657 de 1987);
  • d. Compañías Administradoras de Fondos para la Vivienda (Ley 18.281 de 1993); and
  • e. Compañías Administradoras Generales de Fondos (Ley 18.045 de 1981).

Annex H bis-15

Authorities Responsible for Financial Services

The authority of each Party responsible for financial services shall be:

  • a. for Canada, the Department of Finance of Canada; and
  • b. for Chile, the Ministerio de Hacienda,

or a successor that is notified to the other Party in writing.

Footnotes

Footnote 1

The Parties understand that the term “prudential reasons” includes the maintenance of the safety, soundness, integrity, or financial responsibility of individual financial institutions or cross-border financial service suppliers.

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Footnote 2

The Parties understand that a Party may take measures for prudential reasons through regulatory or administrative authorities, in addition to those who have regulatory responsibilities with respect to financial institutions, such as ministries or departments of labour.

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Footnote 3

The Parties understand that, where the provision and transfer of financial information and financial data processing involves personal information, the treatment of such personal information shall be subject to all applicable legislation in Canada governing the protection of personal information.

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Footnote 4

It is understood that where the financial information or financial data processing referred to in subparagraphs (a) and (b) involve personal data, the treatment of such personal data shall be in accordance with Chilean law regulating the protection of such data.

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