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Canada-Korea Free Trade Agreement

Chapter Twenty-Two: Exceptions

Article 22.1: General Exceptions

1. For the purposes of Chapters Two (National Treatment and Market Access for Goods), Three (Rules of Origin), Four (Origin Procedures and Trade Facilitation), Five (Sanitary and Phytosanitary Measures), Six (Standards-Related Measures), Seven (Trade Remedies), and Thirteen (Electronic Commerce), Article XX of the GATT 1994 and, for greater certainty, its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article XX(b) of the GATT 1994 include environmental measures necessary to protect human, animal or plant life or health. The Parties further understand that Article XX(g) of the GATT 1994 applies to measures relating to the conservation of living and non-living exhaustible natural resources.

2. For the purposes of Chapters Nine (Cross-Border Trade in Services), Eleven (Telecommunications), Twelve (Temporary Entry for Business Persons), and Thirteen (Electronic Commerce), Articles XIV (a), (b) and (c) of GATS are incorporated into and made part of this Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article XIV(b) of GATS include environmental measures necessary to protect human, animal or plant life or health.

3. For the purposes of Chapter Eight (Investment), subject to the requirement that those measures are not applied in a manner that would constitute arbitrary or unjustifiable discrimination between investments or between investors, or a disguised restriction on international trade or investment, this Agreement is not to be construed to prevent a Party from adopting or enforcing measures necessary:

Article 22.2: National Security

This Agreement is not to be construed:

Article 22.3: Taxation

1. Except as set out in this Article, this Agreement does not apply to a taxation measure.

2.

3. Notwithstanding paragraph 2:

4. Subject to paragraphs 2 and 5:

5. Paragraph 4 does not:

6. Subject to paragraph 2, and without prejudice to the rights and obligations of the Parties under paragraph 3, Article 8.8 (Performance Requirements) applies to taxation measures.

7. Article 8.11 (Expropriation and Compensation) applies to a taxation measure. However, an investor shall not invoke Article 8.11 (Expropriation and Compensation) as the basis for a claim under Article 8.18 (Claim by an Investor of a Party on its Own Behalf) or 8.19 (Claim by an Investor of a Party on Behalf of an Enterprise) if it has been determined pursuant to this paragraph that the measure is not an expropriation. The investor shall refer to the designated authorities, at the time that it gives its Notice of Intent under Article 8.20 (Notice of Intent to Submit a Claim to Arbitration), the issue of whether that taxation measure is not an expropriation. If the designated authorities do not agree to consider the issue or, having agreed to consider it, fail to agree that the measure is not an expropriation within a period of 180 days of such referral, the investor may submit its claim to arbitration under Article 8.23 (Submission of a Claim to Arbitration).

8. This Agreement is not to be construed to require a Party to furnish or allow access to information the disclosure of which would be contrary to the Party’s law protecting information concerning the taxation affairs of a taxpayer.

Article 22.4: Transfers

1. Chapters Eight (Investment), Nine (Cross-Border Trade in Services), and Ten (Financial Services) are not to be construed to prevent Korea from applying measures pursuant to Article 6 of the Foreign Exchange Transactions Act, provided that such measures Footnote 1:

2. Paragraph 1 does not apply to measures that restrict:

Article 22.5: Disclosure of Information

1. This Agreement is not to be construed to require a Party to furnish or allow access to information the disclosure of which would impede law enforcement or would be contrary to the Party’s law protecting the deliberative and policy-making processes of the executive branch of government at the cabinet level, personal privacy, or the financial affairs and accounts of individual customers of financial institutions.

2.This Agreement is not to be construed to require, during the course of any dispute settlement procedure under this Agreement, a Party to furnish or allow access to information protected under its competition laws, or a competition authority of a Party to furnish or allow access to other information that is privileged or otherwise protected from disclosure.

Article 22.6: Cultural Industries

This Agreement is not to be construed to apply to measures adopted or maintained by either Party with respect to cultural industries except as specifically provided in Articles 1.6 (Cultural Cooperation) and 2.3 (Tariff Elimination).

Article 22.7: World Trade Organization Waivers

To the extent that there are overlapping rights and obligations in this Agreement and the WTO Agreement, measures adopted by a Party in conformity with a waiver decision adopted by the WTO pursuant to Article IX of the WTO Agreement are deemed to be also in conformity with this Agreement. The conforming measure of either Party shall not give rise to legal actions by an investor of a Party against the other Party under Section B of Chapter Eight (Investor-State Dispute Settlement).

Article 22.8: Definitions

For the purposes of this Chapter:

competition authority means:

cultural industries means persons engaged in any of the following activities:

designated authority means:

or their respective successors;

information protected under its competition laws means:

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

taxes and taxation measures do not include:

Annex 22-A: Taxation and Expropriation

The determination of whether a taxation measure, in a specific fact situation, constitutes an expropriation requires a case-by-case, fact-based inquiry that considers all relevant factors relating to the investment, including the factors listed in Annex 8-B (Expropriation) and the following considerations:

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