TITLE II: SERVICES AND INVESTMENT
Chapter 1: General provisions
Article SERVIN.1.1: Objective and scope
1. The Parties affirm their commitment to establish a favourable climate for the development of trade and investment between them.
2. The Parties reaffirm the right to regulate within their territories to achieve legitimate policy objectives, such as: the protection of public health; social services; public 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.
3. This Title does not apply to measures affecting natural persons of a Party seeking access to the employment market of the other Party or to measures regarding nationality, citizenship, residence or employment on a permanent basis.
4. This Title shall not prevent a Party from applying measures to regulate the entry of natural persons into, or their temporary stay in, its territory, including those measures necessary to protect the integrity of its borders and to ensure the orderly movement of natural persons across them, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to the other Party under the terms of this Title. The sole fact of requiring a visa for natural persons of certain countries and not for those of others shall not be regarded as nullifying or impairing benefits under this Title.
5. This Title does not apply to:
(a) air services or related services in support of air services6, other than:
6 Air services or related services in support of air services include, but are not limited to, the following
(i) aircraft repair and maintenance services;
(ii) computer reservation system services;
(iii) ground handling services;
(iv) the following services provided using a manned aircraft, subject to compliance with the Parties respective laws and regulations governing the admission of aircrafts to, departure from and operation within, their territory: aerial fire-fighting; flight training; spraying; surveying; mapping; photography; and other airborne agricultural, industrial and inspection services; and
(v) the selling and marketing of air transport services;
(b) audio-visual services;
(c) national maritime cabotage7; and
(d) inland waterways transport.
6. This Title does not apply to any measure of a Party with respect to public procurement of a good or service purchased for governmental purposes, and not with a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is ‘covered procurement’ within the meaning of Article PPROC.2 [Incorporation of certain provisions of the GPA and covered procurement].
7. Except for Article SERVIN.2.6 [Performance requirements], this Title does not apply to subsidies or grants provided by the Parties, including government-supported loans, guarantees and insurance.
Article SERVIN.1.2: Definitions
For the purposes of this Title:
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.
7 National maritime cabotage covers: for the Union, without prejudice to the scope of activities which may be considered as cabotage under the relevant national legislation, transportation of passengers or goods between a port or point located in a Member State and another port or point located in that same Member State, including on its continental shelf, as provided for in the United Nations Convention on the Law of the Sea, done in Montego Bay, Jamaica, on 10 December 1982, and traffic originating and terminating in the same port or point located in a Member State; for the United Kingdom, transportation of passengers or goods between a port or point located in the United Kingdom and another port or point located in the United Kingdom, including on its continental shelf, as provided for in the United Nations Convention on the Law of the Sea, done in Montego Bay, Jamaica, on 10 December 1982, and traffic originating and terminating in the same port or point located in the United Kingdom.
(a) “activities performed in the exercise of governmental authority” means activities which are performed, including services which are supplied, neither on a commercial basis nor in competition with one or more economic operators8;
(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 does not include so-called line maintenance;
(c) “computer reservation system 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;
(d) “covered enterprise” means an enterprise in the territory of a Party established in accordance with point (h) by an investor of the other Party, in accordance with the applicable law, existing on the date of entry into force of this Agreement or established thereafter;
(e) “cross-border trade in 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 activity” means any activity 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 legal person or a branch or a representative office of a legal person;
(h) “establishment” means the setting up or the acquisition of a legal person, including through capital participation, or the creation of a branch or representative office in the territory of a Party, with a view to creating or maintaining lasting economic links;
(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; air cargo and mail handling; fuelling of an aircraft; aircraft servicing and cleaning; surface transport; and flight operations, crew administration and flight planning; ground handling services do not include: self-handling; security; 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 legal person of a Party that seeks to establish, is establishing or has established an enterprise in accordance with point (h) in the territory of the other Party;
(k) “legal person of a Party”9 means:
8 For greater certainty, the term “activities performed in the exercise of governmental authority” when used in relation to measures of a Party affecting the supply of services, includes “services supplied in the exercise of governmental authority” as defined in point (p) of Article SERVIN.1.2 [Definitions].
9 For greater certainty, the shipping companies referred to in this point are only considered as legal persons
(i) for the Union:
(A) a legal person constituted or organised under the law of the Union or at least one of its Member States and engaged, in the territory of the Union, in substantive business operations, understood by the Union, in line with its notification of the Treaty establishing the European Community to the WTO (WT/REG39/1), as equivalent to 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 (TFEU); and
(B) shipping companies established outside the 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 the United Kingdom:
(A) a legal person constituted or organised under the law of the United Kingdom and engaged in substantive business operations in the territory of the United Kingdom; and
(B) shipping companies established outside the United Kingdom and controlled by natural persons of the United Kingdom, whose vessels are registered in, and fly the flag of, the United Kingdom;
(l) “operation” means the conduct, management, maintenance, use, enjoyment, or sale or other form of disposal of an enterprise;
(m) “professional qualifications” means qualifications attested by evidence of formal qualification, professional experience, or other attestation of competence;
(n) “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, but not including the pricing of air transport services nor the applicable conditions;
(o) “service” means any service in any sector except services supplied in the exercise of governmental authority;
(p) “services 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;
(q) “service supplier” means any natural or legal person that seeks to supply or supplies a service;
(r) “service supplier of a Party” means a natural or legal person of a Party that seeks to supply or supplies a service.
of a Party with respect to their activities relating to the supply of maritime transport services.
Article SERVIN.1.3: Denial of benefits
1. A Party may deny the benefits of this Title and Title IV [Capital movements, payments, transfers and temporary safeguard measures] of this Heading to an investor or service supplier 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, service supplier or covered enterprise; or
(b) would be violated or circumvented if the benefits of this Title and Title IV [Capital movements, payments, transfers and temporary safeguard measures] of this Heading were accorded to that investor, service supplier or covered enterprise, including where the measures prohibit transactions with a natural or legal person which owns or controls any of them.
2. For greater certainty, paragraph 1 is applicable to Title IV [Capital movements, payments, transfers and temporary safeguard measures] of this Heading to the extent that it relates to services or investment with respect to which a Party has denied the benefits of this Title.
Article SERVIN.1.4: Review
1. With a view to introducing possible improvements to the provisions of this Title, and consistent with their commitments under international agreements, the Parties shall review their legal framework relating to trade in services and investment, including this Agreement, in accordance with Article FINPROV.3 [Review].
2. The Parties shall endeavour, where appropriate, to review the non-conforming measures and reservations set out in Annex SERVIN-1 [Existing measures], Annex SERVIN-2 [Future measures], Annex SERVIN-3 [Business visitors for establishment purposes, intra-corporate transferees and short-term business visitors] and Annex SERVIN-4 [Contractual service suppliers and independent professionals] and the activities for short term business visitors set out in Annex SERVIN-3 [Business visitors for establishment purposes, intra-corporate transferees and short-term business visitors], with a view to agreeing to possible improvements in their mutual interest.
3. This Article shall not apply with respect to financial services.
Chapter 2: Investment liberalisation Article
SERVIN.2.1: Scope
This Chapter applies to measures of a Party affecting the establishment of an enterprise to perform economic activities and the operation of such an enterprise by:
(a) investors of the other Party;
(b) covered enterprises; and
(c) for the purposes of Article SERVIN.2.6 [Performance requirements], any enterprise in the territory of the Party which adopts or maintains the measure.
Article SERVIN.2.2: Market access
A Party shall not adopt or maintain, with regard to establishment of an enterprise by an investor of the other Party or by a covered enterprise, or operation of a covered enterprise, either on the basis of its entire territory or on the basis of a territorial sub-division, measures that:
(a) impose limitations on:
(i) 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;
(ii) the total value of transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(iii) the total number of operations or on 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;10 11
(iv) the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment; or
(v) 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 an economic activity, 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 an investor of the other Party may perform an economic activity.
Article SERVIN.2.3: National treatment
1. Each Party shall accord to investors of the other Party and to covered enterprises treatment no less favourable than that it accords, in like situations, to its own investors and to their enterprises, with respect to their establishment and operation in its territory.
2. The treatment accorded by a Party under paragraph 1 means:
(a) with respect to a regional or local level of government of the United Kingdom, treatment no less favourable than the most favourable treatment accorded, in like situations, by that level of government to investors of the United Kingdom and to their enterprises in its territory; and
(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.
10 Points (a) (i) to (iii) of Article SERVIN.2.2 [Market access] do not cover measures taken in order to limit the production of an agricultural or fishery product.
11 Point (a)(iii) of Article SERVIN.2.2 [Market access] does not cover measures by a Party which limit inputs for the supply of services.
Article SERVIN.2.4: Most favoured nation treatment
1. Each Party shall accord to investors of the other Party and to covered enterprises treatment no less favourable than that it accords, in like situations, to investors of a third country and to their enterprises, with respect to establishment in its territory.
2. Each Party shall accord to investors of the other Party and to covered enterprises treatment no less favourable than that it accords, in like situations, to investors of a third country and to their enterprises, with respect to operation in its territory.
3. Paragraphs 1 and 2 shall not be construed as obliging a Party to extend to investors of the other Party or to covered enterprises the benefit of any treatment resulting from:
(a) an international agreement for the avoidance of double taxation or other international agreement or arrangement relating wholly or mainly to taxation; or
(b) measures providing for recognition, including the recognition of the standards or criteria for the authorisation, licencing, or certification of a natural person or enterprise to carry out an economic activity, or the recognition of prudential measures as referred to in paragraph 3 of the GATS Annex on Financial Services.
4. For greater certainty, the “treatment” referred to in paragraphs 1 and 2 does not include investor-to-state dispute settlement procedures provided for in other international agreements.
5. For greater certainty, the existence of substantive provisions in other international agreements concluded by a Party with a third country, or the mere formal transposition of those provisions into domestic law to the extent that it is necessary in order to incorporate them into the domestic legal order, do not in themselves constitute the “treatment” referred to in paragraphs 1 and
2. Measures of a Party pursuant to those provisions may constitute such treatment and thus give rise to a breach of this Article.
Article SERVIN.2.5: Senior management and boards of directors
A Party shall not require a covered enterprise to appoint individuals of any particular nationality as executives, managers or members of boards of directors.
Article SERVIN.2.6: Performance requirements
1. A Party shall not impose or enforce any requirement, or enforce any commitment or undertaking, in connection with the establishment or operation of any enterprise in its territory:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced or services provided in its territory or to purchase goods or services from natural or legal persons or any other entities in its territory;
(d) 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;
(e) to restrict sales of goods or services in its territory that such enterprise produces or supplies, by relating those sales in any way to the volume or value of its exports or foreign exchange inflows;
(f) to transfer technology, a production process or other proprietary knowledge to a natural or legal person or any other entity in its territory12;
(g) to supply exclusively from the territory of that Party a good produced or a service supplied by the enterprise to a specific regional or world market;
(h) to locate the headquarters for a specific region of the World which is broader than the territory of the Party or the world market in its territory;
(i) to employ a given number or percentage of natural persons of that Party;
(j) to achieve a given level or value of research and development in its territory;
(k) to restrict the exportation or sale for export; or
(l) 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 with regard to any future licence contract freely entered into between the enterprise and a natural or legal person or any other entity in its territory, if the requirement is imposed or enforced or the commitment or undertaking is enforced, in a manner that constitutes direct interference with that licence contract by an exercise of non-judicial governmental authority of a Party, to adopt:
(i) a rate or amount of royalty below a certain level; or
(ii) a given duration of the term of a licence contract.
This point does not apply where the licence contract is concluded between the enterprise and the Party. For the purposes of this point, a “licence contract” means any contract concerning the licensing of technology, a production process, or other proprietary knowledge.
2. A Party shall not condition the receipt or continued receipt of an advantage, in connection with the establishment or operation of an enterprise in its territory, on compliance with any of the following requirements:
(a) achieving a given level or percentage of domestic content;
(b) purchasing, using or according a preference to goods produced or services supplied in its territory, or to purchase goods or services from natural or legal persons or any other entity in its territory;
(c) relating 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 that enterprise;
12 For greater certainty, point (f) of Article SERVIN.2.6(1) [Performance requirements] is without prejudice to the provisions of Article DIGIT.12 [Transfer of or access to source code].
(d) restricting the sales of goods or services in its territory that that enterprise produces or supplies by relating those sales in any way to the volume or value of its exports or foreign exchange inflows; or
(e) restricting 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 operation of any enterprise in its territory, on compliance with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory.
4. Points (f) and (l) of paragraph 1 do not apply where:
(a) the requirement is imposed or enforced, or the commitment or undertaking is enforced, by a court or administrative tribunal, or by a competition authority pursuant to a Party’s competition law to prevent or remedy a restriction or a distortion of competition; or
(b) a Party authorises the use of an intellectual property right in accordance with Article 31 or Article 31bis 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.
5. Points (a) to (c) of paragraph 1 and points (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.
6. For greater certainty, this Article does not preclude the enforcement by the competent authorities of a Party of any commitment or undertaking given between persons other than a Party which was not directly or indirectly imposed or required by that Party.
7. For greater certainty, points (a) and (b) of paragraph 2 do not apply to requirements imposed by an importing Party in relation to the content of goods necessary to qualify for preferential tariffs or preferential quotas.
8. Point (l) of paragraph 1 does not apply if the requirement is imposed or enforced, or the commitment or undertaking is enforced, by a tribunal as equitable remuneration under the Party’s copyright laws.
9. A Party shall neither impose nor enforce any measure inconsistent with its obligations under the Agreement on Trade-Related Investment Measures (TRIMs), even where such measure has been listed by that Party in ANNEX SERVIN-1 [Existing measures] or ANNEX SERVIN-2 [Future measures].
10. 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 SERVIN-1 [Existing measures] or ANNEX SERVIN-2 [Future measures].
11. A condition for the receipt or continued receipt of an advantage referred to in paragraph 2 does not constitute a requirement or a commitment or undertaking for the purposes of paragraph 1.
Article SERVIN.2.7: Non-conforming measures and exceptions
1. Articles SERVIN.2.2 [Market access], SERVIN.2.3 [National treatment], SERVIN.2.4 [Most favoured nation treatment], SERVIN.2.5 [Senior management and boards of directors] and SERVIN.2.6 [Performance requirements], do not apply to:
(a) any existing non-conforming measure of a Party at the level of:
(i) for the Union:
(A) the Union, as set out in the Schedule of the Union in Annex SERVIN.1 [Existing measures];
(B) The central government of a Member State, as set out in the Schedule of the Union in Annex SERVIN.1 [Existing measures];
(C) a regional government of a Member State, as set out in the Schedule of the Union in Annex SERVIN.1 [Existing measures]; or
(D) a local government, other than that referred to in point (C); and
(ii) for the United Kingdom:
(A) the central government, as set out in the Schedule of the United Kingdom in Annex SERVIN.1 [Existing measures];
(B) a [regional government], as set out in the Schedule of the United Kingdom in Annex SERVIN.1 [Existing measures];
or
(C) a local government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in point (a); or
(c) a modification to any non-conforming measure referred to in points (a) and (b) of this paragraph, provided that it does not decrease the conformity of the measure, as it existed immediately before the modification, with Articles SERVIN.2.2 [Market access], Article SERVIN.2.3 [National treatment], Articles SERVIN.2.4 [Most favoured nation treatment], SERVIN.2.5 [Senior management and boards of directors] or SERVIN.2.6 [Performance requirements].
2. Articles SERVIN.2.2 [Market access], SERVIN.2.3 [National treatment], SERVIN.2.4 [Most favoured nation treatment], SERVIN.2.5 [Senior management and boards of directors] and SERVIN.2.6 [Performance requirements] do not apply to a measure of a Party which is consistent with the reservations, conditions or qualifications specified with respect to a sector, subsector or activity listed in Annex SERVIN.2 [Future measures].
3. Articles SERVIN.2.3 [National treatment] and SERVIN.2.4 [Most favoured nation treatment] do not apply to any measure that constitutes an exception to, or a derogation from, Articles 3 or 4 of the TRIPS Agreement, as specifically provided for in Articles 3 to 5 of that Agreement.
4. For greater certainty, Articles SERVIN.2.3 [National treatment] and SERVIN.2.4 [Most favoured nation treatment] 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.