Canada Gazette, Part I, Volume 154, Number 42: Comprehensive and Progressive Agreement for Trans-Pacific Partnership

October 17, 2020

Global Affairs Canada

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Canadian Statement on Implementation

Part One – General

Introduction

This Statement on Implementation for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or Agreement) sets out the role of the CPTPP in the context of the Government of Canada’s (the Government) general approach to trade policy, the Government’s interpretation of the rights and obligations contained within the Agreement and reflected in the Act to implement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam (CPTPP Implementation Act), and measures the Government will pursue to implement the CPTPP as part of its efforts to ensure that Canadians will benefit to the maximum extent possible from Canada’s participation in the Agreement.

The Government has approved the Agreement and the implementing legislation because it is satisfied that the Agreement will benefit Canadians, will create jobs, strengthen economic relations with important partners and boost Canada’s trade with the Asia-Pacific region. The CPTPP is a modern free trade agreement (FTA) which covers virtually all sectors and aspects of trade between the Parties in order to eliminate or reduce barriers, while maintaining strong labour and environmental protection.

The CPTPP is also a major landmark in the development and global articulation of inclusive trade — an agreement that will improve trade among the Parties and includes high standards for consumers, workers, and the environment. Inclusive trade means ensuring that all segments of society can take advantage of the economic opportunities flowing from trade and investment — including those groups traditionally underrepresented, such as women, Indigenous peoples, and small and medium-sized businesses. It also means ensuring that trade agreements include strong provisions in important areas such as labour rights, environmental protection, and gender equality; and reinforces the continued right of governments to regulate in the public interest.

Purpose of the Statement on Implementation

This Statement provides the Government’s understanding of the rights and obligations set out in the CPTPP. For each chapter, the Statement sets out what the Agreement says and how Canada has implemented the Agreement in domestic law and other actions the Government will undertake to ensure that Canadians will benefit from the Agreement. As a legal document dealing with complex matters the text of the Agreement can be difficult to understand, owing in part to the fact that the Agreement’s rights and obligations will be implemented within different legal traditions and contexts. The intent of this Statement is to simply and succinctly express the basic rights and obligations in the Agreement in order to ensure that Canadians have a clearer understanding of what is involved. In that regard, the Statement seeks not only to explain the basic contours of the CPTPP and inform Canadians on its substance, but also lets Canada’s trading partners know in clear and concise language how Canada interprets the Agreement and intends to pursue the rights and obligations it contains.

Part Two – Provisions of the CPTPP

Preamble

The Preamble is the introductory statement in the Agreement that outlines the shared commitments and aspirations of the CPTPP’s 11 members and provides the political context in which they negotiated both the CPTPP and the Trans-Pacific Partnership (TPP).

The CPTPP Preamble reaffirms the matters set out in the TPP preamble and then affirms the commitment of the Parties to realize expeditiously the benefits promised by the Agreement. The recitals of the CPTPP Preamble recognize the importance of trade and investment while also recognizing the importance of other values, including sustainable development, environmental protection, gender equality, Indigenous rights, and labour rights. The Preamble also recognizes the Parties’ right to regulate in the public interest.

The Agreement’s objectives are also referred to in section 7 of the CPTPP Implementation Act and will guide the interpretation of the Act.

The Government will implement the CPTPP in a manner that is consistent with the Agreement and its underlying principles and objectives.

Article 1 – Incorporation of the TPP

Article 1 provides for the incorporation of the TPP by reference and makes the provisions of that agreement part of the CPTPP except for the provisions relating to Accession, Entry into Force, Withdrawal and Authentic Texts. These four provisions are specifically written for the CPTPP.

Article 2 – Suspension of the Application of Certain Provisions of the TPP

Article 2 provides for those provisions of the TPP that the Parties have agreed to suspend the application of under the Agreement. They are set out and discussed under the Annex – List of Suspended Provisions below. These suspensions will continue until the Parties together agree to end the suspension of one or more of these provisions.

Article 3 – Entry into Force

Article 3 sets out how the Agreement came into force. This occurred 60 days after the date on which the sixth Party notified New Zealand, the CPTPP Depositary, in writing, that it had completed its applicable legal procedures for ratification. Australia became the 6th country to do so on October 31, 2018 (Canada was the 5th country to do so, on October 26, 2018, joining Mexico, Japan, Singapore and New Zealand). The Agreement came into force on December 30, 2018. It subsequently came into force for Vietnam on January 14, 2019. For the remaining four signatories, Article 3.2 provides that the Agreement will come into force for each of them 60 days after the date they each notify New Zealand that they have completed their domestic procedures.

Article 4 – Withdrawal

Article 4 sets out the means by which a Party may withdraw from the Agreement. Like the TPP, under the CPTPP a Party may withdraw from the Agreement by providing written notice to the Depositary and the other Parties of its desire to do so. A withdrawal will take effect six months after a Party provides the notice described above.

Article 5 – Accession

Article 5 provides that accession to the Agreement is open to any economy who reaches agreement with the Parties on the terms and conditions for accession.

Article 6 – Review of the CPTPP

Article 6 sets out a review mechanism for the Agreement that a Party may trigger if the entry into force of the TPP is imminent or if the TPP is unlikely to enter into force.

Article 7 – Authentic Texts

Article 7 provides that English, French and Spanish texts of the Agreement are equally authentic.

Annex – List of Suspended Provisions

Chapter 5 (Customs Administration and Trade Facilitation)

Article 5.7 (Express Shipments) – Paragraph 1 – subparagraph (f): second sentence

Suspension of the second sentence suspends the obligation of Parties to each periodically review their respective de minimis thresholds waiving customs duties on low-value courier imports.

Chapter 9 (Investment)

(a) Article 9.1 (Definitions):

(b) Article 9.19 (Submission of a Claim to Arbitration)

(c) Article 9.22 (Selection of Arbitrators): Paragraph 5;

(d) Article 9.25 (Governing Law): Paragraph 2 including footnote 35;

(e) Annex 9-L (Investment Agreements): all of this Annex

The suspensions in Chapter 9 suspend provisions allowing investors to bring claims for withdrawal of an “investment authorization” or breach of an “investment agreement” under the investor-state dispute settlement (ISDS) mechanism. Under Article 9.1, “investment authorizations” are defined as those granted by the authorities of a Party to an investor or its covered investment, which for Canada refers exclusively to authorizations provided by the Minister of Industry under section 21 or 22 of the Investment Canada Act’s “net benefit” review mechanism. “Investment agreements” are defined as written agreements between the investor and a Party’s central level authority, creating an exchange of rights or obligations, upon which the investor relied in making its investment. The CPTPP Parties decided to suspend these provisions, bringing the CPTPP’s scope of investor-state dispute settlement back into line with Canada’s standard approach.

Chapter 10 (Cross-Border Trade in Services)

Annex 10-B (Express Delivery Services):

The suspension of Paragraph 5 suspends the prohibition against a monopoly supplier of postal services cross-subsidizing its own or any other supplier’s express delivery services. Paragraph 6 suspends the requirement that a postal monopoly not abuse its position by acting inconsistently with a Party’s national treatment and market access obligations with respect to express delivery services in the Party where it is located.

Chapter 11 (Financial Services)

(a) Article 11.2 (Scope) – Paragraph 2 – subparagraph (b): the phrase “Article 9.6 (Minimum Standard of Treatment)” including footnote 3;

The suspension in Article 11.2 removes the possibility of an investor directly bringing claims that CPTPP Party measures falling under the Financial Services chapter breach the minimum standard of treatment obligation through ISDS.

(b) Annex 11-E: Entire Annex

The Annex 11-E suspension was a consequential change following the suspension in Article 11.2 and removed a phase-in period for countries to submit to the application of ISDS to claims of minimum standard of treatment breaches.

Chapter 13 (Telecommunications)

Article 13.21 (Resolution of Telecommunications Disputes) – Paragraph 1: subparagraph (d) including the heading “Reconsideration” and footnote 22

The suspension of subparagraph 1(d) of Article 13.21 suspends a commitment to allow an enterprise affected adversely by a determination or decision of a Party’s regulatory body to appeal to that body for reconsideration. While Canada’s domestic regime is already consistent with this provision, its suspension addressed concerns of other CPTPP Parties.

Chapter 15 (Government Procurement)

(a) Article 15.8 (Conditions for Participation): Paragraph 5 including footnote 1;

Article 15.8 allows for the imposition of conditions for the participation of suppliers in a covered procurement, but ensures that these are not used to discriminate against suppliers of another Party. Paragraph 5 clarifies that the provisions in this Article do not prevent a procuring entity from promoting compliance with labour rights in the territory in which the procured goods are produced or the procured services are performed. This paragraph was for greater certainty only, and its suspension does not prevent Canada from promoting compliance with labour rights.

(b) Article 15.24 (Further Negotiations) – Paragraph 2: the phrase “No later than three years after the date of entry into force of this Agreement”

The suspension of the phrase “No later than three years after the date of entry into force of this Agreement” in Paragraph 2 of Article 15.24 allowed the CPTPP Parties to change the time period for the beginning of future negotiations to expand coverage under the Chapter. These further negotiations will now begin no earlier than five years after the entry into force of the CPTPP, at the request of a Party.

Chapter 18 (Intellectual Property)

(a) Article 18.8 (National Treatment): the last two sentences of footnote 4;

Footnote 4 sets out the meaning of “protection” for the purposes of Paragraph 1 of Article 18.8. The second last sentence of the footnote clarifies the phrase “matters affecting the use of intellectual property (IP) rights specifically covered by the Chapter,” and the last sentence of the footnote further clarifies that the preceding sentence is without prejudice to a Party’s interpretation of this phrase in footnote 3 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

(b) Article 18.37 (Patentable Subject Matter) – Paragraph 2: all of this paragraph; Paragraph 4: last sentence;

Paragraph 2 deals with the availability of patents for new uses of a known product, new methods of using a known product, or new processes of using a known product. The suspension suspends the obligation to make patents available for inventions claimed as at least one of the above-noted uses or processes. Canada already meets this original TPP obligation.

The last sentence of Paragraph 4 deals with the availability of patents at least for inventions that are derived from plants. The suspension suspends the obligation to make patents available at least for inventions that are derived from plants. Canada already meets this original TPP obligation.

(c) Article 18.46 (Patent Term Adjustment for Unreasonable Granting Authority Delays): all of this Article including footnotes 36 through 39;

Article 18.46 (including corresponding footnotes 36 through 39) outlines the requirement to provide for the adjustment of the term of a patent to compensate for “unreasonable” delays in the Party’s issuance of patents, with permitted exclusions from the determination of “unreasonable” delays.

The suspension of Article 18.46, and the corresponding footnotes, suspends the obligation to provide for patent term adjustment (PTA) in respect of “unreasonable” delays in the issuance of a patent. Canada does not currently provide for PTA in its domestic regime.

(d) Article 18.48 (Patent Term Adjustment for Unreasonable Curtailment): all of this Article including footnotes 45 through 48;

Article 18.48 (including corresponding footnotes 45 through 48) outlines the requirement of, and the conditions for, a Party compensating for unreasonable curtailment, in respect of the marketing approval of pharmaceutical products by adjusting patent terms. A footnote to the Article provides that a Party may alternatively make available a period of additional sui generis protection to compensate for unreasonable curtailment of the effective patent term as a result of the marketing approval process. Canada already provides an additional period of protection for eligible pharmaceutical products under its Certificate of Supplementary Protection (CSP) regime. Canada meets the original TPP obligation by way of its existing CSP regime.

The suspension of Article 18.48, and the corresponding footnotes, suspends the obligation to provide for patent term restoration in respect of “unreasonable curtailment” in the marketing approval process.

(e) Article 18.50 (Protection of Undisclosed Test or Other Data): all of this Article including footnotes 50 through 57;

Article 18.50 (including corresponding footnotes 50 through 57) deals with the five years of protection in specified circumstances of undisclosed test or other data for a new pharmaceutical product where such data is required to obtain marketing approval. Article 18.50 also requires the protection of undisclosed test or other data for a new pharmaceutical product in specified circumstances if submission of evidence of prior marketing approval of the product in another territory is required to obtain marketing approval.

The suspension of Article 18.50, and the corresponding footnotes, suspends the obligation to provide five years of data protection for small molecule drugs, plus three years for a “new indication, new formulation or new method of administration” of an approved small molecule drug, or eight years of data protection overall. Canada already provides eight years of data protection overall for small molecule drugs and meets the original TPP obligation under Article 18.50.

(f) Article 18.51 (Biologics): all of this Article including footnotes 58 through 60;

Article 18.51 (including corresponding footnotes 58 through 60) deals with the provision of at least eight years (or at least five years plus “other measures”) protection of undisclosed test or other data for a new pharmaceutical product that is, or contains, a biologic, where such data is required to obtain marketing approval.

The suspension of Article 18.51, and the corresponding footnotes, suspends the obligation to provide eight years of data protection for biologic drugs, or five years plus “other measures.” Canada already meets the original TPP obligation to provide eight years of data protection overall for biologic drugs.

(g) Article 18.63 (Term of Protection for Copyright and Related Rights): all of this Article including footnotes 74 through 77;

Article 18.63 (including corresponding footnotes 74 through 77) deals with the term of protection for copyright and related rights. This Article requires the term of protection for a work, performance, or phonogram to be at least “life of the author” plus 70 years where copyright is calculated on the basis of the life of a natural person. Where copyright is calculated on a basis other than the life of a natural person, this Article requires that each Party provide a term of protection for a work, performance, or phonogram of at least 70 years from publication. However, if such a work, performance, or phonogram is not published within 25 years from its creation, each Party is only required to provide a term of at least 70 years from creation.

The suspension of Article 18.63, and the corresponding footnotes, suspends the obligations relating to term of protection. At the time of entry into force of the CPTPP Canada already provided 70 years of protection for performances and phonograms from the date of publication. As a result of this suspension Canada was not required under the Agreement to change any other terms of protection, including providing a term of “life of the author” plus 70 years for works calculated on the basis of the life of a natural person.

(h) Article 18.68 (Technological Protection Measures [TPMs]): all of this Article including footnotes 82 through 95;

Article 18.68 (including corresponding footnotes 82 through 95) deals with technological protection measures (TPMs), and specifically effective technological measures, or “digital locks,” on copyrighted works, performances or phonograms.

Article 18.68 requires each Party to prohibit the circumvention of effective TPMs that are used by rights holders to protect their copyright content. These prohibitions would apply to the act of circumvention, as well as to services and devices used for circumvention. Each Party must provide civil and criminal remedies in relation to violations of these prohibitions. Parties may adopt limitations and exceptions to these prohibitions in order to enable non-infringing uses.

The suspension of Article 18.68, and the corresponding footnotes, suspends the obligation to provide the specific legal protections for TPMs, as outlined in this Article. Canada already meets the original TPP obligation.

(i) Article 18.69 (Rights Management Information [RMI]): all of this Article including footnotes 96 through 99;

Article 18.69 (including corresponding footnotes 96 through 99) deals with rights management information (RMI), or “digital watermarks,” on copyrighted works, performances or phonograms. RMI, such as the identity of the copyright owner or any conditions on using the copyright content, is used by rights holders in association with their content in order to manage their rights.

Article 18.69 requires each Party to prohibit the removal or alteration of RMI, the distribution of RMI that has been altered, and the distribution of content where the RMI has been removed or altered.

The suspension of Article 18.69, and the corresponding footnotes, suspends the obligation to provide the specific legal protections in respect of RMI, as outlined in this Article. At the time of entry into force of the CPTPP Canada already provided legal protections in respect of RMI, but did not provide criminal remedies in this area.

(j) Article 18.79 (Protection of Encrypted Programme-Carrying Satellite and Cable Signals): all of this Article including footnotes 139 through 146;

Article 18.79 (including corresponding footnotes 139 through 146) requires that each Party provide certain criminal remedies and civil remedies in respect of encrypted programme-carrying satellite and cable signals.

The suspension of Article 18.79 suspends the obligation to provide specific protections in respect of satellite and cable signals as set out in this Article. Canada already meets the original TPP obligation.

(k) Article 18.82 (Legal Remedies and Safe Harbours): all of this Article including footnotes 149 through 159;

Article 18.82 (including corresponding footnotes 149 through 159) and the corresponding Annexes 18-E and 18-F (see below) deal with legal remedies for copyright owners and liability safe harbours for Internet service providers (ISPs). This Article requires that legal remedies be available for rights holders to address copyright infringement in the online environment, and that each Party establish or maintain appropriate safe harbours in respect of online services that are ISPs. Paragraph 3 requires that each Party prescribe in its law conditions for ISPs to qualify for the limitations on liability set out in this Article, or alternatively, provide for circumstances under which ISPs do not qualify for these limitations. The suspension of Article 18.82 suspends Parties’ CPTPP obligations in these areas.

The original TPP obligations in Paragraphs 3 and 4 of Article 18.82 must be read in conjunction with footnote 149 to Article 18.82 and Annex 18-E (Annex to Section J), which preserves Canada’s current exceptions and limitations for ISPs and its “Notice and Notice” regime.

(l) Annex 18-E (Annex to Section J): all of this Annex;

Annex 18-E sets out obligations that are an alternative to the obligations set out in Paragraphs 3 and 4 of Article 18.82.

One such obligation is the continued provision of statutory secondary liability for copyright infringement in cases in which a person, by means of the Internet or another digital network, provides a service primarily for the purpose of enabling acts of copyright infringement, in relation to the factors set out in a Party’s law.

Canada already meets the original TPP obligations in Article 18.82, in part by way of Annex 18-E. While Article 18.82 and Annex 18-E (Annex to Section J) have been suspended, the CPTPP will not require any changes to Canada’s current exceptions and limitations for ISPs and its “Notice and Notice” regime.

(m) Annex 18-F (Annex to Section J): all of this Annex

Annex 18-F provides that, as an alternative to implementing Section J (Internet Service Providers), a Party may implement Article 17.11.23 of the United States–Chile Free Trade Agreement, which is incorporated into and made part of this Annex.

The suspension of Article 18.82, and the corresponding footnotes and annexes (Annex 18-E and Annex 18-F), suspends the obligation to provide certain measures in respect of copyright infringement in the online environment.

Chapter 20 (Environment)

Article 20.17 (Conservation and Trade) – Paragraph 5: “or another applicable law” including footnote 26

The CPTPP Environment Chapter includes commitments for Parties to take measures to combat the illegal take and the illegal trade of wild flora and fauna. The suspension of the phrase “or another applicable law” including footnote 26 refines the scope of law that would apply in determining whether flora or fauna has been taken or traded illegally — specifically, that another Party’s domestic law is not relevant in determining whether such take or trade is illegal. The suspension narrows the scope of applicable law to a Party’s domestic law, which, in Canada, would include the Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act (WAPPRIITA) and related regulations.

Chapter 26 (Transparency and Anti-Corruption)

Annex 26-A (Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices): Article 3 (Procedural Fairness) including footnotes 11 through 16

Article 3 and the corresponding footnotes outline procedures for listing new pharmaceutical products or medical devices for reimbursement purposes to the extent that a Party’s national health care authority operates or maintains such procedures.

The suspension of Article 3 and the corresponding footnotes suspends the procedural principles that apply to national health care programmes in which a national health care authority makes decisions on pharmaceutical products and medical devices that are eligible for reimbursement. For reference, the Appendix to Annex 26-A notes that Canada does not currently operate such a health care programme.

Annex II

Schedule of Brunei Darussalam – 14 – Paragraph 3: the phrase “after the signature of this Agreement”

Brunei Darussalam made a change to its Annex II reservation for its coal sector, which had the effect of delaying the application of certain services and investment obligations (i.e. ratchet and standstill on new non-conforming measures) until entry into force of the Agreement, meaning that Brunei Darussalam has more time to enact any non-conforming measures that will be grandfathered under the Agreement. Canada and other Parties agreed to accommodate Brunei Darussalam; the change does not impact any of Canada’s prospective legal rights under the Agreement, nor does it touch on Canadian commercial interests.

Annex IV

Schedule of Malaysia – 3 and 4 – Scope of Non-Conforming Activities (hereinafter referred to as the “Scope”): all references to the phrase “after signature of this Agreement”

Under the CPTPP, the Parties agreed to delay the start of a transition period for Petroliam Nasional Berhad (PETRONAS), Malaysia’s state-owned oil and gas enterprise, until the Agreement enters into force for Malaysia. This will allow PETRONAS to continue, for a limited time, to accord preferences to Malaysian firms in its purchase of goods or services when engaging in upstream activities in Malaysia’s oil and gas sector (e.g. resource exploration and exploitation, supply of equipment used in the industry). This delay will not impact Canada’s prospective legal rights under the Agreement nor does it touch on Canadian commercial interest. Further, through bilateral side letters, each Party agreed not to seek dispute settlement against Malaysia for a period of five years with respect to PETRONAS according preferences to domestic suppliers of certain upstream services.

Part Three – Provisions of the TPP Agreement

Preamble

1. TPP Provisions

The Preamble is the introductory statement in the Agreement that outlines the joint commitments and aspirations of the Parties, and provides the political context in which the Parties negotiated the Agreement. It reflects the Parties’ commitment to free trade, their shared values and their intent in negotiating together. As noted in the CPTPP section, the TPP Preamble was reaffirmed by the CPTPP Parties in the CPTPP.

The Preamble affirms the commitment of the Parties to promote economic integration among themselves, to grow micro, small and medium-sized enterprises, and to advance free trade and investment while recognizing the importance of other values, including environmental protection and enforcement, sustainable development, labour rights, cultural identity and diversity within and among themselves, and the elimination of bribery and corruption.

The Preamble also recognizes the Parties’ right to regulate in the public interest to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system, and public morals.

The Parties affirmed that state-owned enterprises can play a legitimate role in international commerce and resolved to establish rules that promote a level playing field with privately owned businesses, transparency and sound business practices.

Finally, the Preamble recognizes the importance of expanding the benefits of the Agreement through the accession of other States or customs territories.

The Government will implement the Agreement in a manner that is consistent with its underlying principles and objectives.

2. Canadian Legislation

No amendments to Canadian legislation arise from the Preamble.

3. Intended Government Action

The Government will continue to promote Canadian values and its inclusive trade agenda when implementing the Agreement.

Chapter 1 – Initial Provisions and General Definitions

1. TPP Provisions

Chapter 1 establishes how the TPP interacts and co-exists with other international agreements. Chapter 1 also defines the terms used throughout the Agreement. In this regard, individual chapters may contain definitions that have specific application to the obligations of that chapter, including some which may modify or replace the definitions set out in Chapter 1.

Article 1.1 declares the establishment of a free trade area in conformity with Article XXIV of the General Agreement on Tariffs and Trade, 1994 (GATT 1994), and Article V of the General Agreement on Trade in Services (GATS). Article XXIV of GATT 1994 sets out principles and requirements under the World Trade Organization (WTO) for establishing a free trade agreement and requires that Canada and the other Parties notify WTO Members that a free trade area has been established. Likewise, Article V of the GATS sets out principles and requirements for establishing an agreement that liberalizes trade in services and requires that Canada and the other Parties notify the Council for Trade in Services that such an agreement has been established.

Article 1.2 sets out the relationship between the Agreement, the WTO Agreement, and other agreements. Under Article 1.2, the Parties reaffirm their existing rights and obligations with respect to each other under the WTO and other agreements to which both are party. In addition, if a provision of the TPP is inconsistent with a provision of another agreement to which Canada and another Party are party to, then the Parties in question are required to — on request — consult with each other to reach a mutually satisfactory solution. An example of how coexistence is meant to work, and what the CPTPP Parties consider not to be an inconsistency, is found in the footnote to Article 1.2. It states that the fact that another agreement provides more favourable treatment of goods, services investment or persons than that provided under the CPTPP does not mean there is an inconsistency between the two agreements. In other words, in the face of different treatment under the CPTPP and under another agreement that Canada has entered into, the Canadian interest affected may choose to use the agreement which provides it with the best outcome.

Article 1.3 sets out definitions that are used throughout the Agreement in more than one chapter.

Annex 1-A sets out Party-specific definitions resulting from factors such as different government structures.

2. Canadian Legislation

Section 3 of the CPTPP Implementation Act provides that the Act and any federal law that implements or fulfills the Agreement is to be interpreted in a manner consistent with the Agreement. This clause is consistent with Canada’s treaty obligations under the Vienna Convention on the Law of Treaties and is intended to remove any ambiguity that might exist in domestic law regarding the interpretation of implementing measures.

Section 4 of the CPTPP Implementation Act reaffirms that nothing in the Act or the Agreement applies to natural surface or ground water.

3. Intended Government Action

With the passage of the CPTPP Implementation Act and related regulatory and administrative actions, the Government has taken the steps necessary to implement the Agreement in Canada at the federal level. In order to fulfill its transparency obligations, the Government has completed the necessary notifications to the WTO.

Chapter 2 – National Treatment and Market Access for Goods

1. TPP Provisions

One of Canada’s principal goals in the CPTPP negotiations was to achieve increased and improved market access for exports of Canadian goods to CPTPP Parties, and in particular those with which Canada does not already enjoy preferential access through other trade agreements. This goal, among others, was achieved in the National Treatment and Market Access for Goods (NTMA) Chapter — most notably through obligations by the CPTPP Parties to reduce or eliminate tariffs, to not apply restrictions or prohibitions on the import or export of goods, and to treat imported products no less favourably than similar domestic goods. Additional information on tariff elimination and the tariff schedule for each Party is detailed in Annex 2-D of the Agreement.

Article 2.1 provides definitions for a number of terms used in this Chapter, including that “duty-free” means free specifically of customs duty.

Article 2.2 defines the scope of Chapter 2 as applicable to trade in goods of a Party.

Article 2.3 Paragraph 1 ensures that a Party provides non-discriminatory treatment to the goods of the other Party by incorporating Article III of GATT 1994 (National Treatment on Internal Taxation and Regulation) into the CPTPP. National treatment is the obligation for a Party to treat imported goods no less favourably than domestic goods. This means, for instance, that a good imported into a Party cannot be subject to more burdensome conditions, such as higher internal taxes, stricter product regulation or restrictions on its sale, than those to which a like domestic good of that Party would be subject. The national treatment obligation is an essential part of any free trade agreement that eliminates trade barriers because it prevents a Party from replacing border measures with domestic measures that favour domestic goods over imported goods in that Party’s market.

Paragraph 2 clarifies the manner in which the CPTPP’s National Treatment obligation applies to measures maintained or adopted by regional governments; for Canada this applies to provincial and territorial governments. More specifically, with respect to measures of a provincial or territorial government, national treatment means treatment that is no less favourable than the treatment the province or territory accords to like goods produced in Canada.

Paragraph 3 indicates that Paragraph 1 does not apply to certain measures as set out in Annex 2-A. As in its other free trade agreements, Canada maintains an exception to the National Treatment obligation with respect to the following measures:

Article 2.4 provides for the elimination of tariffs on goods traded between the CPTPP Parties that qualify as originating under the rules of origin set out in the Agreement. It also prevents Parties, unless agreed to elsewhere in the Agreement, from increasing existing tariffs or adopting new tariffs on originating goods. In each Party’s tariff schedule, the relevant tariff commitment for each tariff line is identified, including the base tariff for interim staged rates where a good is subject to a gradual phase-out of its tariff. These staging categories are outlined under Annex 2-D. This Article also allows Parties to consult on accelerating tariff elimination. An agreement by two or more Parties on tariff acceleration will supersede these Parties’ existing tariff commitments between them. A Party may unilaterally accelerate its tariff elimination for goods that qualify as “originating” under Chapter 3 (Rules of Origin and Origin Procedures). Following a unilateral tariff reduction, a Party may also unilaterally increase customs duties to the rate established by a Party’s schedule. Finally, Parties agree not to prohibit importers from claiming the WTO applied tariff for originating goods.

Article 2.5 prohibits Parties from adopting new tariff waivers or expanding existing waivers when the waiver is conditioned on a performance requirement. Parties are also prohibited from conditioning existing tariff waivers, either explicitly or implicitly, on a performance requirement. Performance requirements in this context include requiring that a quantity or percentage of goods or services be exported; requiring that a good or service from the importing Party be substituted for an imported good; requiring that a person benefiting from a tariff waiver purchase other goods or services from the Party that grants the waiver; requiring that a person benefiting from a waiver produce goods or services in the territory of the Party granting the waiver that require a level or percentage of domestic content; or a requirement related in any way to the volume or value of imports, to the volume or value of exports or foreign exchange inflows. Performance requirements explicitly exclude requirements that a good — or an identical or similar substitute — be subsequently exported or be used in the production of a good that is subsequently exported.

Article 2.6 provides for the duty-free re-importation of goods, regardless of their origin, that are temporarily exported to another Party and undergo repairs or alterations in that other Party, and are then re-imported into the original Party. This Article also specifies through a footnote that Canada may nonetheless apply to the value of the repair or alteration of specified ships, regardless of their origin, the rate of customs duty that would apply to the ship itself in accordance with the Tariff Schedule of Canada under the CPTPP. Finally, the Article specifies that a “repair or alteration” does not include an operation or process that creates a new or commercially different good or transforms an unfinished good into a finished good.

Article 2.7 provides for duty-free trade for commercial samples of negligible value or printed advertising material imported from the territory of any Party of any origin among Parties. The Article allows Parties to require that commercial samples benefiting from this treatment be imported solely for the solicitation of orders for goods, or services provided from the territory of another Party or non-Party; or that printed advertising material be imported in packets that contain no more than one copy of the material and do not form part of a larger delivery.

Article 2.8 requires Parties to provide, subject to certain permissible conditions, duty-free admission for goods of any origin temporarily imported from another CPTPP Party related to broadcasting, displays or demonstrations, commercial samples, advertising films and recordings and sports activities, where those goods are necessary for carrying out the trade or profession of a person who qualifies for temporary entry according to the laws of the Party into which the goods are temporarily imported. The permissible conditions include requiring that the goods be used solely by or under the personal supervision of a national of another Party in the exercise of the business activity, trade, profession or sport of that national of another Party; that they not be sold or leased; that they be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry of such a good; and that the goods be admissible into a Party under its laws. The Parties also agree to, upon request and provided the reasons are deemed valid by the Party’s customs authority, extend the time allowed for temporary admission. If a good is not used for the purposes covered by the Article, the importing Party can apply tariffs, and any other charges provided for under their laws.

Parties are required to adopt and maintain certain procedures for the expeditious release of goods admitted temporarily for the purposes outlined in the Article including allowing for a good temporarily admitted to be exported through a different point of entry than that through with it was initially admitted and allowing for the destruction of goods imported under this Article in lieu of exporting the good, provided that it is done in accordance with the law and satisfactory proof of destruction is made available.

Parties are required to provide duty-free temporary admission for containers and pallets regardless of their origin.

Article 2.9 establishes a mechanism to facilitate discussions between Parties on any issue related to the Chapter on an as-needed basis. The Article includes information on how to request an ad hoc discussion as well as timelines for replying to a request to meet. Any Party may join ad hoc discussions, subject to the conditions agreed to by the discussing Parties. Urgent ad hoc discussions may be requested when a Party applies a measure without prior notice or without an opportunity for discussions and if the measure threatens to impede the importation of a good in-transit. Ad hoc discussions are confidential and without prejudice to dispute settlement under Chapter 28 of the Agreement.

Article 2.10 Paragraph 1 incorporates Article XI of GATT 1994 (General Elimination of Quantitative Restrictions) in order to ensure that a Party does not maintain or adopt prohibitions or restrictions on the import or export of any good from or to another Party, except where provided under the CPTPP.

Paragraph 2 specifies that the Article prevents Parties from adopting or maintaining export and import price requirements (except under countervailing and anti-dumping duty measures), import licensing conditioned on the fulfillment of a performance requirement, or voluntary export restraints.

Paragraph 5 sets out that provisions on import and export restrictions do not apply to measures as set out in Annex 2-A (listed under Article 2.3 above).

Paragraph 8 prohibits the requirement of contractual or other relationships between exporters and distributors in a given Party.

Article 2.11 specifies that the obligation not to apply prohibitions or restrictions under Article 2.10.1 applies to the import of remanufactured goods with the exception of certain goods in Vietnam (see also Annex 2-B). Remanufactured goods are distinct from used goods in that they undergo significant processing beyond cleaning, repair and maintenance and are thus restored to a higher level of functionality than a repaired or used good.

Article 2.12 builds on the WTO’s Agreement on Import Licensing Procedures. This Article prohibits Parties from adopting or maintaining measures inconsistent with that Agreement. In addition, the Article includes a number of provisions designed to enhance transparency on import licensing requirements by requesting Parties to adhere to additional notification, publication and consultation requirements.

Article 2.13 requires Parties to comply with certain notification, publication and consultation requirements for export licensing procedures.

Article 2.14 prohibits Parties from imposing fees and other charges in connection with the import of goods from, or export of goods to another Party, unless the fee or charge is commensurate with the cost of services provided. Parties are further prohibited from levying such fees or charges on an ad valorem basis, although, pursuant to the footnote, this prohibition will not apply to Mexico until five years after entry into force of the Agreement. Parties are prohibited from requiring consular transactions for imports of goods from other Parties. Parties are obliged to make a current list of fees and charges it imposes in connection with imports or exports of goods online. Parties also commit to periodically review its existing fees and charges with a view to reducing them.

Article 2.15 prohibits a Party from adopting or maintaining any duties, taxes or charges on exports unless it similarly applies that charge to goods destined for domestic consumption. Both Malaysia and Vietnam have some exceptions to this provision (see Annex 2-C).

Article 2.16 requires Parties to publish information related to various customs procedures and fees in an accessible manner.

Article 2.17 requires CPTPP Parties to participate in the WTO Information Technology Agreement (ITA). Brunei Darussalam has a transition period of one year for this provision and Mexico and Chile are required to endeavour to become participants subject to the completion of their internal legal procedures.

Article 2.18 sets out the functions of the Committee on Trade in Goods which include addressing, at the request of Parties, all issues pertaining to trade in goods, including issues arising in the implementation and application of the Agreement.

Article 2.19 provides definitions on a number of terms specific to Chapter 2 Section C on Agriculture.

Article 2.20 provides that Section C on Agriculture only applies to trade in agricultural goods.

Article 2.21 Paragraph 1 commits Parties to work together to achieve an agreement at the WTO to eliminate agricultural export subsidies. This was realized in the 2015 WTO Ministerial Decision on Export Competition.

Paragraph 2 prohibits Parties from maintaining an export subsidy on any agricultural good destined for the territory of another Party. This prohibition does not cover measures set out in Article 10 of the WTO Agreement on Agriculture (Agriculture Agreement).

Article 2.22 commits Parties to work together through the WTO to develop multilateral disciplines to govern the granting of export credits, export credit guarantees and insurance programmes, including disciplines on matters such as transparency, self-financing and repayment terms.

Article 2.23 commits Parties to work toward achieving an agreement at the WTO related to state trading enterprises that includes the following: the elimination of trade-distorting restrictions on the authorization to export agricultural goods; the elimination of special financing granted to state trading enterprises that export for sale a significant share of total agricultural exports; and greater transparency in the operation and maintenance of export state trading enterprises.

Article 2.24 confirms the Parties’ rights under Article XI: 2(a) of GATT 1994 to temporarily apply an export prohibition or restriction to maintain food security as long as it is done so in accordance with Article 12.1 of the Agriculture Agreement.

Article 2.25 establishes a Committee on Agricultural Trade and sets out its functions, which include promoting trade in agricultural goods between Parties; monitoring and promoting cooperation on the administration and implementation of the obligations contained in the Chapter’s Agriculture section, including providing a forum for consultation on trade in agricultural goods; and undertaking additional work that may be assigned by the Committee on Trade in Goods or the CPTPP Commission.

Article 2.26 prohibits Parties from applying duties pursuant to a special safeguard taken under the Agriculture Agreement on imports of agricultural goods from other Parties that are subject to preferential treatment. Despite this Article, Japan may apply a separate safeguard measure to imports of specific agricultural goods from other Parties as permitted under Appendix B-1 – Agricultural Safeguard Measures.

Article 2.27 sets out obligations related to the trade of products of modern biotechnology. Paragraph 1 of Article 2.27 affirms the importance of transparency, cooperation, and the exchange of information related to the trade of products of modern biotechnology. Paragraphs 2 and 3 provide greater certainty that the Article does not impact a Party’s rights or obligations under the WTO or other provisions of the CPTPP, or its domestic laws, regulations or policies related to products of modern biotechnology. Paragraph 4 requires Parties to make public the following information related to products of modern biotechnology, subject to their laws and the availability of information: documentation requirements for completing an application for a product’s authorization; a summary of any risk or safety assessment that has led to the authorization of a product; and a list or lists of products that have been authorized in its territory. Paragraphs 5, 6 and 7 provide for the establishment of contact points as well as importing Party and exporting Party obligations related to the sharing of information in the event of the unintentional presence, at a low level, of a product of modern biotechnology that has been authorized in at least one country according to international guidelines, but not yet in the importing country. Paragraph 8 sets out obligations aimed at reducing the likelihood of time gaps between Parties’ product authorizations. Paragraphs 9 and 10 establish and set out the functions of a working group related to information exchange and cooperation on trade-related matters associated with products of modern biotechnology, under the Committee on Agricultural Trade.

Article 2.28 permits Parties to implement and administer tariff-rate quotas (TRQs) in accordance with Article XIII of GATT 1994, the WTO Agreement on Import Licensing Procedures and Article 2.12 of the CPTPP (Import Licensing). The Article provides that all TRQs established by a Party under the Agreement be incorporated into that Party’s schedule of tariff commitments. The Article also requires the administration of TRQs be transparent, fair and equitable, responsive to market conditions, timely, and not unnecessarily burdensome. The Article requires the publication of all information related to TRQ administration on a Party’s designated publicly available website.

Article 2.29 requires Parties to administer their TRQs in a manner that allows them to be utilized to the fullest extent possible. The Article also prohibits Parties from introducing new or additional conditions related to their TRQ utilization except when done so in accordance with the notification and consultation requirements set out in subparagraphs 2(b) and (c).

Article 2.30 sets out obligations related to the allocation of TRQs. Paragraph 1 requires each importing Party to ensure that any person of a Party that fulfills the importing Party’s eligibility requirements is able to apply and be considered for a quota allocation under the TRQ; and, unless otherwise agreed, refrain from allocating any portion of the quota to producer groups, conditioning allocation on domestic production or limiting access to an allocation only to processors. Parties are required to provide allocations in commercially viable shipping quantities; make allocations for in-quota imports available for any tariff lines subject to the TRQ and valid through the TRQ year; ensure allocation is equitable and transparent among applicants; provide applicants at least four weeks to submit a request for allocation; and ensure quota allocation takes place no later than four weeks before the opening of the quota period except in cases where it is based on import performance. Paragraph 2 sets out the provisions for determining the volume of the TRQs during the first year of the Agreement (from the date of entry into force until December 31 of that calendar year), which will be proportional to the number of months remaining in the TRQ year, including the entirety of the month the Agreement enters into force. Paragraph 3 prohibits Parties from conditioning the application for, or utilization of, a TRQ allocation on the re-export of a good. Paragraph 4 clarifies that the quantity of goods imported under a Party’s TRQ established in the CPTPP shall not contribute to the fulfillment of that Party’s TRQ for such goods established under the WTO or another trade agreement.

Article 2.31 requires Parties to ensure that there is a mechanism in place that allows for the reallocation of unused shares of a TRQ administered by an allocation mechanism in a timely and transparent manner so that the TRQ may be filled to the fullest extent possible. The Article also requires Parties to publish information regularly on their designated publicly available website related to TRQ shares that have been allocated, returned allocation shares, shares available for reallocation, application deadlines for allocation, and, if available, quota utilization rates.

Article 2.32 provides additional transparency requirements related to TRQ administration. Paragraph 1 requires Parties to identify the entity or entities responsible for administering its TRQs and designate a contact point for communications between Parties concerning TRQs. Paragraphs 2, 3, 4 and 5 require Parties publish information on a designated publicly available website related to allocation holders, utilization rates, and remaining quantities, including notification when a TRQ is filled. Paragraph 6 requires a Party administrating a TRQ to consult regarding the administration of its TRQ upon written request of an exporting Party or Parties.

Tariff Elimination and Tariff Schedules

Tariff commitments made by each CPTPP Party are set out in each Party’s respective Annex 2-D to Chapter 2. These annexes include general notes on each Party’s tariff elimination schedule, including information on base rates, staging categories for tariff lines subject to gradual tariff elimination as well as detailed information on tariff rate quota outcomes in an appendix, where applicable. For the vast majority of tariff lines, Parties have made tariff commitments on a CPTPP-wide basis, although some Parties have also made tariff commitments that are differentiated by partner. During CPTPP negotiations, Canada’s market access commitments with respect to six over-quota tariff lines (0201.10.20, 0201.20.20, 0201.30.20, 0202.10.20, 0202.20.20 and 0202.30.20) were made fully plurilateral, with all CPTPP parties receiving market access of a five-year, six-cut linear phase-out of these tariffs.

Upon entry into force of the Agreement, 86% of CPTPP Parties’ tariff lines will be duty-free for originating goods. This amount will reach 99% within 15 years through the gradual phase-out of remaining customs duties, subject to each Party’s specific commitments.

Canada, Japan, Malaysia, Mexico and Vietnam include TRQs among their tariff commitments. Information on TRQ administration for these Parties is provided in their respective Appendix A to Annex 2-D. These TRQs include the following:

Certain Appendices to the NTMA Chapter
Appendix D to Tariff Schedule of Canada – Appendix between Japan and Canada on Motor Vehicle Trade

The Appendix between Japan and Canada on motor vehicle trade provides for non-discriminatory treatment vis-à-vis other CPTPP Parties on standards and regulatory measures, permits the application of safeguards, establishes an accelerated dispute resolution mechanism, and establishes an ad hoc committee related to trade in motor vehicles.

Article 1 provides the scope of the Appendix by defining related terms and by establishing conditions related to the eligibility of dispute settlement mechanisms contained in the Appendix and in Chapter 28 (Dispute Settlement) of the Agreement.

Article 2 provides that Canada and Japan shall accord to each other treatment no less favourable than that accorded to another CPTPP Party with respect to technical regulations, standards or conformity assessment procedures on motor vehicles that are adopted or applied in accordance with a bilateral agreement provided for in this Agreement.

Article 3 provides that Canada and Japan are permitted to apply a transitional safeguard to motor vehicles under heading 87.03 originating from each other in accordance with Chapter 6 (Trade Remedies). The Article also amends certain provisions set out in Chapter 6 (Trade Remedies), such as those related to the transition period, potential extensions, consultation, and compensation.

Article 4 establishes an accelerated dispute settlement mechanism applicable to matters concerning trade of motor vehicles between Canada and Japan through the creation of new provisions and through the reference and amendment to Chapter 28 (Dispute Settlement) of the Agreement, where necessary. The accelerated dispute resolution mechanism includes expedited timelines related to consultation, the establishment of a panel, the release of the panel’s initial and final reports, and retaliation.

Article 5 establishes an ad hoc Committee on Motor Vehicles composed of relevant Canadian and Japanese authorities and sets out its functions.

Japan Appendix B-1 – Agricultural Safeguard Measures

Japan’s Appendix B-1, Agricultural Safeguard Measures, permits Japan to apply safeguards on certain agricultural goods originating from any CPTPP Party. It sets out the following: the originating agricultural goods that may be subject to such safeguard measures; the trigger levels for applying such measures; and the maximum rate of customs duty that may be applied each year for each good. Japan is permitted to apply safeguards on the following agricultural goods: beef; pork; processed pork; whey powder; fresh oranges; and race horses.

Japan Appendix B-2 – Forest Good Safeguard Measures

Japan’s Appendix B-2, Forest Good Safeguard Measures, permits Japan to apply safeguards on certain forest goods imported from specific CPTPP Parties. It sets out the following: the originating forest goods from which CPTPP Party that may be subject to such safeguard measures; the trigger levels for applying such measures; and the maximum rate of customs duty that may be applied each year for each good.

2. Canadian Legislation

To implement Canada’s obligations under the NTMA Chapter, amendments were made to the Customs Act and the Customs Tariff. These amendments are set out in sections 20–30, sections 40–47, and schedules 1–13 of the CPTPP Implementation Act.

The Customs Tariff is a fiscal statute that establishes the rules for determining the tariff treatment and rate of customs duties accorded to imported goods. It also provides for matters such as the prohibition of the importation of specific goods as well as the imposition of additional duties as a result of safeguard actions. The tariffs or rates of duty that apply to all goods upon their importation into Canada are set out in the Schedule to the Customs Tariff. The rules of origin made under the tariff regulations provide the basis for determining whether goods qualify for a particular tariff treatment. The Customs Tariff also provides for various duty relief measures including duty drawback.

To implement the elimination of customs duties under the CPTPP, section 43 of the CPTPP Implementation Act introduces various preferential tariff treatments to contemplate each potential scenario of timing of ratification and tariff phase-outs (e.g., whether a Party is among the first six to ratify or ratifies later, and the various timings of tariff cuts provided for in the Agreement).

The appropriate tariff treatment applicable to each CPTPP Party, as per the provisions of the Agreement, is assigned by an Order in Council. Section 43 also provides that goods are entitled to these preferential tariff treatments only when the rules of origin are met and proof of origin is provided, and sets out the various tariff phase-out categories or “staging categories” in domestic law.

Sections 43 and 47 and schedules 1–13 of the Act establish in domestic law the rate of customs duty for each good in the Canadian tariff classification. Each paragraph (c) of the respective subsections of section 47 of the Act establishes in domestic law that the CPTPP preferential tariff shall be 0% (or “Free”) as of the date of entry into force for all items in the Canadian tariff classification system, other than for tariff items specified in schedules 1, 2 and 4–13 to the Act. Schedule 1 sets out those tariff items that are excluded from a preferential tariff under the CPTPP (over-access supply-managed goods; tariff items unique to other FTAs, such as a country-specific TRQ for sugar for Peru and Honduras; and prohibited importations) and establishes this in domestic law by setting the CPTPP preferential tariff as “N/A.” Schedules 2 and 4–13 set out those tariff items that are subject to a CPTPP preferential tariff that is gradually reduced to 0% (as opposed to being immediately set at 0% upon entry into force) and fixes in domestic law the phase-out schedule. Schedule 3 creates several new tariff items — subdividing existing tariff items — to implement other specific tariff outcomes of the Agreement.

3. Intended Government Action

The robust market access provisions for trade in goods between Canada and CPTPP Parties set out in Chapter 2 and each Party’s respective tariff elimination schedule provides Canadian manufacturers, producers and exporters with enhanced market access throughout the Asia-Pacific region. The Government intends to ensure that each Party fully implements the CPTPP according to the text that was negotiated and agreed to between the Parties.

The Government will also monitor closely the implementation of this Chapter by CPTPP Parties, especially on issues related to trade in goods, including agricultural goods, encountered by Canadian exporters to CPTPP Parties. This intended action is to ensure that issues are monitored, raised and addressed in a timely manner through the appropriate mechanisms available. Canada will ensure that commitments made by CPTPP Parties materialize into tangible market access.

In support of this objective, the FTA Promotion Task Force of Global Affairs Canada, the Canadian Trade Commissioner Service, and Agriculture and Agri-Food Canada will help ensure that Canadian businesses are informed of new opportunities and how these opportunities can be realized.

Chapter 3 – Rules of Origin and Origin Procedures

1. TPP Provisions

Rules of Origin and Origin Procedures are an essential part of any FTA. They provide the basis for traders and customs officials to determine whether a good is entitled to receive preferential tariff treatment under the FTA. Under the CPTPP, the rules of origin ensure that only goods that have undergone sufficient production in a CPTPP Party are eligible for preferential tariff treatment. Goods that do not satisfy the rules of origin are considered non-originating and are not eligible for preferential tariff treatment under the Agreement. The rules of origin are intended to reflect Canadian and other CPTPP Parties’ supply chains and production processes while advancing each Party’s respective sectoral interests to the greatest extent possible.

The Chapter on Rules of Origin and Origin Procedures describes the rules for determining whether a good produced in CPTPP Parties is originating and therefore eligible for preferential tariff treatment under Article 2.4 of Chapter 2 (National Treatment and Market Access for Goods).

The origin procedures are used by the customs authorities to administer the rules of origin and enable the trading community to take advantage of the preferential tariff treatment afforded under the CPTPP. The procedures are created to ensure only goods that meet the rules of origin and are therefore entitled to preferential treatment, receive preferential tariff treatment.

The CPTPP origin procedures contain obligations for importers, exporters, and customs authorities on areas such as certification of origin, record keeping, origin verifications, advance rulings, appeals, penalties and cooperation. Accordingly, the Chapter prescribes the processes necessary for importers and exporters to follow in order to be able to take full advantage of the Agreement, while at the same time providing customs authorities with a methodology to ensure that only qualifying goods enjoy the benefits of CPTPP.

The CPTPP origin procedures support today’s trade environment, provide for paperless processes, and limit the administration costs to traders. This is achieved through electronic processes, voluntary compliance, risk assessment and reduced government intervention. At the same time, the procedures demonstrate an appropriate balance between ensuring compliance and facilitating trade.

The CPTPP rules of origin reflect a compromise between the approaches the Parties have taken in their respective FTAs and are an effort to incorporate best practices from these agreements. The CPTPP origin procedures include procedures that Canada is accustomed to and already has in place with its current partners.

Section A of the Chapter on Rules of Origin and Origin Procedures contains the rules of origin. The origin procedures are set out in Section B of the Chapter, while Section C addresses the functions of the Rules of Origin and Origin Procedures Committee. The Chapter has four annexes and one appendix. Provisions relating to the rules of origin for textile and apparel goods are in a separate chapter (Chapter 4 – Textile and Apparel Goods).

Section A – Rules of Origin

Article 3.1 provides definitions for certain terms used within the Chapter.

Article 3.2 sets out the core rules for determining whether a good is originating.

All of the CPTPP PSROs in Annex 3-D describe the required conditions for a good to be considered originating. For many goods, the PSRO provides two options: (1) one that requires a change to the tariff classification of the good, but that excludes the use of certain non-originating materials, and (2) an alternative that allows for the use of the excluded non-originating materials, provided that a regional value content (RVC) requirement is fulfilled.

The CPTPP provides 4 optional calculation methodologies for determining if a good satisfies an RVC requirement:

Article 3.3 sets out the conditions that must be met for a good to be considered wholly obtained or produced, such as minerals extracted in the territory of a Party, agricultural goods harvested in the territory of a Party, animals born and raised in the territory of a Party, and goods derived from such live animals. Other wholly obtained or produced goods include fish and shellfish caught in the territorial sea of a Party, or beyond the territorial sea by a vessel that meets the requirements, including registration and entitlement to fly the flag of a Party. Goods that are made using wholly obtained or produced materials are also considered wholly obtained or produced.

Article 3.4 provides that goods produced from materials that have been recovered from used goods will be treated as originating when the materials are used in the production of a remanufactured good.

Article 3.5 provides the formulas and definitions associated with the various RVC calculation methodologies set out above.

Article 3.6 makes clear that non-originating materials that undergo further production by a CPTPP Party so as to qualify as originating will be treated as such when those materials are used in the production of another good in a CPTPP Party. It also confirms that production undertaken on a non-originating material in a CPTPP Party will count toward the originating status of a good that is produced using that material. This article also specifies that the value of any processing undertaken on a non-originating material as well as the value of any originating materials used in the production of non-originating materials in a CPTPP Party can also be counted toward the originating status of a good.

Articles 3.7 and 3.8 describe the method for determining the value of originating and non-originating materials for the purposes of an RVC calculation. In the case of non-originating materials, the value is the transaction or customs value at the time of importation, although the value of transporting the material from the place of production to the place of importation may be deducted. For originating materials, the value consists of material and labour costs, as well as an amount for profit and the cost of transporting the material to the place of production.

Article 3.10 provides for accumulation. Materials that qualify as originating based on production in any CPTPP Party will be treated as originating when those materials are used to produce a good in another CPTPP Party. In addition, any production undertaken in a CPTPP Party on a non-originating material may be counted toward the originating status of a good subsequently produced with that material.

Under Article 3.11 (De Minimis), a good that does not qualify as originating is to be treated as originating if the value of the non-originating materials used in production is less than 10% of the value of the good. This article does not apply to goods identified in Annex 3-C (Exceptions to Article 3.11 [De Minimis]).

Article 3.12 applies to fungible materials and goods, which are defined as materials or goods that are of the same kind and commercial quality and which cannot be distinguished from one another for origin purposes. In cases in which originating and non-originating fungible materials may be stored together, the Agreement allows producers to use an inventory management system to determine the proportion of materials that are originating for the purpose of determining the originating status of goods made using such materials. Similarly, an inventory management system can be used to demonstrate that certain goods are originating, even if those goods are stored in a manner that led to the commingling of originating and non-originating goods.

Under Article 3.13, accessories, spare parts, tools or instructional or other information materials that are shipped with a good are disregarded for origin purposes if the good is wholly obtained or subject to a tariff shift PSRO, provided that these materials are invoiced with the good and the quantities and value are customary for the good. However, if a good is subject to a PSRO with a value requirement, the value of non-originating accessories, spare parts, tools or instructional or other information materials, is taken into account in determining whether the good is originating.

Article 3.14 provides that materials used to package a good for retail sale are not taken into consideration if the good is wholly obtained or subject to a tariff shift PSRO, but these materials are considered originating or non-originating, as the case may be, if the good is subject to an RVC requirement.

Article 3.15 provides that materials used to pack a good for shipment are not taken into consideration when determining if the good itself is originating.

Under Article 3.16, indirect materials, such as energy, fuel, lubricants or tools used in the production of a good are considered originating regardless of where it is produced.

Article 3.17 addresses goods that are traded as sets. If it is not possible to determine the Harmonized System (HS) classification of a set of goods based on the HS description most closely matching the set, or on the essential character of the set, the set can obtain originating status if the value of non-originating goods in the set does not exceed 10% of the value of the set.

Article 3.18 specifies that goods that qualify as originating under the CPTPP rules of origin may transit through a non-Party provided that they do not undergo any production outside CPTPP Parties, other than unloading, reloading, or any operation necessary to preserve them in good condition or to transport them to the other Party. In addition, to retain their originating status, goods that transit through a non-Party, or are stored outside of CPTPP Parties, must be under customs control at all times.

The CPTPP PSRO Annex, which provides specific rules for various goods, also includes an Appendix setting out provisions related to the rules of origin for passenger cars, light truck and parts. Under these provisions, certain parts can obtain originating status if they undergo specific manufacturing operations. For example, an engine may be considered originating if it undergoes a complex assembly operation in a CPTPP Party, and a body panel may be considered originating if it is stamped in a Party. This appendix also sets out limits on the value of materials that can be counted toward the RVC of a vehicle based on these operations.

Section B – Origin Procedures

Article 3.19 commits the CPTPP Parties to apply the procedures of this section, but does allow Parties to choose a transition period with respect to certain provisions and make arrangements with other Parties as described in Annex 3-A. Canada will not apply Annex 3-A, as Canada does not require a period in which to transition to the procedures of this section.

Articles 3.20 to 3.26 contain obligations for importers, exporters and producers if the importer wants to take advantage of the reduced or free rate of duty offered on importations of goods under the CPTPP. These provisions include the basis on which an importer may claim the preferential tariff treatment; the establishment of the proof of origin (certification of origin); the validity period of the certification of origin; exemptions from the certification of origin; and obligations regarding importations and exportations, shipping documents, and record maintenance requirements.

Article 3.20 of the CPTPP establishes requirements relating to a proof of origin that is used to certify that the good meets the rules of origin. It is referred to as a certification of origin and consists of a set of minimum data requirements that are provided in Annex 3-B. The certification of origin may be placed on any document, including an invoice, and does not need to follow a prescribed format. Unlike Canada’s other FTAs in which the exporter completes the certification of origin, the CPTPP allows either the importer, exporter or producer to choose to complete the certification of origin.

Paragraph 1 of Article 3.20 identifies who may complete a certification of origin. For Canada, the CPTPP is the first agreement in which either the exporter, producer or importer may choose to certify the origin of the good.

Paragraph 2 establishes a Party’s rights to create provisions specific to importers who choose to certify the origin of the good, including establishing conditions that the importer must meet and requiring the importer to provide documentation to support their certification of origin.

Paragraph 3 obligates the Parties to allow the certification of origin to be provided electronically and in no prescribed format, but it must contain the minimum data requirements set out in Annex 3-B.

Paragraph 4 allows the trader to complete a single certification of origin for multiple shipments of identical goods for a period of up to one year.

Paragraph 5 requires the importing Party to provide a minimum validity period for a certification of origin of 12 months after it has been completed by the exporter, importer, or producer. Canada will go beyond that minimum requirement and allow a validity period for a certification of origin of four years. This is the same period of validity used by Canada under all of its FTAs.

Paragraph 6 provides that the importer may submit the certification of origin in English. If the trader completes the certification of origin in a different language, the importing Party may ask the importer for a translation.

Article 3.21 establishes the basis upon which a certification of origin may be completed by the importer, exporter, or producer.

Article 3.22 obligates the Parties to not reject certifications of origin due to slight discrepancies or minor errors.

Article 3.23 provides that a Party shall not require a certification of origin should the value of the goods be under US$1,000 or its equivalent in the importing Party’s currency or any higher amount as the importing Party may establish. In Canada, the prescribed certification of origin is waived for commercial goods valued at Can$3,300 or less. More information can be found on the CBSA website. The importing Party may also waive the requirement or not require the importer to present a certification of origin for a good. In Canada, for casual goods (i.e. non-commercial goods acquired in a CPTPP Party that are not intended for resale), the requirement to have a certification of origin is waived.

Article 3.24 sets out obligations regarding importations, including the requirements to demonstrate that a good was shipped in accordance with Article 3.18 (Transit and Transhipment). If an importer chooses to claim the preferential tariff treatment upon importation, the importer is declaring that the required certification of origin is in their possession and is required to provide, upon request, a copy of that certification. Should the importer become aware of incorrect information in the certification of origin affecting the originating status of the good, they are required to immediately notify, in Canada, the CBSA by correcting their import declaration and paying any duties owing. An importing Party is prohibited from subjecting an importer to a penalty for making an invalid claim for preferential tariff treatment if the importer voluntary corrects the claim and pays any applicable duty.

Article 3.25 sets out obligations regarding exportations, including a requirement on the exporter or producer to provide, upon request, a certification of origin, if they completed one. Furthermore, the exporter or producer is required to notify every person and Party to whom they provided the certification of origin of any change that could affect its accuracy or validity once they become aware of any incorrect information. A false certification of origin or other false information provided by the exporter or producer will result in similar legal consequences as would apply to an importer.

Article 3.26 relates to the requirement to maintain records. It establishes the type of documentation and records that the exporter, producer, or importer must maintain to support the originating status of the good and the claim of preferential tariff treatment under the CPTPP, as well as establishing a minimum time period of five years to maintain records. In Canada, the time period is six years. The importer, exporter, or producer may choose to maintain these records in any medium, including in electronic, magnetic, written, or optical form, provided they can be promptly retrieved.

Article 3.27 is central to this Chapter. It identifies the methodology to be applied by the Parties in the verification of origin of the goods in order to ensure that only qualifying goods receive the reduced or free rates of duty under the CPTPP.

Paragraph 1 of Article 3.27 stipulates how the Parties may conduct an origin verification. The origin verifications shall be conducted by communicating directly with the importer and whomever certified the origin of the good, and by the following means: a written request for information from the importer, exporter, or producer of the good; or a verification visit to the premise of the exporter or producer. In addition, the CPTPP allows a Party to choose to conduct verification visits of textile and apparel goods in an alternative manner as provided under Chapter 4 (Textile and Apparel Goods).

Paragraph 2 states that when the importing Party is conducting a verification of origin, it shall accept information directly from the importer, exporter, or producer.

Paragraph 3 stipulates that should the importing Party intend to deny a claim for preference, the Party must verify with the trader that certified the origin of the good. For example, the importing Party may accept information from the importer to substantiate the origin of the good, but if the claim for preferential tariff treatment was based on an exporter’s certification of origin, the importing Party prior to denying preference, must verify with that exporter, before issuing a determination.

Paragraph 4 identifies the information that must be included in the request for information or in the notice to conduct a verification visit. This includes the identity of the government authority issuing the request, the reason for the request, and in the case of a verification visit, a request seeking consent from the exporter or producer whose premise the government authority wishes to visit.

Paragraph 6, contains obligations on the importing Party that is conducting the verification. This includes the allowance of 30 days for the importer, exporter or producer to respond to a request for information, 30 days for the exporter or producer to provide consent for a verification visit, and 90 days for the importing Party to make a determination once it has received all the information but no later than 365 days after the first request was sent.

Paragraph 7 provides that the importing Party may request the exporting Party’s assistance to provide a contact point for the verification or collect information on the importing Party’s behalf.

Paragraphs 9 and 10 obligate the importing Party to provide the importer with a written determination of whether or not the good is originating, once the verification of origin is completed. The importing Party is also required to provide the importer, exporter or producer who provided information or certified the origin of the good, with the results of the verification. If the importing Party intends to deny preferential tariff treatment, it must, prior to issuing a written determination, provide those persons that provided information a period of at least 30 days to submit additional information relating to the origin of the goods.

Article 3.28 sets out the grounds for denying a claim for preferential tariff treatment, such as where the trader does not consent to a visit, and obligates the importing Party to issue a determination to the importer. Furthermore, it establishes that preferential tariff treatment shall not be denied because the invoice was issued in a non-CPTPP country. In that case, a Party will require that the certification of origin be separate from the invoice.

Article 3.29 provides that an importer may apply for a refund of excess duties paid after importation, if the importer did not claim preferential tariff treatment at the time of importation. In order to apply for a refund, the importer must make a claim for preferential tariff treatment and provide a copy of the certification of origin, and if required, other documents relating to the importation of the good, no later than one year after the date of importation. Canada’s current legislation goes beyond that minimum requirement and allows four years from the date of accounting for importers to claim a refund.

Article 3.30 requires each Party to establish and maintain penalties for violations of its laws and regulations related to this Chapter. In Canada, these penalties can be criminal, civil or administrative in nature.

Article 3.31 reflects the confidential nature of all information collected in accordance with this Chapter by placing obligations on the Parties with respect to the handling of information and by limiting the disclosure of the information that could prejudice the competitive position of the person providing the information.

Article 3.32 establishes the Committee on Rules of Origin and Origin Procedures which shall consult to address issues and recommend amendments to the Chapter. Issues related to textile and apparel goods shall be addressed by the Committee on Textile and Apparel Goods.

Annexes to the Chapter on Rules of Origin and Origin Procedures

Annex 3-A (Other Arrangements) allows CPTPP Parties, within the first twelve years of the Agreement and for up to five years from the date of entry into force, with a possible extension of no more than five years, to transition from certifications of origin issued by a competent authority or approved exporter to exporter self-certification, if they so choose. Parties applying this Annex are required to provide a notification to the other Parties to that effect (Canada will not be applying this Annex). Should an importing Party conduct a verification of origin where a certification of origin has been issued by a competent authority or completed by an approved exporter, the importing Party can do so in accordance with Article 3.27 (Verification of Origin).

Annex 3-B (Minimum Data Requirements) sets out the information that is required to be contained in a certification of origin.

Annex 3-C (Exceptions to Article 3.11 [De Minimis]) provides a list of goods for which the De Minimis article does not apply.

2. Canadian Legislation

To implement Section A of Chapter 3 of the CPTPP, three regulations are being created under the Customs Tariff to establish in Canadian law the rules of origin for goods to qualify for the CPTPP preferential tariff. The CPTPP Rules of Origin Regulations will implement the rules of origin negotiated by Canada and other CPTPP Parties that will be used to determine when the goods have undergone sufficient production to qualify for preferential treatment. The CPTPP Rules of Origin for Casual Goods Regulations will establish the conditions under which goods acquired in the territory of CPTPP Parties by travellers are considered originating and therefore entitled to preferential tariff treatment. The CPTPP Tariff Preference Regulations will allow eligible goods that are not shipped directly between CPTPP Parties and Canada to retain their eligibility for preferential tariff rates provided the goods remain under customs control in third countries. These regulations were completed prior to the implementation of the CPTPP, and came into force on the same day as the Agreement.

To implement Section B of Chapter 3 of the CPTPP, the Customs Act has been amended by the CPTPP Implementation Act to address provisions relating to the proof of origin under the CPTPP, the refund of duties for CPTPP eligible goods, and the origin verification procedures, including the method of verification, notice requirements, any redetermination of origin and possible withdrawal of preferential tariff treatment. Regulatory changes will also be necessary in order to implement Section B of Chapter 3 and Article 4.6 of Chapter 4. Existing regulations under the Customs Act will be amended to address CPTPP provisions relating to certification of origin for exported goods, proof of origin for imported goods, proof of exportation for certain goods, advance rulings and refund of duties. The regulations to be amended include the Certification of Origin of Goods Exported to a Free Trade Partner Regulations, the Exporters’ and Producers’ Records Regulations, the Free Trade Agreement Advance Rulings Regulations, the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations, the Refund of Duties Regulations, and the Proof of Origin of Imported Goods Regulations. New regulations under the Customs Act will be developed to address certification of origin by an importer as well as verification of origin under this Chapter and Article 4.6 (Verification) of Chapter 4 (Textile and Apparel Goods).

As a result, to support the implementation, the CBSA has published a Customs Notice (CN 18-27) on its website publicly announcing these proposed regulatory amendments and new regulations which have been given effect as of December 30, 2018, the date of entry into force of the Agreement. These regulatory changes are implemented in accordance with Paragraph 167.1(b) of the Customs Act, and remain subject to future decisions from the Governor in Council.

3. Intended Government Action

The CBSA will cooperate with its counterparts from CPTPP Parties, as required by various provisions of the Chapter. As well, the Parties have agreed to work together through the Committee on Rules of Origin and Origin Procedures.

The CBSA published a Customs Notice (CN 18-27) on its website that announced the coming into force date of December 30, 2018, as the date from which Canada and the CPTPP Parties agreed to apply the CPTPP and provided the necessary information for trading to begin under the CPTPP on that date. For importers, the information provided pertains to claiming the preferential tariff treatment when accounting for goods imported under the CPTPP, information concerning the proof of origin requirements to support this claim, any shipping requirements the goods must meet in order to be eligible for the CPTPP preferential tariff treatment as well as information pertaining to the refund provision for CPTPP eligible goods. For importers, exporters, and producers, information pertains to how to complete the proof of origin required by the importer in order to claim the CPTPP preferential tariff treatment. Additionally, the Customs Notice directs readers to the CBSA Border Information Service (BIS) for further information pertaining to the origin procedures contained in the CPTPP. The BIS is an automated telephone service that answers incoming calls and provides general information on CBSA programmes, services and initiatives through recorded scripts, as well as providing access to a live CBSA officer. CBSA officers have general information relevant to the origin procedures contained in the CPTPP and are able to respond to questions from the public concerning the import or export of goods under the Agreement.

Chapter 4 – Textile and Apparel Goods

1. TPP Provisions

While this is a standalone chapter that includes specific provisions relating to textile and apparel goods, many of the provisions within the Rules of Origin Chapter (Chapter 3) also apply in determining the originating status of textile and apparel goods. This Chapter also includes a Product-Specific Rules of Origin (PSRO) Annex (Annex 4-A) as well as a Short Supply List of Products Appendix (Appendix 1) for textile and apparel goods.

Article 4.1 provides definitions for certain terms used within the Chapter.

Article 4.2 sets out rules of origin provisions specific to textiles and apparel. For example, it includes a de minimis provision that allows textile goods that do not qualify as originating under the PSROs to be originating if the total weight of the non-originating materials is less than 10% of the total weight of the textile good. The de minimis provision for apparel and made-up textile goods (e.g. bedsheets) requires that the total weight of all the non-originating fibres and yarns in the component that determines the tariff classification of the good be less than 10% of the total weight of that component (e.g. in the case of a men’s shirt, the fabric that makes up the main body of the shirt would be considered the component that determines the tariff classification of the shirt, and not any other different fabrics, such as the collar or a pocket).

This Article includes a provision for textile and apparel sets, which requires that each of the goods in a set of apparel be originating, or that the total value of the non-originating component of the goods in the set be less than 10% of the total value of the set.

This Article also establishes a short supply list of textile and apparel materials (Appendix 1 to Annex 4-A). These are materials that the Parties agreed are not being produced in commercial quantities in any of the CPTPP Parties and that may be imported from a non-CPTPP country and used to produce an originating textile and apparel good.

Finally, this Article includes a provision that allows certain hand-crafted folklore and cottage industry goods exported to another CPTPP Party to be eligible for duty-free or preferential tariff treatment. This provision is meant to facilitate trade and make it more inclusive for certain groups who may not otherwise take advantage of an FTA.

Article 4.3 addresses emergency actions that an importing Party may take as a result of increased imports of textile and apparel goods such that it threatens the domestic production of a similar good.

Articles 4.4 to 4.9 provide for enhanced cooperation among the Parties and a verification method that will enable the Parties to more effectively verify claims for preferential duty rates under the CPTPP and address customs offences for trade in textile or apparel goods. For these goods, the importing Party is not obligated to provide the exporter or producer with advance notice afforded through the 30-day window to consent to a visit, as required by Article 3.27 (Verification of Origin). These provisions are explained in more detail below.

Article 4.4 provides for cooperation among the Parties for the purposes of assisting each other in the enforcement of laws and regulations related to customs offences and to ensure the accuracy of claims for preferential duty rates under the CPTPP. The Article establishes the type of cooperation that may be requested and the method to request such cooperation from another Party.

Article 4.5 provides for the establishment or maintenance of programmes or practices to identify and address customs offences related to textile and apparel goods. Some CPTPP Parties, of which Canada is not one, have agreed to bilateral agreements to monitor such programmes or practices between each other.

Article 4.6 includes an alternate approach to verification of origin visits that the importing Party may choose to apply, in place of the verification visit process established in Article 3.27 (Verification of Origin), to verify whether the good meets the rule of origin and is entitled to the CPTPP preferential tariff treatment and to determine whether any customs offences have been committed. The verification procedures in this Chapter relate specifically to site visits to an exporter or producer of textile or apparel goods and differ from those provided under Article 3.27. Notably, there is no requirement under this Chapter to provide a 30-day consent period for the exporter or producer and the scope of the visit may extend to addressing customs offences. Furthermore, the importing Party may request cooperation of the exporting Party. The exporting Party may also request a copy of the findings of the visit.

Paragraph 4 establishes obligations on the importing Party requesting a site visit to notify the host Party of the proposed dates, and to indicate the number of exporters or producers to be visited and identify whether any assistance is required by the host Party, any suspected customs offences to be verified and factual information, and whether the importer claimed the preferential tariff treatment.

Paragraph 7 obligates the importing Party to request permission from the exporter or producer, or a person having the capacity to consent on behalf of the exporter or producer, to access the relevant records or facilities. This paragraph also provides provisions to carrying out the site visit on alternative dates.

Paragraph 8 identifies what the importing Party must do when the site visit is completed. This includes the obligation to inform the exporter or producer that they are entitled to request a written report of the results of the visit. Once this request has been received, the importing Party must provide the report within 90 days.

Article 4.7 sets out the basis on which claims for preferential tariff treatment for textile and apparel goods can be denied.

Article 4.8 establishes the Committee on Textile and Apparel Trade Matters, which shall consider any matter arising out of this Chapter including a review of its implementation, consult on any difficulties that may arise, and discuss ways to improve the effectiveness of cooperation.

Article 4.9 reflects the confidential nature of all information collected in accordance with this Chapter by placing obligations on the Parties with respect to the handling of information and by limiting the disclosure of the information that could prejudice the competitive position of the person providing the information.

2. Canadian Legislation

Please refer to the Canadian Legislation section contained in Chapter 3 (Rules of Origin and Origin Procedures).

3. Intended Government Action

The CBSA will cooperate with the CPTPP Parties as required by various provisions of the Chapter. As well, the Parties have agreed to work together through the Committee on Textile and Apparel Trade Matters.

The CBSA published a Customs Notice (CN 18-22) on its website, that announced the coming into force date of December 30, 2018, as the date from which Canada and the CPTPP Parties agreed to apply the CPTPP and provided the necessary information for trading to begin under the CPTPP on that date. This Customs Notice directs readers to the CBSA Border Information Service (BIS) for further information pertaining to the origin procedures contained in the CPTPP. The BIS is an automated telephone service that answers incoming calls and provides general information on CBSA programmes, services and initiatives through recorded scripts, as well as provides access to a live CBSA officer. CBSA officers have general information relevant to the origin procedures contained in the CPTPP and are able to respond to questions from the public concerning the import or export of goods under the Agreement.

Chapter 5 – Customs Administration and Trade Facilitation

1. TPP Provisions

Trade facilitation is a component of broader trade liberalization and ensures that traders can take advantage of the market access benefits in an FTA. Governments, with the support of their trade and business communities, increasingly recognize that the transaction costs associated with international trade can be reduced through the harmonization, modernization, simplification and standardization of customs and border procedures. The trade facilitative measures Canada and the Parties to the CPTPP have set out in this Chapter apply to all trade in goods.

Article 5.1 indicates that each Party shall ensure that its customs procedures are applied predictably, consistently, and transparently.

Article 5.2, Canada and the other CPTPP Parties have agreed to cooperate with a view to facilitating trade, the effective operation of the Agreement, and trader compliance with their respective laws and regulations. The Parties will seek to provide one another with technical advice or assistance, advance notice of any significant administrative change, modification of a law or regulation, or similar measure likely to substantially affect the operation of the Agreement, and subject to their respective law and any relevant international agreements, with information for the purposes of addressing instances involving a reasonable suspicion of unlawful activity.

Article 5.3 requires each Party to provide advance rulings on tariff classification, the origin of a good, as well as the application of customs valuation criteria within 150 days of receiving the request and the necessary information. For Canada, Advance Rulings are provided for inquiries concerning tariff classification and the origin of a good, while National Customs Rulings are provided for customs valuation inquiries. Rulings must remain in effect for at least 3 years, but may be revoked or modified if there is a change in the law, facts, or circumstances on which the ruling was based, or if it was based on inaccurate or false information or was in error. Each CPTPP Party will endeavour to make advance rulings publicly available, subject to any domestic confidentiality requirements.

Under Article 5.4, each Party commits to providing advice or information to traders on issues such as the requirements to qualify for quotas, the application of duty drawback, deferral, or relief, the eligibility requirements for goods under Article 2.6 (Goods Re-entered after Repair and Alteration), country of origin marking, and other matters the Parties may decide.

Article 5.5 ensures that any person receiving a customs determination has access to recourse through administrative and judicial review.

Article 5.6 includes commitments on making electronic systems accessible and employing electronic systems for risk analysis and targeting. Each Party will also endeavour to use international standards relating to the release of goods, develop common standards and elements for import and export data based on the World Customs Organization Data Model, and provide a facility that allows importers and exporters to electronically complete import and export requirements at a single entry point.

Article 5.7 commits each Party to adopt or maintain customs procedures for express shipments while maintaining appropriate customs control. These procedures will allow for a single submission of information to cover multiple goods contained in an express shipment, and provide for this information to be submitted and processed before the arrival of the goods to facilitate expedited release. Additionally, Paragraph 1(f) commits each Party to adopt or maintain a de minimis threshold whereby goods imported by courier valued at or below the threshold, as set out respectively in each Party’s domestic law, are relieved of customs duties under normal circumstances. However, Parties are permitted to assess customs duties on restricted or controlled goods, such as goods subject to import licensing or similar requirements. The second sentence of Paragraph 1(f), requiring Parties to each periodically review their respective de minimis thresholds, is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 5.8 provides that each member of the CPTPP adopt or maintain measures allowing for the imposition of penalties by the customs administration in case of breach of a Party’s customs laws, regulations or procedural requirements. The voluntary disclosure of an error may be treated as a mitigating factor when establishing a penalty.

Article 5.9 requires each Party to adopt or maintain a risk assessment system that enables its customs administration to focus on high-risk goods, and to simplify the release process for low-risk goods.

Article 5.10 commits each Party to maintain simplified customs procedures that incorporate automation and allow for the efficient release of goods prior to the final determination of duties, taxes, and fees.

Article 5.11 is a transparency obligation that commits each Party to publish its customs laws, regulations, and general administrative procedures and guidelines, maintain enquiry points to receive inquiries regarding customs matters, and provide interested persons with opportunities to comment on proposed changes to regulations relating to customs matters.

Article 5.12 requires each Party to ensure that information that is provided and designated as confidential be kept confidential. Parties must also protect against the disclosure of information that could prejudice the competitive position of the person providing the information. When information is shared between CPTPP Parties, the country providing the information may require written assurance that it will be held in confidence and only used for the reason specified in the request.

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 5.

3. Intended Government Action

Global Affairs Canada and the Canada Border Services Agency will cooperate with the CPTPP Parties as required by various provisions of the Chapter.

Please refer to the Intended Government Action Section contained in Chapter 3 (Rules of Origin and Origin Procedures).

Chapter 6 – Trade Remedies

1. TPP Provisions

The Trade Remedies Chapter reaffirms Canada’s and other CPTPP Parties’ WTO rights and obligations concerning anti-dumping, countervailing and global safeguard measures. This Chapter also reinforces certain international best practices related to transparency and procedural fairness in anti-dumping and countervailing duty investigations. Further, this Chapter provides for, in exceptional circumstances, transitional safeguard measures to protect domestic industry from injury following a surge in imports as a result of the elimination of duties pursuant to the Agreement.

Section A: Safeguard Measures

Article 6.1 provides definitions for certain terms used within the Chapter.

Article 6.2 reaffirms the Parties’ WTO rights and obligations under Article XIX of GATT 1994 and the Safeguards Agreement. Article 6.2 also provides that the notification given to the WTO Committee on Safeguards be provided to the other Parties by a Party that initiates a global safeguard investigation. Paragraph 4 outlines limitations to the application of safeguard measures with respect to products that are imported under a tariff rate quota established under the Agreement. Paragraph 5 prohibits the application or maintenance of two or more safeguard measures, including transitional safeguards under this Chapter, bilateral measures under other chapters of the CPTPP or a global measure under Article XIX of GATT 1994 and the Safeguards Agreement.

Article 6.3 provides that a Party may apply a transitional safeguard measure during the transition period, provided that, as a result of the reduction or elimination of tariffs under the CPTPP, imports from one or multiple Parties are being imported in such quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry. Transitional safeguards may take the form of a suspension of further tariff reductions or a tariff increase.

Article 6.4 identifies standards to ensure that transitional safeguard measures are in place only as long as is necessary to prevent or remedy serious injury and to facilitate adjustment by the domestic industry. This period is not to exceed two years, unless a one-year extension is granted, and Parties are required to progressively liberalize measures. A transitional safeguard measure can only be applied once on the same good.

Article 6.5 requires that a transitional safeguard measure only be applied following an investigation by a Party’s competent authority conducted in accordance with Articles 3 and 4.2(c) of the Safeguards Agreement. These articles, along with Article 4.2(a) and 4.2(b) of the Safeguards Agreement, are incorporated into this Agreement.

Article 6.6 requires each Party to notify the other Parties at key stages of a transitional safeguard proceeding and sets out the information to be included in notifications of the application or extension of a measure. Consultations to review notifications may be held.

Article 6.7 requires a Party applying a transitional safeguard measure to provide mutually agreed trade-liberalizing compensation to each Party subject to the measure, following consultations. Compensation may take the form of concessions having substantially equivalent trade effects or being equivalent to the value of the additional duties expected from the transitional safeguard measure. If the consultations do not result in an agreement, the exporting Party may suspend the application of substantially equivalent concessions.

Section B: Antidumping and Countervailing Duties

Article 6.8 reaffirms the Parties’ WTO rights and obligations under Article VI of GATT 1994, the Anti-dumping Agreement and the Agreement on Subsidies and Countervailing Measures. These agreements set out detailed obligations and procedural requirements that Parties are required to follow with respect to anti-dumping and countervailing measures. Article 6.8 also excludes anti-dumping and countervailing measures from dispute settlement under Chapter 28 of the TPP.

Annex 6-A recognizes certain best practices related to transparency and procedural fairness in the conduct of anti-dumping and countervailing duty investigations.

2. Canadian Legislation

The Canadian International Trade Tribunal conducts all safeguard inquiries under the Canadian International Trade Tribunal Act (CITT Act), and safeguard measures are imposed pursuant to provisions in the Customs Tariff. In that regard, to implement Section A of Chapter 6 of the CPTPP, the CITT Act and the Customs Tariff have been amended by the CPTPP Implementation Act to include provisions that allow the CITT to conduct safeguard inquiries in accordance with the requirements of the CPTPP, and to allow for implementation of bilateral safeguard measures in accordance with CPTPP provisions.

No amendments to Canadian legislation arise from Section B of Chapter 6.

3. Intended Government Action

The Government will monitor to ensure that transparency and due process requirements are followed, as well as overall compliance by CPTPP Parties with the obligations of the Chapter.

Chapter 7 – Sanitary and Phytosanitary Measures

1. TPP Provisions

Building on the WTO’s Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement), the CPTPP’s Chapter on Sanitary and Phytosanitary (SPS) Measures, maintains each Party’s right to take the measures necessary to protect against risks to human, animal or plant life or health, while ensuring that CPTPP market access gains are not undermined by unnecessary and unjustifiable restrictions to trade.

The Chapter affirms each Party’s rights and obligations under the SPS Agreement and establishes a series of new commitments on SPS measures and SPS-related activities, including with respect to regionalization, equivalence, science and risk analysis, import checks and transparency. The Chapter establishes a Committee on SPS Measures to foster better communication and cooperation among the Parties and a Cooperative Technical Consultations mechanism that seeks to resolve any matter arising under the Chapter. This mechanism must be used before a Party may have recourse to the Agreement’s general dispute settlement mechanism in Chapter 28.

Article 7.1 sets out the definitions that apply to this Chapter. They include incorporation of the definitions in Annex A of the SPS Agreement and specific definitions that are applicable to this Chapter, including competent authority, emergency measure, import check, import programme, primary representative, risk analysis, risk communication, and risk management.

Article 7.2 sets out the objectives of this Chapter, which are to protect human, animal or plant life or health while facilitating trade; ensure that the Parties’ SPS measures do not create unjustified obstacles to trade; reinforce and build on the SPS Agreement; enhance communication, consultation and cooperation between the Parties and understanding of the application of each Party’s SPS measures; and encourage the Parties to follow international standards, guidelines and recommendations when taking SPS measures.

Article 7.3 defines the scope of this Chapter as applying to all SPS measures, as defined in Annex A of the SPS Agreement, which may directly or indirectly affect trade between the Parties.

In Article 7.4, the Parties affirm their rights and obligations under the SPS Agreement.

Article 7.5 establishes a Committee on SPS Measures. The Committee will be comprised of government representatives responsible for SPS matters of each Party, and has the objective of: enhancing each Party’s implementation of this Chapter; considering SPS matters of mutual interest; and enhancing communication and cooperation on SPS matters. Activities of the Committee may include sharing information on SPS-related trade concerns that arise between Parties, establishing ad hoc working groups to undertake specific tasks, or consulting on matters and positions for the meetings of the WTO SPS Committee or international standard-setting bodies, with a view to facilitating trade and resolving trade tensions at an early stage.

Following an initial meeting within one year of the date of entry into force of the CPTPP, the Committee will meet annually unless the Parties agree otherwise.

Article 7.6 requires each Party to provide a written description of the SPS responsibilities of each of its competent authorities and provide contact points within each of these authorities and to identify its primary representative within 60 days of the date of entry into force of the CPTPP for that Party. It also requires each Party keep this information up to date.

In Article 7.7, the Parties recognize that the adaptation of an importing Party’s SPS measure to regional conditions of an exporting Party is an important means to facilitate trade. This Article requires an importing Party to communicate and share information with an exporting Party in a timely manner with respect to its rationale and process for determining regional conditions, as well as the decision and measures applied as a result of the determination.

Article 7.8 establishes a process for Parties to assess and recognize an SPS measure of an exporting Party as achieving the same level of protection as the importing Party’s SPS measure (“equivalence”). The Parties are required, to the extent feasible and appropriate, to apply equivalence to a group of measures or on a system-wide basis.

Under Article 7.9, the Parties are required to ensure that their SPS measures are based on scientific principles. The Parties must conduct risk analyses for SPS regulations by taking into account the relevant guidance of the WTO SPS Committee and international standards, guidelines and recommendations in a way that is documented, and provide interested persons and other Parties an opportunity to provide comments. This Article goes beyond the commitments under the SPS Agreement by setting out process-related obligations for conducting a risk analysis. For example, an importing Party must provide information on the status of a request to import that requires a risk analysis, and to consider and select risk management options that are not more trade restrictive than required. In addition, the Parties agreed not to stop the importation of a good solely on the basis that an importing Party is undertaking a review of an existing SPS measure if importation was permitted when the review was initiated.

Article 7.10 establishes a process for conducting audits of the exporting Party’s competent authorities and associated inspection systems. When undertaking an audit, Parties are required to carry out on a systemwide basis, in order to check the effectiveness of the regulatory controls of these authorities.

Article 7.11 sets out obligations relating to import checks. This Article includes provisions that require import checks to be carried out without undue delay and the sharing of information on the processes and decisions related to import checks. If an importing Party restricts an import due to an adverse import check, it must notify the importer or its agent, the exporter, the manufacturer, or the exporting party and provide an opportunity for a review of its decision.

Article 7.12 ensures that certification requirements are applied in a manner that is necessary to meet the importing Party’s SPS objectives. This Article promotes the implementation of electronic certification and other technologies to facilitate trade.

Under Article 7.13, Parties are required to notify the WTO of all SPS regulations that may have an effect on trade, including those that conform to relevant international standards, guidelines, and recommendations. This Article formalizes concepts contained in the guidance developed by the WTO SPS Committee, including the obligation to normally provide at least 60 days for interested persons and other Parties to provide written comments on proposed measures and to notify and publish adopted SPS measures. This Article also requires the Parties to allow reasonable requests to extend the comment period and to make available a summary of written comments that a Party has received from the public.

Article 7.14 requires a Party that adopts an emergency measure that is necessary for the protection of human, animal or plant life or health, to notify the other Parties through the primary representative and relevant competent authorities and contact points. Following an initial review within six months, these emergency measures, if maintained, should be reviewed periodically to determine if they remain scientifically valid.

Article 7.15 requires the Parties to explore opportunities for further cooperation, collaboration and information exchange on SPS matters of mutual interest, including joint work on SPS matters with the goal of eliminating unnecessary obstacles to trade between the Parties.

Article 7.16 provides that if a Party requests information from another Party on a SPS-related matter, the Party which receives the request shall endeavor to provide available information to the requesting Party within a reasonable amount of time, and if possible, by electronic means.

Article 7.17 establishes a Cooperative Technical Consultation mechanism to seek to resolve any matter arising under the Chapter. A Party may pursue these consultations with another Party according to the timeframes provided in the Article. If the concerned Parties are unable to resolve the matter through the Cooperative Technical Consultation mechanism, they may have recourse to Chapter 28 (Dispute Settlement).

Article 7.18 provides that Chapter 28 (Dispute Settlement) applies to the Chapter subject to a one-year transition period from entry into force for the articles on Equivalence (7.8), Audits (7.10) and Import Checks (7.11) and a two-year transition period from entry into force for the Article on Science and Risk Analysis (7.9). In addition, Chapter 28 does not apply to two specific provisions: subparagraph 6 (b) of the Article on Equivalence (7.8) and paragraph 4 of the Article on Science and Risk Analysis (7.9).

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 7.

3. Intended Government Action

Canada reserves the right to maintain measures necessary to protect human, animal or plant life or health. At the same time, the Agreement provides a framework for reducing the unjustified use of sanitary and phytosanitary measures as barriers to trade. The Government of Canada intends to make use of the SPS Committee to monitor and discuss matters that could have an impact on trade.

The Government intends to ensure that each Party fully implements CPTPP according to the text that was negotiated and agreed to between the Parties. The CPTPP SPS Chapter is intended to help ensure that CPTPP market access gains for Canadian agricultural and agri-food, fish and seafood, and forestry exports are not undermined by unnecessary or unjustified SPS-related trade restrictions, while maintaining Canada’s ability to establish the necessary measures to address risks to human, animal or plant life or health.

Chapter 8 – Technical Barriers to Trade

1. TPP Provisions

Technical regulations, product standards, and conformity assessment procedures are employed by regulators to ensure the protection of human, animal or plant life or health, and protection of the environment. For example, electrical equipment must conform to safety regulations in order to prevent the possibility of fire or electric shock. However, as tariffs are eliminated, there is the potential that trading partners could use technical requirements relating to products as a means of blocking imports. These requirements are known as “technical barriers to trade” (TBT) measures. Some important terms used in the TBT area and their meaning are the following:

Under the WTO Agreement on Technical Barriers to Trade (TBT Agreement), the CPTPP Parties have already made a number of commitments with respect to TBT measures. This Chapter incorporates and builds on those commitments. In effect, this Chapter helps to ensure that market access gains made in other parts of the CPTPP are not undermined by TBT measures.

This Chapter ensures that TBT measures are applied equally to products and goods originating in both Canada and the other CPTPP Parties. Where differences in regulations or standards arise, the provisions of this Chapter seek to promote convergence of respective practices of the Parties where possible, while protecting each Party’s right to regulate in its own best interests. Nothing in the TBT Chapter forces Canada or the other CPTPP Parties to lower their safety standards and regulations.

Article 8.1 sets out the definitions that apply to the TBT Chapter. They include the definitions contained in Annex 1 of the TBT Agreement as well as additional definitions for “consular transactions,” “marketing authorisation,” “mutual recognition agreement,” “mutual recognition arrangement,” “post-market surveillance,” “TBT Agreement,” and “verify.”

Article 8.2 sets out the objective of this Chapter, which is to facilitate trade, including by eliminating unnecessary technical barriers to trade, enhancing transparency, and promoting greater regulatory cooperation and good regulatory practice.

Article 8.3 provides that this Chapter applies to the preparation, adoption and application of all technical regulations, standards and conformity assessment procedures of central level of government bodies (and, in some cases, to the technical regulations, standards and conformity assessment procedures of government bodies at the level directly below that of the central level of government) that may affect trade in goods between the Parties. The Article also ensures this Chapter does not apply to technical specifications prepared by a governmental entity for its production or consumption requirements or to sanitary and phytosanitary measures.

Article 8.4 incorporates key provisions of the TBT Agreement into the TBT Chapter. They include provisions related to TBT measures, such as requiring national treatment and most-favoured-nation (MFN) treatment; avoid creating unnecessary obstacles to trade; and basing technical regulations on appropriate international standards unless those standards would be ineffective or inappropriate for the regulatory purpose.

Article 8.5 promotes the use of international standards and acknowledges their role in supporting greater regulatory alignment, good regulatory practices and in reducing unnecessary barriers to trade.

Article 8.6 provides National Treatment for conformity assessment bodies between the CPTPP Parties, which will help to streamline duplicative testing requirements. The remaining provisions impose additional requirements to ensure that conformity assessment procedures are conducted in a fair and impartial manner (e.g. providing a rationale for not accepting the results of a conformity assessment procedure conducted in the territory of another Party, limiting conformity assessment fees to the approximate cost of services rendered, etc.).

Article 8.7 recognizes the importance of transparency that goes beyond each Party’s TBT Agreement obligations, and reflects decisions taken by the WTO TBT Committee. The Article sets out agreed transparency procedures. Notably, it requires Parties to allow interested persons from another Party to participate in the development of technical regulations and conformity assessment procedures, and sets out a variety of requirements for publication, provision of information, and receiving and responding to comments.

Article 8.8 normally provides a period of not less than six months as a reasonable interval between publication of technical regulations and conformity assessment procedures and their entry-into-force, so that businesses will have sufficient time to meet the new technical requirements.

Article 8.9 promotes the use of a broad range of mechanisms to help facilitate the acceptance of conformity assessment results. In addition, the Article encourages cooperation between the relevant public and private organizations of the CPTPP Parties with regard to standardisation, conformity assessment, accreditation and measurement.

Article 8.10 promotes information exchange and technical discussions between the Parties so that concerns may be addressed and dealt with as quickly as possible.

Article 8.11 establishes a Committee on Trade in Goods and provides that it will address matters arising in the area of technical barriers to trade.

Article 8.12 provides for contact points for this Chapter to help facilitate communication between CPTPP Parties.

Article 8.13 introduces the sectoral annexes to the TBT Chapter. These include disciplines in seven specific sectors (cosmetics, medical devices, pharmaceuticals, wines and distilled spirits, information and communications technology products, proprietary formulas for prepackaged foods products and food additives, and organic products). These sectoral outcomes build on and complement the obligations in the TBT Chapter, which promote regulatory transparency and predictability while preserving each party’s right to regulate in the public interest to achieve legitimate public policy objectives.

Annex 8-A (Wine and Distilled Spirits) streamlines labelling requirements for wine and distilled spirits (e.g. using supplementary labels for additional information; allowing for lot identification codes; not requiring certain information such as date of production, which may not be necessary for low-risk products such as wine.) The Annex also provides labelling-requirement parameters for wine and distilled spirits, reducing the need for a different approach in each individual market. The Annex also protects the definition and traditional production method of authentic icewine where it is made exclusively from grapes naturally frozen on the vine. In cases where wineries have sought to take advantage of the cachet of the term “icewine” and have marketed that product using grapes that were frozen in industrial freezers, they will be prevented from marketing the product as “icewine.”

Annex 8-B (Information and Communications Technology Products) provides added protection for information and communications technology products that use cryptography. Exceptions are granted for government production, sale, or use of a product as well as for requirements a CPTPP government maintains related to the networks it owns or controls or measures it takes related to financial institutions or markets. The Annex also accepts a supplier’s declaration of conformity that information technology equipment meets a standard or technical regulation for electromagnetic compatibility provided that such a declaration satisfies a party’s testing requirements. Finally, the Annex encourages Parties to implement the Asia-Pacific Economic Cooperation (APEC) Mutual Recognition Arrangement for Conformity Assessment of Telecommunications Equipment of May 8, 1998 (MRA-TEL) and the APEC Mutual Recognition Arrangement for Equivalence of Technical Requirements of October 31, 2010 (MRA-ETR) with respect to each other, and considers other arrangements to facilitate trade in telecommunications equipment.

Annex 8-C (Pharmaceuticals) ensures that the marketing authorisation process for pharmaceutical approvals is done in a timely, reasonable, objective, transparent and impartial manner. For example, the Annex will help establish authorization procedures that will allow companies to efficiently track the marketing approval progress of their pharmaceutical products while ensuring timely mitigation measures if a product application is not approved or deemed deficient. The requirements for CPTPP Parties to comply with this new and transparent marketing authorization process will help reduce the regulatory uncertainty for Canadian pharmaceutical companies.

Annex 8-D (Cosmetics) ensures that the marketing authorisation process for cosmetics (if required) is done in a timely, reasonable, objective, transparent and impartial manner. For example, Canadian cosmetic manufacturers will be allowed to obtain a single marketing authorization for product lines that feature comparable products but differ only in shade or fragrance. This will help lessen the regulatory burden of seeking marketing authorization for each cosmetic product. Also, the Annex recognizes that cosmetic products generally are less of a risk to human health than certain other products such as medical devices or pharmaceuticals, and the need to regulate accordingly. The Annex also helps to reduce trade-restrictive labeling practices that require Canadian cosmetics manufacturers to re-label or repackage their products for different markets.

Annex 8-E (Medical Devices) ensures that the marketing authorisation process for medical devices is done in a timely, reasonable, objective, transparent and impartial manner. For example, the Annex will help establish authorization procedures that will allow companies to efficiently track the marketing approval progress of their medical devices while ensuring timely mitigation measures if a product application is not approved or deemed deficient. Parties will make authorization decisions based on clear, established risk-based criteria. For example, recognizing that different medical devices pose different levels of risk, each Party will need to classify medical devices based on risk and regulate a particular device consistently with that classification. The Annex also requires each Party to permit the manufacturer or supplier of an imported medical device to correct the device’s non-compliant labels by re-labelling the device in accordance with the Party’s regulatory requirements after importation, but prior to sale. This requirement aims at streamlining the process for importing medical devices, including radiation emitting medical devices, and to facilitate the import-export activities of medical devices manufacturers and distributors.

Annex 8-F (Proprietary Formulas for Prepackaged Foods and Food Additives) ensures the confidentiality of information regarding proprietary formulas that CPTPP Parties require companies to provide in order to meet its technical regulations and standards related to prepackaged food and food additives. The Annex ensures that CPTPP Parties retain full rights to require companies to provide information about prepackaged foods and food additives.

Annex 8-G (Organic Products) facilitates the trade of organic products by encouraging information exchange, cooperation, and participation of Parties on matters related to organics.

2. Canadian Legislation

No amendments to Canadian statutes arise from Chapter 8. Amendments to regulations related to Annex 8-E (Medical Devices) relabelling can be found in the Canada Gazette publications: Regulations Amending the Medical Devices Regulations (Importation), SOR/2018-225, and Regulations Amending the Radiation Emitting Devices Regulations (Importation), SOR/2018-226.

3. Intended Government Action

The Government will continue to comply with existing obligations from the TBT Agreement incorporated into this Chapter, and with those additional obligations and procedures described above. Specifically, the Government will continue to be bound by transparency obligations through incorporated provisions from the TBT Agreement, and to actively participate in the Committee responsible for the TBT Chapter. The Government intends to ensure that each Party fully implements the CPTPP according to the text that was negotiated and agreed to between the Parties.

Chapter 9 – Investment

1. TPP Provisions

The purpose of the Investment Chapter is to secure access to the markets of the CPTPP Parties for Canadian investors, and to protect the interests of Canadian investors established in the territories of the CPTPP Parties. This is achieved through a set of obligations that are enforced through investor-state dispute settlement (ISDS) — a mechanism for the resolution of disputes between investors and the Parties. In addition, Chapter 28 (Dispute Settlement) applies to the Investment Chapter, providing for the resolution of disputes that may arise between the CPTPP Parties.

The Chapter’s provisions are separated into two parts. Section A contains the Chapter’s definitions and substantive obligations. These include key definitions such as “investment” and “investor of a Party.” Section A also includes obligations to treat investments in a non-discriminatory manner, to afford them a certain baseline of protection, and to provide investors with certain rights of treatment (for instance, to transfer finances into and out of the host country). Section B outlines the Chapter’s ISDS mechanism, and elaborates the procedures by which an investor can initiate a claim under the Chapter.

The Investment Chapter should be read together with Annexes I and II, which contain country-specific reservations with respect to certain obligations of the Chapter. In addition, certain general exceptions contained in Chapter 29 (Exceptions and General Provisions), such as the national security exception, apply to the obligations in the Chapter. This structure of reservations and exceptions is similar to past Canadian FTAs.

An important outcome of the negotiation was that Canada agreed to revise the Investment Canada Act (ICA) such that CPTPP investors that are not state-owned enterprises will benefit from an investment review threshold not less than Can$1.5 billion in enterprise value, adjusted in accordance with the applicable methodology in January of each subsequent year as set out in the Investment Canada Act.. This commitment is set out in Canada’s Annex I reservation and is coupled with an exclusion from dispute settlement for any decisions made pursuant to the ICA’s investment review mechanism, set out in Annex 9-H of this Chapter.

CPTPP includes a number of innovations related to investments. For example, Chapter 29 (Exceptions and General Provisions) includes an exception allowing the Parties to prevent ISDS claims that challenge a tobacco control measure from proceeding to arbitration. The Investment Chapter also includes other novel provisions that limit a Party’s ability to impose performance requirements relating to technology. Under these new commitments, the Parties cannot require investors to purchase local technologies, or prevent investors from purchasing the technologies of their choice, subject to certain exceptions.

Section A

Article 9.1 sets out definitions that are specific to the Investment Chapter. Among these:

Article 9.2 Paragraph 1 circumscribes the application of this Chapter to a measure adopted or maintained by a Party relating to an investor of the other Party and to covered investments of such investors. Article 9.10, relating to performance requirements, and Article 9.16, relating to investment and environmental, health and other regulatory objectives, apply to all investments in the territory of the Party adopting or maintaining the measure, including those from non-Parties. Paragraph 2 applies the Chapter’s obligations to central, regional and local levels of government, as well as any person or body exercising authority delegated to it by one of those levels of government. Paragraph 3 clarifies that where an act or situation ceased to exist before the Agreement’s entry into force, it is not covered by the Chapter.

Article 9.3 Paragraph 1 establishes that where there is an inconsistency between this Chapter and any other CPTPP Chapter, the other Chapter prevails to the extent of the inconsistency. Paragraph 3 stipulates that this Chapter does not apply to a measure to the extent that the measure is covered by Chapter 11 (Financial Services). A measure is covered by the Financial Services Chapter when it relates to a financial institution, an investment or an investor in a financial institution, or cross-border trade in financial services. Such a measure is then subject to the specific obligations of the Financial Services Chapter, which incorporates certain obligations from this Chapter.

Together, Articles 9.4 and 9.5 prevent nationality-based discrimination against CPTPP investors and their investments.

Article 9.4 Paragraphs 1 and 2 set out the National Treatment obligation for investors and their investments with respect to the establishment, acquisition, expansion, conduct, operation, management, and sale or other disposition of their investments. National treatment means that Canada will treat, in “like circumstances,” CPTPP investors and their investments no less favourably than it treats Canadian investors and their investments. Paragraph 3 clarifies what national treatment means at the sub-national level; for example, in short, a CPTPP investor established in Alberta is entitled to the treatment accorded to Canadian investors by Alberta in its territory — but it is not entitled to the treatment accorded to a Canadian investor in Manitoba.

Article 9.5 Paragraphs 1 and 2 set out the most-favoured-nation treatment obligation for investors and their investments with respect to the establishment, acquisition, expansion, conduct, operation, management, and sale or other dispositions of their investments. Most-favoured-nation treatment means that Canada will treat, in “like circumstances,” CPTPP investors and their investments no less favourably than it treats investors of a third country and their investments. Paragraph 3 clarifies that the most-favoured-nation treatment obligation does not extend to the procedures for the resolution of investment disputes contained in other international agreements. This means the different dispute settlement provisions of other agreements cannot be brought into CPTPP through the application of the most-favoured-nation treatment obligation.

Footnote 14 (see Article 9.4) clarifies that, for both the National Treatment and Most-Favoured-Nation commitments, a determination of whether the treatment at issue was accorded in “like circumstances” requires an examination of the totality of the circumstances, including whether the difference in treatment was accorded in pursuit of legitimate public welfare objectives.

Article 9.6 requires Parties to accord covered investments a certain baseline of treatment (a “minimum standard of treatment”) in accordance with customary international law, including “fair and equitable treatment” and “full protection and security.”

Paragraph 2 provides that this standard includes, but is not limited to, requirements to not deny justice to covered investments, and to afford them a level of police protection required under customary international law. Paragraph 3 clarifies that a Party’s breach of another provision of the agreement — for instance, the National Treatment obligation — does not, in and of itself, establish a breach of Article 9.6. Paragraphs 4 and 5 clarify that a Party’s acting inconsistently with an investor’s expectations, or a Party’s altering of a subsidy or grant, does not, in and of itself, constitute a breach of the Article.

Article 9.7 requires a Party not to discriminate against investors of another Party when it provides compensation for losses incurred during armed conflict or civil strife. If, during such conflict, a Party’s forces or authorities either requisition or unnecessarily destroy a covered investment, Paragraph 2 requires the Party to provide restitution, compensation, or both. Paragraph 3 creates an exception for a Party’s existing subsidies or grants that are inconsistent with Article 9.4.

Article 9.8 sets out the conditions for when a Party can expropriate a covered investment, ensuring that an affected investor will receive fair and prompt compensation for its losses. The Article should be read with Annex 9-B, which explains the difference between a “direct” and an “indirect expropriation”; elaborates key elements of the legal test for an indirect expropriation; and clarifies that non-discriminatory measures that are designed to protect legitimate public welfare objectives (such as health, safety, and the environment) do not constitute indirect expropriation, except in rare circumstances.

Paragraph 1 provides that a Party may not directly or indirectly expropriate a covered investment, except for a public purpose, in a non-discriminatory manner, on payment of compensation, and under due process of law. Paragraph 2 requires, among other things, that any compensation be paid without delay and reflect the fair market value of the investment before the expropriation took place. Paragraphs 3 and 4 set out the manner in which compensation and interests shall be calculated in the event of an expropriation. Paragraph 5 stipulates that the Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights when such issuance is consistent with the Intellectual Property Chapter (Chapter 18) of this Agreement and the WTO TRIPS Agreement. Paragraph 6 notes that a Party’s lawful and discretionary decision to not issue or renew a subsidy or grant does not, in and of itself, constitute an expropriation.

Article 9.9 ensures that CPTPP investors are able to “transfer” or move funds into and out of the territory host country (e.g. contributions to capital, profits from the investment, payments against loans, etc.). Paragraph 1 provides that all capital transfers related to a covered investment to and from the host state of the investment shall be permitted freely and without delay. Paragraphs 2 and 3 permit transfers to be made in freely usable currencies and as returns in kind. Paragraph 4 creates an exception allowing the Parties to limit capital transfers when applying, in good faith, their laws relating to matters such as the protection of creditors, the dealing in securities, or the satisfaction of judgments.

Article 9.10 sets limits on the types of requirements the Parties can impose on foreign investments, such as protectionist or trade-distorting requirements on investments that would impair their success, or otherwise disrupt trade between the Parties.

Paragraph 1 prohibits the imposition and enforcement of a number of specified performance requirements in connection with the establishment, acquisition, expansion, conduct, operation, and management of investments. Subparagraphs (a) through (i) list the prohibited requirements, which include those to buy local goods, or to export a given level of the goods or services the investment produces. Among these, subparagraph (h) and (i) are novel obligations: (h) prohibits the Parties from imposing requirements to purchase local technologies, or from preventing the investment from purchasing the technologies of its choice; and (i) restricts the Parties from imposing specific royalty amounts on contracts between private parties in certain circumstances.

Paragraph 2 is similar to Paragraph 1, but prohibits a Party’s conditioning the receipt of an advantage on compliance with certain requirements. An “advantage” could include preferential tax treatment, grants, subsidies, or other government benefits conferred on an investment. This obligation applies to a more limited list of restrictions, listed in subparagraphs (a) through (d), which include requirements that the investment purchase local goods, or balance the value or volume of its imports against that of its exports.

Paragraph 3 outlines certain exceptions to the preceding obligations. For example, subparagraph (a) clarifies that the prohibition of Paragraph 2 does not apply to requirements to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development in its territory. Additional exceptions are created for government procurement; enforcement of a Party’s competition laws, copyright laws and intellectual property rights consistent with the WTO TRIPS Agreement; measures necessary to protect human, animal or plant life or health; or to protect living or non-living exhaustible natural resources, among others.

Paragraph 4 clarifies that Paragraph 1 does not prevent a Party from imposing requirements to employ or train workers in its territory — provided that this does not require the transfer of proprietary technologies or practices. Paragraphs 5 and 6 clarify that the Article’s obligations do not apply to requirements other than those identified, or to those entered into freely by private parties.

Article 9.11 Paragraph 1 is designed to ensure that investors are able to appoint the senior managers of their choice by prohibiting the Parties from requiring that covered investments appoint senior managers of any particular nationality. In contrast, Paragraph 2 clarifies that a Party may require that a majority of an investment’s board of directors be of a particular nationality, provided such requirement does not materially impair the ability of the investor to exercise control over its investment.

Article 9.12 establishes reservations against Articles 9.4 (National Treatment), 9.5 (Most-Favoured-Nation Treatment), 9.10 (Performance Requirements) and 9.11 (Senior Management and Boards of Directors).

Paragraph 1 specifies that these obligations do not apply to existing non-conforming measures that a Party maintains at its “central” (i.e. federal) and “regional” (i.e. provincial and territorial) levels of government, as listed and described in that Party’s Schedule to Annex I. Canada’s Annex I specifically lists all existing non-conforming measures that it maintains at the federal level, including for the Investment Canada Act and other matters such as telecommunications, transport, business services, and energy. It also includes a general reservation for all existing non-conforming measures at the provincial and territorial level, effectively “grandfathering” such measures. Subparagraph 1(a)(iii) grandfathers existing measures at the local level of government for all CPTPP Parties.

Furthermore, subparagraph 1(b) provides that these obligations will not apply to the continuation or renewal of listed non-conforming measures and grandfathered measures, or to subordinate measures taken pursuant to the non-conforming measures (for example, the exercise of a discretion set out in legislation listed in a Party’s Annex I), so long as the subordinate measure is taken under the authority of and is consistent with the reserved measure. This permits the Parties to maintain existing non-conforming measures, but ensures new non-conforming measures are not introduced (this is referred to as the “standstill” mechanism). Nor do the obligations apply to amendments to the non-conforming measures, provided the amendments do not make the measure less conforming with the obligations (this is referred to as the “ratchet” mechanism, because it ensures that any liberalization by a Party of a non-conforming measure is not later reversed).

Paragraph 2 stipulates that these obligations do not apply to a measure that a Party adopts or maintains with respect to a sector, sub-sector or activity as set out in that Party’s Schedule to Annex II. Canada has taken Annex II reservations regarding matters such as aboriginal affairs, fisheries, social services, and transport. Such reservations apply to measures of governments at any level in Canada. In those sectors, federal, provincial and territorial governments maintain broad policy flexibility. The “standstill” and “ratchet” obligations do not apply to the sectors, sub-sectors or activities listed in Annex II.

Paragraph 3 specifies that, upon request of another Party, the Parties shall enter into consultations on a regional non-conforming measure. Paragraph 4 prohibits a Party from adopting a measure that requires that an investor, because of its nationality, dispose of its investment, even if a Party has taken an Annex II reservation against the National Treatment obligation. Paragraph 5 creates an exception against Articles 9.4 and 9.5 for measures falling within applicable exceptions in Chapter 18 (Intellectual Property) or the WTO TRIPS Agreement. Paragraph 6 creates an exception against Articles 9.4, 9.5, and 9.11 for government procurement and subsidies and grants provided by a Party.

Article 9.13 ensures that where rights under this Chapter transfer to a Party or designee of that Party pursuant to payment made under an insurance contract or other form of indemnity, the other Party shall recognize the subrogation and the investor shall be precluded from pursuing those rights under the treaty. This is designed to ensure that if an entity like Export Development Canada (EDC) pays out an insurance policy to a Canadian investor, EDC would be in position to file a claim under this Chapter, to the extent of the subrogation.

Article 9.14 Paragraph 1 clarifies that Article 9.4, relating to national treatment, does not prevent a Party from adopting or maintaining special formalities, such as residency requirements for registration or requirements that the investment be legally constituted. However, these formalities cannot materially impair the protections afforded to the investment under the Chapter. Paragraph 2 clarifies that Articles 9.4 and 9.5 do not preclude a Party from collecting routine data from the investment for information or statistical purposes.

Article 9.15 allows the Parties to deny the benefits of the treaty under certain circumstances. Paragraph 1 permits the denial of benefits to an enterprise of another CPTPP Party, and to its investments, if it is owned or controlled by a person of a non-Party (or the denying Party), and has no substantial business activity in any CPTPP Party (other than the denying Party). This prevents non-Parties from accessing the benefits of the Agreement by establishing “mailbox companies” or shell corporations in CPTPP Parties. Paragraph 2 permits the denial of benefits to an enterprise of another CPTPP Party, and to its investments, if it is owned or controlled by an investor of a non-Party against which the denying Party maintains a measure which prohibits transactions with such an enterprise. This ensures the maintenance and the integrity of a Party’s sanctions regime.

Article 9.16 clarifies that nothing shall be construed as preventing a Party from enforcing measures otherwise consistent with the Chapter to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives. This Article supports Canada’s right to regulate in pursuit of legitimate public policy objectives.

Article 9.17 reaffirms the importance of each Party encouraging enterprises operating within its territory, subject to its jurisdiction, to voluntarily adopt internationally recognized standards of corporate social responsibility.

Section B

Section B sets out the Chapter’s ISDS mechanism. This provides for the neutral and effective enforcement of the obligations established in Section A by an ad hoc tribunal.

Article 9.19 sets out the scope of the arbitral mechanism. An investor may bring a claim, either on its own behalf or on behalf of an enterprise that it owns or controls, for a breach by a Party of any of the obligations under Section A. In order to submit a claim, the investor must have suffered loss or damage in relation to its covered investment as a result of the alleged breach. The provisions of Article 9.19 relating to claims regarding Investment Agreements or Investment Authorizations, as well as Annex 9-L, are suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

As set out in Annex 9-H, decisions following a review under the Investment Canada Act (ICA) are not subject to ISDS or the general dispute settlement mechanism in Chapter 28. Given that decisions by Federal Government Ministers under the ICA are final and not subject to appeal, except for judicial review, the exclusion from dispute settlement ensures that those decisions are not overturned by investment tribunals and dispute settlement panels.

In addition, certain rules apply to investment disputes arising from public debt restructuring and taxation measures. A claim relating to a Party’s restructuring of debt may only be submitted in accordance with Annex 9-G. In the case of a negotiated restructuring, only claims that a Party has breached National Treatment or Most-Favoured-Nation treatment may proceed to dispute settlement under Section B.

Temporal limitations also apply. Article 9.21 establishes a 3.5-year time-bar to initiating a claim under Section B; consultations must be initiated within 3.5 years of the date that the investor knew or should have known of the alleged breach, and that the investor or enterprise incurred loss or damage as a result. The ISDS tribunal will not have competence to hear claims that are outside this period, as the Parties wanted to avoid the legal uncertainty that can arise over a prolonged period.

Prior to the initiation of arbitral proceedings, Article 9.18 requires that the claimant and the respondent Party first seek to resolve their dispute through consultations. If the dispute has not been resolved after six months of consultations, the investor may submit a claim to arbitration.

Before submitting a formal claim to arbitration, Paragraph 3 of Article 9.19 requires that the claimant first submit a notice of its intent to arbitrate, and provide certain information about the claim, including the legal and factual basis for the claim, the relief sought, and the amount of damages claimed. This notice must be submitted 90 days before submitting a formal claim.

Should the claimant proceed to submit a formal claim to arbitration, they must select the procedural rules under which the arbitral proceedings will be conducted. Paragraph 4 of Article 9.19 specifies that a claim can be submitted under the following sets of rules:

The claimant must submit written consent to the arbitration. Further to Paragraph 7 of Article 9.19, the claimant must also submit the name of the arbitrator it wishes to appoint, and provide written consent for that arbitrator to be appointed.

The CPTPP Parties provide standing consent to arbitration through Article 9.20 of the Chapter. This means the Parties are not required to submit written consent on a case-by-case basis.

In order for the claim to proceed, the claimant must also submit a written waiver of its rights to initiate or continue a proceeding for damages through a Party’s domestic courts, or through any other dispute settlement proceeding, with respect to any of the measures alleged to be in breach. Investors are free to pursue damages in domestic courts or proceedings other than under the CPTPP; however, if they choose to bring an investment dispute under the CPTPP, they can no longer pursue it in other fora. This is designed to prevent duplicative claims and double recovery. In addition, Annex 9-J establishes that where an investor of a Party elects to submit a claim that Chile, Mexico, Peru or Vietnam has breached an obligation of Section A under the domestic courts or administrative tribunals of those Parties, the investor may not thereafter submit the claim to arbitration under this Chapter.

Article 9.22 provides that unless the disputing parties agree otherwise, the tribunal will be composed of three arbitrators. The claimant will appoint one arbitrator; the respondent Party will appoint another; and the third, who will serve as the presiding arbitrator, will be appointed by mutual agreement of the disputing parties. If the tribunal is not constituted within 75 days of the submission of the claim to arbitration, a disputing party can request that the ICSID Secretary General appoint, at his or her discretion, all arbitrators not yet appointed. Any arbitrators appointed in this way cannot be a national of either party, unless the disputing parties agree otherwise. Paragraph 5 of Article 9.22, relating to the selection of arbitrators for cases involving Investment Agreements or Investment Authorizations, is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 9.22 Paragraph 6 of relates to the Code of Conduct for state-state dispute settlement under Chapter 28 (Dispute Settlement). Further to this provision the Parties developed a Code of Conduct for ISDS arbitrators, that was adopted at the CPTPP Commission’s first meeting in Tokyo in January 2019.

Article 9.23 Paragraph 2 allows for non-disputing CPTPP Parties to make oral and written submissions to the tribunal regarding the interpretation of the Agreement. Paragraph 3 permits the tribunal to accept and consider submissions made by other persons or entities (i.e. amicus curiae submissions), where such submissions may assist the tribunal in its deliberations. The tribunal can consider such submissions provided

Any such submission must include basic information identifying the author, as well as their affiliation with the disputing parties and any sources of financial assistance provided to assist in preparing the submission. The disputing parties shall be given an opportunity to respond to the submission. Finally, the tribunal is responsible for ensuring that such submissions do not disrupt or unduly burden the proceedings.

Paragraphs 4–6 set up efficient procedures to resolve disputes where a claim is manifestly without legal merit or unfounded as a matter of law. Following the constitution of the tribunal, the respondent has a limited period of time to file an objection that a claim is manifestly without legal merit. Upon receipt of such an objection, a tribunal must suspend the proceedings on the merits and establish a schedule to consider the objection. The tribunal must promptly issue a decision or award on the question, on the assumption that all alleged facts are true. The process and determination of whether the claim is without legal merit is without prejudice to the merits of the allegations.

Paragraph 7 clarifies that the burden of proof rests with the claimant. Paragraph 8 prohibits the respondent from asserting as a defence that the claimant has received or will receive compensation through an insurance contract. Paragraph 9 accords the tribunal the power to order an interim measure of protection to preserve the rights of a disputing party or to ensure that the tribunal’s jurisdiction remains effective, including by issuing an order to preserve evidence. Paragraph 10 allows a disputing party to request a tribunal’s decision on liability in advance of its issuance, and provides a 60-day comment period.

Paragraph 11 commits the Parties to consider the potential application of an appellate mechanism for reviewing awards rendered by ISDS tribunals, should one be developed in the future under other institutional arrangements.

Article 9.24 ensures that ISDS proceedings are conducted in a transparent manner. It ensures that key documents relevant to the proceedings are made public, and that the tribunal hearings are open to the public. Only those parts of the hearing that reference confidential or protected information may be held in private, and the tribunal will make the appropriate arrangements for ensuring that information is not disclosed.

Paragraph 3 establishes that the respondent Party is not required to disclose information that it may withhold in accordance with the Agreement’s general exceptions for national security (Article 29.2) and disclosure of information (Article 29.7). Paragraph 4 outlines procedures for the protection and redaction of confidential information.

Paragraph 5 establishes that nothing in this Chapter prevents a respondent from disclosing to the public information that it is required to disclose under its access to information laws. The respondent should make best efforts to apply its laws so as to ensure the protection of information that has been designated as confidential in the arbitration.

Article 9.25 establishes that the tribunal shall decide the issues in dispute in accordance with the Agreement and applicable rules of international law. It also establishes that interpretive decisions issued by the CPTPP Commission are binding on the tribunal. Paragraph 2 relating to claims involving Investment Agreements or Investment Authorizations is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Where a respondent asserts as a defence that the measure at issue is within the scope of a reservation for non-conforming measures set out in Annexes I or II, Article 9.26 establishes a right for the respondent Party to request a binding interpretive decision from the Commission on the issue.

Article 9.27 permits the tribunal to appoint one or more experts to report on any factual issue concerning scientific matters, unless the disputing parties disagree, and subject to any terms and conditions that the disputing parties may agree.

For efficient resolution of disputes initiated under Section B, Article 9.28 provides that when two or more claims submitted separately have a question of law or fact in common and arise out of the same events or circumstances, a disputing party may seek the establishment of a separate tribunal, and request that such tribunal issue a consolidation order. The newly established tribunal, if it is satisfied that two or more of the claims have a question of law or fact in common, may assume jurisdiction over some or all of the claims, or instruct a tribunal previously established to assume jurisdiction over all or part of the claims.

Article 9.29 establishes the binding and final nature of awards, including under the ICSID Convention, the New York Convention, or the Inter-American Convention, as applicable. A tribunal may award monetary damages and applicable interest, restitution of property, or a combination of the two. A tribunal may also award costs and attorney’s fees incurred by the disputing parties, but cannot award punitive damages. Where a claim was made by an investor on behalf of an enterprise, the award shall be provided to the enterprise. Tribunal awards are binding and final, and each Party shall provide for the enforcement of an award in its territory.

2. Canadian Legislation

Subsection 8(2) of the CPTPP Implementation Act sets out the general prohibition against an individual or entity bringing a claim against Canada for a breach of the CPTPP. Subsection 8(3) provides an exception for investment dispute settlement under Section B of Chapter 9.

Section 11 of the CPTPP Implementation Act authorizes the Minister for International Trade to appoint an arbitrator in accordance with Section B of Chapter 9.

Subsection 12(c) of the CPTPP Implementation Act provides the authority for the Government of Canada to pay its appropriate share of the costs, remuneration and expenses of panels or arbitration Tribunals, including those established under Section B of Chapter 9.

Section 19 of the CPTPP Implementation Act amends the schedule to the Investment Canada Act (ICA) to raise the net benefit review threshold to Can$1.5 billion in enterprise value for non-state-owned enterprise investors from CPTPP partner countries.

Section 31 of the CPTPP Implementation Act amends the Commercial Arbitration Act to ensure that investment dispute settlement claims under the CPTPP are considered commercial arbitration for the purposes of that Act.

3. Intended Government Action

Investment agreements protect the interests of Canadian investors abroad and provide a rules-based approach to the resolution of disputes involving foreign investors in Canada. The investment dispute resolution mechanism within the CPTPP allows for a fair and impartial tribunal to be created, which would then hear and resolve a case.

The Government will ensure that the individuals proposed for the tribunal possess the requisite characteristics to ensure an impartial process for the resolution of investment disputes.

CPTPP Parties have agreed to the application of a code of conduct to further ensure the independence and impartiality of the members of the tribunals, and the maintenance of confidentiality.

Chapter 10 – Cross-Border Trade in Services

1. TPP Provisions

This Chapter addresses trade in services as supplied on a cross-border basis. Services are a key component of global value chains as they help to promote value-added commercial activities. Services represent a high proportion of the value of trade, particularly when accounting for services embodied in traded goods.

The importance of services in the Canadian economy continues to grow. Services have increased from approximately 65% of Canada’s gross domestic product (GDP) in 2000 to 70% in 2018. The percentage of hours worked in the services sector consistently grew at an average annual rate of 1.4% during the same period.

Cross-border trade in services (CBTS) is an increasingly important component of Canada’s international trade. CBTS refers to the production, distribution, marketing, sale, and delivery of a service abroad, including payment for and use of that service by a consumer. Canadian service suppliers are active in CPTPP markets across all services sectors of the economy, including travel services; management services; computer and information services; research and development services; architectural, engineering, and other technical services; maintenance and repair services; as well as transportation services.

Rules of this Chapter form the foundation for the liberalization of the services market under the CPTPP. This Chapter establishes key rules with respect to treatment of service suppliers of another Party (i.e. National Treatment, Most-Favoured-Nation Treatment, Local Presence, and Market Access), and establishes the framework for services market access under this Agreement. These key rules and market access facilitate cross-border trade in services across all services sectors, such as professional (e.g. accounting, architecture, engineering, technical testing), consulting and advisory, computer-related, environmental, transportation, and research and development services.

Additional aspects of Canada’s traditional approach to CBTS in its trade agreements are incorporated in this Agreement, with rules addressing issues such as Recognition and Domestic Regulation.

Overall, these features ensure that market access for Canadian service suppliers is secure going forward.

Article 10.1 defines the key terms used in this Chapter, such as “cross-border trade in services” or “cross-border supply of services,” “enterprise,” “enterprise of a Party,” “measures adopted or maintained by a Party,” “service supplied in the exercise of governmental authority,” “service supplier of a Party,” and “specialty air services.” These definitions clarify that this Chapter addresses three modes of supply, namely the cross-border supply (mode 1), the consumption abroad (mode 2), and the presence aspect of the movement of natural persons (part of mode 4).

Article 10.2 establishes the scope of the obligations of this Chapter as applying to any measure affecting the production, distribution, marketing, sale or delivery of a service, as well as purchase or use of, or payment for, a service. This Article also applies to measures affecting the access to and use of distribution, transport or telecommunications networks and services in connection with the supply of a service, the presence in the Party’s territory of a service supplier of another Party, and the provision of a bond or other form of financial security as a condition for the supply of a service. This Article lays out a list of sectors and/or circumstances where this Chapter would not apply, including services supplied in the exercise of governmental authority, financial services, air services (unless specifically included in Article 10.2), government procurement, and any measure related to subsidies or government support. Note that financial services and government procurement are treated in Chapter 11 (Financial Services) and Chapter 15 (Government Procurement) of the Agreement, respectively; while most air services are governed by separate international agreements, including bilateral Air Transport Agreements between Canada and most Parties.

Article 10.3 describes the core obligation of National Treatment (NT), which requires each Party to treat service suppliers of the other Party no less favourably than it treats its own service suppliers, in like circumstances.

Article 10.4 sets out the Most-Favoured-Nation (MFN) Treatment obligation. Under MFN, each Party must treat service suppliers of another Party no less favourably than it treats service suppliers of another Party or a third Party, in like circumstances. This ensures that this Agreement establishes a level playing field for service suppliers from Parties as the conditions of trade further liberalize between Parties and their other trading partners.

Article 10.5 describes the Market Access obligation under this Chapter. This obligation prohibits the imposition of certain types of regulatory measures that would restrict the supply of services. Specifically, this obligation prohibits quantitative limits on the number of service suppliers; the total value of services transactions or assets; the total number of service operations or the total quantity of service output; or the total number of natural persons who may be employed in a particular service sector. This obligation also prohibits a Party from restricting or requiring a specific type of legal entity or joint venture as a condition to supply a service.

Article 10.6 describes the Local Presence (LP) obligation, which prohibits a Party from requiring a service supplier of another Party to establish or maintain a business presence, or to be resident, in its territory as a condition to supply a service on a cross-border basis.

Article 10.7 specifies that Parties are allowed to adopt or maintain the measures that do not conform with National Treatment, Most-Favoured-Nation Treatment, Market Access, and Local Presence obligations, which are listed in their respective Annex I (existing non-conforming measures) or Annex II (existing or future non-conforming measures).

Annex I lists existing non-conforming measures against the obligations that are maintained at the federal level and also includes a general reservation for all existing non-conforming measures at the regional level, effectively “grandfathering” such measures in the case of Canada. Subparagraph 1(a)(iii) of Article 10.7.1 grandfathers existing measures at the local (for example municipal) level of government for all the Parties.

The standstill and ratchet mechanisms apply to those non-conforming measures listed under Annex I. The standstill mechanism binds current domestic regulatory regimes by ensuring that no Party will impose future measures that are new or more restrictive than those that were in place when this Agreement entered into force. The ratchet mechanism captures autonomous liberalization by ensuring that any future trade liberalizing changes to a Party’s measures will automatically be locked-in under this Agreement and, therefore, cannot subsequently be made more restrictive.

Each Annex I reservation includes a reference to the specific measure as well as a general description. The headnote of each Party’s schedule addresses how such reservation should be read in the event of an inconsistency between the measure referenced and the description. In the case of Canada, the measure prevails.

Annex II lists those sector, sub-sectors or activities where a Party preserves policy flexibility with regard to the NT, MFN, Market Access (MA) and LP obligations. For instance, Canada has taken Annex II reservations for measures related to health, public education, and other social services, culture, maritime cabotage, fisheries, and Aboriginal affairs, as well as minority affairs.

For preferential commitments taken by Parties under Annex II, the standstill and ratchet mechanisms do not apply; however, they are bound as listed.

Annexes I and II non-conforming measures are listed on a negative list basis, which provides maximum predictability and transparency about which measures are excluded from which obligation. Certain Parties, including Canada, have additionally embedded a positive list of commitments against the Market Access obligation under Annex II.

Article 10.8 describes the application of rules which ensure that all measures of general application affecting trade in services (e.g. relating to qualification requirements and procedures, technical standards and licensing requirements) are transparent, accessible, administered in a reasonable period of time, as well as in an objective and impartial manner by regulatory authorities. This provides greater certainty that such regulatory measures will not nullify or impair market access gains achieved through other areas of this Agreement. The ability of Parties to exercise discretion in the public interest is maintained, notably through the provision that Domestic Regulation rules do not apply where reservations are listed under Annex I and Annex II against the National Treatment and Market Access obligations.

Article 10.9 encourages designated regulatory bodies to work with their counterparts in order to recognize the education, experience, requirements, licences or certifications, in the jurisdictions of another Party via harmonization or mutual recognition agreements/arrangements. The MFN obligation does not apply to this Article, meaning that recognition between a Party and a non-Party is not accorded automatically to other Parties. This Article is supplemented by Annex 10-A on Professional Services.

Article 10.10 allows Parties to deny the benefits of this Chapter to an enterprise of another Party, if the enterprise is owned or controlled by a person of a non-Party. The Article also specifies that the benefits can be denied if the service supplier is an enterprise that has no substantive business activities in the territory of any Party other than the denying Party (e.g. “shell” company).

Article 10.11 requires each Party to maintain or establish appropriate mechanisms for responding to inquiries from interested persons regarding the regulations of this Chapter.

Article 10.12 describes conditions under which transfers and payments are allowed. It should be noted that this Article is subject to Annex 9-E (Transfers) of Chapter 9 (Investment).

Article 10.13 recognizes the importance of air services in facilitating the expansion of trade and enhancing economic growth. It encourages Parties to work at liberalizing air services through separate agreements.

Annex 10-A encourages the mutual recognition of professional qualifications, for instance through mutual recognition arrangements, especially for the regulated professions of engineering and architectural services, as well as legal services. A Professional Services Working Group is established to facilitate actions regarding the consultations of relevant bodies; the establishment of dialogues; the development of agreements on the recognition of professional qualifications, licensing and registration; and the implementation of a temporary or project specific licensing or registration regime.

Annex 10-B clarifies Parties’ obligations vis-à-vis a postal monopoly and a universal postal service, but does not apply to air transport services, services supplied in the exercise of governmental authority, or maritime transport services. Paragraphs 5 and 6 of Annex 10-B are suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Annex 10-C allows a transition period of three years after the date of entry into force of this Agreement for the application of the ratchet mechanism to Vietnam’s non-conforming measures listed under Annex I.

2. Canadian Legislation

No legislative modifications are required to implement this Chapter.

3. Intended Government Action

Cross-border trade in services will be a key component of Canada’s international trade profile going forward. The Government will monitor services trade activities, consult with stakeholders, and look for strategies to facilitate greater cross-border trade in services. Where appropriate, Canada will engage with its counterparts through the Professional Services Working Group in order to pursue this objective.

Chapter 11 – Financial Services

1. TPP Provisions

The CPTPP seeks to provide a high level of confidence to Canadian financial institutions by locking in current levels of market access and future liberalization in all CPTPP Parties. The Agreement is particularly significant because fast-growing countries (e.g. Malaysia and Vietnam) made new commitments to Canada to maintain a level playing field and not discriminate against Canadian financial institutions.

The CPTPP reflects Canada’s high-standard approach to addressing financial services in trade agreements. It incorporates a standalone chapter on financial services, which includes tailored provisions on market access, national treatment, most-favoured-nation treatment and regulatory transparency.

The Chapter also includes a number of special rules reflecting the unique nature of the financial services sector in the economy. In particular, a robust prudential exception is included to protect the ability of CPTPP financial authorities to take measures for prudential reasons, such as protecting investors and consumers, and ensuring the integrity and stability of the financial system. The Chapter establishes important safeguards for investment disputes regarding financial regulatory measures or the prudential exception, including provisions regarding the financial services expertise of arbitrators and that establish a filter mechanism for determining whether and to what extent the prudential exception is a valid defence to a claim. New features of the Chapter include commitments that allow for the cross-border delivery of electronic payment card services, and that ensure a level-playing field for Canadian insurers competing with postal entities that supply insurance in CPTPP Parties.

Canada’s objectives in the CPTPP were twofold. The first was to seek enhanced market access and greater legal clarity for Canadian financial institutions operating in CPTPP Parties, going beyond the CPTPP Parties’ financial services commitments in the GATS. In this respect, the CPTPP will largely lock in current market access and regulatory treatment for Canadian financial institutions, as well as capture future liberalization undertaken by CPTPP Parties. The CPTPP will also provide Canadian investors in CPTPP financial institutions with investment protections, for example in cases of expropriation or limits on transfers. The second objective was to advance an ambitious and specialized set of rules on financial services trade and investment that reflect the highly regulated nature of the sector. In this respect, the Agreement includes a chapter for financial services that facilitates the commercial operations of financial institutions, subject to prudential regulation, and establishes a dispute settlement framework tailored to the financial services sector.

Article 11.1 sets out definitions applicable to this Chapter.

Article 11.2 sets out the scope of the Financial Services Chapter, which covers measures relating to financial institutions, investors and their respective investments in financial institutions in a Party’s territory, and cross-border trade in financial services.

Subparagraph 2(a) incorporates commitments from Chapter 9 (Investment) and Chapter 10 (Cross-Border Trade in Services) into the Financial Services Chapter. These include provisions that provide protections to financial institutions, financial services investments and investors against expropriation, breaches of the minimum standard of treatment and limitations on the ability to transfer funds from abroad by the CPTPP Parties. Subparagraph 2(b) incorporates the investor-state dispute settlement framework established in Section B (Investor-State Dispute Settlement) of Chapter 9 into the Financial Services Chapter for a narrow set of claims.

The reference to Article 9.6 (Minimum Standard of Treatment) in subparagraph 2(b) of Article 11.2 (including footnote 3), and Annex 11-E, which relates to how section B of Chapter 9 (Investment) applies to claims that a Party has breached Article 9.6 (Minimum Standard of Treatment), are suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions (above).

Paragraph 3 of Article 11.2 specifies that the Chapter does not apply to measures relating to activities or services that form part of a public retirement plan or statutory system of social security, or that are conducted for the account with the guarantee, or using the financial resources of a Party. However, the Chapter applies to the extent that a Party allows such activities or services to be conducted by its financial institutions in competition with a public entity or a financial institution.

Paragraph 4 provides that the Chapter does not apply to government procurement of financial services. Paragraph 5 stipulates that the Chapter does not apply to subsidies or grants with respect to the cross-border supply of financial services, including government-supported loans, guarantees and insurance.

Article 11.3 tailors the National Treatment obligation to financial services. It specifies that each Party must treat the financial institutions of another Party, the investors of another Party and their investments in financial institutions, and the cross-border financial service suppliers of another Party no less favourably than it treats its own financial institutions, investors and their investments in financial institutions, or financial service suppliers, when they are in like circumstances.

Article 11.4 tailors the most-favoured-nation treatment obligation to financial services. It provides that each Party must treat the financial institutions of another Party, the investors of another Party and their investments in financial institutions, and the cross-border financial service suppliers of another Party no less favourably than it treats the financial institutions, investors and investments in financial institutions, and cross-border financial service suppliers of any other Party or of a non-Party (i.e., non-CPTPP countries), when they are in like circumstances.

Article 11.5 prohibits a Party from imposing certain market access limitations on a financial institution of another Party. These include limitations on the number of financial institutions, the total value of financial service transactions or assets, the total number of financial service operations, the total number of persons that may be employed at a financial institution, and the types of legal entities through which a financial institution may operate.

Article 11.6 requires Parties to allow financial service suppliers to provide the services specified in Annex 11-A (Cross-Border Trade) on a cross-border basis under terms and conditions that accord national treatment. These services include certain insurance and banking services. Paragraph 3 provides clarification that a Party may require the registration or authorization of cross-border financial service suppliers of another Party.

Article 11.7 provides financial institutions of a Party the right to supply new financial services in another Party’s territory, provided that the host Party permits its own financial institutions to do so, in like circumstances, without adopting a new law or modifying an existing one. The host Party retains the ability to determine the form through which the service is to be provided, and to require the financial institution to obtain authorization to supply the new service. However, authorization may only be refused for prudential reasons.

Article 11.8 clarifies that nothing in the Chapter requires a Party to provide or allow access to information related to a) the financial affairs and accounts of individual customers of financial institutions or cross-border financial service suppliers or b) confidential information, the disclosure of which would impede law enforcement, otherwise be contrary to the public interest or prejudice an enterprise’s legitimate commercial interests.

Article 11.9 prohibits a Party from requiring that members of senior management or other essential personnel of a financial institution of another Party be of any particular nationality, or requiring that more than a minority of the board of directors of a financial institution of another Party be composed of nationals of the Party or persons residing in the territory of the Party.

Article 11.10 sets out the mechanics for the reservations taken by the Parties for current and future measures within the scope of the Chapter. Paragraph 3 explains that where a Party has set out a reservation under one of the relevant provisions of Chapter 9 (Investment) or Chapter 10 (Cross-Border Trade in Services), that reservation also applies to the corresponding Articles in this Chapter, to the extent that the measure is within the scope of this Chapter. This provision avoids duplication of reservations by the Parties.

Article 11.11 contains the prudential exception to safeguard the right of Parties to adopt or maintain measures for prudential reasons. These include measures to protect investors, depositors, policy holders and persons to whom a fiduciary duty is owed, as well as measures to ensure the integrity and stability of the financial system. Paragraph 2 reaffirms a public entity’s ability to pursue non-discriminatory measures of general application in pursuit of monetary and related credit or exchange rate policies.

Article 11.12 deals with the recognition of prudential measures. Specifically, it sets out the framework under which a Party may recognize a prudential measure of another Party or non-CPTPP country. The recognition of a prudential measure of another Party or non-CPTPP country does not obligate a Party to automatically extend such recognition on a most-favoured-nation basis to the other Parties. However, a Party must provide adequate opportunity for the other Parties to gain the recognition extended to another Party or non-CPTPP country (for example by demonstrating equivalent regulation). Recognition may be accorded autonomously, achieved through harmonisation, or based upon an agreement or other arrangement with another Party or a non-CPTPP country.

Article 11.13 recognizes the importance of promoting regulatory transparency in financial services. Paragraph 2 requires Parties to ensure that measures of general application are administered in a reasonable, objective and impartial manner. Paragraphs 3 to 5 require Parties, to the extent practicable, to publish measures prior to adoption, provide a reasonable opportunity for stakeholders to comment, and allow reasonable time between the publication and entry into force of the measures covered by the Chapter. Paragraph 10 requires a Party’s regulatory authority to make an administrative decision on a complete application and to notify the applicant of its decision within 120 days unless it notifies the applicant without undue delay if it is not practicable to do so.

Article 11.14 requires a Party to ensure that a self-regulatory organization of a Party observes the National Treatment and most-favoured-nation treatment obligations of the Chapter if membership in, participation in, or access to, the self-regulatory organization is required to supply a financial service.

Article 11.15 requires a Party to grant, under terms and conditions that accord national treatment, a financial institution of another Party established in its territory access to payment and clearing systems operated by public entities and to official funding and refinancing facilities available in the normal course of ordinary business. The Article does not confer access to a Party’s lender of last resort facilities.

Article 11.16 recognizes the importance of maintaining and developing regulatory procedures to expedite the offering of insurance services by licensed suppliers.

Article 11.17 recognizes the importance of not imposing arbitrary requirements on the performance of back-office functions of a financial institution in a Party’s territory.

Article 11.18 refers to the specific commitments (portfolio management, transfer of information, supply of insurance by postal insurance entities, electronic payment card services and transparency considerations) made by each Party in Annex 11-B (Specific Commitments). For example, the Parties have made certain individualized commitments to allow portfolio managers in another Party’s territory to provide advice to its asset managers, to permit the cross-border transfer of information for processing, and to allow electronic payment services for payment card transactions to be provided on a cross-border basis.

Article 11.19 establishes the Financial Services Committee, which is key to supervising the implementation of the Chapter, considering issues referred to it by a Party and participating in investor-state dispute settlement as described in Article 11.22 (Investment Disputes in Financial Services). The Committee is to be composed of an official of each Party’s authority responsible for financial services. For Canada, the Committee representative will be an official from the Department of Finance.

Article 11.20 allows a Party to request consultations with another Party on any matter arising under the Agreement that affects financial services. The Party receiving a request is to give it sympathetic consideration. Paragraph 2 establishes procedures for consultations on matters relating to existing non-conforming measures maintained by a Party at the regional level of government.

Article 11.21 provides that Chapter 28 (Dispute Settlement) will apply to the Chapter, subject to certain modifications. In particular, when a dispute arises under the Financial Services Chapter, panellists must meet certain qualifications, including having expertise or experience in financial services law or practice. Paragraph 5 provides that, as necessary, a panel making a determination on the suspension of benefits in the financial sector shall seek the views of financial services experts.

Paragraph 4 clarifies that when a Party invokes Article 11.11 (Exceptions) as a defence in an investor-state dispute, a Party can request a state-to-state panel to make a determination on whether, and to what extent, the invoked exception is a valid defence without having to request consultations under Chapter 28.

Article 11.22 modifies the investor-state dispute settlement process where a Party invokes Article 11.11 (Exceptions) as a defence. It also requires financial services expertise or experience to be taken into account in the appointment of arbitrators when a challenged measure relates to the regulation or supervision of financial institutions, markets or instruments.

When Article 11.11 (Exceptions) is invoked as a defence in investor-state dispute settlement, the financial authorities of the Party of the claimant and of the respondent Party shall attempt to come to a joint determination on whether and to what extent the exception applies. If they do not reach a joint determination within 120 days of the receipt of the respondent’s written request for a determination, either Party can request the establishment of a state-to-state dispute settlement panel to determine whether the exception is a valid defence to the claim. The intent of this provision is to allow the financial authorities of the Parties to be involved in the determination of whether the challenged measure is within the provisions of Article 11.11 (Exceptions), and to the extent an exception applies, to prevent the challenge from going forward.

2. Canadian Legislation

The CPTPP does not require any changes, legislative or otherwise, to Canada’s financial sector regulatory framework.

3. Intended Government Action

The Government will use CPTPP as a means to support the commercial interests of Canadian financial institutions with operations in the CPTPP Parties. This may occur through Canada’s representation on the Financial Services Committee, which provides financial authorities with the opportunity to discuss the functioning of the Agreement as it applies to financial services.

Chapter 12 – Temporary Entry for Business Persons

1. TPP Provisions

Provisions to support the temporary entry of business persons form an integral part of modern trade agreements due to the important role the mobility of highly skilled business people plays in growing businesses and expanding trade. In addition, substantive obligations on temporary entry can facilitate gains in other areas of a FTA, including cross-border trade in services, investment, market access for goods, and government procurement.

Chapter 12 aims at increasing transparency and predictability and includes substantive obligations similar to those undertaken by Canada in several of its existing FTAs. The Chapter also includes Party-specific annexes listing market access commitments and any applicable conditions or limitations. The Chapter includes

On market access, Canada’s commitments are taken on a reciprocal and case-by-case basis, and tailored according to the different types of business persons covered. For Canada, these commitments address specific barriers faced by business persons when seeking entry into other markets. The principle of reciprocity is central to Canada’s approach as it ensures that the access Canada grants to other CPTPP Parties is the same as the access Canada receives from those Parties.

The categories of business persons captured by Canada’s schedule of commitments are

Canada also took reciprocal commitments for the spouses of intra-corporate transferees, investors and highly skilled professionals and technicians.

This Chapter facilitates business visitors seeking to enter Canada, or other CPTPP Parties, by ensuring that they will not require work permits for covered activities, as the purpose of their visit is not to enter the labour market.

For other categories of covered business persons, Canada has committed to provide facilitated access that is free from numerical restrictions or economic needs tests (such as labour market tests) to another Party, only if that Party offers similar treatment. This means that the process of obtaining a work permit for covered business persons will be more predictable, and in some cases, faster and less expensive, which will benefit, for example

The categories of business persons and substantive obligations in this Chapter are consistent with Canada’s traditional approach to temporary entry in trade agreements. For example, Canada’s CPTPP temporary entry provisions do not cover low-skilled jobs. In addition, consistent with Canada’s other trade agreements, the provisions do not include permanent employment, citizenship, residency, or any Canadian visa requirements (as visas are distinct from temporary work authorizations). In the CPTPP, Canada also has knowledge, wage, education and experience requirements for professionals and technicians in order to maintain the integrity of the domestic labour market, including

Professionals and technicians will not be eligible to enter Canada under the CPTPP with the objective of seeking employment. A pre-arranged contract or offer of employment is required prior to applying for a work permit under Canada’s temporary entry commitments.

Article 12.1 defines the key terms used in this Chapter. Notably, this Article defines terms such as “business person,” “temporary entry,” “immigration formality” and “immigration measures.” Canada’s previous FTAs do not define the latter two terms.

Article 12.2 establishes the scope of the obligations in this Chapter. At the same time, in line with Canada’s previous FTAs, Article 12.2 reaffirms that the Parties have a right to apply measures in order to protect the integrity of their territories with respect to physical entry of persons (including with respect to immigration visas) and maintains Canada’s ability to regulate its domestic labour market and general immigration measures, as long as the measures do not undermine the benefits of this Chapter. Finally, it clarifies that the Chapter’s provisions do not apply to measures regarding citizenship, residence, employment on a permanent basis or access to the employment market of a Party.

Article 12.3 sets out disciplines related to the processing of applications, including the commitment to process applications and communicate any decision related to the application as expeditiously as possible, as well as a commitment ensuring that fees for the processing of applications are reasonable.

Article 12.4 sets out the main obligations of the Chapter relating to the granting of temporary entry, with each Party committing to grant temporary entry to business persons of the other Party in accordance with the provisions set out in the Chapter. Article 12.4 also explains that business persons seeking temporary entry must meet the general eligibility requirements for entry. The Article specifies that business persons entering a Party’s territory are not exempt from meeting any applicable licensing or other requirements, including any mandatory codes of conduct, to practice a profession or otherwise engage in business activities. The Chapter finally includes language clarifying that Parties may deny entry to a business person if the entry could adversely affect an ongoing labour dispute.

Article 12.5 outlines certain labour mobility issues that may be explored by Parties in the Asia-Pacific Economic Cooperation context, but does not impose any obligations to do so.

Article 12.6 details the Parties’ commitments related to the provision of information, including the obligation to make explanatory material publicly available regarding the requirements for temporary entry, as well as typical processing times, to enable business persons to better understand the procedures. The Article also includes an obligation on responding to enquiries.

Article 12.7 establishes a Committee composed of government representatives of each Party that is mandated to consider any matter arising under the Chapter, including implementation and future facilitation of labour mobility.

Article 12.8 provides Parties with the opportunity to engage in mutually agreed cooperation activities. Those activities could include activities related to visa-related endeavours and regulatory experiences.

Article 12.9 lists which chapters of the Agreement impose obligations on Parties regarding their immigration measures, and clarifies that the Chapter does not impose obligations or commitments in any other chapter of the Agreement.

Article 12.10 outlines the requirements that must be fulfilled prior to initiating dispute settlement procedures under Chapter 28 (Dispute Settlement) against another Party.

Market Access Annexes 12-A

There are eleven Party-specific annexes to this Chapter, in which each Party outlines their respective market access commitments. Each schedule also includes any conditions and limitations, including the duration of stay, applicable to each category of business persons covered.

Annex 12-A: Canada

Canada’s annex sets out its specific commitments related to the temporary entry of business persons and specifies Canada’s right to maintain or adopt any measure that is not specifically prohibited in the schedule.

Canada’s schedule is divided into four sections covering four categories of business persons:

Section A outlines Canada’s commitments and conditions to grant temporary entry to Business Visitors without requiring a work permit or imposing a numerical restriction. Section A includes a list of covered business activities (e.g. meetings and consultations, sales, general service). Canada’s commitments for Business Visitors are taken on a reciprocal basis.

Section B outlines Canada’s commitments and conditions to grant temporary entry to Intra-Corporate Transferees, including for executives, managers, specialists, and management trainees, without requiring economic needs tests or imposing numerical restrictions. Provisions governing the entry and work authorization of the spouses of Intra-Corporate Transferees are also outlined. Canada’s commitments for Intra-Corporate Transferees and their spouses are taken on a reciprocal basis.

Section C outlines Canada’s commitments and conditions to grant temporary entry to Investors without requiring economic needs tests or imposing numerical restrictions. Provisions governing the entry and work authorization of the spouses of Investors are also outlined. Canada’s commitments for Investors and their spouses are taken on a reciprocal basis.

Section D outlines Canada’s commitments and conditions to grant temporary entry to highly skilled Professionals and Technicians without requiring economic needs tests or imposing numerical restrictions. Provisions governing the entry and work authorization of the spouses of highly skilled Professionals and Technicians are also outlined. Section D also lists, on a Party-by-Party basis, the occupations for which facilitated entry will be granted by Canada. Canada’s commitments for Professionals and Technicians are taken on a reciprocal basis.

2. Canadian Legislation

No amendments to Canadian legislation or regulations arise from Chapter 12.

3. Intended Government Action

Canada’s Immigration and Refugee Protection Regulations provide the authorities required to implement Canada’s commitments in Chapter 12 with regard to the granting of temporary entry for covered categories of business persons.

The Government has published programme delivery instructions to guide immigration officers in the implementation of Chapter 12 commitments, including for exemptions from the requirement to obtain a Labour Market Impact Assessment.

To maintain the integrity of the domestic labour market, professionals and technicians must meet knowledge, wage, education and experience requirements for temporary entry.

Chapter 13 – Telecommunications

1. TPP Provisions

Telecommunications services are an important sector because of the valuable role these services undertake in support of national economies and international trade. Open markets for telecommunications encourage investment, leading to economic development and stimulating innovation and the availability of innovative services. Furthermore, telecommunications services are key inputs into domestic, regional and international trade, making it possible for goods and service providers in virtually every sector of the economy to penetrate local markets or around the globe. They are the backbone of the Internet and electronic commerce, enabling online procurement and the delivery of goods or services through electronic means.

This Chapter seeks to enhance regulatory certainty for telecommunications service suppliers by including disciplines to ensure reasonable and non-discriminatory access to and use of telecommunications services, and that telecommunications regulators act impartially, objectively and in a transparent fashion. In this way, the Telecommunications Chapter supports Canadian telecommunications service suppliers and investors by making the regulatory environment for telecommunications services among CPTPP Parties more predictable and competitive.

Article 13.1 sets out the definitions applicable to this Chapter. Key definitions in the Chapter include “cost-oriented,” “telecommunications,” “public telecommunications service” and “major supplier.”

Article 13.2 establishes the scope of the Chapter as applying to measures relating to access to and use of telecommunications services, obligations regarding suppliers of public telecommunications services and any other measure relating to telecommunications services. This Article also ensures that a Party’s measures affecting the broadcast or cable distribution of radio or television programmes will not be subject to the obligations of the Chapter, other than to ensure continued access to and use of a public telecommunications service and the transparency of technical measures that also affect public telecommunications services. This Article further clarifies that the Chapter does not place any requirements on a Party to establish, construct, acquire, lease, operate or provide a telecommunications network or service that is not offered to the public generally. Moreover, the Chapter does not place any requirements on a Party to compel any enterprise exclusively engaged in the broadcast or cable distribution of radio or television programming to make available its broadcast or cable facilities as a public telecommunications network. Nor does the Chapter prevent a Party from prohibiting a private network from using it to supply a public telecommunications service or to supply third persons.

Article 13.3 recognizes that regulatory needs and approaches differ market by market. The Parties recognize that each Party may determine how to implement its obligations under the Chapter, including through active and direct regulatory oversight of its telecommunications service suppliers or through the reliance on market forces to discipline suppliers in meeting the Chapter obligations. When a Party decides to refrain from applying a regulation, it may do so when it is determined that certain policy objectives will be maintained, including the prevention of unreasonable or discriminatory practices and the protection of consumers, and that forbearance is in the public interest.

Article 13.4 establishes one of the basic obligations of the Chapter, which requires each Party to ensure that enterprises will have access to and use of public telecommunications services in the territory of the CPTPP Parties on reasonable and non-discriminatory terms and conditions. In accordance with Paragraph 5, the Parties are required to ensure that no conditions are to be imposed on access and use of public telecommunications networks and services unless they are necessary to safeguard the public service responsibilities of the public telecommunications network and services operators or to protect the technical integrity of such networks. Under this Article, firms may purchase, lease, or attach private equipment to the public telecommunications network and use these networks to move information within and across the borders of Canada and the other CPTPP Parties. Canada and the other CPTPP Parties may take action to protect the security and confidentiality of telecommunications messages and the privacy of telecommunications users.

Article 13.5 requires Parties to ensure all public telecommunications suppliers in a Party’s territory provide interconnection of its networks to other CPTPP Parties’ suppliers of public telecommunications services. In doing so, the public telecommunications service supplier shall take reasonable measures to protect the confidentiality of any commercially sensitive information it receives as a result of the interconnection arrangements. Paragraph 4 ensures that public telecommunications service suppliers provide number portability to allow customers to retain their telephone number when changing suppliers. The definition of “number portability” circumscribes the commitment to only apply to number portability at the same geographic location and in the same category of services (e.g., wireless to wireless or wireline to wireline). Paragraph 5 ensures that all public telecommunications service suppliers are provided with access to telephone numbers on a non-discriminatory basis.

Article 13.6 provides for the Parties to cooperate on promoting transparent and reasonable rates for international mobile roaming services. If a Party decides to regulate the rates or conditions for wholesale international mobile roaming services, it shall ensure that a foreign mobile service supplier has access to these regulated rates or conditions, provided that there is a bilateral agreement between the two Parties or that the foreign mobile service supplier offers reasonably comparable rates or conditions to the domestic mobile service supplier. Furthermore, the Parties shall share information on retail rates for international mobile roaming services offered to their respective domestic consumers.

Article 13.7 requires each Party to ensure that a major supplier in its territory accords treatment to other suppliers of public telecommunications services in a manner that is no less favourable than the treatment the major supplier provides to its own subsidiaries, affiliates or non-affiliated service suppliers that are in like circumstances. This commitment applies to the provision of telecommunications services, including with respect to rates and quality, as well as the availability of technical interfaces for the interconnection of networks.

Article 13.8 requires the Parties to take appropriate measures to prevent anti-competitive practices by a major telecommunications service supplier that may abuse its dominant position in the market. In particular, such practices may include anti-competitive cross-subsidization, including for the purposes of impeding or preventing a competitor’s entry into, or expansion in, a market; the use of information obtained from competitors, such as through interconnection negotiations, for a competitive advantage; or not making available the necessary technical and commercially relevant information to other service suppliers.

Article 13.9 prevents a Party from prohibiting the resale of any public telecommunications service, and requires the Parties to ensure that a major supplier in its territory offers for resale its public telecommunications services at reasonable rates and on reasonable and non-discriminatory terms and conditions. Paragraph 3 permits a Party to determine which public telecommunications must be offered for resale by the major supplier, based on considerations relating to the promotion of competition or the interests of users.

Article 13.10 requires that the regulatory bodies of the Parties have the authority to require a major supplier to offer access to unbundled network elements it controls to other suppliers of public telecommunications services on reasonable, non-discriminatory and transparent terms and conditions and at cost-oriented rates. The Parties may determine which network elements that are required to be made available by major suppliers and which suppliers that may obtain those elements.

Article 13.11 provides commitments on the interconnection of telecommunications networks to the facilities and equipment of major suppliers to allow the users of one telecommunications service supplier to communicate with the users of another supplier or access services supplied by another supplier. The Article requires each Party to ensure that a public telecommunications service supplier may interconnect its telecommunications network with a major supplier on reasonable and non-discriminatory terms and conditions and at cost-oriented rates that are transparent and sufficiently unbundled.

This Article also requires each Party to ensure that the procedures for interconnection as well as the rates, terms and conditions set by the regulatory body and included in interconnection agreements in effect or a reference interconnection offer are made publicly available. Furthermore, each Party is required to ensure that the major supplier makes available either its interconnection agreements in force or a reference interconnection offer. Each Party must also ensure that suppliers of public telecommunications services of another Party have the opportunity to interconnect their facilities and equipment with those of the major supplier through the negotiation of a new interconnection agreement.

Article 13.12 requires each Party to ensure that a major supplier provides leased circuit services to other service suppliers on reasonable and non-discriminatory terms and conditions that are based on a generally available offer. Furthermore, the Parties shall ensure that its regulatory body has the authority to require major suppliers to offer leased circuit services at cost-oriented rates that are based on network capacity used by the service supplier.

Article 13.13 requires each Party to ensure that a major supplier provides physical or virtual co-location to its premises for the installation, maintenance or repair of equipment necessary for other suppliers of public telecommunications services to interconnect their networks with the major supplier or access unbundled network elements. Each Party is also required to ensure that the terms and conditions offered by the major supplier for co-location are to be reasonable and non-discriminatory and at cost-oriented rates. The Parties may determine which premises are to be offered by the major supplier, based on an analysis of the state of competition in the specific market where co-location is required, whether the premise can be economically or technically substituted, or other specified public interest factors.

Article 13.14 requires each Party to ensure that a major supplier provides a public telecommunications service supplier with access to its poles, ducts, conduits, rights of way or other structures on reasonable, non-discriminatory and transparent terms and conditions. A Party may determine those structures that are to be made available by the major supplier, taking into account the effects on competition when access to structures are not made available to competitors, whether such structures can be substituted in an economically or technically feasible, or other specified public interest factors.

Article 13.15 requires each Party to ensure that a major supplier that controls international submarine cable landing stations provides public telecommunications suppliers with access to the landing station consistent with the provisions of Article 13.11 (Interconnection with Major Suppliers), Article 13.12 (Provisioning and Pricing of Leased Circuits Services by Major Suppliers) and Article 13.13 (Co-Location by Major Suppliers).

Article 13.16 requires a Party’s telecommunications regulatory body to be separate from and not accountable to any public telecommunications service supplier. All decisions and procedures by the regulatory body must be impartial with respect to all market participants, including telecommunications service suppliers and other enterprises that may participate in the market. Furthermore, the Parties will ensure that the regulatory body does not hold a financial interest in a public telecommunications service supplier or provide more favourable treatment to a telecommunications service supplier on the basis that a supplier is owned by a Party.

Article 13.17 permits a Party to define any universal service obligation it wishes to maintain provided that it is administered in a transparent, non-discriminatory and competitively neutral manner, and that the universal service obligation is not more burdensome than necessary.

Article 13.18 provides a commitment that a Party will make publicly available any licensing criteria and procedures it requires to supply a public telecommunications service, including the time it normally requires to reach a decision and the terms and conditions of all licences in effect. Furthermore, the Party will provide an applicant for a licence, upon request, the reasons the Party has denied, revoked, or refused to renew a licence or applied supplier-specific conditions to the licence.

Article 13.19 requires a Party to administer the procedures for the allocation and use of scarce telecommunications resources, including frequencies, numbers and rights-of-way, in an objective, timely, non-discriminatory, and transparent manner. Furthermore, each Party must make the current state of allocated frequency bands publicly available. This Article also clarifies that a Party’s spectrum and frequency management policies, which may limit the number of suppliers of wireless telecommunications services due to the scarcity of spectrum resources, shall not be considered a violation of the market access obligation in Article 10.5 (Market Access), which prohibits a Party from maintaining measures that limit the number of service suppliers in its territory. The Parties will endeavour to rely on open and transparent processes when allocating spectrum resources for commercial use, and rely on market-based approaches, such as spectrum auctions, when assigning the spectrum to wireless services suppliers.

Article 13.20 requires that the CPTPP Parties’ competent authorities for the enforcement of regulations, which may include the telecommunications regulatory body or any other enforcement authority, has the authority to ensure that suppliers of a public telecommunications service, including a major supplier, complies with the Party’s obligations under the Chapter.

Article 13.21 requires the Parties to ensure that enterprises, including telecommunications service suppliers, will have access to a dispute settlement mechanism in a timely manner to resolve disputes with a telecommunications service supplier regarding the substantive obligations covered in Articles 13.4 through 13.15. The regulatory body is required to issue a binding decision to resolve the dispute or provide reasons if it declines to initiate any action to resolve the dispute. In circumstances where the dispute pertains to the interconnection of networks with a major supplier, a public telecommunications services supplier of another Party may, within a reasonable and publicly specified period of time, seek a review by the telecommunications regulatory body to resolve disputes regarding the appropriate terms, conditions and rates. Paragraph 2 prohibits the Parties from allowing an application for judicial review of a regulatory body’s determination or decision to constitute grounds for non-compliance with the regulatory body’s determination or decision, unless otherwise ordered by the judicial body.

Subparagraph 1(d) of Article 13.21 is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 13.22 requires each Party to ensure that its laws, regulations and policies relating to public telecommunications services are made publicly available and that interested parties are given an opportunity to provide input into the development of a proposed regulation.

Article 13.23 prohibits the Parties from preventing public telecommunications service suppliers to have the freedom to determine the technologies it deploys when providing services, subject to legitimate public policy interests, such as the interoperability of the technology with the network. A Party may place conditions for the use of certain technologies when it finances the development of advanced networks.

Article 13.24 provides that the Telecommunications Chapter shall prevail to the extent that any provision under the Chapter is inconsistent with the provisions of another CPTPP Chapter.

Article 13.25 recognizes the importance of international standards for global compatibility and interoperability of telecommunications networks, and commits the Parties to promoting those standards at relevant international organizations.

Article 13.26 establishes a Committee on Telecommunications to review and monitor the implementation and operation of the Chapter, discuss or report on any issue related to the Chapter, or carry out any other function delegated to the Committee. The Committee is not intended to convene on a regular schedule but will meet on an ad hoc basis to address issues as they arise.

Annex 13-B exempts certain rural telecommunications service suppliers and their associated facilities in Peru from the application of the articles pertaining to a major supplier as well as the number portability commitments contained in Article 13.5 Paragraph 4 (Obligations Relating to Suppliers of Public Telecommunications Services — Number Portability).

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 13.

3. Intended Government Action

The Government of Canada will be vigilant in monitoring the CPTPP Parties’ compliance with the obligations of the Chapter. The conditions set out in the Chapter, such as the provisions on access to and use of public telecommunications networks, interconnection and resolution of telecommunications disputes are the kinds of provisions that are already fully captured in the Canadian telecommunications laws and regulations and did not require any further development as a result of the CPTPP.

Chapter 14 – Electronic Commerce

1. TPP Provisions

Electronic commerce forms an integral part of the daily experiences of businesses and consumers throughout the global economy as innovative information technologies, such as cloud computing, eliminate distances between suppliers and their customers. Furthermore, it is an essential component to modern accounting, inventory management, marketing, distribution and sales.

In recognition of the growing importance of electronic commerce in the global economy, as well as the transformative nature of the technology that enables it, Canada and the CPTPP Parties negotiated a stand-alone electronic commerce chapter. This Chapter includes measures to protect personal information and to facilitate cooperation on issues such as electronic signatures, the treatment of spam and the protection from fraudulent and deceptive commercial practices. The Chapter also includes a commitment to maintain the current framework of not applying customs duties on digital products transmitted electronically as a means to further enhance the transparent and predictable regulatory framework of electronic commerce.

Article 14.1 sets out definitions applicable to this Chapter. Key definitions in the Chapter include “computing facilities,” “covered person,” “digital product,” and “electronic transmission.”

Under Article 14.2, Parties define the scope of this Chapter as applying to measures adopted or maintained by a Party that affect trade by electronic means. The Article also specifies that the Chapter does not apply to government procurement, or information that is held or processed by or on behalf of a Party, or any measures relating to such information, including measures relating to its collection. The Article further clarifies that any measure that affects the supply of a service delivered or performed electronically is subject to the obligations contained in the following chapters: Chapter 9 (Investment); Chapter 10 (Cross-Border Trade in Services); and Chapter 11 (Financial Services); and that it is subject to any exceptions or non-conforming measures that are applicable to those obligations.

Article 14.3 prohibits a Party from applying a customs duty on electronic transmissions, including content transmitted electronically. Content transmitted electronically would include, for example, digital products that are downloaded from the Internet, such as a song or software. This commitment only applies to customs duties related to the importation or exportation of content transmitted electronically, and does not apply to an internal tax, fee or other internal charge.

Article 14.4 prohibits CPTPP Parties from discriminating against digital products, such as a song or software, originating from outside of their territory. It does not, however, prevent CPTPP Parties from offering subsidies, grants, loans, guarantees, or insurance for digital products. The Parties also agreed that this obligation does not apply to broadcasting, and that to the extent there is an inconsistency between the rights and obligations in the Intellectual Property Chapter (Chapter 18) and this Article, the Intellectual Property Chapter shall prevail.

Under Article 14.5, Parties agreed to maintain legal frameworks governing electronic transactions that are consistent with the principles of the UNCITRAL Model Law on Electronic Commerce (1996) or the United Nations Convention on the Use of Electronic Communications in International Contracts. Furthermore, Parties agreed under this Article to make efforts to avoid imposing requirements that would create unnecessary regulatory burdens on electronic transactions, and to facilitate input by interested parties when developing their respective legal frameworks for electronic transactions.

With respect to electronic authentication and electronic signatures, Article 14.6 prohibits Parties from denying the legal validity of a signature solely on the basis that the signature is in electronic form, except in circumstances otherwise provided for under their law. The Article also prohibits the Parties from adopting or maintaining any measure for electronic authentication that either prohibits parties to an electronic transaction from deciding on the authentication methods for that transaction, or prevents parties to an electronic transaction from having the opportunity to establish before judicial or administrative authorities that their transaction complies with any legal requirements with respect to authentication. However, the Parties recognize there may be instances under which a Party may seek to ensure that an authentication method meets certain performance standards or is certified for use by an authority accredited under its laws. The Article also encourages the use of interoperable electronic authentication among the Parties.

Article 14.7 relates to online consumer protection, and requires each Party to adopt or maintain consumer protection laws to protect consumers from fraudulent and deceptive commercial activities that could cause harm when engaged in electronic commerce. Furthermore, the Parties recognize the importance of adopting and maintaining such frameworks, and the importance of their respective national consumer protection agencies and other relevant bodies cooperating on activities related to cross-border electronic commerce.

Article 14.8 includes commitments related to the protection of personal information online. The primary commitment of this Article requires each Party to adopt or maintain a legal framework that provides for the protection of personal information for the users of electronic commerce. This commitment is supported by a best practice statement which states that when developing or amending such a framework, Parties should take into account principles and guidelines that are published by relevant international bodies. Furthermore, the Parties agreed to endeavour to adopt non-discriminatory practices when it comes to protecting users of e-commerce from violations of privacy and that they should publish information on the personal information protections it provides to users of e-commerce, including information on how individuals can pursue remedies, and how businesses can comply with domestic legal requirements. Finally, the Article encourages Parties to develop mechanisms which promote compatibility between their respective privacy regimes, recognizing that different legal approaches might be taken to protect personal information.

Under Article 14.9, Parties agreed to endeavour to make trade administration documents available to the public in electronic form and to accept trade administration documents submitted electronically as the legal equivalent of the paper version of those documents.

Under Article 14.10, Parties recognize the benefits to consumers in their territories in having the ability to access and use the online services and applications of their choice, use the device of their choice, and access information about how the network they are using is managed by their Internet service provider (ISPs), referred to in the Article as an Internet access service supplier.

Parties agreed in Article 14.11 to allow for the cross-border transfer of information by electronic means, including personal information, when this activity is for business purposes of a covered person under the Agreement. The Article permits a Party to adopt or maintain domestic measures to achieve a legitimate public policy objective, such as the privacy or security of information, provided that the measure is not arbitrary, a disguised restriction on trade, or unjustifiable discrimination, and does not impose any greater restrictions on the transfer of information than necessary to achieve the policy objective. The exceptions under Paragraph 3 are intended to have the same interpretation as provided under the General Exceptions in Article XIV of the WTO GATS.

In Article 14.12, the Parties recognize that suppliers who are seeking international Internet connection should be allowed to negotiate with Internet providers of another Party on a commercial basis.

Article 14.13 prohibits Parties from requiring that data be stored or processed within its territory, as a condition of doing business there. Similar to Article 14.11, it permits the Parties to adopt domestic measures for legitimate public policy objectives, provided that the measure is not arbitrary, a disguised restriction on trade, or unjustifiable discrimination, and does not impose any greater restrictions on the transfer of information than are required to achieve these objectives. The exceptions under Paragraph 3 are intended to have the same interpretation as provided under the General Exceptions in Article XIV of GATS.

Article 14.14 addresses spam, or unsolicited commercial electronic messages. This Article requires the Parties to adopt or maintain measures to ensure that those who send unsolicited commercial electronic messages facilitate the ability of recipients to be able to prevent receiving future messages, require recipients’ consent to receive spam messages, or otherwise provide for the minimization of spam messages. Furthermore, under this Article, Parties have agreed to provide recourse against senders of spam messages who fail to comply with the domestic measures that are adopted or maintained by the Party.

Under Article 14.15 Parties have agreed to cooperate in a number of areas related to electronic commerce. These include, inter alia, working together to assist small and medium-sized enterprises in overcoming obstacles related to electronic commerce; exchanging information and experiences on measures related to consumer protection and personal information protection; and encouraging the development of private sector methods of self-regulation in relation to e-commerce issues.

A more specific cooperation provision is included under Article 14.16 (Cooperation on Cybersecurity Matters). Under this Article, Parties recognize the importance of building the capabilities of their respective national entities that are responsible for cybersecurity, as well as using existing collaboration mechanisms to identify and mitigate cybersecurity threats.

Article 14.17 prohibits the Parties from requiring the disclosure of source code of software owned by a person of another Party, as a condition for the import, distribution, sale, or use of such software, or of products containing such software, in its territory. This commitment only applies to mass market software and does not apply to software used in critical infrastructure. The Parties have also clarified that the Article does not prevent companies from requiring the disclosure of source code in commercial contracts or prevent a Party from requiring source codes to be modified to ensure compliance with laws or regulations that do not contravene the commitments of the Agreement. Furthermore, Parties have clarified within the Article that this commitment should not be understood to impact requirements relating to patents, including any orders issued by a judicial authority relating to patent disputes.

Article 14.18 provides Malaysia and Vietnam with a two-year moratorium from the application of dispute settlement under the Agreement with respect to their commitments under Article 14.4 (Non-Discriminatory Treatment of Digital Products), Article 14.11 (Cross- Border Transfer of Information by Electronic Means) and, for Vietnam, Article 14.13 (Location of Computing Facilities). The moratorium only applies to existing measures at the time of entry into force of the Agreement. Following entry into force, Malaysia and Vietnam’s measures are expected to conform to the obligations under these Articles. Furthermore, Canada and Vietnam agreed, pursuant to a side letter to the Agreement, that Vietnam’s cybersecurity measures would have a five-year moratorium from the application of dispute settlement with respect to its commitments under Article 14.11 (Cross-Border Transfer of Information by Electronic Means) and Article 14.13 (Location of Computing Facilities). This moratorium applies to both existing and future cybersecurity measures.

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 14.

3. Intended Government Action

The Government of Canada will be vigilant in monitoring the CPTPP Parties’ compliance with the obligations of the Chapter. The provisions on electronic commerce do not require further action on the part of the Government. The conditions set out in the Chapter, such as the provisions on domestic electronic transactions frameworks, cross-border information transfers, and personal information protection, are the kinds of provisions that are already fully captured under Canada’s domestic laws and regulations, and did not require any further development as a result of the CPTPP.

Chapter 15 – Government Procurement

1. TPP Provisions

Government procurement refers to the purchase of goods and services by a government from private-sector suppliers. This represents a very significant market, as the Organisation for Economic Co-operation and Development (OECD) and the WTO both estimate that government purchases represent approximately 15% of a country’s GDP.

The Chapter on Government Procurement provides significant commercial opportunities for Canadian businesses, which will benefit from updated and expanded market access with existing trading partners, as well as new government procurement opportunities in Australia, Brunei, Malaysia and Vietnam. Canadian businesses across all sectors will be able to compete equally with domestic suppliers in these markets for government procurement contracts involving covered goods, services and construction services.

In addition to the Canadian federal government, all Canadian provinces and territories have taken commitments on government procurement in the TPP. These are comparable to the coverage provinces and territories have offered in the context of the WTO Agreement on Government Procurement (GPA).

Article 15.1 provides general definitions applicable to this Chapter.

Article 15.2 sets out the scope and coverage of the Chapter. In particular, it sets out what procurement is covered and in doing so, focuses on the coverage set out in the market access schedules (i.e. annexes) of the Parties (see below). This Article identifies a number of activities not covered by this Chapter, including public employment contracts or procurements taking place and for consumption outside of the territories of the Parties. Article 15.2 also sets out rules governing the value of procurements to ensure that obligations under the Chapter are not unfairly avoided. Finally, Article 15.2 clarifies that nothing in this Chapter should be interpreted as preventing Parties from developing new procurement policies or procedures, as long as they are not inconsistent with the Chapter.

Article 15.3 provides general exceptions to the coverage of the Chapter to ensure that Parties are not prevented from adopting measures to protect, among other things, public safety, the environment or intellectual property. These exceptions are consistent with Canada’s other trade agreements, including the GPA and the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

Article 15.4 sets out a number of general principles that apply to covered procurement. The national treatment and non-discrimination principles require Parties and their procuring entities to treat the goods, services and suppliers of any other Party no less favourably than they treat their own goods, services and suppliers. These principles also prohibit Parties and procuring entities from treating suppliers less favourably than others based on their degree of foreign affiliation or ownership, as well as from discriminating against local suppliers on the basis that the goods or services they offer are those of another Party. Such rules promote public accountability and give suppliers the confidence that the procurement process will be conducted fairly.

This Article requires that procuring entities use an open tendering procedure for covered procurements, unless provisions contained in Article 15.9 or 15.10 apply (see below). This Article also states that Parties will seek to make information on covered procurements accessible by electronic means, and that when that is the case, they will use generally available information technology systems and ensure the integrity of information provided by suppliers.

The general principles of Article 15.4 also aim to prevent Parties from imposing rules of origin to goods and services for covered procurements that are different from those used in the normal course of trade. The Article also prevents Parties from seeking, imposing or enforcing any offset, i.e. any condition or undertaking that requires, for instance, the use of domestic content.

Article 15.5 allows a developing country CPTPP Party to adopt transitional measures in the area of government procurement. These transitional measures are specific to each developing country Party and are set out in their market access schedules (see Section J of the Schedules — three countries have adopted transitional measures — Brunei, Malaysia and Vietnam). They must be applied in a manner that does not discriminate between the other Parties. Acceptable transitional measures may include, among others, preferential price programmes for goods or services originating in the developing country Party; a transitional threshold for covered goods or services that is higher than the permanent threshold; or the delayed application of certain obligations of the Government Procurement Chapter for a period no longer than that which is necessary to effectively implement these obligations.

Article 15.5 also stipulates that, after this Chapter has entered into force, a developing country Party may ask the other Parties to extend the transition period for any measure adopted according to this Article, or to approve new transitional measures in special unforeseen circumstances. At the same time, Article 15.5 requires developing country Parties who have adopted transitional measures to take the necessary steps to ensure their compliance with the Chapter at the end of their transition period, and to inform the other Parties of these steps. Each Party also commits to giving consideration to any request by a developing country Party for technical cooperation and capacity building in relation to the developing country Party’s implementation of this Chapter.

Article 15.6 is a key transparency provision. It obliges Parties to publish information on any new or modified measures related to covered procurement. Such measures may include, for instance, laws, regulations, judicial decisions and administrative rulings. For added transparency, Parties are required to also indicate in their market access schedules the paper or electronic means through which this information will be published, and to respond to any inquiry relating to this information.

Article 15.7 is another key transparency provision. It requires that procuring entities publish notices of intended procurement (information on covered procurement opportunities), except in cases of limited tendering as set out in Article 15.10 (see below). These notices of intended procurement must be readily accessible to the public, through paper or electronic means. If available through electronic means, notices must be accessible free of charge and through a single point of access (for central government procurements), or through links in a single electronic portal (for all other entities covered). This Article also describes the type of information that must be included in a notice of intended procurement, and encourages Parties to publish their notices in English. Under this Article, procuring entities are also encouraged to publish information regarding their future procurement plans for the following fiscal year (called notices of planned procurement).

Article 15.8 allows for the imposition of conditions for the participation of suppliers in a covered procurement, but ensures that these are not used to discriminate against suppliers of another Party. For example, the procuring entities of a Party cannot require prior experience in the territory of that Party to be a condition of the procurement. In addition, any condition for participation must be limited to those that ensure that a supplier has the ability and capacity to undertake the procurement. Article 15.8 also specifies a number of grounds for which a Party may exclude a supplier, for instance bankruptcy, false declarations or failure to pay taxes. Paragraph 5 of Article 15.8 is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions.

Article 15.9 allows Parties and procuring entities to maintain supplier registration systems in order to more efficiently complete procurement processes, provided that they do not create unnecessary obstacles or discriminate against suppliers of another Party. This Article also enables Parties and procuring entities to maintain a multi-use list of suppliers that a procuring entity has determined satisfy the conditions for participation in that list. Multi-use lists are, however, subject to certain conditions, for instance a requirement to, at a minimum, publish an annual notice inviting interested suppliers to apply for inclusion on the list, and including on the list all suppliers that satisfy the conditions for participation set out in this notice. Suppliers must be promptly informed of decisions or changes regarding their inclusion on a multi-use list. Finally, Article 15.9 also prescribes conditions regarding the use of selective tendering (i.e. inviting only qualified suppliers to submit a tender for a procurement), in order to ensure that these processes are carried out transparently and impartially.

Article 15.10 allows procuring entities to use limited tendering, whereby the procuring entity does not follow the normal procurement procedures and limits the number of suppliers to one or more suppliers of its choice. Limited tendering must not be used to avoid competition between suppliers or discriminate against suppliers of another Party, and is only allowed under certain circumstances. These include cases where no suppliers satisfied the conditions for participation; cases where patents, copyrights or other exclusive rights must be protected; purchases made under exceptionally advantageous conditions, such as those arising from liquidation, receivership or bankruptcy; and for reasons of extreme urgency where the procurement could not be obtained in time through an open or selective tendering process.

Article 15.11 confirms that procuring entities may conduct negotiations with suppliers as part of procurement processes, provided that the procuring entities indicate their intent to do so in the notice of intended procurement, and that negotiations be carried out in accordance with the evaluation criteria set out in that notice.

Article 15.12 states that the Parties, including their procuring entities, may prepare, adopt or apply technical specifications for the goods or services being procured, as long as these are not used to create an obstacle to trade between the Parties. In addition, this Article sets out certain rules regarding technical specifications, including, among others, when possible, using recognized international standards to set technical specifications; refraining from requiring or referring to a particular trademark, patent, copyright, design, producer or supplier; and refraining from seeking or accepting advice on technical specifications from a person that may have a commercial interest in the procurement. These rules are not intended to preclude a procuring entity from applying technical specifications to promote the conservation of natural resources, protect the environment, or to protect sensitive government information.

Article 15.13 identifies the information (tender documentation) that procuring entities must provide in order to ensure that suppliers are able to prepare and submit tenders. This includes a description of the nature and quantity of goods or services being procured, any conditions for the participation of suppliers, and the evaluation criteria that will be used to select a supplier. If a procuring entity modifies the evaluation criteria or requirements set out in a notice of intended procurement or in the tender documentation, it must provide the new information to suppliers participating in the procurement and give them proper time to modify or re-submit their initial tender.

Article 15.14 aims to ensure that procuring entities provide suppliers with sufficient time to prepare and submit requests for participation and responsive tenders, taking into account such factors as the nature and complexity of the procurement. The regular time period between a notice of intended procurement and the final date for the submission of tenders shall be no shorter than 40 days, unless the procurement meets certain conditions included in this Article, for instance if a notice of planned procurement was previously published, or if a state of urgency exists. However, time periods for tendering should never be shorter than 10 days.

Article 15.15 ensures that procuring entities treat all tenders fairly and impartially. For example, unless a procuring entity determines that it is not in the public interest to award a contract, it must award a contract to the supplier that is capable of fulfilling the contract and has submitted the most advantageous tender (or, if price is the sole criterion, the tender with the lowest price). It also provides that a procuring entity shall not use options, cancel a covered procurement or modify or terminate an awarded contract to avoid the obligations of this Chapter.

Article 15.16 places requirements on procuring entities in order to ensure the transparency of procurement award information. For example, procuring entities must notify participating suppliers of contract award decisions and, upon request, provide an explanation to an unsuccessful supplier of the reasons why their tender was not selected. In addition, procuring entities must publish notices providing information on awarded procurements, such as the name and address of the successful suppliers, and the value of the contracts awarded.

Article 15.17 allows a CPTPP Party to request and obtain information from another Party in order to determine whether a procurement was conducted fairly, impartially and in accordance with the Chapter. Article 15.17 however includes safeguards to prevent the disclosure of confidential information, and ensure that any information that could prejudice fair competition between suppliers in future tenders is not disclosed without the written consent of the supplier that provided the information. This Article further confirms that Parties are not required to disclose confidential information where, among other instances, such disclosure would be contrary to the public interest or where it would impede law enforcement.

Article 15.18 requires Parties to ensure that they have the proper criminal or administrative measures in place to address corruption in government procurement, as well as the proper policies and measures to deal with conflicts of interest related to procurements.

Article 15.19 requires Parties to designate an impartial and independent administrative or judicial authority (review authority) to allow suppliers to challenge any procurement decision that they believe runs contrary to the obligations of this Chapter. Article 15.19 describes certain rules that review authorities must follow, including for instance providing sufficient time to suppliers to prepare and submit a complaint and providing an explanation of decisions in a timely manner and in writing. The Article further requires Parties to have procedures in place that provide for prompt interim measures to preserve the supplier’s opportunity to participate in the procurement, and, in cases where a review body determines that there has been a breach of the Chapter, measures that provide for corrective action or compensation for the loss or damages suffered.

Article 15.20 allows CPTPP Parties to modify their schedules (annexes) to this Chapter, which contain their market access commitments. Parties that modify their market access commitments must provide compensatory adjustments, if necessary, in order to maintain a comparable level of coverage. Parties are not required to provide compensation if the proposed modifications are minor or if they relate to a procuring entity for which a Party to the agreement has relinquished its control or influence. Article 15.20 allows Parties to raise objections to any proposed modification, but the emphasis is on seeking to resolve any objections through consultations.

Article 15.21 recognizes that small and medium-sized enterprises (SMEs) play an important role for economic growth and employment. Therefore, Article 15.21 prescribes measures to facilitate the participation by SMEs in covered procurement, including efforts to provide tender documentation free of charge, to conduct procurement by electronic means, and to consider the size, design and structure of the procurement, including the use of subcontracting by SMEs.

Article 15.22 encourages Parties to cooperate in certain key areas to promote the liberalization of their government procurement markets. These areas include, among others, exchanging experience and information on regulatory frameworks; expanding the use of electronic procurement; capability building; and institutional strengthening.

Article 15.23 establishes a Committee on Government Procurement which will meet at the request of the Parties to address matters related to the implementation and operation of this Chapter, including discussing transitional measures.

Article 15.24 provides that Parties will undertake further negotiations with a view to achieving expanded coverage for the Chapter. This Article also provides for future consideration of possibly extending sub-central coverage. The time period in which this may occur was adjusted under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Annex 15-A: Parties’ Schedules

The schedules (annexes) adopted by each CPTPP Party set out the entities that the Parties have agreed will be subject to the procedural rules and obligations of the Chapter, including at the central and sub-central government level, where applicable. The schedules also set out the applicable contract-value thresholds for each type of entity (in other words, the value at which point the obligations of this Chapter are triggered). Other sections of the schedules list the goods, services and construction services procured by covered entities to which the Chapter applies, as well as certain general notes, the formula used to adjust thresholds, the means of publication of procurement information, and, if applicable, transitional measures regarding the application of this Chapter and a Party’s schedules.

Section A – Central Governments

In Section A, Parties identify the central government entities whose procurements are covered by this Chapter, as well as the relevant thresholds that apply to them (see Chapter 15 Section H [Threshold Adjustment Formula]). In Section A, Parties also identify specific notes and exceptions related to central government coverage, for instance whether subordinate entities are also covered, and limitations on certain types of procurement (for example, defence procurements). Canada’s Section A thresholds are the same as the GPA and CETA, and the list of covered entities is also similar, including most federal departments and agencies.

Section B – Sub-central Governments

In Section B, Parties identify the sub-central government entities whose procurements are covered by this Chapter and the thresholds that apply to them. For Canada, thresholds and coverage are similar to the GPA. Covered entities include specified departments and agencies in each one of the provinces and territories. Municipalities and their services are not covered. For provincial and territorial covered entities, certain exceptions apply, including for programmes promoting the developing of distressed areas and for procurements intended to contribute to economic development in certain provinces and territories. Canada’s Section B commitments do not apply to Malaysia, Mexico or Vietnam, who did not provide coverage of their sub-central government entities as part of their market access schedules.

Section C – Other Entities

In Section C, Parties identify other entities whose procurements are covered by this Chapter and the thresholds that apply to them. For Canada, this includes specified federal Crown corporations, at thresholds that mirror the GPA and CETA. Provincial Crown corporations are not included. All other Parties have also taken commitments for other entities.

Section D – Goods

In Section D, Parties identify the goods which are covered by this Chapter, when procured by covered entities listed in Sections A–C. For all Parties, this includes generally all goods, subject to the provisions of the Chapter. For reasons of national security, some countries — including Canada, Japan and Mexico — have specified that for certain entities with responsibilities related to safety and security (for instance the Department of Defence), only the procurement of specified goods is covered by the Agreement.

Section E – Services

In Section E, Parties list the services that are covered by this Chapter, when procured by covered entities listed in Sections A–C. Canada, like Japan, Malaysia, Singapore and Vietnam, bases its lists on the United Nations Provisional Central Product Classification. Canada’s Section E distinguishes between services covered for central government and federal Crown corporation procurements, and services covered for sub-central government procurements. Canada’s Section E also includes a number of exceptions, notably public utilities services, shipbuilding and repair, and services related to cultural industries.

Section F – Construction Services

In Section F, Parties identify the construction services that are covered by this Chapter, when procured by covered entities listed in Sections A–C. For all Parties, this generally includes all construction services, subject to the provisions of the Chapter. Canada’s Section F also specifies that the Chapter does not cover procurement for dredging services and construction services procured by the federal Department of Transport.

Section G – General Notes

In Section G, Parties outline general notes that provide important qualifications to the scope of the Chapter. Canada’s general notes exclude certain goods and services from coverage under the Chapter, such as shipbuilding and repair services, set-asides to benefit micro, small and medium enterprises, and measures adopted or maintained with respect to Aboriginal peoples.

Section H – Threshold Adjustment Formula

In Section H, Parties set out the specific formula to be used to convert thresholds expressed into Special Drawing Rights (SDRs) into their domestic currency. Parties also indicate the frequency at which they will adjust and publish their thresholds. Except for Mexico, who does not base its thresholds on SDRs, all Parties have adopted similar threshold adjustment formulas. For Canada, thresholds will be adjusted every even-numbered year. Their value in Canadian dollars will be based on the average of the daily values of the Canadian dollar in terms of SDRs over the two-year period preceding the year where adjusted thresholds are to take effect.

Section I – Procurement Information

In Section I, Parties indicate where they will publish information related to covered procurements. For Canada, this will be on the Canadian Government Tender System, as well as on the Government’s legislation and regulations website.

Section J – Transitional Measures

As discussed under Article 15.5 above, in Section J, developing countries Parties may list any transitional measures regarding their application of this Chapter. Only Brunei, Malaysia and Vietnam have adopted transitional measures under this Section.

2. Canadian Legislation

Consistent with Canada’s other FTAs, the Canadian International Trade Tribunal Procurement Inquiry Regulations will be amended to give the Canadian International Trade Tribunal jurisdiction over bid challenges taken under this Chapter.

Further, the Financial Administration Act will be amended to enable the federal government to implement its commitments with respect to the procurements undertaken by Crown corporations listed under Section C of Annex 15-A: Schedule of Canada.

3. Intended Government Action

Canada has already adopted rules in regard to its procurement activities that reflect the principles and obligations contained in the CPTPP — including in relation to non-discrimination, impartiality and transparency — in a number of its trade agreements, including the GPA.

The Treasury Board of Canada Secretariat has published a Contracting Policy Notice for the heads of federal departments and agencies, to ensure understanding and compliance with Canada’s obligations with regard to the Chapter on Government Procurement of the CPTPP. In addition, the Canadian Government will continue to work closely with Canadian businesses and with provincial and territorial governments to ensure understanding of Canada’s commitments.

Chapter 16 – Competition Policy

1. TPP Provisions

Recognizing that anticompetitive business conduct has the potential to distort the proper functioning of markets and could undermine the benefits of trade liberalization, this Chapter contains competition policy provisions.

Article 16.1 requires the Parties to maintain both competition laws that prohibit anticompetitive business conduct and authorities responsible for the enforcement of those competition laws, with the goal of promoting economic efficiency and consumer welfare. The competition laws should apply to all commercial activities, but exemptions from that law are permitted providing they are transparent and based on public policy or public interest grounds. The Parties’ enforcement policies cannot discriminate on the basis of nationality.

Article 16.2 requires the Parties to adhere to procedural fairness principles in the administration and enforcement of their competition laws.

Article 16.3 encourages the Parties to maintain laws or other measures that allow for private rights of action. This enables a person to seek redress from a court or tribunal for injury to that person’s business or property caused by a violation of competition laws. This can follow a competition law investigation or be brought independently.

Article 16.4 recognizes the importance of cooperation and coordination between competition authorities, and requires the Parties to cooperate in competition law enforcement and policy. The competition authorities can further their cooperation by establishing cooperation arrangements.

Article 16.5 furthers this cooperation by encouraging the Parties to engage in technical cooperation through training, information exchange, and assisting in the implementation of new competition laws.

Article 16.6 recognizes the importance of consumer protection in creating efficient and competitive markets, and enhancing consumer welfare. Parties are required to maintain consumer protection laws or other laws that proscribe fraudulent and deceptive commercial activities. Parties are encouraged to cooperate and coordinate in this area.

Article 16.7 reflects the principle of transparency in competition law enforcement, including setting out final decisions of violations of competition law in writing. This Article also requires the Parties to be transparent with each other and share public information on enforcement policies and practices.

Article 16.8 requires the Parties to enter into consultations to address specific issues that may arise under the Chapter.

Article 16.9 provides that Chapter 16 is not subject to dispute settlement.

The Chapter also contains an Annex specific to Brunei, which has an extended period of time to implement the provisions in this Chapter.

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 16.

3. Intended Government Action

Competition laws and policies are necessary to ensure that the benefits of trade liberalization are not offset by anticompetitive business conduct. For example, competition law helps to ensure that cartels do not block market access gained through the trade agreement. In order to maximize the benefits of trade under the Agreement, the Government of Canada will continue to cooperate with the CPTPP Parties to ensure effective enforcement of Parties’ respective competition laws.

Chapter 17 – State-Owned Enterprises and Designated Monopolies

1. TPP Provisions

This Chapter has new rules to address the role of state-owned enterprises in global trade while upholding Canada’s ability to use Crown corporations to serve the public interest.

Canada’s concern with state-owned enterprises stems not from their existence, but rather from their economic performance and the effect this can have on international trade. For example, state-owned enterprises may enjoy privileges and immunities not available to private firms, thereby giving them an undue competitive advantage over their rivals. Such entities also have the potential to distort trade by discriminating between different country markets and providing more favourable treatment for domestic goods and services. With these concerns in mind, CPTPP seeks to ensure that Canadian companies can compete with foreign firms on a level playing field.

The following Article 17.1 definitions apply for the purposes of the Chapter:

Article 17.13 Paragraph 5, together with Annex 17-A, excludes entities below a certain size, which means that only larger state-owned enterprises are subject to the rules. The threshold initially excludes entities with annual revenue from commercial activities below Can$360 million, to be adjusted at three-year intervals. The threshold is expressed in SDR, a monetary unit set by the International Monetary Fund. The conversion to Canadian dollars will change periodically with currency fluctuations.

Article 17.2 sets out the scope of the Chapter, stating it applies to activities of state-owned enterprises and designated monopolies of a Party that affect trade or investment between the CPTPP Parties. It also declares that the Chapter does not apply to

The CPTPP does not seek to privatize state-owned enterprises, or prevent the establishment of new ones. Article 17.2 Paragraph 9 affirms the ability of a Party to establish or maintain a state enterprise (as defined in Article 1.3) or a state-owned enterprise, and to designate a monopoly. Furthermore, the rules in Articles 17.4, 17.6, and 17.10 do not apply to services supplied in the exercise of governmental authority (e.g., in fields such as health and public education).

Under Article 17.3, each Party is to ensure that its state-owned enterprises, state enterprises, and designated monopolies act in accordance with the CPTPP whenever the entity has been granted regulatory, administrative, or other governmental authority. These are powers that firms could not ordinarily exercise in the absence of a specific act of delegation by government, such as authority to grant import or export licences, approve commercial transactions, or impose quotas, fees, or other charges.

Article 17.4 requires each Party to ensure that its state-owned enterprises act in accordance with commercial considerations in the free trade area — including factors such as price, quality, and availability — when a state-owned enterprise engages in commercial activities. For instance, a state-owned enterprise should generally take economic (rather than policy) considerations into account when selecting business partners and awarding contracts. However, the Article does not oblige a state-owned enterprise to conduct itself exactly like a private company. The requirement to act in accordance with commercial considerations does not apply when the state-owned enterprise undertakes activities on a cost-recovery or not-for-profit basis, or when the state-owned enterprise provides a public service pursuant to a government mandate in a non-discriminatory manner. Similarly, each Party is to ensure that its designated monopolies act in accordance with commercial considerations when buying or selling goods or services, except when the designated monopoly is fulfilling the terms of its designation.

This Article also requires each Party to ensure that a state-owned enterprise, when purchasing a good or a service in the free trade area, does not discriminate against goods or services sold by an enterprise of another Party. Similarly, when a state-owned enterprise sells a good or a service, a Party is to ensure that the state-owned enterprise does not discriminate against another Party’s companies. The rule in Article 17.4 Paragraph 1 only applies when the state-owned enterprise is engaging in commercial activities. Similar rules apply for a designated monopoly when buying or selling a monopoly good or service. For instance, a postal service operator that is a designated monopoly may not charge, for the same letter delivery service, higher prices to firms of another Party than those charged to domestic firms. Article 17.2 Paragraph 11 makes it clear that these non-discriminatory treatment obligations do not undercut Canada’s reservations for non-conforming measures from Chapter 9 (Investment), Chapter 10 (Cross-Border Trade in Services), and Chapter 11 (Financial Services), including those relating to social services and minority or aboriginal affairs.

Article 17.4 Paragraph 3 provides that a state-owned enterprise or a designated monopoly is not precluded from purchasing or selling goods or services on different terms and conditions (including those related to price), or refusing to purchase or sell goods or services. However, such differential treatment or refusal must accord with commercial considerations. For example, a designated monopoly may impose differential markups on imported goods to the extent these correspond to the higher costs associated with the distribution of those goods.

Finally, each Party is to ensure that each of its designated monopolies does not use its monopoly position to engage in anticompetitive practices that negatively affect trade and investment between the Parties in a non-monopolized market in its territory (for example, through anti-competitive agreements and abuse of dominant position).

Article 17.5 Paragraph 1 requires each Party to provide its courts with jurisdiction over the commercial activities of an enterprise that is owned or controlled through ownership interests by a foreign government based within a Party’s territory. However, this requirement only exists if a Party provides jurisdiction over similar claims against firms that are not owned or controlled through ownership interests by a foreign government. At the same time, Paragraph 2 requires each Party to ensure that administrative bodies regulating both state-owned and private firms do so in an impartial manner and do not use their regulatory authority to provide preferential treatment to their state-owned enterprises.

Article 17.6 addresses a concern with the potential distorting effect of government assistance granted exclusively or predominately to state-owned enterprises. The Article prohibits a Party from causing adverse effects to the interests of another Party, or from causing injury to a domestic industry of another Party, through the use of non-commercial assistance that it provides — either directly by the government or indirectly through another entity — to a state-owned enterprise “by virtue” of that company’s government ownership or control. Under Article 17.1, “non-commercial assistance” means the direct transfer or potential transfer of funds (such as grants, financing on terms that are better than those commercially available, or equity capital inconsistent with usual investment practice) and the provision of goods or services other than general infrastructure on terms that are better than those commercially available.

Article 17.6 includes the following obligations:

Importantly, the Article excludes government support provided to a state-owned enterprise for services supplied in its own territory. The exclusion also preserves policy space for future governments to establish new Crown corporations to provide services within Canada.

Articles 17.7 and 17.8 define the terms “adverse effects” and “injury,” respectively.

Article 17.7 provides that “adverse effects” include displacing or impeding a competitor’s goods or services from a market (involving a significant change in relative shares of the market to the disadvantage of the like good or like service); the significant undercutting of a competitor’s prices; or significant price suppression, price depression, or lost sales. Adverse effects are deemed by Paragraph 6 not to arise from a Party’s initial capitalization of a state-owned enterprise or a Party’s acquisition of a controlling interest in a private company (so that it becomes a state-owned enterprise) that principally supplies services within the Party’s territory.

Article 17.8 states that “injury” means material injury or threat of material injury to a domestic industry or material retardation of the establishment of an industry. A determination of material injury may involve an examination of the volume of production by the covered investment that has received non-commercial assistance and its impact on the domestic industry producing the like good. A threat of material injury determination is subject to a high threshold and cannot be based on mere allegations.

Article 17.9 permits each Party to list their specific exceptions to certain provisions of the Chapter in Annex IV (State-Owned Enterprises and Designated Monopolies — Non-Conforming Activities) and Annex 17-D. These exceptions may include information on the relevant entity, the nature of its activities that may not conform to the Chapter, and any relevant government measures.

Article 17.10 requires each Party to provide the other Parties or otherwise publish a list of its state-owned enterprises and information on the expansion or new designation of a monopoly. On request from another Party, a Party will provide further information about policies or programmes which allow for the provision of non-commercial assistance that could affect trade and investment between the Parties. This includes, for example, information on the form of non-commercial assistance provided, the names of the organizations providing it, the legal basis, the policy objective pursued, and the duration of the policy or programme. Other information to be provided will vary depending on the type of non-commercial assistance at issue. Paragraph 9 and Article 29.7 (Exceptions and General Provisions) have protections for confidential and commercially sensitive information. In Canada, the Financial Administration Act (R.S.C., 1985, c. F-11) outlines the legal framework for the accountability of publicly owned federal organizations.

Articles 17.11 and 17.12 provide opportunities for the Parties to exchange information and views on improving the governance and operation of state-owned enterprises, and to promote the principles underlying the Chapter.

In addition to the exceptions noted above, Article 17.13 has a number of exceptions that preserve policy flexibility for governments.

With respect to the rules to act in accordance with commercial considerations and to provide non-discriminatory treatment, a Party may

With respect to the rule not to cause adverse effects or injury to the interests of another Party through the provision of non-commercial assistance, a Party may

The general and security exceptions in Chapter 29 (Exceptions and General Provisions) also apply. For example, Article 29.1 incorporates the GATT Article XX and GATS Article XIV exceptions into CPTPP for the purposes of certain chapters, including Chapter 17.

Chapter 17 includes six annexes that provide further details on certain Articles in the Chapter. Some of the annexes apply to all of the Parties. Annex 17-E is specific to Singapore, while Annex 17-F is specific to Malaysia.

Article 17.14 together with Annex 17-C obliges the Parties to conduct further negotiations on possibly extending the application of the rules in the Chapter to the activities of state-owned enterprises and designated monopolies at the sub-federal levels of government, and to address effects caused in a market of a non-Party through the supply of services by a Party’s state-owned enterprise that has received non-commercial assistance.

Article 17.15 establishes the scope of application of Annex 17-B. Annex 17-B sets out a process that Parties (and a panel if one has been established) must follow in the event of a dispute under Article 17.4 or Article 17.6 in order to obtain information relevant to the claims that is not otherwise readily available.

Consistent with Article 17.9, Canada has listed in Annex 17-D the following rules that do not apply to state-owned enterprises or designated monopolies at the provincial, territorial, or local levels of government:

Consistent with Article 17.9, each Party has set out in its Schedule to Annex IV (State-Owned Enterprises and Designated Monopolies — Non-Conforming Measures) a series of reservations specific to its situation and sensitivities. Canada has reservations for the following:

2. Canadian Legislation

Section 16 of the CPTPP Implementation Act amends the Financial Administration Act by adding CPTPP to Schedule VII, which lists the free trade agreements subject to Section 89.7 of the Financial Administration Act. Section 89.7 permits the Governor in Council to issue a directive to any parent Crown corporation for the purpose of implementing a provision of the CPTPP.

3. Intended Government Action

The Government will work closely with the provinces and territories to ensure that designated monopolies and state-owned enterprises in the free trade area will accord non-discriminatory treatment to the investments, goods, and services suppliers of the other Parties.

Chapter 18 – Intellectual Property

1. TPP Provisions

Intellectual property (IP) rights are the rights given to persons over the creations of the mind, which can include inventions (which can be protected by patents); literary and artistic works (which can be protected by copyright); designs (which can be protected by industrial design rights); symbols, names, and images used in commerce (which can be protected by trademarks); geographical indications (GIs); undisclosed test or other data (such as in respect of agricultural chemical products); and trade secrets. Almost all businesses have some form of IP, whether it is a brand, creation, design, trade secret, or an invention.

IP is also an increasingly important aspect of international trade agreements, providing Canadian businesses, exporters, entrepreneurs, and investors with a predictable and transparent framework of rules in those markets where they do business. The CPTPP contains a comprehensive Chapter on IP, and establishes a transparent and predictable standard for the protection and enforcement of IP rights in the Asia-Pacific region. This will give Canadians confidence that they will encounter a consistent minimum standard of rules across all CPTPP markets.

This Chapter includes provisions in almost all categories of IP rights protection and enforcement such as trademarks, GIs, industrial designs, copyright and related rights, patents, pharmaceutical IP protection, data protection for agricultural chemical products, trade secrets, and civil, criminal, and border enforcement. As these categories are dealt with in separate sections in the Chapter, this summary also separates them out, along with any legislative action related to a category. The Chapter also builds on several existing international IP agreements, such as the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), and certain treaties administered by the World Intellectual Property Organization (WIPO).

Section A: General Provisions

Article 18.1 contains a list of definitions of terms used throughout this Chapter. This Article includes definitions of “intellectual property,” as well as various international IP treaties and instruments.

Articles 18.2 and 18.3 set out the objectives and principles of the Chapter.

Article 18.4 sets out the overarching understanding between the Parties in respect of this Chapter, recognizing the need to promote innovation and creativity, facilitate the diffusion of information, knowledge, technology, culture and the arts, and foster competition and open and efficient markets, having regard to the underlying public policy objectives of national systems.

Article 18.5 requires each Party to provide adequate and effective protection and enforcement of IP rights. Article 18.5 indicates that each Party is free to determine the most appropriate method of implementing the obligations of this Chapter within its own legal system and practice.

Article 18.6 affirms Parties’ commitment to the WTO Doha Declaration on the TRIPS Agreement and Public Health, including the rights of the Parties to take measures to protect public health and promote access to medicines. Further, the Chapter does not prevent the effective utilization of the “TRIPS/health solution” in respect of compulsory licences for export to WTO Members having insufficient drug manufacturing capabilities, and provides that Parties shall immediately consult in order to adapt the IP Chapter as appropriate in light of a waiver of any provision, or any amendment, of the TRIPS Agreement.

Article 18.7 affirms that each Party is, or will become, a party to the listed international agreements.

Article 18.8 Paragraph 1 requires, in respect of all categories of IP covered in the Chapter, that each Party accord to nationals of another Party treatment no less favourable than it accords to its own nationals with regard to the protection of IP rights, subject to procedures provided in treaties concluded under the auspices of WIPO relating to the acquisition or maintenance of IP rights. This Article also provides that a Party may limit the rights of performers and producers of another Party to the rights its persons are accorded within the jurisdiction of that other Party, with respect to secondary uses of phonograms (also referred to as sound recordings) by means of analog communications and free over-the-air (OTA) broadcasting.

Footnote 4 to Article 18.8 sets out the meaning of “protection” for the purposes of Paragraph 1. Two sentences in this footnote relating to the phrase “matters affecting the use of intellectual property rights specifically covered by the Chapter” are suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.9 sets out transparency obligations, including that each Party must endeavour to publish online its laws, regulations, procedures and administrative rulings of general application concerning the protection and enforcement of IP rights, as well as public information concerning applications for trademarks, GIs, designs, patents, and plant variety rights, and public information concerning registered or granted trademarks, GIs, designs, patents and plant variety rights.

Article 18.10 addresses the application of the IP Chapter to existing subject matter.

Article 18.11 concerns the exhaustion of IP rights, which is a limitation on the scope of IP rights providing when the owner may no longer exercise some or all of its rights with respect to an IP-protected article. Internationally, the precise scope of exhaustion may differ between countries. Article 18.11 clarifies that nothing in the Agreement prevents a Party from determining whether or under what conditions the exhaustion of IP rights applies under its legal system.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

With respect to national treatment obligations in Article 18.8 concerning copyright protection accorded to performances and sound recordings, Canada will monitor the implementation approaches of the other CPTPP Parties, and make any necessary changes to Canada’s reciprocity arrangements in a timely manner.

Section B: Cooperation

Article 18.12 provides that each CPTPP Party may designate and notify contact points for the purposes of cooperation under this Section.

Article 18.13 provides for cooperation between the Parties on IP.

Article 18.14 provides for cooperation between the Parties’ respective patent offices, including by facilitating the sharing and use of search and examination work, and reducing differences in their respective procedures and processes. Article 18.14 also affirms that the Parties will give due consideration to ratifying or acceding to the Patent Law Treaty (PLT), which Canada ratified on July 30, 2019.

Article 18.15 includes a recognition by the Parties of the importance of a rich and accessible public domain.

Article 18.16 includes a recognition by the Parties of the relevance of IP systems and traditional knowledge (TK) associated with genetic resources (GR) to each other, when that TK is related to those IP systems. Article 18.16 requires that Parties endeavour to cooperate through their respective IP agencies or other institutions to enhance the understanding of issues connected with TK associated with GR (TKa) and GR, and to endeavour to pursue quality patent examination in areas related to TKa. These obligations will not require changes to Canadian law and are consistent with current practice.

Article 18.17 sets out that cooperation activities under this Chapter are subject to resource availability and on terms and conditions as mutually agreed by the Parties.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

The Government will continue its cooperation and discussions with the CPTPP Parties on IP issues.

Section C: Trademarks

Trademarks are letters, words, sounds or designs that a business uses to distinguish its goods or services from those of others in the marketplace. Over time, a trademark often comes to stand not only for the actual goods and services a business sells, but also its reputation and brand.

Article 18.18 prohibits a Party from denying registration to sound marks or from requiring, as a condition of registering a trademark, that it be visually perceptible.

Article 18.19 requires that trademarks include collective marks and certification marks, and requires that signs that may serve as GIs are capable of protection under its trademark system.

Article 18.20 requires each Party to provide to trademark owners the exclusive right to prevent third parties from unauthorized use of identical or similar signs where that use would result in a likelihood of confusion.

Article 18.21 allows each Party to provide limited exceptions to the rights conferred by a trademark.

Article 18.22 sets out certain restrictions on conditions for determining whether a trademark is well-known, and requires each Party to provide procedures to refuse or cancel the registration, or prohibit the use, of a trademark where it is likely to cause confusion with a prior well-known trademark.

Article 18.23 sets out requirements for each Party’s system for the examination and registration of trademarks.

Article 18.24 requires that each Party provide an electronic system for trademark applications and maintenance, as well as an online database.

Article 18.25 requires that each Party adopt or maintain a trademark classification system consistent with the Nice Agreement Concerning the International Classification of Goods and Services for the Purpose of the Registration of Marks (Nice Agreement), and sets out certain requirements for each Party on registrations and publications in respect of using the Nice Classification system.

Article 18.26 requires a minimum 10-year term for the initial registration and each renewal of a trademark registration.

Article 18.27 prohibits a Party from requiring that trademark licences be recorded to establish the validity of the licence or as a condition for use of the trademark.

Article 18.28 deals with country-code top-level domain (ccTLD) names, which are Internet domain names established for countries or territories (for instance, “.ca” for Canada). The Article sets out requirements for the settlement of disputes in respect of ccTLDs, and requires that appropriate remedies be available where a person, with a bad-faith intent to profit, registers or holds a domain name that is identical or confusingly similar to a trademark.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

No other action is required by Canada to implement Section C (Trademarks). With respect to the Nice Agreement, Canada has acceded to this Treaty.

Section D: Country Names

Article 18.29 requires each Party to provide interested persons with the legal means to prevent a country name from being used for commercial use in a way that misleads consumers as to the origin of a good.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

No other action is required by Canada to implement Section D (Country Names).

Section E: Geographical Indications

A GI is a sign used on products that come from a particular place with characteristics or qualities related to that place.

Article 18.30 confirms the Parties’ understanding that GIs may be protected through a trademark system, a sui generis system, or through other legal means.

Article 18.31 sets out the requirements for a Party’s administrative procedures to protect or recognize GIs, if that Party provides for such administrative procedures.

Article 18.32 provides that if a Party protects or recognizes GIs through the procedures referred to in Article 18.31, then that Party is required to provide for procedures that allow interested persons to object to the protection or recognition of a GI, or to seek cancellation of a GI, as well as to allow for the protection or recognition to be refused. This Article also sets out the grounds for an objection to the protection or recognition of a GI, refusal of a GI, or cancellation of a GI.

Article 18.33 sets out guidelines for determining whether a term is the common name for the relevant good in the territory of a Party, and requires that when making such a determination, the Party’s authorities have the ability to take into account how consumers in that territory understand the term.

Article 18.34 provides that where a single component of a GI-protected multi-component term is a common name for the relevant good in the Party’s territory, the Party may not protect that individual component.

Article 18.35 states that if a Party protects or recognizes a GI pursuant to Article 18.31, that protection or recognition begins no earlier than the filing date in the Party or the registration date in the Party, as applicable.

Article 18.36 outlines the requirements for administrative procedures where a Party recognizes or protects a GI pursuant to an international agreement. The negotiated CPTPP outcome enables Canada to continue to meet its commitments on GIs in existing international agreements, such as under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

No other action is required by Canada to implement this Section.

Section F: Patents – Subsection A – General Patents

Patents may be granted for inventions that are new, useful and non-obvious, as well as to improvements on products or processes.

Article 18.37 provides that a Party shall make patents available for any invention that meets the enumerated patentability criteria (new, useful, and non-obvious), and provides certain permissible exclusions from patentability.

Paragraph 2, on the availability of patents for uses of a known product, new methods of using a known product, or new process of using a known product, is suspended under CPTPP. The last sentence of Paragraph 4, on the availability of patents at least for inventions that are derived from plants, is also suspended — see Part 2, Annex – List of Suspended Provisions above.

Article 18.38 requires that each Party provide a grace period of 12 months prior to the filing date of a patent application in respect of information contained in public disclosures when determining if an invention is novel or has an inventive step.

Article 18.39 outlines the conditions under which a patent may be cancelled, revoked or nullified.

Article 18.40 allows each Party to provide limited exceptions to the exclusive rights conferred by a patent.

Article 18.41 contains an understanding of the Parties that nothing in the IP Chapter limits a Party’s rights and obligations under Article 31 of the TRIPS Agreement, any waiver or any amendments to that Article that the Parties accept.

Article 18.42 contains requirements for when an invention is made independently by more than one inventor and separate applications claiming that invention is filed with, or for, the relevant authority of the Party.

Article 18.43 requires that a patent applicant shall have at least one opportunity to make amendments, corrections and observations in connection with its application.

Article 18.44 outlines when each Party is to endeavour to publish unpublished pending patent applications.

Article 18.45 sets out the information that each Party shall make available to the public in respect of patent applications and granted patents.

Article 18.46 outlines the requirement to provide for the adjustment of the term of a patent to compensate for “unreasonable” delays in the Party’s issuance of patents, with permitted exclusions from the determination of unreasonable delays. This Article (including corresponding footnotes 36 through 39) is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

2. Canadian Legislation

No amendments to Canadian legislation arise from this subsection.

3. Intended Government Action

No other action is required by Canada to implement this subsection.

Section F: Patents – Subsection B – Measures Relating to Agricultural Chemical Products

Data protection refers to a form of protection for test data or other related information that is provided in confidence to a government in order to receive marketing approval to sell an agricultural chemical product (such as a pesticide), or a pharmaceutical product (see Subsection C: Measures Relating to Pharmaceutical Products).

Article 18.47 deals with the provision of at least 10 years of protection in specified circumstances of undisclosed test or other data for a new agricultural chemical product where such data is required to obtain marketing approval. The protection in specified circumstances of undisclosed test or other data for a new agricultural chemical product is also required if submission of evidence of prior marketing approval of a product in another territory is required to obtain marketing approval. Canada does not permit reliance on evidence of a prior marketing approval of the product in another territory as a condition of granting marketing approval for a new agricultural chemical product, and therefore legislative amendments are not required in this area.

Canada and Chile have agreed in a CPTPP side letter that nothing in Article 18.47 limits a Party from establishing conditions, limitations or exceptions when implementing the obligations set forth under this Article, provided that such conditions, limitations or exceptions are consistent with the provisions of the IP Chapter.

2. Canadian Legislation

No amendments are required under this subsection.

3. Intended Government Action

No other action is required by Canada to implement this subsection.

Section F: Patents – Subsection C – Measures Relating to Pharmaceutical Products

Article 18.48 outlines the requirement of, and the conditions for, a Party compensating for unreasonable curtailment, in respect of the marketing approval of pharmaceutical products by adjusting patent terms. A footnote to the Article provides that a Party may alternatively make available a period of additional sui generis protection to compensate for the unreasonable curtailment of the effective patent term as a result of the marketing approval process. Canada already provides an additional period of protection for eligible pharmaceutical products under its Certificate of Supplementary Protection (CSP) regime. Canada meets the original TPP obligation by way of its existing CSP regime. This Article (including corresponding footnotes 45 through 48), is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.49 requires each Party to adopt or maintain a regulatory review exception for pharmaceutical products. Canada already provides a broad regulatory review exception in its domestic law, which satisfies this obligation.

Article 18.50 deals with the provision of at least five years of protection in specified circumstances of undisclosed test or other data for a new pharmaceutical product where such data is required to obtain marketing approval. This Article also requires the protection of undisclosed test or other data for a new pharmaceutical product in specified circumstances if submission of evidence of prior marketing approval of the product in another territory is required to obtain marketing approval. This Article (including corresponding footnotes 50 through 57) is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.51 deals with the provision of at least eight years (or at least five years plus “other measures”) of protection of undisclosed test or other data for a new pharmaceutical product that is, or contains, a biologic where such data is required to obtain marketing approval. This Article (including corresponding footnotes 58 through 60) is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.52 defines a new pharmaceutical product.

Article 18.53 sets out requirements where a Party permits, as a condition of approving the marketing of a pharmaceutical product, reliance on evidence or information concerning the safety and efficacy of previously approved products.

Canada and Vietnam have agreed in CPTPP to a side-letter that recognizes that nothing in Article 18.53 limits a Party from establishing conditions, limitations or exceptions when implementing the obligations set forth under this Article, provided that such conditions, limitations or exceptions are consistent with the provisions of the IP Chapter.

Article 18.54 outlines when a Party shall not alter a period of protection provided for a product.

2. Canadian Legislation

No amendments to Canadian legislation arise from this subsection.

3. Intended Government Action

No other action is required by Canada to implement this Section.

Section G: Industrial Designs

Industrial designs are the ornamental or aesthetic aspect of a good. It can include three-dimensional features, such as its shape, or two-dimensional features, such as patterns, lines, or colour.

Article 18.55 requires that each Party ensure adequate and effective protection of industrial designs consistent with the TRIPS Agreement, and that protection is available for designs embodied in a part of an article.

Article 18.56 includes a recognition by the Parties of the importance of improving the quality and efficiency, and facilitating the process of cross-border acquisition of rights in their respective industrial design systems, and the importance of giving due consideration to ratifying or acceding to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs. Canada acceded to this Treaty on November 5, 2018.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

No other action is required by Canada to implement this Section.

Section H: Copyright and Related Rights

Copyright refers to the rights of authors in relation to their literary, musical, dramatic, and artistic works. Related rights, which are also referred to as neighbouring rights, refer to the rights of creative contributors such as performers and producers of sound recordings (also referred to as phonograms).

Article 18.57 contains a list of definitions used throughout this Section.

Article 18.58 requires each Party to provide a right of reproduction for authors, performers and producers of phonograms.

Article 18.59 requires each Party to provide to authors a right of communication to the public, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.

Article 18.60 requires each Party to provide a right of distribution to authors, performers and producers of phonograms. This right only applies to fixed copies that can be put into circulation as tangible objects.

Article 18.61 provides that there is no hierarchy when seeking authorization from both the author of a work embodied in a phonogram, and a performer or producer that owns rights in the phonogram.

Article 18.62 requires that each Party provide: to performers a right of broadcasting and communication to the public in respect of their unfixed performances, unless the performance is already a broadcast performance, and a right to the fixation of their unfixed performances; and a right of broadcasting and communication to the public for producers and performers in respect of their phonogram performances fixed in, and the making available to the public of those performances and phonograms in such a way that members of the public may access them from a place and at a time individually chosen by them. Pursuant to subparagraph 3(b) of Article 18.62, the Parties are afforded certain flexibility in implementing this obligation.

Article 18.63 requires the term of protection for a work, performance, or phonogram to be at least “life of the author” plus 70 years where copyright is calculated on the basis of the life of a natural person. Where copyright is calculated on a basis other than the life of a natural person, this Article requires that each Party provide a term of protection for a work, performance, or phonogram of at least 70 years from publication. However, if such a work, performance, or phonogram is not published within 25 years from its creation, each Party is only required to provide a term of at least 70 years from creation. This Article (including corresponding footnotes 74 through 77) is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.64 requires that each Party apply Article 18 of the Berne Convention and Article 14.6 of the TRIPS Agreement in respect of works, performances and phonograms, and the rights in and protections afforded to that subject matter as required by Section H (Copyright and Related Rights) of this Chapter.

Article 18.65 concerns limitations and exceptions. Paragraph 1 provides that, for this Section, each Party shall confine limitations or exceptions to exclusive rights to certain special cases that do not conflict with a normal exploitation of the work, performance or phonogram, and do not unreasonably prejudice the legitimate interests of the rights holder (this is known internationally as the “three-step test”). However, Paragraph 2 clarifies that this Article does not reduce or extend the scope of applicability of the limitations and exceptions permitted by the TRIPS Agreement, the Berne Convention, the WIPO Copyright Treaty, or the WIPO Performances and Phonograms Treaty.

Article 18.66 requires that each Party endeavour to achieve an appropriate balance in its copyright and related rights system, among other things by means of limitations or exceptions that are consistent with Article 18.65, including those for the digital environment, giving due consideration to legitimate purposes such as, but not limited to: criticism; comment; news reporting; teaching; scholarship; research, and other similar purposes; and facilitating access to published works for persons who are blind, visually impaired or otherwise print disabled (as recognized by the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled; Canada acceded to this treaty in June 2016).

Article 18.67 deals with contractual transfers in respect of the acquisition or holding of an economic right in a work, performance or phonogram

Article 18.68, which deals with technological protection measures (TPMs), performances or phonograms, is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.69, which deals with rights management information (RMI), is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.70 recognizes the important role of collective management societies for copyright and related rights in collecting and distributing royalties based on practices that are fair, efficient, transparent, and accountable.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

No other action is required by Canada to implement this Section.

Section I: Enforcement

This Section establishes core obligations related to the civil, criminal and border enforcement of IP rights. Arrangements for the protection of rights are important for an IP system, because without them there is no way for owners of that IP to enforce their rights effectively. With the rapid development of new technologies increasing the possible ways to infringe IP rights, modernized IP enforcement rules have been reflected in the CPTPP.

Article 18.71 outlines general obligations relating to the enforcement procedures specified in this Section, including to ensure that procedures are fair and equitable.

Article 18.72 sets out requirements regarding presumptions in enforcement proceedings involving IP.

Article 18.73 sets out requirements regarding final judicial decisions and administrative rulings of general application in enforcement proceedings, including a requirement that these decisions and rulings be in writing, and are published or otherwise made available to the public. This Article also requires each Party to make information on IP enforcement efforts available to the public.

Article 18.74 sets out several requirements regarding the availability of procedures and remedies for rights holders to enforce any IP right covered by the IP chapter including injunctive relief; damages; court costs such as attorney fees and other expenses; destruction of infringing goods and related materials; production of evidence; compensation for abuse of procedures; and sanctions. Certain procedures and remedies are also required in relation to TPMs and RMI, including provisional measures; damages; court costs; destruction of devices and products.

Article 18.75 sets out requirements regarding the availability of provisional measures in instances where a rights holder’s IP right is being infringed or when infringement is imminent.

Article 18.76 sets out several requirements in respect of border enforcement, including on applications to suspend or detain suspected counterfeit trademark, or confusingly similar trademark, or pirated copyright goods, as well as customs control authority in respect of suspected counterfeit trademark or pirated copyright goods upon import, or export, or in transit. To comply with the obligation in paragraph 5 regarding “in transit” goods, a Party has the option to instead endeavour to provide, available information to another Party in respect of the goods that it has examined.

Article 18.77 requires that each Party provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright or related rights piracy on a commercial scale, including requirements in respect of wilful importation or exportation, and in respect of labels or packaging. This Article also requires each Party to provide criminal procedures and penalties in respect of the unauthorized copying of a cinematographic work in a movie theatre.

Article 18.78 outlines a Party’s obligation to ensure that persons have the legal means to prevent trade secrets lawfully in their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices. This Article requires that each Party provide criminal procedures and penalties for one or more of the cases set out in Paragraph 2, and provides that each Party may limit the availability of its criminal procedures, or limit the level of penalties available, to one or more of the cases enumerated in Paragraph 3.

Article 18.79 requires that each Party provide certain criminal remedies and civil remedies in respect of encrypted programme-carrying satellite and cable signals, is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Article 18.80 requires each Party to adopt or maintain appropriate measures that provide that its central government agencies use only non-infringing computer software protected by copyright and related rights.

2. Canadian Legislation

With respect to the obligation under Article 18.76 on applications to detain or suspend suspected confusingly similar trademark goods are imported into the territory of the Party, Sections 17 and 18 of the CPTPP Implementation Act amends the Trademarks Act to allow for the detention of “confusingly similar” trademark goods that are imported into Canada.

3. Intended Government Action

No other action is required by Canada to implement this Section.

Section J: Internet Service Providers

This section deals with the liability of those who act as online intermediaries in relation to material that might be protected by copyright and related rights, such as Internet service providers (ISPs).

Article 18.81 contains a definition of ISP.

Article 18.82 and the corresponding Annexes 18-E and 18-F, which deal with legal remedies for copyright owners and liability safe harbours for ISPs, are suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

No other action is required by Canada to implement this Section.

Section K: Final Provisions

This section deals with CPTPP Party-specific transition periods for the implementation of obligations in the IP Chapter, which are provided in Paragraph 4 of Article 18.83.

2. Canadian Legislation

No amendments to Canadian legislation arise from this Section.

3. Intended Government Action

The Government will monitor the compliance of CPTPP Parties’ obligations under the IP Chapter, in view of their respective transition periods, taking into account that a number of the transition periods pertain to obligations that have been suspended under the IP Chapter, and will not necessarily, therefore, come into effect for those Parties upon the expiration of their respective transition periods.

Annexes

The IP Chapter contains country-specific and general annexes pertaining to obligations throughout the Chapter. Annex 18-A pertains to New Zealand, Annex 18-B pertains to Chile, Annex 18-C pertains to Malaysia, and Annex 18-D pertains to Peru. Annexes 18-E and 18-F pertain to legal remedies and safe harbours in respect of Internet service providers.

As noted above under the discussion of Article 18.82, Annexes 18-E and 18-F have been suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Chapter 19 – Labour

1. TPP Provisions

Building on Canada’s past practice of incorporating labour provisions in its FTAs, the Labour Chapter contains comprehensive and enforceable labour rights obligations, reaffirms the CPTPP Parties’ commitment to respect and provide protection for internationally recognized labour principles and rights. It also commits the Parties to not only effectively enforce their labour laws, but also not to relax these laws and standards to encourage trade or attract investment.

The labour provisions provide additional assurances that the Parties maintain high standards of labour protection and continue to foster good labour governance. This Chapter also helps to ensure that trade and the protection of workers’ rights are mutually supportive and reinforcing, and that the increased prosperity resulting from liberalized trade does not occur at the expense of high labour standards.

These objectives are supported by provisions that encourage and promote public participation, allow members of the public to provide written submissions related to this Chapter, lay out a framework for the CPTPP Parties to cooperate on trade-related labour issues of common interest, and provide an institutional mechanism to address matters arising under the Labour Chapter, along with recourse to Chapter 28 (Dispute Settlement).

Article 19.1 provides the definitions for terms used throughout the Labour Chapter.

Article 19.2 outlines the statement of shared commitment, in which the CPTPP Parties affirm their obligations as members of the International Labour Organization (ILO), including those stated in the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up of 1998 (ILO Declaration).

Article 19.3 requires each CPTPP Party to adopt and maintain in its statutes and regulations, and practices thereunder, the following internationally recognized principles and rights at work, as stated in the ILO Declaration:

To further protect the rights of workers, Article 19.3 commits each Party to ensure that its statutes and regulations, and practices thereunder, establish acceptable conditions of work with respect to minimum wages, hours of work, and occupational health and safety.

In Article 19.4, the CPTPP Parties recognize that it is inappropriate to encourage trade and investment by weakening or reducing the protections afforded in each Party’s labour laws. Accordingly, the Parties commit to not waive or derogate from their respective statutes or regulations in matters related to trade or investment, or offer to do so.

Article 19.5 affirms each CPTPP Party’s obligation to enforce its labour laws. Article 19.5 also provides that if a Party fails to comply with an obligation under the Chapter, a decision made by that Party on the provision of enforcement resources shall not excuse that failure. Each Party has the discretion to allocate enforcement resources between labour enforcement activities, so long as they are not inconsistent with the Chapter’s obligations.

Article 19.6 recognizes the goal of eliminating all forms of forced or compulsory labour, including forced or compulsory child labour. It also requires each CPTPP Party to discourage the importation of goods from other sources produced in whole or in part by forced or compulsory labour, including forced or compulsory child labour.

Article 19.7 requires each CPTPP Party to endeavour to encourage enterprises to voluntarily adopt corporate social responsibility initiatives on labour.

Article 19.8 commits each CPTPP Party to promote public awareness of its labour laws, including by ensuring that information related to its labour laws and enforcement and compliance procedures is publicly available.

Furthermore, Article 19.8 commits each Party to ensure that persons with a legally recognized interest have appropriate access to impartial and independent tribunals for the enforcement of its labour laws, with proceedings that are fair, equitable and transparent, comply with due process of law, and do not entail unreasonable fees or time limits or unwarranted delays. These proceedings must also normally be open to the public.

Each Party has the additional responsibility to ensure that the Parties to these proceedings are entitled to support or defend their respective positions. Final decisions on the merits of a case must be based on information which the parties to the case were offered the opportunity to be heard, state the reasons on which they are based and are available in writing without undue delay.

Each Party must also provide parties to these proceedings with the right to seek appeal, access to remedies under its law for the effective and timely enforcement of their rights, and procedures to effectively enforce final decisions of its tribunals.

Article 19.9 commits each CPTPP Party to provide for the receipt and consideration of written public submissions on matters related to the Chapter, and to make the procedures for doing so publicly available. Each Party may require that, in order to be considered, a submission must, at a minimum, raise an issue directly relevant to the Chapter and explain how the issue raised is related to trade or investment.

Each Party is required to consider matters raised by the submission, to provide a timely response to the submitter, and to make the submission, and the results of its consideration, available to the other Parties and the public in a timely manner.

Article 19.10 recognizes the importance of cooperation as a mechanism for effective implementation of the Chapter, to enhance opportunities to improve labour standards and to further advance common commitments regarding labour matters, including workers’ wellbeing and quality of life and principles and rights stated in the ILO Declaration.

In addition, this Article outlines a number of principles to guide the Parties in undertaking cooperative activities, as well as a range of potential areas for cooperation, such as effective implementation of the rights in the ILO Declaration. It also provides a list of potential activities, such as workshops, study trips and collaborative research.

Article 19.11 allows a CPTPP Party to request dialogue with another Party on any matter arising under the Labour Chapter and sets out a framework for doing so. A written request must be delivered to the contact point of the other Party and must include information that is specific and sufficient to enable the receiving Party to respond. Unless the dialoguing Parties decide otherwise, dialogue must commence within 30 days of the receipt of the request. If the dialoguing Parties resolve the matter, they are to document the outcome, including specific steps and timelines, and make the outcome available to the public, unless they decide otherwise.

Article 19.12 establishes a Labour Council composed of senior governmental representatives at the ministerial or other level, as designated by each Party. The Article outlines that the Labour Council shall meet within one year of the Agreement coming into force, and every two years thereafter, unless the Parties decide otherwise. The Labour Council shall be chaired by each Party on a rotational basis.

The responsibilities of the Labour Council are to consider matters related to the Labour Chapter, establish and review priorities to guide decisions by the Parties about labour cooperation and capacity building activities undertaken pursuant to the Labour Chapter, agree on a general work programme in accordance with these priorities, oversee and evaluate the general work programme, review reports from the contact points, discuss matters of mutual interest, facilitate public participation and awareness of the implementation of the Labour Chapter, and perform any other functions as the Parties may decide. The Labour Council shall also review the implementation of the Labour Chapter to ensure its effective operation and report on the findings.

Article 19.13 mandates the designation of a contact point for each Party to address matters related to the Labour Chapter. The contact points must facilitate regular communication and coordination between the Parties, to assist and report to the Labour Council, to act as a channel for communication with the public in their respective territories and to work with each other and other appropriate agencies of their governments to develop and implement cooperative activities.

Article 19.14 recognizes the importance of public engagement. To promote accountability, the Labour Council is required to provide a means for receiving and considering the views of interested persons on matters related to the Labour Chapter.

This Article also commits each CPTPP Party to establish or maintain, and consult, a national labour consultative or advisory body for members of its public, including representatives of its labour and business organizations, to provide views on matters regarding the Labour Chapter.

Article 19.15 outlines procedures and timelines for requesting consultations regarding any matter arising under the Chapter. Other Parties may participate in the labour consultations if they have a substantial interest and deliver a written notice to the consulting Parties. Each consulting Party must provide sufficient information to enable a full examination of the matter. Any Party participating in the consultations shall treat any confidential information exchanged during the consultations on the same basis as the Party providing the information.

If the consulting Parties are unable to resolve the matter, any consulting Party may request that the Council representatives of the consulting Parties convene to consider the matter, which must be done within 30 days of this request.

If the consulting Parties have failed to resolve the matter within 60 days of the initial receipt of a request for consultations, the requesting Party may request the establishment of a panel under Chapter 28 (Dispute Settlement). However, no Party may have recourse to the Dispute Settlement Chapter without first seeking to resolve the matter in accordance with Article 19.15. So, in effect, the consultation process under this Article takes the place of consultations under the Dispute Settlement Chapter.

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 19.

3. Intended Government Action

The Government will work with the Parties to support effective implementation of the commitments in the Labour Chapter.

Chapter 20 – Environment

1. TPP Provisions

The Environment Chapter reaffirms the commitment of the CPTPP Parties to advance environmental protection objectives while enhancing trade relations. The provisions in the Chapter incorporate commitments to help ensure that trade and environment are mutually supportive, and that increased prosperity resulting from liberalized trade does not occur at the expense of the environment. The Chapter is subject to the Agreement’s binding and enforceable dispute resolution mechanism under Chapter 28 (Dispute Settlement), which can be used to address questions regarding compliance.

The objectives of the Environment Chapter are to promote mutually supportive trade and environmental policies; promote high levels of environmental protection and effective enforcement of environmental laws; and enhance the capacities of the Parties to address trade-related environmental issues. These objectives are supported by substantive and enforceable commitments requiring Parties to maintain high levels of environmental protection, effectively enforce their respective environmental laws, and promote public participation and transparency. The Chapter also contains commitments on a broad range of environmental issues, and creates a framework for cooperation on such issues. It will only be necessary to consider having recourse to the Dispute Settlement mechanism if Parties are unable to resolve the matter through the chapter-specific consultation and cooperation mechanisms.

Article 20.1 defines the term “environmental law” to mean a statute or regulation of a Party, the primary purpose of which is the protection of the environment or the prevention of danger to human life or health through the prevention of the release of pollutants, chemical and waste management, or conservation and protection of wild flora and fauna, including endangered species and protected areas. The definition does not include measures directly related to worker health and safety nor measures enacted primarily for the purpose of subsistence or aboriginal harvesting of natural resources. This Article also clarifies the scope of laws that are covered by this definition.

Article 20.2 outlines the objectives of the Chapter and highlights the importance of enhanced cooperation. It also notes that environmental laws should not be used as a disguised restriction on trade or investment.

Article 20.3 outlines key commitments in the Chapter. The Parties recognize the sovereign right of each Party to establish its own environmental priorities and levels of protection, while striving for high levels of protection. The Parties commit to effectively enforce their respective domestic laws and not derogate or waive from such laws to encourage trade or investment.

Article 20.4 recognizes the important role of multilateral environmental agreements (MEAs), and affirms the commitment of each Party to implement the MEAs to which it is a party. The Parties acknowledge the importance of engaging in a dialogue on the negotiation and implementation of MEAs and trade agreements.

In Article 20.5, the Parties agree to take measures to protect the ozone layer, through the control of the production and consumption of, and trade in, substances that deplete or otherwise modify the ozone layer. The Parties agree to make publicly available information about their programmes and activities related to ozone layer protection, and to cooperate in addressing areas of mutual interest.

In Article 20.6, the Parties recognize the importance of protecting and preserving the marine environment and agree to take measures to prevent the pollution of the marine environment from ships. The Parties commit to make publicly available appropriate information about its programmes and activities related to the prevention of pollution of the marine environment from ships, and to cooperate in addressing areas of mutual interest.

Article 20.7 sets out requirements to ensure that alleged violations of environmental laws are given due consideration by a Party, and that procedures are available to persons with a legally recognized interest to seek remedies or sanctions. These proceedings must not be unnecessarily complicated or prohibitively costly, nor entail unreasonable time limits or unwarranted delays. These proceedings must also be fair, equitable and transparent. Any hearings in these proceedings will be open to the public, except when the administration of justice requires otherwise.

Article 20.8 sets out potential modalities for public participation and commits the Parties to seek to accommodate requests for information regarding the Party’s implementation of this Chapter.

In Article 20.9, the Parties agree to provide for the receipt and consideration of written submissions from the public regarding a Party’s implementation of this Chapter. The Parties will make their procedures for such submissions readily accessible and publicly available. If a submission asserts that a Party is failing to effectively enforce its environmental laws, following the written response by that Party, the Environment Committee (established under Article 20.19 — see below) may consider whether the matter may benefit from cooperative activities. The Article also requires the Committee to establish procedures for discussing submissions and responses, referred to it. These procedures may also provide for the use of experts or existing institutional bodies to develop a report for the Committee.

In Article 20.10, the Parties agree to encourage enterprises within their territories to adopt voluntarily principles of corporate social responsibility that are related to the environment, consistent with internationally recognized standards and guidelines that have been endorsed or are supported by that Party.

Article 20.11 encourages the use of flexible and voluntary mechanisms to contribute to the achievement and maintenance of high levels of environmental protection and complement domestic regulatory measures. Such mechanisms should be designed in a manner that maximizes their environmental benefits and avoids the creation of unnecessary barriers to trade, should be truthful and not misleading, and based on relevant international standards. They should also promote competition and innovation and not treat a product less favourably on the basis of origin.

Article 20.12 sets out potential modalities for cooperation between the Parties to address matters of joint or common interests related to the implementation of this Chapter. Such cooperation may be carried out on a bilateral or plurilateral basis, build on, or complement, existing mechanisms, and include non-governmental bodies or organizations and non-Parties to the Agreement.

In Article 20.13, the Parties agree to promote and encourage the conservation and sustainable use of biological diversity in accordance with their respective laws or policies. The Parties recognize the importance of respecting, preserving and maintaining knowledge and practices of Indigenous and local communities embodying traditional lifestyles that contribute to the conservation and sustainable use of biological diversity. The Parties also recognize the importance of facilitating access to genetic resources within their respective national jurisdictions, consistent with their international obligations, and the importance of public participation and consultation related to conservation and sustainable use of biological diversity.

Article 20.14 commits the Parties to work together to identify ways to assess and address risks and adverse impacts of invasive alien species.

In Article 20.15, the Parties acknowledge that transition to a low emissions economy requires collective action and agree to cooperate to address matters of common interest. The Parties also agree to engage in cooperative and capacity-building activities related to transitioning to a low emissions economy as appropriate.

In Article 20.16, the Parties acknowledge that inadequate fisheries management, fisheries subsidies that contribute to overfishing and overcapacity, and illegal, unreported and unregulated fishing can have significant negative impacts on trade, development and the environment, and agree to take measures aimed at addressing these issues. The Parties commit to take measures aimed at the conservation and the sustainable management of fisheries. The Parties also commit to prohibit certain subsidies that contribute to overfishing and overcapacity and have up to three years to bring into conformity subsidy programmes in place before the date of entry into force of this Agreement. The Parties agree to notify the other Parties of any relevant subsidy that is granted or maintained to persons engaged in fishing or fishing-related activities and, to the extent possible, provide information relating to other fisheries subsidies that the Party grants or maintains, in particular fuel subsidies.

Article 20.17 commits each Party to fulfill its obligations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), take measures to protect species at risk, and combat the illegal take of, and illegal trade in, wild fauna and flora, including through the exchange of information and joint activities on conservation issues, as well as through cooperation activities among law enforcement networks. The phrase “or another applicable law” in Paragraph 5 of Article 20.17 is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

In Article 20.18, the Parties recognize the importance of this Agreement to promote trade and investment in environmental goods and services. The Environment Committee will consider issues identified by a Party related to trade in environmental goods and services, including issues identified as potential non-tariff barriers. The Parties will endeavor to address such barriers, including by working with other relevant committees.

Article 20.19 establishes the Environment Committee which is responsible for overseeing the implementation of this Chapter, including cooperative activities. The Committee is also responsible for endeavoring to resolve matters related to the Chapter’s interpretation and application as well as any other functions identified by the Parties. Decisions of the Committee are made by consensus, and shall be made available to the public. Each Party is also required to designate and notify a contact point to facilitate communication between the Parties in the implementation of this Chapter.

Article 20.20 outlines procedures for a Party to request consultations should any matter arise under the Environment Chapter and provides for participation in the consultations by other Parties who may have a substantial interest in the matter. The focus is on making every effort to address matters through cooperation and dialogue, including by seeking advice from relevant experts.

In Article 20.21, if the consulting Parties have failed to resolve the matter under Article 20.20, a Party may request that the Committee convene to consider the matter.

Article 20.22 provides for Ministerial consultations if the consulting Parties have failed to resolve the matter under Article 20.21. Such consultations will be confidential and without prejudice to any rights of any Party in any future proceeding.

Article 20.23 provides that if the consulting Parties have failed to resolve the matter, the requesting Party may seek to utilize dispute settlement (Chapter 28) of the Agreement. Dispute settlement panels must follow certain specific requirements for a dispute arising under Article 20.17 Paragraph 2 (Conservation and Trade).

2. Canadian Legislation

The Environment Chapter does not require legislative or regulatory changes. The Chapter explicitly recognizes each Party’s right to establish its own priorities in order to protect the environment, and to adopt or modify its laws and policies accordingly. Each Party commits to seek to ensure that those laws and policies provide for and encourage high levels of environmental protection, and strive to continue to improve such laws and policies and their underlying levels of protection. A number of Canadian federal acts are relevant in this regard, including those related to environmental protection, pollution prevention — such as the Canadian Environmental Protection Act — as well as biodiversity and conservation — including the Species at Risk Act, the Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act and the Migratory Birds Convention Act.

3. Intended Government Action

The Government will work with the Parties to implement the commitments in the Environment Chapter.

Chapter 21 – Cooperation and Capacity Building

1. TPP Provisions

Chapter 21 provides the Parties with a common understanding of the importance of cooperation and capacity building activities to assist in implementing the CPTPP and enhance its benefits. The Cooperation and Capacity Building Chapter also provides the Parties with a framework under which they can communicate and share best practices, and identify areas of required assistance.

Article 21.1 recognizes the importance of cooperation and capacity building activities among and between the Parties to assist in implementing the CPTPP and to achieving its benefits. This provision also notes the important role that the private sector can play in such activities, particularly with respect to assisting SMEs in participating in global markets.

Article 21.2 sets out suggested areas of cooperation and capacity building activities, such as implementation, promoting trade and investment, and helping Parties to take advantage of the Agreement. It also signals the importance that technology and innovation can play in cooperation and capacity building activities, and that activities can occur in the form of workshops, targeted projects, and the sharing of experts and best practices on policies and procedures.

Article 21.3 establishes contact points in each Party to coordinate cooperation and capacity building activities and through which a Party may request such activities.

Article 21.4 establishes a Committee on Cooperation and Capacity Building and defines the responsibilities of the Committee, which include: facilitating the exchange of information; acting as a forum; facilitating public-private partnerships; encouraging institutions, such as donors, private sector entities, and NGOs, to assist in activity development and delivery; establishing ad hoc working groups; coordinating with other bodies established under the Agreement in support of the development and implementation of activities; and reviewing the implementation and operation of the Chapter.

Article 21.5 recognizes that the Parties are at different levels of development and thus vary in the availability of resources and capabilities to support cooperation and capacity building activities. It encourages the Parties to provide appropriate financial or in-kind resources for these activities subject to their ability.

Article 21.6 provides that the provisions of Chapter 21 are not subject to dispute settlement (Chapter 28).

2. Canadian Legislation

No amendments to Canadian legislation arise from this Chapter.

3. Intended Government Action

The Government will continue to advance cooperation and capacity building when implementing the Agreement.

Chapter 22 – Competitiveness and Business Facilitation

1. TPP Provisions

The Parties recognize that business environments must be responsive to market developments in order to enhance economic competitiveness both at home and abroad as well as to promote economic integration and development among themselves.

Article 22.1 provides definitions for terms specific to this Chapter.

Article 22.2 establishes a Committee on Competitiveness and Business Facilitation with responsibilities including: discussing ways to promote economic integration and an environment that facilitates trade and investment; exploring ways for businesses to take advantage of CPTPP opportunities; advising the Commission on ways to enhance competitiveness and the participation of SMEs in regional supply chains; and, promoting and strengthening supply chains in the free trade area. Finally, Article 22.2 requires the Committee to meet within one year after the date of entry into force of the Agreement and thereafter as necessary.

Article 22.3 requires the Committee explore ways to implement the Agreement to promote the development and strengthening of supply chains in order to integrate production, facilitate trade and reduce the cost of doing business in the free trade area. The Article further requires the Committee to develop recommendations and promote capacity building activities to assist SMEs to participate in supply chains in the free trade area; to work with other bodies established under the Agreement to identify and discuss measures affecting the development and strengthening of supply chains; and to explore best practices and experiences relevant to the development and strengthening of supply chains. During the fourth year after the Agreement’s entry into force, the Committee is required to commence a review of the extent to which the Agreement has facilitated the development, strengthening and operation of supply chains within the free trade area, and to submit its report containing the findings and recommendations to the Commission.

Article 22.4 requires the Committee to establish a mechanism through which the public may provide input on matters relevant to enhancing competitiveness and business facilitation.

Article 22.5 provides that the provisions of Chapter 22 are not subject to dispute settlement (Chapter 28).

2. Canadian Legislation

No amendments to Canadian legislation arise from this Chapter.

3. Intended Government Action

Working with CPTPP Parties, the Government will work to develop and strength supply chains within the free trade area and encourage SMEs to participate in such supply chains.

Chapter 23 – Development

1. TPP Provisions

A first for a Canadian FTA, the CPTPP contains a chapter dedicated to development which recognizes the important role that open trade and investment and inclusive growth play in improving welfare, reducing poverty, raising living standards and creating new employment opportunities in support of development.

Article 23.1 confirms the importance of creating and strengthening a trade and investment environment that promotes inclusive economic development and prosperity. It acknowledges the potential for trade and investment in contributing to economic development and prosperity. It also acknowledges the importance of economic growth and development to the promotion of increased regional economic integration. The Article recognizes the potential for joint development activities to reinforce efforts to achieve sustainable development goals. Finally, this Article recognizes that the Agreement’s cooperation and capacity building activities are an important component of development activities.

Article 23.2 acknowledges the importance of implementing development policies; that the Agreement has been designed to take into account the different levels of economic development of the CPTPP Parties; and the importance of transparency, good governance and accountability for the creation of effective development policies.

Article 23.3 acknowledges the benefits of broad-based economic growth, and the need for sustained high-level commitment from governments in order to generate and sustain such growth. The Article also provides examples of the types of government policies that enhance broad-based economic growth.

Article 23.4 recognizes the importance of enhancing and encouraging business and workplace opportunities for women in order to contribute to economic growth, and outlines cooperative activities that the Parties should consider undertaking to enhance the ability of women to fully access the benefits under this Agreement.

Article 23.5 recognizes the importance of the promotion and development of education, science and technology, research and innovation, as well as the creation of related government policies, can have on maximizing the benefits derived from the Agreement.

Under Article 23.6, the Parties committed to endeavor to facilitate joint activities between government, private and multilateral institutions so that the benefits of the Agreement might more effectively advance development goals. It outlines the types of activities that may be undertaken to assist in advancing each Party’s development goals.

Article 23.7 establishes a Committee on Development, and outlines its framework and scope. The Committee will consist of government representatives and consider issues associated with the implementation and operation of the Chapter and facilitate the exchange of information on issues related to development.

Article 23.8 governs the relationship between this Chapter and other chapters of the Agreement in case of any inconsistencies.

Article 23.9 provides that the provisions of Chapter 23 are not subject to dispute settlement (Chapter 28).

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 23.

3. Intended Government Action

The Government intends to use of existing mechanisms to promote the achievement of the objectives identified in this Chapter. The Government, with its CPTPP counterparts, established a Development Committee with the objective to ensure the effective implementation of this Chapter.

Chapter 24 – Small and Medium-Sized Enterprises

1. TPP Provisions

The SME Chapter reflects the CPTPP Parties shared interest in promoting the participation of SMEs in trade and reinforces Canada’s inclusive approach to trade that seeks to ensure that SMEs share in the benefits and opportunities associated with increased trade and investment.

Article 24.1 commits each Party to create a website targeted at SMEs with easily accessible information on the Agreement and ways smaller firms can take advantage of it, including description of the provisions of CPTPP relevant to them. The website may also include links to: customs regulations and procedures, regulations and procedures concerning intellectual property rights; technical regulations, standards, and sanitary and phytosanitary measures relating to importation and exportation; foreign investment regulations; business registration procedures; employment regulations; and taxation information. This dedicated SME website will increase transparency and help facilitate trade by creating a convenient platform for SMEs to access information related to trade.

Article 24.2 establishes an SME Committee that will meet within one year of the date of entry into force, and thereafter as necessary. The Committee will review how well the CPTPP is serving SMEs, consider ways to further enhance its benefits, and oversee cooperation or capacity building activities to support SMEs. These activities could include, those related to export counseling, assistance, and training programmes for SMEs, information sharing, or, trade finance. The SME Committee can coordinate its work programme with those of other Committees, or Working Groups to identify appropriate opportunities for cooperation to improve the ability of SMEs to engage in trade and investment opportunities provided by this Agreement. This provision will assist in the integration of SME-related activities and issues in the work of all the Committees under the CPTPP.

Article 24.3 provides that the provisions of Chapter 24 are not subject to dispute settlement (Chapter 28).

2. Canadian Legislation

No changes to Canadian legislation arise out of Chapter 24.

3. Intended Government Action

The Government published a dedicated SME website containing information vital for SMEs to be able to take advantage of the opportunities such as rules of origin, schedules, intellectual property issues, investment, taxation, business registration and tariff information.

The Government, with its CPTPP counterparts, established the SME Committee aiming to ensure the effective implementation of this Chapter. The SME Committee provides a mechanism to cooperate on activities that promote the engagement of Canadian SMEs in international trade and help ensure that SME-related issues are discussed by other committees and working groups.

Chapter 25 – Regulatory Coherence

1. TPP Provisions

Governments use regulations to achieve a range of policy objectives, such as ensuring the health and safety of their citizens, protecting the environment and protecting consumers. While the vast majority of regulations are designed to achieve non-trade–related objectives, they can also have the unintended effect of restricting or distorting trade. As tariffs have decreased globally, regulatory and other non-tariff barriers are the hurdles that Canadian exporters are increasingly facing when attempting to gain access to foreign markets.

This Chapter is a new approach in helping to deal with the growing challenge posed by non-tariff barriers. The Chapter aims to facilitate regulatory coherence between CPTPP Parties by encouraging widely-accepted good regulatory practices, which provides greater regulatory transparency and more predictable access to foreign markets for Canadian companies.

Article 25.1 sets out the definitions that apply to this Chapter.

Article 25.2 provides a definition of “regulatory coherence” and recognizes the importance of enhancing the benefits of this Agreement through regulatory coherence.

Article 25.3 sets out the scope of “covered regulatory measures,” which is self-defining and flexible for each Party. Parties have up to a year after the Agreement enters into force to determine the scope and, while significant coverage is the aim, each Party can determine the scope based on any factor it chooses (e.g. level of government, branch of government, sector and/or other factors).

Article 25.4 encourages regulatory coordination within government (e.g. the establishment of a central coordinating body), which will prevent conflicting or duplicative regulations from being developed by regulators.

Article 25.5 promotes good regulatory practices, such as the use of regulatory impact assessments, to help inform interested stakeholders of the nature of a regulation, the problems being addressed and alternatives considered; ensuring that new regulatory measures are easy to understand and publicly available where appropriate; periodically reviewing existing regulatory measures to determine if they remain the most effective means of achieving the desired objective; and, public notice of future regulatory measures. Together with Article 25.4, greater regulatory transparency will help provide Canadian exporters, including SMEs, with greater predictability regarding foreign regulatory frameworks and their enforcement.

Article 25.6 establishes a Committee on Regulatory Coherence, which will consist of government representatives and meet within the first year after entry into force of the Agreement, and thereafter as necessary. The Committee will consider issues associated with the implementation and operation of the Chapter, and consider developments in the areas of good regulatory practices with a view to making recommendations to the Commission for improvements to the Chapter to enhance the benefits of the Agreement.

Article 25.7 outlines various cooperation initiatives between the Parties, which may include information exchanges, dialogues and training programmes.

Article 25.8 establishes a mechanism to provide continuing opportunities for interested persons of the Parties to provide input on matters related to regulatory coherence.

Article 25.9 refers to the notification of implementation, which is a report prepared by each Party to describe the steps that it has taken since entry into force of the Agreement and the steps that it plans to take to implement this Chapter. Parties will have an opportunity to review these reports and pose questions. The Committee may use its review and discussion of the report as a basis for identifying opportunities for assistance and cooperative activities in accordance with Article 25.7 (Cooperation).

Article 25.10 governs the relationship between this Chapter and other chapters of the CPTPP in the case of any inconsistencies.

Article 25.11 provides that the provisions of Chapter 25 are not be subject to dispute settlement (Chapter 28).

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 25.

3. Intended Government Action

The Government intends to implement this Chapter and ensure that each Party fully implements the Chapter as agreed to between the Parties.

Chapter 26 – Transparency and Anticorruption

1. TPP Provisions

The Parties recognize the importance of clear and transparent regulation in which economic activity can take place. The Transparency and Anticorruption Chapter commits the Parties to publish their laws, regulations, procedures, and administrative rulings that could affect trade and investment and other matters covered by the Agreement. The Chapter also helps to ensure that Canadian stakeholders are notified of, or have access to, information regarding measures that may affect trade under the CPTPP. The Chapter also includes provisions intended to require each Party to have laws or measures to combat bribery and corruption, to require enforcement of these laws or measures and to provide protection to whistleblowers. Finally, the Chapter includes an Annex on transparency and procedural fairness with respect to pharmaceutical products and medical devices.

Section A: Definitions

Article 26.1 sets out the definitions that are applicable to this Chapter.

Section B: Transparency

Article 26.2 requires that each Party publish its laws, regulations, procedures and administrative rulings of general application with respect to matters covered by the Agreement. Article 26.2 also requires that, to the extent possible, each Party publish in advance, its laws, regulations, procedures and administrative rulings of general application with respect to the Agreement that it plans to adopt and that interested persons and other Parties have a reasonable opportunity to comment.

Article 26.3 provides for procedural fairness and transparency in domestic administrative proceedings.

Article 26.4 requires each Party to have impartial and independent judicial, quasi-judicial or administrative tribunals to review and if warranted, correct administrative decisions. Parties to proceedings before these courts or tribunals must also have a reasonable opportunity to support or defend their case.

Article 26.5 ensures that at the request of another Party, a Party shall, to the extent possible, provide information and respond to questions in a timely manner. Information provided under this Article is without prejudice as to whether the measure is consistent with the Agreement.

Section C: Anti-Corruption

Article 26.6 affirms the Parties resolve to eliminate bribery and corruption and recognizes the need to build integrity within both their public and private sectors. The Parties affirm their adherence to certain APEC principles and require that each Party join the United Nations Convention against Corruption. Article 26.6 also recognizes that the Parties’ domestic laws apply with respect to the description of offences, prosecution and punishment.

Article 26.7 requires that each Party adopt or maintain legislative measures to combat corruption under its laws with respect to influencing public officials, foreign public officials or an official of a public international organization. This includes adopting measures to ensure that offenders are held liable for an offence and are subject to effective, proportionate and dissuasive criminal or noncriminal sanctions, and measures to ensure the proper maintenance of books and records, financial statements, and accounting and auditing standards.

Article 26.8 requires that each Party promote integrity, honesty and responsibility among its public officials and adopt or maintain measures with respect to the selection and training of public officials, transparency and declarations with respect to their functions and activities, and identification of potential conflicts of interest. Article 26.8 also requires Parties to adopt or maintain codes or standards of conduct and disciplinary measures.

Article 26.9 requires that each Party effectively enforce its laws and measures to comply with Article 26.7 paragraph 1 (Measures to Combat Corruption) after the date of entry into force and should not use non-enforcement as a means to encourage trade and investment.

Article 26.10 requires that each Party promote the participation of the private sector and society in the prevention and fight against corruption and suggests ways that a Party may do so.

Article 26.11 states that the Chapter shall not affect Parties obligations under other international conventions.

Article 26.12 provides that, with exception to Article 26.9 Section C (Anti-Corruption), Chapter 26 will be subject to dispute settlement (Chapter 28).

Annex 26-A – Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices

Annex A outlines principles of relevance to the pharmaceutical products and medical devices sectors, such as the importance of innovation and the need to promote timely and affordable public access to these products. The Annex also provides a consultative mechanism to discuss issues of interest to the parties on a broad range of issues pertaining to these sectors.

Annex A.1 sets out the definitions that are specific to Annex 26-A, including a reference to “Party-Specific Definitions” in the Appendix to Annex 26-A.

Annex A.2 outlines principles of relevance to the pharmaceutical products and medical devices sectors, such as timely and affordable access to pharmaceutical products and medical devices; protecting and promoting public health; and acknowledging the importance of research and development.

Annex A.3 is suspended under the CPTPP — see Part 2, Annex – List of Suspended Provisions above.

Annex A.4 outlines the ways in which pharmaceutical product manufacturers can disseminate information to health professionals and consumers, and specifies that this dissemination of information be only as permitted under a Party’s laws, regulations and procedures.

Annex A.5 states that Parties shall provide an opportunity for consultation on issues covered by this Annex upon request of another Party.

Annex A.6 provides that the provisions of Annex 26-A are not subject to dispute settlement (Chapter 28).

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 26.

3. Intended Government Action

The Government will continue to promote transparency in laws, regulations, and in administrative, judicial and quasi-judicial proceedings in Canada and in other Parties. Canadians affected by measures or proposed measures of the Parties and having concerns that these measures could affect the benefits under the Agreement should contact Canadian Government officials.

Chapter 27 – Administrative and Institutional Provisions

1. TPP Provisions

Chapter 27 sets out how the Agreement will be managed and implemented by the CPTPP Parties. The Chapter establishes the structure, function, processes and procedures of the CPTPP Commission, which will oversee the implementation and operation of the Agreement.

Article 27.1 establishes the Commission which is composed of government representatives of each Party at the level of Minister or senior officials.

Article 27.2 sets out the functions of the Commission, including the consideration of matters with respect to the implementation of the Agreement; the review of the economic relationship and partnership among Parties; the consideration of proposals to modify or amend the Agreement; oversight on work of bodies established under the Agreement; consideration of ways to improve trade and investment among Parties; establishment and amendment (if necessary) of Dispute Settlement Rules of Procedure; periodic review of Dispute Settlement Panel roster; work to resolve disputes associated with the interpretation or application of the agreement; issue interpretations of the Agreement provisions; seek advice from non-governmental sources on issues related to its functions (outlined in Paragraph 1); and take any other action agreed to by the Parties.

The Commission will also review the operation of the Agreement with a view to updating and enhancing it to ensure it continues to address the trade and investment issues and challenges faced by the Parties in a relevant manner. In undertaking a review of the Agreement, the Commission will take into account information from various sources.

Article 27.3 provides that the Commission, and all other subsidiary bodies under the Agreement, will make decisions by consensus unless a different way of making a decision is set out elsewhere in the Agreement.

Article 27.4 sets out that the Commission must meet within one year of the date of entry into force of the Agreement and thereafter as decided by the Parties in order to fulfill its functions. This Article also allows for the Commission and any other subsidiary body under the Agreement to establish its own rules of procedure. For the Commission, the Party chairing its meeting is responsible for administrative support for the meeting. The Commission and other subsidiary bodies can meet by any means agreed to, including by videoconference or via email.

Article 27.5 sets out the framework to establish a “contact point” for each Party. These contact points will facilitate communications between the Parties on any matter covered by the Agreement.

Article 27.6 requires each Party to designate an office to provide administrative support for dispute settlement proceedings.

Article 27.7 sets out the requirements and process for reporting to the Commission for those Parties that have been granted a transition period to become compliant with particular obligations under the Agreement. These requirements include reporting on its progress toward implementing the obligation at Commission meetings and then in writing prior to expiration of the transition period. A Party with the transition period must also notify the other Parties, in writing, of the measures taken to implement the obligation no later than the expiry of the transition period.

2. Canadian Legislation

Section 10 of the CPTPP Implementation Act provides that the Minister of International Trade is the principal representative of Canada on the Commission.

Subsection 12(a) of the CPTPP Implementation Act provides that the Government of Canada will pay its appropriate share of any expenditures incurred by or on behalf of the Commission.

3. Intended Government Action

The Government will work with other Parties to implement the Agreement in accordance with these provisions. The Government anticipates regular meetings of the Commission and committees to carry out the commitments of the Agreement.

Chapter 28 – Dispute Settlement

1. TPP Provisions

The CPTPP dispute settlement mechanism provides an expeditious and effective means for the resolution of disputes between Canada and the other CPTPP Parties pertaining to the interpretation or application of the Agreement.

The Chapter provides for the ability to resolve disagreements through cooperative means such as consultation and mediation, so that formal dispute settlement is used only if the Parties to a dispute fail to resolve it through other means.

Article 28.1 sets out a number of key definitions used in the Chapter, including definitions of “complaining Party” and “responding Party,” the primary parties in a dispute.

Article 28.2 affirms the importance of cooperation and consultations between the Parties in the interpretation and application of the Agreement. The Parties shall make every attempt, through cooperation and consultations, to arrive at a mutually satisfactory resolution of any matter that might affect the operation of the Agreement.

Article 28.3 establishes that the scope of the Chapter applies to any dispute concerning the interpretation or application of the provisions of the Agreement, unless otherwise provided elsewhere in the Agreement. For example, dispute settlement under this Chapter does not apply to certain chapters, see, for instance, Chapter 16 (Competition Policy) and Chapter 24 (Small and Medium-Sized Enterprises), or applies with limitations in other chapters, see, for instance, Chapter 12 (Temporary Entry), Chapter 14 (Electronic Commerce) and Chapter 26 (Transparency and Anti-Corruption). This Article also sets out how side instruments between two or more Parties concluded in connection with the Agreement, for example, side letters, interact with the Agreement’s dispute settlement mechanism.

Article 28.4 provides that the same dispute cannot be heard simultaneously under the CPTPP dispute settlement process and under another international trade agreement to which the Canada and the other CPTPP Party to the dispute are parties. This means, for example, that where there is a substantially equivalent provision in the WTO Agreement and in CPTPP, and a dispute has been brought to the WTO, the CPTPP dispute settlement procedures cannot also be used. Under what trade agreement a dispute is actually heard depends on the choice made by the complaining Party.

Article 28.5 allows Parties to seek to resolve a dispute through a consultations process that involves any matter covered by the Chapter. When consultations are requested, the consulting Parties are to enter into them within 30 days of the date of receipt of the request by the responding Party, unless the matter involves perishable goods, in which case consultations will commence within 15 days. In order to have efficient and productive consultations, each consulting Party is to provide sufficient information to enable a full examination of the matter at issue and to protect any confidential information of the other consulting Party. The consultation process must be used before any matter can move to a panel (see Article 28.7).

Article 28.6 provides other options for Parties to use to resolve any trade issues cooperatively, namely good offices, conciliation and mediation.

Article 28.7 lays out the circumstances under which a complaining Party may request the establishment of a panel to hear a dispute and the procedure for such a request. The Article also confirms that a panel shall not be established to review a proposed measure. A panel’s terms of reference are then set out in Article 28.8.

Article 28.9 sets out the rules for appointing panel members. Panels are to be composed of three panellists with each disputing party appointing one panellist. The panel chair is appointed according to a series of steps that will lead to the complete panel being appointed no more than 65 days of the request for establishment of a panel. The rules ensure that neither Party can block the composition of a panel.

Article 28.10 sets out the qualifications for panellists and specifies that all panellists are to have specialized knowledge of international trade, law and must be chosen on the basis of their objectivity, reliability and sound judgment. Further, panellists must be independent and not affiliated with the government of any of the Parties and not take instructions from any Party. As well, they must comply with the Code of Conduct established by the Parties in the Rules of Procedure for panels (see Article 28.13 [Rules of Procedure for Panels]). The Code of Conduct is to require, among other things, that each potential panellist must avoid conflicts of interest, both direct and indirect, and must disclose, before he or she is confirmed as a panellist, any potential conflict of interest that may affect his or her impartiality or independence. There are also provisions in the Agreement requiring specific expertise or experience for Party appointed panellists in Labour, Environment, Anti-Corruption and Financial Services disputes.

Article 28.11 addresses two additional elements of panel composition. First, it provides for the establishment of a Roster of Panel Chairs. This Roster is to be appointed by consensus and consist of at least 15 individuals. The Roster may include up to one national from each Party. Second, the Article provides for the potential establishment of Party-Specific Lists of individuals who may serve as panellists for that Party.

Article 28.12 describes the role of a panel – to make an objective assessment of the matter before it and to provide the findings, determinations and recommendations necessary for resolving the dispute. Paragraph 3 confirms that the provisions of the Agreement are to be interpreted by panels in accordance with customary rules of interpretation of public international law, such as those set out in the Vienna Convention on the Law of Treaties. It also explains the circumstances in which Panel and Appellate Body reports of the WTO Dispute Settlement Body are to be taken into account.

Article 28.13 confirms that the Parties will establish Rules of Procedure for panels that will be subsequently adopted by the CPTPP Commission. These rules are to ensure a number of specific requirements including that panel hearings will be open to the public subject to protection of confidential information or unless otherwise agreed by both disputing Parties and that non-governmental entities will have the opportunity to provide written views on the dispute to the panel.

Article 28.14 sets out the rules for the participation of other CPTPP Parties not directly involved in a dispute (known as Third Parties) to participate when they consider that they have an interest in the dispute.

Article 28.15 provides for the use of experts by the panel when the panel and the disputing Parties agree this is appropriate.

Article 28.16 sets out the circumstances in which a panel may suspend or terminate its work.

Articles 28.17 and 28.18 deal with the interim and final panel reports, respectively. The strict timelines associated with the interim and final panel reports ensure the expeditious resolution of disputes between CPTPP Parties.

Under Article 28.19, CPTPP Parties have committed to taking action necessary to comply with the final panel report whenever possible. The Article also provides the responding Party a reasonable period of time to take such measures. If the disputing Parties cannot agree on that period of time, they may ask the panel Chair to determine that time period, which normally shall not exceed 15 months.

Article 28.20 allows for temporary remedies where a Party fails to bring its measures into compliance. When this occurs, the complaining Party is entitled to suspend obligations (to a level equivalent to the nullification or impairment caused by the violation) or receive compensation. Any disagreements on compliance or the equivalence of the retaliation may be referred to the panel.

This Article also contains two novel remedies that may modify or replace the “traditional” remedy of suspension of obligations discussed above. First, when the circumstances of Article 28.20 Paragraph 7 and related paragraphs in Article 28.20 are met, a responding Party may pay a monetary assessment in lieu of suspension of benefits by a complaining Party, for a maximum of 12 months. This period can be extended if the complaining Party agrees. Second, further to Article 28.20 Paragraph 8 and related paragraphs in Article 28.20, the disputing Parties may agree that a monetary assessment may be paid into a fund designated by the disputing Parties and then used for actions that will resolve the dispute.

Article 28.21 provides a review mechanism allowing a responding Party to obtain a panel decision that it has taken action that brings itself into compliance in circumstances where the complaining Party has suspended benefits under Article 28.20. When this occurs, the complaining Party is required to end the suspension of benefits.

Article 28.22 provides that no Party can create rights of action under its domestic laws for claims that an action of a Party is inconsistent with the Agreement or that a Party has failed to carry out its obligations under the Agreement.

Article 28.23 represents a commitment by all CPTPP Parties to encourage and facilitate the use of arbitration and other means of alternative dispute resolution for the settlement of international commercial disputes in the CPTPP free trade area.

2. Canadian Legislation

Section 10 of the CPTPP Implementation Act provides that the Minister for International Trade is the principal representative of Canada on the CPTPP Commission. Further, Section 11 authorizes the Minister for International Trade to appoint panellists and to propose the names of individuals to be included in the Roster of Panel Chairs under Article 28.11 of the Agreement.

Section 12 of the CPTPP Implementation Act provides the authority for payment of remuneration and expenses incurred by panels and the CPTPP Commission, as well as among other bodies established under the Agreement.

Section 13 of the CPTPP Implementation Act provides a mechanism for the suspension of obligations in a case where Canada is a complaining Party following a determination by a panel that the responding Party has failed to bring its measure(s) into compliance. Any suspension made under this clause will be in effect only so long as the inconsistent measure is not rectified by that responding Party.

3. Intended Government Action

The Government will ensure that the individuals proposed for appointment to a panel or to the Roster of Panel Chairs under Articles 28.9 and 28.11 possess the requisite characteristics in order to enable disputes to be heard in a timely, objective and impartial manner.

The Government will also consult closely with affected stakeholders with respect to dispute settlement under this Chapter and with the provinces and territories in the preparation and presentation of submissions in any dispute settlement proceedings in which provincial or territorial measures are at issue.

Chapter 29 – Exceptions and General Provisions

1. TPP Provisions

Chapter 29 sets out crosscutting exceptions that apply to several chapters or the entire Agreement. Generally, these exceptions are designed to ensure that Canada and the other CPTPP Parties maintain the right to regulate or take policy actions for certain purposes or in certain areas notwithstanding specific obligations in the Agreement. This Chapter specifies when Canada or the other Parties may impose measures that would otherwise be inconsistent with the obligations of the Agreement.

Article 29.1 sets out general exceptions to the obligations in the Agreement. With respect to various goods-related chapters and provisions, the general exceptions in the GATT 1994, and their interpretive notes are incorporated into the Agreement, with the necessary changes having been made to make them applicable to the Agreement. Likewise, with respect to services-related chapters and provisions, the applicable general exceptions in the GATS have been incorporated into the Agreement with the necessary changes having been made to make them applicable to the Agreement. This allows Canada and the other CPTPP Parties to take, for example, measures (including environmental measures) necessary to protect human, animal, or plant life or health that would otherwise be inconsistent with obligations under the Agreement. In addition, this Article affirms that nothing in the Agreement will prevent Canada and the other Parties from undertaking actions authorized by the Dispute Settlement Body of the WTO or a decision made by a dispute settlement panel of another free trade agreement that Canada and another Party are party to, such as maintaining or increasing customs duties.

Article 29.2 provides for exceptions to the Agreement on the grounds of essential security interests. This ensures that Canada and the other CPTPP Parties are not required to provide or allow access to any information where they determine that doing so would go against their essential security interests. This exception also ensures that Canada and the other Parties may apply measures that they consider necessary to fulfill their obligations on maintaining or restoring international peace and security or protecting their own essential security interests.

Article 29.3 allows Canada and the Parties to institute safeguards that restrict capital payments or transfers in the event or threat of a balance-of-payments crisis or external financial difficulties, or if such payments or transfers cause or threaten serious difficulties for macroeconomic management. It also specifies that these measures shall not treat Canada differently than other trading partners, be consistent with the relevant articles of the Agreement of the International Monetary Fund, only go as far as is necessary, not exceed 18 months except under exceptional circumstances, not be inconsistent with the Agreement’s obligations on expropriation and compensation under Article 9.8, not interfere with investors’ ability to earn a market rate of return on any restricted assets, and not be used to avoid necessary macroeconomic adjustments. In addition, the Parties must endeavour to provide that any of these types of safeguards put in place be price-based, or otherwise explain their rationale for using quantitative restrictions. This Article also incorporates Article XII and the Understanding on the Balance of Payments Provisions of the GATT 1994 into the Agreement, with the necessary changes having been made to make them applicable to the Agreement, and establishes the relevant procedures to be followed in the use of these measures.

Like Canada’s other trade agreements, except for CETA, nothing in the Agreement applies to taxation measures unless specified in Article 29.4, specifically

In addition, Article 29.4 provides that if there is a provision in the Agreement which is inconsistent with a provision in a tax convention (e.g. avoidance of double taxation agreement) that Canada and the other CPTPP Parties are party to, the provision in the tax convention will prevail. The Article also sets out the relevant procedures for the taxation authorities of the Parties to follow in the event of an issue with respect to inconsistency between the Agreement and a tax convention.

Article 29.5 allows Canada or any other Party to deny the benefits of investor-state dispute settlement (under Section B of Chapter 9 [Investment]), either before a claim is submitted, or at any time during arbitral proceedings, for claims challenging a tobacco control measure. This means that, if Canada chooses to do so, no claim can be submitted or proceed against Canada under the Agreement’s investor-state dispute settlement mechanism for measures related to the production or consumption of manufactured tobacco products, their distribution, labelling, packaging, advertising, marketing, promotion, sale, purchase, use, as well as enforcement measures such as inspection, recordkeeping, and reporting requirements.

Article 29.6 provides that New Zealand may take measures that accord more favourable treatment to the Māori in respect of matters covered by the Agreement, including in fulfillment of New Zealand’s obligations under the Treaty of Waitangi, as long as any such measures are not used as a means of arbitrary or unjustified discrimination or as a disguised restriction on trade in goods, services, or investment.

Article 29.7 states that the Agreement does not require Canada or any other Party to provide or allow access to information that would impede law enforcement, prejudice the legitimate commercial interests of particular companies, or otherwise be contrary to the public interest.

Article 29.8 provides that Canada and the other Parties may each establish measures to respect, preserve, and promote traditional knowledge and traditional cultural expression.

2. Canadian Legislation

No amendments to Canadian legislation arise from Chapter 29.

3. Intended Government Action

The provisions of Chapter 29 allow Canada to continue to regulate in the public interest, including, where necessary, by relying on the general exceptions in this Chapter.

Chapter 30 – Final Provisions

1. TPP Provisions

This Chapter includes provisions related to the entry into force, accession, and withdrawal from the Agreement which were changed in CPTPP.

Article 30.1 confirms that the annexes, appendices, and footnotes to the main text of the Agreement constitute an integral part of the Agreement.

Article 30.2 sets out rules regarding amendments to the Agreement and entry into force of the amendments. An amendment to the Agreement may be agreed to in writing, and will enter into force 60 days after the date on which Canada and the other CPTPP Parties have notified the Depositary, in writing, of their approval of the amendment or on another date agreed to between all CPTPP Parties.

Article 30.3 provides that the Parties consult on whether to amend the Agreement if a provision of the WTO Agreement that has been incorporated by reference into the Agreement is amended.

Article 30.4, dealing with accession, was replaced by Article 5 of the CPTPP. Article 30.5, dealing with entry into force, was replaced by Article 3 of the CPTPP. Article 30.6, dealing with withdrawal, was replicated in Article 4 of the CPTPP. Article 30.7 establishes New Zealand as the Depositary for the Agreement and sets out the functions of that role.

Article 30.8, which deals with authentic texts, was replicated in Article 7 of the CPTPP.

2. Canadian Legislation

Section 50 of the CPTPP Implementation Act provides that the CPTPP Implementation Act will come into force on a day fixed by order of the Governor in Council. This date was subsequently fixed as December 30, 2018.

3. Intended Government Action

The Government will implement the Agreement as per the above provisions.