STATES OF JERSEY

EXTENSION TO JERSEY OF UK MEMBERSHIP OF THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP

Presented to the States on 25th November 2024 by the Minister for External Relations

STATES GREFFE

2024  R.173

STATES OF JERSEY

REPORT: EXTENSION TO JERSEY OF UK MEMBERSHIP OF THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP

Presented to the States Assembly on 26th November 2024 by the Minister for External Relations

REPORT

This Report to the States Assembly provides an overview of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and its anticipated extension to Jersey through UK accession as the 12th member country.

It provides States Members with an overview of –

• The background to prospective CPTPP application to Jersey

• The stages of application of the CPTPP to Jersey

• An assessment of the implications, including risks and opportunities, for application of the CPTPP to Jersey

Annexes

• Annex I – the CPTPP chapters by implementation stage (summary)

• Annex II – the CPTPP chapters (full core text)

• Annex III – UK Accession Protocol (full core text)

MINISTER FOR EXTERNAL RELATIONS 26th NOV 2024

The extension to Jersey of UK membership to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

EXECUTIVE SUMMARY

The UK government has decided to seek membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a pre-existing plurilateral international trade agreement that currently comprises eleven countries in the Pacific Rim region. Jersey, as a British Crown Dependency, can choose to participate in the UK's membership of the CPTPP.

The Government of Jersey indicated a desire for the agreement to be applied to the Island following the decision of the States Assembly (P.94/2021) to endorse goods trade participation and potential later services trade participation in such international agreements.

The UK accession to the CPTPP is expected to enter into force from 15 December 2024, which means the agreement will begin to apply to Jersey through a staged process from this date.

There are three stages to the potential application of CPTPP membership to Jersey. Firstly, from the first day of CPTPP application, Jersey can make use of full goods-related trade easements with respect to CPTPP countries, and vice versa. Secondly, following an initial application period of two years from entry into force, broader regulatory alignment chapters to achieve high-quality trading standards will automatically come into force for Jersey and will be reciprocated by CPTPP partners. Thirdly, the remainder of the CPTPP agreement, concerning services trade and investment provisions, may then be applicable to Jersey, subject to a successful UK-led negotiation with CPTPP partners.

The CPTPP will span five continents and a combined market population of nearly 600 million people including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The extension of UK membership of the CPTPP to Jersey presents not only potential future commercial opportunities, but also a platform from which Jersey can build its profile as a well-regulated, innovative, and dynamic jurisdiction. Participation in CPTPP would integrate the Island within an internationally recognised marker of best practice in free and fair trade standards; as well as enhancing Jersey's reputation bilaterally with individual CPTPP members in the Pacific Rim region.

A detailed cross-government review has determined that Jersey is ready to comply with all provisions in stages one and two of the proposed application of the CPTPP. Work is already underway to ensure Jersey will be fully compliant with the outstanding provisions to allow for a request to CPTPP members for full extension of the agreement. When reaching the final stage of applying the wider agreement with respect to services, a further Report will be presented to the States Assembly.  

The extension of UK membership to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

Jersey, along with the governments of the other Crown Dependencies of Guernsey and the Isle of Man, is expected to join the CPTPP in December 2024. This follows agreement with the UK government to have the agreement applied as part of the UK's accession as the 12th member of the CPTPP. This report sets out the membership implications for Jersey and the immediate process which results from the CPTPP entering into force.

1. BACKGROUND TO THE ACCESSION

The Government of Jersey's Common Strategic Policy (2024-2026) [1]sets out the intent to enhance opportunities for business and strengthen Jersey's reputation, while the Common Policy for External Relations [2] details the need to ensure Jersey is an

"internationally connected economy; safeguarding its competitive position as a platform for global business and promoting growth through trade and investment". The opportunity for participation in new UK Free Trade Agreements is one aspect of this approach.

In this context, the CPTPP is an important agreement that will give Jersey a platform to signal its commitment to high-quality international trade standards and has the potential to unlock new trade and investment opportunities for Jersey businesses in the Pacific Rim region.

The CPTPP is a broad-based and comprehensive free trade agreement signed in 2018 between Australia, Canada, Japan, Mexico, New Zealand, Singapore, Brunei Darussalam, Chile, Malaysia, Peru, and Vietnam. The CPTPP aims to align likeminded liberal economies to common standards, and to modernise the terms of trade and market access which will allow businesses of all sectors to trade into the region and across borders more easily.

In 2021, the UK entered into accession dialogues to join the CPTPP with the stated goal of accessing better trade terms' with one of the fastest growing regions' in GDP terms. [3] Following extensive negotiations, CPTPP partners finalised an agreement to include the UK in 2023.

As part of its accession negotiations, the UK – following established constitutional practice to advance Jersey's interests – sought the position of the Government of Jersey regarding inclusion within the CPTPP. In February 2022, the Council of Ministers (CoM) agreed to participate in the CPTPP, initially on a limited basis of goods-only but with the option and ambition for full inclusion once sufficient time was available to deliver against any compliance expectations incumbent to the CPTPP. This position aligned with the decision of the States Assembly in respect of Jersey's overall approach to participation in FTAs; namely to seek goods participation from the outset with an extension mechanism – if negotiable  – for later chapter coverage, particularly in relation to services and investment. [4]

Since 2022, the Government of Jersey has initiated a cross-government programme of work to bring together departments to assess the opportunities, risks, and requirements within the CPTPP. This review has resulted in an agreed assessment of the Island's compliance, together with a plan to ensure Jersey is fully compliant in outstanding areas to enable full services and investment participation.

By 15 December 2024, the UK (and Crown Dependencies) will complete its accession to the CPTPP as its 12th member country.

2. STAGED PROCESS OF CPTPP APPLICATION TO JERSEY

The CPTPP was an established trade agreement before the UK sought accession. This makes it different to other agreements that the UK has negotiated bilaterally. The UK's negotiations therefore took place against the backdrop of set core text and established trading principles.

A chapter-by-chapter summary of the CPTPP provisions is available in Annex I. A copy of the full Agreement is included as Annex II.

For the Crown Dependencies, there will be three stages of prospective CPTPP application, as outlined below:

Stage 1 – provisions regarding trade in goods

The application of CPTPP provisions in December 2024, for Jersey, will be limited to goods-related provisions solely. From day 1' of CPTPP application, businesses in Jersey can make use of full goods-related trade easements with respect to CPTPP countries. In turn, the Government of Jersey will reciprocate access to its market for CPTPP countries with the same goods-related liberalisations. This ensures full alignment with the UK to maintain coherence within the Customs Union between Crown Dependencies and the UK.

Stage 2 – provisions aligning regulatory standards

After an initial 2-year period following entry into force of the CPTPP, broader regulatory alignment chapters will automatically come into force for Jersey and will be reciprocated by CPTPP partners. These chapters ensure good national practice across areas like competition, labour, and the environment. This will involve no new compliance burdens for Jersey and will instead afford certain assurances and familiarity of practice for firms that may operate within the CPTPP region.

Stage 3 – services & investment offer

Work is already underway to ensure outstanding areas identified in the cross- government compliance review are addressed. Subject to the outcome of this process, Jersey can then request that the UK initiate negotiation with CPTPP partners for full application of the agreement to the Island.

Evolution of the CPTPP agreement

The CPTPP is designed as a live' and evolving' compact. Therefore, it is anticipated that partners will seek further agreement by consensus to raise standards of liberalisation and regulation on a rolling and regular basis. Jersey would, via the UK, feed into any member dialogues to achieve CPTPP consensus on new commitments. Therefore, Jersey's assessment of compliance is a status quo' assessment. Further analysis may be needed in future if CPTPP partners reach agreement on substantive new commitments.

3. DISAPPLICATION

As a means of risk management, and in line with the decision of the States Assembly (P.94/2021),[5] the Government of Jersey has secured a separate disapplication mechanism within the negotiated text. This means Jersey has reserved the right to seek disapplication of the CPTPP – in totality – for any reason, and at any stage after the first day of membership in the CPTPP. Importantly, this disapplication mechanism is separate to the UK's own membership of the CPTPP. It means that, following notification of Jersey's intention to exit the CPTPP – submitted via the UK to CPTPP partners – Jersey could be exited from the agreement through a 2-year transition of disapplying the provisions of the CPTPP agreement.

4. IMPLICATIONS FOR JERSEY

The Government of Jersey has undertaken a cross-departmental analysis of the CPTPP core text (Annex II) to analyse trade liberalisation opportunities, conduct a risk assessment of potential sector exposure within the region, and identify where there may need to be changes effected to ensure that the CPTPP commitments can be delivered appropriately and efficiently. Consequently, the cross-department review has examined each chapter of the agreement, each sector, each area of regulation on-island, and each individual economic market in the CPTPP bloc coverage.

4.i. CPTPP market exposure

The CPTPP presents a substantial potential market opportunity as an almost entirely free trade' area which will span five continents and nearly 600 million consumers. The Pacific Rim region one of the fastest-growing in the world: it is projected to grow at an average of 14% between 2023-28 – and will account for 65% of the world's 5.4 billion middle class consumers by 2030. [6]

Current Trade

The Jersey Customs & Immigration Service (JCIS) has completed analysis on the present value of trade with the CPTPP countries. However, because data is confined only to goods, and only those which enter or leave the island directly, it is challenging to determine its full value. With respect to goods entering/exiting via the UK, and the wider elements of exports across all services sectors, there is no reliable data source. The data picture available suggests Jersey does not have existing deep direct trade ties with the Pacific Rim area. Between 2018-2022 total goods imports from CPTPP countries were valued at around £6.6 million, whilst exports to these countries were £4.8 million.

Notwithstanding, Jersey businesses are already involved in commercial activity in CPTPP member countries. The Government of Jersey has worked with its Arm's Length Organisations (ALOs) to engage with businesses on-island and uncovered existing ties to the region spanning financial services, tech development, dairy, and light manufacturing. A number of Jersey firms have since expressed an enthusiasm for the principles behind CPTPP membership and the associated potential market gains from decreased tariffs, predictable treatment from regulators, and more security of data.

Future Trade

The region is currently the fastest growing consumer import base of services globally – in 2022, Singapore imported $71 billion of professional services, Canada imported $10 billion of financial services, and Malaysia imported $8 billion of business support services. [7] While CPTPP markets are not the centre of current Jersey financial and professional services exports, the extra protections in the agreement and the economic growth of the CPTPP region presents an opportunity for Jersey firms of all services sub- sectors to grow their customer bases.

International Profile

The plurilateral nature of the CPTPP (spanning 11 countries prior to UK accession) represents an opportunity for promoting Jersey's reputation as a highly professional, well-regulated, innovative economy that is seeking increased trade and investment with one of the fastest-growing regions in the world.

Participation in the CPTPP provides Jersey not only with an opportunity to deepen its bilateral ties with its member countries, but also to benefit from alignment with an internationally recognised marker of high-quality trade standards. Organisations like the World Trade Organisation, World Customs Organisation, World Intellectual Property Organisation, United National Trade & Development Agency, and other multilateral agencies have singled out the CPTPP as best practice in modern trade standards which connect economic growth, sustainable development, and high regulatory quality.

4.ii. CPTPP Contents – Stage 1 – trade in goods

The UK accession text (Annex III) provides for inclusion of Jersey in the CPTPP for trade in goods from the date it enters into force for the UK. This covers all matters relating to trade easements for physical goods including: tariffs and customs duties; customs processes; import and export controls; and technical matters relating to cross- border administration and delivery of goods.

Tariffs and Duties

The CPTPP rules out tariffs and duties across 99% of tangible goods product lines, ensuring that any Jersey businesses wishing to sell goods into the region will do so at a more competitive rate than those vendors outside the trade bloc. Tariffs for imported goods from the region will likewise be dropped, and ensure complete alignment of goods treatment within the UK-Crown Dependencies Customs Union. When surveying Jersey's current import profile from CPTPP countries, volumes appear to be low and would not present any additional burdens on our customs systems nor significant financial implications from loss of duty income.

Customs rules

Additionally, alignment of customs rules regarding the origin of components and complex final goods brings with it an opportunity for Jersey firms to connect into global value chains that stretch over the Pacific Rim. For example, Jersey aviation components used in Canadian manufacturing processes or Jersey dairy used in UK ice creams sold in Japan will be treated as local' for all intents and purposes by removing costs and customs red tape. This should help ensure Jersey components are more competitive than those of firms based outside the CPTPP.

Agriculture

The CPTPP's application also includes provisions on agriculture which will apply to Jersey, particularly with respect to subsidies, import quotas, production support, protected geographical indication (GI), and import controls. After thorough assessment and engagement with the UK, the Government of Jersey has determined that there will be no changes to the Jersey agricultural regime in any of these areas. While there is no requirement to alter existing programmes such as farming subsidy or ban on milk imports, the CPTPP does bring in enhanced protections to certain areas of interest to Jersey agriculture – specifically a commitment from members to protect GIs such as those found under the Genuine Jersey brand.

The Government of Jersey has focussed its CPTPP assessment on analysis of risks of further liberalisation regarding CPTPP countries – particularly with respect to any potential incentives for CPTPP countries to drive their food and drink products into Jersey at high volume. There is significant existing research in this area within the CPTPP region. Examination of available import and export data and trends in Jersey, the UK, and CPTPP countries, suggests agrifood products from the region are so low as to make the immediate risk of market flooding negligible. However, this possibility will need to be monitored continually following application.

Additionally, to address any concerns about admitting poorer quality food or drink products into Jersey through this agreement, assurances have been granted by the UK Food Standards Agency – which is the primary controlling agent of agrifood import/export within the UK Customs Union with Crown Dependencies – that existing controls will stop any potential import of products with could be harmful, such as containing high levels of pesticides or hormones posing a known public health risk.

More positively, wines, beers and spirits present an interesting opportunity with no corresponding risk for Jersey in the region. This sector was ranked amongst the top 10 imports for Canada, Japan, Malaysia and Singapore in 2022, with respective governments noting an informal interest in high-value, high-quality options to introduce to market. In future, Jersey producers in this sector may wish to consider the opportunity and would benefit from enhanced and tariff-free market access.

Manufacturing

CPTPP countries are significant goods-manufacturing economies, with nearly all rating highly amongst global peers for computing technology, semiconductors, energy generating equipment, telecommunications equipment, transportation equipment and vehicles, and infrastructure materials. Few Jersey businesses are major consumers of such goods, so the initial immediate impact of access to these lower-cost alternatives through the CPTPP will be confined to a small number of Jersey businesses.

4.iii. CPTPP Contents – Stage 2 – provisions aligning standards  

The CPTPP accession agreement outlines that Jersey, and the other Crown Dependencies, will be included in the regulatory alignment provisions of the agreement after an initial two-year period within membership. Regulatory alignment – the international cohesion of norms around competitive standards in each domestic market – refers in the CPTPP agreement (as summarised in  Annex I) to nine chapters of commitments across issues like open competition, labour standards, environmental standards, encouraging development cooperation (for areas such as women's economic empowerment), fostering the growth of small and medium-sized enterprises (SMEs), and ensuring transparency and efficiency from economic regulators.

These regulatory chapters are sometimes referred to as Level Playing Field' (LPF) chapters. The LPF chapters were originally a condition of membership enforced by the more economically advanced members to ensure that their businesses were not disadvantaged by adhering to higher and more costly expectations from domestic regulation than other members with lower standards.

The cross-government analytical effort examined Jersey's regime against each of the nine LPF chapters. The current analysis is that there are no new standards on which Jersey would need to improve on its existing standards to achieve the commitments of the CPTPP. This demonstrates the island's existing high standards of regulation.

Environmental standards

The CPTPP seeks to modernise trade practice by binding members to continued cooperation, collaboration, and certain legal commitments with regard to the environment and climate change. The main provisions of this chapter commit members to controlling exploitation and export of natural resources, illegal wildlife and fisheries trade, and maritime shipping impacts connected with depletion of the ozone layer.

Jersey is in a position to welcome the ambitions in this chapter to help address climate change through trade impacts given its existing commitments found in the Carbon Neutral Roadmap 2022. [8]

4.iv. CPTPP Contents – Stage 3 – services & investment offer  

The CPTPP accession text includes a provision for Jersey to seek application of the services and investment chapters, utilising a negotiation mechanism between the UK and CPTPP partners. After initial participation in the CPTPP, Jersey can ask the UK to invoke this mechanism to request that CPTPP partners consider extending full participation of the wider services and investment chapters to Jersey.

These services and investment chapters offer significant market access commitments for all CPTPP members to open business opportunities across financial services, electronic commerce, telecommunications, procurement, the temporary movement of skilled persons, and investment facilitation.

These chapters are regarded by CPTPP members and multilateral international agencies as progressive and modern commitments to ensure open globally-orientated markets and fair-trading standards. The CPTPP agreement goes further than other comparable international trade agreements by addressing common trade frictions experienced by services businesses engaged in a highly digitised global marketplace. Specifically, the chapters focus on liberalising domestic practices on data management, delivering predictable regulator transparency for matters of data protection and cybersecurity, and offering a more formalised arbitration routes for firms concerned about disputes arising through electronic commerce.

Financial Services

The primary interest for Jersey in these chapters concerns market access for financial services. Unlike goods sectors, the CPTPP would not target the immediate costs of doing trade in the region directly – namely legal and regulatory compliance costs. Instead, the financial services chapter guarantees equality of treatment for foreign firms operating in each CPTPP market – ensuring that a CPTPP member firm trying to set up in-market or just deliver a transaction in-market must be treated in every way – legal, financial and regulatory – the same as a domestic financial services provider. This safeguard is designed to provide an assurance against volatility within individual jurisdictions and an increasing coherence around best practice standards for financial services regulation.

The CPTPP may present certain Jersey financial services providers with a significant opportunity to grow new and existing forms of business in the region given sizeable demand in these markets for financial instruments and products. Equal domestic treatment would provide useful assurance to Jersey firms operating in CPTPP countries, ensuring that regulatory practices are familiar, fairly applied, and clearly communicated.

Investment

Existing and future investments made using Jersey financial instruments would be covered if Jersey achieves eventual full participation in the CPTPP. The investment chapter provides protection in these markets to ensure that investment projects are not subject to arbitrary decisions or regulatory changes. It also allows CPTPP partners an option for official recourse, which the UK could undertake on Jersey's behalf, through the investment grievances process in the event of misfortune.

These investor protections would create a reciprocal duty on Jersey through the CPTPP Investor-State Dispute Settlement system (ISDS). This provision allows foreign investors from one CPTPP partner to legally challenge government policies and regulation in another CPTPP partner which they believe negatively impacts their investments in that jurisdiction. ISDS provisions have historically been used successfully in a number of contexts, challenging discriminatory practices or unfair treatment targeting individual foreign firms. The Government of Jersey has assessed this risk alongside the UK and determined that this potential is unlikely to materialise due to broad carveouts in CPTPP text – explicitly considering public health, environmental protections, and national security concerns – disallowing challenge against domestic legislation that serves a legitimate public policy interest'.

Electronic Commerce

The Electronic Commerce Chapter includes a series of modern provisions that will support Jersey businesses and consumers to trade and engage digitally. Provisions focus on areas such as preventing the imposition of customs duties on electronic transactions, enabling the use of electronic signatures and promoting cooperation in areas, such as cybersecurity.

The Chapter includes commitments on data, which underpin trade in modern economies, enabling the free flow of data whilst guaranteeing that personal data protection frameworks are adopted (or remain in place). The Chapter also removes data localisation requirements, ensuring that Jersey businesses benefit from greater choice and lower operating costs when delivering their services in the region. Given Jersey's growing digital tech sector and technologically enabled growth sectors, including financial and professional services, these provisions provide much needed opportunities and regulatory assurance in the region.

Telecommunications

The Telecommunications Chapter includes a series of provisions which support telecommunications trade and investment, in the interests of Jersey businesses and consumers. Provisions focus on areas that improve regulatory coherence, remove barriers to trade for foreign suppliers and safeguard fair and competitive practices. The Chapter supports positive outcomes for consumers by encouraging cooperation on international mobile roaming rates, provides transparency in regulatory decision-making, and a forum to effectively respond to technological and regulatory developments across the telecommunications sector.

Temporary Movement of Skilled People

While the services chapters commit to certain minimum standards regarding entry of natural persons for temporary business purposes, particularly with regard to treatment on visas, there are no new obligations which Jersey would need to apply to comply with these best practice norms on cross-border movements.

Intellectual Property (IP)

To ensure full compliance with the services provisions and protections within the CPTPP, work has already been commissioned to update the Island's IP registry and associated legislation in Jersey – namely introducing a system of primary registration for trademarks. This work is necessary to ensure that Jersey can meet the requirements of CPTPP in relation to various areas of IP (patents, designs, trademarks, and copyright), the extension of relevant international agreements, and IP enforcement. [9]In addition, these changes are also made in the knowledge that Jersey's IP Registry needs to provide a similar offering to those of other comparable competitor jurisdictions and to complement the island's highly sophisticated financial services sector.

5. CONCLUSION

In December 2024, the Depositary to the CPTPP (New Zealand) will announce that the UK has successfully completed accession into membership. At that time, the UK membership will be effectively extended to Jersey for goods provisions.

The Government of Jersey is already prepared for the associated changes to customs and revenue collection processes, and the Government is planning to engage businesses on the island to make the best use of these new export opportunities.

The Government has initiated conversations with the UK about negotiating Jersey's inclusion in the services and investment chapters at the earliest available opportunity. Further updates will follow to the States Assembly as Jersey's coverage within the CPTPP evolves over time.

ANNEX I – SUMMARY OF CPTPP CORE TEXT CHAPTERS BY APPLICATION STAGE

ANNEX I – SUMMARY OF CPTPP CORE TEXT CHAPTERS BY APPLICATION STAGE Stage 1 – (Day 1) Removing tariffs and barriers to trade in goods  

• Chapter 2 - National Treatment and Market Access for Goods

• This chapter governs the treatment of manufactured and agricultural goods traded between Members. The chapter covers tariff reduction commitments, imposes disciplines on import and export restrictions, and clarifies import and export licencing procedures. It also seeks to curb the use of government policies that distort markets, including export taxes and duties, and export subsidies. CPTPP Parties commit to complying with and implementing relevant WTO Agreements, and to working together in the WTO to develop further disciplines on trade in goods.

• Chapter 3 - Rules of Origin and Origin Procedures

• This chapter will underpin the preferential tariff arrangements available to CPTPP producers, importers and exporters. It incorporates criteria for determining whether a good imported from a Party is eligible for preferential tariff treatment under the CPTPP.

• Chapter 4 - Textile and Apparel Goods

• The CPTPP Textiles and Apparel chapter applies exclusively to trade in textiles and apparel goods.

• Chapter 5 - Customs Administration and Trade Facilitation

• This chapter facilitates trade among the Parties by limiting the administrative burdens of customs processes and providing certainty for traders in their dealings with their respective customs authorities. It is designed to encourage cooperation between customs authorities, promote efficient customs procedures and provide transparency and fairness to traders. The chapter preserves the ability for customs authorities to enforce domestic laws and regulations.

• Chapter 6 - Trade Remedies

• Trade remedies are measures that a Party can apply should imported goods cause, or threaten to cause, injury to a domestic industry. Trade remedy measures include safeguards, and anti-dumping and countervailing duties.

• Chapter 7 - Sanitary and Phytosanitary Measures (SPS)

• The CPTPP SPS chapter builds on each party's World Trade Organization obligations and sets out how they will facilitate trade while protecting human, animal and plant life and health.

• Chapter 8 - Technical Barriers to Trade

• This chapter's primary aim is to facilitate trade, including by eliminating discriminatory barriers to trade and those that are more trade restrictive than necessary. It also enhances transparency and promotes good practice and greater regulatory cooperation.

Stage 2 – (2 years) Regulation and supporting a level playing field' for business  

• Chapter 16 - Competition Policy

• The Competition Policy chapter focusses on promoting competitive markets by adopting and maintaining laws that combat anti-competitive business activities.
• Activities that are anti-competitive or that defraud or deceive consumers have the potential to restrict trade and investment and adversely affect businesses and consumers in CPTPP Parties. Transparent, fair and comprehensive competition policies support the operation of competitive markets and economic growth in CPTPP Parties.

• Chapter 17 - State-Owned Enterprises and Designated Monopolies

• This chapter includes ground-breaking rules aimed at ensuring these entities make decisions on a commercial basis and compete with private enterprises on a level playing field, without receiving unfair advantages from the governments that own them.
• SOEs can be used to deliver critical public services, but some also operate in the commercial space and compete with private businesses.

• Chapter 19 – Labour

• The Labour chapter promotes compliance with internationally-recognised labour rights, enhanced cooperation and consultation on labour issues, and effective enforcement of labour laws in CPTPP Parties.
• This chapter includes provisions that reflect a shared commitment by CPTPP Parties to combat forced, compulsory, and child labour.

• Chapter 20 - Environment

• The Environment chapter promotes the effective enforcement of domestic environmental laws and lays the foundations for the CPTPP Parties to work together to address a range of trade-related environmental challenges, including overfishing and illegal wildlife trade.

• Chapter 21 - Cooperation and Capacity Building

• This chapter acknowledges the importance of cooperation and capacity building between CPTPP Parties in implementing and enhancing the benefits of the CPTPP.
• This chapter recognises that cooperation and capacity building activities will be undertaken on a mutually agreed basis between two or more CPTPP Parties and seek to build on existing arrangements and agreements.

• Chapter 22 - Competitiveness and Business Facilitation

• The Competitiveness and Business Facilitation chapter focuses on strengthening supply chains (also known as global value chains' or GVCs). GVCs are central to international trade and investment, particularly in Asia.

• Chapter 23 - Development

• This chapter affirms CPTPP Parties' commitment to promoting open trade and investment, as well as the contribution trade and investment makes to economic development and prosperity.
• This chapter emphasises that CPTPP Parties, which are at different stages of economic development, shall pursue national policies that maximise the opportunities afforded by the CPTPP.

• Chapter 24 - Small and Medium-Sized Enterprises

• This chapter aims to promote the growth and development of SMEs in CPTPP Parties.

• Chapter 25 - Regulatory Coherence

• This chapter encourages good regulatory practices among CPTPP Parties. Greater adherence to good regulatory practices in CPTPP Parties will result in improved business environments and contribute to maximising the potential gains from the CPTPP.

Stage 3 – (if applicable) removing barriers to services trade and easing investment

• Chapter 9 – Investment

• This chapter offers investors of Parties improved protection, predictability, and transparency for their investments in fast-growing CPTPP markets. It requires the Parties to treat each other's investors and their investments no less favourably than they treat any other investor in their territory; protects investors from government actions that are abusive, manifestly arbitrary, or in breach of due process; includes protections from expropriation without prompt and adequate compensation; and ensures investors are able to transfer capital into and out of the host country.

• Chapter 10 – Cross-Border Trade in Services

• The Cross-Border Trade in Services chapter establishes rules for the supply of services between CPTPP Parties, including obligations which require CPTPP Parties to treat local and foreign service providers equally.

• Chapter 11 – Financial Services

• The Financial Services chapter establishes rules and obligations on the supply of financial services between Parties, including banking, insurance and securities services.

• Chapter 12 – Temporary Entry for Business Persons

• This chapter facilitates the entry and temporary stay of nationals and permanent residents to facilitate the pursuit of business or investment opportunities.

• Chapter 13 – Telecommunications

o This chapter seeks to ensure that telecommunications companies in CPTPP Parties are treated equally in other CPTPP markets. It contains a comprehensive suite of rules to ensure incumbent telecommunications companies with a dominant market position provide foreign telecommunications suppliers with access to services and key infrastructure on reasonable terms and conditions. CPTPP Parties have agreed to enhanced transparency in telecommunications regulation. These rules will provide existing suppliers with greater certainty about their operating conditions and space for new players to enter the market.

• Chapter 14 – Electronic Commerce

• The Electronic Commerce (e-commerce') chapter ensures that trade conducted electronically between CPTPP Parties takes place efficiently and with appropriate consumer protections. The chapter also contains new rules which support the expanding role of the internet in international trade. For the first time, businesses will have certainty about their ability to move data across borders and investment decisions about data storage facilities.

• Chapter 15 – Government Procurement

o The Government Procurement chapter sets high quality standards for government procurement that are robust, transparent and allow suppliers to participate fairly in procurement processes. Critically, this chapter will ensure that governments do not discriminate against foreign suppliers when assessing tenders and awarding contracts. Under the CPTPP, governments must follow world-class procurement processes that provide increased levels of transparency and greater certainty for businesses, big and small. CPTPP Parties will be required to establish a review mechanism so that suppliers (both foreign and domestic) can challenge government procurements that do not follow proper processes.

• Chapter 18 - Intellectual Property

• This chapter reflects a shared commitment by CPTPP Parties to effective and balanced intellectual property systems and confirms the importance of intellectual property to international trade in the 21st century.

• Chapter 26 – Transparency and Anti-Corruption

• This chapter promotes greater transparency in the making and implementation of laws, regulations and government decisions.

ANNEX II – CPTPP CONSOLIDATED CORE TEXT

COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR

TRANS-PACIFIC PARTNERSHIP PREAMBLE

The Parties to this Agreement, resolving to :

REAFFIRM the matters embodied in the preamble to the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016 (hereinafter referred to as "the TPP");

REALISE expeditiously the benefits of the TPP through this Agreement and their strategic and economic significance;

CONTRIBUTE to maintaining open markets, increasing world trade, and creating new economic opportunities for people of all incomes and economic backgrounds;

PROMOTE further regional economic integration and cooperation between them;

ENHANCE opportunities for the acceleration of regional trade liberalisation and investment;

REAFFIRM the importance of promoting corporate social responsibility, cultural identity and diversity, environmental protection and conservation, gender equality, indigenous rights, labour rights, inclusive trade, sustainable development and traditional knowledge, as well as the importance of preserving their right to regulate in the public interest; and

WELCOME the accession of other States or separate customs territories to this Agreement,

HAVE AGREED as follows :

Article 1 : Incorporation of the Trans-Pacific Partnership Agreement

1. The Parties hereby agree that, under the terms of this Agreement, the provisions of the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016 ("the TPP") are incorporated, by reference, into and made part of this Agreement mutatis mutandis, except for Article 30.4 (Accession), Article 30.5 (Entry into Force), Article 30.6 (Withdrawal) and Article 30.8 (Authentic Texts).[10]
2. For the purposes of this Agreement, references to the date of signature in the TPP shall mean the date of signature of this Agreement.
3. In the event of any inconsistency between this Agreement and the TPP, when the latter is in force, this Agreement shall prevail to the extent of the inconsistency.

Article 2 : Suspension of the Application of Certain Provisions

Upon the date of entry into force of this Agreement, the Parties shall suspend the application of the provisions set out in the Annex to this Agreement, until the Parties agree to end suspension of one or more of these provisions.[11]

Article 3 : Entry into Force

1. This Agreement shall enter into force 60 days after the date on which at least six or at least 50 per cent of the number of signatories to this Agreement, whichever is smaller, have notified the Depositary in writing of the completion of their applicable legal procedures.
2. For any signatory to this Agreement for which this Agreement has not entered into force under paragraph 1, this Agreement shall enter into force 60 days after the date on which that signatory has notified the Depositary in writing of the completion of its applicable legal procedures.

Article 4 : Withdrawal

1. Any Party may withdraw from this Agreement by providing written notice of withdrawal to the Depositary. A withdrawing Party shall simultaneously notify the other Parties of its withdrawal through the overall contact points designated under Article 27.5 (Contact Points) of the TPP.
2. A withdrawal shall take effect six months after a Party provides written notice to the Depositary under paragraph 1, unless the Parties agree on a different period. If a Party withdraws, this Agreement shall remain in force for the remaining Parties.

Article 5 : Accession

After the date of entry into force of this Agreement, any State or separate customs territory may accede to this Agreement, subject to such terms and conditions as may be agreed between the Parties and that State or separate customs territory.

Article 6 : Review of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Further to Article 27.2 (Functions of the Commission) of the TPP, if the entry into force of the TPP is imminent or if the TPP is unlikely to enter into force, the Parties shall, on request of a Party, review the operation of this Agreement so as to consider any amendment to this Agreement and any related matters.

Article 7 : Authentic Texts

The English, Spanish and French texts of this Agreement are equally authentic. In the event of any divergence between those texts, the English text shall prevail.

In witness whereof the undersigned, being duly authorised by their respective Governments, have signed this Agreement.

DONE at Santiago the eighth day of March, two thousand and eighteen, in the English, French and Spanish languages.

1. [12]hapter 5 (Customs Administration and Trade Facilitation) Article 5.7 (Express Shipments) – paragraph 1 – subparagraph (f): second sentence
2. Chapter 9 (Investment)

1. Article 9.1 (Definitions):
   1. definition of investment agreement including footnotes 5 through 9;
   2. definition of investment authorisation including footnotes 10 and 11;
2. Article 9.19 (Submission of a Claim to Arbitration)

1. paragraph 1:

1. subparagraph (a)(i)(B) including footnote 31;
2. subparagraph (a)(i)(C);
3. subparagraph (b)(i)(B);
4. subparagraph (b)(i)(C);

5. the chaussette "provided that a claimant may submit pursuant to subparagraph (a)(i)(C) or (b)(i)(C) a claim for breach of an investment agreement only if the subject matter of the claim and the claimed damages directly relate to the covered investment that was established or acquired, or sought to be established or acquired, in reliance on the relevant investment agreement.";

2. paragraph 2: all of this paragraph including footnote 32;
3. paragraph 3 – subparagraph (b): the phrase "investment authorisation or investment agreement";

3. Article 9.22 (Selection of Arbitrators): paragraph 5;
4. Article 9.25 (Governing Law): paragraph 2 including footnote 35;
5. Annex 9-L (Investment Agreements): all of this Annex

3. Chapter 10 (Cross-Border Trade in Services)

Annex 10-B (Express Delivery Services):

1. paragraph 5 including footnote 13;
2. paragraph 6 including footnote 14

4. Chapter 11 (Financial Services)

1. Article 11.2 (Scope) – paragraph 2 – subparagraph (b): the phrase "Article 9.6 (Minimum Standard of Treatment)" including footnote 3;
2. Annex 11-E: all of this Annex

5. Chapter 13 (Telecommunications)

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

6. Chapter 15 (Government Procurement)

1. Article 15.8 (Conditions for Participation): paragraph 5 including footnote 1;
2. Article 15.24 (Further Negotiations) – paragraph 2: the phrase "No later than three years after the date of entry into force of this Agreement"[13]

7. Chapter 18 (Intellectual Property)

1. Article 18.8 (National Treatment): the last two sentences of footnote 4;
2. Article 18.37 (Patentable Subject Matter)
   1. paragraph 2: all of this paragraph;
   2. paragraph 4: the last sentence;
3. Article 18.46 (Patent Term Adjustment for Unreasonable Granting Authority Delays): all of this Article including footnotes 36 through 39;
4. Article 18.48 (Patent Term Adjustment for Unreasonable Curtailment): all of this Article including footnotes 45 through 48;

5. Article 18.50 (Protection of Undisclosed Test or Other Data): all of this Article including footnotes 50 through 57;
6. Article 18.51 (Biologics): all of this Article including footnotes 58 through 60;
7. Article 18.63 (Term of Protection for Copyright and Related Rights): all of this Article including footnotes 74 through 77;
8. Article 18.68 (Technological Protection Measures (TPMs)): all of this Article including footnotes 82 through 95;
9. Article 18.69 (Rights Management Information (RMI)): all of this Article including footnotes 96 through 99;
10. Article 18.79 (Protection of Encrypted Program-Carrying Satellite and Cable Signals): all of this Article including footnotes 139 through 146;
11. Article 18.82 (Legal Remedies and Safe Harbours): all of this Article including footnotes 149 through 159;
12. Annex 18-E (Annex to Section J): all of this Annex;
13. Annex 18-F (Annex to Section J): all of this Annex

8. Chapter 20 (Environment)

Article 20.17 (Conservation and Trade) – paragraph 5: the phrase "or another applicable law" including footnote 26

9. 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

10. Annex II

Schedule of Brunei Darussalam – 14 – paragraph 3: the phrase "after the signature of this Agreement"[14]

11. 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"[15]

PREAMBLE The Parties to this Agreement, resolving to:

ESTABLISH  a comprehensive regional agreement that promotes economic integration to liberalise trade and investment, bring economic growth and social benefits, create new opportunities for workers and businesses, contribute to raising living standards, benefit consumers, reduce poverty and promote sustainable growth;

STRENGTHEN the bonds of friendship and cooperation between them and their peoples;

BUILD on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization;

RECOGNISE the differences in their levels of development and diversity of economies;

STRENGTHEN the competitiveness of their businesses in global markets and enhance the competitiveness of their economies by promoting opportunities for businesses, including promoting the development and strengthening of regional supply chains;

SUPPORT  the growth and development of micro, small and medium- sized enterprises by enhancing their ability to participate in and benefit from the opportunities created by this Agreement;

ESTABLISH a predictable legal and commercial framework for trade and investment through mutually advantageous rules;

FACILITATE regional trade by promoting efficient and transparent customs procedures that reduce costs and ensure predictability for their importers and exporters;

RECOGNISE their inherent right to regulate and resolve to preserve the flexibility of the Parties 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;

RECOGNISE further their inherent right to adopt, maintain or modify health care systems;

AFFIRM that state-owned enterprises can play a legitimate role in the diverse economies of the Parties, while recognising that the provision of unfair advantages to state-owned enterprises undermines fair and open trade and investment, and resolve to establish rules for state-owned enterprises that promote a level playing field with privately owned businesses, transparency and sound business practices;

PROMOTE high levels of environmental protection, including through effective enforcement of environmental laws, and further the aims of sustainable development, including through mutually supportive trade and environmental policies and practices;

PROTECT and enforce labour rights, improve working conditions and living standards, strengthen cooperation and the Parties' capacity on labour issues;

PROMOTE  transparency, good governance and the rule of law, and eliminate bribery and corruption in trade and investment;  

RECOGNISE the important work that their relevant authorities are doing to strengthen macroeconomic cooperation, including on exchange rate issues, in appropriate fora;

RECOGNISE the importance of cultural identity and diversity among and within the Parties, and that trade and investment can expand opportunities to enrich cultural identity and diversity at home and abroad;

CONTRIBUTE to the harmonious development and expansion of world trade and provide a catalyst to broader regional and international cooperation;

ESTABLISH an Agreement to address future trade and investment challenges and opportunities, and contribute to advancing their respective priorities over time; and

EXPAND their partnership by encouraging the accession of other States or separate customs territories in order to further enhance regional economic integration and create the foundation of a Free Trade Area of the Asia Pacific,

HAVE AGREED as follows:

CHAPTER 1

INITIAL PROVISIONS AND GENERAL DEFINITIONS

Section A: Initial Provisions Article 1.1: Establishment of a Free Trade Area

The Parties, consistent with Article XXIV of GATT 1994 and Article V of GATS, hereby establish a free trade area in accordance with the provisions of this Agreement.

Article 1.2: Relation to Other Agreements

1. Recognising the Parties' intention for this Agreement to coexist with their existing international agreements, each Party affirms:

1. in relation to existing international agreements to which all Parties are party, including the WTO Agreement, its existing rights and obligations with respect to the other Parties; and
2. in relation to existing international agreements to which that Party and at least one other Party are party, its existing rights and obligations with respect to that other Party or Parties, as the case may be.

2. If a Party considers that a provision of this Agreement is inconsistent with a provision of another agreement to which it and at least one other Party are party, on request, the relevant Parties to the other agreement shall consult with a view to reaching a mutually satisfactory solution. This paragraph is without prejudice to a Party's rights and obligations under Chapter 28 (Dispute Settlement).[16]

Section B: General Definitions

Article 1.3: General Definitions

For the purposes of this Agreement, unless otherwise provided in this

Agreement:

AD Agreement  means the  Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, set out in Annex 1A to the WTO Agreement;

Agreement means the Trans-Pacific Partnership Agreement; APEC means Asia-Pacific Economic Cooperation;

central level of government has for each Party the meaning set out in Annex 1-A (Party-Specific Definitions);

Commission means the Trans-Pacific Partnership Commission established under Article 27.1 (Establishment of the Trans-Pacific Partnership Commission);

covered investment means, with respect to a Party, an investment in its territory of an investor of another Party in existence as of the date of entry into force of this Agreement for those Parties or established, acquired, or expanded thereafter;

customs administration means the competent authority that is responsible under the laws of a Party for the administration of customs laws, regulations and, where applicable, policies, and has for each Party the meaning set out in Annex 1-A (Party-Specific Definitions);

customs duty includes any duty or charge of any kind imposed on or in connection with the importation of a good, and any surtax or surcharge imposed in connection with such importation, but does not include any:

1. charge equivalent to an internal tax imposed consistently with Article III:2 of GATT 1994;
2. fee or other charge in connection with the importation commensurate with the cost of services rendered; or
3. antidumping or countervailing duty;

Customs Valuation Agreement means the  Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, set out in Annex 1A to the WTO Agreement;

days means calendar days;

enterprise  means any entity constituted or organised under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association or similar organisation;  

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

GATS means the General Agreement on Trade in Services, set out in Annex 1B to the WTO Agreement;

GATT 1994 means the General Agreement on Tariffs and Trade 1994, set out in Annex 1A to the WTO Agreement;

goods means any merchandise, product, article or material;

goods of a Party means domestic products as these are understood in GATT 1994 or such goods as the Parties may agree, and includes originating goods of a Party;

government procurement means the process by which a government obtains the use of or acquires goods or services, or any combination thereof, for governmental purposes and not with a view to commercial sale or resale or use in the production or supply of goods or services for commercial sale or resale;  

Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, Chapter Notes and Subheading Notes as adopted and implemented by the Parties in their respective laws;  

heading means the first four digits in the tariff classification number under the Harmonized System;

measure includes any law, regulation, procedure, requirement or practice;

national means a "natural person who has the nationality of a Party" according to Annex 1-A (Party-Specific Definitions) or a permanent resident of a Party;

originating means qualifying as originating under the rules of origin set out in Chapter 3 (Rules of Origin and Origin Procedures) or Chapter 4 (Textile and Apparel Goods);

Party means any State or separate customs territory for which this Agreement is in force;  

person means a natural person or an enterprise;

person of a Party means a national or an enterprise of a Party;

preferential tariff treatment means the customs duty rate applicable to an originating good, pursuant to each Party's Tariff Schedule set out in Annex 2-D (Tariff Commitments);

recovered material means a material in the form of one or more individual parts that results from:

1. the disassembly of a used good into individual parts; and
2. the cleaning, inspecting, testing or other processing of those parts as necessary for improvement to sound working condition;

remanufactured good means a good classified in HS Chapters 84 through 90 or under heading 94.02 except goods classified under HS headings 84.18, 85.09, 85.10, and 85.16, 87.03 or subheadings 8414.51, 8450.11, 8450.12, 8508.11, and 8517.11, that is entirely or partially composed of recovered materials and:

1. has a similar life expectancy and performs the same as or similar to such a good when new; and
2. has a factory warranty similar to that applicable to such a good when new;

regional level of government has for each Party the meaning set out in Annex 1- A (Party-Specific Definitions);

Safeguards Agreement means the Agreement on Safeguards, set out in Annex 1A to the WTO Agreement;

sanitary or phytosanitary measure means any measure referred to in paragraph 1 of Annex A to the SPS Agreement;

SCM Agreement  means the  Agreement on Subsidies and Countervailing Measures, set out in Annex 1A to the WTO Agreement;

SME  means a small and medium-sized enterprise, including a micro-sized enterprise;

SPS Agreement means the  Agreement on the Application of Sanitary and Phytosanitary Measures, set out in Annex 1A to the WTO Agreement;

state enterprise  means an enterprise that is owned, or controlled through ownership interests, by a Party;

subheading means the first six digits in the tariff classification number under the Harmonized System;

territory has for each Party the meaning set out at Annex 1-A (Party-Specific Definitions);

textile or apparel good means a good listed in Annex 4-A (Textiles and Apparel Product-Specific Rules of Origin);

TRIPS Agreement means the  Agreement on Trade-Related Aspects of Intellectual Property Rights, set out in Annex 1C to the WTO Agreement;[17]

WTO means the World Trade Organization; and

WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on April 15, 1994.

ANNEX 1-A PARTY-SPECIFIC DEFINITIONS

Further to Article 1.3 (General Definitions), for the purposes of this Agreement, unless provided elsewhere in this Agreement:

central level of government means:

1. for Australia, the Commonwealth Government;
2. for Brunei Darussalam, the national level of government;
3. for Canada, the Government of Canada;
4. for Chile, the national level of government;
5. for Japan, the Government of Japan;
6. for Malaysia, the federal level of government;
7. for Mexico, the federal level of government;
8. for New Zealand, the national level of government;
9. for Peru, the national level of government;
10. for Singapore, the national level of government;
11. for the United States, the federal level of government; and
12. for Viet Nam, the national level of government;

customs administration means:

1. for Australia, the Department of Immigration and Border Protection;
2. for Brunei Darussalam, the Royal Customs and Excise Department;
3. for Canada, the Canada Border Services Agency;
4. for Chile, the National Customs Service of Chile (Servicio Nacional de Aduanas);

5. for Japan, the Ministry of Finance;
6. for Malaysia, the Royal Malaysian Customs Department;
7. for Mexico, the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público);
8. for New Zealand, the New Zealand Customs Service;
9. for Peru, the National Superintendence of Customs and Tax Administration (Superintendencia Nacional de Aduanas y de Administración Tributaria);
10. for Singapore, the Singapore Customs;
11. for the United States, U.S. Customs and Border Protection; and, with respect to provisions that concern enforcement, information sharing and investigations, this also means U.S. Immigration and Customs Enforcement, as applicable; and
12. for Viet Nam, the General Department of Viet Nam Customs,

or any successor of such customs administration;

natural person who has the nationality of a Party means:

1. for Australia, a natural person who is an Australian citizen as defined in the Australian Citizenship Act 2007, as amended from time to time, or any successor legislation;
2. for Brunei Darussalam, a subject of His Majesty the Sultan and Yang Di-Pertuan in accordance with the laws of Brunei Darussalam;
3. for Canada, a natural person who is a citizen of Canada under Canadian legislation;
4. for Chile, a Chilean as defined in Article 10 of the Political Constitution of the Republic of Chile (Constitución Política de la República de Chile);
5. for Japan, a natural person who has the nationality of Japan under its laws;
6. for Malaysia, a natural person who is a citizen of Malaysia in accordance with its laws and regulations;

7. for Mexico, a person who has the nationality of Mexico in accordance with its applicable laws;
8. for New Zealand, a natural person who is a citizen as defined in the Citizenship Act 1977, as amended from time to time, or any successor legislation;
9. for Peru, a natural person who has the nationality of Peru by birth, naturalisation or option in accordance with the Political Constitution of Peru (Constitución Política del Perú) and other relevant domestic legislation;
10. for Singapore, a person who is a citizen of Singapore within the meaning of its Constitution and its domestic laws;
11. for the United States, a "national of the United States" as defined in the Immigration and Nationality Act; and
12. for Viet Nam, a natural person who is a citizen of Viet Nam within the meaning of its Constitution and its domestic laws;

regional level of government means:

1. for Australia, a state of Australia, the Australian Capital Territory, or the Northern Territory;
2. for Brunei Darussalam, the term regional level of government is not applicable;
3. for Canada, a provincial or territorial government;
4. for Chile, as a unitary Republic, the term regional level of government is not applicable;
5. for Japan, the term regional level of government is not applicable;
6. for Malaysia, a State of the Federation of Malaysia in accordance with the Federal Constitution of Malaysia;
7. for Mexico, a state of the United Mexican States;
8. for New Zealand, the term regional level of government is not applicable;
9. for Peru, regional government in accordance with the Political Constitution of Peru (Constitución Política del Perú) and other applicable legislation;

10. for Singapore, the term regional level of government is not applicable;
11. for the United States, a state of the United States, the District of Columbia, or Puerto Rico; and
12. for Viet Nam, the term regional level of government is not applicable; and

territory means:

1. for Australia, the territory of Australia:

1. excluding all external territories other than the Territory of Norfolk Island, the Territory of Christmas Island, the Territory of Cocos (Keeling) Islands, the Territory of Ashmore and Cartier Islands, the Territory of Heard Island and McDonald Islands, and the Coral Sea Islands Territory; and
2. including Australia's air space, territorial sea, contiguous zone, exclusive economic zone and continental shelf over which Australia exercises sovereign rights or jurisdiction in accordance with international law;

2. for Brunei Darussalam, the land territory, internal waters and territorial sea of Brunei Darussalam, extending to the air space above its territorial sea, as well as to its sea-bed and subsoil over which it exercises sovereignty, and the maritime area beyond its territorial sea, which has been or may hereafter be designated under the laws of Brunei Darussalam in accordance with international law as an area over which Brunei Darussalam exercises sovereign rights and jurisdiction with respect to the seabed, the subsoil and superjacent waters to the seabed and subsoil as well as the natural resources;
3. for Canada:

1. the land territory, air space, internal waters and territorial seas of Canada;
2. the exclusive economic zone of Canada, as determined by its domestic law, consistent with Part V of the  United Nations Convention on the Law of the Sea done at Montego Bay on December 10, 1982 (UNCLOS); and
3. the continental shelf of Canada, as determined by its

domestic law, consistent with Part VI of UNCLOS;

4. for Chile, the land, maritime, and air space under its sovereignty, and the exclusive economic zone and the continental shelf within which it exercises sovereign rights and jurisdiction in accordance with international law and its domestic law;
5. for Japan, the territory of Japan, and all the area beyond its territorial sea, including the sea-bed and subsoil thereof, over which Japan exercises sovereign rights or jurisdiction in accordance with international law including the UNCLOS and the laws and regulations of Japan;
6. for Malaysia, its land territory, internal waters and territorial sea, as well as any maritime area situated beyond the territorial sea as designated or that might in the future be designated under its national law, in accordance with international law, as an area within which Malaysia exercises sovereign rights and jurisdiction with regards to the seabed, subsoil and superjacent waters to the seabed and subsoil as well as the natural resources;
7. for Mexico:

1. the states of the Federation and the Federal District;
2. the islands, including the reefs and keys, in the adjacent seas;
3. the islands of Guadalupe and Revillagigedo, situated in the Pacific Ocean;
4. the continental shelf and the submarine shelf of such islands, keys and reefs;
5. the waters of the territorial seas, in accordance with international law, and its interior maritime waters;
6. the space located above the national territory, in accordance with international law; and
7. any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the United Nations Convention on the Law of the Sea done at Montego Bay on December 10, 1982, and its domestic law, Mexico may exercise sovereign rights or jurisdiction;

8. for New Zealand, the territory of New Zealand and the exclusive

economic zone, seabed and subsoil over which it exercises sovereign rights with respect to natural resources in accordance with international law, but does not include Tokelau;

9. for Peru, the mainland territory, the islands, the maritime areas and the air space above them, under sovereignty or sovereign rights and jurisdiction of Peru, in accordance with the provisions of the Political Constitution of Peru (Constitución Política del Perú) and other relevant domestic law and international law;
10. for Singapore, its land territory, internal waters and territorial sea, as well as any maritime area situated beyond the territorial sea which has been or might in the future be designated under its national law, in accordance with international law, as an area within which Singapore may exercise sovereign rights or jurisdiction with regards to the sea, the sea-bed, the subsoil and the natural resources;
11. for the United States:

1. the customs territory of the United States, which includes the 50 states, the District of Columbia, and Puerto Rico;
2. the foreign trade zones located in the United States and Puerto Rico; and
3. the territorial sea of the United States and any area beyond the territorial sea within which, in accordance with customary international law as reflected in the  United Nations Convention on the Law of the Sea, the United States may exercise sovereign rights or jurisdiction; and

12. for Viet Nam, the land territory, islands, internal waters, territorial sea, and air space above them, the maritime areas beyond territorial sea including seabed, subsoil and natural resources thereof over which Viet Nam exercises its sovereignty, sovereign rights or jurisdiction in accordance with its domestic laws and international law.

CHAPTER 2

NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

Section A: Definitions and Scope

Article 2.1: Definitions

For the purposes of this Chapter:

advertising films and recordings  means recorded visual media or audio materials, consisting essentially of images or sound, showing the nature or operation of goods or services offered for sale or lease by a person of a Party, that are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public;

Agreement on Agriculture means the  Agreement on Agriculture, set out in Annex 1A to the WTO Agreement;

commercial samples of negligible value means commercial or trade samples: having a value, individually or in the aggregate as shipped, of not more than one U.S. dollar or the equivalent amount in the currency of another Party; or so marked, torn, perforated or otherwise treated that they are unsuitable for sale or for use except as commercial samples;

consular transactions  means requirements that goods of a Party intended for export to the territory of another Party must first be submitted to the supervision of the consul of the importing Party in the territory of the exporting Party for the purpose of obtaining consular invoices or consular visas for commercial invoices, certificates of origin, manifests, shippers' export declarations, or any other customs documentation required on or in connection with importation;

consumed means, with respect to a good:

1. actually consumed; or
2. further processed or manufactured:

1. so as to result in a substantial change in the value, form or use of the good; or
2. in the production of another good;

duty-free means free of customs duty;

goods admitted for sports purposes means sports requisites admitted into the territory of the importing Party for use in sports contests, demonstrations or training in the territory of that Party;  

goods intended for display or demonstration includes their component parts, ancillary apparatuses and accessories;

import licensing means an administrative procedure requiring the submission of an application or other documentation, other than that generally required for customs clearance purposes, to the relevant administrative body of the importing Party as a prior condition for importation into the territory of that Party;

Import Licensing Agreement means the  Agreement on Import Licensing Procedures, set out in Annex 1A to the WTO Agreement;

performance requirement means a requirement that:

1. a given level or percentage of goods or services be exported;
2. domestic goods or services of the Party granting a waiver of customs duties or an import licence be substituted for imported goods;
3. a person benefiting from a waiver of customs duties or a requirement for an import licence purchase other goods or services in the territory of the Party that grants the waiver of customs duties or the import licence or accord a preference to domestically produced goods;
4. a person benefiting from a waiver of customs duties or a requirement for an import licence produce goods or supply services in the territory of the Party that grants the waiver of customs duties or the import licence, with a given level or percentage of domestic content; or
5. relates in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows,

but does not include a requirement that an imported good be:

6. subsequently exported;
7. used as a material in the production of another good that is subsequently exported;

8. substituted by an identical or similar good used as a material in the production of another good that is subsequently exported; or
9. substituted by an identical or similar good that is subsequently exported; and

printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials and posters, that are used to promote, publicise or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge.

Article 2.2: Scope

Unless otherwise provided in this Agreement, this Chapter applies to trade in goods of a Party.

Section B: National Treatment and Market Access for Goods Article 2.3: National Treatment

1. Each Party shall accord national treatment to the goods of the other Parties in accordance with Article III of GATT 1994, including its interpretative notes, and to this end, Article III of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.
2. For greater certainty, the treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of government, treatment no less favourable than the most favourable treatment that the regional level of government accords to any like, directly competitive or substitutable goods, as the case may be, of the Party of which it forms a part.
3. Paragraph 1 shall not apply to the measures set out in Annex 2-A (National Treatment and Import and Export Restrictions).

Article 2.4: Elimination of Customs Duties

1. Unless otherwise provided in this Agreement, no Party shall increase any existing customs duty, or adopt any new customs duty, on an originating good.
2. Unless otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Schedule to Annex 2-D (Tariff Commitments).

3. On request of any Party, the requesting Party and one or more other Parties shall consult to consider accelerating the elimination of customs duties set out in their Schedules to Annex 2-D (Tariff Commitments).
4. An agreement between two or more of the Parties to accelerate the elimination of a customs duty on an originating good shall supersede any duty rate or staging category determined pursuant to those Parties' Schedules to Annex 2-D (Tariff Commitments) for that good once approved by each Party to that agreement in accordance with its applicable legal procedures. The parties to that agreement shall inform the other Parties as early as practicable before the new rate of customs duty takes effect.
5. A Party may at any time unilaterally accelerate the elimination of customs duties set out in its Schedule to Annex 2-D (Tariff Commitments) on originating goods of one or more of the other Parties. A Party shall inform the other Parties as early as practicable before the new rate of customs duty takes effect.
6. For greater certainty, no Party shall prohibit an importer from claiming for an originating good the rate of customs duty applied under the WTO Agreement.
7. For greater certainty, a Party may raise a customs duty to the level set out in its Schedule to Annex 2-D (Tariff Commitments) following a unilateral reduction for the respective year.

Article 2.5: Waiver of Customs Duties

1. No Party shall adopt any new waiver of a customs duty, or expand with respect to an existing recipient or extend to any new recipient the application of an existing waiver of a customs duty, that is conditioned, explicitly or implicitly, on the fulfilment of a performance requirement.
2. No Party shall, explicitly or implicitly, condition the continuation of any existing waiver of a customs duty on the fulfilment of a performance requirement.

Article 2.6: Goods Re-entered after Repair and Alteration

1. No Party shall apply a customs duty to a good, regardless of its origin, that re-enters the Party's territory after that good has been temporarily exported from the Party's territory to the territory of another Party for repair or alteration, regardless of whether that repair or alteration could have been performed in the territory of the Party from which the good was exported for repair or alteration or increased the value of the good.[18]

2. No Party shall apply a customs duty to a good, regardless of its origin, admitted temporarily from the territory of another Party for repair or alteration.
3. For the purposes of this Article, "repair or alteration" does not include an operation or process that:

1. destroys a good's essential characteristics or creates a new or commercially different good; or
2. transforms an unfinished good into a finished good.

Article 2.7: Duty-Free Entry of Commercial Samples of Negligible Value and Printed Advertising Material

Each Party shall grant duty-free entry to commercial samples of negligible value and printed advertising material imported from the territory of another Party, regardless of their origin, but may require that:

1. commercial samples of negligible value be imported solely for the solicitation of orders for goods, or services provided from the territory, of another Party or a non-Party; or
2. printed advertising material be imported in packets that each contain no more than one copy of the material and that neither that material nor those packets form part of a larger consignment.

Article 2.8: Temporary Admission of Goods

1. Each Party shall grant duty-free temporary admission for the following goods, regardless of their origin:

1. professional equipment, including equipment for the press or television, software, and broadcasting and cinematographic equipment, that is necessary for carrying out the business activity, trade or profession of a person who qualifies for temporary entry pursuant to the laws of the importing Party;
2. goods intended for display or demonstration;
3. commercial samples and advertising films and recordings; and
4. goods admitted for sports purposes.

2. Each Party shall, at the request of the person concerned and for reasons its customs authority considers valid, extend the time limit for duty-free temporary admission beyond the period initially fixed.
3. No Party shall condition the duty-free temporary admission of the goods referred to in paragraph 1, other than to require that those goods:

1. 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;
2. not be sold or leased while in its territory;
3. be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the goods;
4. be capable of identification when imported and exported;
5. be exported on the departure of the national referred to in subparagraph (a), or within any other period reasonably related to the purpose of the temporary admission that the Party may establish, or within one year, unless extended;
6. be admitted in no greater quantity than is reasonable for their intended use; and
7. be otherwise admissible into the Party's territory under its laws.

4. Each Party shall grant duty-free temporary admission for containers and pallets regardless of their origin, that are in use or to be used in the shipment of goods in international traffic.

1. For the purposes of this paragraph, container means an article of transport equipment that is: fully or partially enclosed to constitute a compartment intended for containing goods; substantial and has an internal volume of one cubic metre or more; of a permanent character and accordingly strong enough to be suitable for repeated use; used in significant numbers in international traffic; specially designed to facilitate the carriage of goods by more than one mode of transport without intermediate reloading; and designed both for ready handling, particularly when being transferred from one mode of transport to another, and to be easy to fill and to empty, but does

not include vehicles, accessories or spare parts of vehicles or packaging.[19]

2. For the purposes of this paragraph, pallet means a small, portable platform, which consists of two decks separated by bearers or a single deck supported by feet, on which goods can be moved, stacked and stored, and which is designed essentially for handling by means of fork lift trucks, pallet trucks or other jacking devices.