EU-Japan FTA / EPA As of 16 December 2016 · 2017. 6. 29. · 5 Limited Limited EU-Japan FTA / EPA...

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Merged Trade in Goods text

As of 16 December 2016

CHAPTER [X]

TRADE IN GOODS

[EU: SECTION A: COMMON PROVISIONS] [JP: SECTION A: SCOPE AND

DEFINITIONS]

ARTICLE [1]: OBJECTIVE

The Parties [shall] progressively liberalise trade in goods in accordance with the provisions of

this Agreement.

ARTICLE [2]: SCOPE

This Chapter shall apply to trade in goods between the Parties.

ARTICLE [3]: DEFINITIONS

1. “export licensing procedures” means administrative procedures, whether or not referred to

as “licensing”, used by a Party for the operation of export licensing regimes requiring the

submission of an application or other documentation, other than that required for customs

procedures, to the relevant administrative body as a prior condition for exportation from that

Party;

2. "non-automatic import or export licensing procedures" [is defined as] licensing procedures

where approval of the application is not granted for all legal and natural persons who fulfil the

requirements of the Party concerned for engaging in import or export operations involving the

goods subject to licensing procedures;

Notes / comments:

- text in black is common / agreed;

- text in red is Japan’s proposal; - text in blue is EU’s proposal; - text in green is drafting note.

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3. “originating [goods]” means goods which qualify as originating [goods] under the

provisions of [Chapter] [ ](Rules of Origin).

ARTICLE [4]: CUSTOMS DUTY

1. For the purposes of this Chapter, “customs duty”, which each Party shall reduce or

eliminate in accordance with the Schedules set out in Annex [...], consists of any duty or

charge of any kind imposed on or in connection with the importation of a good, including any

form of surtax or surcharge imposed on or in connection with such importation. A customs

duty does not include any:

(a) charge equivalent to an internal tax imposed consistently with Article III of GATT

1994;

(b) duty applied consistently with the provisions of Articles VI and XIX of GATT 1994,

Agreement on Anti-Dumping, SCM Agreement, Agreement on Safeguards, Article 5

of Agreement on Agriculture and Article 22 of DSU; and

(c) fee or other charge imposed consistently with Article 13 of this Chapter.

[JP: SECTION B: NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS]

ARTICLE [5]: CLASSIFICATION OF GOODS

1. For the purposes of this Agreement, the classification of goods in trade between the Parties

shall be that set out in each Party's respective Schedule set out in Annex […] in conformity

with the Harmonised [Commodity Description and Coding] System.

[JP: 2. Each Party shall ensure consistency in administrating its tariff classifications and the

tariffs imposed on originating goods of the other Party imported into the Area of the former

Party.]

2. Each Party shall ensure consistency in applying [its laws and regulations] [of][or] tariff

classification of goods originating in the other Party.

ARTICLE [6]: NATIONAL TREATMENT

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Each Party shall accord national treatment to the goods of the other Party in accordance with

Article III of GATT 1994, including its Notes and Supplementary Provisions. To this end,

Article III of GATT 1994 and its Notes and Supplementary Provisions are incorporated into

and made part of this Agreement, mutatis mutandis.

[EU: SECTION B: REDUCTION AND ELIMINATION OF CUSTOMS DUTIES]

ARTICLE [7]: REDUCTION AND ELIMINATION OF CUSTOMS DUTIES [EU: ON

IMPORTS]

1. Except as otherwise provided for in this Agreement, each Party shall reduce or eliminate

customs duties on [EU: goods originating in] [JP: originating goods of] the other Party in

accordance with the Schedules set out in Annexes […]

2. For each good, the base rate of customs duties, to which reductions or eliminations are to

be applied under paragraph 1, shall be that specified in the Schedules included/set out in

Annex [X].

[JP: 3. Upon request of either Party, the Parties shall negotiate on issues such as improving

market access conditions on originating goods designated for negotiation in the Schedules in

Annex [1], in accordance with the terms and conditions set out in such Schedules.]

[EU: 4. [X] years after the entry into force of this Agreement,] [O]on the request of either

Party, the Parties shall [option: may] consult to consider accelerating [option: and broadening

the scope] of the reduction and elimination of customs duties on imports. A decision by the

Parties [in the Committee on Trade in Goods] on such acceleration or broadening shall

supersede any duty rate or staging category determined pursuant to their Schedules for that

good.]

5. If at any moment a Party reduces its applied most favoured nation (hereinafter referred to as

the "MFN") customs duty rates on an originating good of the other Party after the date of

entry into force of this Agreement, that duty rate shall apply if and for as long as it is lower

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than the customs duty rate on the same good calculated in accordance with its Schedule.

ARTICLE [8]: CUSTOMS VALUATION

For the purposes of determining the customs value of goods traded between the Parties, the

provisions of Part I of the Agreement on Implementation of Article VII of the General

Agreement on Tariffs and Trade 1994 in Annex 1A to the WTO Agreement shall apply

mutatis mutandis.

ARTICLE [9]: EXPORT DUTIES

Neither Party may maintain, or introduce any duties, taxes, fees or other charges of any kind

imposed on a good exported from the Party to the other Party. For the purposes of this Article,

“fees or other charges of any kind”, shall not include any fees or other charges imposed

consistently with Article 13, that are limited to the amount of the approximate cost of service

rendered.

[EU: ARTICLE [10]: STANDSTILL

No new customs duties shall be introduced nor shall those already applied be increased in

trade between the Parties from the date of entry into force of this Agreement.]

[JP: Except as otherwise provided for in this Agreement，neither Party shall increase any

customs duty on originating goods of the other Party from the rate to be applied in accordance

with its Schedule in Annex […].]

[EU: SECTION C: NON-TARIFF MEASURES]

[JP: ARTICLE [11]: EXPORT SUBSIDIES][EU: COMPETITION]

[JP: Neither Party shall introduce or maintain any export subsidies listed in subparagraphs

1(a) through (f) of Article 9 of the Agreement on Agriculture in Annex 1A to the WTO

Agreement on any agricultural good which is listed in Annex 1 to the Agreement on

Agriculture and exported to the other Party.]

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[EU: 1. For the purposes of this Article, “export subsidies” shall mean subsidies referred to in

Article 1 (e) of the WTO Agreement on Agriculture and other subsidies listed in Annex I of

Subsidies and countervailing measures ("Illustrative List of Export Subsidies") that may be

applied to agricultural goods , subject to paragraph 2.

2. “Measures with equivalent effect” are export credits, export credit guarantees or insurance

programmes, as well as other measures that have an equivalent effect to an export subsidy.

3. The Parties reaffirm their commitment expressed in the 2015 Nairobi Ministerial

Declaration on Export Competition to exercise utmost restraint with regard to any recourse to

all forms of export subsidies and all export measures with equivalent effect.

4. Neither Party shall introduce or maintain [JP: any export subsidies listed in subparagraphs

1(a) through (f) of Article 9 of the Agreement on Agriculture in Annex 1A to the WTO

Agreement] [EU: an export subsidy or other measure having an equivalent effect] on any

agricultural good [JP: which is listed in Annex 1 to the Agreement on Agriculture and

exported to the other Party] [EU: that is exported, or incorporated in a product that is

exported, to the territory of the other Party after the other Party has fully eliminated the tariff,

immediately or after the transitional period, on that agricultural good in accordance with

Annex XX (Tariff Elimination/Schedules)].

[EU: 5. The Parties agree that the international food aid transactions destined for the territory

of the Parties or the territory of a non-Party with which both Parties have concluded a

preferential trade agreement or arrangement, as well as for the territory of a least developed

country, shall be provided in fully untied, in cash and fully grant form with the exception of

clearly defined emergency situations1.

1 Emergency situation refers to a situation where:

(a) there has been a declaration of an emergency by the recipient country or by the Secretary-

General of the United Nations; or

(b) there has been an emergency appeal from a country; a relevant United Nations agency,

including the World Food Programme and the United Nations Humanitarian Programme

Cycle; the International Committee of the Red Cross or the International Federation of Red

Cross and Red Crescent Societies; a relevant regional or international intergovernmental

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ARTICLE [12]: IMPORT AND EXPORT RESTRICTIONS

1. Neither Party may adopt or maintain any prohibition or restriction other than customs

duties on the importation of any good of the other Party or on the exportation or sale for

export of any good destined for [EU: the customs territory of] the other Party, in accordance

with Article XI of GATT 1994 and its interpretative notes. To this end, Article XI of GATT

1994 and its interpretative notes are incorporated into and made part of this Agreement,

mutatis mutandis.

2. Where a Party intends to adopt an export prohibition or restriction on any good listed in

Annex X in accordance with paragraph 2 of Article XI or Article XX of GATT 1994, the

Party shall:

(a) seek to limit such prohibition or restriction to the extent necessary, giving due

consideration to its possible negative effects on the other Party;

(b) provide the other Party with written notice thereof, wherever possible prior to the

introduction of such prohibition or restriction and as far in advance as practicable to,

or, if not, no later than 15 days after such introduction, whereby such written notice

shall include a description of the good involved, the introduced prohibition or

restriction including its nature, its reasons, and the date of introduction of such

prohibition or restriction and expected duration; and

(c) upon request, provide the other Party with a reasonable opportunity for consultation

with respect to any matter related to such prohibition or restriction.

ARTICLE [13]: FEES AND FORMALITIES CONNECTED WITH IMPORTATION

AND EXPORTATION

agency; a non-governmental humanitarian organization of recognised standing traditionally

working in conjunction with the former bodies; and in either case, there is an assessment of

need coordinated under the auspices of a relevant United Nations agency, including the World

Food Programme; the International Committee of the Red Cross or the International

Federation of Red Cross and Red Crescent Societies. Needs assessment should be done with

the involvement of the recipient government and may involve a relevant regional

intergovernmental organization or an NGO, but while the latter bodies may be so involved,

this is in a context where they are in coordination with the relevant United Nations agency or

ICRC/IFRCRCS as the case may be.

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1. Each Party shall ensure, in accordance with Article VIII of GATT 1994, that all fees and

charges of whatever character (other than customs duties, export duties and other than taxes

within the purview of Article III of GATT 1994) imposed by the Parties on or in connection

with importation or exportation shall be limited to the amount of the approximate cost of

services rendered which shall not be calculated on an ad valorem basis, and shall not represent

an indirect protection to domestic goods or a taxation of imports for fiscal purposes.

2. Neither Party shall require consular transactions, including related fees and charges. For the

purposes of this paragraph, “consular transactions” means requirements by the consul of the

importing Party located in 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.

ARTICLE [14]: IMPORT AND EXPORT LICENSING PROCEDURES

1. The Parties affirm their existing rights and obligations under the WTO Agreement on

Import Licensing Procedures (hereinafter referred to as the "Import Licensing Agreement").

2. The Parties shall adopt or maintain any export licensing procedures in accordance with:

(a) Paragraphs 1 through 9 of Article 1 of the Import Licensing Agreement;

(b) Article 3 of the Import Licensing Agreement.

To this end, the provisions referred to in subparagraphs (a), and (b) and (c) of this paragraph

are incorporated into and made part of this Agreement, mutatis mutandis and shall apply for

any export licensing procedures, between the Parties. The Parties may adopt or maintain any

export licensing procedures in accordance with Article 2 of the Import Licensing Agreement,

mutatis mutandis. For the purposes of this Article, the provisions on export licensing

procedures shall apply to any good listed in Annex X.

3. The Parties shall ensure that all export licensing procedures are neutral in application and

administered in a fair, equitable, non-discriminatory and transparent manner.

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4. The Parties shall adopt or maintain import or export licensing procedures only when other

appropriate procedures to achieve an administrative purpose are not reasonably available.

5. The Parties shall not adopt or maintain non-automatic import or export licensing

procedures unless necessary to implement a measure that is consistent with this Agreement.

Any Party adopting non- automatic licensing procedures shall indicate clearly the measure

being implemented through such licensing procedure.

6. Each Party shall respond within 60 days to enquiries from the other Party regarding any

licensing procedures which the Party to which the request is addressed intends to adopt or has

adopted or maintained, as well as the criteria for granting and/or allocating import or export

licenses.

7. In applying export restrictions to any product in the form of quota, each party shall aim at a

distribution of trade in such product approaching as closely as possible the shares which is

expected in the absence of such restrictions.

8. If a Party adopts or maintains export licensing procedures, Parties shall hold consultations

upon the request of the other Party, on any issues related to the implementation of such

procedures with the other Party, and give due consideration to the results of such

consultations.

[EU: ARTICLE [15]: ELIMINATION OF SECTORAL NON-TARIFF MEASURES]

[JP: Article [15]: Non-Tariff Measures]

1. The Parties shall undertake further commitments on sector-specific non-tariff measures on

goods as set out in Annexes […] (hereinafter referred to as “Sectoral Annexes”).

2. Except as otherwise provided in this Agreement, […] years from the entry into force of this

Agreement and on the request of either Party, the Parties shall enter into negotiations with the

aim of broadening the scope of their commitments, or undertaking additional commitments on

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sector-specific non-tariff measures on goods.]

[JP: 1. Each Party shall not introduce or maintain any non-tariff measures on the importation

of any good of the other Party or on the exportation or sale for export of any good destined for

the other Party which are inconsistent with its obligations under the WTO Agreement.

2. Each Party shall ensure the transparency of its non-tariff measures permitted in paragraph 1

and shall ensure full compliance with its obligations under the WTO Agreement.]

ARTICLE [16]: RESTRICTIONS TO SAFEGUARD THE BALANCE OF PAYMENTS

1. Nothing in this Chapter shall be construed to prevent a Party from taking any measure for

balance- of-payments purposes. A Party taking such measure shall do so in accordance with

the conditions established under Article XII of the GATT 1994 and the Understanding on the

Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994 in

Annex 1A to the WTO Agreement.

2. Nothing in this Chapter shall preclude the use by a Party of exchange controls or exchange

restrictions in accordance with the Articles of Agreement of the International Monetary Fund.

[EU: SECTION D: SPECIFIC EXCEPTIONS RELATED TO GOODS]

ARTICLE [17]: GENERAL EXCEPTIONS

1. Nothing in this Chapter shall prevent the taking of measures in accordance with Article XX

of GATT 1994, its Notes and Supplementary Provisions, which are hereby incorporated into

and made part of this Agreement , mutatis mutandis.

2. Where a Party intends to take any measures in accordance with subparagraphs (i) and (j) of

Article XX of GATT 1994, the Party shall:

(a) provide the other Party with all relevant information; and

(b) upon request, provide the other Party with a reasonable opportunity for consultation

with respect to any matter related to such measure, with a view to seeking a solution

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mutually acceptable to the Parties. The Parties may agree on any means needed to put

an end to the matters subject to consultation. Where exceptional and critical

circumstances requiring immediate action make prior provision of information or

examination impossible, the Party intending to take the measures may apply forthwith

the measures necessary to deal with the circumstances and shall immediately inform

the other Party thereof.

[EU: SECTION E: INSTITUTIONAL] [JP: SECTION 3: OTHER] PROVISIONS

[JP: ARTICLE [X.19]: SUB-COMMITTEE ON TRADE IN GOODS

1. For the purposes of the effective implementation and operation of this Chapter, the Parties

hereby establish a Sub-Committee on Trade in Goods (hereinafter referred to in this Article as

“the Sub- Committee”).

2. The functions of the Sub-Committee shall be:

(a) reviewing and monitoring the implementation and operation of this Chapter;

(b) considering any other matter related to this Chapter, including those related to the

classification of goods under the Harmonized System;

(c) reporting the findings of the Sub-Committee to the Joint Committee; and

(d) carrying out other functions as may be delegated by the Joint Committee.

3. The Sub-Committee shall be composed of representatives of the Parties.

4. The Sub-Committee shall hold meetings at such times and venues or by means, as may be

agreed by the Parties.]

ARTICLE (?): REMANUFACTURED GOODS

Unless otherwise provided for in this Agreement, each Party shall provide that

remanufactured goods are treated as new goods. A Party may require that remanufactured

goods are identified as such for distribution or sale.

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For the purposes of this Article, “remanufactured goods” means goods classified in HS under

heading 40.12 , Chapter 84 through 90 or under heading 94.02, that:

(a) are entirely or partially composed of parts obtained from used goods;

(b) have a similar life expectancy and performs the same as such goods when new; and

(c) have a factory warranty similar to that applicable to such a good when new.

[EU: ARTICLE (?): ORIGIN MARKING

Except as otherwise provided in this Agreement, where Japan applies obligatory country of

origin marking requirements to non-agricultural products falling under the scope of this

Chapter, Japan shall accept the marking "Made in EU" or a similar marking in Japanese, as

fulfilling such requirements.]

[JP: Except as otherwise provided for in this Agreement, where a Party applies obligatory

country of origin marking requirements to goods other than food, agricultural or fishery goods

as defined in the laws and regulations of that Party, the marking “Made in Japan” or a similar

marking in the local language of the importing country, in case of the Union, and the marking

"Made in EU" or a similar marking in Japanese, in case of Japan, shall be accepted as

fulfilling such requirements.]

Drafting note: This article is a package of Paragraph 2 of Classification of Goods (26 October

2016)

ARTICLE (?): 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 its

[customs] territory after that good has been temporarily exported from its [customs] territory

to the [customs] territory of the other Party for repair or alteration, regardless of whether such

repair or alteration could have been performed in the [customs] territory of the Party from

which the good was temporarily exported for repair or alteration, provided that the goods re-

enter into the [customs] territory of that Party within the period as specified in its laws and

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regulations2.

2. Paragraph 1 does not apply to a good under customs control in the customs territory of a

Party without payment of import duties and taxes that is exported for repair or alteration and

is not [re-entered] into that customs territory under customs control without payment of

import duties and taxes.

3. No Party shall apply a customs duty to a good, regardless of its origin, imported

temporarily from the [customs] territory of the other Party for repair or alteration, provided

that the good is re-exported from the [customs] territory of the importing Party within the

period as specified in its laws and regulations3.

4. For the purposes of this Article, repair or alteration means any operation or process

undertaken on goods to remedy operating defects or material damage and entailing the re-

establishment of goods to their original function or to ensure their compliance with technical

requirements for their use. Repair or alteration of goods include restoring and maintenance

regardless of a possible increase of the value of the good, but does not include an operation or

process that:

(a) destroys a good's essential characteristics or creates a new or commercially different

good; or

(b) transforms an unfinished good into a finished good; or

(c) is used to change the function of a good.

2 In the Union, the outward processing procedure as laid down in Regulation (EU) No

952/2013 is used for the purpose of this paragraph. 3 In the Union, the inward processing procedure as laid down in Regulation (EU) No 52/2013

is used for the purpose of this paragraph.

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Annex []

Referred to in Chapter [] (Trade in Goods)

List of goods in relation to Article [12]( IMPORT AND EXPORT RESTRICTIONS) and

Article [14]( IMPORT AND EXPORT LICENSING PROCEDURES)

Note: This Annex is based on the Harmonised System, as amended on 1 January 2012.

Chapter Description of Goods

25 SALT; SULPHUR; EARTHS AND STONE; PLASTERING MATERIALS,

LIME AND CEMENT

26 ORES, SLAG AND ASH

27

MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR

DISTILLATION; BITUMINOUS SUBSTANCES; MINERAL WAXES

28

INORGANIC CHEMICALS; ORGANIC OR INORGANIC COMPOUNDS OF

PRECIOUS METALS, OF RARE-EARTH METALS, OF RADIOACTIVE

71

NATURAL OR CULTURED PEARLS, PRECIOUS OR SEMI-PRECIOUS

STONES, PRECIOUS METALS, METALS CLAD WITH PRECIOUS METAL,

72 IRON AND STEEL

73 ARTICLES OF IRON OR STEEL

74 COPPER AND ARTICLES THEREOF

75 NICKEL AND ARTICLES THEREOF

76 ALUMINIUM AND ARTICLES THEREOF

78 LEAD AND ARTICLES THEREOF

79 ZINC AND ARTICLES THEREOF

80 TIN AND ARTICLES THEREOF

81 OTHER BASE METALS; CERMETS; ARTICLES THEREOF]

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Text as of 26 January 2016

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CHAPTERi RULES OF ORIGIN

Section A: Rules of Origin

Article [X01]: Definitionsii

For the purposes of this Chapter:

(a) “customs authority” means:

- in Japan, the Ministry of Finance; and

- in the European Union, the services of the European Commission responsible

for customs matters and the customs administrations and any other authorities

empowered in the Member States of the European Union to apply and enforce

customs legislation;

(b) “importer” means a person who imports the originating product and claims

preferential tariff treatment for it;

(c) “exporter” means a person, located in a Party, who, in accordance with the

requirements laid down in the laws and regulations of the Party, exports or produces

the originating product and makes out a statement on origin;

(d) “preferential tariff treatment” means the rate of customs duties applicable to an

originating good in accordance with paragraph 1 of Article [7- ] (Elimination of

Customs Duties in Chapter on Trade in Goods);

(e) “chapters” and “headings” and “subheadings” mean the chapters (the first two digit

code), the headings (the first four digit) code and sub-headings (the six digit code) as

referred to in the Harmonized Commodity Description and Coding System, referred to

in this Protocol as “the Harmonized System” or “HS”;

(f) “consignment” means products which are either sent simultaneously from one

exporter to one consignee or covered by a single transport document covering their

shipment from the exporter to the consignee or, in the absence of such a document, by

a single invoice;

(g) “aquaculture” means the farming of aquatic organisms, including fish, molluscs,

crustaceans, other aquatic invertebrates and aquatic plants from seed stock such as

eggs, fry, fingerlings, larvae, parr, smolts or other immature fish at a post-larval stage

by intervention in the rearing or growth processes to enhance production such as

regular stocking, feeding or protection from predators;

still pending:

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(a) "manufacture" means any kind of working

or processing including assembly;

(p) “production” means a method of obtaining goods including manufacturing, assembling,

processing, raising, growing, breeding,

mining, extracting, harvesting, fishing,

trapping, gathering, collecting, hunting and

capturing

(b) "material" means any ingredient, raw

material, component or part, etc., used in the

manufacture of the product;

(j) “material” means a product is used in the production of another product, including any

components, ingredients, raw materials or

parts;

(k) “non-originating material” means a material which does not qualify as originating

under this Chapter;

(l) “originating material” means a material which qualifies as originating under this

Chapter;

(c) "product" means the product being

manufactured, even if it is intended for later use

in another manufacturing operation;

(d) "goods" means both materials and products;

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(g) “Generally Accepted Accounting Principles” means the recognised consensus or substantial authoritative support within a Party

at a particular time as to which economic

resources and obligations should be recorded

as assets and liabilities, which changes in

assets and liabilities should be recorded, how

the assets and liabilities and changes in them

should be measured, what information should

be disclosed and how it should be disclosed,

and which financial statements should be

prepared. These standards may be broad

guidelines of general application as well as

detailed practices and procedures;

Article [X02]: Requirements for originating products

1. Except as otherwise provided in this Chapter, the following shall be considered originating

in a Party when produced thereiii:

(a) wholly obtained or produced products as established in Article X03;

(b) products produced using non-originating materials provided they satisfy all applicable

requirements of Annex {Product-Specific Rules of Origin} , or

(c) products produced exclusively from materials originating in this Party, and when those

products satisfy all other applicable requirements of this Chapter.

2. Except as provided for in Article XXXiv, the requirements set out in this Chapter relating to

the acquisition of originating status must be satisfied without interruption in a Party.

Article [X03]: Wholly Obtained or Produced Products

For the purposes of Article {Requirements for originating status}, a product is wholly

obtained or produced {entirely}v in {the territory of}vi a Party if it is:

(a) a plant or plant product, grown, cultivated, harvested, picked or gathered there;

(b) a live animal born and raised there;

(c) a product obtained from a live animal raised there;

(d) [EU: products obtained from slaughtered animals born and raised there;]vii

(e) an animal obtained by hunting, trapping, fishing, gathering or capturing there;

(f) a product obtained from aquaculture there;

(g) a mineral or other naturally occurring substance, not included in subparagraphs

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through (f), extracted or taken there;

(h) fish, shellfish and other marine life taken from the sea, seabed or subsoil outside {the

territories of} the Parties and, in accordance with international law, outside the

territorial sea of non-Parties by a Party’s vessel; (i) a product produced exclusively from products referred to in subparagraph (h) on board

a Party’s factory ship outside {the territories of}ix the Parties and, in accordance with

international law, outside the territorial sea of non-Parties;

(j) a product other than fish, shellfish and other marine life taken by a Party or a person of

a Party from the seabed or subsoil outside the territories of the Parties, and beyond

areas over which non-Parties exercise jurisdiction provided that a Party or person of

that Party has the right to exploit that seabed or subsoil in accordance with

international law;

(k) a product that is:

i. waste or scrap derived from production there; or

ii. waste or scrap derived from used products collected there, provided that those

products are fit only for the recovery of raw materials; and

(l) a product produced there, exclusively from products referred to in subparagraphs

(m) through (k), or from their derivatives.

2. The terms 'vessels' and 'factory ships' in paragraph 1(h) and (i) shall apply only to

vessels and factory ships:

(a) which are registered in a Member State of the Union or in Japan;

(b) which sail under the flag of a Member State of the Union or of Japan; and

(c) which meet one of the following conditions:

i. they are at least 50% owned by nationals of a Member State of the Union or of

Japan; or

ii. they are owned by juridical persons:

- which have their head office and their main place of business in a

Member State of the Union or Japan, and

- which at least 50% of ownership belongs to nationals or juridical

persons of a Member State of the Union or Japan.

Article [X05]: [Japan: Non-Qualifying Operations] [EU: Insufficient working or

processing]

[Japan: 1. A good shall not be considered as an originating good merely by reason of:] [EU: 1.

Without prejudice to paragraph 2, the following operations shall be considered as insufficient

working or processing to confer the status of originating products, whether or not the

requirements of Article {Sufficiently worked or processed products} are satisfied:]

(a) [EU: preserving] operations to ensure [Japan: the preservation of products][EU: that

the products remain] in good condition during transport and storage [Japan: (such as

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drying, freezing, keeping in brine) and other similar operations];

(b) [Japan: changes of packaging and] breaking-up and assembly of packages;

(c) [EU: washing, cleaning; removal of dust, oxide, oil, paint or other coverings;

(d) ironing or pressing of textiles and textile articles;

(e) simple painting and polishing operations;

(f) husking and partial or total milling of rice; polishing and glazing of cereals and rice;

(g) operations to colour or flavour sugar or form sugar lumps; partial or total milling of

crystal sugar;

(h) peeling, stoning and shelling, of fruits, nuts and vegetables;

(i) sharpening, simple grinding or simple cutting;]

[Japan: (j) collection of parts and components classified as a good pursuant to Rule

2(a) of the General Rules for the Interpretation of the Harmonized System;

(k) mere making-up of sets of articles; or]

(l) [EU: sifting, screening, sorting, classifying, grading, matching (including the making-

up of sets of articles;]

(m) [EU: simple] placing in bottles, [EU: cans, flasks, bags,] cases, boxes, [EU: fixing on

cards or boards] and [EU: all] other simple packaging operations;

(n) [EU: affixing or printing marks, labels, logos and other like distinguishing signs on

products or their packaging;

(o) simple mixing of products, whether or not of different kinds; mixing of sugar with any

material;

(p) simple addition of water or dilution or dehydration or denaturation of products;

(q) simple assembly of parts of articles to constitute a complete article or] disassembly

[EU: of products into parts];

(r) [Japan: any][EU: a] combination of [EU: two or more of the] operations [Japan:

referred to in subparagraphs][EU: specified in points] (a) [Japan: through][EU: to] (q);

[EU: (s) slaughter of animals.

2. For the purpose of paragraph 1, operations shall be considered simple when neither special

skills nor machines, apparatus or tools especially produced or installed for those operations

are required for their performance.

3. All operations carried out either in the Union or in Japan on a given product shall be

considered together when determining whether the working or processing undergone by that

product is to be regarded as insufficient within the meaning of paragraph 1.]

[Japan: 2. Paragraph 1 shall prevail over the product specific rules set out in Annex [ ].

Article [X06]: [Japan: Accumulation][EU: Cumulation]

[Japan: For the purposes of determining whether a good qualifies as originating in a Party:

(a) a good originating in the other Party which is used as a material in the production of

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the good in the former Party may be considered as originating in the former Party; and

(b) production carried out on a non-originating material within the former party or in the

other Party by one or more producers may be taken into account, regardless of whether

that production was sufficient to confer originating status to the material itself.]

[EU: Notwithstanding Article {EU: Origin requirements}, products shall be considered as

originating in a Party if such products are obtained there by incorporating materials

originating in the other Party, provided that the working or processing carried out goes

beyond the operations referred to in Article {Insufficient working or processing} while it shall

not be necessary that the materials of the other Party have undergone sufficient working or

processing.]

Article [X07]: [Japan : De Minimis] [EU: Tolerances]

[Japan: For the application of the product specific rules set out in Annex [ ], non- originating

materials used in the production of a good that do not satisfy an applicable rule for the good

shall be disregarded, provided that the totality of such materials does not exceed specific

percentages (10% FOB) in value, weight or volume of the good and such percentages are set

out in the product specific rule for the good.]

[EU: 1. By way of derogation from Article [Sufficient working or processing] and subject to

paragraphs 2 and 3 of this Article, non-originating materials which, according to the

conditions set out in the list, in Annex II are not to be used in the manufacture of a given

product may nevertheless be used, provided that their total value or net weight assessed for

the product does not exceed:

(a) 10 % of the weight of the product for products falling within Chapters 2 and 4 to 24 of

the Harmonized System, other than processed fishery products of Chapter 16;

(b) 10 % of the ex-works price of the product for other products, except for products

falling within Chapters 50 to 63 of the Harmonized System, for which the tolerances

mentioned in Notes 6 and 7 of Annex I, shall apply.

2. Paragraph 1 shall not allow to exceed any of the percentages for the maximum content of

non-originating materials as specified in the rules laid down in the list in Annex II.

3. Paragraphs 1 and 2 shall not apply to products wholly obtained in a Party within the

meaning of Article {Wholly Obtained Products}. However, without prejudice to Article

{Insufficient working or processing} and Article {Unit of qualification} paragraph 2, the

tolerance provided for in those paragraphs shall nevertheless apply to the sum of all the

materials which are used in the manufacture of a product and for which the rule laid down in

the list in Annex II for that product requires that such materials be wholly obtained.]

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Article [X08]: Unit of qualification

1. The unit of qualification for the application of the provisions of this Protocol shall be the

particular product which is considered as the basic unit when determining classification using

the Harmonized System.

2. When a consignment consists of a number of identical products classified under the same

heading of the Harmonized System, each individual item shall be taken account when

applying the provisions of this Protocol.

Article [X09]: [Japan: Fungible Goods and Materials] [EU: Accounting segregation]

[Japan: 1. For the purposes of determining whether a good qualifies as an originating good,

where fungible originating materials and fungible non-originating materials that are

commingled in an inventory are used in the production of the good, the origin of the materials

may be determined pursuant to an inventory management method under the Generally

Accepted Accounting Principles in the Party.

2. Where fungible originating goods and fungible non-originating goods are commingled in

an inventory and, prior to exportation do not undergo any production process or any operation

in the Party where they were commingled other than splitting-up of the consignment, and

unloading, reloading and any other operation to preserve them in good condition, the origin of

the good may be determined pursuant to an inventory management method under the

Generally Accepted Accounting Principles in the Party.]

[EU: 1.If originating and non-originating fungible materials are used in the working or

processing of a product, competent authorities may, at the written request of economic

operators, authorise the management of materials using the accounting segregation method

without keeping the materials in separate stocks.

2. Competent governmental authorities may make the granting of authorisation referred to in

paragraph 1 subject to any conditions they deem appropriate.

3. The authorisation shall be granted only if by use of the accounting segregation method it

can be ensured that, at any time, the number of products obtained which could be considered

as originating in a Party is the same as the number that would have been obtained by using a

method of physical segregation of the stocks.

4. A manufacturer using the accounting segregation method shall make out or apply for a

proof of origin for the quantity of products which may be considered as originating in the

exporting Party. At the request of the customs authorities or competent governmental

authorities of the exporting Party, the beneficiary shall provide a statement of how the

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quantities have been managed.

5. Competent authorities shall monitor the use made of the authorisation referred to in

paragraph 3 and may withdraw it if the manufacturer makes improper use of it or fails to fulfil

any of the other conditions laid down in this protocol.]

Article [X10]: [EU: Sets]

[EU: A set, as defined in General Rule 3{(b) and (c)} of the Harmonized System, shall be

regarded as originating when all component products are originating. Where a set is

composed of originating and non-originating components, the set as a whole shall be regarded

as originating, provided that the value of the non-originating components does not exceed 15

per cent of the ex-works price of the set.]

Article [X11]: Non-alteration

1. The originating {products} declared for home use in a Party shall be the same products as

exported from the other Party in which they obtained originating status. They shall not have

been altered, transformed in any way or subjected to operations other than to preserve them in

good condition or than adding or affixing marks, labels, seals or any other documentation to

ensure compliance with specific domestic requirements of the importing Party, prior to being

declared for home use.

2. Storage or exhibition of products may take place in a non-Party provided that they remain

under customs supervision in that non-Party

3. Without prejudice to the provisions Section B, the splitting of consignments may take place

in the territory of a non-Party where carried out by the exporter or under his responsibility

provided they remain under customs supervision in that non-Party.

4. In case of doubt whether the conditions provided for in paragraphs 1 to 3 are complied

with, the customs authorities may request the importer to provide evidence of compliance,

which may be given by any means, including contractual transport documents such as bills of

lading or factual or concrete evidence based on marking or numbering of packages or any

evidence related to the goods themselves.

Article [X12]: Returning goods

If originating goods exported from a Party to a non-Party return, they must be considered as

non-originating, unless it can be demonstrated to the satisfaction of the customs authorities

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that:

(a) the returning goods are the same as those exported; and

(b) they have not undergone any operation beyond that necessary to preserve them in

good condition while in that non-Party or while being exported.

Article [X13]: Accessories, Spare Parts, Tools and Instructional or Other Information

Materialsx

1. In determining whether a good is wholly obtained, or satisfies a process or change in tariff

classification requirement as set out in Annex {PSRs}, accessories, spare parts, tools and

instructional or other information materials as described in paragraph 4 shall be disregarded.

2. In determining whether a product meets a value requirement set out in Annex

{PSRs}, the value of accessories, spare parts, tools and instructional or other information

materials as described in paragraph 4, are to be taken into account as originating or non-

originating materials, as the case may be, in calculating the value requirement of the product.

3. A product’s accessories, spare parts, tools or instructional or other information materials, as

described in paragraph 4, have the originating status of the product with which they are

delivered.

4. For the purposes of this Article, accessories, spare parts, tools, and instructional or other

information materials are covered when:

(a) the accessories, spare parts, tools and instructional or other information materials are

classified with, delivered with but not invoiced separately from the product; and

(b) the types, quantities, and value of the accessories, spare parts, tools and instructional

or other information materials are customary for that product.

A

rticle [X14]: [Japan: Indirect materials][EU: Neutral materials and elements]xi

The following [Japan: indirect materials][EU: neutral materials and elements] which may be

used in the [Japan: production][EU: manufacture] of a [Japan: good][EU: product] shall be

[Japan: without regard to where they are produced, considered as originating materials] [EU:

disregarded to determine whether a product is originating]:

(a) energy and fuel;

(b) [EU: plant and equipment, including materials [to be] used

for their maintenance];

(c) [EU: machines and] tools [Japan: ,][EU: and] dies and moulds;

(d) spare parts and materials used in the maintenance of equipment and buildings;

(e) lubricants, greases, compounding materials and other [Japan: goods][EU: materials]

used in [Japan: production][EU: manufacture] or used to operate equipment and

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buildings;

(f) gloves, glasses, footwear, clothing, safety equipment and supplies;

(g) equipment, devices and supplies used for testing or inspecting the good;[EU: catalyst

and solvent; and;]

(h) [Japan: catalyst and solvent; and;]

(i) [Japan: any] other goods which are not incorporated into the [Japan: good][EU: final

composition of the product] but whose use in the [Japan: production][EU:

manufacture] of the [Japan: good][EU: product] can be reasonably demonstrated to be

a part of that [Japan: production][EU: manufacture].

Article [X15]: Packing Materials and Containers for Shipment

Packing materials and containers for shipment that are used to protect a good during

transportation shall be disregarded in determining whether a product is originating.

Article [X16]: Packaging Materials and Containers for Retail Salexii

1. Packaging materials and containers in which a product is packaged for retail sale, if

classified with the good, shall be disregarded in determining whether all the non- originating

materials used in the production of the product have undergone the applicable change in tariff

classification or a specific manufacturing or processing operation set out in Annex {PSRs} or

whether the good is wholly obtained or produced.

2. If a product is subject to a value requirement set out in Annex {PSRs}, the value of the

packaging materials and containers in which the good/ product is packaged for retail sale, if

classified with the good, are taken into account as originating or non- originating, as the case

may be, in calculating the value requirement of the product.

Section B: Origin Proceduresxiii

TITLE

PREFERENTIAL TARIFF TREATMENT

Article 16: Claim for preferential tariff treatment

1. The importing Party shall {on importation} grant preferential tariff treatment to an

originating {product} within the meaning of this Chapter on the basis of a claim by the

importer for preferential tariff treatment. The importer accepts responsibility for the

correctness of the claim for preferential tariff treatment and compliance with the requirements

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provided for in the Chapter.

2. The claim for preferential tariff treatment shall be based on either:

(a) a statement on origin that the {product} is originating, made out by the exporter, or

(b) the importer’s knowledge that the {product} is originating.

3. The claim for preferential tariff treatment and its basis as referred to in paragraph 2, point

a) or point b) shall be included in the customs import declaration in accordance with the laws

and regulations of the importing Party. The customs authority of the importing Party may

request the importer to provide an explanation, as part of the import declaration or

accompanying it, that the {products} meet the requirements of this Chapter and to the extent

that the importer can provide such explanation.

4. The importer making a claim based on a statement on origin referred to in paragraph 2(a)

shall possess this statement and, when required provide a copy of the statement to the customs

authority of the importing Party.

5. Paragraphs 2, 3 and 4 do not apply in the cases specified in Article 20.

Article 17: Statement on origin

1. A statement on origin may be made out by an exporter of the {product} on the basis of

information demonstrating that the {product} is originating, including information on the

originating status of materials used in the production of the {product}. The exporter is

responsible for the correctness of the statement on origin made out and the information

provided.

2. The statement on origin shall be made out using one of the linguistic versions included in

Annex XX on an invoice or on any other commercial document that describes the originating

{product} in sufficient detail to enable its identification. The importing Party shall not require

the importer to submit a translation of the statement on origin.

3. The customs authorities of the importing Party shall not reject a claim for preferential tariff

treatment due to minor errors or discrepancies in the statement on origin.

4. A statement on origin shall be valid for one year from the date it was made out.

5. A statement on origin may apply to:

(a) a single shipment of a good into {the territory of} a Party; or

(b) multiple shipments of identical goods within any period specified in the statement on

origin not exceeding 12 months.

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6. Where, at the request of the importer and on the requirements laid down by the customs

authorities of the importing Party, dismantled or non-assembled {products} within the

meaning of General Rule 2(a) of the Harmonized System falling within Sections XV to XXI

of the Harmonized System are imported by instalments, a single statement on origin for such

{products} may be used.

Article18: Importer's knowledge

The importer’s knowledge that a {product} is originating shall be based on information demonstrating that the {product} is originating and satisfies the requirements provided for in

this Chapter.

Article 19: Record keeping requirements

1. An importer claiming preferential tariff treatment for a {product} imported into {the

territory of} that Party shall:

(a) in case a statement of origin served as a basis for the claim, have in his possession and

maintain, for a minimum of 3 years from the date of importation of the {product}, the

statement on origin made out by the exporter;

(b) in case the claim was based on his own knowledge, have in his possession and

maintain, for a minimum of 3 years from the date of importation, all records

demonstrating that the {product} satisfies the requirements to obtain originating

status.

2. An exporter who made out a statement on origin shall for a minimum of 4 years following

the making out of that statement on origin have in his possession and maintain copies of

statement on origins and all other records demonstrating that the {product} satisfies the

requirements to obtain originating status.

3. The records to be kept in accordance with this Article may be held in electronic form. This

Article does not apply in the cases specified in Article 20.

Article 20: Small consignments and waivers

1. {Products} sent as small packages from private persons or forming part of travellers'

personal luggage shall be admitted as originating {products} provided that such {products}

are not imported by way of trade1, have been declared as meeting the requirements of this

1 The imports which are occasional and consist solely of {products} for the personal use of

the recipients or travellers or their families shall not be considered as imports by way of trade

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Chapter and where there is no doubt as to the veracity of such a declaration.

2. Provided that the importation does not form part of importations that may reasonably be

considered to have been made separately for the purpose of avoiding the requirement for a

statement on origin, the total value of these {products} referred to in paragraph 1;

(a) in the case of the EU, shall not exceed EUR 500 in the case of small packages or EUR

1 200 in the case of {products} forming part of travellers' personal luggage. The

amounts to be used in any given national currency shall be the equivalent in that

currency of the amounts expressed in euro as at the first working day of October. The

amounts shall be those published for that day by the European Central Bank, unless a

different amount is communicated to the European Commission by 15 October, and

shall apply from 1 January the following year. The European Commission shall notify

Japan of the relevant amounts.

(b) in the case of Japan, shall not exceed 100,000 Yen, or such amount as Japan may

establish.

3. Each Party may provide that the basis for the claim as referred to in Article 16(2) shall not

be required for an importation of a good for which the importing Party has waived the

requirement.

Article 21: Verification

1. For the purposes of verifying whether a {product} imported into its territory from {the

territory of} the other Party is originating or whether the other requirements of this Chapter

are fulfilled, the importing Party may conduct a verification based on risk assessment

methods, which may include random selection, by means of a request for information from

the importer who made the claim referred to in Article 16. The importing Party may conduct a

verification either at the time of import declaration, before the release of goods, or at after the

clearance of the goods.

2. The request for information in paragraph 1 shall contain no more than the following data

elements:

(a) The statement on origin, where such a statement was the basis of the claim referred to

in paragraph 2(a) of Article 16;

(b) The HS-code of the final {product} and origin criteria used;

(c) A brief description of the production process;

(d) Where the origin criterion was based on a specific production process, a specific

description of that process;

(e) Where applicable a description of the originating and non-originating materials used in

if it is evident from the nature and quantity of the {products} that no commercial purpose is in

view.

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the production process;

(f) Where the origin criterion was ‘wholly obtained’, the applicable category (such as harvesting, mining, fishing and place of production);

(g) Where the origin criterion was based on a value method, the value of the final

{product} as well as the value of all the non-originating or as appropriate originating

materials used in the production;

(h) Where the origin criterion was based on weight, the weight of the final {product} as

well as the weight of the relevant non-originating materials or as appropriate

originating materials used in the final {product};

(i) Where the origin criterion was based on changes in tariff classification, a list of all the

non-originating materials including their tariff classification (in 2, 4 or 6 digit format

depending on the origin criteria);

(j) {Where applicable, the indication of the use of the sets rule, tolerances (de minimis),

absorption, accounting segregation for fungible materials, cumulation, non-alteration,

[DDBs].}

3. Where the claim for preferential tariff treatment is based on a statement on origin referred

to in paragraph 2(a) of Article 16, the importer shall inform the customs authority of the

importing Party when the requested information may be provided in full or in relation to one

or more data elements by the exporter directly.

4. Where the claim for preferential tariff treatment is based on the importer's knowledge

referred to in paragraph] 2(b) of Article16, after having first requested information [in

accordance with Article 21 paragraph 1,] the customs authority of the importing Party

conducting the verification may send a request for information to the importer when it

considers that additional information is required for verifying the originating status of the

{product}. The customs authority of the importing Party may request the importer for specific

documentation and information, where appropriate.

5. If the customs authorities of the importing Party decide to suspend the granting of

preferential treatment to the {products} concerned while awaiting the results of the

verification, release of the {products} shall be offered to the importer subject to [appropriate

precautionary measures including guarantees.] Any suspension of preferential treatment shall

be reinstated as soon as possible after the originating status of the {products} concerned or the

fulfilment of the other requirements of this Chapter has been ascertained by the customs

authorities of the importing Party.

Article 22: Administrative Cooperation

1. In order to ensure the proper application of this Chapter, the Parties shall cooperate with

each other, through the customs authorityxiv in verifying whether {products} are originating

and compliance with the other requirements provided for in the Chapter.

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2. Where the claim for preferential tariff treatment is based on a statement on origin referred

to in paragraph 2(a) of Article 16, after having first requested information [in accordance with

Article 21 paragraph 1,] the customs authority of the importing Party conducting the

verification may also send a request for information within a period of two years after the

importation of the goods, to the customsxv authority of the exporting Party when the customs

authority of the importing Party conducting the verification considers that it requires

additional information for verifying the originating status of the {product}. The request for

information should include the following information:

(a) the statement on origin;

(b) the identity of the customs authority issuing the request;

(c) the name of the exporter;

(d) the subject and scope of the verification;

(e) where applicable any relevant documentation.

The customs authority of the importing Party may request the customs authorityxvi of the

exporting Party for specific documentation and information, where appropriate.

3. The customs authority of the exporting Party may in accordance with its laws and

regulations, request documentation or examination by calling for any evidence or by visiting

the premises of the exporter to review records and observe the facilities used in the production

of the {product}.

4. Without prejudice to paragraph 5, the customsxviii authority of the exporting Party following

the request referred to in paragraph 2 shall provide the following information:

(a) the requested documentation where available;

(b) an opinion on the originating status of the {product};

(c) the description of the {product} subject to examination and the tariff classification

relevant to the application of the rule of origin;

(d) a description and explanation of the production process sufficient to support the

originating status of the {product};

(e) information on the manner in which the examination was conducted; and

(f) supporting documentation, where appropriate.

5. The customsxix authority of the exporting Party shall not transmit the information to the

customs authority of the importing Party referred to in paragraph 4 when such information is

deemed confidential by the exporter.

Article 23: Mutual Assistance in the fight against fraud

In case of a suspected breach of the provisions of this Chapter, the Parties shall provide each

other with mutual assistance in customs matters, in accordance with the Agreement between

the European Community and the Government of Japan on cooperation and mutual

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administrative assistance in customs matters.

Article 24: Denial of Preferential Tariff Treatment

1. Without prejudice to the paragraph 3, the customs authority of the importing Party may

deny preferential tariff treatment where:

(a) within a period of 3 months following the request for information pursuant to Article

21, paragraph 1:

i. no reply is provided, or

ii. the information provided is inadequate to confirm that the {product} is

originating where the claim for preferential tariff treatment is based on the

importer's knowledge referred to in paragraph 2(b) of Article 16;

(b) within a period of 3 months following the request for information pursuant to Article

21, paragraph 4



originating;

(c) within a period of 10 months following the request for information pursuant to Article

22, paragraph 2:



originating;

(d) [following a prior request for assistance pursuant to Article 23 [in accordance with

Article XX CTF / with the provisions of CCMAA] and within the mutually agreed

period, in respect of {products} having been subject of a claim as referred to in Article

16(1):]

i. the customs authority of the exporting Party fails to provide the assistance, or

ii. the result of this assistance is inadequate to confirm that the {product} is

originating.

2. The customs authority of the importing Party may deny preferential tariff treatment to a

{product} for which an importer claims preferential tariff treatment where the importer fails

to comply with requirements of this Chapter other than those relating to the originating status

of the {products}.

3. Where the customs authority of the importing Party has sufficient justification to deny

preferential tariff treatment under paragraph 1 in cases where the customs authority of the

exporting Party provided an opinion pursuant to paragraph 4(ii) of Article 22, confirming the

originating status of the {products}, the customs authority of the importing Party shall notify

the customs authority of the exporting Party, within [2] months of receiving the opinion its

intension to deny the preference.

In such case and at the request of either Party, consultations shall be held within a period of

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[3] months from the date of the notification referred to in the first subparagraph. The period

for consultation may be extended on a case by case basis by mutual agreement between the

Parties. The consultation may take place within the procedure set by the [Customs

Committee] established under this Agreement.

At the expiry of the period for consultation, the customs authority of the importing Party may

deny the preferential tariff treatment only on the basis of sufficient justification and after

having granted the importer the right to be heard.

Article 25: Confidentiality

1. Each Party shall maintain, in accordance with its laws and regulations, the confidentiality

of information provided to it by the other Party pursuant to this Chapter, and shall protect that

information from disclosure.

2. Information obtained by the authorities of the importing Party may only be used by such

authority for the purposes of this Chapter.

3. Confidential business information obtained from the exporter by the authority of the

exporting Party or importing Party through the application of Articles 21 and 22 shall not be

disclosed unless otherwise provided for in this Chapter.

4. Information obtained by the customs authority of the importing Party pursuant to this

Chapter shall not be used by the importing Party in any criminal proceedings carried out by a

court or a judge, unless permission to use such information is requested by and provided to

the importing Party through the diplomatic channels or other channels established in

accordance with the applicable laws and regulations of the exporting Party.

Article 26: [Sanctions and administrative measures]

The Parties shall impose [administrative measures, and sanctions where appropriate], in

accordance with their respective laws and regulations, on any person who draws up, or causes

a document to be drawn up, which contains incorrect information provided for the purpose of

obtaining a preferential treatment for {products}, or who does not comply with the

requirements set out in Article 19, or who does not provide the evidence or refuses the visit

referred to in Article 22(3).

EU: Article X (Placeholder) Temporary withdrawal of preferential tariff treatment

The customs of authority of importing Party may withdraw the preferential tariff treatment in

accordance with article XY “Special measures concerning the management of preferential tariff treatment”.

EU: Article X (Placeholder)

Customs committee to oversee the implementation of this Protocol

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ANNEX

TEXT OF THE STATEMENT ON ORIGIN

The statement on origin, the text of which is given below, must be completed in accordance

with the footnotes. However, the footnotes do not have to be reproduced.

(Period: from ________to _______ 2)

The exporter of the products covered by this document (Exporters reference No ...3) declares

that, except where otherwise clearly indicated, these products are of ...4 preferential origin.

Origin criteria used5

……………………………………………………………….............................................. 6 (Place and date)

...…………………………………………………………………….................................. (Printed name of the exporter)

2 When the statement on origin is completed for multiple shipments of identical originating

products within the meaning of Article XX, indicate the period for which the statement on

origin will apply. The period shall not exceed 12 months. All importations of the product must

occur within the period indicated. Where a period is not applicable, the field can be left blank. 3 [Indicate the reference number through which the exporter or producers may be identified.

For the EU this will be the XX number.] 4 Indicate the origin of the product 5 Indicate, depending on the case, one or more of the following codes

(a) for a product which is wholly obtained or produced entirely in the territory of a Party/

one or more of the Parties, exclusively from originating materials

(b) for a product produced entirely in the territory of a Party/ one or more of the Parties,

using non-originating materials provided the product satisfies all applicable

requirements of Annex XX’ (Product-Specific Rules), with the following additional

information on the type of PSR actually applied to the product:

i. for a ‘Change of Tariff Classification’ rule

ii. for a ‘Value-Added’ / ‘Regional value Content’ rule

iii. for a ‘Specific Processing’ rule

(c) for ‘Accumulation’ or ‘Cumulation’ (d) De Minimis/ Tolerance

6 These indications may be omitted if the information is contained on the document itself.

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ANNEX XX

STATEMENT ON ORIGIN

Specific requirements as for the making out of a statement on origin

A statement on origin, the text of which is set out below, shall be made out using one of the

following linguistic versions and in accordance with the domestic law of the exporting Party.

If the statement is handwritten, it shall be written in ink in printed characters. The statement

on origin must be drawn up in accordance with the respective footnotes. The footnotes do not

have to be reproduced.

Bulgarian version

Spanish version

Czech version

Danish version

German version

Estonian version

Greek version

English version

The exporter of the products covered by this document (Reference No ... (1)) declares that,

except where otherwise clearly indicated, these products are of ... preferential origin (2).

French version

Croatian version

Italian version

Latvian version

Lithuanian version

Hungarian version

Maltese version

Dutch version

Polish version

Portuguese version

Romanian version

Slovak version

Slovenian version

Finnish version

Swedish version

Japanese version

i The use of the word 'Chapter' is without prejudice with regard to the structure and

denomination of parts of the agreement

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ii Definitions proposed by Japan for “certification body” and “competent governmental authority” are not reproduced in this text pending agreement on the deletion of Article 17a iii Japan agrees to refer to ‘a Party’ subject to agreement on the provision of (ac)cumulation iv On (ac)cumulation v Japan reflecting whether to keep 'entirely' vi Japan reflection whether to keep 'in the territory of' vii Japan accepts principle but still need legal check viii Japan reflection whether to keep 'in the territories of' ix Japan reflection whether to keep 'in the territories of' x Subject to review pending final Japan's position related to the use of the build-up method xi

Subject to review pending final Japan's position related to the use of the build-up method xii

Subject to review pending final Japan's position related to the use of the build-up method xiii Article 17a on 'Certification of statement on origin' proposed by Japan is not reproduced in

this text as Japan has indicted that it is willing to withdraw its proposal pending overall

agreement on the Rules of Origin Chapter xiv The text: 'or other competent governmental authority' is not reproduced in this text pending

agreement on the

deletion of Article 17a xv The text: 'or other competent governmental' is not reproduced in this text pending

agreement on the deletion of Article 17a xvi The text: 'or other competent governmental' is not reproduced in this text pending

agreement on the deletion of Article 17a xvii The text: 'or other competent governmental' is not reproduced in this text pending

agreement on the deletion

of Article 17a xviii The text: 'or other competent governmental' is not reproduced in this text pending

agreement on the deletion of Article 17a xix The text: 'or other competent governmental' is not reproduced in this text pending

agreement on the deletion of Article 17a

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Japan-EU EPA (SPS) (Non-Paper)

Legend: [Text under consideration]

Article 1: Objectives

The objectives of this Chapter are:

1. to protect human, animal or plant life or health through the development, adoption

and enforcement of sanitary and phytosanitary (hereinafter referred to as “SPS”) measures while minimizing negative effects of SPS measures on trade between the

Parties;

2. to promote cooperation between the Parties on the implementation of the Agreement

on the Application of Sanitary and Phytosanitary Measures in Annex 1A to the WTO

Agreement (hereinafter referred to as “SPS Agreement”); and

3. to provide a mean to improve communication and cooperation, and a framework for

addressing issues related to the implementation of sanitary and phytosanitary measures,

and achieve mutually acceptable solutions.

Article 2: Scope of Application

This Chapter shall apply to all SPS measures of the Parties under the SPS Agreement that

may, directly or indirectly, affect trade between the Parties.

Article 3: Definitions


1. The definitions set out in Annex A of the SPS Agreement shall apply.

2. The Parties may agree on other definitions for the application of this Chapter taking

into consideration the glossaries and definitions developed by relevant international

organisations, such as the CODEX Alimentarius Commission (hereinafter referred to as

“Codex Alimentarius”), the International Office of Epizootics (hereinafter referred to as

“OIE”) and the relevant international organizations operating within the framework of the International Plant Protection Convention (hereinafter referred to as “IPPC”). In the event of an inconsistency between definitions agreed by both Parties and the definitions

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set out in the SPS Agreement, the definitions set out in the SPS Agreement shall prevail.

3. In addition, for the purpose of this Chapter;

a) “import conditions” means any sanitary or phytosanitary measures that are required to be fulfilled for the import of products.

b) "protected zone" for a specific regulated pest means an officially defined

geographical part of the [territory][Area] of each Party in which that pest is not

established in spite of favourable conditions and its presence in other parts of the

[territory][Area] of the Party.

Article 4: Rights and Obligations

The Parties reaffirm their rights and obligations relating to SPS measures under the SPS

Agreement.

Article 5: Competent Authorities and contact points

As of the date of entry into force, the Parties shall provide the other with a description of the

competent authorities for the implementation of this Chapter and a contact point for

communication on all matters arising under this Chapter.

The Parties shall inform each other of any significant changes in the structure, organization

and division of competency of their competent authorities and ensure that the information on

contact points is kept up to date.

Article 6: Risk Assessment

The Parties shall ensure that their SPS measures are based on risk assessment in accordance

with relevant provisions, including Article 5, of the SPS Agreement.

Article 7: Import conditions, import procedures and trade facilitation

1. Import conditions shall be established by the importing Party in order to achieve the

appropriate level of protection and shall be based on consultations between the Parties when

necessary.

2. Without prejudice to the rights and obligations each Party has under the SPS Agreement,

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the importing Party should apply import conditions for products to the total [territory][Area]

of the exporting Party in a consistent manner if so requested by the exporting Party.

3. The provisions of the previous paragraphs shall not affect the import conditions existing

between the Parties on the date of entry into force of this Agreement. The Parties shall give

consideration to any request for a review of these import conditions.

4. The Parties shall ensure, with respect to any import procedure to check and ensure the

fulfilment of sanitary or phytosanitary measures, including that for approval and clearance

process that:

a) such procedures are simplified, expedited and completed without undue delay,

in accordance with the SPS Agreement;

b) such procedures are not applied in a manner which would constitute an

arbitrary or unjustifiable discrimination against the other Party;

c) the standard processing period of each procedure is published or that the

anticipated processing period is communicated to the applicant upon request; and

d) information requirements are limited to what is necessary for appropriate

control, inspection and approval procedures, including for approval of the use of

additives or for the establishment of tolerances for contaminants in food, beverages

or feedstuffs.

[5. EU: More specifically, concerning approval procedure for food additives, food enzymes

and food flavourings, on receipt of an application the Party shall acknowledge receipt of the

application in writing to the applicant within 14 working days of receiving it shall as soon as

possible request an opinion from a risk assessment body, where applicable. The risk

assessment authority shall give its opinion within 9 months of receipt of valid application.

Within 9 months of the risk assessment authority giving its opinion, the Party shall update the

relevant legislation. Guidelines should be made available for describing the information

required for the application.]

[Japan opposes to the EU proposal and proposes to delete the paragraph 5].

6. Taking into account applicable standards agreed under the International Plant Protection

Convention (IPPC) the Parties undertake to maintain adequate information on their pest status

(including surveillance, eradication and containment programmes and their results) in order to

support the categorization of pests and to justify phytosanitary import conditions.

7. The Parties shall establish lists of regulated pests for commodities where a phytosanitary

concern exists. The list shall contain as appropriate:

a) the quarantine pests not known to occur within any part of its own [territory /

Area];

b) the quarantine pests known to occur within any part of its own [territory / Area]

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but not widely distributed and under official control;

c) any other regulated pest for which phytosanitary measures may be taken.

For commodities for which a phytosanitary concern exists, import conditions shall be limited

to measures ensuring the absence of regulated pests of the importing Party.

The importing Party shall make available its list of regulated commodities and the

phytosanitary import requirements for all regulated commodities. This information shall

include as appropriate the specific quarantine pests and additional declarations on

phytosanitary certificates as prescribed by the importing Party.

8. Where it is necessary to establish import conditions to respond to a request by the

exporting Party:

a. the importing Party shall take all necessary steps to allow trade to take place

without undue delay;

b. the exporting Party shall:

- provide all relevant information required by the importing Party; and

- give reasonable access to the importing Party for audit and other relevant

procedures.

9. Where a range of alternative sanitary or phytosanitary measures may be available to

attain the appropriate level of protection of the importing Party, the Parties shall, upon request

of the exporting Party, consider selecting more practicable and less trade-restrictive solution.

10. Where a certificate issued by the exporting Party is required for sanitary or phytosanitary

objectives, the format of the certificate and its contents shall be agreed between the Parties,

taking into account international standards, guidelines or recommendations of Codex

Alimentarius, OIE or IPPC.

11. The Parties shall promote the implementation of electronic certification and other

technologies to facilitate trade.

12. Verifications by officials of the importing Party in the [territory][Area] of the exporting

Party should be to facilitate new trade and not be applied as a permanent measure. The

importing Party shall accept replacing an existing verification measure by an alternative

measure which verifies the compliance with the agreed requirements for phytosanitary

measures by the exporting Party, if so requested by the exporting Party and subsequently

agreed by the Parties without undue delay.

13. Consignments of regulated commodities shall be accepted on the basis of adequate

assurances by the exporting Party, without specific import authorisations in the form of a

licence or permit, except where official consent for import is necessary, based on the relevant

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standards, guidelines and recommendations of IPPC.

14. Pest risk analysis shall begin as promptly as possible and conclude without undue delay.

15. Any fees imposed for the procedures on imported products from the exporting Party shall

be equitable in relation to any fees charged on like domestic products and should be no higher

than the actual cost of the service.

Article 8: Audit

1. In order to attain and maintain confidence in the effective implementation of this Chapter,

the Parties shall assist each other to carry out audit of:

a) all or parts of the exporting Party's inspection and certification system;

b) the results of the controls carried out under the exporting Party's inspection and

certification system; in accordance with the provisions of the SPS Agreement, taking

into account the relevant international standards, guidelines and recommendations of

the Codex Alimentarius, OIE or IPPC.

2. For the purposes of carrying out such audit, the importing Party may conduct audit by

means of requests of information from the exporting Party or audit visits to the exporting

Party.

3. An audit visit shall be carried out under the conditions discussed and agreed in advance

by the exporting and the importing Parties.

4. The importing Party shall provide the exporting Party the opportunity to comment in

writing on the findings of the audit. The importing Party shall take any such comment into

account before it makes its conclusions and takes any action. The importing Party shall

provide a report setting out its conclusions in writing to the exporting Party without undue

delay.

5. The costs for audit shall be borne by the importing Party unless otherwise agreed between

the Parties.

Article 9: Procedure for Listing of Establishments or Facilities

1. When required by the importing Party, the competent authorities of the exporting Party

shall ensure that lists of establishments and facilities which comply with the importing Party's

import conditions are drawn up, kept updated and communicated to the importing Party.

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2. The importing Party may request the exporting Party to provide information which is

necessary to consider the list referred to in paragraph 1. Except when additional information

is required, the importing Party shall take the necessary measures to allow imports from these

establishments and facilities without undue delay.

Without prejudice to provisions of Article 13 (Emergency Measures), such measures shall not

include prior inspection except when such inspection is required by each Party's laws and

regulations or agreed between the Parties. A Party shall notify the other Party of intentions to

introduce new laws and regulations within the scope of this Article and allow the other Party

to provide comments thereon.

3. The importing Party may conduct the audit in accordance with Article 8 of this Chapter.

4. The importing Party shall make these lists publicly available as appropriate.

Article 10: Adaptation to Regional conditions

Animals, animal products and animal by-products

1. The Parties recognise the concept of zone and compartment specified in the OIE

Terrestrial Animal Health Code and the OIE Aquatic Animal Health Code.

2. When establishing or maintaining sanitary import conditions upon the request by the

exporting Party, the importing Party shall recognise the zones or compartments established by

the exporting Party as a basis for consideration towards the determination of allowing or

maintaining the import.

3. The exporting Party shall identify its zones or compartments referred to in paragraph 2

and, if requested, provide a full explanation and supporting data based on the OIE Terrestrial

Animal Health Code or the OIE Aquatic Animal Health Code, or in other ways as deemed

appropriate by both Parties based on the knowledge acquired through experience of the

exporting Party’s relevant sanitary authorities.

4. The Parties shall ensure that the procedures and provisions indicated in paragraphs 2 and

3 are carried out without undue delay.

5. The SPS Specialised-Committee will exchange information on or review a way to

establish and maintain a mutual recognition of health status, unless otherwise agreed between

the Parties, based on the OIE Terrestrial Animal Health Code and recommendations.

6. Each Party may establish zones or compartments referred to in paragraph 2 for diseases

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not covered by the OIE Terrestrial Animal Health Code or the OIE Aquatic Animal Health

Code and agree to apply such zones or compartments in the trade between the Parties.

Plants and plant products

7. The Parties recognise the concepts of pest free areas, pest free places of production and

pest free production sites, as well as areas of low pest prevalence specified in the International

Standards for Phytosanitary Measures developed under IPPC, as well as of protected zones

which the Parties agree to apply in their trade.

8. When establishing or maintaining phytosanitary import conditions upon the request by

the exporting Party, the importing Party shall recognise the pest free areas, pest free places of

production, pest free production sites, areas of low pest prevalence and protected zones

established by the exporting Party as a basis for consideration towards the determination of

allowing or maintaining the import.

9. The exporting Party shall identify its pest free areas, pest free places of production, pest

free production sites, areas of low pest prevalence or protected zones and, if requested,

provide a full explanation and supporting data based on the relevant International Standards

for Phytosanitary Measures or in other ways as deemed appropriate by both Parties based on

the knowledge acquired through experience of the exporting Party’s relevant phytosanitary authorities.

10. In implementing provisions of paragraphs 7, 8 and 9 of this Article, technical

consultations and audit may be carried out. Technical consultations shall take place in

accordance with Article 12. The Audits shall be carried out in accordance with Article 8,

taking into account the biology of the pest and the commodity concerned.

11. The Parties shall ensure that the procedures and provisions indicated in paragraphs 8, 9

and 10 are carried out without undue delay.

12. Whenever a quarantine pest is detected in a protected zone, the exporting Party shall

immediately notify the importing party. In addition, it shall immediately suspend relevant

export if so required by the importing Party. The resumption of its export can [Japan

18.01.2017: may] take place after the importing Party is satisfied with the assurance provided

by the exporting Party.

Article 11: Transparency and Exchange of Information

1. The Parties shall, in accordance with Article 7 and Annexes B and C of the SPS

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Agreement,

a) ensure transparency as regards:

- SPS measures, including import conditions;

- control, inspection and approval procedures, including complete details about the

mandatory administrative steps, expected timelines, and authorities in charge of

receiving import applications and of processing them;

b) enhance mutual understanding of each Party’s SPS measures and their

application; and

c) upon reasonable request from the other Party and as soon as possible provide

information on its SPS measures and their application, including:

i. import conditions that apply to the import of specific products;

ii. progress on the application for authorisation of specific products;

iii. the frequency of import checks carried out on products from the other party;

and

iv. matters related to the development and application of its SPS measures,

including the progress on new available scientific evidence, that affect, or may

affect, trade between the Parties with a view to minimizing their negative trade

effects.

2. When the information referred to in paragraphs 1(a) and (c) has been made available by

notification of a Party under the SPS Agreement or when such information has been made

available on an official, publicly accessible and fee free web-site of that Party, the information

referred to in paragraphs 1(a) and (c) shall be considered to have been provided.

Article 12: Technical Consultations

1. Where a Party has significant concerns regarding human, animal, or plant life or health or

measures proposed or implemented by the other Party, that Party can request technical

consultations.

2. The other Party shall respond to such a request without undue delay and shall engage in

the technical consultations to address these concerns.

3. Each Party shall endeavour to provide necessary information to avoid a disruption in

trade and/or to reach a mutually acceptable solution.

4. Where the Parties have already established other mechanisms to address the concerns

than those referred to in this Article, they shall utilize them to the maximum extent possible in

order to avoid unnecessary duplication.

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Article 13: Emergency Measures

1. If a Party adopts an emergency measure that is necessary for the protection of human,

animal or plant life or health, the competent authority of the Party shall:

a) immediately notify competent authorities of the other Party of such emergency

measure;

b) allow the other Party to make comments in writing;

c) engage, if necessary, in technical consultations as referred to in Article 13

d) take the comments referred to in subparagraph (b) and results of technical

consultations referred to in subparagraph (c) into account.

2. The importing Party shall consider information provided, in a timely manner, by the

exporting Party when making decisions with respect to consignments that, at the time of

adoption of emergency measures, are being transported between the Parties, in order to avoid

unnecessary disruptions to trade.

3. The importing Party shall ensure that any emergency measure referred to in paragraph 1

is not maintained without scientific evidence. The importing Party shall review the measure

with a view to minimizing its negative effect on trade by either repealing or replacing it by

permanent measures.

Article 14: Equivalence

1. An importing Party shall accept an exporting Party’s SPS measures as equivalent, if the exporting Party objectively demonstrates to the importing Party that its measures achieve the

importing Party’s appropriate level of SPS protection. For this purpose, reasonable access

shall be given, upon request, to the importing Party for inspection, testing and other relevant

procedures.

2. Each Party shall, upon request, enter into consultations with the aim of achieving bilateral

arrangements related to (determination) of the equivalence of specified SPS measures.

3. In (determining) equivalence, the Parties shall take into account the relevant guidance of

the WTO SPS Committee and international standards, guidelines and recommendations, in

particular the “Decision on the Implementation of Article 4 of the Agreement on the

Application of Sanitary and Phytosanitary Measures” adopted by the Committee on SPS Measures of the WTO (G/SPS/19/Rev.2).

4. Where equivalence has been determined, the Parties may agree on alternative import

conditions and simplified certificates, taking into account international standards, guidelines

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or recommendations of Codex Alimentarius, OIE or IPPC.

Article 15: Specialised-Committee on SPS Measures

1. For the purposes of the effective implementation and operation of this Chapter, the

Parties hereby establish a Specialised-Committee on SPS Measures (hereinafter referred to in

this Article as “the Specialised-Committee”).

The Specialised-Committee shall be composed of representatives of the Parties who have a

responsibility for SPS measures with relevant expertise.

2. The objectives of the Specialised-Committee are to:

a) Enhance each Party's implementation of this Chapter;

b) Consider Sanitary and Phytosanitary matters of mutual interest;

c) Enhance communication and cooperation on Sanitary and Phytosanitary matters

of mutual interest.

3. The Specialised-Committee:

a) Shall provide a forum to improve the Parties' understanding of SPS issues that

relate to the implementation of the SPS Agreement;

b) Shall provide a forum to enhance mutual understanding of each Party's SPS

measures and the regulatory processes that relate to those measures;

c) Shall monitor, review and exchange information on the implementation and

operation of this Chapter;

d) Shall serve as a forum to address with a view to reaching mutually acceptable

solutions, the concerns referred to in paragraph 1 of Article 12 provided that the

Parties have first attempted to address them through the technical consultations

pursuant to Article 12 and other topics agreed between the Parties;

e) Shall determine the appropriate means, which may include ad hoc working

groups, to undertake specific tasks related to the functions of the Specialised-

Committee;

f) May identify and consider technical cooperation projects between the Parties in

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relation to development, implementation, and application of SPS measures;

g) May consult on matters and positions for the meetings of the Committee on

Sanitary and Phytosanitary measures established under Article 12 of the SPS

Agreement, and meetings held under the auspices of the Codex Alimentarius, OIE

and IPPC.

4. The Specialised-Committee shall establish its rules of procedures and may revise those

procedures as needed.

5. The first meeting of the Specialised-Committee shall hold within one year of the date of

entry into force of this Agreement and the Specialised-Committee normally meets once a year

thereafter unless the Parties agree otherwise.

Article 16: Non application of DS / Dispute Settlement

[EU: No Party shall have recourse to dispute settlement under Chapter XX (Dispute

Settlement) for a dispute that [JP delete: exclusively] alleges a violation of the provisions of

the WTO SPS Agreement.]

[Japan: Chapter YY (Dispute Settlement) shall not apply to this Chapter.]

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1

CHAPTER […] TECHNICAL BARRIERS TO TRADE

Article 1

Objectives

The objectives of this Chapter are to facilitate and increase trade in goods between the Parties

by ensuring that technical regulations, standards and conformity assessment procedures do not

create unnecessary obstacles to trade, by enhancing joint cooperation between the Parties,

including on the implementation of the Agreement on Technical Barriers to Trade in Annex

1A to the WTO Agreement (hereinafter referred to as "TBT Agreement"), and by pursuing

appropriate ways to reduce unnecessary negative effects on trade of measures within the

scope of this Chapter.

Article 2

Scope

1. This Chapter shall apply to the preparation, adoption and application of technical

regulations, standards and conformity assessment procedures of central government bodies as

defined in the TBT Agreement, that may affect the trade in goods between the Parties.

2. Each Party shall take such reasonable measures as may be available to it to encourage

the observance by local government bodies on the level directly below that of a central

government within its territory which are responsible for the preparation, adoption and

application of technical regulations and conformity assessment procedures of the provisions

of Article 5 (Technical Regulations), Article 6 (International Standards), Article 7

(Standards), Article 8 (Conformity Assessment Procedures), Article 9 (Transparency), Article

10 (Market Surveillance) and Article 11 (Marking and Labelling).

3. This Chapter shall not apply to:

(a) purchasing specifications prepared by governmental bodies for production or

consumption requirements of such bodies; or

(b) sanitary and phytosanitary measures as defined in Annex A of the Agreement on the

Application of Sanitary and Phytosanitary Measures in Annex 1A to the WTO

Agreement.

Article 3

Reaffirmation and Incorporation of the TBT Agreement

The Parties reaffirm their rights and obligations under the TBT Agreement and the following

provisions of the TBT Agreement are incorporated into and made part of this Agreement,



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mutatis mutandis:

(a) Article 2 (Preparation, Adoption and Application of Technical Regulations by Central

Government Bodies);

(b) Article 3 (Preparation, Adoption and Application of Technical Regulations by Local

Government Bodies and Non-Governmental Bodies);

(c) Article 4 (Preparation, Adoption and Application of Standards);

(d) Article 5 (Procedures for Assessment of Conformity by Central Government Bodies);

(e) Article 6 (Recognition of Conformity Assessment by Central Government Bodies);

(f) Article 7 (Procedures for Assessment of Conformity by Local Government Bodies);

(g) Article 8 (Procedures for Assessment of Conformity by Non-Governmental Bodies);

(h) Article 9 (International and Regional Systems);

(i) Annex 1 (Terms and their Definitions for the Purpose of this Agreement); and

(j) Annex 3 (Code of Good Practice for the Preparation, Adoption and Application of

Standards).

Article 4

Definitions

For the purposes of this Chapter, the terms and definitions set out in Annex 1 of the TBT

Agreement shall apply.

Article 5

Technical Regulations

1. The Parties recognise the importance of good regulatory practice with regard to the

preparation, adoption and application of technical regulations, in particular the work carried

out by the WTO TBT Committee on good regulatory practice. In this context, the Parties

undertake to:

(a) when developing a technical regulation:

(i) assess in accordance with their respective laws and regulations or

administrative guidelines the available regulatory or non-regulatory

alternatives to the proposed technical regulation that may fulfil the Party's

legitimate objective, in order to ensure that the proposed technical regulation is

not more trade-restrictive than necessary to fulfil a legitimate objective, in

accordance with Article 2.2 of the TBT Agreement.

Nothing in this provision shall affect the rights of each Party to prepare, adopt

and apply measures without delay where urgent problems including safety,

health, environmental protection or national security arise or threaten to arise.

(ii) endeavour to systematically carry out impact assessments for technical



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regulations with significant effect on trade, including an assessment of their

impact on trade;

(iii) wherever appropriate, specify technical regulations based on product

performance requirements, rather than design or descriptive characteristics.

(b) without prejudice to Article 2.3 of the TBT Agreement, review adopted technical

regulations at appropriate intervals, preferably not exceeding five years, in particular

with a view to increasing their convergence with relevant international standards. In

undertaking this review, the Parties shall, inter alia, take into account any new

development in the relevant international standards and whether the circumstances

that have given rise to divergences from any relevant international standard continue

to exist. The outcome of these reviews shall be communicated and explained to the

other Party upon request.

2. When a Party considers that its technical regulation and a technical regulation of the

other Party that have the same objectives and product scope are equivalent, the Party may

request in writing, with the detailed reasons, that the other Party recognises them as

equivalent. The other Party shall give positive consideration to accepting these technical

regulations as equivalent, even if they differ, provided that it is satisfied that the technical

regulation of the requesting Party adequately fulfils the objectives of its own technical

regulation. Where a Party does not accept a technical regulation of the other Party as

equivalent to its own, it shall, upon request of the other Party, explain its decision.

3. At the request of a Party that has an interest in developing a technical regulation

similar to a technical regulation of the other Party, such other Party shall provide, to the extent

practicable, relevant information, including studies or documents, except for confidential

information, on which it has relied in its development.

4. Each Party shall uniformly and consistently apply requirements related to the placing

on the market of products which are established through technical regulations for its whole

territory. If a Party has substantiated reasons that

(1) any of these requirements are not applied uniformly and consistently, and

(2) this situation leads to significant impact on bilateral trade,

this Party may notify, in writing, the substantiated reasons to the other Party with a view to

clarifying, and if appropriate, addressing the issue in a timely manner by the Contact Points or

other appropriate bodies established under this Agreement.

Article 6

International Standards

1. For the purpose of applying this Chapter and the TBT Agreement, standards issued by

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the International Electrotechnical Commission (IEC), the International Telecommunication

Union (ITU), the Codex Alimentarius Commission, the International Civil Aviation

Organisation (ICAO), the World Forum for Harmonisation of Vehicle Regulations (WP.29)

within the framework of the United Nations Economic Commission for Europe (UNECE), the

United Nations Sub-Committee of Experts on the Globally Harmonized System of

Classification and Labelling of Chemicals (UN/SCEGHS), and International Council on

Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) shall be

considered as relevant international standards within the meaning of Article 2, Article 5 and

Annex 3 of the TBT Agreement, provided that in their development the principles and

procedures set out in the Decision of the WTO Committee on Technical Barriers to Trade on

Principles for the Development of International Standards, Guides and Recommendations

With Relation to Article 2, Article 5 and Annex 3 of the Agreement (G/TBT/9, 13 November

2000, Annex 4) have been followed, except when such standards or relevant parts of them

would be ineffective or inappropriate means for the fulfilment of the legitimate objectives

pursued.

2. With a view to harmonising standards on as wide a basis as possible, the Parties shall

encourage national or regional standardising bodies within their Area:

(a) to play a full part, within the limits of their resources, in the preparation by relevant

international standardising bodies of international standards;

(b) to use relevant international standards as a basis for the standards they develop, except

where such international standards would be ineffective or inappropriate, for instance,

because of an insufficient level of protection or fundamental climatic or geographical

factors or fundamental technological problems;

(c) to avoid duplication of, or overlap with, the work of international standardising

bodies;

(d) to review their standards not based on relevant international standards at appropriate

intervals, preferably not exceeding five years, with a view to increasing their

convergence with relevant international standards.

3. When developing technical regulations or conformity assessment procedures,

(i) each Party shall use relevant international standards, guides or

recommendations, or the relevant parts of them, to the extent provided in

paragraph 4 of Article 2 and paragraph 4 of Article 5 of the TBT Agreement, as

a basis for its technical regulations and conformity assessment procedures and

avoid deviations from, or additional requirements as compared to the relevant

international standards, except when the Party developing the technical

regulation or conformity assessment procedure can demonstrate, based on

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such international standards would be an ineffective or inappropriate means for

the fulfilment of the legitimate objectives pursued, as referred to in paragraph 2

of Article 2 and paragraph 4 of Article 5 of the TBT Agreement;

(ii) where a Party does not use such international standards, guides or

recommendations, or the relevant parts of them, referred to in paragraph 1, as a

basis for its technical regulations or conformity assessment procedures, it shall,

upon request of the other Party explain the reasons why such international

standards have been deemed inappropriate or ineffective for the fulfilment of

the legitimate objectives pursued, as referred to in paragraph 2 of Article 2 and

paragraph 4 of Article 5 of the TBT Agreement, and provide the relevant

information, including available scientific or technical evidence on which this

assessment is based, and identify the parts of the respective technical regulation

or conformity assessment procedure which substantially deviate from the

relevant international standards, guides or recommendations.

4. Each Party shall encourage its national or regional standardising bodies within their

territories to cooperate with the relevant standardising bodies of the other Party in

international standardising activities. Such cooperation may take place in international

standardising bodies of which both Parties or standardising bodies of both Parties are

members.

Such bilateral cooperation could be aimed, inter alia, at promoting the development of

international standards; facilitating the development of common standards in areas of shared

interest where there are no international standards, in particular as regards new products or

technologies; further enhancing the exchange of information between the Parties’ standardising bodies.

Article 7

Standards

1. The Parties reconfirm their obligations under Article 4.1 of the TBT Agreement to

ensure that national or regional standardising bodies within their territories accept and comply

with the Code of Good Practice for the Preparation and Adoption of Standards in Annex 3 to

the TBT Agreement.

2. The Parties recall that, pursuant to the definition of a standard in Annex 1 of the TBT

Agreement, compliance with standards is not mandatory. Where a standard is required to

comply with, through incorporating or referencing it, in a technical regulation or conformity

assessment procedure, the Party in question shall comply with the transparency obligations set

out in Article 2.9 or 5.6 of the TBT Agreement, and in Article 7 of this Chapter in developing

the draft technical regulation or conformity assessment procedure.

3. Each Party shall encourage, subject to its laws and regulations, its national or regional



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standardising bodies to ensure adequate participation of interested persons1 within the Area of

that Party in the standard development process and to allow persons of the other Party to

participate in consultation procedures, which are available to the general public, on terms no

less favourable than those accorded to its own persons.

4. The Parties undertake to exchange information on:

(a) their use of standards in support of demonstrating or facilitating compliance with

technical regulations;

(b) their standard-setting processes, in particular the manner and extent to which

international or regional standards are used as a basis for their regional or national

standards; and

(c) co-operation agreements or arrangements on standardization with third parties or

international organizations.

Article 8

Conformity Assessment Procedures

1. The provisions set out in para. 1(a)(i) and 1(a)(ii) and 1(b) of the Article (Technical

Regulation) with respect to the preparation, adoption and application of technical regulations

shall also apply, mutatis mutandis, to conformity assessment procedures.

2. Further to paragraph 1.2 of Article 5 of the TBT Agreement, each Party shall ensure

that conformity assessment procedures are not more strict or are not applied more strictly than

is necessary to give the importing Party adequate confidence that products conform with the

applicable technical regulations or standards, and take into account the risks associated with

products, including the risks non-conformity would create.

3. The Parties recognise that a broad range of mechanisms exist to facilitate the

acceptance of the results of conformity assessment procedures. Such mechanisms may

include:

(a) mutual recognition agreements for the results of conformity assessment procedures

with respect to specific technical regulations conducted by bodies located in the other

Party;

(b) co-operative and voluntary arrangements between conformity assessment bodies

located in the Parties;

(c) plurilateral and multilateral recognition agreements or arrangements to which the

1 (legal scrubbing) “interested persons” as defined in Transparency Chapter.



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Parties are participants;

(d) use of accreditation to qualify conformity assessment bodies;

(e) government designation of conformity assessment bodies, including bodies located

in the other Party;

(f) recognition by a Party of results of conformity assessment procedures conducted in

the other Party; and

(g) manufacturer’s or supplier’s declaration of conformity.

4. The Parties shall exchange information on the range of such mechanisms. A Party

shall, upon request of the other Party, provide information:

(a) on these and similar mechanisms with a view to facilitating the acceptance of

conformity assessment results;

(b) on factors, including assessment and management of risk, considered when selecting

appropriate conformity assessment procedures for specific products;

(c) on accreditation policy including on international standards for accreditation, and

international agreements and arrangements in the field of accreditation, including

those of the International Laboratory Accreditation Cooperation (ILAC) and the

International Accreditation Forum (IAF) to the extent possible and used by a Party in

a specific area.

5. Having regard to those mechanisms, each Party shall:

(a) use whenever possible in accordance with its laws and regulations a supplier’s declaration of conformity as assurance of conformity with applicable technical

regulations;

(b) use accreditation with authority derived from government or performed by

government, as appropriate as a means to demonstrate the technical competence to

qualify conformity assessment bodies;

(c) when accreditation is established by law as a necessary separate step to qualify

conformity assessment bodies, ensure the independence of accreditation activities

from conformity assessment activities, and the absence of conflicts of interest

between accreditation bodies and the conformity assessment bodies they accredit.

The Parties may comply with this obligation by means of separation of conformity

assessment bodies from accreditation bodies.

This subparagraph shall not apply to the conformity assessment activities performed



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by a Party itself when a Party retains the final decision making authority on the

conformity of a product;

(d) consider joining, or, as applicable, not prohibit testing, inspection and certification

bodies from joining, international agreements or arrangements for the facilitation of

acceptance of conformity assessment results;

(e) not prohibit economic operators from choosing among conformity assessment

bodies, insofar as two or more conformity assessment bodies are authorised by a

Party to carry out conformity assessment procedures required for placing a product

on the market.

6. The Parties shall cooperate in the field of mutual recognition in accordance with the

Agreement on Mutual Recognition between Japan and the European Community, signed at

Brussels on 4 April 2001. The Parties may also decide to extend its coverage with respect to

product scopes, applicable regulatory requirements and recognised conformity assessment

bodies in accordance with its relevant provisions.

Article 9

Transparency

1. When developing a technical regulation or conformity assessment procedure which

may have a significant effect on trade, the Parties agree:

(a) to carry out consultation procedures, subject to their laws and regulations, which are

available to the general public and make the results of such consultations and any

existing impact assessments publicly available;

(b) to allow persons of the other Party to participate in such consultation procedures

which are available to the general public on terms no less favourable than those

accorded to its own persons;

(c) to take the other Party's views into account when carrying out such consultation

procedures which are available to the general public, and upon request provide

written responses in a timely manner to the comments made by the other Party;

(d) further to Article 5(a)(ii), to make publicly available the results of the impact

assessment, if carried out, including of the impact on trade, on a proposed technical

regulation or conformity assessment procedure;

(e) to endeavour to provide, upon request, a summary of the impact assessment referred

to in subparagraph (d) in English.

2. The Parties agree when making notifications in accordance with Article 2.9.2 or 5.6.2



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of the TBT Agreement, to:

(a) allow in principle at least 60 days following the notification for the other Party to

provide comments in writing to the proposal, except where urgent problems of

safety, health, environmental protection or national security arise or threaten to arise;

where practicable, to give appropriate consideration to reasonable requests for

extending the comment period;

(b) provide the electronic version of the full notified text together with the notification;

(c) provide, in case the notified text is not in one of the official WTO languages, a

detailed and comprehensive description of the content of the measure in the

notification format, as well as, if already available, a translation of the notified text in

one of the official WTO languages;

(d) reply in writing to written comments received from the other Party on the proposal,

no later than the date of publication of the final technical regulation or conformity

assessment procedure;

(e) provide information on the adopted final text through an addendum to the original

notification;

(f) allow a reasonable interval between the publication of technical regulations and their

entry into force for economic operators of the other Party to adapt. The phrase

“reasonable interval” shall be understood to mean normally a period of not less than 6 months, except when this would be ineffective in fulfilling the legitimate objectives

pursued;

(g) ensure that the WTO TBT Enquiry Point provides information and answers in one of

the official WTO languages to reasonable enquiries from the other Party or from

interested parties of the other Party on adopted technical regulations and conformity

assessment procedures.

3. Each Party shall, on request of the other Party, provide information regarding the

objectives of, and rationale for, a technical regulation or conformity assessment procedure

that the Party has adopted or is proposing to adopt.

4. Each Party shall ensure that all adopted technical regulations and conformity

assessment procedures are publicly and freely available on official websites and, if already

available, in English.

Article 10

Market Surveillance

1. For the purpose of this Article, “market surveillance” is a public authority function



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separate from and carried out after conformity assessment and means activities conducted and

measures taken by public authorities on the basis of procedures of a Party to enable the Party

to monitor or address compliance of products with the Party’s requirements as set out in the relevant legislation.

2. The Parties undertake, inter alia, to:

(a) exchange information on market surveillance and enforcement activities (for

instance, on the authorities responsible for market surveillance and enforcement, or

on measures taken against dangerous products);

(b) ensure the independence of market surveillance functions from conformity

assessment functions with a view to avoiding conflicts of interest. This shall not

apply to authorisation functions by a Party itself relating to final decisions on the

conformity of a product. The Parties may comply with this obligation by means of

separation of market surveillance authorities from conformity assessment bodies;

(c) ensure that there are no conflicts of interest between market surveillance authorities

and the persons concerned, including the manufacturer, the importer and the

distributor, subject to control or supervision.

Article 11

Marking and Labelling

1. The Parties note that a technical regulation may include or deal exclusively with

marking or labelling requirements. Accordingly, if a Party develops marking or labelling

requirements as a technical regulation, the Party shall ensure that such requirements are not

prepared, adopted or applied with a view to or with the effect of creating unnecessary

obstacles to international trade and are not more trade restrictive than necessary to fulfil

legitimate objectives as referred to in paragraph 2 of Article 2 of the TBT Agreement.

2. In particular, the Parties agree that, where a Party requires marking or labelling of

products as a technical regulation:

(a) Information required for such marking or labelling of products shall be limited to

what is relevant for persons concerned, including consumers, users of the product or

authorities, to indicate the product's compliance with regulatory requirements;

(b) unless necessary to fulfil a legitimate objective, the Parties shall not require any prior

approval, registration or certification of the labels or markings of products as a

precondition for placing on its market products that otherwise comply with its

mandatory technical requirements;

(c) where a Party requires the use of a unique identification number for marking or



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labelling, the Party shall issue such number to the persons concerned, including the

manufacturer, the importer and the distributor without undue delay and on a non-

discriminatory basis;

(d) provided it is not misleading, contradictory or confusing or legitimate objectives are

not compromised thereby, in relation to the information required in the country of

destination of the goods, the Party shall permit the following:

(i) information in other languages in addition to the language required in the

country of destination of the goods;

(ii) international nomenclatures, pictograms, symbols or graphics;

(iii) additional information to that required in the country of destination of the

goods;

(e) the Party shall accept that labelling and corrections to labelling take place in customs

warehouses at the point of import as an alternative to labelling in the exporting Party

unless such labelling is required to be carried out by approved persons for reasons of

public health or safety.

(f) the Party shall, in cases where it considers that legitimate objectives under the TBT

Agreement are not compromised thereby, endeavour to accept non-permanent or

detachable labels, or marking or labelling in the accompanying documentation rather

than physically attached to the product.

Article 12

Joint Cooperation

1. The Parties shall strengthen their cooperation in the field of standards, technical

regulations and conformity assessment procedures with a view to increasing the mutual

understanding of their respective systems and facilitating access to their respective markets.

The Parties recognise that existing regulatory cooperation dialogues are important means to

strengthen such co-operation.

2. The Parties shall seek to identify, develop and promote trade facilitating initiatives of

mutual interest.

3. Such initiatives may include:

(a) improving the quality and effectiveness of their standards, technical regulations and

conformity assessment procedures, and promoting good regulatory practices through

regulatory cooperation, including the exchange of information, experiences and data;



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(b) where appropriate, simplifying their technical regulations, standards and conformity

assessment procedures;

(c) increasing the convergence of their standards, technical regulations and conformity

assessment procedures with relevant international standards, guides or

recommendations;

(d) ensuring efficient interaction and cooperation of regulatory authorities at national,

regional or international level;

(e) promoting or enhancing cooperation between organizations in the Parties in charge

of standardisation, accreditation, and conformity assessment;

(f) exchanging information, insofar as possible, about TBT-related agreements and

arrangements subscribed to at international level.

Article 13

Contact Points and Sub-Committee on Technical Barriers to Trade

1. The Parties shall designate a Contact point in the Government of Japan and in the

European Commission. The Parties shall provide each other with the name and the contact

details of relevant officials in that organization, including information on telephone, facsimile,

e-mail and other relevant detail.

2. The Parties shall notify each other promptly of any change of its Contact point and of

the information of the relevant officials.

3. The Contact point’s functions shall include:

(a) exchanging information on technical regulations, standards and conformity

assessment procedures of both Parties or any other matters pursuant to this Chapter;

(b) providing any information or explanation requested by a Party pursuant to this

Chapter, in print or electronically, within a reasonable period of time agreed between

the Parties and, if possible, within 60 days;

(c) promptly clarifying and addressing, where possible, any issue that a Party raises

related to the development, adoption or application of technical regulations,

standards and conformity assessment procedures under this Chapter and the TBT

Agreement.

4. The Parties hereby establish a Sub-Committee on Technical Barriers to Trade

(hereinafter referred to in this Article as “the Sub-Committee”).

5. The functions of the [Sub-Committee] shall be to:



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(a) review the implementation and operation of this Chapter;

(b) review the joint cooperation in the development and improvement of technical

regulations, standards and conformity assessment procedures as laid out in Article 10

of this Chapter;

(c) review this Chapter in light of any developments under the WTO Committee on

Technical Barriers to Trade established under Article 13 of the TBT Agreement, and

if necessary, developing recommendations for amendments to this Chapter;

(d) take any steps the Parties may consider that will assist them in implementing this

Chapter and the TBT Agreement and in facilitating trade between the Parties;

(e) discuss any matter arising under this Chapter, upon a Party’s request;

(f) promptly address any issue that a Party raises related to the development, adoption or

application of technical regulations, standards and conformity assessment procedures

of the other Party under this Chapter and the TBT Agreement;

(g) establish, if necessary to achieve the objectives of this Chapter, ad hoc technical

working groups to deal with specific issues or sectors with a view to identifying a

solution;

(h) exchange information on the work in regional and multilateral fora engaged in

activities related to technical regulations, standards and conformity assessment

procedures;

(i) report to the Joint Committee [EU: Trade Committee], as it considers appropriate, on

the implementation and operation of this Chapter;

(j) carry out other functions as may be delegated by the Joint Committee [EU: Trade

Committee].

6. The [Sub-Committee] and any ad hoc technical working group established shall be

coordinated by:

(a) in the case of Japan, the Ministry of Foreign Affairs,

(b) in the case of the EU, the European Commission.

Each authority referred to above will be responsible for coordinating with the relevant

institutions and persons in their respective territories/Areas as well as ensuring that such

institutions and persons are convened as necessary.

7. The [Sub-Committee] shall be composed of representatives of the Parties.

8. Upon request of a Party, the [Sub-Committee] shall meet at such times and venues or



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by means to be agreed.

[JP: Article x11]

Non-Application of Chapter xx

(Dispute Settlement)

The dispute settlement procedures provided for in Chapter [26] (Dispute Settlement) shall not

apply to this Chapter.

[JP: No Party shall have recourse to dispute settlement under Chapter XX (Dispute

Settlement) for a dispute that exclusively alleges a violation of the provisions of the TBT

Agreement incorporated under paragraph 1 of Article 3.]

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Japan-EU EPA/FTA Negotiation

Consolidated Text

(Status 30 January 2017)

[EU: Title [X] TRADE IN SERVICES, INVESTMENT AND E-COMMERCE]

Chapter [XX] Electronic Commerce

[JPN new proposal intersessional November 2016: Article [X01] Objective and General

Provisions]

[EU: Objective and Principles]

1. The Parties recognise that electronic commerce contributes to economic growth and

increases trade opportunities in many sectors. The Parties also recognise the importance of

facilitating the use and development of electronic commerce.

2. The objective of this Chapter is to contribute to creating an environment of trust and

confidence in the use of electronic commerce and to promote electronic commerce between

the Parties.

[JPN: 3. This Chapter shall apply to measures that affect trade by electronic means.

Note: Nothing in this Chapter shall be considered as affecting the views of either Party on

whether electronic commerce is categorised as trade in services or trade in goods.]

[JPN: 4. In the event of any inconsistency between this Chapter and Chapter X (Trade in

Goods), X (Investment), X (Cross-Border Trade in Services) or X (Intellectual Property

Rights), the Chapter other than this Chapter shall prevail to the extent of the inconsistency.]

[EU: 5. Electronic transmissions shall be considered as the provision of services, within the

meaning of Chapter III (Cross-border supply of services).]

[JPN: X. The Parties recognise the principle of technological neutrality in electronic

commerce.]

[JPN: Article X: General Exceptions

For the purposes of this Chapter, Article [XX] (Cross border supply of services – General

Exceptions) shall apply mutatis mutandis.]

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Article [X02] Definitions


[JPN: (a) “digital data” means computer programmes, text, video, images and sound recordings, or any combinations thereof, that are digitally encoded, electronically transmitted,

and produced for commercial sale or distribution, and does not include those that are fixed on

a carrier medium;

Note: Nothing in this Chapter shall be considered as affecting the views of either Party on

whether trade in digital data through electronic transmission is categorised as trade in services

or trade in goods.]

(b) “electronic signature” means data in electronic form which are attached to or logically associated with other electronic data and fulfils the following requirements:

(i) it is used by a person to confirm that the electronic data to which it relates has

been created or signed, in accordance with each Party’s laws and regulations, by that person; and

(ii) it confirms that information in the electronic data has not been altered.

(c) “electronic authentication” means the process or act of verifying the identity of a party to

an electronic communication or transaction or ensuring the integrity of an electronic

communication.

Article [X03] Customs Duties

The Parties shall not impose customs duties on electronic transmissions.

[JPN: Article [X04] Non-Discriminatory Treatment of Digital Data]

[JPN: 1. Unless otherwise specified in its Schedules in Annex X (Investment) and X (Cross-

Border Trade in Services), no Party shall accord less favourable treatment to digital data

created, produced, published, contracted for, commissioned or first made available on

commercial terms in the area of the other Party, or to digital data of which the author,

performer, producer, developer or owner is a person of the other Party, than it accords to other

like digital data.]

[JPN: 2. Paragraph 1 shall not apply to:

(a) government procurement; and

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(b) subsidies provided by a Party or a state enterprise, including grants, government-supported

loans, guarantees and insurance.]

[JPN: Article [X05]: Cross-Border Transfer of Information by Electronic Means

1. The Parties recognise that each Party may have its own regulatory requirements concerning

the transfer of information by electronic means.

2. Each Party shall allow the cross-border transfer of information by electronic means, when

this activity is for the conduct of the business of a covered person.

3. Nothing in this Article shall prevent a Party from adopting or maintaining measures

inconsistent with paragraph 2 to achieve a legitimate public policy objective, provided that the

measure:

(a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable

discrimination or a disguised restriction on trade; and

(b) does not impose restrictions on transfers of information greater than are required to

achieve the objective.]

[JPN: Article [X06]: Prohibition on Locating Computing Facilities Requirement

1. Neither Party may require:

(a) a service supplier of the other Party;

(b) an investor of the other Party; or

(c) an investment in the Party’s area of an investor of the other Party, as a condition for

conducting its business in the Party’s area, to use or locate computing facilities in that area.

2. Notwithstanding paragraph 1, nothing in this Article shall be construed to prevent a Party

from adopting or maintaining measures affecting the use or location of computing facilities

necessary to achieve a legitimate public policy objective, provided that such measures are not

applied in a manner which would constitute a means of arbitrary or unjustifiable

discrimination or a disguised restriction on trade.]

[JPN proposal Intersessional December 2016 for a Drafter’s Note on Article [XX] Prohibition on Locating Computing Facilities Requirement and Article [XX] Cross-Border Transfer of

Information by Electronic Means: In light of EU’s commitment to expedite its relevant internal coordination, the Parties confirm that they have reached common views in terms of

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substance on the articles, and aim to finalise mutually agreeable texts of them, consistent with

“G7 Principles and Actions on Cyber”, without delay.]

[JPN: Article [X07]: Source Code

1. Neither Party may require the transfer of, or access to, source code of software owned by a

person of the other Party, as a condition of the import, distribution, sale or use of such

software, or of products containing such software, or of products containing such software, in

its Area.

Note: For greater certainty, source code of software referred to in paragraph 1 does not

include open source software.

2. For purposes of this Article, paragraph 1 does not apply to measures necessary to achieve

legitimate public policy objectives, provided that such measures are not applied in a manner

which would constitute a means of arbitrary or unjustifiable discrimination or a disguised

restriction on trade.]

Note Intersessional December 2016: EU intends to submit a text proposal as soon as

possible.

Article [X09] Domestic Regulation

Each Party shall ensure that all its measures of general application affecting electronic

commerce are administered in a reasonable, objective, and impartial manner.

[EU: Article [X]: Principle of no prior authorisation

1. The Parties will endeavour not to impose prior authorization nor any other requirement

having equivalent effect on the provision of services by electronic means.

2. Paragraph 1 shall be without prejudice to authorisation schemes which are not specifically

and exclusively targeted at services provided by electronic means, and to rules in the field of

electronic communications and broadcasting services.]

Article [X]: Conclusion of contracts by electronic means

[JPN: Recognising the importance of the principle of technological neutrality in electronic

commerce,] Neither Party shall adopt or maintain measures regulating electronic transactions

that:

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a) deny the legal effect, validity or enforceability of a contract, solely on the grounds that it is

in the form of an electronic communication; or

b) otherwise create obstacles for the use of electronic contracts, unless such measures are

provided for in its laws and regulations.

Article [X] Electronic Authentication and Electronic Signature

1. Except in circumstances otherwise provided for under its laws and regulations, each Party

shall not deny the legal validity of a signature solely on the basis that the signature is in

electronic form.

2. Neither Party shall adopt or maintain measures regulating electronic signature and

authentication that would:

(a) prohibit parties to an electronic transaction from mutually determining the appropriate

electronic authentication methods for their transaction; or

(b) prevent parties to electronic transactions from having the opportunity to establish before

judicial or administrative authorities that their electronic transactions comply with any legal

requirements with respect to electronic signature and authentication.

3. Notwithstanding paragraph 2, each Party may require that, for a particular category of

transactions, the method of authentication meets certain performance standards or is certified

by an authority accredited in accordance with its laws and regulations.

Article [X] Consumer Protection

1. The Parties recognise the importance of adopting and maintaining transparent and effective

consumer protection measures applicable to electronic commerce as well as measures

conducive to the development of consumer confidence in electronic commerce.

2. The Parties recognise the importance of cooperation between their respective competent

authorities in charge of consumer protection on activities related to electronic commerce in

order to enhance consumer protection.

3. The Parties recognise the importance of adopting or maintaining measures, in accordance

with their respective laws and regulations, to protect the personal data of electronic commerce

users.

Article [X] Unsolicited Commercial Electronic Messages

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1. Each Party shall adopt or maintain measures regarding unsolicited commercial electronic

messages that:

(a) require suppliers of unsolicited commercial electronic messages to facilitate the ability of

recipients to prevent ongoing reception of those messages; and

(b) require the prior consent, as specified according to the laws and regulations of each Party,

of recipients to receive commercial electronic messages.

2. Each Party shall ensure that commercial electronic messages are clearly identifiable as

such, clearly disclose on whose behalf they are made, and contain the necessary information

to enable recipients to request cessation free of charge and at any moment.

3. Each Party shall provide recourse against suppliers of unsolicited commercial electronic

messages that do not comply with the measures adopted or maintained pursuant to paragraphs

1 and 2.

Article [X10] Cooperation on Regulatory Issues of Electronic Commerce

1. The Parties shall, where appropriate, cooperate and participate actively in multilateral fora

to promote the development of electronic commerce.

2. The Parties agree to maintain a dialogue on regulatory issues of electronic commerce with

a view to sharing information and experience, as appropriate, including on related laws,

regulations and their implementation, and best practices with respect to electronic commerce

in relation to, inter alia:

(a) consumer protection,

(b) cyber-security,

(c) combatting unsolicited commercial electronic messages,

(d) the recognition of certificates of electronic signatures issued to the public,

(e) the challenges for small and medium enterprises in the use of electronic commerce,

(f) the facilitation of cross-border certification services,

(g) intellectual property

(h) electronic government.

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EU-Japan FTA/EPA

(Negotiator Use Only)

Without prejudice

Text as of 6 December 2016

1

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CHAPTER XX DISPUTE SETTLEMENT

SECTION 1

Objective, Scope and Definitions

ARTICLE [1]

Objective

The objective of this Chapter is to establish an effective and efficient mechanism for

settling disputes between the Parties concerning the interpretation and application of

this Agreement with a view to reaching a mutually agreed solution.

ARTICLE [2]

Scope

Unless otherwise provided for in this Agreement, this Chapter shall apply with respect to

the settlement of any dispute between the Parties concerning the interpretation and

application of the provisions of this Agreement.

ARTICLE [3]

Definitions


(a) “arbitrator” means a member of a panel;

(b) “Code of Conduct” means the Code of Conduct for Members of a Panel

referred to in Article [30] (Rules of Procedure and Code of Conduct);

(c) “complaining Party” means the Party that requests the establishment of a panel

pursuant to Article [7] (Establishment of the Panel);

(d) “covered provisions” means the provisions of this Agreement covered by this

Chapter in accordance with Article [2] (Scope);

(e) “days” means calendar days “DSB” means the Dispute Settlement Body of the

WTO;

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(f) “panel” means a panel established pursuant to Article [7] (Establishment of the

Panel);

(g) “Party complained against” means the Party against which a dispute has been

brought before a panel pursuant to Article [7] (Establishment of the Panel); and

(h) “Rules of Procedure” means the Rules of Procedure of a Panel referred to in

Article [30] (Rules of Procedure and Code of Conduct).

SECTION 2

Consultations and Mediation

ARTICLE [4]

Request for information

Before a request for consultations or mediation is made pursuant to Article [5]

(Consultations) or [6] (Mediation) respectively, a Party may request in writing any

relevant information with respect to a measure at issue. The Party to which such request is

made shall make all efforts to provide the requested information in a written response to be

submitted within [20] days.

ARTICLE [5]

Consultations

1. The Parties shall endeavour to resolve any dispute referred to in Article [2]

(Scope) through consultations in good faith with a view to reaching a mutually

agreed solution.

2. Either Party may seek consultations concerning any dispute referred to in

Article [2] (Scope). Any request for consultations shall be submitted in writing

to the other Party. In the request for consultations, the Party which requested

consultations shall give the reasons for the request, including identification of

the measure at issue and an indication of its factual basis and its legal basis

specifying the relevant provisions.

3. During consultations each Party shall provide sufficient information to enable a

full examination of the measure at issue including how it might affect the

operation and application of this Agreement.

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4. The Party to which the request for consultations is made shall reply to the

request within [10] days after the date of its receipt. The Parties shall enter into

consultations in good faith within [30] days after the date of receipt of the

request. Consultations shall be deemed concluded within [45] days after the

date of receipt of the request unless the Parties agree otherwise. Where both

Parties consider that the case concerns matters of urgency, including those

which concern goods or services that rapidly lose their quality, current

condition or commercial value in a short period of time, consultations shall be

deemed concluded within [25] days after the date of receipt of the request

unless the Parties agree otherwise.

5. Consultations may be held in person or by any other means agreed by the

Parties. Unless otherwise agreed by the Parties, consultations, if held in person,

shall take place in the Party to which the request is made.

6. Consultations, including all information disclosed and positions taken by the

Parties during these proceedings, shall be confidential and without prejudice to

the rights of either Party in any further proceedings.

ARTICLE [6]

Mediation

1. A Party may request the other Party at any time to enter into a mediation

procedure with respect to any matter falling within the scope of this Chapter as

referred to in Article [2] (Scope), where the matter concerns a measure that

adversely affects trade or investment between the Parties.

2. The mediation procedure may begin at any time by agreement of the Parties. It

shall be initiated, conducted and terminated in accordance with the Mediation

Procedure, adopted by the Joint Committee pursuant to subparagraph [X] of

paragraph [Y] of Article [Z] (Joint Committee) of Chapter [XX]

3. If the Parties agree, the mediation procedure may continue while procedures of

the panel provided for in this Chapter are in progress.

SECTION 3

Panel Procedure

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ARTICLE [7]

Establishment of the Panel

1. The Party that sought consultations pursuant to Article [5] (Consultations) may

request the establishment of a panel if:

(a) the Party to which the request for consultations is made does not

respond to such request within [10] days after the date of its receipt, or

does not enter into consultations within [30] days after the date of

receipt of the request;

(b) the Parties agree not to have consultations; or

(c) the Parties fail to resolve the dispute through the consultations within

[45] days, or within [25] days in cases of urgency, including those

which concern goods or services that rapidly lose their quality, current

condition or commercial value in a short period of time, after the date

of receipt of the request for consultations unless the Parties agree

otherwise.

2. The request for the establishment of a panel pursuant to paragraph 1 shall be

made in writing to the Party complained against. The complaining Party shall

explicitly identify in its complaint:

(a) the measure at issue;

(b) the legal basis specifying the covered provisions which are relevant

and in a manner sufficient to present clearly how such measure is in

breach of those provisions; and

(c) the factual basis.

ARTICLE [8]

Composition of the Panel

1. A panel shall be composed of three arbitrators.

2. Within [10] days of the date of receipt by the Party complained against of the

request for the establishment of a panel, the Parties shall consult with a view to

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reaching an agreement on the composition of the panel.

3. If the Parties do not reach an agreement on the composition of the panel within

the time period provided for in paragraph 2, each Party shall appoint an

arbitrator from the sub-list for that Party established pursuant to Article [9] (List

of Arbitrators) within [5] days from the expiry of the time period provided for in

paragraph 2. If a Party fails to appoint an arbitrator within that time period, the

co-chair of the Joint Committee from the complaining Party shall select by lot,

within [5] days from the expiry of the time period, an arbitrator from the sub-list

for the Party that has failed to appoint an arbitrator, established pursuant to

Article [9] (List of Arbitrators). The co-chair of the Joint Committee from the

complaining Party may delegate such selection by lot of the arbitrator.

4. If the Parties do not reach an agreement on the chairperson of the panel within

the time period provided for in paragraph 2, upon request of either Party, the

co-chair of the Joint Committee from the complaining Party shall select by lot,

within [5] days after the request, the chairperson of the panel from the sub-list

of chairpersons established pursuant to Article [9] (List of Arbitrators). The

request shall be copied to the other Party. The co-chair of the Joint Committee

from the complaining Party may delegate such selection by lot of the

chairperson of the panel.

5. Should any of the lists provided for in Article [9] (List of Arbitrators) not be

established or not contain at least nine individuals as referred to in that Article,

the following procedures applies:

(a) for the selection of the chairperson:

(i) when the sub-list of chairpersons contains at least two

individuals agreed by the Parties, the co-chair of the Joint

Committee from the complaining Party shall select by lot

the chairperson from those individuals within [5] days

from the request referred to in paragraph 4; or

(ii) when the sub-list of chairpersons contains one individual

agreed by the Parties, that individual shall act as chairperson;

or

(iii) when a chairperson cannot be selected pursuant to

subparagraphs (i) or (ii) or when the sub-list of chairpersons

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contains no individual agreed by the Parties, the co-chair of

the Joint Committee from the complaining Party shall, within

[5] days from the request of a Party, select by lot the

chairperson from the up to six individuals who had been

formally proposed as chairperson by one or both Parties at the

time of establishing or updating the list of arbitrators referred

to in Article 9 (List of Arbitrators). A Party may propose a

new individual if an individual who had been formally

proposed for a chairperson by that Party is no longer

available.

(b) for the selection of an arbitrator other than the chairperson:

(i) when the sub-list of a Party contains at least two

individuals agreed by the Parties, that Party shall select an

arbitrator from those individuals within [5] days from the

expiry of the time period provided in the paragraph 2; or

(ii) when the sub-list of a Party contains one individual agreed by

the Parties, that individual shall act as an arbitrator; or

(iii) when an arbitrator cannot be selected pursuant to

subparagraphs (i) or (ii) or when the sub-list of arbitrators

for a Party contains no individual agreed by the Parties, the

co-chair of the Joint Committee from the complaining

Party shall select an arbitrator applying mutatis mutandis

the procedure referred to in subparagraph 5(a).

6. The date of establishment of the panel shall be the date on which the last of the

three arbitrators has notified to the Parties the acceptance of his or her

appointment.

ARTICLE [9]

List of Arbitrators

1. The Joint Committee shall, at its first meeting held pursuant to paragraph 2 of

Article [X] (Joint Committee) of Chapter [XX] (General/Institutional

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Provisions), establish a list of at least nine individuals who are willing and able

to serve as arbitrators. The list shall be composed of three sub-lists: one sub-list

for each Party and one sub-list of individuals who are not nationals of either

Party and who shall act as the chairperson of the panel. Each sub-list shall

include at least three individuals. [For the establishment or an update of the

sub-list of chairpersons, each Party may propose up to three individuals.] The

Joint Committee will ensure that the list is always maintained at this level.

2. The Joint Committee may establish an additional list, consisting of individuals

with demonstrated expertise in specific sectors covered by this Agreement,

which may be used to compose the panel subject to the agreement of the

Parties.

ARTICLE [10]

Qualifications of Arbitrators

All arbitrators shall:

(a) have demonstrated expertise in law, international trade, and other matters covered

by this Agreement. The chairperson shall also have experience in arbitration

proceedings;

(b) be independent of, and not be affiliated with or take instructions from, either

Party;

(c) serve in their individual capacities and not take instructions from any organisation

or government with regard to matters related to the dispute; and

(d) comply with the Code of Conduct.

ARTICLE [11]

Replacement of Arbitrators

If in an arbitration proceeding under this Chapter, any of the arbitrators of the original

panel is unable to participate, withdraws, or needs to be replaced because he or she does not

comply with the requirements of the Code of Conduct, the procedure set out in Article

[8] (Composition of the Panel) shall apply.

ARTICLE [12]

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Functions of the Panel

The panel established pursuant to Article [7] (Establishment of the Panel):

(a) shall make an objective assessment of the matter before it, including an

objective assessment of the facts of the case and the applicability of and

conformity with the covered provisions;

(b) shall set out, in its decisions, the findings of fact and law and the

rationale behind any findings and conclusions that it makes; and

(c) should consult regularly with the Parties and provide adequate

opportunities for the development of a mutually agreed solution.

ARTICLE [13]

Terms of Reference

1. Unless the Parties agree otherwise within [10] days after the date of the

establishment of the panel, the terms of reference of the panel shall be:

“to examine, in the light of the relevant provisions of this Agreement cited by the

Parties, the matter referred to in the request for the establishment of the panel, to

decide on the conformity of the measure at issue with the relevant provisions of

this Agreement and to issue a report in accordance with Articles [18] (Interim

Report) and [19] (Final Report).”

2. If the Parties agree on other terms of reference than those referred to in paragraph

1, they shall notify the agreed terms of reference to the panel within three days of

their agreement.

ARTICLE [14]

Decision on Urgency

If a Party so requests, the panel shall decide, within [15] days of its establishment,

whether the case concerns matters of urgency.

ARTICLE [15]

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Panel Proceedings

1. Any hearing of the panel shall be open to the public, unless the Parties agree

otherwise or unless the submission and arguments of a Party contains

confidential information. When hearings are held in closed session their

confidentiality shall be respected.

2. The venue for the hearings shall be decided by mutual agreement between the

Parties. If there is no agreement, the venue shall alternate between the Parties

with the first hearing to be held in the Party complained against.

3. The panel and the Parties shall treat as confidential any information submitted by

a Party to the panel which that Party has designated as confidential. Where that

Party submits a confidential version of its written submissions to the panel, it shall

also, upon request of the other Party, provide a non-confidential summary of the

information contained in its submissions that could be disclosed to the public

with an explanation why the non-disclosed information is confidential.

4. The deliberations of the panel shall be kept confidential.

5. The Parties shall be given the opportunity to attend any of the presentations,

statements, arguments or rebuttals in the proceedings. The Parties shall make

available to each other any information or written submissions submitted to the

panel, including any comments on the descriptive part of the interim report and

responses to questions of the panel as well as written comments on those

responses.

6. The interim report and the final report shall be drafted without the presence of the

Parties, and in the light of the information provided and the statements made.

The arbitrators shall assume full responsibility for the drafting of the reports

and shall not delegate this responsibility to any other person.

7. The panel shall attempt to make its decisions, including its final report, by

consensus. It may also make its decisions, including its final report, by majority

vote where a decision cannot be arrived at by consensus. In no case shall

dissenting opinions of arbitrators be published.

8. The decisions of the panel shall be final and binding on the Parties. They shall be

unconditionally accepted by the Parties. They shall not add to or diminish the

rights and obligations of the Parties under this Agreement. They shall not be

construed as creating rights and obligations to natural or legal persons.

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ARTICLE [16]

Rules of Interpretation

The panel shall interpret the covered provisions in accordance with customary rules of

interpretation of public international law, including those codified in the Vienna

Convention on the Law of Treaties. The panel shall also take into account relevant

interpretations in reports of panels and the Appellate Body adopted by the DSB.

ARTICLE [17]

Receipt of Information

1. At the request of a Party, or upon its own initiative, the panel may seek, from the

Parties, relevant information it considers necessary and appropriate. The Parties

shall respond promptly and fully to any request by the panel for such

information.

2. Upon the request of a Party or its own initiative, the panel may seek any

information it deems appropriate from any source. The panel also has the right to

seek the opinion of experts as it deems appropriate.

3. The panel may receive amicus curiae submissions from natural persons of a

Party or legal persons established in a Party in accordance with the Rules of

Procedure.

4. Any information obtained by the panel under this Article shall be made available

to the Parties and the Parties may provide comments on that information.

ARTICLE [18]

Interim Report

1. The panel shall issue an interim report to the Parties setting out the descriptive

part and its findings and conclusions within [120] days after the date of its

establishment in a manner enabling the Parties to review it. When the panel

considers that this deadline cannot be met, the chairperson of the panel shall

notify the Parties in writing, stating the reasons for the delay and the date on

which the panel plans to issue its interim report. Under no circumstances, shall

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the period of the delay exceed [30] days after the deadline.

2. Each Party may submit to the panel written comments and a written request to

review precise aspects of the interim report within [15] days after the date of

issuance of the interim report. After considering any written comments and

request by each Party on the interim report, the panel may modify interim

report and make any further examination it considers appropriate.

3. In cases of urgency, including those which concern goods or services that rapidly

lose their quality, current condition or commercial value in a short period of

time,

(a) the panel shall make every effort to issue its interim report within [60]

days and, in any case, no later than [75] days after the date of its

establishment; and

(b) each Party may submit to the panel written comments and a written

request to review precise aspects of the interim report, within [7] days

of the issuance of the interim report.

ARTICLE [19]

Final Report

1. The panel shall issue its final report to the Parties within [30] days after the

date of the issuance of the interim report. When the panel considers that this

deadline cannot be met, the chairperson of the panel shall notify the Parties in

writing, stating the reasons for the delay and the date on which the panel plans

to issue its final report. Under no circumstances, shall the period of the delay

exceed [30] days after the deadline.

2. In cases of urgency, including those which concern goods or services that

rapidly lose their quality, current condition or commercial value in a short

period of time, the panel shall make every effort to issue its final report within

[15] days and, in any case, no later than [30] days after the date of the issuance

of the interim report.

3. The final report of the panel shall include a sufficient discussion of the written

comments and request made by the Parties on the interim report. The panel

may, in its final report, suggest ways in which the final report could be

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implemented.

4. The Parties shall make the final report publicly available in their entirety within

10 days of its issuance. The Parties may decide to publish the final report only

in parts, or not to publish the final report, in order to protect confidential

information.

ARTICLE [20]

Compliance with the Final Report

1. The Party complained against shall take any measure necessary to comply

promptly and in good faith with the final report issued pursuant to Article [19]

(Final Report).

2. The Party complained against shall, within [30] days after the date of issuance of the

final report, notify the complaining Party of the length of the reasonable period

of time for complying with the final report and the Parties shall endeavour to

agree on the time required for compliance. If there is disagreement between the

Parties on the length of the reasonable period of time for complying with the final

report, the complaining Party may, within [20] days after the receipt of the

notification made under this paragraph by the Party complained against, request

in writing the original panel to determine the length of the reasonable period

of time. Such request shall be notified simultaneously to the other Party. The

original panel shall notify its determination to the Parties within [30] days from the

date of the submission of the request.

3. The length of the reasonable period of time may be extended by mutual agreement

of the Parties.

4. The Party complained against shall inform the complaining Party in writing of its

progress to comply with the final report at least one month before the expiry of the

reasonable period of time, unless otherwise agreed by the Parties.

ARTICLE [21]

Compliance Review

1. The Party complained against shall notify the complaining Party no later than

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the expiry of the reasonable period of time of any measure that it has taken to

comply with the final report.

2. Where there is disagreement as to the existence or consistency with the covered

provisions of measures taken to comply with the final report, the complaining

Party may request in writing the original panel to examine the matter. The

request shall be notified simultaneously to the Party complained against.

3. The request under paragraph 2 shall provide the factual and legal basis for the

complaint, including the specific measures at issue and in a manner to present

clearly how such measures are inconsistent with the covered provisions.

4. The panel shall notify its decision to the Parties within [90] days after the date

of the referral of the matter.

ARTICLE [22]

Temporary Remedies in Case of Non-Compliance

1. The Party complained against shall, upon request of the complaining Party,

enter into consultations with a view to developing mutually satisfactory

compensation or any alternative arrangement if:

(a) in accordance with Article [21] (Compliance Review), the original

panel finds that the measures taken to comply with the final report as

notified by the Party complained against is inconsistent with the covered

provisions;

(b) the Party complained against fails to notify any measure taken to

comply with the final report before the expiry of the reasonable period of

time determined in accordance with paragraph 2 of Article 20

(Compliance with the Final Report); or

(c) the Party complained against notifies the complaining Party that it is

impracticable to comply with the final report within the reasonable

period of time determined in accordance with paragraph 2 of Article 20

(Compliance with the Final Report).

2. If the complaining Party decides not to make a request under paragraph 1, or, in

case such request is made, if no mutually satisfactory compensation or any

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alternative arrangement has been agreed within [20] days after the date of

receipt of the request made in accordance with paragraph 1, the complaining

Party may notify the Party complained against in writing that it intends to

suspend the application to the Party complained against of concessions or other

obligations under the covered provisions. The notification shall specify the

level of intended suspension of concessions or other obligations.

3. The complaining Party shall have the right to implement the suspension of

concessions or other obligations referred to in paragraph 2 [10] days after the

date of receipt of the notification by the Party complained against, unless the

Party complained against has requested arbitration under paragraph 6.

4. The suspension of concessions or other obligations:

(a) shall be at a level equivalent to the nullification or impairment that is

caused by the failure of the Party complained against to comply with

the final report; and

(b) may be applied to other sectors covered by this Chapter in accordance

with Article [2] (Scope) than the sector or sectors in which the panel

has found nullification or impairment, in particular if the complaining

Party is of the view that such suspension is effective in inducing

compliance.

NOTE: JPN reserves its right to come back on this subparagraph depending on

the negotiations on the car annex

5. The suspension of concessions or other obligations or the compensation or any

alternative arrangement referred to in this Article shall be temporary and shall

only apply until the inconsistency of the measure with the covered provisions

which has been found in the final report has been removed, or the Parties have

reached a mutually agreed solution.

6. If the Party complained against objects to the level of intended suspension of

concessions or other obligations, it may request in writing the original panel to

examine the matter. The request shall be notified simultaneously to the

complaining Party. The original panel shall notify to the Parties its decision on

the appropriate level of suspension of concessions or other obligations within

[30] days after the date of the submission of the request. Concessions or other

obligations shall not be suspended until the original panel has notified its

decision. The suspension of concessions or other obligations shall be consistent

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with the decision.

7. If the Party complained against considers that the suspension of concessions

or other obligations does not comply with paragraph [4], it may request the

original panel to examine the matter. The panel shall notify to the Parties

its decision on the matter within [30] days after the date of the submission

of the request.

ARTICLE [23]

Compliance Review after the Adoption of

Temporary Remedies

1. Upon the notification by the Party complained against to the complaining Party of

the measure it has taken to comply with the final report of the panel,

(a) in a situation where the right to suspend concessions or other

obligations has been exercised by the complaining Party in accordance

with Article [22] (Temporary Remedies in Case of Non-Compliance), the

complaining Party shall terminate the suspension of concessions or other

obligations within [30] days from the receipt of the notification, with the

exception of cases under paragraph 2; or

(b) in a situation where mutually satisfactory compensation or alternative

arrangement has been agreed, the Party complained against may

terminate the application of such compensation or arrangement after

[30] days from its notification, with the exception of cases under

paragraph 2.

2. If the Parties do not reach an agreement on whether the notified measure is

consistent with the covered provisions within [30] days of the date of receipt of the

notification, the complaining Party shall request in writing the original

arbitration panel to examine the matter. The request shall be notified

simultaneously to the Party complained against. The decision of the panel shall be

notified to the Parties within [45] days of the date of the submission of the

request. If the panel decides that the measure taken to comply is consistent with the

covered provisions, the suspension of concessions or other obligations, or

compensation or any alternative arrangement, shall be terminated within [15]

days. Where relevant, the level of suspension of concessions or other

obligations, or of compensation or any alternative arrangement, shall be adapted

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in light of the decision of the panel.

ARTICLE [24]

Suspension and Termination of Proceedings

When the Parties make a joint request, the proceedings of the panel shall be suspended at

any time for a period agreed by the Parties not exceeding 12 consecutive months. In the

event of such a suspension, the relevant time periods shall be extended by the amount

of time for which the proceedings of the panel were suspended. The proceedings of the

panel shall be resumed at any time upon the joint request of the Parties, or at the end

of the agreed suspension period at the written request of either Party. The request shall

be addressed to the chairperson of the panel, as well as to the other Party, where

applicable. If the proceedings of the panel have been suspended for more than 12

consecutive months, the authority for establishment of the panel shall lapse and the

proceedings of the panel shall be terminated. The Parties may agree to terminate the

proceedings of the panel at any time by a joint notification to the chairperson of the panel.

SECTION 4

General Provisions

ARTICLE [25]

Administration of the Dispute Settlement Procedure

1. Each Party shall:

(a) designate an office that shall be responsible for the administration of the dispute

settlement procedure under this Chapter;

(b) be responsible for the operation and costs of its designated office; and

(c) notify the other Party in writing of the office’s location and contact information

within [x months] after the entry into force of this Agreement.

2. Notwithstanding paragraph 1, the Parties may agree to entrust jointly an external

body to provide support for certain administrative tasks for the dispute settlement

procedure under this Chapter.

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ARTICLE [26]

Mutually Agreed Solution

1. The Parties may reach a mutually agreed solution at any time with respect to

any dispute referred to in Article [2] (Scope).

2. If a mutually agreed solution is reached during panel proceedings or a mediation

procedure, the Parties shall jointly notify any such solution to the chairperson

of the panel or the mediator, respectively. Upon such notification, the panel

proceedings or the mediation procedure shall be terminated.

3. Each Party shall take measures necessary to implement the mutually agreed

solution within the agreed time period.

4. No later than the expiry of the agreed time period the implementing Party shall

inform the other Party in writing of any measure that it has taken to implement the

mutually agreed solution.

ARTICLE [27]

Choice of Forum

1. Where a dispute arises regarding a particular measure in alleged breach of an obligation

under this Agreement and a substantially equivalent obligation under any other international

agreement to which both Parties are parties, including the WTO Agreement, the

complaining Party may select the forum in which to settle the dispute.

2. Once a Party has selected the forum and initiated a dispute settlement procedure

under this Chapter or under the other international agreement with respect to the

particular measure referred to in paragraph 1, that Party shall not initiate a dispute

settlement procedure in another forum with respect to that particular measure,

unless the forum selected first fails to make findings on the issues in dispute for

jurisdictional or procedural reasons.

3. For the purposes of paragraph 2:

(a) a dispute settlement procedure under this Chapter is deemed to be

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initiated when a Party requests the establishment of a panel in

accordance with paragraph 1 of Article [7] (Establishment of the Panel);

(b) a dispute settlement procedure under the WTO Agreement is deemed to

be initiated when a Party requests the establishment of a panel in

accordance with Article 6 of the Understanding on Rules and

Procedures Governing the Settlement of Disputes of the WTO; and

(c) a dispute settlement procedure under any other agreement is deemed to be

initiated in accordance with the relevant provisions of that agreement.

4. Nothing in this Agreement shall preclude a Party from implementing the

suspension of concessions or other obligations authorised by the DSB. The

WTO Agreement shall not be invoked to preclude a Party from suspending

concessions or other obligations under the covered provisions.

ARTICLE [28]

Time Period

1. All time periods provided for in this Chapter shall be counted in calendar days

from the day following the act to which they refer.

2. Any time period provided for in this Chapter may be modified for a particular

dispute by mutual consent of the Parties. The panel may at any time propose to

the Parties to modify any time limit referred to in this Chapter, stating the

reasons for the proposal. Upon requests from either Party, the panel shall,

decide whether to modify the time period referred to in paragraph 2 and 3(b) of

Article 18 (Interim Report), stating the reasons therefor, inter alia, in view of

the complexity of the particular dispute.

ARTICLE [29]

Expenses

Unless the Parties agree otherwise, the expenses of the panel, including the

remuneration of its arbitrators, shall be borne by the Parties in equal shares in

accordance with the Rules of Procedure.

ARTICLE [30]

Rules of Procedure and Code of Conduct

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The panel proceedings provided for in this Chapter shall be conducted in accordance

with the Rules of Procedure of a Panel and the Code of Conduct for Members of a Panel,

adopted by the Joint Committee pursuant to subparagraph [X] of paragraph [Y] of

Article [Z] (Joint Committee) of Chapter [XX].

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CODE OF CONDUCT

FOR MEMBERS OF A PANEL

I. Definitions

1. In this Code of Conduct:

(a) "administrative staff", in respect of an arbitrator, means persons under the

direction and control of the arbitrator, other than assistants;

(b) “Agreement” means the [Japan-EU EPA/FTA];

(c) “arbitrator” means a member of a panel;

(d) "assistant" means a person who, under the terms of appointment of an

arbitrator, conducts research or provides assistance to that arbitrator;

(e) "candidate" means an individual whose name is on the list of arbitrators

referred to in Article [X] of Chapter […] of the Agreement;

(f) “panel” means a panel established pursuant to Article [X] of Chapter [Dispute

Settlement] of the Agreement; and

(g) "proceeding" means a proceeding of the panel.

II. Provision of Code of Conduct

2. The Parties shall provide this Code of Conduct to each candidate at the time when his

or her name is included on the list referred to in Article [X] of Chapter [XX]

(Dispute Settlement) of the Agreement.

III. Governing Principles

3. Each candidate and arbitrator shall observe high standards of conduct, in accordance

with this Code of Conduct, so that the integrity and impartiality of the dispute

settlement mechanism is preserved.

IV. Disclosure Obligations

4. Prior to the acceptance of his or her appointment as an arbitrator, a candidate

requested to serve as an arbitrator shall disclose any interest, relationship or matter

that is likely to affect his or her independence or impartiality or that might

reasonably create an appearance of impropriety or bias in the proceedings. To this

end, he or she shall make all reasonable efforts to become aware of any such

interests, relationships and matters, including financial interests, professional

interests, or employment or family interests.

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5. The disclosure obligation under paragraph 4 is a continuing duty and shall also apply

to an arbitrator after acceptance of his or her appointment. During the course of the

proceedings, an arbitrator shall disclose in writing any new information regarding the

obligation under paragraph 4 to the Parties at the earliest time he or she becomes

aware of it.

6. In meeting these disclosure requirements, personal privacy shall be respected.

V. Performance of Duties

7. Upon acceptance of his or her appointment, an arbitrator shall be available to

perform and shall perform his or her duties thoroughly and expeditiously throughout

the panel procedure, and with fairness and diligence.

8. An arbitrator shall consider only those issues raised in each proceeding and

necessary for a decision and shall not delegate the duty of such consideration to any

other person.

9. An arbitrator shall not engage in ex parte contacts concerning matters under

consideration by the panel in the proceedings.

VI. Independence and Impartiality

10. An arbitrator shall be independent and impartial, shall avoid direct and indirect

conflicts of interests, shall not be influenced by self-interest, outside pressure,

political considerations, public clamour and loyalty to a Party or fear of criticism,

and shall avoid creating an appearance of impropriety or bias.

11. An arbitrator shall not, directly or indirectly, incur any obligation or accept any

benefit that would in any way affect, or appear to affect, the proper performance of

his or her duties.

12. An arbitrator shall not use his or her position on the panel to advance any personal or

private interests and shall avoid actions that may create the impression that others are

in a special position to influence him or her.

13. An arbitrator shall not allow past or existing financial, business, professional,

personal, family or social relationships or responsibilities to influence his or her

conduct or judgement.

14. An arbitrator shall avoid entering into any relationship or acquiring any financial

interests that are likely to affect his or her impartiality or that might reasonably create

an appearance of impropriety or bias.

15. A former arbitrator shall avoid actions that may create the appearance that he or she

was biased in carrying out his or her duties or derived advantage from the decision of

the panel in which he or she served.

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VII. Confidentiality

16. No arbitrator shall at any time disclose any non-public information concerning,

or acquired during, the panel procedure for which he or she is appointed. No

arbitrator shall in any case use such information to gain personal advantage or

advantage for others or to adversely affect the interest of others.

17. No arbitrator shall disclose the decision of the panel or parts thereof, unless

the decision is made publicly available.

18. An arbitrator shall not, at any time, disclose the deliberations of a panel or

any arbitrator's view, nor make any statements on the panel procedure for which he

or she is appointed or on the issues in dispute in such procedure.

19. The obligations under paragraphs 16 to 18 shall continue to apply to a

former arbitrator.

VIII. Other Obligations

20. A candidate or an arbitrator shall communicate matters concerning actual or

potential violations of this Code of Conduct to both Parties for their

consideration at the earliest possible time and on a confidential basis.

21. An arbitrator shall take all reasonable and appropriate steps to ensure that his or

her assistant and administrative staff is aware of, and comply with, the

obligations incurred by arbitrators under Parts III, IV, VI and VII of this Code of

Conduct.

22. Each arbitrator shall keep a record and render a final account of the time devoted

to the panel procedure and of his or her expenses, as well as the time and

expenses of his or her assistants.

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Draft text “Investment”(excl. ISDS) 18th round – Tokyo 12 2016

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Colour codes:

TEXT = proposal made by Japan

TEXT = proposal made by EU

TEXT = negotiator’s notes that contain clarifications and/or follow-up items (but that do

not form part of the negotiated text)

CHAPTER [X]

INVESTMENT

SECTION X

SCOPE

Article [XI]

Scope

1. This Chapter shall apply to measures adopted or maintained by a Party, relating to:

(a) investors of the other Party; and

(b) covered investments; and

(c) with respect to Article [x7], all investments in the [Area] [Territory] of the Party

adopting or maintaining the measure with regard to the establishment or operation

of economic activities.

2. The Section on liberalization of Investments with regard to the establishment of a

covered investment, does not apply to measures relating to:

[(a) air services, related services in support of air services and other services supplied by

means of air transport other than:

(i) Aircraft repair and maintenance services;

(ii) The selling and marketing of air transport services;

(iii) Computer reservation system (CRS) services;

(iv) Ground handling services;

(v) Airport operation services.]

(b) [Cabotage]

[2. The section on Liberalisation of Investments shall not apply to audio-visual services.]

Note: Japan prefers not to take such reservations in the text but instead in Annex II. Japan

confirmed its interest in the liberalisation of computer games.

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[3. In the event of any inconsistency between this Chapter and another Chapter, the other

Chapter shall prevail to the extent of the inconsistency.]

[Provisional compromise 12/2016:

In the event of any inconsistency between Section X [Liberalization] of this [Chapter] and

Chapter/section [cross border services], the latter shall prevail to the extent of the

inconsistency]

[15th round note updated 09/2016; Paragraph 3 to be adapted depending on the final

content and structure of the chapter on services, including financial services. In case no

inconsistency is found this paragraph can be dropped. Both Japan and EU to reflect on the

need to ensure that other chapters in the agreement are not made subject to ISDS.]

Article [x2]

Review

1. The Parties shall endeavour, where appropriate, to reduce or eliminate the non-

conforming measures specified in its Schedules in Annexes [XI] and [XII] respectively.

2. With a view to introducing possible improvements to the provisions of this

[Title/Chapter], and consistent with their commitments in international agreements, the

Parties shall review their legal framework relating to cross-border trade in services,

investment and the investment environment including any obstacles to cross-border trade in

services or investment in accordance with the procedure set out in Institutional Provisions –

Subcommittee in charge of investment.

Note: Move to Chapter 1 (general provisions) if needed can be further adapted to cover

ISDS/ICS.

SECTION X

LIBERALISATION OF INVESTMENTS

Article [X3]

Market Access

Neither party shall maintain or adopt with regard to market access through establishment or

operation by an investor of a Party or by an enterprise constituting a covered investment,

either on the basis of its entire [Area] [Territory] or on the basis of entire territory or

territorial subdivision measures that impose limitations on:

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(a) the number of enterprises, whether in the form of numerical quotas, monopolies,

exclusive rights or the requirements of an economic needs test;

(b) the total value of transactions or assets in the form of numerical quotas or the

requirement of an economic needs test;

(c) the total number of operations or on the total quantity of output expressed in terms

of designated numerical units in the form of quotas or the requirement of an

economic needs test;

(d) the participation of foreign capital in terms of maximum percentage limit on

foreign shareholding or the total value of individual or aggregate foreign

investment;

(e) measures which restrict or require specific types of legal entity or joint ventures

through which an investor of the other Party may perform an economic activity.

(f) the total number of natural persons that may be employed in a particular sector or

that an enterprise may employ and who are necessary for, and directly related to,

the performance of the economic activity in the form of numerical quotas or the

requirement of an economic needs test.

Article [x4]

National Treatment

1. Each Party shall accord to investors of the other [Party] and to covered investments

treatment no less favourable than the treatment it accords, in like situations, to its own

investors and their investments with respect to establishment in its [Area] [Territory].

2. Each Party shall accord to investors of the other [Party] and to covered investments

treatment no less favourable than the treatment it accords, in like situations, to its own

investors and their investments with respect to operation in its [Area] [Territory].

3. For greater certainty, the provisions of paragraphs 1 and 2 shall not be construed as to

prevent a Party from prescribing statistical formalities or information requirements, in

connection with the covered investments in its [Area] [Territory], provided that those

formalities or requirements do not constitute a means to circumvent the obligations of that

Party pursuant to this Article.

Article [x5]

Most-Favoured-Nation Treatment

1. Each Party shall accord to investors of [the other Party] and to covered investments

treatment no less favourable than the treatment it accords, in like situations, to investors of

a non-Party and to their investments with respect to establishment in its [Area] [Territory].

Provisional Note: This paragraph will be accepted after the agreement on the offers.

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2. Each Party shall accord to investors of [the other Party] and to covered investments

treatment no less favourable than the treatment it accords, in like situations, to investors of

a non-Party and to their investments with respect to operation, in its [Area] [Territory].

3. For greater certainty, the treatment accorded to investors of a non-Party or to their

investments in like circumstances, referred to in paragraphs 1 and 2 of this Article, covers

the treatment which such investors or investments would be entitled to receive even in the

absence of an existing investment at the time when the comparison is made.

4. The provisions of paragraph 1 and 2 shall not be construed to oblige a Party to extend

to investors and investments of the other Party the benefit of any treatment resulting from:

(a) an international agreement for the avoidance of double taxation or other

international agreement or arrangement relating wholly or mainly to taxation;

(b) existing or future measures providing for recognition of qualifications, licences or

prudential measures as referred to in Article VII of the General Agreement on

Trade in Services or its Annex on Financial Services.

Note: EU to include REIO in the annexes on NCM.

5. For greater certainty, the “treatment” referred to in Paragraphs 1 and 2 does not include

investor-to-state dispute settlement procedures provided for in other international

agreements.

[6. Substantive provisions in other international agreements concluded by a Party [FN] with

a non-Party do not in themselves constitute “treatment” as referred to in paragraph 2 of this Article. [For greater certainty,] actions or inactions by a Party in relation to substantive

provisions in other international agreements can constitute treatment and thus give rise to

establishing a breach of paragraph 2 of this Article only to the extent that the breach:

(i) is established based on this Article and not as a breach of the said provisions in

other international agreements; and

(ii) caused loss or damage to an investor or covered investment, which is not

established based on differences in the amount of compensation that may be

obtained by means of the said provisions in other international agreements, in a

dispute settlement case.]

Footnote: For greater certainty, the fact that such provisions are transposed into domestic

legislation does not change their qualification as international law provisions and

consequently their coverage under this Paragraph.

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Article [x7]

Prohibition of Performance Requirements

1. Neither Party shall impose or enforce any of the following requirements or enforce any

commitment or undertaking in connection with the establishment or operation of any

investments in its [Area] [Territory] [FN1]:

(a) to export a given level or percentage of goods or services;

(b) to achieve a given level or percentage of domestic content;

(c) to purchase, use or accord a preference to goods produced or services supplied in its

[Area] [Territory], or to purchase goods or services from natural or juridical persons

or any other entity in its [Area] [Territory];

(d) to relate in any way the volume or value of imports to the volume or value of

exports or to the amount of foreign exchange inflows associated with such

investment;

(e) to restrict sales of goods or services in its [Area] [Territory] that such investments

produce or supply by relating such sales in any way to the volume or value of its

exports or foreign exchange inflows;

(f) to restrict the exportation or sale for export;

(g) to appoint, as executives, managers or members of boards of directors, individuals

of any particular nationality;

(h) to transfer technology, a production process or other proprietary knowledge to a

natural or juridical person or any other entity in its [Area] [Territory] except when:

(i) the requirement is imposed or the commitment or undertaking is enforced by a

court, administrative tribunal or competition authority in order to remedy a

violation of competition laws and regulations; or

(ii) such transfer takes place as a result of the use of the subject matter of a patent

authorized by a government of a Party in accordance with Article 31 of the

Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex

1C to the WTO Agreement (hereinafter referred to as “the TRIPS Agreement”), or of measures requiring the disclosure of data that fall within the scope of, and

are consistent with, paragraph 3 of Article 39 of the TRIPS Agreement.

(i) to locate the headquarters of that investor for a specific region or the world market

in its Area;

[Note 12.2016: EU shall update its schedules accordingly.]

(j) to hire a given number or percentage of its nationals;

(k) to achieve a given level or value of research and development in its Area; or

(l) to supply one or more of the goods produced or services provided by the

investment to a specific region or to the world market, exclusively from its own

[Area] [Territory];

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(m) to adopt:

(i) a rate or amount of royalty below a certain level; or

(ii) a given duration of the term of a license contract [FN2], in regard to any license

contract in existence at the time the requirement is imposed or enforced, or any

commitment or undertaking is enforced, or any future license contract freely

entered into between the investor and a natural or juridical person or any other

entity in its Area, provided that the requirement is imposed or the commitment

or undertaking is enforced in a manner that constitutes a direct interference with

that licence contract by an exercise of non-judicial governmental authority of a

Party. For greater certainty, paragraph (m) does not apply when the license

contract is concluded between the investor and a Party.

Footnote 1: For greater certainty, a condition for the receipt or continued receipt of an

advantage referred to in paragraph 2 does not constitute a “requirement” or a “commitment or undertaking” for the purpose of paragraph1.

Footnote 2: A “license contract” referred to in this subparagraph means any contract concerning the licensing of technology, a production process, or other proprietary

knowledge.

2. Neither Party may condition the receipt or continued receipt of an advantage, in

connection with the establishment or operation of any investments in its [Area] [Territory],

on compliance with any of the following requirements:

(a) to achieve a given level or percentage of domestic content;

(b) to purchase, use or accord a preference to goods produced in its [Area] [Territory],

or to purchase goods from natural or juridical persons or any other entity in its

[Area] [Territory];

(c) to relate in any way the volume or value of imports to the volume or value of

exports or to the amount of foreign exchange inflows associated with such

investment;

(d) to restrict sales of goods or services in its [Area] [Territory] that such investments

produce or supply by relating such sales in any way to the volume or value of its

exports or foreign exchange inflows;

(e) to restrict the exportation or sale for export;

3. (a) Nothing in paragraph 2 shall be construed to prevent a Party from conditioning the

receipt or continued receipt of an advantage, in connection with the establishment or

operation of any investment in its [Area] [Territory], on compliance with a

requirement to locate production, supply a service, train or employ workers,

construct or expand particular facilities, or carry out research and development, in

its [Area] [Territory].

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(b) Subparagraphs 1(a), 1(b), 1(c), 2(a) and 2(b) shall not apply to qualification

requirements for goods or services with respect to export promotion and foreign

aid programmes.

(c) Subparagraph 1(h) and (m) shall not apply when:

(i) the requirement is imposed or the commitment or undertaking is enforced by a

court, administrative tribunal or competition authority in order to remedy a

violation of competition laws and regulations; or

(ii) a Party authorizes use of an intellectual property right in accordance with

Article 31 of the TRIPS Agreement, or measures requiring the disclosure of

data/proprietary information that fall within the scope of, and are consistent

with, paragraph 3 of Article 39 of the TRIPS Agreement.

(d) Paragraph (m) shall not apply if the requirement is imposed or the commitment or

undertaking is enforced by a tribunal as equitable remuneration under the Party’s

copyright laws.

(e) Subparagraphs 2(a) and 2(b) shall not apply to requirements imposed by an

importing Party relating to the content of goods necessary to qualify for

preferential

tariffs or preferential quotas.

4. This article is without prejudice to the obligations of a Party under the WTO

Agreement.

Article [x8]

Non-Conforming Measures and Exceptions

1. Articles [xx](MA), [x3](NT), [x4](MFN) and [x7](PPR) do not apply to:

(a) any existing non-conforming measure that is maintained by [a Party] at a level of;

(i) with respect to the European Union [or an EU Member State]:

(A) the European Union, as set out in its Schedule in Annex [XI];

(B) the national government of an EU Member State, as set out in its

Schedule in Annex [XI];

(C) a provincial, territorial or regional government of an EU Member State,

as set out in its Schedule in Annex [XI]; or

(D) a local government, other than government referred to in (i)(C); and

(ii) with respect to Japan:

(A) the central government, as set out in its Schedule in Annex [XI];

(B) a prefecture, as set out in its Schedule in Annex [XI];

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(C) a local government other than a prefecture.

(b) the continuation or prompt renewal of any non-conforming measure referred to in

subparagraphs (a); or

(c) an amendment or modification to any non-conforming measure referred to in

subparagraphs (a) and (b), provided that the amendment or modification does not

decrease the conformity of the measure as it existed immediately before the

amendment or modification, with Articles [xx](MA), [x3](NT), [x4](MFN) and

[x7](PPR).

2. Articles [xx](MA), [x3](NT), [x4](MFN) and [x7](PPR) do not apply to any measure

that a Party adopts or maintains with respect to sectors, sub-sectors or activities set out in its

Schedule in Annex [XII].

3. Neither Party shall, under any measure adopted after the date of entry into force of this

Agreement and covered by its Schedule in Annex [XII], require an investor of the other

Party, by reason of its nationality, to sell or otherwise dispose of an investment that exists at

the time the measure becomes effective.

4. Articles [x3](NT), [x4](MFN) shall not apply to any measure that constitutes an

exception to, or a derogation from, Articles 3 or 4 of the TRIPS Agreement, as specifically

provided in Articles 3 through 5 of the TRIPS Agreement.

5. Articles [xx](MA), [x3](NT), [x4](MFN) and [x7](PPR) shall not apply to any measure

that a Party adopts or maintains with respect to government procurement.

6. Articles [X3], [X4] and [X5] do not apply to subsidies granted by the Parties.

SECTION 2

INVESTMENT PROTECTION

Article 13

Investment and regulatory measures

[1. For the purpose of this Title, the Parties reaffirm their right to adopt within their

territories regulatory measures necessary to achieve legitimate policy objectives, such as

the protection of public health, safety, the environment or public morals, social or consumer

protection or the promotion and protection of cultural diversity.]

Drafters’ note: This paragraph shall be moved in Chapter general provisions Article 1 as

Paragraph 2. In that case, Paragraph 1 of this Article will read as follows:

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In case Japan accepts Paragraph 1 at the beginning of this Title,

1. Article 1 Paragraph 2 of Chapter 1 of this Title applies to this Section in accordance

with the following:

2. For greater certainty, the mere fact that a Party takes or fails to take action including

through a modification to its laws that may negatively affect an investment or an investor’s expectations, including expectations of profits, does not amount to a breach of an obligation

under this Section as applicable. This includes a Party’s decision not to issue or renew a

subsidy or to modify or withdraw it.

[3. For greater certainty, the provisions of this Section as applicable shall not be construed

to require a Party to act inconsistently with the decision to discontinue a subsidy [FN1] or

to request its reimbursement, ordered by a competent court, administrative tribunal or other

competent authority [FN2] based on regulations existing at the time when the subsidy was

granted [FN3].

[FN1]: In the case of the EU, “subsidy” includes “state aid” as defined in the EU law.

[FN2]: In the case of the EU, “other competent authority” is the European Commission, in accordance with Article 108 of the Treaty of the Functioning of the European Union.

[FN3]: In the case of EU, Article 107 to 109 of the Treaty on the Functioning of the

European Union].

Drafters’ note: Paragraph 3 does not prohibit investors from ISDS claims when a Party in

addition to discontinuing a subsidy or requesting its reimbursement for instance denies

access to justice or harasses the investors or adopts other behaviour which is a breach of

FET.

Article [X14]

General Treatment of Investment

1. In accordance with international law, Each Party shall accord to covered investment

and to investors of the other Party, with respect to their covered investments, fair and

equitable treatment and full protection and security in its [Area] [Territory].

2. A Party breaches the obligation to grant fair and equitable treatment if a measure or

series of measures constitute:

(a) denial of justice in criminal, civil or administrative proceedings;

(b) disregard of the fundamental principles of due process including through lack of

transparency, in any administrative or judicial proceedings;

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(c) manifest arbitrariness;

(d) discrimination on manifestly wrongful grounds, such as gender, race or religious

belief;

(e) abusive treatment, including coercion, duress and harassment;

3. For greater certainty, full protection and security refers to the physical security of

covered investments and of investors with respect to their covered investments.

4. When applying the above fair and equitable treatment obligation, a tribunal may take

into account whether a Party made a specific representation to an investor to induce a

covered investment, that created a legitimate expectation, and upon which the investor

relied in deciding to make or maintain the covered investment, but that the Party

subsequently frustrated.

5. A determination that there has been a breach of another provision of this Agreement, or

of a separate international agreement, does not in itself establish that there has been a

breach of this Article.

Article [x14]

Compensation for losses

1. Each Party shall accord to investors of the other Party that have suffered loss or damage

relating to their investments in the [Area] [Territory] of the former Party due to armed

conflict or a state of emergency such as revolution, insurrection or civil disturbance in the

[Area] [Territory] of that former Party, treatment no less favourable than the treatment it

accords to its own investors or to investors of a non-Party, whichever is more favourable to

the investor, with respect to restitution, indemnification, compensation or any other form of

settlement.

2. Without prejudice to paragraph 1 of this Article, investors of a Party who, in any of the

situations referred to in that paragraph, suffer losses in the [Territory] [Area] of the other

Party resulting from:

(a) requisitioning of their investment or a part thereof by the latter’s armed forces or authorities; or

(b) destruction of their investment or a part thereof by the latter’s armed forces or authorities, which was not required by the necessity of the situation;

shall be accorded adequate and effective restitution or compensation by the other Party

without undue delay.

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Article 16

Expropriation and Compensation

1. Neither Party shall expropriate or nationalise, either directly or indirectly through a

measure having an effect equivalent to expropriation or nationalisation (hereinafter referred

to as “expropriation”), the investments of investors of the other Party in its [Area]

[Territory] except:

(a) for a public purpose;

(b) in a non-discriminatory manner;

(c) upon payment of prompt, adequate and effective compensation in accordance with

paragraph 2 through 4 of this article; and

(d) in accordance with due process of law.

For greater certainty, this paragraph shall be interpreted in accordance with Annex X on

Expropriation.

2. Such compensation shall be equivalent to the fair market value of the expropriated

investment at the time when the expropriation was publicly announced or when the

expropriation took place, whichever is earlier. The fair market value shall not reflect any

change in value occurring because the expropriation had become publicly known earlier.

3. Such compensation shall be paid without delay and shall include interest at a normal

commercial rate, accrued from the date of expropriation until the date of payment. It shall

be effectively realisable and freely transferable in accordance with Article 17 (Transfers)

and shall be paid in a freely convertible currency accepted by the investor, at the market

exchange rate prevailing on the date of expropriation.

Footnote: For greater certainty, a Party may not impose on an investor to accept

compensation in a given currency.

4. This Article does not apply to the issuance of compulsory licenses granted in relation

to intellectual property rights in accordance with the Agreement on the TRIPS Agreement,

or to the revocation, limitation, or creation of intellectual property rights, to the extent that

such revocation, limitation, or creation is consistent with Chapter XX (Chapter on the

Intellectual Property) and the TRIPS Agreement.

Footnote: For greater certainty, the term “revocation” of intellectual property rights includes the cancellation or nullification of those rights, and the term “limitation” of intellectual property rights includes exceptions to those rights.

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Article [x15]

Transfers

1. Each Party shall allow all transfers relating to a covered investment made in its [Area]

[Territory] by an investor of the other Party to be made in a freely convertible currency

without restriction or delay into and out of its Area. Such transfers shall include:

(a) contributions to capital such as principal and additional funds to maintain, develop

or increase the investment;

(b) profits, capital gains, dividends, and other returns, interest, royalty payments, fees

including management fees and technical assistance fees, and other incomes

accruing from the investment;

(c) payments made under a contract entered into by the investor, or the covered

investment, including loan payments in connection with the investment;

(d) proceeds of the sale or liquidation of all or any part of the investment;

(e) earnings and other remuneration of personnel engaged from abroad and working in

connection with the investment;

(f) payments made in accordance with Articles [x14](Compensation for losses) and

[x16] (Expropriation and Compensation); and

(g) payments arising out of the settlement of a dispute including payments arising

under Article [X](final award in ISDS provisions).

2. Transfers shall be made at the market rate of exchange prevailing on the date of

transfer.

Article 18

Subrogation

If a Party, or its designated agency thereof, makes a payment to any investor of that Party

under an indemnity, guarantee or insurance contract pertaining to an investment of such

investor in the [Area] [Territory] of the other Party, the other Party shall recognise the

assignment to the former Party or its designated agency of any right or claim of such

investor under this Chapter but for the subrogation on account of which such payment is

made and shall recognise the right of the former Party or its designated agency to exercise

by virtue of subrogation any such right or claim to the same extent as the original right or

claim of the investor. The investor may not pursue these rights to the extent of the

subrogation

Article [x21]

Denial of Benefits

A Party may deny the benefits of this Chapter to an investor of the other Party that is an

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enterprise of the other Party and to its investments if the enterprise is owned or controlled

by

a natural or juridical person of a non-Party and the denying Party adopts or maintains

measures with respect to the non-Party that: (i) are related to maintenance of international

peace and security, including the protection of human rights; and (ii) prohibit transactions

with the enterprise or that would be violated or circumvented if the benefits of this Chapter

were accorded to the enterprise or to its investments

[Drafters’ Note: The article is intended to cover sanctions against e.g. DPRK while at the same time not excluding territories with special status e.g. Taiwan.]

Annex [ ]: Expropriation

The Parties confirm their shared understanding that:

1. Expropriation may be either direct or indirect:

(a) direct expropriation occurs when an investment is nationalised or otherwise

directly expropriated through formal transfer of title or outright seizure.

(b) indirect expropriation occurs where a measure or series of measures by a Party has

an effect equivalent to direct expropriation, in that it substantially deprives the

investor of the fundamental attributes of property in its investment, including the

right to use, enjoy and dispose of its investment, without formal transfer of title or

outright seizure.

2. The determination of whether a measure or series of measures by a Party, in a specific

fact situation, constitutes an indirect expropriation requires a case-by-case, fact-based

inquiry that considers, among other factors:

(a) the economic impact of the measure or series of measures and its duration,

although the fact that a measure or a series of measures by a Party has an adverse

effect on the economic value of an investment, standing alone, does not establish

that an indirect expropriation has occurred;

(b) whether the expectations of the investor arising out of the investment were distinct

and reasonable;

(c) the character of the measure or series of measures, including its object and context.

3. For greater certainty, except in rare circumstances where they are manifestly excessive

in the light of their purpose, non-discriminatory measures [FN1] that are designed and

applied by a Party to protect legitimate public policy objectives such as health, safety and

the environment do not constitute indirect expropriation.

Footnote: For the purposes of this Annex, it is understood that non-discriminatory measures

that are designed and applied by a Party to protect legitimate public policy objectives do not

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include, for instance, measures that are arbitrary or based on bad faith.

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Capital movements, payments and transfers and temporary safeguard measures

Article x.1

Current Account

Without prejudice to other provisions of this Agreement, the Parties shall allow, in freely

convertible currency, and in accordance with the provisions of the Articles of the Agreement

of the International Monetary Fund, as applicable, any payments and transfers with regard to

transactions on the current account of the balance of payments between the Parties.

Article x.2

Capital Movements

1. Without prejudice to other provisions of this Agreement, the Parties shall not impose,

with regard to transactions on the capital and financial account of balance of payments, any

restrictions on the free movement of capital for the purpose of liberalisation of investments

and other transactions consistent with Chapter X Section 1 [Liberalisation of investments] of

Title XX [Trade in Services, Investment and E-Commerce].

2. The Parties shall consult each other with a view to facilitating the movement of capital

between them in order to promote trade and investment.

Article x.3

Application of laws and regulations relating to capital movements, payments or

transfers

The provisions of Article [12] [Transfers] of Chapter X [Investment Protection], Articles X.1

and X.2 of this Chapter shall not preclude a Party from applying its laws and regulations

relating to:

(a) bankruptcy, insolvency or the protection of the rights of creditors;

(b) issuing, trading or dealing in securities, or futures, options and other derivatives;

(c) financial reporting or record keeping of capital movements, payments or transfers

where necessary to assist law enforcement or financial regulatory authorities;

(d) criminal or penal offenses, deceptive or fraudulent practices.

Drafters’ Note: The reasons for referring to deceptive or fraudulent practices are the

following: (i) some practices such as tax evasion may qualify as civil law offenses depending

on the legal system, (ii) consistency with GATS and general exceptions article in this

agreement and (iii) in line with the meaning of “fake exceptions” to transfers in case law. (a) ensuring compliance with orders or judgments in adjudicatory proceedings; or

(b) social security, public retirement or compulsory savings schemes.

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Such laws and regulations shall not, however, be applied in an inequitable, arbitrary or

discriminatory manner, or otherwise constitute a disguised restriction on capital movements,

payments or transfers.

Article x.4

Temporary safeguard measures

1. In exceptional circumstances of serious difficulties for the operation of the Union's

economic and monetary union, or threat thereof, the Union may take safeguard measures with

regard to capital movements, payments or transfers for a period not exceeding six months.

Such measures shall be strictly necessary and shall not constitute a means of arbitrary or

unjustified discrimination between a Party and a non-Party in like situations.

2. A Party may adopt or maintain restrictive measures with regard to capital movements,

payments or transfers1:

(a) in the event of serious balance-of-payments or external financial difficulties or threat

thereof;

(b) where, in exceptional circumstances, movements of capital, payments or transfers

cause or threaten to cause serious macroeconomic difficulties related to monetary

and exchange rate policies.

3. The measures referred to in paragraph 2:

(a) shall be consistent with the Articles of Agreement of the International Monetary

Fund, as applicable;

(b) shall not exceed those necessary to deal with the circumstances described in

paragraph 1;

(c) shall be temporary and shall be phased out progressively as the situation specified in

paragraph 2 improves;

(d) shall avoid unnecessary damage to the commercial, economic and financial interests

of the other Party;

(e) shall be non-discriminatory compared to third parties in like situations.

Drafters' Note: The requirements in paragraph 3 are not meant to be stricter than those in

paragraph 1.

4. In the case of trade in goods, each Party may adopt restrictive measures in order to

safeguard its external financial position or balance-of-payments. These measures shall be in

accordance with the General Agreement on Trade and Tariffs (GATT) and the Understanding

on the Balance of Payments provisions of the GATT 1994.

1 In the case of EU, such measures may be taken by the EU’s member states in situations other than those referred to in paragraph 1.

Limited

Limited

5. In the case of trade in services, each Party may adopt restrictive measures in order to

safeguard its external financial position or balance of payments. These measures shall be in

accordance with Article XII of the General Agreement on Trade in Services (GATS).

6. A Party maintaining or having adopted measures referred to in paragraphs 1 to 3 shall

promptly notify the other Party of them.

7. Where the restrictions are adopted or maintained under this Article, consultations shall be

held promptly in the [Committee on Trade in Services and Investment – to be adapted] unless

consultations are held in other fora. The consultations shall assess the balance-of-payments or

external financial difficulty or other macroeconomic difficulties that led to the respective

measures, taking into account, inter alia, such factors as:

(a) the nature and extent of the difficulties;

(b) the external economic and trading environment; or

(c) alternative corrective measures which may be available.

The consultations shall address the compliance of any restrictive measures with paragraphs 1

to 3. All relevant findings of statistical or factual nature presented by the IMF, where

available, shall be accepted and conclusions shall take into account the assessment by the IMF

of the balance-of-payments and the external financial situation or other macroeconomic

difficulties of the Party concerned.

Limited

Limited

Without prejudice

Japan-EU EPA

12/ 2016

Investment Chapter

Annex [X]: Public debt

1. No claim that a restructuring of debt issued by a Party breaches an obligation under this

[Chapter] may be submitted to, or if already submitted, continue in, arbitration under Section

[Investor-State Dispute Settlement] if the restructuring is a negotiated restructuring at the time

of submission, or becomes a negotiated restructuring after such submission, except for a claim

that the restructuring violates Article X (National Treatment) or Article X (Most-Favoured-

Nation Treatment)2_bookmark40 .

2. Notwithstanding Article X [Submission of a Claim, Section on Investor-State Dispute

Settlement], and subject to paragraph 1 of this Annex, an investor of a Party may not submit a

claim under Section [Investor-State Dispute Settlement] that a restructuring of debt issued by

the other Party breaches an obligation under this [Chapter], other than Articles X [National

Treatment] or X [Most-Favoured Nation], unless 270 days have elapsed from the date of

submission by the claimant of the written request for consultations pursuant to Article X

[Consultations].

3. For the purposes of this Annex:

“Negotiated restructuring” means the restructuring or rescheduling of debt issued by a

Party that has been effected through (i) a modification or amendment of debt

instruments, as provided for under their terms, including their governing law, or (ii) a

debt exchange or other similar process in which the holders of no less than 75 % of the

aggregate principal amount of the outstanding debt under the debt instruments that are

subject to restructuring -> have consented to that debt exchange or other process.

"Governing law" of a debt instrument means a jurisdiction's legal and regulatory

framework applicable to that debt instrument.

4. For greater certainty, debt issued by a Party includes all forms of debt of Japan or of the

European Union, or of a Member State of the European Union, at the central, regional or local

level.

2 For the purpose of this Annex, the mere fact that the relevant treatment distinguishes between investors or

investments on the basis of legitimate public policy objectives in the context of a debt crisis or threat thereof

does not amount to a breach of Article X [National Treatment] or Article X [Most-Favoured Nation]

Drafters’ Note: The Parties agree that legitimate public policy objectives include compliance with debt restructuring terms, principles and rules agreed by London club or Paris club or other international fora.

Limited Text after 17 round, as of 27/9/16 EU-Japan FTA: Investment Dispute Resolution

Without prejudice / Origin: EU

[EU: Section X - Resolution of Investment Disputes and Investment Court System

Sub-Section 1: Scope and Definitions]

Article 1

Scope and Definitions

1. This [Section] shall apply to a dispute between a Party and [EU: a claimant] [JP: an investor] of

the other Party concerning a measure alleged to breach the provisions of [EU: Articles x.4, paragraph

2 [national treatment as regards operation of an investment], x.5 [most favoured nation as regards

operation of an investment], and section 2 [investment protection] [JP: this Chapter (Investment)]

[EU: , which breach allegedly causes loss or damage to the claimant or its locally established

company] [where the claimant claims to have suffered loss or damage as a result of the alleged

breach (hereinafter referred to as `investment dispute`).]

1. [JP: A tribunal] [EU: The Tribunal] established under Article 8 may not decide claims that fall

outside of the scope of this [section] as defined in paragraph 1.

For the purpose of this [Section]:

"disputing parties" means the claimant and respondent;

[EU: "claimant" means an investor of a Party, as defined in Article (Definitions) of Chapter

(Investment & Services) which seeks to submit or has submitted a claim pursuant to this (Section),

either:

(a) acting on its own behalf; or

(b) acting on behalf of a locally established company which it owns or controls. The locally

established company shall be treated as a national of another Contracting State for the purposes of

Article 25 (2) (b) of the Convention on the Settlement of Investment Disputes between States and

Nationals of Other States of 18 March 1965 (ICSID-Convention).

“locally established company” means a juridical person, established in the territory of one Party, and

owned and controlled by an investor of the other Party.]

[JP: “claimant” means an investor of a Party that is a party to an investment dispute with the other

Party.]

[A juridical person is:

(i) owned by natural or juridical persons of the other Party if more than 50 per cent of the equity

interest in it is beneficially owned by natural or juridical persons of that Party;

(ii) controlled by natural or juridical persons of the other Party if such natural or juridical persons

have the power to name a majority of its directors or otherwise to legally direct its actions.]

"non-disputing Party" means either Japan, when the respondent is the European Union or a Member

State of the European Union; or the European Union, when Japan is the respondent.



"respondent" means either Japan or, in the case of the European Union, either the European Union or

the Member State concerned as notified pursuant to Article 4.

“UNCITRAL Transparency Rules” means the UNCITRAL Rules on Transparency in Treaty-based

Investor-State Arbitration.

[EU: "Third Party funding" means any funding provided by a natural or legal person who is not a

party to the dispute but who enters into an agreement with a disputing party in order to finance part or

all of the cost of the proceedings in return for a remuneration dependent on the outcome of the dispute

or in the form of a donation or grant.]

"Investment dispute settlement" means a method of dispute resolution of an investment dispute under

this [Chapter/Section] other than consultations provided for in Article 2 and mediation provided for in

Article 3.

Article 1

Anti-Circumvention

For greater certainty, [JP: a tribunal] [EU: the Tribunal] shall decline jurisdiction where the dispute

had arisen, or was foreseeable on the basis of a high degree of probability, at the time when the

claimant acquired ownership or control of the investment subject to the dispute and [JP: a tribunal]

[EU: the Tribunal] determines, on the basis of the facts of the case, that the claimant has acquired

ownership or control of the investment for the main purpose of submitting the claim to arbitration

under this section. The possibility to decline jurisdiction in such circumstances is without prejudice to

other jurisdictional objections which could be entertained [JP: a tribunal] [EU: the Tribunal].

[EU: SUB-SECTION 2: ALTERNATIVE DISPUTE RESOLUTION AND CONSULTATIONS]

Article 2

Consultations

1. Any dispute should, as far as possible, be settled amicably, where possible, before the submission

of a request for consultations. For greater certainty, such a settlement may be agreed at any time,

including after a claim has been submitted to investment dispute settlement pursuant to Article 5.

[EU: A mutually agreed solution between the disputing parties shall be notified to the non-disputing

Party within 15 days of the mutually agreed solution being agreed. The [...] Committee shall keep

under surveillance the implementation of such mutually agreed solutions and the Party to the mutually

agreed solution shall regularly report to the [...] Committee on the implementation of such solution.]

Unless the disputing parties agree to a longer time period, consultations shall be held within 60 days

of the submission of the request for consultations pursuant to paragraph 2.

2. A [claimant] [investor] of one Party alleging a breach of the [EU: provisions referred to in Article 1

paragraph 1] [JP: provisions of this Chapter] may submit a request for consultations to the other Party.

The request shall contain the following information:



(a) the name and address of the [claimant] [investor] [EU: and, where such request is submitted on

behalf of a locally established company, the name, address and place of incorporation of the locally

established company;]

(b) the provisions [of this Chapter] [referred to in Article 1 paragraph 1] alleged to have been

breached;

(c) the legal and the factual basis for the claim including the measures alleged to be inconsistent with

the provisions [of this Chapter] [referred to in Article 1 paragraph 1].

(d) the relief sought and the amount of damages claimed.

[EU: (e) evidence establishing that the claimant is an investor of the other Party and that it owns or

controls the investment and, where it acts on behalf of a locally established company, that it owns or

controls the locally established company.

Where a request for consultations is submitted by more than one claimant or on behalf of more than

one locally established company, the information in (a) and (e) shall be submitted for each claimant or

each locally established company, as the case may be.]

3. Unless the disputing parties agree otherwise, the place of consultation shall be:

(a) Tokyo where the consultations concern measure[s] by Japan;

(b) Brussels where the [measures subject to the request for consultations include a measure] by the

European Union; or

(c) the capital of the Member State of the European Union concerned, where the consultations

concern exclusively measure[s] by that Member State.

Consultations may also take place by videoconference or other means [EU: particularly where a small

or medium sized enterprise is involved].

4. A request for consultations must be submitted within the later of:

(a) 3 years after the date on which the claimant, [EU: or, as applicable, the locally established

company] becomes or should have become aware of the measures alleged to be inconsistent with the

[provisions referred to in Article 1 paragraph 1] and of the loss or damage alleged to have been

incurred thereby or;

(b) [2 or 3] years after the claimant, [EU: or, as applicable, the locally established company [EU:

ceases to pursue] [JP: has withdrawn] any claim before any court or tribunal under the domestic law

of a Party with respect to the measures alleged to constitute a breach referred to in Article 1 and, in

any event, no later than 10 years after the date on which the claimant [EU: or, as applicable, its locally

established company,] becomes of should have become aware of the measures alleged to be

inconsistent with the provisions [EU: referred to in Article 1(1) ] [JP: of this Chapter] and of the loss

or damage alleged to have been incurred thereby.

5. In the event that the claimant has not submitted a claim to investment dispute settlement pursuant to

Article 5 within 18 months of submitting the request for consultations, the claimant shall be deemed

to have withdrawn from proceedings under this section and to have waived its rights to bring a claim

under this section. This period may be extended by agreement between the claimant and the Party

concerned.

6. The time periods in paragraphs 4 and 5 shall not render claims inadmissible where the claimant can

demonstrate that the failure to request consultations or submit a claim to investment dispute



settlement is due to the claimant's inability to act as a result of actions taken by [the party concerned],

provided that the claimant acts as soon as reasonably possible after it is able to act.

7. In the event that the request for consultations concerns an alleged breach of the agreement by the

European Union, or by a Member State of the European Union, it shall be sent to the European Union.

[JP: Where the measures referred to in the request for consultation include those of a Member State of

the European Union, the European Union shall notify the [claimant][investor] of the fact.] [EU:

Where treatment of a Member State of the European Union is identified, it shall also be sent to the

Member State concerned.]

Article 3

Mediation

1. The disputing parties may at any time agree to have recourse to mediation.

2. Recourse to mediation is voluntary and without prejudice to the legal position of either disputing

party.

[EU: 3. Recourse to mediation shall be governed by the rules set out in Annex I. Any time limit

mentioned in Annex I may be modified by mutual agreement between the disputing parties.]

[EU: 4. The [...] Committee shall, upon the entry into force of this Agreement, establish a list of six

individuals, of high moral character and recognised competence in the fields of law, commerce,

industry or finance, who may be relied upon to exercise independent judgment and who are willing

and able to serve as mediators.

5. The mediator shall be appointed by agreement of the disputing parties. The disputing parties may

jointly request the President of the Tribunal to appoint a mediator from the list established pursuant to

this Article, or, in the absence of a list, from individuals proposed by either Party]

6. Once the disputing parties agree to have recourse to mediation, the period of limitation referred to

in Articles 2(4) and 2(5) shall be suspended between the date on which it was agreed to have recourse

to mediation and the date on which a disputing party or the mediator, whichever is earlier, receives

written notice of the decision to terminate the mediation by the other disputing party. [EU: At the

request of both parties, the Tribunal or the Appeal Tribunal shall stay the proceedings.]

[EU: SUB -SECTION 3: SUBMISSION OF A CLAIM AND CONDITIONS

PRECEDENT]

Article 4

Notice of intent to submit a claim to investment dispute settlement

1. If the dispute cannot be settled within 90 days of the submission of the request for consultations,

the claimant may deliver a notice of intent to submit a claim to investment dispute settlement.

The notice shall contain the following information:

(a) the name and address of the [EU: claimant] [JP: investor];



(b) the provisions [JP: of this Chapter] [EU: referred to in Article 1 paragraph 1] alleged to have been

breached;

(c) the legal and the factual basis for the claim including the JPN: measures alleged to be inconsistent

with the provisions [JP: of this Chapter] [EU: referred to in Article 1 paragraph 1].

(d) the relief sought and the amount of damages claimed.

[EU: (e) evidence establishing that the claimant is an investor of the other Party and that it owns or

controls the investment and, where it acts on behalf of a locally established company, that it owns or

controls the locally established company.]

The notice shall be delivered to the European Union where the measures referred in the notice include

those of either the European Union or a Member States of European Union. [EU: Where treatment of

a Member State of the European Union is identified in the notice of intent to submit a claim to

arbitration, such notice shall also be sent to the Member State concerned.] The notice shall be

delivered to Japan where the measures referred in the notice are those of Japan.

2. Where a notice of intent referred to in paragraph 1 has been delivered to the European Union, the

European Union shall, after having made a determination, inform the claimant within 60 days of the

notice referred to in paragraph 1 as to whether the European Union or a Member State of the

European Union shall be the respondent, on the basis of which the claimant may submit a claim

pursuant to Article [5]].

[JP: 3. Where the claimant has not been informed of the determination within the time period

provided in paragraph 2, the claimant may submit a notice of arbitration pursuant to Article [5] on the

basis of the application of the following criteria:

(a) in the event that the notice of intent exclusively identifies the measure by a Member State,

that Member State shall act as respondent; and

(b) in the event that the notice of intent identifies any measure by an institution, body or

agency of the European Union, the European Union shall act as respondent.]

4. Where either the European Union or a Member State is respondent [JP: pursuant to paragraphs 2

or 3] [EU: following a determination made pursuant to paragraph 2], neither the European Union nor

the Member State concerned may assert the inadmissibility of the claim, lack of jurisdiction of [JP: a

tribunal] [EU: the Tribunal] or otherwise assert that the claim or award is unfounded or invalid on the

ground that the proper respondent should be the European Union rather than the Member State or vice

versa.]

5. [JP: A tribunal] [EU: The Tribunal and the Appeal Tribunal] shall be bound by the

determination made pursuant to paragraph 2.]

6. Nothing in this Agreement or the applicable investment dispute settlement rules shall prevent the

exchange of all information relating to a dispute between the European Union and the Member

State concerned.

Article 5

Submission of claim to investment dispute settlement



1. If the investment dispute cannot be settled through consultations within three months of the

submission of the notice of intent to submit a claim to investment dispute settlement, the claimant,

provided that it satisfies the requirements set out in Article 6, may submit the investment dispute to

[EU: the Tribunal] [JP: a tribunal] under one of the following dispute settlement rules:

(a) the Convention on the Settlement of Investment Disputes between States and Nationals of Other

States, done at Washington, March 18, 1965 (hereinafter referred to in this Section as “the ICSID

Convention”);

(b) Rules Governing the Additional Facilities for the Administration of Proceedings by the Secretariat

of the International Centre for Settlement of Investment Disputes (hereinafter referred to in this

Section as “the ICSID Additional Facilities Rules”);

(c) the Arbitration rules of the United Nations Commission on International Trade Law (hereinafter

referred to in this Section as “UNCITRAL”), in their most recent form as of the date of the

submission of a claim to arbitration; or

(d) any other dispute settlement rules on agreement of the disputing parties.

2. In the event that the investor proposes a specific set of dispute settlement rules pursuant to

subparagraph 1(d) and if the disputing parties have not agreed in writing on such arbitration rules, or

the respondent has not replied to the investor, within 30 days of receipt of the proposal, the investor

may submit a claim under the investment dispute settlement rules provided for in subparagraphs 1(a),

(b) and (c).

[JP: 3. The claimant may, when submitting its claim, propose that a sole arbitrator should hear the

case. The respondent shall give sympathetic consideration to such a request, in particular where the

claimant is a small or medium-sized enterprise or the compensation or damages claimed are relatively

low.]

The investment dispute settlement rules applicable pursuant to paragraph 1 shall govern the

proceedings subject to the specific rules set out in this [Chapter] [Section] [EU: as supplemented by

any rules adopted by the [...] Committee, by the Tribunal or by the Appeal Tribunal].

4. Claims submitted in the name of a class composed of a number of unidentified claimants, or

submitted by a representative intending to conduct the proceedings in the interest of a number of

identified or unidentified claimants that designate the representatives to make on its own discretion,

any decisions and conducts relating to the proceedings on their behalf shall not be admissible, [where]

[provided that] those proceedings are initiated [by] [at] the initiative of that representative and that

representative is not included in the claimants.

[EU: 5. For greater certainty, a claimant may not submit a claim under this Section if its investment

has been made through fraudulent misrepresentation, concealment, corruption, or conduct amounting

to an abuse of process.]

Article 6

Other claims

1. No claim may be submitted to investment dispute settlement under this Section unless:



(a) a claimant withdraws any pending claims submitted to any [domestic or international court or

tribunal] with respect to any measure alleged to constitute a breach referred to in Article 1 [EU: and

the submission of the claim pursuant to Article 5 is accompanied by evidence of any such

withdrawal], and

(b) the submission of the claim pursuant to Article 5 is accompanied by the claimant’s written waiver

of its right to initiate before any [domestic or international court or tribunal], any proceeding with

respect to any measure alleged to constitute a breach referred to in Article 1.

2. Notwithstanding paragraph 1, the claimant may initiate or continue [an action] that seeks interim

injunctive [or declaratory] relief and [does not involve the payment of monetary damages] before a

court or tribunal of the respondent, provided that the action is brought for the sole purpose of

preserving the claimant’s or [EU: its locally established company’s] [JP: the enterprise’s] rights and

interests during the pendency of the investment dispute settlement proceedings.

[JP: The waiver provided pursuant to [paragraph 1 (b)] shall cease to apply:

i. where the claim is rejected on the basis of a failure to meet the requirements of Article 2(2) or on

any other procedural or jurisdictional grounds;

ii. where a claim is dismissed pursuant to Article 10 (Preliminary objections) or Article 10bis (Claims

unfounded as a matter of law); or

iii. where a claim is withdrawn in conformity with applicable arbitration rules within 12 months of the

constitution of the Tribunal.]

[EU: The declaration provided pursuant to paragraph 1(b) shall cease to apply where the claim is

rejected on the basis of a failure to meet the nationality requirements to bring an action under this

Agreement.]

[EU: 3. For the purposes of this Article, the term "claimant" includes the investor and, where

applicable, the locally established company. In addition, for the purposes of paragraphs 1 and 2(a), the

term "claimant" also includes:

(a) where the claim is submitted by an investor acing on its own behalf, all persons who, directly or

indirectly, have an ownership interest in or are controlled by the investor; or

(b) where the claim is submitted by an investor acting on behalf of a locally established company, all

persons who, directly or indirectly, have an ownership interest in or are controlled by the locally

established company,

and claim to have suffered the same loss or damage as the investor or locally established company.1]

4. [EU: Where claims are brought both pursuant to this Section and Section X (State to State Dispute

Settlement) or another international agreement] [JP: Where a Party has initiated a dispute settlement

procedure und Chapter X (Dispute Settlement)] with respect to the measure alleged to be inconsistent

with any of the provisions [JP: of this Chapter] [EU: referred to in Article 1(1)], [JP: a tribunal

should] [EU: a division of the Tribunal constituted under this Section shall], where relevant [EU: after

hearing the disputing parties,] take into account [EU: proceedings pursuant to Section X (State to

State dispute settlement) or another international agreement in its decision, order or award] [JP:

[EU: 1

For greater certainty, the same loss or damage means loss or damage flowing from the same treatment

which the person seeks to recover in the same capacity as the claimant (e.g. if the claimant sues as a shareholder,

this provision would cover a related person also pursuing recovery as a shareholder).]



decisions made in that dispute settlement procedure, including the Final Report as referred to Article

10] of Chapter X (Dispute Settlement)]. [EU: To this end, it may also, if it considers necessary, stay its

proceedings. In acting pursuant to this provision the Tribunal shall respect Article 12(6).]

Article 7

Consent

1. [EU: The respondent] [JP: Each Party hereby] consents to the submission of [an investment dispute

by a claimant to investment dispute settlement under Article 5 paragraph 1] [chosen by the claimant]

[in accordance with this Agreement].

2. The consent under paragraph 1 and the submission of a claim under this Section shall [be deemed

to] satisfy the requirements of:

(a) Article 25 of the ICSID Convention and the ICSID Additional Facility Rules for written consent of

the disputing parties; and,

(b) Article II of the New York Convention for the Recognition and Enforcement of Foreign Arbitral

Awards for an “agreement in writing”.

[EU: 3. [For greater certainty], The claimant is deemed to give consent in accordance with the

procedures provided for in this Section at the time of submitting a claim pursuant to Article 5.

4. For greater certainty, the consent provided pursuant to this Article requires that:

(a) the disputing parties refrain from enforcing an award rendered pursuant to this Section before such

award has become final pursuant to Articles 12(6) or 12(7); and

(b) the disputing parties refrain from seeking to appeal, review, set aside, annul, revise or initiate any

other similar procedure before an international or domestic court or tribunal, as regards an award

pursuant to this section.]

Article 7

Third-Party Funding

1. Where there is a third party funding, the disputing party benefiting from it shall notify to the other

disputing party and to [JP: a tribunal where applicable] [EU: the division of the Tribunal, or where the

division of the Tribunal is not established, to the President of the Tribunal], the name and address of

the third party funder.

2. Such notification shall be made at the time of submission of a claim, or, where [the [EU:

agreement] [JP: contract] for a third party funding is concluded or such funding] is made after the

submission of a claim, without delay [EU: as soon as the agreement is concluded or the donation or

grant is made].

[JP: 3. For greater certainty, the tribunal shall not draw any adverse inference against the claimant

from the fact that it benefits from third party funding.]

Article 8

Constitution of the Tribunal

Note: At the 14th

round, EU submitted revised text proposals including articles on "Tribunal of First



Instance", "Appeal Tribunal", "Ethics" and "Multilateral Dispute Settlement Mechanisms" which are

intended to replace the current Article 8 (Constitution of the Tribunal).

1. Unless the disputing parties have agreed to appoint a sole arbitrator, the tribunal shall comprise

three arbitrators, one appointed by each of the disputing parties and the third, who shall be the

chairperson, appointed by agreement of the disputing parties.

2. If the disputing parties agree to appoint a sole arbitrator, the disputing parties shall seek to agree on

the sole arbitrator. If they fail to do so within 90 days of the day on which the respondent gave its

agreement to submitting the dispute to a sole arbitrator, the sole arbitrator shall be drawn by the

Secretary General of ICSID on the request of a disputing party [EU: from the list of chairpersons

established pursuant to paragraph 5 below].

3. [If the disputing parties have not agreed to appoint a sole arbitrator and] if the tribunal has not been

constituted within 90 days from the date on which a claim pursuant to Article 5 has been submitted,

the Secretary General of ICSID shall, on the request of a disputing party, appoint the [arbitrator or

arbitrators not yet appointed] [EU: from the list established pursuant to paragraph 5.

4. The Committee for the Settlement of Investor-State Disputes shall, no later than the earliest of the

provisional application or entry into force of this Agreement, establish a list of individuals who are

willing and able to serve as arbitrators. The Committee for Investor-State Dispute Settlement shall

ensure that at all times the list includes at least [15] individuals.

5. Each Party shall propose at least [seven] individuals to serve as arbitrators. The Parties shall also

select at least [five] individuals who are not nationals of either Party to act as chairperson of the

tribunals. In case one party wishes to appoint more than [seven] individuals, the other Party may

propose the same number of additional arbitrators and the Parties may agree to increase the number of

chairpersons accordingly.]

6. All arbitrators appointed pursuant to this Section shall have [EU: specialised] knowledge [EU:

expertise or experience] of [EU: international law, in particular] public international law [JP: , such as

/ including] [EU: and] international investment law. [EU: They shall be independent, serve in their

individual capacities and not take instructions from any organisation or government with regard to

matters related to the dispute, or is affiliated with the government of any Party or any disputing party,

and shall comply with Annex II [Code of Conduct]. Arbitrators who serve on the list established

pursuant to paragraph 5 shall not, for that reason alone, be deemed to be affiliated with the

government of any Party.]

7. If a disputing party considers that an arbitrator does not meet the requirements [EU: set out in

paragraph 6], it shall send a notice of its intent to challenge the arbitrator within 15 days after:

a) the appointment of the arbitrator has been notified to the challenging party; or,

b) the disputing party became aware of the facts giving rise to the alleged failure to meet such

requirements.

8. The notice of an intention to challenge shall be promptly communicated to the other disputing

party, to the arbitrator or arbitrators, as applicable, and to the Secretary General of ICSID. The notice

of challenge shall state the reasons for the challenge.

9. When an arbitrator has been challenged by a disputing party, the disputing parties may agree to the

challenge, in which case the disputing parties may request the challenged arbitrator to resign. The

arbitrator may also, after the challenge, elect to resign. In neither case does this imply acceptance of

the validity of the grounds for the challenge.



10. If, within 15 days from the date of the notice of challenge, the challenged arbitrator has elected not

to resign, the Secretary General of ICSID shall, after hearing the disputing parties and after providing

the arbitrator an opportunity to submit any observations, issue a decision within 45 days of receipt of

the notice of challenge and forthwith notify the disputing parties and other arbitrators, as applicable.

11. Unless the disputing parties agree otherwise, the arbitration shall be held in a country that is a

party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at

New York, June 10, 1958 (hereinafter referred to in this Article as “the New York Convention”).

EU proposal 14th

round:

SUB-SECTION 4: INVESTMENT COURT SYSTEM

Article 8

Tribunal of First Instance (Tribunal)

1. A Tribunal of First Instance ('Tribunal') is hereby established to hear claims submitted pursuant to

Article 5.

2. The […] Committee shall, upon the entry into force of this Agreement, appoint fifteen Judges to

the Tribunal. Five of the Judges shall be nationals of a Member State of the European Union, five

shall be nationals of Japan and five shall be nationals of third countries.

3. The […] Committee may decide to increase or to decrease the number of the Judges by multiples

of three. Additional appointments shall be made on the same basis as provided for in paragraph 2.

4. The Judges shall possess the qualifications required in their respective countries for appointment to

judicial office, or be jurists of recognised competence. They shall have demonstrated expertise in

public international law. It is desirable that they have expertise in particular, in international

investment law, international trade law and the resolution of disputes arising under international

investment or international trade agreements.

5. The Judges appointed pursuant to this Section shall be appointed for a six-year term, renewable

once. However, the terms of seven of the fifteen persons appointed immediately after the entry into

force of the Agreement, to be determined by lot, shall extend to nine years. Vacancies shall be filled

as they arise. A person appointed to replace a person whose term of office has not expired shall hold

office for the remainder of the predecessor's term.

6. The Tribunal shall hear cases in divisions consisting of three Judges, of whom one shall be a

national of a Member State of the European Union, one a national of Japan and one a national of a

third country. The division shall be chaired by the Judge who is a national of a third country.

7. Within 90 days of the submission of a claim pursuant to Article 6, the President of the Tribunal

shall appoint the Judges composing the division of the Tribunal hearing the case on a rotation basis,

ensuring that the composition of the divisions is random and unpredictable, while giving equal

opportunity to all Judges to serve.

8. The President and Vice-President of the Tribunal shall be responsible for organisational issues and

will be appointed for a two-year term and shall be drawn by lot from among the Judges who are

nationals of third countries. They shall serve on the basis of a rotation drawn by lot by the Chair of

the [...] Committee. The Vice-President shall replace the President when the President is unavailable.



9. Notwithstanding paragraph 6, the disputing parties may agree that a case be heard by a sole Judge

who is a national of a third country, to be selected by the President of the Tribunal. The respondent

shall give sympathetic consideration to such a request from the claimant, in particular where the

claimant is a small or medium-sized enterprise or the compensation or damages claimed are

relatively low. Such a request should be made at the same time as the filing of the claim pursuant to

Article 6.

10. The Tribunal shall draw up its own working procedures.

11. The Judges shall be available at all times and on short notice, and shall stay abreast of dispute

settlement activities under this Agreement.

12. In order to ensure their availability, the Judges shall be paid a monthly retainer fee to be fixed by

decision of the […] Committee. [Note: the retainer fee suggested by the EU would be around 1/3rd

of the retainer fee for WTO Appellate Body members (i.e. around € 2,000 per month)]. The President of the Tribunal and, where applicable, the Vice-President, shall receive a fee equivalent to the fee determined pursuant to Article 8 (12) for each day worked in fulfilling the functions of President of the Tribunal pursuant to this Section.

13. The retainer fee shall be paid equally by both Parties into an account managed by the Secretariat

of [ICSID/the Permanent Court of Arbitration]. In the event that one Party fails to pay the retainer fee

the other Party may elect to pay. Any such arrears will remain payable, with appropriate interest.

14. Unless the [...] Committee adopts a decision pursuant to paragraph 15, the amount of the other

fees and expenses of the Judges on a division of the Investment Tribunal shall be those determined

pursuant to Regulation 14(1) of the Administrative and Financial Regulations of the ICSID

Convention in force on the date of the submission of the claim and allocated by the Tribunal among

the disputing parties in accordance with Article 12(4).

15. Upon a decision by the […] Committee, the retainer fee and other fees and expenses may be

permanently transformed into a regular salary. In such an event, the Judges shall serve on a full-time

basis and the […] Committee shall fix their remuneration and related organisational matters. In that

event, the Judges shall not be permitted to engage in any occupation, whether gainful or not, unless

exemption is exceptionally granted by the President of the Tribunal.

16. The Secretariat of [ICSID/the Permanent Court of Arbitration] shall act as Secretariat for the

Tribunal and provide it with appropriate support. The expenses for such support shall be met by the

Parties to the Agreement equally.

Article 8

Appeal Tribunal 1. A permanent Appeal Tribunal is hereby established to hear appeals from the awards issued by the

Tribunal.

2. The Appeal Tribunal shall be composed of six Members, of whom two shall be nationals of a

Member State of the European Union, two shall be nationals of Japan and two shall be nationals of

third countries.

3. The […] Committee, shall, upon the entry into force of this Agreement, appoint the members of

the Appeal Tribunal. For this purpose, each Party shall propose three candidates, two of which may

be nationals of that Party and one shall be a non-national, for the […] Committee to thereafter jointly

appoint the Members.



4. The Committee may agree to increase the number of the Members of the Appeal Tribunal by

multiples of three. Additional appointments shall be made on the same basis as provided for in

paragraph 3.

5. The Appeal Tribunal Members shall be appointed for a six-year term, renewable once. However,

the terms of three of the six persons appointed immediately after the entry into force of the

agreement, to be determined by lot, shall extend to nine years. Vacancies shall be filled as they arise.

A person appointed to replace a person whose term of office has not expired shall hold office for the

remainder of the predecessor's term.

6. The Appeal Tribunal shall have a President and Vice-President responsible for organisational

issues, who shall be selected by lot for a two-year term and shall be selected from among the

Members who are nationals of third countries. They shall serve on the basis of a rotation drawn by lot

by the Chair of the [...] Committee. The Vice-President shall replace the President when the President

is unavailable.

7. The Members of the Appeal Tribunal shall possess the qualifications required in their respective

countries for appointment to the highest judicial offices, or be jurists of recognised competence. They

shall have demonstrated expertise in public international law. It is desirable that they have expertise

in international investment law, international trade law and the resolution of disputes arising under

international investment or international trade agreements.

8. The Appeal Tribunal shall hear appeals in divisions consisting of three Members, of whom one

shall be a national of a Member State of the European Union, one a national of Japan and one a

national of a third country. The division shall be chaired by the Member who is a national of a third

country.

9. The composition of the division hearing each appeal shall be established in each case by the

President of the Appeal Tribunal on a rotation basis, ensuring that the composition of each division is

random and unpredictable, while giving equal opportunity to all Members to serve.

10. The Appeal Tribunal shall draw up its own working procedures.

11. All persons serving on the Appeal Tribunal shall be available at all times and on short notice and

shall stay abreast of other dispute settlement activities under this agreement.

12. The Members of the Appeal Tribunal shall be paid a monthly retainer fee and receive a fee for

each day worked as a Member, to be determined by decision of the […] Committee. [Note: the

retainer and daily fee suggested by the EU would be around the same as for WTO Appeal Tribunal

members (i.e. a retainer fee of around € 7,000 per month)]. The President of the Appeal Tribunal and,

where applicable, the Vice-President, shall receive a fee for each day worked in fulfilling the

functions of President of the Appeal Tribunal pursuant to this Section.

13. The remuneration of the Members shall be paid equally by both Parties into an account managed

by the Secretariat of [ICSID/the Permanent Court of Arbitration]. In the event that one Party fails to

pay the retainer fee the other Party may elect to pay. Any such arrears will remain payable, with

appropriate interest

14. Upon a decision by the […] Committee, the retainer fee and the fees for days worked may be

permanently transformed into a regular salary. In such an event, the Members of the Appeal Tribunal

shall serve on a full-time basis and the […] Committee shall fix their remuneration and related

organisational matters. In that event, the Members shall not be permitted to engage in any



occupation, whether gainful or not, unless exemption is exceptionally granted by the President of the

Appeal Tribunal.

15. The Secretariat [ICSID/the Permanent Court of Arbitration] shall act as Secretariat for the Appeal

Tribunal and provide it with appropriate support. The expenses for such support shall be met by the

Parties to the Agreement equally.

Article 8

Ethics

1. The Judges of the Tribunal and the Members of the Appeal Tribunal shall be chosen from persons

whose independence is beyond doubt. They shall not be affiliated with any government.2

They shall not take instructions from any government or organisation with regard to matters related to the dispute. They shall not participate in the consideration of any disputes that would create a direct or indirect conflict of interest. In so doing they shall comply with Annex II (Code of Conduct). In addition, upon appointment, they shall refrain from acting as counsel or as party-appointed expert or witness in any pending or new investment protection dispute under this or any other agreement or domestic law.

2. If a disputing party considers that a Judge or a Member has conflict of interest, it shall send a

notice of challenge to the appointment to the President of the Tribunal or to the President of the

Appeal Tribunal, respectively. The notice of challenge shall be sent within 15 days of the date on

which the composition of the division of the Tribunal or of the Appeal Tribunal has been

communicated to the disputing party, or within 15 days of the date on which the relevant facts came

to its knowledge, if they could not have reasonably been known at the time of composition of the

division. The notice of challenge shall state the grounds for the challenge.

3. If, within 15 days from the date of the notice of challenge, the challenged Judge or Member has

elected not to resign from that division, the President of the Tribunal or the President of the Appeal

Tribunal, respectively, shall, after hearing the disputing parties and after providing the Judge or the

Member an opportunity to submit any observations, issue a decision within 45 days of receipt of the

notice of challenge and forthwith notify the disputing parties and other Judges or Members of the

division.

4. Challenges against the appointment to a division of the President of the Tribunal shall be decided

by the President of the Appeal Tribunal and vice-versa.

5. Upon a reasoned recommendation from the President of the Appeal Tribunal, the Parties, by

decision of the […] Committee, may decide to remove a Judge from the Tribunal or a Member from

the Appeal Tribunal where his behaviour is inconsistent with the obligations set out in paragraph 1

and incompatible with his continued membership of the Tribunal or Appeal Tribunal. If the

behaviour in question is alleged to be that of the President of the Appeal Tribunal then the President

of the Tribunal of First Instance shall submit the reasoned recommendation. Articles 8(2) and 8 bis

(3) shall apply mutatis mutandis for filling vacancies that may arise pursuant to this paragraph.

Article 8

Multilateral Dispute Settlement Mechanisms

Upon the entry into force between the Parties of an international agreement providing for a

2 For greater certainty, this does not imply that persons who are employed by a government or receive an

income from the government, but who are otherwise independent of the government, are ineligible.



[EU: SUB-SECTION 5: CONDUCT OF PROCEEDINGS]

Article 9

Applicable law and rules of Interpretation

[EU: 1. The Tribunal shall determine whether the treatment subject to the claim is inconsistent with

any of the provisions referred to in Article 1(1) alleged by the claimant.]

When rendering its decision, [EU: the Tribunal] [JP: a tribunal] shall apply this [Chapter] and other

provisions of this Agreement as applicable, and other rules and principles of international law

applicable between the Parties.

2. [EU: The Tribunal] [JP: a tribunal] shall interpret the relevant provisions of this Agreement in

accordance with customary rules of interpretation of public international law, as codified in the

Vienna Convention on the Law of Treaties. For greater certainty, the tribunal may, where relevant,

take into account generally and internationally accepted principles of public or administrative law in

interpreting this Agreement.

[EU: 3. For greater certainty, pursuant to paragraph 1, the domestic law of the Parties shall not be part

of the applicable law. Where the Tribunal is required to ascertain the meaning of a provision of the

domestic law of one of the Parties as a matter of fact, it shall follow the prevailing interpretation of

that provision made by the courts or authorities of that Party.

4. For greater certainty, the meaning given to the relevant domestic law made by the Tribunal shall

not be binding upon the courts or the authorities of either Party. The Tribunal shall not have

jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement,

under the domestic law of the disputing Party.]

5. [Where serious concerns arise as regards matters of interpretation [EU: which may affect

investment], the [Joint Committee] may adopt decisions interpreting a provision of [EU: this

agreement] [JP: this Chapter]]. Any such interpretation shall be binding on [EU: the Tribunal and the

Appeal Tribunal] [JP: a tribunal] hearing a claim submitted in accordance with Article 5 [EU: The

[institutional body] may decide that an interpretation shall have binding effect from a specific date]

[JP: where the measure on which the claim is based occurred after the date on which the interpretation

was adopted by the Committee].

Article 10

Claims Manifestly without Legal Merit

1. The respondent may, no later than 30 days after the constitution of the [EU: division of the

Tribunal] [JP: tribunal] pursuant to Article 8, and in any event before the first session of the [EU:

division of the Tribunal] [JP: tribunal], [EU: or 30 days after the respondent became aware of the facts

on which the objection is based], file an objection that a claim is manifestly without legal merit.

multilateral investment tribunal and/or a multilateral appellate mechanism applicable to disputes

under this Agreement, the relevant parts of this section shall cease to apply. The [] Committee may

adopt a decision specifying any necessary transitional arrangements.



2. The respondent shall specify as precisely as possible the basis for the objection.

3. The Tribunal, after giving the disputing parties the opportunity to present their observations on the

objection, shall, [EU: at the first meeting of the division of the Tribunal or promptly thereafter, issue a

decision or provisional award on the objection, stating the grounds therefor. In the event that the

objection is received after the first meeting of the division of the Tribunal, the] Tribunal shall issue

such decision or award as soon as possible, and no later than [120] days after the objection was filed.

[In doing so, the Tribunal shall assume the alleged facts to be true, and may also consider any relevant

facts not in dispute.]

4. The decision of [EU: the Tribunal] [JP: a tribunal] shall be without prejudice to the right of a

disputing party to object, [pursuant to Article 10bis (Claims unfounded as a matter of law)] or in the

course of the proceeding, to the legal merits of a claim and without prejudice to the Tribunal’s

authority to address other objections as a preliminary question.

EU: Article 10bis

Claims Unfounded as a Matter of Law

1. Without prejudice to [EU: the Tribunal’s] [JP: a tribunal’s] authority to address other

objections as a preliminary question or to a respondent’s right to raise any such objections at any

appropriate time, the Tribunal shall address and decide as a preliminary question any objection by the

respondent that, as a matter of law, a claim, or any part thereof, submitted under this section is not a

claim for which an award in favour of the claimant may be made under Article 12 (Provisional

Award), even if the facts alleged were assumed to be true. The Tribunal may also consider any

relevant facts not in dispute.

2. An objection under paragraph 1 shall be submitted to the Tribunal as soon as possible after

the [EU: division of the Tribunal] [JP: the tribunal] is constituted, and in no event later than the date

the Tribunal fixes for the respondent to submit its counter-memorial or statement of defence or, in the

case of an amendment to the [claim], the date the Tribunal fixes for the respondent to submit its

response to the amendment. An objection may not be submitted under paragraph 1 as long as

proceedings under Article 10 (Claims manifestly without legal merit) are pending, unless the Tribunal

grants leave to file an objection under this article, after having taken due account of the circumstances

of the case.

3. On receipt of an objection under paragraph 1, and unless it considers the objection

manifestly unfounded, the Tribunal shall suspend any proceedings on the merits, establish a schedule

for considering the objection consistent with any schedule it has established for considering any other

preliminary question, and issue a decision or [EU: provisional] award on the objection, stating the

grounds therefore.

Article 11

Transparency

1. The UNCITRAL Rules on Transparency in treaty-based Investor-State Arbitration (the

“UNCITRAL Transparency Rules”) shall apply to investment disputes [EU: under this Section, with

the following additional obligations] [JP: subject to paragraphs 2 to [4]].

2. The [EU: request for consultations under Article 2, the] notice of intent to submit a claim to

investment dispute settlement [EU: and the determination of the respondent] under Article 4 [EU: ,



the agreement to mediate under Article 3, the notice of challenge and the decision on challenge under

Article 8 ter and the request for consolidation under Article 17 and all documents submitted to and

issued by the Appeal Tribunal] shall be included in the list of documents referred to in Article 3(1) of

the UNCITRAL Transparency Rules.

[EU: 3. Exhibits shall be included in the list of documents mentioned in Article 3(2) of the

UNCITRAL Transparency Rules.]

4. Notwithstanding Article 2 of the UNCITRAL Transparency Rules, the [JP: respondent] [EU:

European Union or Japan as the case may be] shall make available to the public in a timely manner

[EU: prior to the constitution of the division of the Tribunal], relevant documents pursuant to

paragraph 2, subject to [JP: Article 7 of the UNCITRAL Transparency Rules] [EU: the redaction of

confidential or protected information]. Such documents may be made publicly available by

communication to the repository referred to in the UNCITRAL Transparency Rules.

[EU: 5. A disputing party may disclose to other persons in connection with proceedings, including

witnesses and experts, such unredacted documents as it considers necessary in the course of

proceedings under this Section. However, the disputing party shall ensure that those persons protect

the confidential or protected information in those documents.]

3 For greater certainty, the term confidential or protected information shall be understood as defined in and

determined pursuant to Article 7 of the UNCITRAL Transparency Rules.

EU proposal 14th

round:

[EU: Article 11 bis

The non-disputing Party to the Agreement

1. The respondent shall, within 30 days after receipt or promptly after any dispute concerning

confidential or protected information has been resolved,3

deliver to the non-disputing Party:

(a) a request for consultations referred to in Article 2, a notice of intent to submit a claim to dispute

settlement and the determination of the respondent referred to in Article 4, a claim referred to in

Article 5 and any other documents that are appended to such documents;

(b) on request:

a. pleadings, memorials, briefs, requests and other submissions made to the Tribunal by a disputing

party;

b. written submissions made to the Tribunal by a third person; c. minutes or transcripts of hearings of the Tribunal, where available; and

d. orders, awards and decisions of the Tribunal.

(c) on request and at the cost of the non-disputing Party, all or part of the evidence that has been

tendered to the Tribunal.

2. The non-disputing Party has the right to attend a hearing held under this Section.



3. The Tribunal shall accept or, after consultation with the disputes parties, may invite written or oral

submissions on issues relating to the interpretation of this Agreement from the non-disputing Party.

The Tribunal shall ensure that the disputing parties are given a reasonable opportunity to present their

observations on any submission by the non-disputing Party.

Article 11 ter

Intervention by third parties

1. The Tribunal shall permit any natural or legal person which can establish a direct and present

interest in the result of the dispute (the intervener) to intervene as a third party. The intervention shall

be limited to supporting, in whole or in part, the award sought by one of the disputing parties.

2. An application to intervene must be lodged within 90 days of the publication of submission of the

claim pursuant to Article 5. The Tribunal shall rule on the application within 90 days, after giving the

disputing parties an opportunity to submit their observations.

3. If the application to intervene is granted, the intervener shall receive a copy of every procedural

document served on the disputing parties, save, where applicable, confidential documents. The

intervener may submit a statement in intervention within a time period set by the Tribunal after the

communication of the procedural documents. The disputing parties shall have an opportunity to reply

to the statement in intervention. The intervener shall be permitted to attend the hearings held under

this Chapter and to make an oral statement.

4. In the event of an appeal, a natural or legal person who has intervened before the Tribunal shall be

entitled to intervene before the Appeal Tribunal. Paragraph 3 shall apply mutatis mutandis.

5. The right of intervention conferred by this Article is without prejudice to the possibility for the

Tribunal to accept amicus curiae briefs from third parties in accordance with Article 11.

6. For greater certainty, the fact that a natural or legal person is a creditor of the claimant shall not be

considered as sufficient in itself to establish that it has a direct and present interest in result of the

dispute.

Article 11

Expert Reports

The Tribunal, at the request of a disputing party or, after consulting the disputing parties, on its own

initiative, may appoint one or more experts to report to it in writing on any factual issue concerning

environmental, health, safety, or other matters raised by a disputing party in a proceeding.

Article 12

Final Award

Note: At the 14th

round, EU submitted a revised text proposal for Article 12 (Provisional Award)

which is intended to replace the current Article 12 (Final Award).

1. Where the arbitral tribunal finds that there has been a breach by the [EU: respondent] [JP: disputing

Party] of any obligation [EU: of the Investment Protection Chapter] [JPN: under this Agreement], the

arbitral tribunal may, on the basis of a request from the [EU: claimant] [JP: disputing investor] and

after hearing the disputing parties, award only one or both of the following remedies:

JP’s proposal on 11th round



(a) monetary damages and any applicable interest; and

(b) restitution of property [which has been expropriated, nationalized or requisitioned], in which case

the award shall provide that the [EU: respondent] [JP: disputing Party] may pay monetary damages

[EU: representing the fair market value of the property before the [expropriation, nationalization or

requisition] became known] [determined in accordance with [Section on investment protection]] and

any applicable interest, in lieu of restitution.

2. [Monetary damages] [The remedies awarded in accordance with paragraph 1] shall not be greater

than the loss suffered by the investor [or, as applicable, its locally established company,] [as a result

of the breach of the relevant provisions of the Agreement], reduced by any prior damages or

compensation already provided by the [EU: Party concerned] [JP: disputing Party].

3. The tribunal shall specify these amounts in its award.

[EU: 3bis. Where the claim is submitted on behalf of a locally established company, the arbitral award

shall be made to the locally established company.]

[JP: 3bis. Where the claim is submitted on behalf of [a locally established company,

(a) an award of monetary damages and any applicable interest shall provide that the sum be paid to

the [locally established company];

(b) an award of restitution of property shall provide that restitution be made to the [locally established

company]; and

(c) the award shall provide that it is made without prejudice to any right that any person may have

under applicable domestic law in the relief provided in the award.]

4. The arbitral tribunal shall order that the costs of arbitration be borne by the unsuccessful disputing

party. In exceptional circumstances, a tribunal may apportion costs between the disputing parties if it

determines that apportionment is appropriate in the circumstance of the case. Other reasonable costs,

including costs of legal representation and assistance, shall be borne by the unsuccessful disputing

party, unless the tribunal determines that such apportionment is unreasonable in the circumstances of

the case. Where only parts of the claims have been successful the costs shall be adjusted, [JP: taking

into account the totality of the circumstances of the case including] [EU: proportionately, to] the

number or extent of the successful parts of the claims.

Article 12: Final Award

1. Where the arbitral tribunal finds that there has been a breach by the [respondent/disputing Party] of any obligation [EU: of the Investment Protection Chapter/JPN: under this Chapter or an investment agreement], the arbitral tribunal may, on the basis of a request from the [claimant/disputing investor] and after hearing the disputing parties, award only one or both of the following remedies:

Article.12

4. The arbitral tribunal shall order that the costs of arbitration be borne by the unsuccessful disputingparty. In exceptional circumstances, a tribunal may apportion costs between the disputing parties if itdetermines that apportionment is appropriate in the circumstance of the case. Other reasonable costs,including costs of legal representation and assistance, shall be borne by the unsuccessful disputingparty, unless the tribunal determines that such apportionment is unreasonable in the circumstances ofthe case. Where only parts of the claims have been successful the costs shall be adjusted, [JP: basedon the number and the extent of the successful parts of the claims. If the tribunal determines that such



EU proposal 14th

round:

Article 12

Provisional award

1. Where the Tribunal concludes that the treatment in dispute is inconsistent with the provisions

referred to in Article 1(1) alleged by the claimant, the Tribunal may, on the basis of a request from the

claimant, and after hearing the disputing parties, award only:

(a) monetary damages and any applicable interest;

(b) restitution of property, in which case the award shall provide that the respondent may pay

monetary damages representing the fair market value of the property at the time immediately before

the expropriation or impending expropriation became known, whichever is earlier, and any applicable

interest in lieu of restitution, determined in a manner consistent with Article X of Chapter Y

(Expropriation).

Where the claim was submitted on behalf of a locally-established company, any award under this

paragraph shall provide that:

(a) any monetary damages and interest shall be paid to the locally established company;

(b) any restitution shall be made to the locally established company.

The Tribunal may not order the repeal, cessation or modification of the treatment concerned.

2. Monetary damages shall not be greater than the loss suffered by the claimant or, as applicable, the

locally established company, as a result of the breach of the relevant provisions of the agreement,

reduced by any prior damages or compensation already provided by the Party concerned.

3. The Tribunal may not award punitive damages.

4. The Tribunal shall order that the costs of the proceedings be borne by the unsuccessful disputing

party. In exceptional circumstances, the Tribunal may apportion costs between the disputing parties if

it determines that apportionment is appropriate in the circumstance of the case. Other reasonable

costs, including costs of legal representation and assistance, shall be borne by the unsuccessful

disputing party, unless the Tribunal determines that such apportionment is unreasonable in the

circumstances of the case. Where only some parts of the claims have been successful the costs shall be

adjusted, proportionately, to the number or extent of the successful parts of the claims. The Appeal

Tribunal shall deal with costs in accordance with this article.

5. No later than one year after the entry into force of this Agreement, the […] Committee shall adopt

supplemental rules on fees for the purpose of determining the maximum amount of costs of legal

representation and assistance that may be borne by an unsuccessful claimant which is a natural person

or a small or medium-sized enterprise. Such supplemental rules shall, in particular, take into account

the financial resources of such claimants and the amounts of compensation sought.

6. The Tribunal shall issue a provisional award within 18 months of the date of submission of the

claim. If that deadline cannot be respected, the Tribunal shall adopt a decision to that effect, which

adjustment is unreasonable in the circumstances of the case, it may also take into account othercircumstances in adjusting the cost]., [JP: taking into account the totality of the circumstances of thecase including] [EU: proportionately, to] the number or extent of the successful parts of the claims.



Article 13

Indemnification or Other Compensation

In proceedings under this Section, the respondent may not assert, and the Tribunal shall not accept, as

a valid defence, counterclaim, right of set-off or otherwise, that the claimant or the locally established

company has received or will receive indemnification or other compensation pursuant to an insurance

or guarantee contract in respect of all or part of the damages sought in an investment dispute under

this [Agreement/Chapter/Section].

EU proposal 14th

round:

Article 13 bis

Interim decisions

The Tribunal may order an interim measure of protection to preserve the rights of a disputing party or

to ensure that the Tribunal's jurisdiction is made fully effective, including an order to preserve

evidence in the possession or control of a disputing party or to protect the Tribunal's jurisdiction. The

Tribunal may not order the seizure of assets nor may it prevent the application of the treatment alleged

to constitute a breach.

Article 13 ter

Discontinuance

If, following the submission of a claim under this section, the claimant fails to take any steps in the

proceeding during 180 consecutive days or such periods as the disputing parties may agree, the

claimant shall be deemed to have withdrawn its claim and to have discontinued the proceedings. The

Tribunal shall, at the request of the respondent, and after notice to the disputing parties, take note of

the discontinuance in an order. After such an order has been rendered the authority of the Tribunal

shall lapse. The claimant may not subsequently submit a claim on the same matter.

Article 13

Security for Costs

1. For greater certainty, upon request, the Tribunal may order the claimant to post security for all or a

part of the costs if there are reasonable grounds to believe that the claimant risks not being able to

honour a possible decision on costs issued against it.

2. If the security for costs is not posted in full within 30 days after the Tribunal’s order or within any

other time period set by the Tribunal, the Tribunal shall so inform the disputing parties. The Tribunal

will specify the reasons for such delay. A provisional award shall become final if 90 days have elapsed

after it has been issued and neither disputing party has appealed the award to the Appeal Tribunal.

7. Either disputing party may appeal the provisional award, pursuant to Article 14. In such an event, if

the Appeal Tribunal modifies or reverses the provisional award of the Tribunal then the Tribunal shall,

after hearing the disputing parties if appropriate, revise its provisional award to reflect the findings

and conclusions of the Appeal Tribunal. The provisional award will become final 90 days after its

issuance. The Tribunal shall be bound by the findings made by the Appeal Tribunal. The Tribunal

shall seek to issue its revised award within 90 days of receiving the report of the Appeal Tribunal.



Article 14

Arbitration costs

Note: Under the revised text proposal submitted by the EU at the 14th

round, costs are addressed

within Article 8.

The fees and expenses of the arbitrators appointed pursuant to Article 8 shall be those determined

pursuant to Regulation 14(1) of the Administrative and Financial Regulations of the ICSID

Convention in force on the date of submission of the claim to arbitration.

EU proposal 14th

round:

Article 14

Appeal procedure

1. Either disputing party may appeal before the Appeal Tribunal a provisional award, within 90 days

of its issuance. The grounds for appeal are:

(a) that the Tribunal has erred in the interpretation or application of the applicable law;

(b) that the Tribunal has manifestly erred in the appreciation of the facts, including the appreciation of

relevant domestic law; or,

(c) those provided for in Article 52 of the ICSID Convention, in so far as they are not covered by (a)

and (b).

2. If the Appeal Tribunal rejects the appeal, the provisional award shall become final. The Appeal

Tribunal may also dismiss the appeal on an expedited basis where it is clear that the appeal is

manifestly unfounded, in which case the provisional award shall become final. If the appeal is well

founded, the Appeal Tribunal shall modify or reverse the legal findings and conclusions in the

provisional award in whole or part. Its decision shall specify precisely how it has modified or reversed

the relevant findings and conclusions of the Tribunal.

3. As a general rule, the appeal proceedings shall not exceed 180 days from the date a party to the

dispute formally notifies its decision to appeal to the date the Appeal Tribunal issues its decision.

When the Appeal Tribunal considers that it cannot issue its decision within 180 days, it shall inform

the disputing parties in writing of the reasons for the delay together with an estimate of the period

within which it will issue its decision. In no case should the proceedings exceed 270 days.

4. A disputing party lodging an appeal shall provide security for the costs of appeal and for any

amount awarded against it in the provisional award.

5. The provisions of Articles 7bis [Third-Party Funding], 11 [Transparency], 13 bis [Interim

decisions], 13 ter [Discontinuance], 11 bis [The non-disputing party to the proceeding] shall apply

mutatis mutandis in respect of the appeal procedure.

may order the suspension or termination of the proceedings.



Article 15

Enforcement of awards

Note: At the 14th

round, EU submitted a revised text proposal for Article 15 (Enforcement of awards)

which is intended to replace the current Article 15 (Enforcement of awards).

1. An award rendered by an arbitral tribunal established pursuant to Article 8 shall be [final and]

binding between the disputing parties.

2. Recognition and enforcement of an award shall be governed by the applicable laws and regulations,

as well as applicable international agreements such as, where applicable, the ICSID Convention and

the New York Convention.

3. A claim that is submitted to arbitration under this Section shall be deemed to arise out of a

commercial relationship or transaction for the purposes of Article 1 of the New York Convention on

the Recognition and Enforcement of Foreign Arbitral Awards.

4. A disputing party may not seek enforcement of a final award until:

(a) in the case of a final award made under the ICSID Convention:

i. 120 days have elapsed from the date the award was rendered and no disputing party has requested

revision or annulment of the award, or

ii. where enforcement of the award has been stayed, revision or annulment proceedings have been

completed; and

(b) in the case of a final award under the ICSID Additional Facility Rules the UNCITRAL Arbitration

Rules, or any other rules applicable pursuant to Article 5 (Submission of a Claim to Arbitration):

i. 90 days have elapsed from the date the award was rendered and no disputing party has commenced

a proceeding to revise, set aside or annul the award, or

ii. where enforcement of the award has been stayed, a court has dismissed or allowed an application to

revise set aside or annul the award and there is no further appeal.



EU proposal for new Article 15, 14th

round:

Article 15

Enforcement of awards

1. Final awards issued pursuant to this Section by the Tribunal shall be binding between the disputing

parties and shall not be subject to appeal, review, set aside, annulment or any other remedy.

2. Each Party shall recognize an award rendered pursuant to this Agreement as binding and enforce

the pecuniary obligation within its territory as if it were a final judgement of a court in that Party.

3. Execution of the award shall be governed by the laws concerning the execution of judgments in

force where such execution is sought.

4. For greater certainty, Article X (Rights and obligations of natural or juridical persons under this

Agreement, Chapter X) shall not prevent the recognition, execution and enforcement of awards

rendered pursuant to this Section.

5. For the purposes of Article 1 of the New York Convention on the Recognition and Enforcement of

Foreign Arbitral Awards, final awards issued pursuant to this Section shall be deemed to be arbitral

awards and to relate to claims arising out of a commercial relationship or transaction.

6. For greater certainty and subject to paragraph 1, where a claim has been submitted to dispute

settlement pursuant to Article 5(1) (a), a final award issued pursuant to this Section shall qualify as an

award under Section 6 of the Convention on the Settlement of Investment Disputes between States

and Nationals of Other States of 18 March 1965 (ICSID).

Article 16

Role of the Parties to the Agreement

1. No Party shall give diplomatic protection, or bring an international claim, in respect of [EU: a] [JP:

an investment] dispute submitted pursuant to Article 5 [EU: or in respect of treatment covered by this

Section and subject to mediation pursuant to Article 3], unless the other Party has failed to abide by

and comply with the award rendered in such dispute. Diplomatic protection, for the purposes of this

paragraph, shall not include informal diplomatic exchanges for the sole purpose of facilitating a

settlement of the [JP: investment] dispute. This shall not exclude the possibility of dispute settlement

under [chapter on state-to-state dispute settlement] in respect of a measure of general application even

if that measure is alleged to have violated the agreement as regards a specific investment in respect of

which a dispute has been initiated pursuant to Article 5 and is without prejudice to Article 12.

Article 17

Consolidation

Note: EU will provide proposals for adjustments to Article 17 (Consolidation) at a later stage,

building on the new EU proposal for an Investment Court System submitted by the EU at the 14th

round.

1. Where two or more claims that have been submitted separately to arbitration under Article 5

(Submission of Claim to Arbitration) 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 in accordance with:

(a) the agreement of all the disputing parties sought to be covered by the order, in which case the

disputing parties shall submit a joint request in accordance with paragraph 3; or

(b) paragraphs 2 through 14 provided that only one respondent is sought to be covered by the

order.

2. A disputing party seeking a consolidation order shall first deliver a notice to the other disputing

parties sought to be covered by the order. This notice shall specify:

(a) the names and addresses of all the disputing parties sought to be covered by the order;

(b) the claims, or parts thereof, sought to be covered by the order; and

(c) the grounds for the order sought.

[EU: The disputing parties shall endeavour to agree on the consolidation order sought, the applicable

arbitration rules and the composition of the consolidating tribunal.]

3. Where the disputing parties referred to in paragraph 2 have not reached an agreement on

consolidation within thirty days of the notice, a disputing party may make a request for a

consolidation order under paragraph 7. The request shall be delivered, in writing, to the Secretary-

General of ICSID and all the disputing parties sought to be covered by the order. Such a request

shall specify:

(a) the names and addresses of all the disputing parties sought to be covered by the order;

(b) the claims, or parts thereof, sought to be covered by the order; and

(c) the grounds for the order sought.

Where the disputing parties have reached an agreement on consolidation of the claims, they shall

submit a joint request to the Secretary-General of ICSID in accordance with this paragraph.

4. Unless the Secretary-General of ICSID finds within thirty days after receiving a request under

paragraph 3 that the request is manifestly unfounded, a tribunal shall be established in accordance

with paragraphs 6 and 7.

[EU: 5. The tribunal shall conduct its proceedings in the following manner:

(a) unless all disputing parties otherwise agree, where all the claims for which a consolidation order is

sought have been submitted to arbitration under the same dispute settlement mechanism, the

consolidating tribunal shall proceed under the same dispute settlement mechanism;

(b) where the claims for which a consolidation order is sought have not been submitted to arbitration

under the same dispute settlement mechanism:

(i) the disputing parties may agree on the applicable dispute settlement mechanism available under

Article 5 (Submission of Claim to Arbitration) which shall apply to the consolidation proceedings;

or



(ii) if the disputing parties cannot agree on the same dispute settlement mechanism within thirty days

from the request made pursuant to paragraph 3, the UNCITRAL arbitration rules shall apply to the

consolidation proceedings.]

[JP: 5. The arbitration rules applicable to the proceedings under this Article shall be determined as

follows:

(a) when all of the claims for which a consolidation order is sought have been submitted to

arbitration under the same arbitration rules pursuant to Article 5 (Submission of Claim to Arbitration),

these arbitration rules shall apply;

(b) when the claims for which a consolidation order is sought have not been submitted to arbitration

under the same arbitration rules:

(i) the claimants may collectively agree on the arbitration rules available under Article

5 (Submission of Claim to Arbitration) paragraph 1 (a)(b) and (c); or

(ii) if the claimants cannot agree on the arbitration rules within 30 days of the Secretary -

General of ICSID receiving the request for consolidation, the UNCITRAL Arbitration Rules

shall apply.]

6. Unless the disputing parties sought to be covered by the order otherwise agree, a tribunal

established under this Article shall comprise three arbitrators:

(a) one arbitrator appointed by agreement of the claimants;

(b) one arbitrator appointed by the respondent; and

(c) the presiding arbitrator appointed by the Secretary-General of ICSID, provided, however, that the

presiding arbitrator shall not be a national of [either Party].

7. If, within sixty days after the Secretary-General of ICSID receives a request made under paragraph

3, the respondent fails or the claimants fail to appoint an arbitrator in accordance with paragraph 6

[EU: or the disputing parties fail to agree on the presiding arbitrator], the Secretary-General of

ICSID, on the request of any disputing party sought to be covered by the order, shall appoint the

arbitrator or arbitrators pursuant to the procedure set out in paragraph 3 of Article 8 (Constitution of

the Tribunal).

8. Where the tribunal established under this Article is satisfied that two or more claims that have been

submitted to arbitration under Article 5 (Submission of Claim to Arbitration) have a question of law

or fact in common, and arise out of the same events or circumstances, the tribunal may, in the

interest of fair and efficient resolution of the claims, including the consistency of arbitral awards,

and after hearing the disputing parties, by order:

(a) assume jurisdiction over, and hear and determine together, all or part of the claims; [EU: or]

(b) assume jurisdiction over, and hear and determine one or more of the claims, the determination of

which it believes would assist in the resolution of the others [EU:][JP:or

[(c) instruct a tribunal previously established under Article 8 (Constitution of the Tribunal) to

assume jurisdiction over, and hear and determine together, all or part of the claims, provided that

(i) that tribunal, at the request of any claimant not previously a disputing party before that tribunal,

shall be reconstituted with its original members, except that the arbitrator for the claimants shall be

appointed pursuant to paragraphs 6(a) and 7; and

(ii) that tribunal shall decide whether any prior hearing shall be repeated.]

9. Where a tribunal has been established under this Article, a claimant that has submitted a claim to

arbitration under Article 5 (Submission of Claim to Arbitration) and that has not been named in a



request made under paragraph 3 may make a written request to the tribunal that it be included in

any order made under paragraph 8. Such request shall comply with the requirements set out in

paragraph 3.

10. On application of a disputing party, the tribunal established under this Article, pending its decision

under paragraph 8, may order that the proceedings of a tribunal established under Article 8

(Constitution of the Tribunal) be stayed, unless the latter tribunal has already adjourned its

proceedings.

11. A tribunal established under Article 8 (Constitution of the Tribunal) shall cease to have

jurisdiction to decide a claim, or parts of a claim, over which a tribunal established under this

Article has assumed jurisdiction, and the proceedings of the former tribunal shall be stayed or

adjourned accordingly.

12. The award of the tribunal established under this Article in relation to claims, or parts of claims,

over which it has assumed jurisdiction, shall be binding on the tribunals established under Article 8

(Constitution of the Tribunal) in respect of these claims [, or parts thereof, once the conditions of

paragraph 4 of Article 15 (Enforcement of Awards) have been fulfilled.][EU: , except to the extent

that the award has been stayed in accordance with this Agreement, or the relevant provisions of the

dispute settlement mechanism to which the request for consolidation was submitted in accordance

with paragraph 5].

13. A claimant may withdraw its claim or part thereof subject to consolidation from arbitration under

this Article, provided that such claim or part thereof may not thereafter be resubmitted to arbitration

under Article 5 (Submission of Claim to Arbitration). [EU: If it does so no later than 15 days after

the decision of the consolidating tribunals to assume jurisdiction over its claim, its earlier

submission of the claim to that arbitration shall not prevent the claimant’s recourse to dispute

settlement other than under this Section].

14. At the request of one of the disputing parties, the tribunal established under this Article may take

such measures as it sees fit in order to preserve the confidentiality of protected information of that

disputing party vis-à-vis other disputing parties. Such measures may include allowing the

submission of redacted versions of documents containing protected information to the other

disputing parties or arrangements to hold parts of the hearing in private.

Article 18

[Institutional body]

Note: Placement, functioning and role of Committees to be revisited taking into account outcomes of

negotiations on investment and investment dispute resolution.

[EU: 1. The [Institutional body] shall examine:

(a) difficulties which may arise in the implementation of this section;

(b) possible improvements of this section, in particular in the light of experience and developments in

other international fora; and,

(c) the implementation of any mutually agreed solution as regards a dispute under this Section



pursuant to Article 2.

2. The [Institutional body] may, on agreement of the Parties, and after completion of the respective

legal requirements and procedures of the Parties, adopt decisions to:

(a) appoint the Judges to the Tribunal and the Members of the Appeal Tribunal pursuant to

Articles 8 and 8bis;

(b) adopt interpretations of the agreement pursuant to Article 9(5);

(c) adopt and amend rules supplementing the applicable dispute settlement rules and amend the

applicable rules on transparency. Such rules and amendments are binding on the Tribunal and

Appeal Tribunal.]



[EU: ANNEX I

Mediation Mechanism for investment disputes

Article 1

Objective and scope

1. The objective of the mediation mechanism is to facilitate the finding of a mutually agreed solution

through a comprehensive and expeditious procedure with the assistance of a mediator.

Section A

Procedure under the Mediation Mechanism

Article 2

Initiation of the Procedure

1. Either disputing party may request, at any time, the commencement of a mediation procedure.

Such request shall be addressed to the other party in writing.

Where the request concerns an alleged breach of the agreement by the authorities of the European Union or by the authorities of the Member States of the European Union, and no respondent has been determined pursuant to Article 4 (Notice of intent to submit a claim and determination of the Respondent), it shall be addressed to the European Union.] Where the request concerns [EU: treatment] [JP: a measure] adopted by a Member State of the European Union, and the European Union accepts the request, the response shall specify whether the European Union or the Member

State concerned will be a party to the mediation.4

[EU: 2. The party to which such request is addressed shall give sympathetic consideration to the

request and accept or reject it in writing within 10 working days of its receipt.

Article 3

Selection of the Mediator

1. If both disputing parties agree to a mediation procedure, a mediator shall be selected in accordance

with the procedure set out in Article 3 of Section X (Resolution of Investment Disputes and

Investment Court System). The disputing parties shall endeavour to agree on a mediator within 15

working days from the receipt of the reply to the request.

2. A mediator shall not be a national of either Party to the Agreement, unless the disputing parties

agree otherwise.

3. The mediator shall assist, in an impartial and transparent manner, the disputing parties in reaching a

mutually agreed solution.

4 For greater certainty, where the request concerns treatment by the European Union, the party to the mediation

shall be the European Union and any Member State concerned shall be fully associated in the mediation. Where

the request concerns exclusively treatment by a Member State, the party to the mediation shall be the Member

State concerned, unless it requests the European Union to be party.



Article 4

Rules of the Mediation Procedure

1. Within 10 working days after the appointment of the mediator, the disputing party having invoked

the mediation procedure shall present, in writing, a detailed description of the problem to the mediator

and to the other disputing party. Within 20 working days after the date of delivery of this submission,

the other disputing may provide, in writing, its comments to the description of the problem. Either

disputing party may include in its description or comments any information that it deems relevant.

2. The mediator may decide on the most appropriate way of bringing clarity to the measure

concerned. In particular, the mediator may organise meetings between the disputing parties, consult

the disputing parties jointly or individually, seek the assistance of or consult with relevant experts and

stakeholders and provide any additional support requested by the disputing parties. However, before

seeking the assistance of or consulting with relevant experts and stakeholders, the mediator shall

consult with the disputing parties.

3. The mediator may offer advice and propose a solution for the consideration of the disputing parties

which may accept or reject the proposed solution or may agree on a different solution. However, the

mediator shall not advise or give comments on the consistency of the measure at issue with this

Agreement.

4. The procedure shall take place in the territory of the Party concerned, or by mutual agreement in

any other location or by any other means.

5. The disputing parties shall endeavour to reach a mutually agreed solution within 60 days from the

appointment of the mediator. Pending a final agreement, the disputing parties may consider possible

interim solutions.

6. Mutually agreed solutions shall be made publicly available. However, the version disclosed to the

public may not contain any information that a disputing party has designated as confidential.

7. The procedure shall be terminated:

(a) by the adoption of a mutually agreed solution by the disputing parties, on the date of adoption;

(b) by a written declaration of the mediator, after consultation with the disputing parties, that further

efforts at mediation would be to no avail;

(c) by written notice of a disputing party.

Section B

Implementation

Article 5

Implementation of a Mutually Agreed Solution

1. Where a solution has been agreed, each disputing party shall take the measures necessary to

implement the mutually agreed solution within the agreed timeframe.

2. The implementing disputing party shall inform the other disputing party in writing of any steps or

measures taken to implement the mutually agreed solution.



3. On request of the disputing parties, the mediator shall issue to the disputing parties, in writing, a

draft factual report, providing a brief summary of (1) the measure at issue in these procedures; (2) the

procedures followed; and (3) any mutually agreed solution reached as the final outcome of these

procedures, including possible interim solutions. The mediator shall provide the disputing parties 15

working days to comment on the draft report. After considering the comments of the disputing parties

submitted within the period, the mediator shall submit, in writing, a final factual report to the

disputing parties within 15 working days. The factual report shall not include any interpretation of this

Agreement.

Section C

General Provisions

Article 6

Rela t ionsh ip to Dispute

Settlement

1. The procedure under this mediation mechanism is not intended to serve as a basis for dispute

settlement procedures under this Agreement or another agreement. A disputing party shall not rely on

or introduce as evidence in such dispute settlement procedures, nor shall any adjudicatory body take

into consideration:

(a) positions taken by a disputing party in the course of the mediation procedure;

(b) the fact that a disputing party has indicated its willingness to accept a solution to the measure

subject to mediation; or

(c) advice given or proposals made by the mediator.

2. The mediation mechanism is without prejudice to the rights and obligations of the Parties and the

disputing parties under Section X (Resolution of Investment Disputes and Investment Court System)

and Chapter Y (State to state Dispute Settlement).

3. Unless the disputing parties agree otherwise, and without prejudice to Article 4(6), all steps of the

procedure, including any advice or proposed solution, shall be confidential. However, any disputing

party may disclose to the public that mediation is taking place.

Article 7

Time Limits

Any time limit referred to in this Annex may be modified by mutual agreement between the disputing

parties.

Article 8

Costs

1. Each disputing party shall bear its own expenses derived from the participation in the mediation

procedure.

2. The disputing parties shall share jointly and equally the expenses derived from organisational

matters, including the remuneration and expenses of the mediator. Remuneration of the mediator shall

be in accordance with that foreseen for Judges of the Tribunal under Article 8 of Section X

(Resolution of Investment Disputes and Investment Court System)].



[EU: ANNEX II

Code of Conduct for Members of the Tribunal, the Appeal Tribunal and Mediators

Article 1

Definitions

Article 1: Definitions

1. In this Code of Conduct:

"member" means a Judge of the Tribunal or a Member of the Appeal Tribunal established pursuant to

Section X (Resolution of Investment Disputes and Investment Court System);

"mediator" means a person who conducts mediation in accordance with Article 3 of Section X

(Resolution of Investment Disputes and Investment Court System);

"candidate" means an individual who is under consideration for selection as a member of the Tribunal

or Appeal Tribunal;

"assistant" means a person who, under the terms of appointment of a member, assists the member in

his research or supports him in his duties;

"staff", in respect of a member, means persons under the direction and control of the member, other

than assistants;

"party" means a disputing party under Section X (Resolution of Investment Disputes and Investment

Court System).

Article 2

Responsibilities to the process

Every candidate and member shall avoid impropriety and the appearance of impropriety, shall be

independent and impartial, shall avoid direct and indirect conflicts of interest and shall observe high

standards of conduct so that the integrity and impartiality of the dispute settlement mechanism is

preserved. Former members must comply with the obligations established in Articles 6 and 7 of this

Code of Conduct.

Article 3

Disclosure obligations

1. Prior to their appointment candidates shall disclose any past and present interest, relationship or

matter that is likely to affect his or her independence or impartiality or that might reasonably create an

appearance of impropriety or bias in the proceeding. To this end, a candidate shall make all

reasonable efforts to become aware of any such interests, relationships or matters.

2. Members shall communicate matters concerning actual or potential violations of this Code of

Conduct in writing, to the disputing parties and Parties.



3. Members shall at all times continue to make all efforts to become aware of any interests,

relationships or matters referred to in paragraph 1 of this Article. Members shall disclose such

interests, relationships or matters by informing the disputing parties.

Article 4

Duties of Members

1. A member shall perform his or her duties thoroughly and expeditiously throughout the course of the

proceeding and shall do so with fairness and diligence.

2. A member shall consider only those issues raised in the proceeding and which are necessary for a

decision or award and shall not delegate this duty to any other person.

3. A member shall take all appropriate steps to ensure that his or her assistant and staff are aware of,

and comply with, Articles 2, 3, 5 and 7 of this Code of Conduct.

4. A member shall not engage in ex parte contacts concerning the proceeding.

Article 5

Independence and Impartiality of Members

1. A member must be independent and impartial and avoid creating an appearance of bias or

impropriety and shall not be influenced by self-interest, outside pressure, political considerations,

and public clamour, loyalty to a Party or disputing party or fear of criticism.

2. A member shall not, directly or indirectly, incur any obligation or accept any benefit that would in

any way interfere or appear to interfere, with the proper performance of his or her duties.

3. A member may not use his or her position on the arbitral tribunal to advance any personal or

private interests and shall avoid actions that may create the impression that others are in a special

position to influence him or her.

4. A member may not allow financial, business, professional, family or social relationships or

responsibilities to influence his or her conduct or judgment.

5. A member must avoid entering into any relationship or acquiring any financial interest that is likely

to affect him or her impartiality or that might reasonably create an appearance of impropriety or bias.

Article 6

Obligations of former members

All former members must avoid actions that may create the appearance that they were biased in

carrying out their duties or derived advantage from the decisions or awards of the Tribunal or Appeal

Tribunal.

Article 7

Confidentiality

1. No member or former member shall at any time disclose or use any non-public information

concerning a proceeding or acquired during a proceeding, except for the purposes of the proceeding,

and shall not, in any case, disclose or use any such information to gain personal

advantage or advantage for others or to adversely affect the interest of others.

2. No member shall disclose a decision or award or parts thereof prior to its publication in

accordance with the transparency provisions of Section X (Resolution of Investment

Disputes and Investment Court System).

3. No member or former member shall at any time disclose the deliberations of the Tribunal or

Appeal Tribunal, or any member's views, whatever they may be.

Article 8 Expenses

Each member shall keep a record and render a final account of the time devoted to the

procedure and of the expenses incurred, as well as the time and expenses of their assistant and

staff.

Article 9 Mediators

The rules set out in this Code of Conduct as applying to members or former members shall

apply, mutatis mutandis, to mediators

Limited

EU-Japan FTA

Without prejudice

Text as of 30 September 2016

TRADE AND SUSTAINABLE DEVELOPMENT

Article [1]

Context and objectives

1. The Parties recognise the importance of promoting the development of international trade

in a way that contributes to sustainable development, for the welfare of present and future

generations, taking into consideration the Agenda 21 on Environment and Development of

1992, the International Labour Organisation (ILO) Declaration on Fundamental Principles

and Rights at Work of 1998, the Johannesburg Plan of Implementation on Sustainable

Development of 2002, the Ministerial declaration of the UN Economic and Social Council on

Full Employment and Decent Work of 2006, the ILO Declaration on Social Justice for a Fair

Globalisation of 2008, the Outcome Document of the UN Conference on Sustainable

Development of 2012 entitled "The Future We Want" and the 2030 Agenda for Sustainable

Development.

2. The Parties recognise the contribution of this Agreement to promoting sustainable

development of which economic development, social development and environmental

protection are mutually reinforcing components. The Parties further recognise that the

purpose of this Chapter is to strengthen the trade relations and cooperation between the

Parties in ways that promote sustainable development, and is not to harmonise the

environment or labour standards of the Parties.

Article [2]

Right to regulate and levels of protection

1. Recognising the right of each Party to determine its sustainable development policies and

priorities, to establish its own levels of domestic environmental and labour protection, and to

adopt or modify accordingly its relevant laws and regulations, consistently with its

commitment to the internationally recognised standards and agreements to which the Party is

a party, each Party shall strive to ensure that its laws, regulations and related policies provide

high levels of environmental and labour protection and shall strive to continue to improve

those laws and regulations and their underlying levels of protection.

2. The Parties shall not encourage trade and investment by relaxing or lowering the level of

protection provided by their respective domestic environmental or labour laws and

regulations. To this effect, the Parties shall not waive or otherwise derogate from such laws

and regulations or fail to effectively enforce them through a sustained or recurring course of

action or inaction, in a manner affecting trade or investment between the Parties.

3. The Parties shall not use their respective environmental or labour laws and regulations in

a manner which would constitute a means of arbitrary or unjustifiable discrimination against

the other Party, or a disguised restriction on international trade.

Article [3]

International labour standards and conventions

1. The Parties recognise full and productive employment and decent work for all as key

elements to respond to economic, labour and social challenges. The Parties also recognise the

importance of promoting the development of international trade in a way that is conducive to

full and productive employment and decent work for all. In this context, the Parties shall have

exchanges of views and information on trade-related labour issues of mutual interest through

the mechanism of Article 13 of this Chapter, and as appropriate in other for a.

2. The Parties reaffirm their obligations deriving from ILO membership as members of the

ILO.] The Parties reaffirm their respective commitments with regard to the ILO Declaration

on Fundamental Principles and Rights at Work adopted by the International Labour

Conference at its 86th Session in 1998 and its Follow-up. Accordingly, the Parties shall

respect, promote and realise in their laws and practices and in their whole [territories][Areas]

the internationally recognised principles concerning fundamental rights at work, which are:

a) The freedom of association and the effective recognition of the right to collective

bargaining;

b) The elimination of all forms of forced or compulsory labour;

c) The effective abolition of child labour; and

d) The elimination of discrimination in respect of employment and occupation.

3. Accordingly, each Party shall make continued and sustained efforts to pursue [0316 EU:

towards] ratification [EU alt: , in accordance with domestic rules/procedures/ to the extent

that it has not yet done so], of the fundamental ILO Conventions. The Parties will also

consider the ratification of other conventions that are classified as up-to-date by the ILO.

[(30092016) (JP and EU to revert) Each Party shall make [EU: continued and sustained]

efforts on its own initiative to pursue ratification of the fundamental ILO Conventions and

other ILO Conventions which each Party considers appropriate to ratify.]

[JP alt: Each Party shall make [continued and sustained] efforts on its own initiative to pursue

ratification of the ILO Conventions, including the fundamental ILO Conventions [, as

appropriate] [Alt: , which each Party considers appropriate to ratify].

[30062016 JP: Each party shall make efforts on its own initiative to study the possibility of

ratification of the fundamental ILO conventions as well as of other ILO conventions.]

[EU alt 2: Each Party shall make continued and sustained efforts on its own initiative to

pursue/towards ratification of the fundamental ILO Conventions, as well as of other ILO

Conventions [JP: ,] which each Party considers appropriate to ratify.]

[EU alt 3: Each Party shall make continued and sustained efforts on its own initiative to

pursue/towards ratification of the fundamental ILO Conventions as well as of other ILO

Conventions which each Party considers appropriate to ratify.]

4. The Parties shall exchange information on their respective situation as regards the

ratification of ILO Conventions and Protocols, including the fundamental ILO Conventions.

5. Each Party reaffirms its commitment to effectively implement in its laws and practices

in its whole [territory] [Area] ILO Conventions ratified by Japan and the Member States of

the European Union respectively.

6. The Parties recognise that the violation of the fundamental principles and rights at

work referred to in paragraph 2 of this Article cannot be invoked or otherwise used as a

legitimate comparative advantage, and that labour standards should not be used for

protectionist trade purposes.

Article [4]

Multilateral environmental agreements

1. The Parties stress the importance of multilateral environmental agreements, in particular

those to which the Parties are parties, as a means of multilateral environmental governance for

the international community to address global or regional environmental challenges. The

Parties also stress the importance of achieving mutual supportiveness between trade and

environment. In this context, the Parties shall exchange views and information on trade-

related environmental matters of mutual interest through the mechanism of Article 13 (Sub-

Committee) of this Chapter, and as appropriate in other fora.

2. Each Party reaffirms its commitment to effectively implement in its laws and related

practices the multilateral environmental agreements to which the Party is a party.

3. Each Party shall exchange information with the other Party on its respective situation and

advancements regarding ratification, acceptance or approval of, or accession to, multilateral

environmental agreements, which each Party considers appropriate to be bound by, as well as

regarding amendments to, and implementation of, such agreements.

4. The Parties reaffirm their commitment to achieving the ultimate objective of the United

Nations Framework Convention on Climate Change (UNFCCC). The Parties commit to work

together to take actions to address climate change towards achieving the purpose of the Paris

Agreement adopted by the Conference of the Parties to the UNFCCC at its 21st session.

5. Nothing in this Agreement prevents a Party from adopting or maintaining measures to

implement the multilateral environmental agreements to which it is a party provided that such

measures are not applied in a manner that would constitute a means of arbitrary or

unjustifiable discrimination between the Parties or a disguised restriction on trade.

Article [5]

Trade and investment favouring sustainable development

The Parties recognize the importance of enhancing the contribution of trade and investment to

the goal of sustainable development in its economic, social and environmental dimensions.

Accordingly:

(a) [The parties recognise the importance of [EU: the] principles concerning fundamental

rights at work, decent work for all [EU: , ] and fundamental values of freedom, human

dignity, social justice, security and non-discrimination for sustainable economic and

social development and efficiency, as well as the importance of seeking better

integration thereof into trade and investment policies] (JP to revert)

(b) The Parties shall strive to facilitate and promote trade and investment in

environmental goods and services, in a manner consistent with other provisions of this

agreement.

(c) The Parties shall strive to facilitate trade and investment in goods and services of

particular relevance for climate change mitigation, such as sustainable renewable

energy and energy efficient goods and services, in a manner consistent with other

provisions of this agreement.

(d) The Parties shall strive to promote trade and investment in goods that contribute to

enhanced social conditions and environmentally sound practices, including goods that

are the subject of public labelling schemes. The Parties recognise the contribution to

sustainability of other voluntary initiatives, including private ones.

(e) The Parties shall encourage corporate social responsibility and exchange views and

information thereon through the mechanism of Article 13 of this Chapter, and as

appropriate in other fora. In this regard, the Parties recognise the importance of the

relevant internationally recognised principles and guidelines, including the OECD

Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of

Principles concerning Multinational Enterprises and Social Policy.

Article [6]

Biological diversity

1. Each Party recognises the importance of ensuring the conservation and sustainable use

of biological diversity in accordance with relevant international agreements to which the Party

is a party, notably the Convention on Biological Diversity (CBD) and its protocols and the

Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

2. To this end, each Party shall:

(a) encourage the use of products which were obtained through a sustainable use of

natural resources and which contribute to the conservation and sustainable use of

biodiversity, including through labelling schemes, taking into account the importance

of trade in such products.

(b) implement effective measures to combat illegal trade in endangered species of wild

fauna and flora as covered by CITES, and as appropriate in other endangered species,

such as monitoring and enforcement measures, and awareness-raising actions.

(c) implement, as appropriate, the decisions which were adopted under the international

agreements referred to in paragraph 1, including through laws, strategies, plans and

programmes.

(d) exchange information and consult with the other Party at bilateral and global level on

the matters of this Article, including trade in wildlife and natural resource-based

products, the valuation, mapping and assessment of ecosystems and their services, and

the access to genetic resources and the fair and equitable sharing of benefits arising

from their utilisation.

Article [7]

Sustainable management of forests and trade in timber and timber products

1. The Parties recognise the importance of ensuring the conservation and sustainable

management of forests.

2. To this end, the Parties shall:

(a) encourage conservation and sustainable management of forests, and trade in timber

and timber products harvested in accordance with the laws and regulations of the

country of harvest.

(b) contribute to combating illegal logging and related trade, including as appropriate with

respect to the trade with third countries.

(c) exchange information and share experiences at bilateral and global levels with a view

to promoting the conservation and sustainable management of forests and trade in

legally harvested timber and timber products, as well as to combating illegal logging.

Article [8]

Trade and sustainable use of fisheries resources and sustainable aquaculture

1. The Parties recognise the importance of ensuring the conservation and sustainable use

and management of fisheries resources and of safeguarding marine ecosystems as well as the

promotion of responsible and sustainable aquaculture.

2. To this end, the Parties shall:

(a) comply with the UN Convention on the Law of the Sea of 1982, the FAO Agreement

to Promote Compliance with International Conservation and

(b) Management Measures by Fishing Vessels on the High Seas, and the UN Agreement

on the Conservation and Management of Straddling Fish Stocks and Highly Migratory

Fish Stocks, take measures to achieve the objectives and principles of the FAO Code

of Conduct for Responsible Fisheries of 1995, encourage the implementation of port

state measures both at global and regional levels, and, as appropriate, encourage third

parties to ratify, accept, approve, or accede to, relevant international instruments to

which the Parties are parties;

(c) promote conservation and sustainable use of fisheries resources through appropriate

international organisations, agencies and bodies, including Regional Fisheries

Management Organisations (RFMOs) in which both Parties are participating. This

shall include, where applicable, effective monitoring, control and enforcement of the

RFMOs’ resolutions, recommendations or measures, and implementation of their Catch Documentation or Certification Schemes; (c) adopt and implement effective

tools for combating illegal, unreported and unregulated (IUU) fishing, including

through legal instruments, control, monitoring and enforcement, and capacity

management measures, where appropriate. The Parties recognise that voluntary

sharing of information on IUU fishing will enhance the effectiveness of these tools in

the fight against IUU fishing. The Parties also underline the crucial role of members

with major fisheries markets at RFMO level to leverage a sustainable use of fisheries

resources.

(d) promote the development of sustainable and responsible aquaculture, taking into

account its economic, social and environmental aspects.

Article [9]

Scientific information

When preparing and implementing measures aimed at protecting the environment or labour

conditions that may affect trade or investment, the Parties shall take account of available

scientific and technical information, and where appropriate, relevant international standards,

guidelines or recommendations, and the precautionary approach.

Article [10]

Transparency

[Each Party, in accordance with its domestic laws and Chapter [X] [Transparency], shall

ensure that any measures aimed at protecting the environment and labour conditions that may

affect trade or investment are developed, introduced and implemented in a transparent

manner, with due notice and public consultation [JP delete: , and with appropriate and timely

communication to and consultation of non-state actors].]

[(20160929) Each Party shall ensure that any measure of general application pursuing the

objectives of this chapter are [administered (check against Transparency Chapter)] in a

transparent manner, in accordance with Chapter [X] [Transparency], including with due

notice and public consultation, including of non-state actors.] (EU and JP to revert)

(Notes: Pending until the finalization of transparency chapter.)

Article [11]

Review of sustainability impacts

The Parties recognise the importance of reviewing, monitoring and assessing, jointly or

individually, the impact of the implementation of this Agreement on sustainable development

through their respective processes and institutions, as well as those set up under this

Agreement.

Article [12]

Cooperation

Recognising the importance of cooperation on trade and investment related aspects of

environmental and labour policies in order to achieve the objectives of this Agreement, the

Parties may, inter alia:

(a) cooperate at bilateral or multilateral level in the field of environmental protection and

labour, including through appropriate international organisations, agencies or bodies

in which the Parties participate [EU: , and strive to support each other’s full participation in, or membership to MEAs]. [EU (20160929): , including/for instance

by striving to support each other’s full participation in, or membership to MEAs // The parties highlight the importance of striving to support the other Party’s efforts to achieve full participation in, or membership to MEAs].

(b) cooperate on evaluating the mutual impact between trade and environment and labour

as well as on ways to enhance, prevent or mitigate such impacts taking into account

the monitoring and assessment carried out by the parties, for instance sustainability

impact assessments as far as the EU is concerned.

(c) cooperate to facilitate and promote trade and investment in environmental goods and

services, in a manner consistent with other provisions of this Agreement, including

through the exchange of information.

(d) cooperate on labelling schemes, including through the exchange of information on

eco-labels, as well as other measures and initiatives that contribute to sustainability,

including as appropriate fair and ethical trade schemes.

(e) cooperate to promote corporate social responsibility, notably through the exchange of

information and best practices, including on adherence, implementation, follow-up,

and dissemination of internationally agreed guidelines and principles.

(f) cooperate on trade-related aspects of the International Labour Organisation’s agenda of decent work for all.

(g) cooperate on trade-related aspects of multilateral environmental agreements, including

through the exchange of views and information on the implementation of CITES and

technical and customs cooperation.

(h) cooperate on trade-related aspects of the international climate change regime,

including means to promote low-carbon technologies, other climate-friendly

technologies and energy efficiency.

(i) cooperate to promote the conservation and sustainable use of biological diversity,

including combatting illegal trade in endangered species of wild fauna and flora.

(j) cooperate to promote the conservation and sustainable management of forests and

trade in legally harvested timber and timber products, as well as to combat illegal

logging.

(k) cooperate, bilaterally or through appropriate international organisations, agencies or

bodies in which both Parties are participating, to promote sustainable fishing and

aquaculture practices and trade in legally obtained fisheries resources, as well as to

combat IUU fishing.

Article [13]

Sub-Committee [Specialised Committee] on Trade and Sustainable Development

1. Each Party shall designate an office within its administration that shall serve as Contact

Point with the other Party for purposes of implementing this chapter.

2. For the purposes of the effective implementation and operation of this Chapter, the

Parties hereby establish a Sub[Specialised]-Committee on Trade and Sustainable

Development (hereafter referred to in this Article as “the Sub[Specialised]-Committee”). 3. The functions of the Sub[Specialised]-Committee shall be:

(a) reviewing and monitoring the implementation and operation of this Chapter;

(b) considering any other matter related to this Chapter as the Parties may agree;

(c) interacting with civil society on the implementation of this chapter;

(d) reporting the findings of the Sub[Specialised]Committee to the Joint Committee;

(e) carrying out other tasks assigned by the Joint Committee;

(f) seeking/finding solutions to resolve differences between the Parties as to the

implementation of this Chapter

[30062016 JP: footnote for paragraph 3(c): For the purpose of this Chapter, the Parties

agree that “civil society” means [EU: independent] economic, social and environmental

stakeholders, including employers' and workers' organisations].

4. The Sub[Specialised] Committee shall be co-chaired, at an appropriate level, by

representatives of the Parties.

5. The Sub[JP: Specialised]-Committee shall [JP: hold meetings] at such time and venues,

as may be agreed by the Parties [30062016 JP: , or whenever requested by a Party for

consultations with the other Party pursuant to paragraph 1 of article 16.] within the first year

after the present Agreements enters into force, and thereafter as necessary. It shall establish its

own rules of procedures]

[30062016 EU: The Sub[Specialised]-Committee shall meet within the first year after the

present Agreement enters into force, and thereafter at such time and venues as may be agreed

by the Parties, at the request of either Party, or whenever requested by a Party for

consultations with the other Party pursuant to paragraph 1 of article 16. It shall establish its

own rules of procedures. It shall establish its own rules of procedures].

[20160929 JP: The Sub[Specialised]-Committee shall be convened within one year of the date

of entry into force of this Agreement. Thereafter, the Sub[Specialised]-Committee shall be

convened at such venues and times as may be agreed by the Parties or at the request of either

Party, including for consultations with the other Party pursuant to paragraph 1 of article 16].

[20160929 EU: The Sub[Specialised]-Committee shall be convened within one year of the

date of entry into force of this Agreement. Thereafter, the Sub[Specialised]-Committee shall

be convened at such venues and times as may be agreed by the Parties or at the request of

either Party, including for consultations with the other Party pursuant to Article XX

[Government Consultations], or as otherwise foreseen under in Article XX on Specialised

Committees of Chapter XX on Institutional, General and Final Provisions. It shall establish its

own rules of procedures].

(EU: check state of play on institutional provisions).

Article [14]

Domestic advisory group

1. Each Party shall convene meetings of its own new or existing domestic advisory group

or groups on economic, social and environmental issues related to this Chapter and consult

with the group or groups which work(s) in accordance with the Party’s laws, regulations and practices.

2. Each Party is responsible for ensuring a balanced representation of independent

economic, social and environmental stakeholders, including employers' and workers'

organisations, in such advisory group or groups.

3. Such group or groups of each Party may meet on its/their own initiative and express

its/their opinions on the implementation of this Chapter independently of the Party and submit

such opinions to the Party.

Article [15]

Joint Dialogue with civil society

1. The Parties shall convene a Joint Dialogue with civil society organisations in their

territories/areas, including members of their domestic advisory groups, as referred to in

Article 14, to conduct a dialogue on this Chapter.

2. The Parties shall promote a balanced representation of relevant interests, including

independent representative organisations of economic, environmental and social interests, as

well as other relevant stakeholders as appropriate. The participants in the Joint Dialogue may

express their opinion on the implementation of this Chapter independently of either Party.

3. The Joint Civil Society Dialogue Forum shall be convened once a year unless otherwise

agreed by the Parties. The Parties shall agree on the operation of the Joint Civil Society

Dialogue Forum no later than one year after the entry into force of the present Agreement.

[JP: 3. [EU delete: The Joint Dialogue shall be convened at such time and venues as may be

agreed by the Parties.][EU: The Joint Civil Society Dialogue shall be convened once a year

unless otherwise agreed by the Parties.] The Parties shall agree (on the operation of the joint

dialogue) no later than one year after the entry into force of this Agreement.]

[30062016 JP: 3. The Joint Dialogue shall be convened within one year of the date of entry

into force of this agreement. Thereafter, the Joint Dialogue shall be convened at such venues

and times as may be agreed upon.]

[20160929 JP: 3. The Joint Dialogue shall be convened and the Parties shall agree on the

operation of the Joint Dialogue within one year after the date of entry into force of this

Agreement. Thereafter, the Joint Dialogue shall be convened at such venues and times as may

be agreed by the Parties.] (JP to revert)

[20160929 EU: 3. The Parties shall convene the first Joint Dialogue and agree on its operation

within one year after the date of entry into force of this Agreement. Thereafter, the Joint

Dialogue shall be facilitated once a year unless otherwise agreed by the Parties.]

[20160929 EU alt: 3. The Parties shall convene the first Joint Dialogue and agree on its

operation within one year after the date of entry into force of this Agreement. Thereafter, the

Joint Dialogue meets once a year unless it decides otherwise.]

4. The Parties shall present an update on the implementation of this Chapter to the Joint

Civil Society Dialogue Forum. The views and opinions of the Joint Civil Society Dialogue

Forum shall be submitted to the SubCommittee on Trade and Sustainable Development and

be publicly available.

[JP: 4. [EU: The Parties present an update on the implementation of this Chapter to the Joint

Civil Society Dialogue.] [0316 EU alt: The Parties inform the Joint Civil Society Dialogue on

the status of the implementation of this Chapter. (JP will revert)] The views and opinions of

the Joint Dialogue may be [EU: shall be] submitted to the SubCommittee on Trade and

Sustainable Development and be made publicly available. (EU will revert).]

[20160929 4. The Parties will provide the Joint Dialogue with information on the

implementation of this Chapter. The views and opinions of the Joint Dialogue may be

submitted to the Sub-Committee on Trade and Sustainable Development and be made

publicly available.] (EU and JP will revert)

Article [16]

Government Consultations

[(30092016) JP:

1. A Party may request in writing [to hold the Specialised Committee (JP to revert)] for

consultations with the other Party concerning any matter on interpretation and application of

this Chapter. The Party requesting consultations shall set out the reasons for the request,

including identification of the matter and an indication of its factual basis and its legal basis,

specifying the relevant provisions of this Chapter.

2. When a Party requests consultation pursuant to paragraph 1, the other Party shall reply

promptly and enter into consultations with a view to reaching a mutually satisfactory

resolution of the matter.

3. If no solution is reached through the consultation referred to in paragraphs 1 and 2, the

Specialised-Committee [EU: shall be convened promptly upon request of a Party to consider

the matter and] may seek advice from experts [EU: including from relevant international

organisations and bodies], as may be required by both Parties on an ad hoc basis. The [JP:

Parties] [EU: Committee] shall discuss appropriate measures to be implemented taking into

account the advice provided by the experts.

4. During consultations, each Party shall provide sufficient information to enable a full

examination of the matter in question. The Parties shall take into account the activities of

relevant international organisations [JP: in which both parties are participating for facilitating

the consultations.] (EU to send additional proposal).

4. [30062016 EU Alt:

During consultations, each Party shall provide sufficient information to enable a full

examination of the considered matter. The Parties shall take into account the activities of the

ILO or relevant multilateral environmental organisations or bodies so as to promote greater

cooperation and coherence between the work of the Parties and these organisations. Where

relevant, the Parties may seek advice from these organisations or bodies.]

4. The Parties shall ensure that the solutions reached through the consultations under

paragraphs 1, 2 and 3, will be [EU: jointly made] publicly available [JP: in an agreed

manner], unless otherwise agreed by the Parties. ]

(EU and JP to revert on the proposal for the whole article)

Article [17]

Panel of Experts

1. A Party may, 90 days after the delivery of a request for consultations under Article

[16.2], request, by delivering a written request to the contact point of the other Party, that a

Panel of Experts be convened to examine a matter that has not been satisfactorily addressed

through government consultations.

2. The provisions set out in Sub-Section [1] [Arbitration Procedure] and [3] [Common

Provisions], as well as in Article 24 [Time limits] of Section 3 [Dispute Settlement

Procedures] of Chapter [Y] [Dispute Settlement], as well as the Rules of Procedure in Annex I

and the Code of Conduct in Annex II to Chapter [Y] [Dispute Settlement], shall apply, except

as otherwise provided in the present Article.

3. The Sub-Committee on Trade and Sustainable Development shall, at its first meeting

after the entry into force of the present Agreement, establish a list of at least 15 individuals

who are willing and able to serve as experts in Panel procedures. Each Party shall propose at

least five individuals to serve as experts. The Parties shall also select at least five individuals

who are not nationals of either Party and who shall act as chairperson to the Panel of experts.

The SubCommittee on Trade and Sustainable Development will ensure that the list is always

maintained at this level.

4. The list referred to in paragraph 3 shall comprise individuals with specialised knowledge

of or expertise in labour or environmental law, issues addressed in this Chapter, or the

resolution of disputes arising under international agreements. They shall be independent,

serve in their individual capacities and not take instructions from any organisation or

government with regard to issues related to the matter at stake, or be affiliated with the

government of any Party, and shall comply with Annex II [Code of Conduct] to Chapter [Y]

[Dispute Settlement].

5. For matters arising under this Chapter, should the Panel of Experts be composed

according to the procedures set out in Art. [6.3] [Establishment of the arbitration panel] of

Chapter [Y] [Dispute Settlement], the experts shall be selected from the list referred to in

Article [17.3] [Panel of Experts] of the present Chapter, in accordance with the relevant

provisions of Sub-Section [1] [Arbitration Procedure] of Section [3] [Dispute Settlement

Procedures] of Chapter [Y] [Dispute Settlement].

6. Unless the Parties agree otherwise within five days from the date of establishment of the

Panel of Experts, the terms of reference of the Panel of Experts shall be: "to examine, in the

light of the relevant provisions of the Trade and Sustainable Development Chapter, the matter

referred to in the request for the establishment of the Panel of Experts, and to issue a report, in

accordance with Article [17.8] [Panel of Experts] of the present Chapter, making

recommendations for the solution of the matter".

7. In matters related to the respect of multilateral agreements as set out in Articles 3 and 4 of

the present Chapter, the Panel of Experts should seek information and advice from the ILO or

MEA bodies.

8. The Panel of Experts shall issue its report to the Parties, in accordance with the timeline

set out in Article 21 [Decisions and Rulings of the Arbitration Panel] of Chapter [Y] [Dispute

Settlement]. This report shall set out the findings of facts, the applicability of the relevant

provisions and the basic rationale behind any findings and recommendations that it makes.

The Parties shall make this report publicly available within 15 days of its issuance.

9. The Parties shall discuss appropriate measures to be implemented taking into account the

Panel's report and recommendations. The Party concerned shall inform its domestic advisory

group(s) and the other Party of its decisions on any actions or measures to be implemented no

later than three months after the report has been made publicly available. The follow-up to the

report and the recommendations of the Panel of Experts shall be monitored by the Sub-

Committee on Trade and Sustainable Development. The domestic advisory groups and the

Joint Civil Society Dialogue Forum may submit observations to the Sub-Committee on Trade

and Sustainable Development in this regard.

Limited

Limited Without prejudice

Text after December 2016 intersession

Animal Welfare

1. The Parties will cooperate for the mutual benefits on animal welfare matters with focus

on farmed animals with a view to improving understanding on their respective laws and

regulations.

2. To this purpose the Parties may adopt a working plan [EU: defining], with mutual

consent, the categories and priorities of animals to be dealt with under this Article, and

establish an animal welfare technical working group to exchange information, expertise and

experiences in the field of animal welfare and to explore the possibility of promoting further

cooperation.

Limited

Limited

Without Prejudice

1


Consolidated Text


CHAPTER [V] SECTION [VI]

Financial Services

Article [1]

Scope

[This Section shall apply to measures by a Party affecting trade in financial services.]

1. For the purpose of Article 1(4) j of Chapter I "services supplied in the exercise of

governmental authority" means the following:

(a) activities conducted by a central bank or monetary authority or by any other public

entity in pursuit of monetary or exchange rate policies;

(b) activities forming part of a statutory system of social security or public retirement

plans; and

(c) other activities conducted by a public entity for the account or with the guarantee or

using the financial resources of the Party or its public entities.

2. For the purposes of Article 1(4) j of Chapter I, if a Party allows any of the activities

referred to in paragraph 1(b) or (c) to be conducted by its financial service suppliers in

competition with a public entity or a financial service supplier, “services” shall include such activities.

3. Article 1(4) k of Chapter I shall not apply to services covered by this Section.

4. The provisions of this article shall not be construed as limiting the rights of investors and

investments under [Chapter II Section 2 [Investment Protection]] of this Title.

Article [2]

Definitions

For the purposes of this [Chapter and of Chapters II Section 1, III and IV of this Title]

(a) “financial service” means any service of a financial nature offered by a financial service supplier of a Party. Financial services include all insurance and insurance-

related services, and all banking and other financial services (excluding insurance).

Limited

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2

Financial services include the following activities:

[(i)] [A.] Insurance and insurance-related services

[(A)] [1.] direct insurance (including co-insurance):

[(aa)] [(a)] life;

[(bb)] [(b)] non-life;

[(B)] [2.] reinsurance and retrocession;

[(C)] [3.] insurance intermediation, such as brokerage and agency; and

[(D)] [4.] services auxiliary to insurance, such as consultancy, actuarial, risk

assessment and claim settlement services;

[(ii)] [B.] Banking and other financial services (excluding insurance)

[(A)] [1.] acceptance of deposits and other repayable funds from the public;

[(B)] [2.] lending of all types, including consumer credit, mortgage credit, factoring

and financing of commercial transaction;

[(C)] [3.] financial leasing;

[(D)] [4.] all payment and money transmission services, including credit, charge

and debit cards, travellers cheques, and bankers drafts;

[(E)] [5.] guarantees and commitments;

[(F)] [6.] trading for own account or for account of customers, whether on an

exchange, in an over- the-counter market or otherwise, the following:

[(aa)] [(a)] money market instruments (including cheques, bills and certificates

of deposits);

[(bb)] [(b)] foreign exchange;

[(cc)] [(c)] derivative products including, but not limited to, futures and options;

[(dd)] [(d)] exchange rate and interest rate instruments, including products such

as swaps, forward rate agreements;

[(ee)] [(e)] transferable securities;

[(ff)] [(f)] other negotiable instruments and financial assets, including bullion;

[(G)] [7.] participation in issues of all kinds of securities, including underwriting

and placement as agent, whether publicly or privately, and provision of services

related to such issues;

[(H)] [8.] money broking;

[(I)] [9.] asset management, such as cash or portfolio management, all forms of

collective investment management, pension fund management, custodial,

depository and trust services;

[(J)] [10.] settlement and clearing services for financial assets, including securities,

derivative products and other negotiable instruments;

[(K)] [11.] provision and transfer of financial information, and financial data

processing and related software by suppliers of other financial services; and

[(L)] [12.] advisory, intermediation and other auxiliary financial services on all the

activities listed in subparagraphs [(A)] [(1)] through [(K)] [(11)], including credit

reference and analysis, investment and portfolio research and advice, advice on

acquisitions and on corporate restructuring and strategy;

Limited

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3

(b) “financial service supplier” means any natural or juridical person of a Party wishing to supply or supplying financial services but the term “financial service supplier” does not include a public entity;

(c) “new financial service” means a service of a financial nature, including services

related to existing and new products or the manner in which a product is delivered,

that is not supplied by any financial service supplier in the [JP: Area] [EU: Territory]

of a Party but which is supplied in the [JP: Area] [EU: Territory] of the other Party.

(d) “public entity” means: [(i)] a government, a central bank or a monetary authority of a Party, or an entity

owned or controlled by a Party, that is principally engaged in carrying out

governmental functions or activities for governmental purposes, not including an

entity principally engaged in supplying financial services on commercial terms; or

[(ii)] a private entity, performing functions normally performed by a central bank or a

monetary authority, when exercising those functions;

(e) “self-regulatory organisation” means a non-governmental body, including a securities

or futures exchange or market, clearing agency, or other organisation or association,

that exercises regulatory or supervisory authority over financial service suppliers by

delegation from a Party.

Article [3]

Financial Services new to the [JP: Area] [EU: Territory] of a Party

A Party shall permit financial service suppliers of the other Party established in the area of the

former Party to offer in the [JP: Area] [EU: Territory] of the former Party any new financial

service.

Notwithstanding (Market Access, paragraph on juridical form) of Chapter [X] (X), a Party

may determine the juridical form through which the new financial service may be supplied

and may require authorisation for the supply of the service.

Where such authorisation is required, it may be refused for prudential reasons and not for the

only reason that the service is new to the territory/area of a Party.

Article [4]

Payment and Clearing Systems

Under terms and conditions that accord national treatment, each Party shall grant to financial

service suppliers of the other Party established in its [JP: Area] [EU: 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. This Article is not

Limited

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4

intended to confer access to the Party’s lender of last resort facilities.

Article [5]

Self-regulatory organisations

When a Party requires membership or participation in, or access to, any self-regulatory

organisation in order for financial service suppliers of the other Party to supply financial

services on an equal basis with financial service suppliers of the Party, or when the Party

provides directly or indirectly such entities, privileges or advantages in supplying financial

services, the Party shall ensure that such self-regulatory organisations observe the obligations

of Article [X] (National Treatment - Investment) with respect to financial service suppliers of

the other Party.

Article [6]

Transfers of Information and Processing of Information

New language round 17:

[1. Each Party shall allow a financial service supplier of the other Party to transfer

information in electronic or other form, into and out of its territory, for data processing where

such processing is required in the financial service supplier’s ordinary course of business. Nothing in this paragraph restricts the right of a Party to adopt or maintain measures to protect

personal data, personal privacy and the confidentiality of individual records and accounts, so

long as such measures are not used to circumvent the provisions of this Article.

2. Each Party shall adopt or maintain appropriate measures for the protection of privacy and

personal data with regard to the transfer of financial information.]

Drafting Note: JP can accept this. EU is encouraged to update its final position.

Article [7]

Effective and transparent regulation

1. Where a license is required for the supply of a financial service, a Party shall make the

requirements and procedures for such a license publicly available.

2. If a Party requires additional information from the applicant in order to process its

application, it shall notify the applicant without undue delay.

3. Each Party shall endeavour to ensure that the rules of general application adopted or

maintained by self-regulatory bodies in that Party are promptly published or otherwise made

available in such a manner as to enable interested persons to become acquainted with them.

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5

Article [8]

Prudential carve-out

1. Nothing is this Agreement shall prevent a Party from adopting or maintaining measures

for prudential reasons, including for:

(a) the protection of investors, depositors, policy-holders or persons to whom a fiduciary

duty is owed by a financial service supplier; or

(b) ensuring the integrity and stability of the Party’s financial system.

2. Where such measures do not conform with the provisions of this Agreement, they shall

not be used as a means of avoiding the Party’s obligations under this Agreement.

3. Nothing in [this Title] shall be construed to require a Party to disclose information

relating to the affairs and accounts of individual customers or any confidential or proprietary

information in the possession of public entities.

[EU: Article [9]

Supply of Insurance Services by Postal Insurance Entities

1. The disciplines set out in this section apply where a Party allows its postal insurance

entity to underwrite and supply direct insurance services to the general public. The services

covered by this paragraph do not include the supply of insurance related to the collection,

transport and delivery of letters or packages by a Party’s postal insurance entity.

2. No Party shall adopt or maintain a measure that creates conditions of competition that are

more favourable to a postal insurance entity with respect to the supply of insurance services

described in paragraph 1 as compared to a private supplier of like insurance services in its

market, including by:

(a) imposing more onerous conditions on a private supplier’s licence to supply insurance services than the conditions the Party imposes on a postal insurance entity to supply

like services; or

(b) making a distribution channel for the sale of insurance services available to a postal

insurance entity under terms and conditions more favourable than those it applies to

private suppliers of like services.

3. With respect to the supply of insurance services described in paragraph 1 by a postal

insurance entity, a Party shall apply the same regulations and enforcement activities as apply

Limited

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Without Prejudice

6

to the supply of like insurance services by private suppliers.

4. In implementing its obligations under paragraph 3, a Party shall require a postal insurance

entity that supplies insurance services described in paragraph 1 to publish an annual financial

statement with respect to the supply of such services. The statement shall provide the level of

detail required by the relevant generally accepted accounting principles and shall be subject to

auditing standards, applied in the Party’s territory with respect to publicly traded private enterprises supplying like services, or equivalent rules.

5. Paragraphs 1 to 4 do not apply to a postal insurance entity in the territory of a Party:

(a) that the Party neither owns nor controls, directly or indirectly, as long as the Party

does not maintain any advantage that modifies the conditions of competition in favour

of the postal insurance entity in the supply of insurance services as compared to a

private supplier of like insurance services in its market; or

(b) if neither the sale of direct life nor non-life insurance underwritten by the postal

insurance entity accounts for more than ten percent of total annual premium income in

the relevant segment of the Party’s market.

6. For purposes of this section, postal insurance entity means an entity that underwrites and

sells insurance to the general public and is owned or controlled, directly or indirectly, by a

postal entity of the Party.]

[EU: Article [10]

Supply of Insurance Services by Mutual Aid Cooperatives

1. No Party shall adopt or maintain measures that create conditions of competition that are

more favourable to mutual aid cooperatives with respect to the supply of insurance services as

compared to other suppliers of like insurance services in its market, including by imposing

less onerous capital or protection funding requirements.

2. A Party shall apply the same level of supervisory oversight and enforcement activities to

mutual aid cooperatives as it applies to the supply of like insurance services by other private

insurance undertakings. Where a Party's supervisory regime includes proportionality

provisions, including possible exemptions for smaller and less complex insurance

undertakings, such provisions shall apply to all insurance undertakings, irrespective of their

legal form.

3. A Party shall require mutual aid cooperatives to publish an annual financial statement

with respect to the supply of insurance services. The statement shall provide the level of detail

required by the relevant generally accepted accounting principles and shall be subject to

auditing standards, applied in the Party’s territory with respect to publicly traded private enterprises supplying like services, or equivalent rules.]

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Without Prejudice

7

***

Annex of Financial Services [Section]

Regulatory Co-operation on Financial Regulation

Article X - 1 Regulatory co-operation

1. The Parties shall work together bilaterally and in international bodies with the objective

of further strengthening global financial stability, fair and efficient markets and protection of

investors, depositors, policy-holders and persons to whom fiduciary duty is owed by a

financial services supplier (“regulatory co-operation”).

2. In their regulatory co-operation the Parties shall base themselves on the principles and

prudential standards agreed at multilateral level and follow the principles set out in Article

X-3 – (Principles of regulatory co-operation) as implemented in the framework envisaged in

Article X-5 (Framework for regulatory co-operation).

Article X - 2 Scope of regulatory co-operation

1. The regulatory co-operation shall cover the entire area of financial services [JP: except

insurance services supplied by mutual aid cooperatives], which shall also include accounting

and audit frameworks, unless the Parties specifically agree otherwise.

2. The provisions of this Chapter shall be without prejudice to the distribution and the

exercise of competences of regulatory and supervisory authorities of the Parties. The Parties

recognise that their regulatory co-operation in the area of financial services should be based

on due consideration of differences in market structures and in the range of business models

that may exist between the Parties in this area.

Article X - 3 Principles of regulatory co-operation

1. Each Party shall make its best endeavours to ensure that internationally agreed standards

for regulation and supervision in the financial services sector are implemented and applied in

its [JP: Area] [EU: Territory]. Such internationally agreed standards are, inter alia, the

standards and principles issued by the Basel Committee on Banking Supervision, the

International Association of Insurance Supervisors, the International Organization of

Securities Commissions, and the Financial Stability Board.

2. The Parties shall use their best endeavours to achieve mutual compatibility of their

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respective regulatory and supervisory frameworks for financial services in a way that supports

the objectives mentioned in Article X-1.

3. Without prejudice to its own legislative processes, each Party shall make its best

endeavours to offer the other Party an opportunity to be informed at an early stage and to

provide comments on its forthcoming regulatory initiatives in the area of financial services

that may be of relevance to that other Party.

4. The Parties shall be able, wherever possible, to rely on each other’s rules and supervision. The foregoing shall be without prejudice to each Party’s right to assess, on the basis of its own rules, in particular criteria for reliance, the regulatory and supervisory framework of the

other Party with a view to establishing reliance. For the purposes of any such assessment, a

Party shall not require that the other Party’s rules and supervision are identical to its own rules and supervision, but shall base its assessment on regulatory outcomes.

5. The Parties shall keep each other informed of how they provide for effective supervision

and enforcement of rules for implementing internationally agreed standards or any other rules,

in particular in the areas where one of the Parties relies on the regulatory and supervisory

framework of the other Party.

6. The Parties shall in the process of formulation of their planned regulatory initiatives in

the area of financial services, give reasonable consideration to the impacts of such initiatives

on market operators and the jurisdiction of the other Party.

7. Each Party shall examine a measure which has been brought to its attention by a specific

request, in writing, of the other Party and which may have an impact on the ability of market

operators to provide financial services within the [JP: Areas] [EU: territories] of the Parties,

with a view to rendering, insofar as possible, the measure mutually compatible.

8. Any Party may rescind at any time its decision to rely on the regulatory and supervisory

framework of the other Party and revert to the application and enforcement of its own rules,

where the rules of the other Party are no longer equivalent in outcome, the other Party fails to

enforce its rules effectively or there is insufficient co-operation of the other Party in the

supervision of financial institutions. The Parties shall consult with each other in an

appropriate manner prior to reverting to the application and enforcement of their own rules.

Article X - 4 Joint EU-Japan Financial Regulatory [Forum]

1. The Parties hereby establish the Joint EU-Japan Financial Regulatory [Forum].

2. The [Forum] is in charge of steering regulatory co-operation between the Parties in the

area of financial services referred to Article X-2. In particular, the [Forum] takes stock of

progress and undertakes forward planning of regulatory co-operation. The [Forum] shall

observe the principles of regulatory co-operation laid out in Article X-3 implemented in the

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framework referred to in Article X-5.

3. The [Forum] shall be composed of representatives of the European Commission and of

the Government of Japan including the Financial Services Agency mandated to deal at

technical level with financial services regulatory issues.

Without prejudice to the right of each Party to decide on the composition of its representation

in the [Forum], each Party in the [Forum] may request the other Party to invite representatives

from other financial regulatory or supervisory authorities within that other Party’s [JP: Area]

[EU: territory] with a view to contributing to the [Forum]’s discussions and preparatory work in matters related to the activity of such other financial regulatory or supervisory authorities.

The other Party should give positive consideration to such request.

4. The meetings of the [Forum] will be co-chaired by senior officials from the Financial

Services Agency of Japan and from the European Commission, or their successors.

5. Each Party in the [Forum] shall designate a contact point to facilitate regulatory co-

operation. The [Forum] may establish expert working groups to examine specific issues.

6. The meetings of the [Forum] shall be held alternately in Tokyo, Japan and in Brussels,

Belgium, at least once a year, and whenever members consider it expedient or necessary.

Article X - 5 Framework for regulatory co-operation

1. The [Forum] shall develop and apply a framework for regulatory co-operation in order to

implement the principles set out in Article X-3.

2. The framework for regulatory co-operation shall include:

(a) A mechanism for information exchange and consultation with the other Party, in

appropriate forms, on forthcoming initiatives, without prejudice to each Party's own

legislative and administrative processes.

(b) Guidelines on reliance on each other’s regulatory and supervisory framework, where

possible, adapted for each specific area of financial regulation.

(c) A procedure for examining measures referred to in paragraph 7 of Article X-3 which

have been brought to its attention by a specific request of the other Party.

(d) Guidelines on the governance of the [Forum].

(e) A process for technical mediation referred to in Article X-6.

(f) If so agreed, any other arrangements to enhance regulatory co-operation.

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3. The framework for regulatory co-operation may also envisage specific arrangements

facilitating co-operation in cross-border supervision and enforcement.

Article X - 6 Technical mediation

1. Chapter XXX (Dispute Settlement) shall not apply to the settlement of disputes arising

under [this additional provision (Regulatory co-operation in the area of financial services)].

2. Without prejudice to paragraph 1, any Party may request in writing the other Party that a

process of technical mediation is launched with respect to the principles of regulatory co-

operation as set out in Article X-3. The process of technical mediation may be launched only

after the Parties agree on its use in a specific matter.

3. Upon agreement of the Parties to launch the process pursuant to paragraph 2, the [Forum]

shall establish a working group for technical mediation. The working group for technical

mediation shall be composed of representatives of each Party in the [Forum] and shall be

chaired by a mediator with relevant expertise independent of either Party, who shall be

appointed by the [Forum].

4. The chair shall submit a report with the results of the technical mediation to the co-chairs

of the [Forum].

5. The Parties undertake to act in good faith in an attempt to resolve any dispute arising

under this [Annex].

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Consolidated Text


Text in green is in principle agreed subject to confirmation in the next round

SECTION [V] – TELECOMMUNICATIONS SERVICES

Article [X1]

Scope

1. This Section sets out principles of the regulatory framework for all telecommunications

services and shall apply to measures by a Party affecting trade in telecommunications

services, which consist in the conveyance of signals including, inter alia, transmission of

video and audio signals (irrespective of the types of protocols and technologies used) through

public telecommunications transport networks.

2. For greater certainty, this section shall not apply to measures affecting:

i) broadcasting services as defined in the laws and regulations of each Party; and

ii) services providing, or exercising editorial control over, content transmitted using

telecommunications transport networks and services.

Cable or broadcast services suppliers shall be considered as public telecommunication

transport services suppliers and their network as public telecommunication transport

networks, when and to the extent providing public telecommunication transport services.

3. Nothing in this [Section] shall be construed to:

(a) require a Party to authorize a service supplier of the other Party to establish, construct,

acquire, lease, operate or supply telecommunications transport networks or services

other than as provided for in this Agreement; or

(b) require a Party (or require a Party to oblige service suppliers under its jurisdiction) to

establish, construct, acquire, lease, operate or supply telecommunications transport

networks or services not offered to the public generally.

Article [X2]

Definitions1

For the purposes of this [Section]:

1 Consistent use throughout the Agreement of introducing definitions by "the term XX

means…" versus "XX is…" is to be decided later on.

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(a) “associated facilities” means those services and infrastructures associated with public telecommunications transport networks or services which are necessary for the

provision of services via those networks or services, such as buildings (including

entries and wiring), ducts and cabinets, masts and antennae;

(b) “cost-oriented” means based on cost, and may include a reasonable profit, and may involve different cost methodologies for different facilities or services;

(c) “enabling use of network facilities” means the making available of facilities and/or

services to another supplier of public telecommunications transport networks or

services under defined conditions, for the purpose of providing public

telecommunications transport services. It may include the use of active or passive

network elements, associated facilities, virtual network services, co-location or other

forms of associated facilities sharing, the use of leased circuits and the use of specified

network facilities or elements, including the local loop, on an unbundled basis;

(d) “end user” means a final consumer of, or subscriber to, a public telecommunications transport network or service, including a service supplier other than a supplier of

public telecommunications transport networks or services;

(e) “essential facilities” means facilities of a public telecommunications transport network or service that

- are exclusively or predominantly provided by a single or limited number of

suppliers; and

- cannot feasibly be economically or technically substituted in order to provide a

service;

(f) “interconnection” means linking2 with suppliers providing public telecommunications

transport networks or services in order to allow the users of one supplier to

communicate with the users of another supplier or to access services provided by

another supplier. Such services may be provided by the suppliers involved or other

suppliers who have access to the network;

(g) “international mobile roaming service” means a commercial mobile service provided

pursuant to a commercial agreement between suppliers of public telecommunications

transport services that enables end-users to use their home mobile handset or other

device for voice, data or messaging services while outside the [EU: Territory] [JPN:

Area] in which the end-user’s home public telecommunications transport network is located;

(h) “leased circuits” means telecommunications facilities between two or more designated points that are set aside for the dedicated use of, or availability to, a particular user,

2 For greater certainty, this may include physical or logical linking, as appropriate.

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irrespective of the technology used;

(i) “major supplier” means a supplier which has the ability to materially affect the terms

of participation, having regard to price and supply, in the relevant market for public

telecommunications transport services as a result of:

i) control over essential facilities; or

ii) its position in the market;

(j) “non-discriminatory” means treatment no less favourable than that accorded under like

circumstances, to its own like services, as well as service suppliers and users of like

public telecommunications transport networks or services;

(k) “number portability” means the ability of end users of public telecommunications transport services who so request to retain, at the same location, the same telephone

numbers without impairment of quality or reliability when switching between the

same category of suppliers of like public telecommunications transport services;

(l) “public telecommunications transport network” means the public telecommunications infrastructure which permits telecommunications between and among defined network

termination points;

(m) “public telecommunications transport service” means any telecommunications transport service offered to the public generally. Such services may include, inter alia,

telegraph, telephone, telex and data transmission typically involving transmission of

customer-supplied information between two or more points without any end-to-end

change in the form or content of the customer's information;

(n) “regulatory authority” means the body or bodies of a Party responsible for the regulation of telecommunications mentioned in this Section;

(o) “telecommunications” means the transmission and reception of signals by wire, radio, optical, or any other electromagnetic means;

[JPN: (p) “trade in telecommunications services” means:

i) cross-border trade in telecommunications services; and

ii) the supply of telecommunications services by an investments of an investor of a

Party, as defined in Article [ ] of Chapter [*] (Investment Chapter), in the Area of

the other Party; and

Note: “cross-border trade in telecommunications services” shall be understood in accordance with the definition contained in subparagraph [ ] of Article [ ] of Chapter

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[*] (definition of “cross-border trade in services” in the Chapter of Cross-Border Trade

in Services).]

(p) “users” means end users or suppliers of public telecommunications transport networks or services.

Article [3]

Approaches to Regulation

1. The Parties recognise the value of competitive markets to deliver a wide choice in the

supply of telecommunications services and to enhance consumer welfare, and that economic

regulation may not be needed if there is effective competition. Accordingly, the Parties

recognise that regulatory needs and approaches differ market by market, and that each Party

may determine how to implement its obligations under this Chapter.

2. In this respect, the Parties recognise that a Party may:

a) engage in direct regulation either in anticipation of an issue that the Party expects may

arise or to resolve an issue that has already arisen in the market;

b) rely on the role of market forces, particularly with respect to market segments that are

competitive or that have low barriers to entry, such as services provided by suppliers

of telecommunications services that do not own network facilities.

3. For greater certainty, a Party that refrains from engaging in regulation in accordance with

paragraph 2 (b), remains subject to the obligations of this Section. Nothing in this article shall

prevent a Party from applying a regulation to a telecommunications service.

Article [X4]

Access and Use

1. Each Party shall ensure that any service supplier of the other Party is accorded access to

and use of public telecommunications transport networks and services on reasonable and non-

discriminatory terms and conditions. This obligation shall be applied, inter alia, through

paragraphs 2 through 6.

2. Each Party shall ensure that service suppliers of the other Party have access to and use of

any public telecommunications transport network or service offered within or across the

border of that Party, including private leased circuits, and to this end shall ensure, subject to

the provisions of paragraphs 5 and 6, that such suppliers are permitted:

a) to purchase or lease and attach terminal or other equipment which interfaces with the

network and which is necessary to supply their services;

b) to interconnect private leased or owned circuits with public telecommunications

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transport networks and services or with circuits leased or owned by other service

suppliers; and

c) to use operating protocols of their choice in the supply of any service, other than as

necessary to ensure the availability of telecommunications transport networks and

services to the public generally.

3. Each Party shall ensure that service suppliers of the other Party may use public

telecommunications transport networks and services for the movement of information within

and across borders, including for intra-corporate communications of such service suppliers,

and for access to information contained in databases or otherwise stored in machine-readable

form in either Party or in any other member of the WTO.

4. Notwithstanding the provisions of paragraph 3, a Party may take such measures as are

necessary to ensure the security and confidentiality of messages subject to the requirement

that such measures are not applied in a manner which would constitute a means of arbitrary or

unjustifiable discrimination or a disguised restriction on trade in services.

5. Each Party shall ensure that no condition is imposed on access to and use of public

telecommunications transport networks and services other than as necessary:

a) to safeguard the public service responsibilities of suppliers of public

telecommunications transport networks and services, in particular their ability to make

their networks or services available to the public generally; or

b) to protect the technical integrity of public telecommunications transport networks or

services.

6. Provided that they satisfy the criteria set out in paragraph 5, conditions for access to

and use of public telecommunications transport networks and services may include:

a) restrictions on resale or shared use of such services;

b) a requirement to use specified technical interfaces, including interface protocols, for

interconnection with public telecommunications transport networks and services;

c) requirements, where necessary, for the inter-operability of public telecommunications

transport services and to encourage the achievement of the goals set out in Article

[X18] (Relation to International Organizations);

d) type approval of terminal or other equipment which interfaces with public

telecommunications transport networks and technical requirements relating to the

attachment of such equipment to such networks;

e) restrictions on inter-connection of private leased or owned circuits with public

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telecommunications transport networks or services or with circuits leased or owned by

other service suppliers; or

f) notification, permit, registration and licensing.

Article [X5]

Number Portability

Each Party shall ensure that suppliers of public telecommunications transport services in its

[EU: Territory] [JPN: Area] provide number portability for mobile services and, any other

services designated by that Party, on a timely basis and on reasonable terms and conditions.

Article [X6]

Resale

Where a Party requires suppliers of public telecommunications transport services to offer their

public telecommunications transport services for resale, the Party shall ensure that such

suppliers of public telecommunications transport services do not impose unreasonable or

discriminatory conditions or limitations on the resale of their public telecommunications

transport services.

Article [X7]

Enabling Use of Network Facilities and Interconnection to be ensured

1. The Parties recognise that enabling use of network facilities and interconnection should

in principle be agreed on the basis of commercial negotiation between the suppliers of public

telecommunications transport networks or services concerned.

2. Each Party shall ensure that any supplier of public telecommunications transport

networks or services has a right and, when requested by a supplier of public

telecommunications transport networks or services of the other Party, an obligation to

negotiate interconnection for the purpose of providing public telecommunications transport

networks or services. Each Party shall provide its telecommunications regulatory body with

the authority to require, where it considers necessary, suppliers of public telecommunications

transport networks or services to provide interconnection with suppliers of public

telecommunications transport services of the other Party.

3. Neither Party shall adopt or maintain any measures which oblige suppliers of public

telecommunications transport networks or services enabling use of network facilities or

granting interconnection to offer different terms and conditions to different suppliers for like

services or impose obligations that are not related to the services provided.

Article [X8]

Obligations Relating to Major Suppliers

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Competitive safeguards

1. Each Party shall adopt or maintain appropriate measures for the purpose of preventing

suppliers who, alone or together, are a major supplier from engaging in or continuing anti-

competitive practices. These anti-competitive practices shall include in particular:

a) engaging in anti-competitive cross-subsidisation;

b) using information obtained from competitors with anti-competitive results; and

c) not making available to other services suppliers on a timely basis technical

information about essential facilities and commercially relevant information which are

necessary for them to provide services.

Treatment by Major Suppliers

2. Each Party shall provide its regulatory authority with the power to require, where

appropriate, that a major supplier in its [EU: Territory] [JPN: Area] accords suppliers of

public telecommunications transport networks or services of the other Party treatment no less

favourable than such major supplier accords in like circumstances to its subsidiaries or its

affiliates, regarding:

a) the availability, provisioning, rates or quality of like telecommunications services; and

b) the availability of technical interfaces necessary for interconnection.

Interconnection with Major Suppliers

3. Each Party shall ensure that major suppliers in its [EU: Territory] [JPN: Area] provide

interconnection at any technically feasible point in the network.

Such interconnection is provided:

a) under non-discriminatory terms, conditions (including with respect to technical

standards, specifications, quality and maintenance) and rates, and of a quality no less

favourable than that provided for the own like services of such major supplier, or for

like services of non-affiliated service suppliers, or for its subsidiaries or other

affiliates;

b) in a timely fashion, on terms, conditions (including with respect to technical standards,

specifications, quality and maintenance) and cost-oriented rates that are transparent,

reasonable, having regard to economic feasibility, and sufficiently unbundled so that

the supplier need not pay for network components or facilities that it does not require

for the service to be provided; and

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c) upon request, at points in addition to the network termination points offered to the

majority of users, subject to charges that reflect the cost of construction of necessary

additional facilities.

4. Each Party shall ensure that a major supplier in its [EU: Territory] [JPN: Area] provides

suppliers of public telecommunications transport services of the other Party the opportunity to

interconnect their facilities and equipment with those of the major supplier through:

a) a reference interconnection offer or another standard interconnection offer containing

the rates, terms, and conditions that the major supplier offers generally to suppliers of

public telecommunications transport services; or

b) the terms and conditions of an interconnection agreement in effect.

5. Each Party shall ensure that the procedures applicable for interconnection to a major

supplier are made publicly available.

6. Each Party shall ensure that a major supplier in its [EU: Territory] [JPN: Area] makes

publicly available either its interconnection agreements or reference interconnection offer.

7. Each Party shall ensure that major suppliers that acquire information from another

supplier of public telecommunications transport networks or services in the process of

negotiating arrangements on, and as a result of, the use of network facilities or

interconnection, use that information solely for the purpose for which it was supplied and

respect at all times the confidentiality of information transmitted or stored.

Enabling Use of Network Facilities and Interconnection

8. Each Party shall ensure that a major supplier in its [EU: Territory] [JPN: Area] enables

the use of network facilities, which may include, inter alia, network elements and associated

facilities, to suppliers of public telecommunications transport networks or services on:

transparent, reasonable and non-discriminatory (including with respect to timeliness) terms

and conditions (including in relation to rates, technical standards, specifications, quality and

maintenance).

For greater certainty, nothing in this paragraph shall prevent a Party from allowing a major

supplier in its [EU: Territory] [JPN: Area] to reject co-location where there is a reasonable

ground for rejection, in particular with regard to technical feasibility.

Article [X9]

The Regulatory Authority

1. Each Party shall ensure that its regulatory authority is legally distinct, and functionally

independent from any supplier of telecommunications services, telecommunications

networks, or telecommunications network equipment.

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Note: For greater certainty, the regulatory authority of a Party shall not be regarded as not

“functionally independent” solely based on the fact that an authority of that Party (other than the regulatory authority) holds shares or other equity interest in a supplier of

telecommunications services, telecommunications networks, or telecommunications network

equipment.

2. A Party that retains ownership or control of providers of public telecommunications

transport networks and/or services shall ensure effective structural separation of the regulatory

function from activities associated with ownership or control.

[EU: 3. The regulatory authority shall act independently of, and shall not seek or take

instructions from, any other body in relation to the exercise of the tasks assigned to it under its

laws and regulations.]

4. The regulatory authority shall be sufficiently empowered to regulate the sector, and to

carry out the task assigned to it, including enforcement of the measures relating to the

obligations set out in this Section. The tasks to be undertaken by the regulatory authority shall

be made public in an easily accessible and clear form.

5. Each Party shall ensure that the decisions of, and the procedures used by, its regulatory

authority are impartial with respect to all market participants.

6. The regulatory authority shall perform its tasks in a transparent manner and, to the extent

practicable, without undue delay.

7. The regulatory authority shall have the power to request from suppliers of

telecommunications networks and services all the information, including financial

information, which is necessary to enable the regulatory authority to carry out its tasks in

accordance with this section. Information requested shall not be more than necessary to

perform the regulatory authority's tasks and shall be treated in accordance with each Party's

laws and regulations relating to business confidentiality.

Article [X10]

Universal Service

1. Each Party has the right to define the kind of universal service obligations it wishes to

maintain.

2. Such obligations will not be regarded as anti-competitive per se, provided they are

administered in a transparent, objective, non-discriminatory and competitively neutral manner

and are not more burdensome than necessary for the kind of universal service defined by the

Party.

3. All suppliers of telecommunications services should be eligible to provide universal

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service. Universal service suppliers shall be designated through a transparent, non-

discriminatory and not unduly burdensome mechanism.

4. The regulatory authority may determine whether a mechanism is required to compensate

the net cost of the supplier(s) designated to provide universal service, taking into account the

market benefit, if any, accruing to such supplier(s), or to share the net cost of universal service

obligations.

Article [X11]

Authorisation to Provide Telecommunication Networks and Services

1. Each Party shall authorise the provision of telecommunication networks or services, to

the extent possible, upon simple notification or registration without requiring a prior explicit

decision by the regulatory authority. The rights and obligations resulting from such

authorisation shall be made publicly available in an easily accessible form.

2. Where necessary, a license for the right of use for radio frequencies and numbers can be

required in order to, in particular:

a) avoid harmful interference;

b) ensure technical quality of service;

c) safeguard efficient use of spectrum.

3. Where a license is required, each Party shall make publicly available:

a) all the licensing criteria and a reasonable period of time normally required to obtain

such a decision ; and

b) the terms and conditions of individual licenses.

4. Each Party shall notify the applicant of the outcome of its application without undue

delay after a decision has been taken. In case a decision is taken to deny an application for or

revoke a license, each Party shall make known to the applicant in principle in writing, upon

request, the reasons for the denial or revocation. In such a case, the applicant shall be able to

seek recourse before an appeal body as referred to in Article [X14].

5. Administrative fees imposed on suppliers, if any, shall be objective, transparent and

commensurate with the administrative costs of the regulatory authority. Administrative fees

do not include payments for rights to use scarce resources and mandated contributions to

universal service provision.

Article [X12]

Allocation and Use of Scarce Resources

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1. Each Party shall carry out any procedures for the allocation and use of scarce resources

related to telecommunications, including frequencies, numbers and rights of way, in an open

objective, timely, transparent and non-discriminatory and not unduly burdensome manner.

2. Each Party shall make publicly available the current state of allocated frequency bands,

but shall not be required to provide detailed identification of frequencies allocated for specific

government uses.

3. A Party’s measures allocating and assigning spectrum and managing frequency are not measures that are per se inconsistent with Article on Market Access in both Cross-Border

Trade in Services Chapter and Investment chapter. Accordingly, each Party retains the right to

establish and apply spectrum and frequency management policies that have the effect of

limiting the number of suppliers of public telecommunications transport services, provided

that it does so in a manner consistent with other provisions of this Agreement. Such right

includes the ability to allocate frequency bands, taking into account current and future needs

and spectrum availability.

Article [X13]

Transparency

Each Party shall ensure that its measures relating to access to and use of public

telecommunications transport networks and services are made publicly available, including

measures relating to:

a) tariffs and other terms and conditions of service;

b) specifications of technical interfaces;

c) bodies responsible for the preparation, amendment and adoption of standards affecting

such access and use;

d) conditions applying to attachment of terminal or other equipment to the public

telecommunications transport networks; and

e) notifications, permit, registration or licensing requirements, if any.

[Note: subject to final decision on placing this article in the horizontal chapter]

Article [X14]

Resolution of Telecommunications Disputes

1. Each Party shall ensure, in accordance with its laws and regulations, that suppliers of

public telecommunications transport networks or services of the other Party have timely

recourse to the regulatory authority of the Party to resolve disputes in connections with rights

and obligations that arise from this Annex.

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In such cases, the regulatory authority shall aim to issue a binding decision as appropriate, to

resolve the dispute without undue delay.

2. If a regulatory authority declines to initiate any action on a request to resolve a dispute, it

shall, upon request, provide a written explanation for its decision within a reasonable period

of time.

3. The regulatory authority shall make the dispute concluding decision available to the

public, in accordance with its laws and regulations, and having regard to the requirements of

business confidentiality.

4. Each Party shall ensure that any supplier of public telecommunications transport

networks or services aggrieved by a determination or decision of its regulatory authority may

obtain review of such determination or decision by either the regulatory authority or an

independent appeal body, which may or may not be a judicial authority.

5. The decisions of the regulatory authority or independent appeal body, where the latter is

not a judicial authority, may also be subject to further review by an independent judicial

authority, save in cases where the parties concerned have accepted an procedure where the

regulatory authority or independent appeal body issues a final determination.

6. Neither Party shall permit an application for review by an appeal body or a judicial

authority to constitute grounds for non-compliance with the determination or decision of the

regulatory authority unless the relevant appeal body or judicial authority withholds, suspends

or repeals such determination or decision.

7. The procedure referred to in paragraphs 1 to 3 of this Article shall not preclude either

party concerned from bringing an action before the courts.

Article [X15]

Relation to International Organizations

The Parties recognize the importance of international standards for global compatibility and

inter-operability of telecommunications transport networks and services, and undertake to

promote such standards through the work of relevant international bodies, including the

International Telecommunication Union and the International Organization for

Standardization.

[JPN: Article [X16]

Working Group on Telecommunications

1. For the purposes of the effective implementation and operation of Chapter [*] (Cross-

Border Trade in Services) and the BIT including this Annex with respect to

telecommunications, a Working Group on Telecommunications (hereinafter referred to in this

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Article as “the Working Group”) is hereby established under the Sub-Committee on Cross-

Border Trade in Services (hereinafter referred to in this Article as “the Sub-Committee”).

2. The functions of the Working Group shall be:

a) reviewing and monitoring the implementation and operation of Chapter [*] (Cross-

Border Trade in Services) and the Chapter [**] (Investment) including this Annex

with respect to telecommunications;

b) discussing any issues related to this Annex and other issues relevant to the

telecommunications sectors agreed on by the Parties;

c) as appropriate, reporting its findings and its outcomes of discussions to the Sub-

Committee; and

d) carrying out other functions as may be delegated by the Sub-Committee.

3. The Working Group shall meet in conjunction with the Sub-Committee meetings, or as

otherwise agreed upon between the Parties.

4. The Working Group shall be:

a) composed of representatives of the Governments of the Parties;

b) co-chaired by officials of the Governments of the Parties.

5. The activities of the Working Group are without prejudice to existing or future relations

between supervisory authorities of the Parties within the scope of their competence.

6. The Working Group may invite by mutual consent of the Parties, representatives of

relevant entities other than the Governments of the Parties, with the necessary expertise

relevant to the issues to be discussed].

Article [X17]

Foreign Shareholding

With regard to the provision of telecommunications transport networks and services through

commercial presence, each Party [shall endeavour not to] [should not] impose joint venture

requirements or limit the participation of foreign capital in terms of maximum percentage

limit on foreign shareholding or the total value of individual or aggregate foreign investment.

[JPN: except those adopted or maintained in accordance with Articles [X] (Non-Conforming

Measures) in Chapter [X] (CBTS) or Article [Y] (Non-Conforming Measures) in Chapter [Y]

(Investment).]

Article [X18]

Limited

Limited 2017-01-30

Without Prejudice

14

Confidentiality of Information

Each Party shall ensure the confidentiality of telecommunications and related traffic data of

subscribers and users over public telecommunications transport network and services without

unduly restricting trade in services.

Article [19]

International Mobile Roaming

1. Each Party shall endeavour to cooperate on promoting transparent and reasonable rates

for international mobile roaming services with a view to promoting the growth of trade

between the Parties and enhancing consumer welfare.

2. Each Party may choose to take steps to enhance transparency and competition with

respect to international mobile roaming rates and technological alternatives to roaming

services, such as:

a) ensuring that information regarding retail rates is easily accessible to consumers; and

b) minimising impediments to the use of technological alternatives to roaming, whereby

consumers when visiting the [EU: Territory] [JPN: Area] of a Party from the [EU:

Territory] [JPN: Area] of the other Party can access telecommunications services

using the device of their choice.

3. Each Party shall encourage suppliers of public telecommunications transport services in

its [EU: Territory] [JPN: Area] to make publicly available information on retail rates for

international mobile roaming services, for voice, data and text messages offered to its end

users when visiting the [EU: Territory] [JPN: Area] of the other Party.

4. Nothing in this Article shall require a Party to regulate rates or conditions for

international mobile roaming services.

Note: This article does not apply to intra-EU roaming services.

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EU-Japan FTA / EPA As of 16 December 2016 · 2017. 6. 29. · 5 Limited Limited EU-Japan FTA / EPA...

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