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Annex 1138.2

Exclusions from Dispute Settlement

Canada

A decision by Canada following a review under the Investment Canada Act, with respect to whether or not to permit an acquisition that is subject to review, shall not be subject to the dispute settlement provisions of Section B or of Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures).

Mexico

A decision by the National Commission on Foreign Investment ("Comisión Nacional de Inversiones Extranjeras") following a review pursuant to Annex I, page I-M4, with respect to whether or not to permit an acquisition that is subject to review, shall not be subject to the dispute settlement provisions of Section B or of Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures).

Chapter Twelve

Cross-Border Trade in Services

Article 1201: Scope and Coverage

1. This Chapter applies to measures adopted or maintained by a Party relating to cross-border trade in services by service providers of another Party, including measures respecting:

(a)

the production, distribution, marketing, sale and delivery of a service;

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(c)

the access to and use of distribution and transportation systems in
connection with the provision of a service;

(d)

the presence in its territory of a service provider of another Party; and

(e)

the provision of a bond or other form of financial security as a condition for the provision of a service.

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(a)

financial services, as defined in Chapter Fourteen (Financial
Services);

(b)

air services, including domestic and international air transportation services, whether scheduled or non-scheduled, and related services in support of air services, other than

(i)

aircraft repair and maintenance services during which an aircraft is withdrawn from service, and

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(d)

subsidies or grants provided by a Party or a state enterprise, including
government-supported loans, guarantees and insurance.

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(a)

impose any obligation on a Party with respect to a national of another Party seeking access to its employment market, or employed on a permanent basis in its territory, or to confer any right on that national with respect to that access or employment; or

(b)

prevent a Party from providing a service or performing a function such as
law enforcement, correctional services, income security or insurance, social
security or insurance, social welfare, public education, public training,
health, and child care, in a manner that is not inconsistent with this
Chapter

Article 1202: National Treatment

1. Each Party shall accord to service providers of another Party treatment no less favorable than that it accords, in like circumstances, to its own service providers.

2. The treatment accorded by a Party under paragraph 1 means, with respect to a state or province, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to service providers of the Party of which it forms a part.

Article 1203: Most-Favored-Nation Treatment

Each Party shall accord to service providers of another Party treatment no less favorable than that it accords, in like circumstances, to service providers of any other Party or of a non-Party.

Article 1204: Standard of Treatment

Each Party shall accord to service providers of any other Party the better of the treatment required by Articles 1202 and 1203.

Article 1205: Local Presence

No Party may require a service provider of another Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border provision of a service.

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(a)

any existing non-conforming measure that is maintained by

(i)

a Party at the federal level, as set out in its Schedule to Annex I,

(ii)

a state or province, for two years after the date of entry into force of
this Agreement, and thereafter as set out by a Party in its Schedule
to Annex I in accordance with paragraph 2, or

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(b)

the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or

(c)

an amendment to any non-conforming measure referred to in subparagraph
(a) to the extent that the amendment does not decrease the conformity of the
measure, as it existed immediately before the amendment, with Articles
1202, 1203 and 1205.

2. Each Party may set out in its Schedule to Annex I, within two years of the date of entry into force of this Agreement, any existing non-conforming measure maintained by a state or province, not including a local government.

3. Articles 1202, 1203 and 1205 do not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors or activities, as set out in its Schedule to Annex II.

Article 1207: Quantitative Restrictions

1. Each Party shall set out in its Schedule to Annex V any quantitative restriction that it maintains at the federal level.

2. Within one year of the date of entry into force of this Agreement, each Party shall set out in its Schedule to Annex V any quantitative restriction maintained by a state or province, not including a local government.

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