Text of the Comprehensive Economic and Trade Agreement – Chapter eighteen: State enterprises, monopolies, and enterprises granted special rights or privileges

Article 18.1 – Definitions

For the purposes of this Chapter:

covered entity means:

1. a monopoly;
2. a supplier of a good or service, if it is one of a small number of goods or services suppliers authorised or established by a Party, formally or in effect, and the Party substantially prevents competition among those suppliers in its territory;
3. any entity to which a Party has granted, formally or in effect, special rights or privileges to supply a good or service, substantially affecting the ability of any other enterprise to supply the same good or service in the same geographical area under substantially equivalent conditions, and allowing the entity to escape, in whole or in part, competitive pressures or market constraints;^{Footnote 1} or
4. a state enterprise;

designate means to establish or authorise a monopoly, or to expand the scope of a monopoly to cover an additional good or service;

in accordance with commercial considerations means consistent with customary business practices of a privately held enterprise in the relevant business or industry; and

non-discriminatory treatment means the better of national treatment and most-favoured-nation treatment as set out in this Agreement.

Article 18.2 – Scope

1. The Parties confirm their rights and obligations under Articles XVII:1 through XVII:3 of the GATT 1994, the Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994, and Articles VIII:1 and VIII:2 of GATS, all of which are hereby incorporated into and made part of this Agreement.

2. This Chapter does not apply to the procurement by a Party of a good or service purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of a good or service for commercial sale, whether or not that procurement is a "covered procurement" within the meaning of Article 19.2 (Scope and coverage).

3. Articles 18.4 and 18.5 do not apply to the sectors set out in Article 8.2 (Scope) and Article 9.2 (Scope).

4. Articles 18.4 and 18.5 do not apply to a measure of a covered entity if a reservation of a Party, taken against a national treatment or most-favoured nation treatment obligation, as set out in that Party's Schedule to Annex I, II, or III, would be applicable if the same measure had been adopted or maintained by that Party.

Article 18.3 – State enterprises, monopolies and enterprises granted special rights or privileges

1. Without prejudice to the Parties' rights and obligations under this Agreement, nothing in this Chapter prevents a Party from designating or maintaining a state enterprise or a monopoly or from granting an enterprise special rights or privileges.

2. A Party shall not require or encourage a covered entity to act in a manner inconsistent with this Agreement.

Article 18.4 – Non-discriminatory treatment

1. Each Party shall ensure that in its territory a covered entity accords non-discriminatory treatment to a covered investment, to a good of the other Party, or to a service supplier of the other Party in the purchase or sale of a good or service.

2. If a covered entity described in paragraphs (b) through (d) of the definition of "covered entity" in Article 18.1 acts in accordance with Article 18.5.1, the Party in whose territory the covered entity is located shall be deemed to be in compliance with the obligations set out in paragraph 1 in respect of that covered entity.

Article 18.5 – Commercial considerations

1. Each Party shall ensure that a covered entity in its territory acts in accordance with commercial considerations in the purchase or sale of goods, including with regard to price, quality, availability, marketability, transportation, and other terms and conditions of purchase or sale, as well as in the purchase or supply of services, including when such goods or services are supplied to or by an investment of an investor of the other Party.

2. Provided that a covered entity's conduct is consistent with Article 18.4 and Chapter Seventeen (Competition Policy), the obligation contained in paragraph 1 does not apply:

1. in the case of a monopoly, to the fulfilment of the purpose for which the monopoly has been created or for which special rights or privileges have been granted, such as a public service obligation or regional development; or,
2. in the case of a state enterprise, to the fulfilment of its public mandate.