Australian Treaty Series

The Governments of the Republic of Austria, the Kingdom of Belgium, Canada, the Kingdom of Denmark, the French Republic, the Federal Republic of Germany, the Kingdom of Greece, the Republic of Iceland, Ireland, the Italian Republic, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, the Kingdom of Norway, the Portuguese Republic, Spain, the Kingdom of Sweden, the Swiss Confederation, the Turkish Republic, the United Kingdom of Great Britain and Northern Ireland, and the United States of America;

CONSIDERING that economic strength and prosperity are essential for the attainment of the purposes of the United Nations, the preservation of individual liberty and the increase of general well-being;

BELIEVING that they can further these aims most effectively by strengthening the tradition of co-operation which has evolved among them;

RECOGNISING that the economic recovery and progress of Europe to which their participation in the Organisation for European Economic Co-operation has made a major contribution, have opened new perspectives for strengthening that tradition and applying it to new tasks and broader objectives;

CONVINCED that broader co-operation will make a vital contribution to peaceful and harmonious relations among the peoples of the world;

RECOGNISING the increasing interdependence of their economies;

DETERMINED by consultation and co-operation to use more effectively their capacities and potentialities so as to promote the highest sustainable growth of their economies and improve the economic and social well-being of their peoples;

BELIEVING that the economically more advanced nations should co-operate in assisting to the best of their ability the countries in process of economic development;

RECOGNISING that the further expansion of world trade is one of the most important factors favouring the economic development of countries and the improvement of international economic relations; and

DETERMINED to pursue these purposes in a manner consistent with their obligations in other international organisations or institutions in which they participate or under agreements to which they are a party;

HAVE THEREFORE AGREED on the following provisions for the reconstitution of the Organisation for European Economic Co-operation as the Organisation for Economic Co-operation and Development:

The aims of the Organisation for Economic Co-operation and Development (hereinafter called the "Organisation") shall be to promote policies designed:

(a) to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy;

(b) to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and

(c) to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations.

In the pursuit of these aims, the Members agree that they will, both individually and jointly:

(a) promote the efficient use of their economic resources;

(b) in the scientific and technological field, promote the development of their resources, encourage research and promote vocational training;

(c) pursue policies designed to achieve economic growth and internal and external financial stability and to avoid developments which might endanger their economies or those of other countries;

(d) pursue their efforts to reduce or abolish obstacles to the exchange of goods and services and current payments and maintain and extend the liberalisation of capital movements; and

(e) contribute to the economic development of both Member and non-member countries in the process of economic development by appropriate means and, in particular, by the flow of capital to those countries, having regard to the importance to their economies of receiving technical assistance and of securing expanding export markets.

With a view to achieving the aims set out in Article 1 and to fulfilling the undertakings contained in Article 2, the Members agree that they will:

(a) keep each other informed and furnish the Organisation with the information necessary for the accomplishment of its tasks;

(b) consult together on a continuing basis, carry out studies and participate in agreed projects; and

(c) co-operate closely and where appropriate take coordinated action.

The Contracting Parties to this Convention shall be Members of the Organisation.

In order to achieve its aims, the Organisation may:

(a) take decisions which, except as otherwise provided, shall be binding on all the Members;

(b) make recommendations to Members; and

(c) enter into agreements with Members, non-member States and international organisations.

1. Unless the Organisation otherwise agrees unanimously for special cases, decisions shall be taken and recommendations shall be made by mutual agreement of all the Members.

2. Each Member shall have one vote. If a Member abstains from voting on a decision or recommendation, such abstention shall not invalidate the decision or recommendation, which shall be applicable to the other Members but not to the abstaining Member.

3. No decision shall be binding on any Member until it has complied with the requirements of its own constitutional procedures. The other Members may agree that such a decision shall apply provisionally to them.

A Council composed of all the Members shall be the body from which all acts of the Organisation derive. The Council may meet in sessions of Ministers or of Permanent Representatives.

The Council shall designate each year a Chairman, who shall preside at its ministerial sessions, and two Vice-Chairmen. The Chairmen may be designated to serve one additional consecutive term.

The Council may establish an Executive Committee and such subsidiary bodies as may be required for the achievement of the aims of the Organisation.

1. A Secretary-General responsible to the Council shall be appointed by the Council for a term of five years. He shall be assisted by one or more Deputy Secretaries-General or Assistant Secretaries-General appointed by the Council on the recommendation of the Secretary-General.

2. The Secretary-General shall serve as Chairman of the Council meeting at sessions of Permanent Representatives. He shall assist the Council in all appropriate ways and may submit proposals to the Council or to any other body of the Organisation.

1. The Secretary-General shall appoint such staff as the Organisation may require in accordance with plans of organisation approved by the Council. Staff regulations shall be subject to approval by the Council.

2. Having regard to the international character of the Organisation, the Secretary-General, the Deputy or Assistant Secretaries-General and the staff shall neither seek nor receive instructions from any of the Members or from any Government or authority external to the Organisation.

Upon such terms and conditions as the Council may determine, the Organisation may:

(a) address communications to non-member States or organisations;

(b) establish and maintain relations with non-member States or organisations; and

(c) invite non-member Governments or organisations to participate in activities of the Organisation.

Representation in the Organisation of the European Communities established by the Treaties of Paris and Rome of 18 April 1951,[1] and 25 March 1957,[2] shall be as defined in Supplementary Protocol No. 1 to this Convention.

1. This Convention shall be ratified or accepted by the Signatories in accordance with their respective constitutional requirements.

2. Instruments of ratification or acceptance shall be deposited with the Government of the French Republic, hereby designated as depositary Government.

3. This Convention shall come into force:

(a) before 30 September 1961, upon the deposit of instruments of ratification or acceptance by all the Signatories; or

(b) on 30 September 1961, if by that date fifteen Signatories or more have deposited such instruments as regards those Signatories; and thereafter as regards any other Signatory upon the deposit of its instrument of ratification or acceptance;[3]

(c) after 30 September 1961, but not later than two years from the signature of this Convention, upon the deposit of such instruments by fifteen Signatories, as regards those Signatories; and thereafter as regards any other Signatory upon the deposit of its instrument of ratification or acceptance.

4. Any signatory which has not deposited its instrument of ratification or acceptance when the Convention comes into force may take part in the activities of the Organisation upon conditions to be determined by agreement between the Organisation and such Signatory.

When this Convention comes into force the reconstitution of the Organisation for European Economic Co-operation shall take effect, and its aims, organs, powers and name shall thereupon be as provided herein. The legal personality possessed by the Organisation for European Economic Co-operation shall continue in the Organisation, but decisions, recommendations and resolutions of the Organisation for European Economic Co-operation shall require approval of the Council to be effective after the coming into force of this Convention.

The Council may decide to invite any Government prepared to assume the obligations of membership to accede to this Convention.[4] Such decisions shall be unanimous, provided that for any particular case the Council may unanimously decide to permit abstention, in which case, notwithstanding the provisions of Article 6, the decision shall be applicable to all the Members. Accession shall take effect upon the deposit of an instrument of accession with the depositary Government.[5]

Any Contracting Party may terminate the application of this Convention to itself by giving twelve months' notice to that effect to the depositary Government.

The Headquarters of the Organisation shall be in Paris, unless the Council agrees otherwise.

The legal capacity of the Organisation and the privileges, exemptions, and immunities of the Organisation, its officials and representatives to it of the Members shall be as provided in Supplementary Protocol No. 2 to this Convention.

1. Each year, in accordance with Financial Regulations adopted by the Council, the Secretary-General shall present to the Council for approval an annual budget, accounts, and such subsidiary budgets as the Council shall request.

2. General expenses of the Organisation, as agreed by the Council, shall be apportioned in accordance with a scale to be decided upon by the Council. Other expenditure shall be financed on such basis as the Council may decide.

Upon the receipt of any instrument of ratification, acceptance or accession, or of any notice of termination, the depositary Government shall give notice thereof to all the Contracting Parties and to the Secretary-General of the Organisation.

IN WITNESS WHEREOF, the undersigned Plenipotentiaries, duly empowered, have appended their signatures to this Convention.

DONE in Paris, this fourteenth day of December Nineteen Hundred and Sixty, in the English and French languages, both texts being equally authentic, in a single copy which shall be deposited with the depositary Government, by whom certified copies will be communicated to all the Signatories.

The Signatories of the Convention on the Organisation for Economic Co-operation and Development;

HAVE AGREED as follows:

1. Representation in the Organisation for Economic Co-operation and Development of the European Communities established by the Treaties of Paris and Rome of 18 April 1951, and 25 March 1957, shall be determined in accordance with the institutional provisions of those Treaties.

2. The Commissions of the European Economic Community and of the European Atomic Energy Community as well as the High Authority of the European Coal and Steel Community shall take part in the work of that Organisation.

IN WITNESS WHEREOF, the undersigned Plenipotentiaries, duly empowered, have appended their signatures to this Protocol.

DONE in Paris, this fourteenth day of December Nineteen Hundred and Sixty, in the English and French languages, both texts being equally authentic, in a single copy which shall be deposited with the Government of the French Republic, by whom certified copies will be communicated to all the Signatories.

The Signatories of the Convention on the Organisation for Economic Co-operation and Development (hereinafter called the "Organisation");

HAVE AGREED as follows:

The Organisation shall have legal capacity and the Organisation, its officials, and representatives to it of the Members shall be entitled to privileges, exemptions, and immunities as follows:

(a) in the territory of the Contracting Parties to the Convention for European Economic Co-operation of 16 April 1948, the legal capacity, privileges, exemptions, and immunities provided for in Supplementary Protocol No. 1 to that Convention;

(b) in Canada, the legal capacity, privileges, exemptions, and immunities provided for in any agreement or arrangement on legal capacity, privileges, exemptions, and immunities entered into between the Government of Canada and the Organisation;

(c) in the United States, the legal capacity, privileges, exemptions, and immunities under the International Organisations Immunities Act provided for in Executive Order No. 10133 of 27 June 1950; and

(d) elsewhere, the legal capacity, privileges, exemptions, and immunities provided for in any agreement or arrangement on legal capacity, privileges, exemptions, and immunities entered into between the Government concerned and the Organisation.

IN WITNESS WHEREOF, the undersigned Plenipotentiaries, duly empowered, have appended their signatures to this Protocol.

DONE in Paris, this fourteenth day of December Nineteen Hundred and Sixty, in the English and French languages, both texts being equally authentic, in a single copy which shall be deposited with the Government of the French Republic, by whom certified copies will be communicated to all the Signatories.

THE COUNCIL

HAVING REGARD to the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960, (hereinafter called the "Convention") and, in particular, to its Articles 5(a) and 16;

HAVING REGARD to the Statement by the Government of the Commonwealth of Australia of 7 May 1971 concerning the acceptance by the Government of the Commonwealth of Australia of the obligations of membership in the Organisation;[6]

CONSIDERING that the Government of the Commonwealth of Australia is prepared to assume the obligations of membership in the Organisation;

DECIDES:

The Government of the Commonwealth of Australia is invited, with effect from 7 June 1971, to accede to the Convention.

In adopting the Decision inviting the Government of the Commonwealth of Australia to accede to the Convention on the Organisation for Economic Co-operation and Development, the Council:

1. accepted the Statement by the Government of the Commonwealth of Australia concerning acceptance by the Government of the Commonwealth of Australia of the obligations of membership in the Organisation, the text of which is set forth in document C(71)86, Annex II;

2. instructed the Secretary-General to inform the Government of the Commonwealth of Australia of any Acts adopted by the Organisation between the effective date of the Decision of the Council inviting the Government of the Commonwealth of Australia to accede to the Convention and the date of deposit by the Government of the Commonwealth of Australia of the instrument of accession to the Convention;

3. agreed that the Government of the Commonwealth of Australia shall notify the Organisation within sixty days whether or not it is willing to accede to the Acts referred to in paragraph 2 above and that, if the Government of the Commonwealth of Australia is unwilling to accede to a particular Act and if it wishes to propose amendments or reservations thereto, the matter shall be submitted to the Council. However, the Government of the Commonwealth of Australia shall not be bound by any Act adopted between the dates specified in paragraph 2 above unless it has signified its readiness to accede to such Act;

4. decided that between the effective date of the Invitation of the Council to the Government of the Commonwealth of Australia to accede to the Convention and the date of accession of the Government of the Commonwealth of Australia to the Convention, the Government of the Commonwealth of Australia can be represented at meetings of the Council and other bodies subject to the rules of the Organisation.

IN WITNESS WHEREOF, the undersigned Representatives, being duly authorised to that effect, have signed the present text.

DONE in Paris, this Seventh day of June Nineteen Hundred and Seventy One, in two copies, in the English and French languages, both texts being equally authentic.

FOR THE GOVERNMENT OF THE FOR THE ORGANISATION FOR

COMMONWEALTH OF AUSTRALIA: ECONOMIC CO-OPERATION AND

DEVELOPMENT:

THE GOVERNMENT OF THE COMMONWEALTH OF AUSTRALIA

HAVING REGARD to the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960 (hereinafter called the "Convention") and to Supplementary Protocols Nos. 1 and 2 to the Convention;

HAVING REGARD to Article 16 of the Convention which provides that the Council of the Organisation may invite any Government prepared to assume the obligations of membership to accede to the Convention;

STATES the following:

1. The Government of the Commonwealth of Australia (subsequently referred to as the "Australian Government") shall, by the deposit of its instrument of accession to the Convention, assume the obligations of membership in the Organisation, accept the views and aims contained in the Report of the Preparatory Committee of the Organisation (December 1960) and accede to the Acts of the Organisation which shall be in force at the time of such deposit, except as otherwise specified in paragraphs 2 and 3 and the Annexes to the present Statement.

2. It is proposed that the following Acts of the Organisation shall not be applicable to the Australian Government:

- Recommendation of the Council on the Movement and Employment of Foreign Workers [C(60)113 (Final)]

- Decision of the Council governing the Employment of Nationals of Member Countries [C(56)258 and subsequent amendments]

- Recommendation of the Council concerning Action in the Field of Energy and the Establishment of an Energy Advisory Commission and an Energy Committee [C(59)172 as amended by C(65)87 (which was repealed by C(70)133 (Final))]

- Recommendation of the Council concerning Action on the Report of the Energy Advisory Commission [C(61)36]

- Recommendation of the Council concerning the Apportionment of Oil Supplies in an Emergency[7] [C(60)83(Final)]

- Resolution of the Council concerning the Apportionment of Oil Supplies in an Emergency[8] [C/M(60)20(Final) Item 177]

- Resolutions of the Council approving the Recommendations of the Oil Committee's Report on Oil Stocks and Storage Capacity [C/M(58)21(Final) Item 195; C/M(62)15, Annex, Item 166]

- Resolution of the Council on the Second Interim Report on the Increase in Oil Stocks and Stockpiling Capacity [C/M(61)16(Final) Item 136]

- Resolution of the Council on the Situation of the Butter Market [C(61)74]

- Resolution of the Council on the Situation of the Dairy Products Market [C/M(61)21(Final) Item 181]

- Recommendation of the Council concerning Government Assistance to the Shipbuilding Industry [C(69)73]

- Recommendation of the Council on Procedure for the Registration of Pharmaceutical Specialities [C(61)106(Final) as amended by C(63)45(Final)]

- Recommendation of the Council on Procedure for Labelling Pharmaceutical Specialities [C(63)57]

- Recommendation of the Council concerning a Common Classification of the Classes of Insurance recognised by the Supervisory Authorities of the Member Countries [C(64)62(Final)]

- Recommendation of the Council concerning Taxation Regulations relating to Nuclear Risk Insurance [C(62)6(Final)]

- Recommendation of the Council concerning a Model of Safety Regulations for Tower Cranes for Building Work [C(67)34].

3. The Australian Government wishes to make the following remarks regarding some of the Acts to which it proposes to accede:

- Decision of the Council concerning Administrative Facilities in favour of International Tourism - 20 February 1968 [C(68)32].

Remarks:

The Australian Government reserves the right not to apply the provisions of Articles 5(c) and 10(c). The duty-free concessional allowance per passenger of tobacco and tobacco products is 1 lb (average) = 453.6 grammes. Concessions to passengers are generally limited to persons (18) years of age or older.

In connection with Appendix II the official national tourist agency national tourist agency of Australia is: Australian Tourist Commission, 414 St. Kilda Road, Melbourne, Victoria 3004.

- Recommendation of the Council concerning Administrative Formalities relating to International Tourism - 20 February 1968 ([C(68)34].

Remarks:

The Australian Government reserves the right not to apply the following provisions of the Annex to the Recommendation:

Section C: Paragraphs 1, 2(b), 4;

Section D: Paragraphs 1, 2;

Section: E: Paragraph 2. Australia requires presentation of a valid vaccination certificate;

Section G: I. Paragraph 1(d). To be applied subject to Australian quarantine requirements. Para. 3(a). To be applied subject to the age provision being 18 years.

- Resolution of the Council concerning an Understanding on Export Credits for Ships - 30 May 1969 [C(69)60 (Final)] as amended by C(70)204(Final) of 16 December 1970].

Remarks:

The Australian Government will submit to the Secretary-General at an early date an Implementation Protocol as provided in Clause 10 of the Resolution.

- Recommendation of the Council concerning the Avoidance of Double Taxation - 30 July 1963 [C(63)113].

Remarks on Section I:

The Australian Government is prepared to use the provisions of the Draft Convention as a guide when negotiation new or revised agreements with Member countries, on the understanding that this does not constitute acceptance of every Article of the Draft Convention. The Australian Government is prepared to provide the Organisation with the text of any of its new or revised double taxation agreements with other Member countries and to notify the Organisation of the reasons for not adopting certain of the Draft provisions when this is applicable.

- Recommendation of the Council concerning the Avoidance of Double Taxation with respect to Taxes on Estates and Inheritances - 28 June 1966 [C(66)50(Final)].

Remarks on Section I:

Should it prove necessary or desirable in the future for it to negotiate agreements of this kind with Member countries, the Australian Government would be prepared to use the provisions of the Draft Convention as a guide, on the understanding that this does not constitute acceptance of every Article of the Draft Convention. However, the Australian Government is prepared to provide the Organisation with the text of any such agreements with Member countries and to notify the Organisation of the reasons for not adopting certain of the Draft Convention provisions in relevant cases.

4. If the Australian Government should wish to abstain from, or make a remark in respect of, any additional Acts of the Organisation not mentioned in paragraphs 2 and 3 above, the Australian Government would wish to enjoy the right, for a period of six months from the date of deposit of the instrument of accession, to submit the matter to the Council of the Organisation for decision.

5. As to the Acts of the Organisation concerning the Development Centre as well as the European Monetary Agreement, the European Nuclear Energy Agency and other programmes of common interest to a limited number of Members, their eventual application to Australia will be considered if the Australian Government should propose to the Council its participation in the Development Centre and/or its accession to the European Monetary Agreement and/or its admission as a member or associate member of the European Nuclear Energy Agency and/or its participation in one or more other programmes of common interest to a limited number of Member countries.

6. The Australian Government endorses the objectives of the Code of Liberalisation of Current Invisible Operations and the Code of Liberalisation of Capital Movements and is prepared to accept the rights, obligations and commitments arising therefrom. The Australian Government proposes to lodge reservations in accordance with paragraph b of Article 2 of the two Codes. The texts of these reservations are set out in Annexes I and II to the present Statement.

7. The Australian Government is prepared to conclude with the Organisation an Agreement on Privileges and Immunities of the Organisation in Australia in accordance with the provisions of paragraph (d) of Supplementary Protocol No. 2 to the Convention.

In adhering to the Code of Liberalisation of Current Invisible Operations, the Australian Government would require derogation from the provisions of its Article 2(a) in connection with three items. The resulting reservations might be formulated as follows:

D/3 Life assurance, Annex I to Annex A, Part I, paragraph 2(b).
D/6 Insurance business operations abroad. Annex I to Annex A, Part III and Part IV.
E/1 Printed films, commercial, documentary, educational, etc. (rentals, dues, subscriptions, reproduction and synchronisation fees, etc) Annex IV to Annex A, paragraph 9: Films and other recorded programs to be used solely for television broadcasts.	The reservation applies only to: (a) foreign-produced advertising material; and (b) time-quota limitations on the screening of programs which are not of Australian origin.

In adhering to the Code of Liberalisation of Capital Movements, the Australian Government would require derogation from the provisions of its Article 2(a) in connection with thirteen items. The resulting reservations might be formulated as follows:

List A, I/A, B: Direct investment: - In the country concerned by non-residents; - Abroad by residents.
List A, III/B2: Admission of securities to capital markets: - Introduction of foreign securities on a recognised domestic security exchange.
List A, IV/B1: Buying and selling of securities: - Purchase abroad, by residents, of listed securities.	The reservation applies only to foreign securities.
List A, VII(i)/B: Credits, directly linked with international commercial transactions or with the rendering of international services, in cases where a resident participates in the underlying commercial or service transaction: - Credits granted by residents to non-residents.	The reservation applies only to credits extending over a period of more than six months after shipment of the goods or performance of the service concerned.
List A, XII/B: Sureties and guarantees: - By residents in favour of non-residents.	The reservation applies only to bank guarantees expressed in foreign currency.
List B, III/B1: Admission of securities to capital markets: - Issue of foreign securities through placing or public sale on the domestic capital market.
List B, IV/A4, B3: Buying and selling of securities: - Sale, by non-residents, of unlisted securities; - Purchase abroad, by residents, of unlisted securities.	The reservation applies only to foreign securities. The reservation applies only to foreign securities.
List B, V/B1: Operations in real estate: - Building or purchase abroad by residents.
List B, VII(ii)/B: Credits directly linked with international commercial transactions or with the rendering of international services, in cases where no resident participates in the underlying commercial or service transaction: - Credits granted by residents to non-residents.
List B, VIII/A, B: Financial credits and loans: - Credits and loans granted by non-residents to residents; - Credits and loans granted by residents to non-residents.

THE COUNCIL,

HAVING REGARD to Articles 2(d) and 5(a) of the Convention on the Organisation for Economic Cooperation and Development of 14 December 1960;

HAVING REGARD to the Code of Liberalisation of Current Invisible Operations;

HAVING REGARD to the Articles of Agreement of the International Monetary Fund of 27 December 1945;

HAVING REGARD to the European Monetary Agreement of 5 August 1955, and the Protocol of Provisional Application of that Agreement of the same date;

HAVING REGARD to the Report of the Committee for Invisible Transactions on the Codes of Liberalisation of Current Invisibles and of Capital Movements of 28 October 1961, and the Comments by the Executive Committee on that Report of 8 December 1961 [OECD/C(61)37; OECD/C(61)73];

DECIDES:

a. Members shall progressively abolish between one another, in accordance with the provisions of Article 2, restrictions on movements of capital to the extent necessary for effective economic cooperation. Measures designed to eliminate such restrictions are hereinafter called "measures of liberalisation".

b. Members shall, in particular, endeavour:

(i) to treat all non-resident-owned assets in the same way irrespective of the date of their formation, and

(ii) to permit the liquidation of all non-resident-owned assets and the transfer of such assets or of their liquidation proceeds.

c. Members should use their best offices to ensure that the measures of liberalisation are applied within their overseas territories.

d. Members shall endeavour to extend the measures of liberalisation to all members of the International Monetary Fund.

e. Members shall endeavour to avoid introducing any new exchange restrictions on the movements of capital or the use of non-resident-owned funds and shall endeavour to avoid making existing regulations more restrictive.

a. Subject to the provisions of paragraph (b)(iv), Members shall grant any authorisation required for the conclusion or execution of transactions and for transfers specified in an item set out in List A or List B of Annex A to this Code.

b. A Member may lodge reservations relating to the obligations resulting from paragraph (a) when:

(i) an item is added to List A of Annex A to this Code;

(ii) obligations relating to an item in that List are extended;

(iii) obligations relating to any such item begin to apply to that Member; or

(iv) at any time, in respect of an item in List B.

Reservations shall be set out in Annex B to the Code.

c. Whenever the liquidation proceeds of non-resident-owned assets may be transferred, the right of transfer shall include any appreciation of the original assets.

d. Whenever existing regulations or international agreements permit loans between residents of different Members otherwise than by issuing marketable domestic securities or by using, in the country in which the borrower resides, funds the transfer of which is restricted, the repayment obligation may be expressed or guaranteed in the currency of either of the two Members concerned.

The provisions of this Code shall not prevent a Member from taking action which it considers necessary for:

(i) the maintenance of public order or the protection of public health, morals and safety;

(ii) the protection of its essential security interests;

(iii) the fulfilment of its obligations relating to international peace and security.

Nothing in this Code shall be regarded as altering the obligations undertaken by a Member as a Signatory of the Articles of Agreement of the International Monetary Fund or other existing multilateral international agreements.

a. The measures of liberalisation provided for in this Code shall not limit the powers of Members to verify the authenticity of transactions or transfers nor to take any measures required to prevent evasion of their laws or regulations.

b. Members shall simplify as much as possible all formalities connected with the authorisation or verification of transactions or transfers and shall cooperate, if necessary, to attain such simplification.

A Member shall be deemed to have complied with its obligations as regards transfers whenever a transfer may be made:

(i) between persons entitled, by the exchange regulations of the State from which and of the State to which the transfer is to be made, respectively, to make and/or to receive the said transfer;

(ii) in accordance with international agreements in force at the time the transfer is to be made; and

(iii) in accordance with the monetary arrangements in force between the State from which and the State to which the transfer is to be made.

a. If its economic and financial situation justifies such a course, a Member need not take the whole of the measures of liberalisation provided for in Article 2(a).

b. If any measures of liberalisation taken or maintained in accordance with the provisions of Article 2(a) result in serious economic and financial disturbance in the Member State concerned, that Member may withdraw those measures.

c. If the overall balance of payments of a Member develops adversely at a rate and in circumstances, including the state of its monetary reserves, which it considers serious, that member may temporarily suspend the application of measures of liberalisation taken or maintained in accordance with the provisions of Article 2(a).

d. However, a Member invoking paragraph (c) shall endeavour to ensure that its measures of liberalisation:

(i) cover, twelve months after it has invoked that paragraph, to a reasonable extent, having regard to the need for advancing towards the objective defined in sub-paragraph (ii), transactions and transfers which the Member must authorise in accordance with Article 2(a) and the authorisation of which it has suspended, since it invoked paragraph (c); and

(ii) comply, eighteen months after it has invoked that paragraph, with its obligations under Article 2(a).

e. Any Member invoking the provisions of this Article shall do so in such a way as to avoid unnecessary damage which bears especially on the financial or economic interests of another Member and, in particular, shall avoid any discrimination between other Members.

Any Member lodging a reservation under Article 2(b) or invoking the provisions of Article 7 shall, nevertheless, benefit from the measures of liberalisation taken by other Members, provided it has complied with the procedure laid down in Article 12 or Article 13 as the case may be.

A Member shall not discriminate as between other Members in authorising the conclusion and execution of transactions and transfers which are listed in Annex A and which are subject to any degree of liberalisation.

Members forming part of a special customs or monetary system may apply to one another, in addition to measures of liberalisation taken in accordance with the provisions of Article 2(a), other measures of liberalisation without extending them to other Members. Members forming part of such a system shall inform the Organisation of its membership and those of its provisions which have a bearing on this Code.

a. Members shall notify the Organisation, within the periods which the latter may determine, of the measures of liberalisation which they have taken and of any other measures which have a bearing on this Code, as well as of any modifications of such measures.

b. Members shall notify the Organisation forthwith of any cases in which they have by virtue of remark (ii) against Section I of List A of Annex A to this Code imposed restrictions on specific transactions or transfers relating to direct investments and shall state their reasons for doing so.

c. Members shall submit to the Organisation, at intervals determined by the Organisation, but of no more than eighteen months, information concerning:

(i) any channels, other than official channels, through which transfers are made, and any rates of exchange applying to such transfers, if they are different from the official rates of exchange;

(ii) any security money markets and any premiums or discounts in relation to official rates of exchange prevailing therein.

d. The Organisation shall consider the notifications submitted to it in accordance with the provisions of paragraphs (a), (b) and (c) with a view to determining whether each Member is complying with its obligations under this Code.

a. Each Member lodging a reservation in respect of an item specified in List B of Annex A to the Code shall forthwith notify the Organisation of its reasons therefor.

b. Each Member shall notify the Organisation within a period to be determined by the Organisation, whether it desires to maintain any reservation lodged by it in respect of an item specified in List A or List B of Annex A to this Code, and if so, state its reasons therefor.

c. The Organisation shall examine each reservation lodged by a Member in respect of an item specified in:

(i) List A at intervals of not more than eighteen months;

(ii) List B within six months of notification, and at intervals of not more than eighteen months thereafter;

unless the Council decides otherwise.

d. The examinations provided for in paragraph (c) shall be directed to making suitable proposals designed to assist Members to withdraw their reservations.

a. Any Member invoking the provisions of Article 7 shall notify the Organisation forthwith of its action, together with its reasons therefor.

b. The Organisation shall consider the notification and reasons submitted to it in accordance with the provisions of paragraph (a) with a view to determining whether the Member concerned is justified in invoking the provisions of Article 7 and, in particular, whether it is complying with the provisions of paragraph (e) of that Article.

c. If the action taken by a Member in accordance with the provisions of Article 7 is not disapproved by the Organisation, that action shall be reconsidered by the Organisation every six months or, subject to the provisions of Article 15, on any other date which the latter may deem appropriate.

d. If, however, in the opinion of a Member other than the one which has invoked Article 7, the circumstances justifying the action taken by the latter in accordance with the provisions of that Article have changed, that other Member may at any time refer to the Organisation for reconsideration of the case at issue.

e. If the action taken by a Member in accordance with the provisions of paragraph (a), (b) or (c) of Article 7 has not been disapproved by the Organisation, then if that Member subsequently invokes paragraph (a), (b) or (c) of Article 7 of the Code of Liberalisation of Current Invisible Operations, or, having invoked one paragraph of Article 7 of this Code, invokes another paragraph of that Article, its case shall be reconsidered by the Organisation after six months have elapsed since the date of the previous consideration, or on any other date which the latter may deem appropriate. If another Member claims that the Member in question is failing to carry out its obligations under paragraph (e) of Article 7 of this Code or paragraph (e) of Article 7 of the Code of Liberalisation of Current Invisible Operations, the Organisation shall consider the case without delay.

f. (i) If the Organisation, following its consideration in accordance with paragraph (b), determines that a Member is not justified in invoking the provisions of Article 7 or is not complying with the provisions of that Article, it shall remain in consultation with the Member concerned, with a view to restoring compliance with the Code.

(ii) If, after a reasonable period of time, that Member continues to invoke the provisions of Article 7, the Organisation shall reconsider the matter. If the Organisation is then unable to determine that the Member concerned is justified in invoking the provisions of Article 7 or is complying with the provisions of that Article, the situation of that Member shall be examined at a session of the Council convened by its Chairman for this purpose unless the Organisation decides on some other procedure.

a. In examining the case of any Member which it considers to be in the process of economic development and which has invoked the provisions of Article 7 the Organisation shall have special regard to the effect that the economic development of the Member has upon its ability to carry out its obligations under paragraph (a) of Articles 1 and 2.

b. In order to reconcile the obligations of the Member concerned under paragraph (a) of Article 2 with the requirements of its economic development, the Organisation may grant that Member a special dispensation from those obligations.

a. A Member invoking the provisions of paragraph (c) of Article 7 shall report to the Organisation, within ten months after such invocation, on the measures of liberalisation it has restored or proposes to restore in order to attain the objective determined in sub-paragraph (d)(i) of Article 7. The Member shall, if it continues to invoke these provisions, report to the Organisation again on the same subject - but with reference to the objective determined in sub-paragraph (d)(ii) of Article 7 - within sixteen months after such invocation.

b. If the Member considers that it will not be able to attain the objective, it shall indicate its reasons in its report and, in addition, shall state:

(i) what internal measures it has taken to restore its economic equilibrium and what results have already been attained, and

(ii) what further internal measures it proposes to take and what additional period it considers it will need in order to attain the objective determined in sub-paragraph (d)(i) or (d)(ii) of Article 7.

c. In cases referred to in paragraph (b), the Organisation shall consider within a period of twelve months, and, if required, of eighteen months from the date on which the Member invoked the provisions of paragraph (c) of Article 7, whether the situation of that Member appears to justify its failure to attain the objective determined in sub-paragraph (d)(i) or (d)(ii) of Article 7 and whether the measures taken or envisaged and the period considered by it as necessary for attaining the objective determined, appear acceptable in the light of the objectives of the Organisation in the commercial and financial fields.

d. If a Member invokes the provisions of both paragraph (c) of Article 7 of this Code and paragraph (c) of Article 7 of the Code of Liberalisation of Current Invisible Operations, the periods of twelve and eighteen months referred to in paragraph (c) shall run from the date of the earlier invocation.

e. If following any of the examinations provided for in paragraph (c) the Organisation is unable to approve the arguments advanced by the Member concerned in accordance with the provisions of paragraph (b), the situation of that Member shall be examined at a session of the Council convened by its Chairman for this purpose unless the Organisation decides on some other procedure.

a. If a Member considers that the measures of liberalisation taken or maintained by another Member, in accordance with Article 2(a), are frustrated by internal arrangements likely to restrict the possibility of effecting transactions or transfers, and if it considers itself prejudiced by such arrangements, for instance because of their discriminatory effect, it may refer to the Organisation.

b. If, following the consideration of a matter referred to it under paragraph (a) the Organisation determines that internal arrangements introduced or maintained by the Member concerned have the effect of frustrating its measures of liberalisation, the Organisation may make suitable suggestions with regard to the removal or modification of such arrangements.

a. If a Member considers that another Member which has not invoked the provisions of Article 7 has retained, introduced or reintroduced restrictions on capital movements or the use of non-resident-owned funds contrary to the provisions of Articles 1, 2, 9 or 10, and if it considers itself to be prejudiced thereby, it may refer to the Organisation.

b. The fact that the case is under consideration by the Organisation shall not preclude the Member which has referred to the Organisation from entering into bilateral conversations on the matter with the other Member concerned.

General tasks

a. The Committee on Capital Movements and Invisible Transactions shall consider all questions concerning the interpretation or implementation of the provisions of this Code or other Acts of the Council relating to the liberalisation of capital movements and the use of non-residents-owned funds and shall report its conclusions thereon to the Council as appropriate.

b. The Committee on Capital Movements and Invisible Transactions shall submit to the Council any appropriate proposals in connection with its tasks as defined in paragraph (a) and, in particular, with the extension of measures of liberalisation as provided in Article 1 of this Code.

Special tasks

a. The Committee on Capital Movements and Invisible Transactions shall:

(i) determine the periods within which the information provided for in paragraphs (a) and (c) of Article 11 and the reasons provided for in paragraph (b) of Article 12 should be notified to the Organisation by the Members concerned;

(ii) subject to paragraph (c) of this Article, consider, in conformity with paragraphs (c) and (d) of Article 12, each reservation notified to the Organisation in accordance with paragraphs (a) and (b) of that Article and make, where appropriate, suitable proposals designed to assist Members to withdraw their reservations;

(iii) determine, in accordance with the provisions of Article 12, the date on which any reservation should be re-examined, if the reservation has not been withdrawn in the meantime;

(iv) consider, in accordance with the provisions of paragraph (d) of Article 11, the notifications submitted to the Organisation;

(v) consider reports and references submitted to the Organisation in accordance with the provisions of Article 13 or paragraphs (a) and (b) of Article 15 where a Member has invoked the provisions of Article 7, or submitted in accordance with the provisions of Article 16 or Article 17;

(vi) determine the date on which the case of a Member which has invoked Article 7 should be reconsidered in accordance with the provisions of paragraph (c), paragraph (e) or paragraph (f)(ii) of Article 13;

(vii) transmit to the United States Government, with any comments it considers appropriate, notifications received from Members in accordance with paragraph (2)(a) of the Decision in Annex C to the Code; and

(viii) consider information received from the United States Government in accordance with paragraph 2(b) of the Decision in Annex C to the Code.

b. When examining the reservations notified in accordance with paragraph (b) of Article 12, the Committee may, at its discretion, consider together either all reservations made by the same Member or all reservations made in respect of the same item specified in Annex A to this Code.

c. The Committee shall, however, not consider any reservations notified to the Organisation in accordance with paragraph (b) of Article 12 by a Member which, at the time of the examination in respect of the item subject to that reservation, is invoking the provisions of Article 7 or is enjoying a dispensation in accordance with paragraph (b) of Article 14.

d. In the cases provided for in sub-paragraphs (ii), (iv), (v) and (viii) of paragraph (a), the Committee shall report to the Council, except in cases of notifications under Article 11(b) on which the Committee shall report only if it considers this appropriate.

e. The Committee shall, whenever it considers it necessary:

(i) consult other Committees of the Organisation on any questions relating to the liberalisation of capital movements; and, in particular,

(ii) request other Committees of the Organisation to give their views on any questions relating to the balance of payments and the state of the monetary reserves of a Member.

Before they are considered by the Council, the Payments Committee shall:

(i) review the reports and proposals by the Committee on Capital Movements and Invisible Transactions made in accordance with the provisions of this Code; and

(ii) forward to the Council any comments thereon which it considers necessary.

In this Code:

(i) "Member" shall mean a Member of the Organisation which adheres to this Code;

(ii) "Domestic securities" shall mean securities issued or to be issued by a resident;

(iii) "Foreign securities" shall mean securities issued or to be issued by a non-resident;

(iv) "Recognised security market" shall mean a stock exchange or security market in a Member country (including an over-the-counter market organised by a recognised association of security dealers);

- which is officially recognised in the country where it operates;

- on which the public can buy and sell securities; and

- on which dealings take place in accordance with fixed rules;

(v) "Securities quoted on a recognised security market" shall mean securities which have been granted an official quotation or are officially listed on such a market or for which dealing prices on such a market are published not less frequently than once a week;

(vi) Security dealing on a "spot basis" shall mean dealing with payment and delivery to be made immediately the transaction is concluded or on the next periodic settlement date of the stock exchange where the transaction takes place;

(vii) "Money market securities" shall mean securities with an original maturity of less than one year;

(viii) "Collective investment securities" shall mean the share certificates, registry entries or other evidence of investor interest in an institution for collective investment which, irrespective of legal form, is organised for the purpose of managing investments in securities or in other assets, applies the principle of risk-spreading, issues its own securities to the public on demand either continuously or at frequent intervals and is required on the request of the holder to redeem such securities, directly or indirectly, within a specified period and at their net asset value;

(ix) "Financial institutions" shall mean banks, savings banks, bodies which specialise in the granting of credits, insurance companies, building societies, investment companies, and other establishments of a similar nature;

(x) "Deposit" shall mean a sum of money paid on terms: (a) under which it will be repaid, with or without interest or premium, and either on demand or at a time or in circumstances agreed by the person making it or receiving it or by his order, and (b) which are not referable to the provision of property or services or to the giving of security;

(xi) "Official channels" shall mean foreign exchange markets in which an officially established rate or officially established rates apply and in which spot transactions take place at rates which are free to fluctuate within the official margins;

(xii) "Blocked funds" shall mean funds owned by residents of other Member countries in accordance with the laws and regulations of the Member where the funds are held and blocked for balance-of-payments reasons;

(xiii) "Unit of account" shall mean the sum in the national currency of a Member which is equal to a unit of value of special drawing rights as valued by the International Monetary Fund.

This Decision, referred to in the present text as the "Code", shall be known as the "Code of Liberalisation of Capital Movements".

Any Member may withdraw from the Code by transmitting a notice in writing to the Secretary-General of the Organisation. The withdrawal shall become effective twelve months from the date on which such notice is received.

Investment for the purpose of establishing lasting economic relations with an undertaking such as, in particular, investments which give the possibility of exercising an effective influence on the management thereof:

A. In the country concerned by non-residents by means of:

1. Creation or extension of a wholly-owned enterprise, subsidiary or branch, acquisition of full ownership of an existing enterprise;

2. Participation in a new or existing enterprise;

3. A loan of five years or longer.

B. Abroad by residents by means of:

1. Creation or extension of a wholly-owned enterprise, subsidiary or branch, acquisition of full ownership of an existing enterprise;

2. Participation in a new or existing enterprise;

3. A loan of five years or longer.

Remarks: Transactions and transfers under A and B shall be free unless:

(i) an investment is of a purely financial character designed only to gain for the investor indirect access to the money or financial market of another country; or

(ii) in view of the amount involved or of other factors a specific transaction or transfer would have an exceptionally detrimental effect on the interests of the Member concerned.

The authorities of Members shall not maintain or introduce:

Regulations or practices applying to the granting of licences, concessions, or similar authorisations, including conditions or requirements attaching to such authorisations and affecting the operations of enterprises, that raise special barriers or limitations with respect to non-resident (as compared to resident) investors, and that have the intent or the effect of preventing or significantly impeding inward direct investment by non-residents.

A. Abroad by residents.

B. In the country concerned by non-residents.

A. Operations in the country concerned by non-residents:

1. (See List B.)

2. Sale.

B. Operations abroad by residents:

1. (See List B.)

2. Sale.

A. Admission of domestic securities on a foreign capital market:

1. Issue through placing or public sale of	(a) shares or other securities of a participating nature;
2. Introduction on a recognised foreign security market of	(b) bonds or other debt securities (original maturity of one year or more).

B. Admission on foreign securities on the domestic capital market:

1. Issues through placing or public sale of	(a) shares or other securities of a participating nature;
2. Introduction on a recognised domestic security market of	(b) bonds or other debt securities (original maturity of one year or more).

C. Operations in the country concerned by non-residents:

1. Purchase	(a) shares or other securities of a participating nature;
2. Sale	(b) bonds and other debt securities (original maturity of one year or more).

D. Operations abroad by residents:

1. Purchase	(a) shares or other securities of a participating nature;
2. Sale	(b) bonds and other debt securities (original maturity of one year or more).

Remarks: The liberalisation obligations under B1 and B2 are subject to the regulations of the security markets concerned.

The authorities of Members shall not maintain or introduce restrictions which discriminate against foreign securities.

Members may:

(a) with regard to transactions and transfers under A, B, C and D require that:

(i) such transactions and transfers must be carried out through authorised resident agents;

(ii) in connection with such transactions and transfers residents may hold funds and securities only through the intermediary of such agents; and

(iii) purchases and sales may be contracted only on a spot basis;

(b) with regard to transactions and transfers under C2, take measures for the protection of investors, including the regulation of promotional activities, provided such measures do not discriminate against the residents of any other Member;

(c) with regard to transactions and transfers under D1, regulate on their territory any promotional activities by, or on behalf of, the residents of other Members.

A. Admission of domestic collective investment securities on a foreign securities market:

1. Issue through placing or public sale.

2. Introduction on a recognised foreign securities market.

B. Admission of foreign collective investment securities on the domestic securities market:

1. Issue through placing or public sale.

2. Introduction on a recognised domestic securities market.

C. Operations in the country concerned by non-residents:

1. Purchase.

2. Sale.

D. Operations abroad by residents:

1. Purchase.

2. Sale.

Remarks: The liberalisation obligations under B1 and B2 are subject to the regulations of the security markets concerned.

The authorities of Members shall not maintain or introduce restrictions which discriminate against foreign collective investment securities.

Members may:

(a) with regard to transactions and transfers under A, B, C and D require that:

(i) such transactions and transfers must be carried out through authorised resident agents;

(ii) in connection with such transactions and transfers residents may hold funds and securities only through the intermediary of such agents; and

(iii) purchases and sales may be contracted only on a spot basis;

(b) with regard to transactions and transfers under C2, take measures for the protection of investors, including the regulation of promotional activities, provided such measures do not discriminate against institutions for collective investment organised under the laws of any other Member;

(c) with regard to transactions and transfers under D1, regulate on their territory any promotional activities of foreign institutions for collective investment.

(i) In cases where a resident participates in the underlying commercial or service transaction.

A. Credits granted by non-residents to residents.

B. Credits granted by residents to non-residents.

(ii) In cases where no resident participates in the underlying commercial or service transaction.

(i) In cases directly related to international trade or international current invisible operations, or in cases related to international capital movement operations in which a resident participates.

A. Sureties and guarantees:

1. By non-residents in favour of residents.

2. By residents in favour of non-residents.

B. Financial back-up facilities:

1. By non-residents in favour of residents.

2. By residents in favour of non-residents.

Remark: Transactions and transfers under X(i)A and B shall be free if they are directly related to international trade, international current invisible operations or international capital movement operations in which a resident participates and which do not require authorisation or have been authorised by the Member concerned.

(ii) In cases not directly related to international trade, international current invisible operations or international capital movement operations, or where no resident participates in the underlying international operation concerned.

A. Sureties and guarantees:

1. By non-residents in favour of residents.

2. By residents in favour of non-residents.

B. Financial back-up facilities:

(See List B.)

A. Operation by non-residents of accounts with resident institutions:

1. In domestic currency.

2. In foreign currency.

B. Operation by residents of accounts with non-resident institutions:

(See List B.)

Remark: Transactions and transfers under XI/A shall be free provided the deposit accounts are operated with financial institutions authorised to accept deposits.

Capital transfers arising under life assurance contracts:[18]

A. Transfers of capital and annuities certain due to resident beneficiaries from non-resident insurers.

B. Transfers of capital and annuities certain due to non-resident beneficiaries from resident insurers.

Remark: Transfers under A and B shall be free also in the case of contracts under which the persons from whom premiums are due or the beneficiaries to whom disbursements are due were residents of the same country as the insurer at the time of the conclusion of the contract but have changed their residence since.

A. Loans.

B. Gifts and endowments.

C. Dowries.

D. Inheritances and legacies.

Remark: Transfers under D shall be free provided that the deceased was resident and the beneficiary non-resident at the time of the deceased's death.

E. Settlement of debts in their country of origin by immigrants.

F. Emigrants' assets.

Remark: Transfers under F shall be free upon emigration irrespective of the nationality of the emigrant.

G. Gaming.

(See List B.)

H. Savings of non-resident workers.

A. Securities and other documents of title to capital assets:

1. Import.

2. Export.

B. Means of Payment:

1. Import.

2. Export.

Remark: In the case of residents the obligation to permit an export applies only to the export of foreign securities and then only on a temporary basis for administrative purposes.

A. Transfer of blocked funds.

B. Use of blocked funds in the country concerned:

1. For operations of a capital nature.

2. For current operations.

C. Cession of blocked funds between non-residents.

A. Operations in the country concerned by non-residents:

1. Building or purchase.

2. (See List A.)

B. Operations abroad by residents:

1. Building or purchase.

2. (See List A.)

A. Admission of domestic securities and other instruments on a foreign money market:

1. Issue through placing or public sale.

2. Introduction on a recognised foreign money market.

B. Admission of foreign securities and other instruments on the domestic money market:

1. Issue through placing or public sale.

2. Introduction on a recognised domestic money market.

C. Operations in the country concerned by non-residents:

1. Purchase of money market securities.

2. Sale of money market securities.

3. Lending through other money market instruments.

4. Borrowing through other money market instruments.

D. Operations abroad by residents:

1. Purchase of money market securities.

2. Sale of money market securities.

3. Lending through other money market instruments.

4. Borrowing through other money market instruments.

Remarks: The liberalisation obligations under B1 and B2 are subject to the regulations of the security markets concerned.

The authorities of Members shall not maintain or introduce restrictions which discriminate against foreign money market securities or other money market instruments.

Members may:

(a) with regard to transactions and transfers under A, B, C and D require that:

(i) such transactions and transfers must be carried out through authorised resident agents;

(ii) in connection with such transactions and transfers residents may hold funds, securities and other instruments only through the intermediary of such agents; and

(iii) purchases and sales may be contracted only on a spot basis;

(b) with regard to transactions and transfers under C2 , take measures for the protection of investors, including the regulation of promotional activities, provided such measures do not discriminate against the residents of any other Member;

(c) with regard to transactions and transfers under D1, regulate on their territory any promotional activities, by or on behalf of, the residents of other Members.

A. Admission of domestic instruments and claims on a foreign financial market:

1. Issue through placing or public sale.

2. Introduction on a recognised foreign financial market.

B. Admission of foreign instruments and claims on a domestic financial market:

1. Issue through placing or public sale.

2. Introduction on a recognised domestic financial market.

C. Operations in the country concerned by non-residents.

1. Purchase.

2. Sale.

3. Exchange for other assets.

D. Operations abroad by residents:

1. Purchase.

2. Sale.

3. Exchange for other assets.

Remarks: The liberalisation obligations under B1 and B2 are subject to the regulations of the financial markets concerned.

The authorities of Members shall not maintain or introduce restrictions which discriminate against foreign negotiable instruments or non-securitised claims.

Members may:

(a) with regard to transactions and transfers under A, B, C and D require that:

(i) such transactions and transfers must be carried out through authorised resident agents; and

(ii) in connection with such transactions and transfers residents may hold funds, negotiable instruments and non-securitised claims only through the intermediary of such agents;

(b) with regard to transactions and transfers under C/2 and C/3, take measures for the protection of investors, including the regulation of promotional activities, provided such measures do not discriminate against the residents of any other Member;

(c) with regard to transactions and transfers under D/1 and D/3, regulate on their territory any promotional activities by, or on behalf of, the residents of other Members.

(i) In cases where a resident participates in the underlying commercial or service

transaction.

A. Credits granted by non-residents to residents.

B. Credits granted by residents to non-residents.

(ii) In cases where no resident participates in the underlying commercial or service transaction.

Remark: Transactions and transfers under VIII(ii)B shall be free if the creditor is an enterprise permitted to extend credits and loans on its national market.

A. Credits and loans granted by non-residents to residents.

B. Credits and loans granted by residents to non-residents.

Remarks: Transactions and transfers under IX/A shall be free if the debtor is an enterprise.

Transactions and transfers under IX/B shall be free if the creditor is an enterprise permitted to extend credits and loans on its national market.

(i) In cases directly related to international trade or international current invisible operations, or in cases related to international capital movement operations in which a resident participates.

(ii) In cases not directly related to international trade, international current invisible operations, or international capital movement operations, or where no resident participates in the underlying international operation concerned.

A. Sureties and guarantees:

(See List A.)

B. Financial back-up facilities:

1. By non-residents in favour of residents.

2. By residents in favour of non-residents.

A. Operation by non-residents of accounts with resident institutions:

(See List A.)

B. Operation by residents of accounts with non-resident institutions:

1. In domestic currency.

2. In foreign currency.

A. In the country concerned by non-residents:

1. Purchase of domestic currency with foreign currency.

2. Sale of domestic currency for foreign currency.

3. Exchange of foreign currencies.

B. Abroad by residents:

1. Purchase of foreign currency with domestic currency.

2. Sale of foreign currency for domestic currency.

3. Exchange of foreign currencies.

Remark. Transactions and transfers under XII/A and B shall be free provided the operations are carried out through authorised resident agents.

A. to F. (See List A.)

G. Gaming.

Remark: Transfers under G shall be free only in respect of winnings. The provision does not cover the stakes wagered.

H. (See List A.)

The present Annex contains the reservations that individual Member countries have lodged in accordance with Article 2(b) of the Code.[26] The reservations have been accepted by the Council and constitute authority for Members to derogate from the provisions of Article 2(a) of the Code with regard to operations enumerated in the Liberalisation Lists A and B.

Reservations will be withdrawn as Members are able to accept in full the liberalisation obligations with respect to the operations shown in the liberalisations Lists A and B. Additional reservations may not be lodged on List A items. The present Annex will be amended by Decisions of the Council, as the need arises.

With respect to inward direct investment, the present Annex lists all reservations maintained on item I/A in List A of the Code. A broader picture of controls and impediments to inward direct investment in Member countries can be found in International Direct investment: Policies and Trends in the 1980s, OECD 1992. The information contained in that report, which will be periodically updated, does not modify the liberalisation obligations of Member countries but is taken into account in the periodic examinations of Member country positions under the Code.

In the country pages that follow, the asterisks added to the mention of item I/A of List A refer to measures or practices, described in Annex E thereafter, allowing inward direct investment or establishment under conditions of reciprocity (ie, allowing residents of another Member country to invest or establish in the Member country concerned under terms similar to those applied by the other Member country to investors resident in the Member country concerned) and/or involving discrimination among investors originating in various OECD Member countries (other than the exceptions to the principle of non-discrimination referred to in Article 10 of the Code of Liberalisation of Capital Movements). Annex E also includes a Council Decision relating to these measures and practices.

Where Member countries permit or prescribe that payment in connection with certain items be made by means other than transfer through the official foreign exchange market, such restrictions would be recorded under "Notes concerning Payment Channels''. As of 31 December 1993 no Member country maintains any such restrictions.

General Remark: The Australian Government accepts the enlarged obligations on banking and financial services in the Code of Liberalisation of Capital Movements consistent with its constitutional powers and the reservations it has lodged in respect of some of the enlarged obligations.

Bearing in mind that the Australian Constitution provides for a federal system of government and State and Territory Governments have powers in relation to some matters within the scope of the enlarged obligations, Australia reserves its position in respect of the enlarged obligations insofar as these obligations relate to actions, including any action in relation to taxation, undertaken by Australian State or Territory Governments. This applies to the enlarged obligations under Items IV to XII, XV and XVI of the Revised Capital Movements Code.

The Australian authorities will take steps to encourage the States and Territories to achieve the liberalisation of operations covered by the enlarged obligations of the Codes that fall within their jurisdiction and will call their attention to the basic principles underlying the liberalisation obligations under the Code. The Australian authorities will also seek the cooperation of the States and Territories in providing information on any existing restrictions applied at the State or Territory level, as well as any new measures that might be taken at that level.

In the event that a Member of the OECD considers that its interests under the Codes are being prejudiced by the actions of an Australian State or Territory Government, the Australian authorities will consult with the Member and the State or Territory Government concerned. They will bring the provisions of the Code and the circumstances of the case in question to the attention of the competent authorities of any State or Territory concerned together with an appropriate recommendation. They will also inform the Organisation of the action taken in this regard and of the results thereof.

Direct investment:

- In the country concerned by non-residents.

Remark: The reservation applies only to:

(i) Investments in banking, real estate, mass circulation and ethnic newspapers, broadcasting (including television), civil aviation and uranium;

(ii) Proposals falling within the scope of Australia's Foreign Acquisitions and Take-overs Act 1975, which broadly covers acquisitions of urban land, acquisitions of partial or controlling interests in Australian companies or businesses with total assets valued over stipulated thresholds and other arrangements relating to foreign control of companies and businesses;

(iii) Proposals to establish new businesses or projects where the total investment is A$10 million or more;

(iv) Investments by foreign governments or their agencies;

(v) Investments to the extent that constituent States or Territories of Australia exercise legislative and administrative control over such investment;

(vi) Ownership of Australian flag vessels, except through an enterprise incorporated in Australia.

Operations in securities on capital markets:

- Issue through placing or public sale of foreign securities on the domestic capital market.

Remark: The reservation applies only to the issue of bearer securities by foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations. In addition, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

- Introduction of foreign securities on a recognised domestic security market.

Remark: The reservation applies only to the introduction of bearer securities by foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations. In addition, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

- Purchase in the country concerned by non-residents.

Remark: The reservation applies only to the purchase of shares and other securities of a participating nature which may be affected by laws on inward direct investment and establishment.

Operations in real estate:

- In the country concerned by non-residents.

Remark: The reservation does not apply to:

(i) Acquisitions of direct interests in non-residential commercial real estate valued under $5 million;

(ii) Acquisitions of interests in time-share schemes where the entitlement of the foreign interest and any associates is less than four weeks per year;

(iii) Acquisitions of residential real estate by approved migrants and other foreign nationals entitled to permanent residence in Australia;

(iv) Acquisitions by non-resident Australian citizens, either directly or indirectly through Australian companies and trusts;

(v) Acquisitions of offices and residences by foreign government missions for use as official missions or residences for staff subject to sale to Australians or other eligible purchasers when no longer being used for those purposes;

(vi) Acquisitions of minority interests in public companies and trusts whose principal assets are comprised of real estate, to the extent permitted by regulations under the Foreign Acquisitions and Takeovers Act;

(vii) Acquisitions of real estate by general insurance companies operating in Australia where the acquisitions are made from the reserves of the companies and are within the prudential guidelines of the Insurance Commissioner;

(viii) Acquisitions by life assurance companies, representing investment of their Australian statutory funds, by Australian pension funds of foreign employers and by foreign-controlled charities or charitable trusts operating in Australia for the primary benefit of Australians.

Operations on money markets:

- Issue through placing or public sale of foreign securities and other instruments on the domestic money market.

Remark: The reservation applies only to the issue of bearer securities by foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations. In addition, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

- Introduction of foreign securities and other instruments on a recognised domestic money market.

Remark: The reservation applies only to the introduction of bearer securities by foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations. In addition, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

- Borrowing through other money market instruments in the country concerned by non-residents.

Remark: The reservation applies only to borrowing through bearer instruments by foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations. In addition, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

Other operations in negotiable instruments and non-securitised claims:

- Issue through placing or public sale of foreign instruments and claims on a domestic financial market.

Remark: The reservation applies only to the issue of bearer instruments by foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations. In addition, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

- Introduction of foreign instruments and claims on a recognised domestic financial market.

Remark: The reservation applies only to the introduction of bearer instruments by foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations. In addition, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

Credits directly linked with international commercial transactions or with the rendering of international services, in cases where no resident participates in the underlying commercial or service transaction:

- Credits granted by residents to non-residents.

Remark: The reservation applies only to credits granted to foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations insofaras, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

Financial credits and loans:

- Credits and loans granted by residents to non-residents.

Remark: The reservation applies only to credits and loans to foreign central banks, foreign governments, foreign government agencies not akin to private sector commercial entities, and international governmental organisations insofaras, for borrowings in excess of $A100 million, these categories of borrowers are required to consult with the Australian authorities prior to undertaking any borrowing in the Australian capital market.

THE COUNCIL,

HAVING REGARD to Articles 2(d) and 5(a) of the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960;

HAVING REGARD to the Code of Liberalisation of Capital Movements (hereinafter called the "Code");

HAVING REGARD to the Report of the Committee for Invisible Transactions on the Codes of Liberalisation of Current Invisible Operations and of Capital Movements of 28 October 1961, in particular, paragraphs 18 to 21 thereof, and the Comments by the Executive Committee on that Report of 8 December 1961 [OECD/C(61)27, OECD/C(61)73];

RECOGNISING that in the United States individual States have jurisdiction to act with respect to certain matters which fall within the purview of the Code;

BELIEVING, however, that there is only a limited area of capital movements in which a Member might consider that the benefits it could reasonably expect to derive from the Code are being denied to it by such action and believing, moreover, that cases of any such action are unlikely to have a significant practical effect on the operation of the Code;

CONVINCED that where instances of this nature arise they will be settled in the tradition of cooperation which has evolved among the Members of the Organisation;

DECIDES:

1. The provisions of the Code shall not apply to action by a State of the United States which comes within the jurisidiction of that State.

ACKNOWLEDGES that:

2. (a) If a Member considers that its interests under the Code are being prejudiced by such action and notifies the Organisation of the circumstances, the United States Government undertakes in conformity with the constitutional procedures of the United States to bring the provisions of the Code and the circumstances notified, with an appropriate recommendation, to the attention of the competent authorities of any State concerned;

(b) The United States Government undertakes to inform the Organisation of the action it has taken pursuant to paragraph 2(a) of this Decision and of the results thereof.

DECIDES:

3. This Decision shall form an integral part of the Code and shall be attached thereto as Annex C.

1. The General List is an attempt to establish a comprehensive catalogue of non-governmental operations involving the transfer of capital from one country to another. It also contains certain sections - concerning, for example, non-resident-owned blocked funds - under which no such transfers take place but which are nevertheless closely related to the subject-matter of international capital movements for private account.

2. The General List serves as the basis for the liberalisation lists of capital movements set out in Annex A to the Code of Liberalisation of Capital Movements, but it does not deal with liberalisation as such. Member countries assume liberalisation obligations only with regard to the operations listed in Annex A to the Code.

3. The General List enumerates operations which comprise transactions between residents of different countries as well as any capital transfers resulting directly therefrom and envisaged thereunder by the parties concerned. For example, the sections dealing with the granting of credits or loans cover not only the initial transfer of the capital amounts in question but also their subsequent retransfer; they do not, however, cover transfers, such as interest, which are considered to be current payments and therefore are dealt with in the Code of Liberalisation of Current Invisible Operations. The purchase or sale of foreign exchange in order to complete an operation included in the General List is covered by the section dealing with that operation. Foreign exchange transactions that are necessary to complete an operation included in the Code of Liberalisation of Current Invisible Operations are covered by the provisions of that Code.

4. All international capital movements have two distinct aspects: the capital export from one country and the corresponding capital import into another. Moreover, an operation between residents and non-residents may take place in the country of the resident, in the country of the non-resident, or in a third country. The attitude to any particular operation of the authorities of the countries concerned may thus differ, and the sections in the General List have been designed to take this into account.

5. Certain international capital operations might be for the account of one and the same person in which case they need not entail transactions between residents and non-residents, e.g. transfers of emigrants' assets, physical movements of capital assets, transfers of blocked funds.

6. The operations enumerated in the General List may be denominated or settled in any currency, including a composite currency such as the ECU or the SDR.

Investment for the purpose of establishing lasting economic relations with an undertaking such as, in particular, investments which give the possibility of exercising an effective influence on the management thereof:

A. In the country concerned by non-residents by means of:

1. Creation or extension of a wholly-owned enterprise, subsidiary or branch, acquisition of full ownership of an existing enterprise;

2. Participation in a new or existing enterprise;

3. A loan of five years or longer.

B. Abroad by residents by means of:

1. Creation or extension of a wholly-owned enterprise, subsidiary or branch, acquisition of full ownership of an existing enterprise;

2. Participation in a new or existing enterprise;

3. A loan of five years or longer.

A. Abroad by residents.

B. In the country concerned by non-residents.

A. Operations in the country concerned by non-residents:

1. Building or purchase.

2. Sale

B. Operations abroad by residents:

1. Building or purchase.

2. Sale.

A. Admission of domestic securities on a foreign capital market:

1. Issue through placing or public sale of	(a) shares or other securities of a participating nature;
2. Introduction on a recognised foreign security market of	(b) bonds or other debt securities (original maturity of one year or more).

B. Admission of foreign securities on the domestic capital market:

1. Issues through placing of	(a) shares or other securities of a participating nature;
2. Introduction on a recognised domestic security market of	(b) bonds or other debt securities (original maturity of one year or more).

C. Operations in the country concerned by non-residents:

1. Purchase	(a) shares or other securities of a participating nature;
2. Sale	(b) bonds and other debt securities (original maturity of one year or more).

D. Operations abroad by residents:

1. Purchase	(a) shares or other securities of a participating nature;
2. Sale	(b) bonds and other debt securities (original maturity of one year or more).

A. Admission of domestic securities and other instruments on a foreign money market:

1. Issue through placing or public sale.

2. Introduction on a recognised foreign money market.

B. Admission of foreign securities and other instruments on the domestic money market:

1. Issue through placing or public sale.

2. Introduction on a recognised domestic money market.

C. Operations in the country concerned by non-residents:

1. Purchase of money market securities.

2. Sale of money market securities.

3. Lending through other money market instruments.

4. Borrowing through other money market instruments.

D. Operations abroad by residents:

1. Purchase of money market securities.

2. Sale of money market securities.

3. Lending through other money market instruments.

4. Borrowing through other money market instruments.

A. Admission of domestic instruments and claims on a foreign financial market:

1. Issue through placing or public sale.

2. Introduction on a recognised foreign financial market.

B. Admission of foreign instruments and claims on a domestic financial market:

1. Issue through placing or public sale.

2. Introduction on a recognised domestic financial market.

C. Operations in the country concerned by non-residents.

1. Purchase.

2. Sale.

3. Exchange for other assets.

D. Operations abroad by residents:

1. Purchase.

2. Sale.

3. Exchange for other assets.

A. Admission of domestic collective investment securities on a foreign securities market:

1. Issue through placing or public sale.

2. Introduction on a recognised foreign securities market.

B. Admission of foreign collective investment securities on the domestic securities market:

1. Issue through placing or public sale.

2. Introduction on a recognised domestic securities market.

C. Operations in the country concerned by non-residents:

1. Purchase.

2. Sale.

D. Operations abroad by residents:

1. Purchase.

2. Sale.

(i) In cases where a resident participates in the underlying commercial or service transaction;

(ii) In cases where no resident participates in the underlying commercial or service transaction.

A. Credits granted by non-residents to residents.

B. Credits granted by residents to non-residents.

A. Credits and loans granted by non-residents to residents.

B. Credits and loans granted by residents to non-residents.

(i) In cases directly related to international trade or international current invisible operations, or in cases related to international capital movement operations in which a resident participates;

(ii) In cases not directly related to international trade, international current invisible operations or international capital movement operations, or where no resident participates in the underlying international operation concerned.

A. Sureties and guarantees:

1. By non-residents in favour of residents.

2. By residents in favour of non-residents.

B. Financial back-up facilities:

1. By non-residents in favour of residents.

2. By residents in favour of non-residents.

A. Operation by non-residents of accounts with resident institutions:

1. In domestic currency.

2. In foreign currency.

B. Operation by residents of accounts with non-resident institutions:

1. In domestic currency.

2. In foreign currency.

A. In the country concerned by non-residents:

1. Purchase of domestic currency with foreign currency.

2. Sale of domestic currency for foreign currency.

3. Exchange of foreign currencies.

B. Abroad by residents:

1. Purchase of foreign currency with domestic currency.

2. Sale of foreign currency for domestic currency.

3. Exchange of foreign currencies.

A. Transfers of capital and annuities certain due to resident beneficiaries from non-resident insurers.

B. Transfers of capital and annuities certain due to non-resident beneficiaries from resident insurers.

A. Loans.

B. Gifts and endowments.

C. Dowries.

D. Inheritances and legacies.

E. Settlement of debts in their country of origin by immigrants.

F. Emigrants' assets.

G. Gaming.

H. Savings of non-resident workers.

A. Securities and other documents of title to capital assets:

1. Import.

2. Export.

B. Means of Payment:

1. Import.

2. Export.

A. Transfer of blocked funds.

B. Use of blocked funds in the country concerned:

1. For operations of a capital nature.

2. For current operations.

C. Cession of blocked funds between non-residents.

THE COUNCIL,

HAVING REGARD to Article 5(a) of the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960;

HAVING REGARD to the Code of Liberalisation of Capital Movements (hereinafter called the "Code");

HAVING REGARD to the Decision of the Council, of 4 April 1984, amending Annex A to the Code [C(83)106(Final)];

HAVING REGARD to the report by the Committee on Capital Movements and Invisible Transactions of 12 June 1986 on Member countries' positions under the amended obligations concerning the inward direct investment item of the Code [C(86)89 and Corrigenda 1 and 2] and, in particular, paragraphs 10-14 thereof;

On the proposal of the Committee on Capital Movements and Invisible Transactions;

I. NOTES that some Member countries allow inward direct investment or establishment under conditions of reciprocity (i.e. allowing residents of another Member country to invest or establish in the Member country concerned under terms similar to those applied by the other Member country to investors resident in the Member country concerned) and/or involving discrimination among investors originating in various OECD Member countries, other than the exceptions to the principle of non-discrimination referred to in Article 10 of the Code;

II. RECOGNISES that reciprocity has operated with other factors, in certain cases at least until now, to broaden the effective sphere of liberalisation.

III. REAFFIRMS, nevertheless, that a more extensive use of reciprocal and/or discriminatory approaches in matters pertaining to inward direct investment or the right of establishment (other than those relating to the exceptions to the principle of non-discrimination referred to in Article 10 of the Code) could reduce the effective sphere of liberalisation among Member countries.

IV. REAFFIRMS also the importance of the principles underlying Article 8 of the Code concerning the right of each Member country to benefit from measures of liberalisation taken by other Member countries, and of the principles underlying Article 9 of the Code concerning the obligation of each Member country to avoid discrimination between other Members in matters relating to the Code.

V. RECOGNISES, nevertheless, the right of each Member country under Article 2 of the Code to refrain from immediately bringing their measures and practices into line with the new obligations concerning the right of establishment introduced by the Council Decision of 4 April 1984, referred to above.

VI. CONSIDERS that, while the status of measures and practices concerning reciprocity and/or involving discrimination among investors originating in various OECD Member countries (other than the exceptions to the principle of non-discrimination referred to in Article 10 of the Code) should be regarded as different from that of restrictions that can be the subject of reservations in accordance with Article 2 of the Code, the procedures applying to such measures and practices should be those applying to measures that can be the subject of reservations.

VII. DETERMINES that the adoption of this Decision concerning the application of item I/A of the Code on inward direct investment and establishment shall not in any way create a precedent for the application of other items of the Code.

VIII. DECIDES:

1. All measures and practices concerning reciprocity and/or involving an element of discrimination concerning inward direct investment or establishment (other than the exceptions to the principle of non-discrimination referred to in Article 10 of the Code) and existing as of the date this Decision is adopted shall have been notified to the Organisation. They are recorded in paragraph 5 of this Decision.

2. Measures and practices recorded in this Decision shall be progressively abolished without, in so doing, extending the scope of restrictions to inward direct investment or establishment. To this end, these measures and practices shall be subject to periodic examination by the Committee on Capital Movements and Invisible Transactions along with the reservations, if any, maintained by the Member countries concerned.

3. The specific aspects of these measures and practices, including those referred to in paragraphs II and III above, shall be taken into account, particularly when these measures and practices are being examined by the Committee on Capital Movements and Invisible Transactions.

4. All the other understandings relating to the Code concerning inward direct investment or establishment shall be considered as applying to these measures and practices.

5. The scope of these measures and practices as notified to the Organisation as of the date of this Decision, is as follows:

Foreign investment in the banking and financial services sectors may be subject to reciprocity considerations.

(i) The establishment of branches of foreign banks or foreign securities houses or branch offices of foreign insurance companies is subject to a reciprocity requirement;

(ii) The extraction, the preparation and the storing of mass minerals, the running of oil refineries, gasworks, filling stations, district heating, the trading of fuels and pipelines are subject to a reciprocity requirement;

(iii) Investment in the transport sector (air transport services, road freight, taxis, buses) is subject to a reciprocity requirement;

(iv) The establishment of tour operators and travel agencies by non-resident entities is subject to a reciprocity requirement.

(i) Establishment of insurance companies by enterprises originating in non-EC member countries may be subject to a reciprocity requirement;

(ii) Establishment of travel agencies by enterprises originating in non-EC member countries is subject to a reciprocity requirement.

Establishment of subsidiaries of foreign banks is generally subject to a reciprocity requirement.

General remark: The Canadian authorities undertake to carry out the provisions of this Decision to the fullest extent compatible with the constitutional system of Canada in that the latter provides that individual provinces may have jurisdiction to act with respect to certain matters under the purview of the present Decision. In particular, the authorities undertake to make every effort to ensure that measures for the liberalisation of capital movements pursuant to the present Decision are applied in their provinces; they will notify the Organisation of any relevant measure taken by a province and, if necessary, they will bring to the attention of the provincial authorities any concerns expressed in this respect by a country subscribing to the present Decision.

Establishment of insurance companies originating in non-EC member countries may be subject to a reciprocity requirement.

Foreign investment in the banking and financial services sectors may be subject to reciprocity considerations.

(i) Establishment of non-resident investors originating in non-EC member countries in the banking and financial services sector may be subject to reciprocity considerations;

(ii) Establishment of insurance companies originating in non-EC member countries may be subject to reciprocity considerations;

(iii) Investment in the following sectors by non-residents originating in non-EC member countries is generally permitted only to enterprises from countries with which France has signed international agreements including a national assimilation or reciprocity clause: newspapers and periodicals (political and general information journals appearing at least once per month other than those intended for foreign communities in France), audiovisual communication services, brokerage, travel and tourism services, road transport and vehicle rental;

(iv) Investment in the following sectors by non-residents originating in non-EC member countries may be subject to international agreements containing a national assimilation or reciprocity clause: exploration and exploitation of mines (including hydro-carbon mines); quarries and waterfalls; import of crude petroleum, petroleum by-products, residues and refined products; nuclear industry; agriculture.

(i) Establishment of branches of foreign credit institutions (including foreign securities houses) by investors from non-EC member countries may be subject to a reciprocity requirement;

(ii) Establishment of airline enterprises that have their headquarters abroad may be subject to a reciprocity requirement.

(i) Establishment in the banking sector by investors originating in non-EC member countries may be subject to a reciprocity requirement;

(ii) Establishment of insurance companies originating in non-EC member countries may be a subject to a reciprocity requirement.

Establishment of foreign joint stock companies is subject to a reciprocity requirement.

(i) Investment in the banking and financial services sectors by investors from non-EC member countries may be subject to reciprocity considerations;

(ii) Establishment of branches of insurance companies originating in non-EC member countries may be subject to reciprocity considerations;

(iii) Foreign acquisition of shipping vessels registered in Ireland is subject to a reciprocity requirement.

(i) Establishment of branches of banks originating in non-EC member countries is subject to a reciprocity requirement;

(ii) Establishment of insurance companies originating in non-EC member countries is subject to a reciprocity requirement;

(iii) Foreign investment in the exploration and exploitation of liquid and gaseous hydrocarbons is subject to a reciprocity requirement.

Establishment of branches and subsidiaries of foreign banks or foreign securities houses is subject to a reciprocity requirement.

Foreign investment in the banking and financial services sector by investors originating in non-EC member countries may be subject to a reciprocity requirement.

(i) Establishment of subsidiaries of foreign banks is subject to a reciprocity requirement;

(ii) Establishment of branches or agencies of foreign insurance companies may be subject to a reciprocity requirement.

(i) Establishment of non-resident investors originating in non-EC member countries in the banking and financial services sector may be subject to a reciprocity requirement;

(ii) Establishment of insurance companies originating in non-EC member countries may be subject to a reciprocity requirement.

Foreign investment in the banking and financial services sector is subject to a reciprocity requirement.

(i) Foreign investment in the banking and financial services sector may be subject to a reciprocity requirement;

(ii) Establishment of foreign insurance companies is subject to a reciprocity requirement.

(i) Foreign investment in the banking and financial services sector may be subject to a reciprocity requirement;

(ii) Establishment of insurance companies originating in non-EC member countries may be subject to a reciprocity requirement;

(iii) Authorisation of mergers and take-overs involving investors from non-EC member countries may be subject to a reciprocity requirement.

6. This Decision, adopted 16 July 1986, shall appear in the publication "Code of Liberalisation of Capital Movements" under the heading "Annex E".

THE COUNCIL,

HAVING REGARD to Articles 2(d)and 5(a) of the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960;

HAVING REGARD to the Code of Liberalisation of Capital Movements;

HAVING REGARD to the Articles of Agreement of the International Monetary Fund of 27 December 1945;

HAVING REGARD to the European Monetary Agreement of 5 August l955, and the Protocol of Provisional Application of that Agreement of the same date;

HAVING REGARD to the Report of the Committee for Invisible Transactions on the Codes of Liberalisation of Current Invisibles and of Capital Movements of 28 October 1961, and the Comments by the Executive Committee on that Report of 8 December 1961 [OECD/C(61)37; OECD/C(61)73];

DECIDES:

a. Members shall eliminate between one another, in accordance with the provisions of Article 2, restrictions on current invisible transactions and transfers, hereinafter called "current invisible operations". Measures designed for this purpose are hereinafter called "measures of liberalisation".

b. Where Members are not bound, by virtue of the provisions of this Code, to grant authorisations in respect of current invisible operations, they shall deal with applications in as liberal a manner as possible.

c. Members shall use their best offices to ensure that the measures of liberalisation are applied within their overseas territories.

d. Members shall endeavour to extend the measures of liberalisation to all members of the International Monetary Fund.

e. "Member" shall mean a Member of the Organisation which adheres to this Code.

a. Members shall grant any authorisation required for a current invisible operation specified in an item set out in Annex A to this Code.

b. A Member may lodge reservations relating to the obligations resulting from paragraph 5(a) when:

(i) an item is added to Annex A to this Code;

(ii) obligations relating to an item in that Annex are extended; or

(iii) obligations relating to any such item begin to apply to that Member.

Reservations shall be set out in Annex B to this Code.

The provisions of this Code shall not prevent a Member from taking action which it considers necessary for:

(i) the maintenance of public order or the protection of public health, morals and safety;

(ii) the protection of its essential security interests; or

(iii) the fulfilment of its obligations relating to international peace and security.

Nothing in this Code shall be regarded as altering the obligations undertaken by a Member as a Signatory of the Articles of Agreement of the International Monetary Fund or other existing multilateral international agreements.

a. The measures of liberalisation provided for in this Code shall not limit the powers of Members to verify the authenticity of current invisible operations nor to take any measures required to prevent evasion of their laws or regulations.

b. Members shall simplify as much as possible all formalities connected with the authorisation or verification of current invisible operations and shall co-operate, if necessary, to attain such simplification.

a. A Member shall be deemed to have complied with its obligations as regards transfers whenever a transfer may be made:

(i) between persons entitled, by the exchange regulations of the State from which and of the State to which the transfer is to be made, respectively, to make and/or to receive the said transfer;

(ii) in accordance with international agreements in force at the time the transfer is to be made; and

(iii) in accordance with the monetary arrangements in force between the State from which and the State to which the transfer is to be made.

b. The provisions of paragraph (a) do not preclude Members from demanding payment of maritime freights in the currency of a third State, provided that such a demand is in conformity with established maritime practice.

a. If its economic and financial situation justifies such a course, a Member need not take the whole of the measures of liberalisation provided for in Article 2(a).

b. If any measures of liberalisation taken or maintained in accordance with the provisions of Article 2(a) result in serious economic disturbance in the Member State concerned, that Member may withdraw those measures.

c. If the overall balance of payments of a Member develops adversely at a rate and in circumstances, including the state of its monetary reserves, which it considers serious that Member may temporarily suspend the application of measures of liberalisation taken or maintained in accordance with the provisions of Article 2(a).

d. However, a Member invoking paragraph (c) shall endeavour to ensure that its measures of liberalisation:

(i) cover, twelve months after it has invoked that paragraph, to a reasonable extent, having regard to the need for advancing towards the objective defined in sub-paragraph (ii), current invisible operations which the Member must authorise in accordance with Article 2(a) and the authorisation of which it has suspended since it invoked paragraph (c), and, in particular, current invisible operations relating to tourism if, in whole or in part, their authorisation has been suspended; and

(ii) comply, eighteen months after it has invoked that paragraph, with its obligations under Article 2(a).

e. Any Member invoking the provisions of this Article shall do so in such a way as to avoid unnecessary damage which bears especially on the commercial or economic interests of another Member and, in particular, shall avoid any discrimination between other Members.

Any Member lodging a reservation under Article 2(b) or invoking the provisions of Article 7 shall, nevertheless, benefit from the measures of liberalisation taken by other Members provided it has complied with the procedure laid down in Article 12 or Article 13 as the case may be.

A Member shall not discriminate as between other Members in authorising current invisible operations which are listed in Annex A and which are subject to any degree of liberalisation

Members forming part of a special customs or monetary system may apply to one another in addition to measures of liberalisation taken in accordance with the provisions of Article 2(a) other measures of liberalisation without extending them to other Members. Members forming part of such a system shall inform the Organisation of its membership and those of its provisions which have a bearing on this Code.

a. Members shall notify the Organisation, within the periods which the latter may determine, of the measures of liberalisation which they have taken and of any other measures which have a bearing on this Code, as well as of any modification of such measures.

b. The Organisation shall consider the notifications submitted to it in accordance with the provisions of paragraph (a) with a view to determining whether each Member is complying with its obligations under this Code.

a. Each Member shall notify the Organisation within a period to be determined by the Organisation, whether it desires to maintain any reservation lodged by it in respect of an item specified in Annex A to this Code, and, if so, state its reasons therefor.

b. The Organisation shall examine each reservation lodged by a Member in respect of an item specified in Annex A to this Code at intervals of not more than eighteen months, unless the Council decides otherwise.

c. The examination provided for in paragraph (b) shall be directed to making suitable proposals designed to assist Members to withdraw their reservations.

a. Any Member invoking the provisions of Article 7 shall notify the Organisation forthwith of its action, together with its reasons therefor.

b. The Organisation shall consider the notifications and reasons submitted to it in accordance with the provisions of paragraph (a) with a view to determining whether the Member concerned is justified in invoking the provisions of Article 7 and, in particular, whether it is complying with the provisions of paragraph (e) of that Article.

c. If the action taken by a Member in accordance with the provisions of Article 7 is not disapproved by the Organisation, that action shall be reconsidered by the Organisation every six months or, subject to the provisions of Article 15, on any other date which the latter may deem appropriate.

d. If, however, in the opinion of a Member other than the one which has invoked Article 7, the circumstances justifying the action taken by the latter in accordance with the provisions of that Article have changed, that other Member may at any time refer to the Organisation for reconsideration of the case at issue.

e. If the action taken by a Member in accordance with the provisions of paragraphs (a), (b) or (c) of Article 7 has not been disapproved by the Organisation, then, if that Member subsequently invokes paragraphs (a), (b) or (c) of Article 7 of the Code of Liberalisation of Capital Movements, or, having invoked one paragraph of Article 7 of this Code, invokes another paragraph of that Article, its case shall be reconsidered by the Organisation after six months have elapsed since the date of the previous consideration, or on any other date which the latter may deem appropriate. If another Member claims that the Member in question is failing to carry out its obligations under paragraph (e) of Article 7 of this Code or paragraph (e) of Article 7 of the Code of Liberalisation of Capital Movements, the Organisation shall consider the case without delay.

f. (i) If the Organisation, following its consideration in accordance with paragraph (b), determines that a Member is not justified in invoking the provisions of Article 7 or is not complying with the provisions of that Article, it shall remain in consultation with the Member concerned, with a view to restoring compliance with the Code.

(ii) If, after a reasonable period of time, that Member continues to invoke the provisions of Article 7, the Organisation shall reconsider the matter. If the Organisation is then unable to determine that the Member concerned is justified in invoking the provisions of Article 7 or is complying with the provisions of that Article, the situation of that Member shall be examined at a session of the Council convened by its Chairman for this purpose, unless the Organisation decides on some other procedure.

a. In examining the case of a Member which it considers to be in process of economic development and which has invoked the provisions of Article 7, the Organisation shall have special regard to the effect that the economic development of that Member has upon its ability to carry out its obligations under paragraph (a) of Articles 1 and 2.

b. In order to reconcile the obligations of the Member concerned under paragraph (a) of Article 2 with the requirements of its economic development, the Organisation may grant that Member a special dispensation from those obligations.

a. A Member invoking the provisions of paragraph (c) of Article 7 shall report to the Organisation, within ten months after such invocation, on the measures of liberalisation it has restored or proposes to restore in order to attain the objective determined in sub-paragraph (d)(i) of Article 7. The Member shall, if it continues to invoke these provisions, report to the Organisation again on the same subject - but with reference to the objective determined in sub-paragraph (d)(ii) of Article 7 - within sixteen months after such invocation.

b. If the Member considers that it will not be able to attain the objective, it shall indicate its reasons in its report and, in addition, shall state:

(i) what internal measures it has taken to restore its economic equilibrium and what results have already been attained; and

(ii) what further internal measures it proposes to take and what additional period it considers it will need in order to attain the objectives determined in sub-paragraphs (d)(i) or (d)(ii) of Article 7.

c. In cases referred to in paragraph (b), the Organisation shall consider within a period of twelve months, and, if required, of eighteen months from the date on which the Member invoked the provisions of paragraph (c) of Article 7, whether the situation of that Member appears to justify its failure to attain the objective determined in sub-paragraph (d)(i) or (d)(ii) of Article 7, and whether the measures taken or envisaged and the period considered by it as necessary for attaining the objective determined, appear acceptable in the light of the objectives of the Organisation in the commercial and financial fields.

d. If a Member invokes the provisions of both paragraph (c) of Article 7 of this Code and paragraph (c) of Article 7 of the Code of Liberalisation of Capital Movements, the periods of twelve and eighteen months referred to in paragraph (c) shall run from the date of the earlier invocation.

e. If, following any of the examinations provided for in paragraph (c), the Organisation is unable to approve the arguments advanced by the Member concerned in accordance with the provisions of paragraph (b), the situation of that Member shall be examined at a session of the Council convened by its Chairman for this purpose, unless the Organisation decides on some other procedure.

a. If a Member considers that the measures of liberalisation taken or maintained by another Member in accordance with Article 2(a) are frustrated by internal arrangements likely to restrict the possibility of effecting current invisible operations, and if it considers itself to be prejudiced thereby, it may refer to the Organisation.

b. If, following the consideration of a matter referred to it under paragraph (a), the Organisation determines that internal arrangements introduced or maintained by the Member concerned have the effect of frustrating its measures of liberalisation, the Organisation may make suitable suggestions with regard to the removal or modification of such arrangements.

a. If a Member considers that another Member which has not invoked the provisions of Article 7 has retained, introduced or re-introduced restrictions on current invisible operations, contrary to the provisions of Article 1, paragraph (a) of Article 2, or Article 9, and if it considers itself to be prejudiced thereby, it may refer to the Organisation.

b. The fact that the case is under consideration by the Organisation shall not preclude the Member which has referred to the Organisation from entering into bilateral conversations on the matter with the other Member concerned.

a. The Committee on Capital Movements and Invisible Transactions shall consist of members chosen by reason of the knowledge they have of problems relating to capital movements and invisible transactions and of the personal standing which they enjoy within the Organisation or in their respective countries. They shall be appointed by the Council from persons nominated by the Member States. The Council shall ensure that no more than one nominee of each Member State shall serve on the Committee at any given time. Unless the Council decides otherwise, the term of office of members of the Committee shall be one year; they may be reappointed.

b. Each member of the Committee shall designate an alternate. Alternates may attend the meetings of the Committee. They shall exercise the functions of members if the latter are unable to attend.

c. The Council shall designate each year from among the members of the Committee a Chairman and a Vice-Chairman.

d. A delegate of any Member State, a nominee of which is not serving on the Committee, may attend its meetings as an observer.

e. The Chairman or the Vice-Chairman of the Payments Committee may attend the meetings of the Committee with the right to participate in its discussions.

f. A representative of the Commission of the European Communities may attend the meetings of the Committee and take part in its work in accordance with Supplementary Protocol No. 1 to the OECD Convention.

g. The Committee may invite other persons to attend its meetings.

h. The proposals of the Committee shall be adopted by a majority of its members. A member who is in disagreement with the majority may request that his views should be recorded in the report of the Committee.

i. The Committee shall adopt its own rules of procedure.

General tasks

The Committee on Capital Movements and Invisible Transactions shall consider all questions concerning the interpretation or implementation of the provisions of this Code or other acts of the Council relating to the liberalisation of current invisible operations and shall report its conclusions thereon to the Council as appropriate.

Special tasks

a. The Committee on Capital Movements and Invisible Transactions shall:

(i) determine the periods within which the information provided for in paragraph (a) of Article 11 and the reasons provided for in paragraph (a) of Article 12 should be notified to the Organisation by the Members concerned;

(ii) subject to paragraph (c) of this Article, consider, in conformity with paragraphs (b) and (c) of Article 12, each reservation notified to the Organisation in accordance with paragraph (a) of that Article and make, where appropriate, suitable proposals designed to assist Members to withdraw their reservations;

(iii) determine, in accordance with the provisions of Article 12, the date on which any reservations should be re-examined, if the reservation has not been withdrawn in the meantime;

(iv) consider, in accordance with the provisions of paragraph (b) of Article 11, the notifications submitted to the Organisation;

(v) consider reports and references submitted to the Organisation in accordance with the provisions of Article 13 or paragraphs (a) and (b) of Article 15 where a Member has invoked the provisions of Article 7, or submitted in accordance with the provisions of Article 16 or Article 17;

(vi) determine the date on which the case of a Member which has invoked Article 7 should be reconsidered in accordance with the provisions of paragraph (c), paragraph (e) or paragraph (f)(ii) of Article 13;

(vii) transmit to the United States Government, with any comments it considers appropriate, notifications received from Members in accordance with paragraph 2(a) of the Decision in Annex C to the Code; and

(viii) consider information received from the United States Government in accordance with paragraph 2(b) of the Decision in Annex C to the Code.

b. When examining the reservations notified in accordance with the provisions of paragraph (a) of Article 12 the Committee may, as it deems fit, consider together either all reservations made by the same Member or all reservations made in respect of the same item specified in Annex A to this Code.

c. The Committee shall, however, not consider any reservations notified to the Organisation in accordance with the provisions of paragraph (a) of Article 12 by a Member which, at the time of the examination in respect of the item subject to that reservation, is invoking the provisions of Article 7 or is enjoying a dispensation in accordance with paragraph (b) of Article 14.

d. In the cases provided for in sub-paragraphs (ii), (iv), (v) and (viii) of paragraph (a) the Committee shall report to the Council.

e. The Committee shall, whenever it considers it necessary:

(i) consult other Committees of the Organisation on any questions relating to the liberalisation of current invisible operations; and, in particular,

(ii) request other Committees of the Organisation to give their views on any questions relating to the balance of payments and the state of the monetary reserves of a Member.

Before they are considered by the Council, the Payments Committee shall:

(i) review the reports and proposals by the Committee on Capital Movements and Invisible Transactions made in accordance with the provisions of this Code; and

(ii) forward to the Council any comments thereon which it considers necessary.

This Decision, referred to in the present text as the "Code", shall be known as the Code of Liberalisation of Current Invisible Operations".

Any Member may withdraw from the Code by transmitting a notice in writing to the Secretary-General of the Organisation. The withdrawal shall become effective twelve months from the date on which such a notice is received

"Unit of account" shall mean the sum in the national currency of a Member which is equal to a unit of value of special drawing rights as valued by the International Monetary Fund.

A/1. Repair and assembly.

A/2. Processing, finishing, processing of work under contract and other services of the same nature.

Remark: In cases where goods are involved, liberalisation applies only if the importation of the goods concerned is liberalised by the Member ordering such processing, finishing, etc.

A/3. Technical assistance (assistance relating to the production and distribution of goods and services at all stages, given over a period limited according to the specific purpose of such assistance, and including eg. advice or visits by experts, preparation of plans and blueprints, supervision of manufacture, market research, training of personnel).[37]

A/4. Contracting (construction and maintenance of buildings, roads, bridges, ports, etc, carried out by specialised firms, and, generally, at fixed prices after open tender).

A/5. Authors' royalties. Patents, designs, trade marks and inventions (the assignment and licensing of patent rights, designs, trade marks and inventions, whether or not legally protected, and transfers arising out of such assignment or licensing).[38]

A/6. Salaries and wages (of frontier or seasonal workers and of other non-residents).

Remark: Free transfer to the country of residence of the recipient. The amounts to be transferred shall be the net salaries and wages, ie. after deduction of living expenses, taxes, social insurance contributions or premiums, if any.

A/7. Participation by subsidiary companies and branches in overhead expenses of parent companies situated abroad and vice versa (ie. overhead expenses other than those included under A/3 and A/5).[39]

B/1. Commission and brokerage.

Profit arising out of transit operations or sale of transhipment.

Representation expenses.

B/2. Differences, margins and deposits due in respect of operations on commodity terminal markets in conformity with normal commercial practice.

B/3. Charges for documentation of all kinds incurred on their own account by authorised dealers in foreign exchange.

B/4. Warehousing and storage, customs clearance.

B/5. Transit charges.

B/6. Customs duties and fees.

C/1. Maritime freights (including chartering, harbour expenses, disbursements for fishing vessels, etc).[40]

Remark: See Note 1 at end of this Annex.

C/2. Inland waterway freights, including chartering.

C/3. Road transport: passengers and freights, including chartering.

C/4. Air transport: passengers and flights, including chartering.

Payment by passengers of international air tickets and excess luggage charges; payment of international air freight charges and chartered flights.

Remark: Without prejudice to the provisions of Annex III.

Receipts from the sale of international air tickets, excess luggage charges, international air freight charges, and chartered flights.

Remark: The transfer of these receipts to the head office of the air transport company concerned shall be free.

C/5. For all means of maritime transport: harbour services (including bunkering and provisioning, maintenance, repairs, expenses for crews, etc).

Remark: In the case of repairs, current maintenance, voyage and emergency repairs[41] (see also C/6).[42]

For all means of inland waterway transport: harbour services (including bunkering and provisioning, maintenance and minor repairs of equipment, expenses for crews, etc.).

Remark: In the case of repairs, current maintenance repairs only (see also C/6).

For all means of commercial road transport: road services (including fuel, oil, minor repairs, garaging, expenses for drivers and crews, etc).

For all means of air transport: operating costs and general overheads, including repairs to aircraft and to air transport equipment.

Remark: Including all charges in connection with the delivery of oil and petrol to air transport companies which are incurred in the currency of the State where the delivery takes place.

C/6. Repair of ships.

Remark: Transactions other than those covered by C/5 (ie. classification, conversion and other major repairs)[43] to the extent to which they do not constitute visible trade.

Repairs of means of transport other than ships and aircraft.

Remark: Transactions other than those covered by C/5 to the extent to which they do not constitute visible trade.

D/1. Social security and social insurance.

Remarks:

1. Free transfer of:

(a) contributions of premiums in respect of social security or social insurance payable in another Member State;

(b) social security and social insurance benefits payable to an insured person or beneficiary residing in another Member State or, for their account, to a social security or social insurance authority in that other State.

2. If the transfer relates to an insurance considered as social insurance by only one of the Members concerned the provisions according the more liberal treatment shall apply.

3. Social insurance transactions carried out by private insurers shall also be subject to the provisions of Parts III and IV of Annex I.

Transactions[44] and transfers in connection with direct insurance (other than social insurance).

D/2. Insurance relating to goods in international trade.

D/3. Life assurance.

D/4. All other insurance.

Remark: Direct insurance transactions between insurers in one Member State and insured in other Member State, and transfers of premiums and contributions between insured insurers in two different Member States. Transfers by insurers in one Member State of settlements and benefits paid or to be paid in another Member State, and transfers of sums necessary for the enforcement of claims arising under an insurance contract. Within the limits specified in Part I of Annex I.

D/5. Transactions and transfers in connection with reinsurance and retrocession.

Remark: The provisions of Part II of Annex I shall also apply.

D/6. Conditions for establishment and operation of branches and agencies of foreign insurers.

Remarks:

1. Authorisation within the limits specified in Part III of Annex I for insurers of other Member States to establish themselves and to transact business.

2. Transfers between branches and agents of such authorised insurers and their head offices: within the limits specified in Part IV of Annex I.

Remark: In cases where these profits are not covered by F/1 below.

Banking commissions and charges.

General Remarks:

1. Regarding operations in the country concerned, Members may take measures for the maintenance of fair and orderly markets and sound institutions and for the protection of investors or other users of banking or financial services, provided those measures do not discriminate against non-resident providers of such services.

2. Regarding operations abroad, Members may regulate on their territory the promotional activities of non-resident providers of such services.

3. Transactions and transfers concerning capital movements in connection with operations covered by Section E of this Code are governed by the Code of Liberalisation of Capital Movements.

E/1. Payment services:

Payment instruments (including the issuance and use of cheques, travellers' cheques, cash cards and credit cards, other than for credit).

Fund transfer services [including transfer of funds by mail, telephone, telex, telegraph, telefax, electronic connection or money transfer (giro)].

Remark: Transactions and transfers for travel and tourism are governed by Item G of this Code.

E/2. Banking and investment services (for securities, collective investment securities, other negotiable instruments and non-securitised claims, credits and loans, sureties, guarantees and financial back-up facilities, liquid funds and foreign exchange).

Underwriting (syndication and distribution of new financial assets).

Broker/dealer services (intermediation and market-making in the purchase, sale or exchange of financial assets, including liquid funds and foreign exchange).

Financial market information, communications and execution systems.

E/3. Settlement, clearing and custodial and depository services (for securities, collective investment securities, other negotiable instruments and non-securitised claims, liquid funds and foreign exchange).

Settlement and clearing systems.

Custodial and depository services.

Remark: Members may require that non-residents participate in a domestic settlement and clearing system only through a branch or subsidiary established in the territory of the Member concerned.

E/4. Asset management.

Cash management.

Portfolio management.

Pension fund management.

Safekeeping of assets.

Trust services.

E/5. Advisory and agency services.

Credit reference and analysis.

Investment research and advice (including securities rating agencies).

Mergers, acquisitions, restructurings, management buyouts, venture capital.

E/6. Fees, commissions and other charges.

Remark: Transfers under Item E/6 shall be free provided the underlying transaction is not subject to authorisation or has been authorised by the authorities of the Member concerned.

E/7. Conditions for establishment and operation of branches, agencies, etc. of non-resident investors in the banking and financial services sector.

See Annex II to Annex A.

F/1. Profits from business activity.

F/2. Dividends and shares in profits.

F/3. Interest (including interest on debenture, mortgages, etc).

F/4. Rent.

Remark: Does not apply to income deriving from capital acquired otherwise than in conformity with the laws covering the acquisition of capital.

Remark: This section covers all international travel as well as stays abroad for purposes other than immigration, such as pleasure, recreation, holiday, sport, business, visits to relatives or friends, missions, meetings, conferences or for reasons of health, education or religion.

No restrictions shall be imposed by Member countries on expenditure by residents for purposes of international tourism or other international travel. For the settlement of such expenditure, no restrictions shall be placed on transfers abroad by or on behalf of travellers or on the use abroad of cash cards or credit cards, in accordance with the provisions of Annex IV. Travellers shall, moreover, be automatically permitted to acquire, export and import domestic and foreign bank-notes and to use travellers' cheques abroad in accordance with the provisions of Annex IV; additional amounts in travellers' cheques and/or foreign bank-notes shall be allowed on presentation of justification. Lastly, travellers shall be permitted to undertake foreign exchange transactions according to the provisions of Annex IV.

H/1. Exportation, importation, distribution and use of printed films and other recordings - whatever the means of reproduction - for private or cinema exhibition, or for television broadcasts.[45]

Remark: The provisions of Annex IV shall also apply. Members shall grant any authorisation required for transactions which they had authorised on 1 January 1959, in virtue of regulations or international agreements in force on that date.

J/1. Pensions and other income of a similar nature.

Remark: In favour of persons who, after having spent their life in a Member State other than their State of origin, establish themselves in any other member State including their own.

J/2. Maintenance payments resulting from a legal obligation or from a decision of a court and financial assistance in cases of hardship.

J/3. Immigrants' remittances.

Remarks: Free periodic transfer, to the Member State of which the person demanding the transfer is a national, of salaries, fees, wages, and other current remuneration, after deduction of living expenses, taxes, and social insurance.

No less favourable treatment shall be accorded to demands for the transfer of earnings of self-employed persons or members of the liberal professions.

J/4. Current maintenance and repair of private property abroad.

J/5. Transfer of minor amounts abroad.

J/6. Subscriptions to newspapers, periodicals, books, musical publications.

Newspapers, periodicals, books, musical publications and records.

Remark. To the extent to which transactions in connection with these items do not constitute visible trade.

J/7. Sport prizes and racing earnings.

Remark: In accordance with the laws of the Members concerned.

K/1. Taxes.

K/2. Government expenditure (transfer of amounts due by governments to non-residents and in connection with official representation abroad and contributions to international organisations).

K/3. Settlements in connection with public transport and postal, telegraphic and telephone services.

K/4. Consular receipts.

L/1. Advertising by all media.

L/2. Court expenses.

L/3. Damages.

L/4. Fines.

L/5. Membership of associations, clubs and other organisations.

L/6. Professional services (including services of accountants, artists, consultants, doctors, engineers, experts, lawyers, etc).

L/7. Refunds in the case of cancellation of contracts and refunds of uncalled-for payments.

L/8. Registration of patents and trade-marks.

Note 1. The provisions of C/1 "Maritime freights, including chartering, harbour expenses, disbursements for fishing vessels, etc", of C/5, first sub-paragraph "For all means of maritime transport: harbour services (including bunkering and provisioning, maintenance, repairs, expenses for crews, etc)", and of the other items that have a direct or indirect bearing on international maritime transport, are intended to give residents of one Member State the unrestricted opportunity to avail themselves of, and pay for, all services in connection with international maritime transport which are offered by residents of any other Member State. As the shipping policy of the governments of the Members is based on the principle of free circulation of shipping in international trade in free and fair competition, it follows that the freedom of transactions and transfers in connection with maritime transport should not be hampered by measures in the field of exchange control, by legislative provisions in favour of the national flag, by arrangements made by governmental or semi-governmental organisations giving preferential treatment to national flag ships, by preferential shipping clauses in trade agreements, by the operation of import and export licensing systems so as to influence the flag of the carrying ship, or by discriminatory port regulations or taxation measures - the aim always being that liberal and competitive commercial and shipping practices and procedures should be followed in international trade and normal commercial considerations should alone determine the method and flag of shipment.

The second sentence of this Note does not apply to the United States.

Note 2. The following are the definitions of the terms employed in the Remarks against C/5 (Maritime transport) and C/6 (Repair of ships) which have been adopted by the Council:

Current maintenance: work which may conveniently be undertaken during a vessel's stay in port, which will contribute towards her general upkeep and efficiency, without being immediately necessary for her continued operation.

Voyage repairs: work which is required during a voyage, due to the normal risks of the sea (eg. weather damage) to enable the vessel to complete the voyage.

Emergency repairs: similar to voyage repairs, but due to less normal causes, such as sudden machinery breakdown or collisions.

Classification: the special work required to pass the survey which the Classification Society holds on each ship every four years.

Conversion: the major operation of altering the size of a ship or the type, eg. from steamer to motorship, from passenger/cargo to cargo ship, or from coal-burner to oil burner.

Note 3. According to the type of knowledge and/or the nature of the contract, "know-how" and manufacturing processes fall under any of the three headings of A/3, A/5 and A/7.

Annex I to Annex A

D/2. Insurance relating to goods in international trade.

1. The conclusion of insurance contracts relating to goods in international trade:

(a) Between a proposer in a Member State and a foreign insurer not established in the country of residence of the proposer;

(b) Between a proposer in a Member State and a foreign insurer established in the country of residence of the proposer, such contract being entered into:

(i) From the head office of the foreign insurer;

(ii) From a place of business of such insurer situated in a Member State other than the country of residence of the proposer; shall be free, subject to the right of Member States to regulate the activities of the insurer himself or of a third party in seeking insurance business.

The transfers required for the execution of such contracts or for the exercise of rights arising therefrom shall be free.

D/3. Life assurance.

2. Transactions and transfers relating to life assurance, except group assurance, between a proposer in a Member State and a foreign insurer not established in the country of residence of the proposer shall be free, subject to the right of Member States to regulate the activities of the insurer himself or of a third party in seeking insurance business.

3. Under existing contracts:

(a) Transfers of premiums[47] due to non-resident insurers from residents shall be free;

(b) Transfers of pensions and annuities other than annuities certain[48] due to non-resident beneficiaries from resident insurers shall be free.

Such transfers shall be free also in the case of contracts under which the persons from whom premiums are due or the beneficiaries to whom disbursements are due were residents of the same country as the insurer at the time of the conclusion of the contract but have changed their residence since.

4. Member States in which premiums paid are allowed, totally or partially, as a deduction for tax purposes shall grant the same benefits whether the contract has been concluded with an insurer established on their territory or abroad.

D/4. All other insurance.

5. Transactions and transfers between a proposer in a Member State and a foreign insurer not established in the country of residence of the proposer, relating to insurance other than that covered under items D/2 and D/3, except group insurance and insurance which is compulsory in the country of residence of the proposer shall be free, subject to the right of Member States to regulate the activities of the insurer himself or of a third party in seeking insurance business.

6. Transactions and transfers shall be free whenever it is not possible to cover a risk in the Member country in which it exists.

7. Member States in which premiums paid are allowed, totally or partially, as a deduction for tax purposes shall grant the same benefits whether the contract has been concluded with an insurer established on their territory or abroad.

8. (a) Transfers of amounts due in respect of indemnities to be settled abroad and paid or payable in execution of in insurance contract by an insurer acting on his own behalf or on behalf of his client shall be free;[49]

(b) Transfers of costs, subsidiary expenses or sums necessary for the exercise of any rights arising out of an insurance contract shall be free;

(c) Without prejudice to cases which are settled individually, each Member shall authorise insurers or their agents who are established in its territory and who settle claims under reciprocal arrangements to offset the payments made on each side and to transfer the balance thereof.

D/5. Reinsurance and retrocession.

1. Accounts relating to reinsurance operations, including the constitution and adjustment of guarantee deposits held by the ceding insurers, as well as accounts relating to cash losses, may be drawn up on the currency of the direct insurance contract, in the national currency of the ceding insurer or in the national currency of the acceptor, according to the provisions of the reinsurance treaty or agreement.

2. The settlement of balances resulting from the account referred to in paragraph 1 shall be authorised. Settlement may be made either by a set-off of any reciprocal credits of the ceding insurer and the reinsurer or (as agreed between the parties):

(a) By transfer to the country of residence of the creditor; or

(b) By payment through a bank account opened in accordance with the provisions of paragraph 3 below; or

(c) By transfer to another Member State to the credit of a bank account opened in accordance with the provisions of paragraph 3 below if the contract stipulates that payment should be made in that Member's currency.

3. Reinsurers shall be authorised to open accounts in banks established in Member States. These accounts may be credited with the amounts due to their holders arising out of reinsurance operations which are to be settled in accordance with the provisions of paragraph 2(b) and (c). They may be debited, at the choice of their holders, with the amounts due under any settlement in connection with reinsurance operations if it is made in accordance with the provisions of paragraph 2(b) and (c) and complies with normal practice. The balances of such accounts may also be transferred to the country of residence of the reinsurer holding the account in question.

4. The provisions of paragraphs 1 to 3 shall apply also to retrocession operations.

D/6. Conditions for establishment and operation of branches and agencies of foreign insurers.

1. All statutory and administrative controls of insurance shall ensure equivalent treatment for national insurers and insurers from other Member States so that the latter shall not be liable to heavier burdens than those imposed on national insurers.

2. Where the establishment of insurers in a Member State is made subject to authorisation:

(a) That Member shall accord insurers from other Member States treatment equivalent to that applied to national insurers;

(b) The competent authorities shall make available to each insurer from another Member State applying for authorisation a written statement setting out fully and precisely the documents and information that the applicant insurer must supply for the purpose of obtaining authorisation, and shall endeavour to simplify and accelerate as appropriate the procedures to be followed prior to the lodging of an application;

(c) Where in addition to legal, financial, accounting and technical requirements (eg. requirements concerning the form of the undertaking, qualification of directors or managers, reinsurance arrangements, etc) the grant of authorisation is also subject to other criteria and in particular is also subject to economic criteria such as the needs of the national insurance market, the competent authorities shall inform applicant insurers of such criteria at the time of their application, and shall apply these criteria in the same way to national insurers as to insurers from other Member States;

(d) The competent authorities shall decide on each application for authorisation by an insurer from another Member State not later than six months from the date on which that application has been completed in all particulars and shall without further delay notify their decision to that insurer;

(e) Where the competent authorities ask an insurer from another Member State for modifications to a completed application for authorisation, they shall inform that insurer of the reasons for seeking such modifications and shall do so under the same conditions as for a national insurer;

(f) Where an application for authorisation by an insurer from another Member State is refused, the competent authorities shall advise that insurer of the reasons for their decision, and shall do so under the same conditions as for a national insurer;

(g) Where authorisation is refused, or where the competent authorities have not dealt with an application upon the expiry of the period of six months provided for under paragraph (d) above, insurers from other Member States shall have the same right of appeal as national insurers.

3. An insurer from one Member State operating in another Member State may appoint on his representative any person who is domiciled and actually resident in that other State, irrespective of his nationality.

Common provisions

4. Present and future statutory and administrative controls of insurance in each Member State shall keep to as low a figure as possible the amounts required from insurers from other Member States as financial guarantees in order to prevent the dispersal of the insurers' assets, insofar as this is compatible with the protection of policy holders and other claimants. Guarantee deposits shall have no other aim than such protection.

Provisions concerning fixed or initial deposits and adjustable deposits

5. A Member which requires fixed or initial deposits and/or adjustable deposits both from national insurers and from insurers from other Member States operating in its territory shall:

(a) Accord to insurers from other Member States the same treatment as that applied to national insurers with respect to the amount and the calculation of such deposits as well as to the eligibility of fixed or initial deposits to count towards the covering of technical reserves;

(b) Allow, at its discretion, any such deposit to be constituted by one or more of the following means, viz.;

(i) Up to the amount of the required deposit:

- A guarantee by an approved bank whose head office is situated in that Member State; or

- A guarantee by an approved insurer whose head office is situated in that Member State, established by the lodging of a policy; or

- The lodging of securities by an approved bank or approved insurer whose head office is situated in that Member State and who has declared that the securities are lodged in the name and for the account of the insurer concerned;

(ii) Up to at least 50 per cent of the required deposit:

- The lodging of currency of the State in which the insurer's head office is situated and/or of securities expressed in the currency of that State, provided either that such securities are negotiable in the State in which the insurer is operating or that the authorities of the State in which the head office of the insurer is situated undertake to authorise the transfer of the proceeds of the sale of such securities if the latter should have to be sold in that State. Securities and currency which are to be used to constitute such guarantees shall first be approved by the insurance supervisory authorities of the State in which the insurer is operating; they shall remain under the control of those authorities, according to the rules governing the constitution and utilisation of similar national assets.

6. A Member which requires from insurers from other Member States operating in its territory fixed or initial deposits and/or adjustable deposits which are not required from national insurers shall allow, at its discretion, such deposits to be replaced as to not less than 50 percent by:

(a) A guarantee by an approved bank whose head office is situated in that Member State; or

(b) A guarantee by an approved insurer whose head office is situated in that country, established by the lodging of a policy unless it allows fixed or initial deposits to count subsequently towards the covering of technical reserves or of any other guarantee required from insurers from other Member States operating in its territory.

Provisions concerning variable deposits and technical reserves

7. A Member which requires variable deposits both from national insurers and from insurers from other Member States operating in its territory shall apply to the latter the same treatment as to national insurers with respect to the calculation of such deposits and their eligibility to count towards the covering of technical reserves.

8. Where a Member requires from insurers from other member States operating in its territory variable deposits or the deposit of technical reserves which it does not require from national insurers, such requirements shall not have the effect of making the mode of calculating such reserves and/or deposits more burdensome than the customary rules for calculating the reserves of national insurers.

General provisions

9. Each member State shall subject national insurers and insurers from other Member States operating in its territory to identical rules for the choice and valuation of their investments and for the adjustment of any depreciation in the value thereof, subject, where appropriate, to the provisions of paragraph 5(b)(ii) above.

10. Where a Member requires the same deposit of investment both from national insurers and from insurers from other Member States operating in its territory, it shall subject both kinds of insurers to identical rules with respect to the manner in which the deposit is to be lodged.

11. Where a Member requires a deposit of investments from insurers from other Member States only, the requirements as to the choice and the valuation of the investments deposited shall not be more burdensome for such insurers than those applicable to national insurers.

12. Where a Member requires insurers from other Member States operating in its territory to deposit investments to cover the technical reserves and does not impose the same obligation on national insurers, in calculating such deposits the following shall be deducted:

(a) In the case of classes of business other than life assurance, marriage and birth assurance, and capital redemption business, cash in hand or at banks and premiums or subscriptions (net of taxes, duties and commissions) which have been outstanding for not more than three months, up to an amount equal to 30 percent of the unearned premiums reserve;

(b) In the case of life assurance, marriage and birth assurance, and capital redemption business:

(i) Cash in hand or at banks, up to an amount equal to one-twelfth of the premium income in the last financial year; and

(ii) Up to 90 percent of premiums or subscriptions (net of taxes, duties and commissions) which have been outstanding for not more than three months.

Acceptable investments

13. Each Member shall endeavour to allow insurers from other Member States operating in its territory the greatest possible choice for their investments.

14. In addition to investments expressly designated therein, the national laws and regulations of each Member for the supervision of insurance should provide that technical reserves and deposits may be constituted by insurers from other Member States by means of any other investment which are admitted by the competent authorities of the Member concerned on such conditions as the latter may determine.

15. Each Member shall allow insurers from other Member States operating in its territory to use immovable property situated therein or mortgages on such property, up to an amount equal to not less than 25 percent of the technical reserves and variable deposits after excluding, where appropriate, any part thereof which may be constituted by means of fixed or initial deposits.

Change of investments

16. If at any time between prescribed periodic adjustments an insurer from one Member State operating in another Member State which requires the deposit of technical reserves can prove to the insurance supervisory authorities of the latter that the sums deposited exceed those required to constitute such technical reserves, the supervisory authorities shall authorise without delay the release of any sums deposited in excess.

17. Each member shall allow insurers from other Member States operating in its territory to change their investments with a minimum of formalities.

(a) In particular, the prior replacement by other investments shall not be required where;

(i) With the prior authorisation of the insurance supervisory authorities, deposited securities are withdrawn from deposit and replaced within one and the same duly authorised institution; and

(ii) Securities are replaced by immovable property which the insurers wish to acquire, or by mortgages on immovable property, provided that the replacement takes place within a short time.

(b) In all other cases where the prior replacement cannot be dispensed with, the insurance supervisory authorities shall allow such replacement of investments to take place with the least delay, and shall keep all charges incumbent on the insurers to the minimum, without, however, in any way diminishing the protection afforded to the policy holders and other claimants.

D/6. Conditions for establishment and operation of branches and agencies of foreign insurers (transfers).

1. The transfer of all amounts which the statutory or administrative controls governing insurance do not require to be kept in the country shall be free.

2. The insurers from a Member State who execute direct insurance transactions in another Member State through one or more branches or through agents shall be authorised, insofar as such insurers, their branches or agents, have no adequate funds available in that country, to transfer to that country such amounts as they require to continue to meet the legal liabilities and/or contractual obligations arising from such transactions.

3. In accordance with Item F/1 of the List of Current Invisible Operations, the transfer of profits arising out of direct insurance operations shall be free. Profits shall be understood to mean the surplus available after providing for liabilities in respect of all legal and/or contractual obligations.

Annex II to Annex A

1. Laws, regulations and administrative practices shall ensure equivalent treatment of domestic enterprises and of branches or agencies of non-resident enterprises operating in the field of banking or financial services (including securities dealing) so that the establishment of branches and agencies of non-resident enterprises shall not be subject to more burdensome requirements than those applying to domestic enterprises.

2. Where the establishment of banks, credit institutions, securities firms, or other financial enterprises is made subject to authorisations:

(a) The competent authorities shall make available to each non-resident enterprise applying for authorisation a written statement setting out fully and precisely the documents and information that the applicant must supply for the purpose of obtaining authorisation, and shall ensure that any procedures to be followed prior to the lodging of an application are straightforward and expeditious;

(b) Where in addition to legal, financial, accounting and technical requirements (eg. requirements concerning the form of the undertaking, qualifications of directors or managers, etc) authorisation is also subject to other criteria, the competent authorities shall inform applicant enterprises of such criteria at the time of their application and shall apply these criteria in the same way to both domestic and non-resident enterprises;

(c) The competent authorities shall decide on each application for authorisation from a non-resident enterprise not later than six months from the date of which the application has been completed in all particulars and shall without further delay notify the enterprise of their decisions;

(d) Where the competent authorities ask a non-resident enterprise for modifications to a completed application for authorisation, they shall inform the enterprise of the reasons for seeking such modifications and shall do so under the same conditions as for a domestic enterprise;

(e) Where an application for authorisation by a non-resident enterprise is refused, the competent authorities shall advise the enterprise of the reasons for their decision and shall do so under the same conditions as for a domestic enterprise;

(f) Where authorisation is refused, or where the competent authorities have not dealt with an application upon the expiry of the period of six months provided for under sub-paragraph (c) above, non-resident enterprises shall have the same right of appeal as domestic enterprises.

3. An enterprise from one Member country operating in another Member country may appoint as its representative any competent person who is domiciled and actually resident in that other country, irrespective of his nationality.

4. (a) An enterprise from one Member country may establish a representative office in another Member country, subject to advance notification to the other Member country;

(b) A representative office shall be permitted to promote business on behalf of its parent enterprise.

5. Members shall impose no restrictions upon the nationality of persons authorised to act as intermediaries in banking and financial services activities, to operate in any segment of the markets relating to those activities or to become members of institutions such as professional associations, securities or other exchanges or markets, self-regulatory bodies of securities or other market intermediaries.

6. Members shall be responsible for assuring that discrimination by nationality is not practised in their jurisdiction as to conditions for membership in any private professional association, self-regulatory body, securities exchange or market, or other private association, membership in which it is necessary to engage in banking or financial services on an equal basis with domestic enterprises or natural persons, or which confers particular privileges or advantages in providing such services.

7. Domestic laws, regulations and administrative practices needed to assure the soundness of the financial system or to protect depositors, savers and other claimants shall not prevent the establishment of branches or agencies of non-resident enterprises on terms and conditions equivalent to those applying to domestic enterprises operating in the field of banking or financial services.

8. (a) Where financial requirements of any kind are imposed for the establishment of a branch or agency of a non-resident enterprise to engage in banking or financial services, the total amount of such financial requirements shall be no more than that required of a domestic enterprise to engage in similar activities.

(b) Any financial requirement may be met by payment in the currency of the host country.

(c) Any financial requirement may be applied to more than one branch or agency of a non-resident enterprise, but the total of the financial requirements to be furnished by all the branches and agencies of the same non-resident enterprise shall be no more than that required of a domestic enterprise to engage in similar activities.

(d) Whenever a ratio or other measure is used for prudential or other purposes, for example, for assessing the liquidity, solvency or foreign exchange position of a branch or agency of a non-resident enterprise, full account shall be taken of the total amount of any financial requirements that have been met in the establishment of such branches or agencies and of any financial contribution of the same nature that has been provided in excess of such requirements.

(e) Whenever a ratio measure is used for prudential or other purposes, the ratio applied to the branches or agencies of non-resident enterprises shall be no less favourable than that applied to domestic enterprises, and shall not differ in any way other than in the replacement of paid-up capital for domestic enterprises by the total amount of any financial requirements that have been met in the establishment of branches or agencies of non-resident enterprises and of any financial contribution of the same nature that has been provided in excess of such requirements.

(f) Any other measures used for prudential or other purposes shall be no less favourable to the branches and agencies of non-resident enterprises than to domestic enterprises.

Annex III to Annex A

C/4. Air transport; passengers and freights, including chartering.

Payment by passengers of international air tickets and excess luggage charges; payment of international air freight charges and chartered flights.

Remark: Each Member shall authorise residents of other Member States and its own residents to use its national currency to make the necessary payments on their own account within its own territory in respect of this item.

Annex IV to Annex A

1. Import of domestic bank-notes

When entering a Member State, non-resident travellers shall be automatically permitted to import at least the equivalent of 1,250 units of account in that Member's bank-notes. Resident travellers returning to their country of residence shall be automatically permitted to import bank-notes of that State up to the total amount exported on their departure therefrom, or lawfully acquired during their stay abroad.

2. Export of domestic bank-notes

When leaving a Member State, resident and non-resident travellers shall be automatically permitted to export at least the equivalent of 150 units of account per person per journey in that Member's bank-notes. No justification shall be required concerning such export.

3. Import of travellers' cheques and foreign bank-notes

When entering a Member State, resident and non-resident travellers shall be automatically permitted to import foreign bank-notes and travellers' cheques regardless of the currency in which they are denominated. This provision does not imply an obligation for the authorities of Member States to provide for the purchase or exchange of travellers' cheques and foreign bank-notes so imported beyond that contained in paragraph 5 below.

4. Export of travellers' cheques and foreign bank-notes

(a) Residents

When leaving a Member State, resident travellers shall be automatically permitted to acquire and to export in a proportion left to the traveller the equivalent of at least 1,250 units of account per person per journey in travellers' cheques, regardless of the currency in which they are denominated, and in foreign bank-notes. No request for justification shall be made concerning such acquisition and export. Under this provision, foreign exchange dealers shall be free, within the limits of their national regulations, to obtain foreign bank-notes and to sell them to travellers. The present provision does not imply any obligation for the authorities themselves to provide such travellers' cheques or foreign bank-notes either directly to the travellers or to foreign exchange dealers.

(b) Non-residents

When leaving a Member State, non-resident travellers shall be automatically permitted to export travellers' cheques, regardless of the currency in which they are denominated, and foreign bank-notes up to the equivalent of the total previously imported or lawfully acquired during their stay.

5. Exchange of means of payment: non-residents

Exchange into Member States' currencies.

Non-resident travellers shall be permitted to exchange into means of payment in the currency of any foreign Member State:

(i) Means of payment in the currency of another foreign Member State which can be shown to have been lawfully imported; and

(ii) Domestic bank-notes which can be shown to have been acquired against such means of payment in the currency of another foreign Member State during their stay.

Under this provision foreign exchange dealers shall be free, within the limits of their national regulations, to exchange the means of payment in question. The provision does not imply any obligation for the authorities themselves to provide such means of payment either directly to the travellers or to foreign exchange dealers.

6. Use of cash cards and credit abroad

The principle of the free use of cash cards and credit cards abroad provided for under Section G of the Code does not imply any obligation for the agencies issuing cash cards or credit cards to amend the rules governing the use of such cards for the settlement of expenditure relating to travel or stays abroad or for obtaining cash abroad.

Annex V to Annex A

Aid to production

1. For cultural reasons, systems of aid to the production of printed films for cinema exhibition may be maintained provided that they do not significantly distort international competition in export markets.

Screen quotas for printed films for cinema exhibition

2. For full-length films made or dubbed in the language of the importing country, internal quantitative regulations may be maintained in the form of screen quotas requiring the exhibition of films of domestic origin during a specific minimum proportion of the total screen time actually utilised over a specified period of not less than one year.[51]

3. Original versions of feature films produced in other Member States in a language foreign to that of the importing country shall be:

(i) excluded from the calculation of the screen quota for domestic films; or

(ii) admitted for exhibition in specialised cinemas which, as a general rule, are not obliged to observe the screen quotas; or

(iii) admitted for exhibition in cinemas other than those mentioned in (ii) under a global screen quota instead of a screen quota applying to individual cinemas.

4. Short information or documentary films produced in other Member States shall gradually be excluded from the calculation of the screen quota for domestic films.

Freedom from duties, deposits or taxes

5. Printed films shall not be subject to any duties, deposits, or taxes which discriminate against imported films.

6. Short information or documentary films produced in other Member States shall enjoy certain of the benefits if any, granted to domestic films in this category (eg. substantial prize awards according to merit, or tax relief on showing).

7. Provided they are intended solely for non-commercial exhibition and are imported by organisations approved by the competent authorities of the country concerned for the purpose of importing such films free from import duties and import taxes, the following categories of films produced in other Member States shall be free from those duties and taxes:

(a) newsreels, at least for two copies of each subject;

(b) educational, scientific or cultural film recognised as such by:

(i) the importing and the exporting country;

(ii) or the Fédération Internationale des Archives du Film (FIAF);

(c) tourist publicity films, provided they comply with the conditions laid down in Articles 13(c) and 14 of the Annex to the Decision of the Council dated 20 February 1968, concerning administrative facilities in favour of international tourism [C(68)32].[52]

Co-production

8. The regulations defining domestically produced films shall be such that any film produced under an international co-production arrangement shall automatically enjoy, in all the Member States that are parties thereto, treatment as favourable as that given to domestically produced films.

1. Article 13(c) of the annex to the Decision of the Council of 20 February 1968, concerning the importation of tourist publicity documents and articles [C(68)32], lays down that, subject to the conditions laid down in Article 14 of the Annex to the Decision, the following articles (inter alia) shall be admitted temporarily free of import duties and import taxes, without entering into a bond in respect of those duties and taxes, or depositing those duties and taxes, when imported from one of the States chiefly for the purpose of encouraging the public to visit that State, inter alia to attend cultural, touristic, sporting, religious or professional meetings or demonstrations held in that State:

Documentary films, records, tape recordings and other sound recordings intended for use in performances at which no charge is made, but excluding those whose subjects lend themselves to commercial advertising and those which are on general sale in the State of importation.

2. Article 14 of the Annex to the Council Decision lays down the facilities provided in Article 13 shall be granted on the following conditions:

(a) the articles must be dispatched either by an official tourist agency or by a national tourist publicity agency affiliated therewith. Proof shall be furnished by presenting to the customs authorities of the State of import a declaration made out in accordance with the model in Appendix I of the Decision, by the dispatching agency. A list of official national tourist agencies in Member States is given in Appendix II of the Decision;

(b) the articles must be imported for, and on the responsibility of, either the accredited representative of the official national tourist agency of the State of dispatch, or of the correspondent appointed by the aforesaid agency and approved by the customs authorities of the importing State. The responsibility of the accredited representative or the approved correspondent includes, in particular, the payment of the import duties and taxes which will be chargeable if the conditions laid down in the Decision are not fulfilled;

(c) the articles imported must be re-exported without alteration by the importing agency. If the articles granted temporary free admission are destroyed in accordance with the conditions laid down by the customs authorities, the importer shall nevertheless be freed from the obligation to re-export.

3. Finally, Article 14 provides that the privilege of temporary free admission shall be granted for a period of eighteen months from the date of importation or for such further period as the customs authorities may in special circumstances allow.

The present Annex contains the reservations that individual Member countries have lodged in accordance with Article 2(b) of the Code of Liberalisation of Current Invisible Operations.[53] These reservations have been accepted by the Council and allow the Members concerned to derogate from the provisions of Article 2(a) of the Code with regard to the operations listed in Annex A.

In the country pages that follow, the asterisks added to the mention of Items D/6 and E/7 refer to Annex E to the Code of Liberalisation of Capital Movements, which describes measures and practises allowing inward direct investment or establishment under conditions of reciprocity (ie. allowing residents of another Member country to invest or establish in the Member country concerned under terms similar to those applied by the other Member country to investors resident in the Member country concerned) and/or involving discrimination among investors originating in various OECD Member countries (other than the exceptions to the principle of non-discrimination referred to in Article 10 of the Code of Liberalisation of Capital Movements and Article 10 of the Code of Liberalisation of Invisible Operations). Annex E also includes a Council Decision relating to these measures and practices.

General Remark: The Australian Government accepts the enlarged obligations on banking and financial services in the Code of Liberalisation of Current Invisible Operations consistent with its constitutional powers and the reservations it has lodged in respect of some of the enlarged obligations.

Bearing in mind that the Australian Constitution provides for a federal system of government and State and Territory Governments have powers in relation to some matters within the scope of the enlarged obligations, Australia reserves its position in respect of the enlarged obligations insofar as these obligations relate to actions, including any action in relation to taxation, undertaken by Australian State or Territory Governments. This applies to the enlarged obligations under Items E/1 to 7 of the Revised Current Invisibles Code.

The Australian authorities will take steps to encourage the States and Territories to achieve the liberalisation of operations covered by the enlarged obligations of the Codes that fall within their jurisdiction and will call their attention to the basic principles underlying the liberalisation obligations under the Code. The Australian authorities will also seek the cooperation of the States and Territories in providing information on any existing restrictions applied at the State or Territory level, as well as any new measures that might be taken at that level.

In the event that a Member of the OECD considers that its interests under the Codes are being prejudiced by the actions of an Australian State or Territory Government, the Australian authorities will consult with the Member and the State or Territory Government concerned. They will bring the provisions of the Code and the circumstances of the case in question to the attention of the competent authorities of any State or Territory concerned together with an appropriate recommendation. They will also inform the Organisation of the action taken in this regard and of the results thereof.

D/5. Transactions and transfers in connection with reinsurance and retrocession.

Annex I to Annex A, Part II.

D/6. Conditions for establishment and operation of branches and agencies of foreign insurers.

Annex I to Annex A, Part III, paragraphs 2(a), 8 and 16.

E/1. Payment services.

Remark: The reservation applies to the provision of payment services by non-residents.

E/7. Conditions for the establishment and operation of branches, agencies, etc. of non-resident investors in the banking and financial services sector.

Annex II to Annex A, paragraphs 1, 4(a) and 5.

Remark: The reservation on paragraph 4(a) concerns the fact that the establishment of representative offices by non-resident financial institutions is subject to authorisation.

H/1. Exportation, importation, distribution and use of printed films and other recordings - whatever the means of reproduction - for private or cinema exhibition, or television broadcasts.

Remark: The reservation applies only to:

(a) foreign-produced advertising material for television broadcasts; and

(b) time-quota limitations on the television screening of programs which are not of Australian origin.

THE COUNCIL,

HAVING REGARD to Articles 2(d) and 5(a) of the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960;

HAVING REGARD to the Code of Liberalisation of Current Invisible Operations (hereinafter called the "Code");

HAVING REGARD to the Report of the Committee for Invisible Transactions on the Codes of Liberalisation of Current Invisibles and of Capital Movements of 28 October 1961, and, in particular, paragraphs 18 to 21 thereof and the Comments by the Executive Committee on that Report of 8 December 1961 [OECD/C(61)37, OECD/C(61)73];

RECOGNISING that in the United States individual States have jurisdiction to act with respect to certain matters which fall within the purview of the Code;

BELIEVING, however, that there is only a limited area of current invisible operations in which a Member might consider that the benefits it could reasonably expect to derive from the Code are being denied to it by such action and believing, moreover, that cases of any such action are unlikely to have a significant practical effect on the operation of the Code;

CONVINCED that where instances of this nature arise they will be settled in the tradition of co-operation which has evolved among the Members of the Organisation;

DECIDES:

1. The provisions of the Code shall not apply to action by a State of the United States which comes within the jurisdiction of that State.

ACKNOWLEDGES THAT:

2. (a) If a Member considers that its interests under the Code are being prejudiced by such action and notifies the Organisation of the circumstances, the United States Government undertakes in conformity with the constitutional procedures of the United States to bring the provisions of the Code and the circumstances notified, with an appropriate recommendation, to the attention of the competent authorities of any State concerned;

(b) The United States Government undertakes to inform the Organisation of the action it has taken pursuant to paragraph 2(a) of this Decision and of the results thereof.

DECIDES:

3. This Decision shall form an integral part of the Code and shall be attached thereto as Annex C.

THE COUNCIL,

HAVING REGARD to Articles 2(d), 3(a) and 5(a) of the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960;

HAVING REGARD to the Code of Liberalisation of Current Invisible Operations (hereinafter called the "Code");

HAVING REGARD to the Report of the Committee for Invisible Transactions on the Codes of Liberalisation of Current Invisibles and of Capital Movements of 28 October 1961, and, in particular, paragraphs 18 and 19 thereof and the Comments by the Executive Committee on that Report of 8 December 1961 [OECD/C(61)37, OECD/C(61)73];

RECOGNISING that in Canada individual Provinces may have jurisdiction to act with respect to certain matters which fall within the purview of the Code;

BELIEVING, however, that there is only a limited area of current invisible operations in which Provincial actions might be relevant to the Code and believing, moreover, that actions by Canadian Provinces are unlikely to have a significant practical effect on the operation of the Code;

CONVINCED that where instances of this nature arise they will be settled in the tradition of cooperation which has evolved among the Members of the Organisation;

DECIDES:

1. To take note of the undertaking of the Canadian Government to carry out the provisions of the Code to the fullest extent compatible with the constitutional system of Canada.

2. This Decision shall form an integral part of the Code and shall be attached thereto as Annex D. It may be reviewed at any time at the request of a Member of the Organisation which adheres to the Code.

[1] UNTS 261 p. 140.

[2] UNTS 298 p. 3.

[3] The Convention entered into force generally 30 September 1961.

[4] The text of the Council decision inviting the Government of Australia to accede to the Convention is reproduced at the end of this document.

[5] Instrument of accession deposited for Australia 7 June 1971 with effect from that date.

[6] The text of the Statement is reproduced at the end of this document.

[7] The Australian Government is nevertheless prepared to cooperate with Member countries if they have to face a supply crisis. [Footnote appeared in original text.]

[8] See preceding footnote.

[9] As amended to 15 April 1993.

[10] All items in the General List of International Capital Movements and Certain Related Operations (see Annex D to the Code) appear on either List A or List B in this Annex A. [Footnote appeared in original text.]

[11] Other than operations falling under Section I or II of the General List. [Footnote appeared in original text.]

[12] Other than operations falling under Section I or II of the General List. [Footnote appeared in original text.]

[13] Other than operations falling under Section IV of the General List. [Footnote appeared in original text.]

[14] Other than operations falling under Sections IV, V or VII of the General List. [Footnote appeared in original text.]

[15] Other than credits and loans falling under Sections I, II, VIII or XIV of the General List. [Footnote appeared in original text.]

[16] Other than operations falling under Section V of the General List. [Footnote appeared in original text.]

[17] Other than operations falling under any other Section of the General List. [Footnote appeared in original text.]

[18] Transfers of premiums and pensions and annuities, other than annuities certain, in connection with life assurance contracts are governed by the Code of Liberalisation of Current Invisible Operations (Item D/3). Transfers of whatever kind or size under other than life assurance contracts are always considered to be of a current nature and are consequently governed by the Current Invisibles Code. [Footnote appeared in original text.]

[19] All items in the General List of International Capital Movements and Certain Related Operations (see Annex D to the Code) appear on either List A or List B in this Annex A. [Footnote appeared in original text.]

[20] Other than operations falling under Section I or II of the General List. [Footnote appeared in original text.]

[21] Other than operations falling under Section IV of the General List. [Footnote appeared in original text.]

[22] Other than operations falling under Sections IV, V or VII of the General List. [Footnote appeared in original text.]

[23] Other than credits and loans falling under Sections I, II, VIII or XIV of the General List. [Footnote appeared in original text.]

[24] Other than operations falling under Section V of the General List. [Footnote appeared in original text.]

[25] Other than operations falling under any other Section of the General List. [Footnote appeared in original text.]

[26] Only the reservation of Australia are reproduced here.

[27] All items on this General List of International Capital Movements and Certain Related Operations appear also on Liberalisation List A or B in Annex A to the Code. [Footnote appeared in original text.]

[28] Other than operations falling under Sections I or II of the General List. [Footnote appeared in original text.]

[29] Other than operations falling under Sections I or II of the General List. [Footnote appeared in original text.]

[30] Other than operations falling under Section V of the General List. [Footnote appeared in original text.]

[31] Other than operations falling under Sections IV, V or VII of the General List. [Footnote appeared in original text.]

[32] Other than credits and loans falling under Sections I, II, VIII or XlV of the General List. [Footnote appeared in original text.]

[33] Other than operations falling under Section V of the General List. [Footnote appeared in original text.]

[34] Other than operations falling under any other Section of the General List. [Footnote appeared in original text.]

[35] Transfers of premiums and pensions and annuities, other than annuities certain, in connection with life assurance contracts are governed by the Code of Liberalisation of Current Invisible Operations (Item D/3). Transfers of whatever kind or size under other than life assurance contracts are always considered to be of a current nature and are consequently governed by the Current Invisibles Code. [Footnote appeared in original text.]

[36] As amended to 29 March 1993 - C(93)12/FINAL.

[37] See also Note 3 at end of this Annex. [Footnote appeared in original text.]

[38] Idem. [Footnote appeared in original text.]

[39] Idem. [Footnote appeared in original text.]

[40] This item does not cover transport between two ports of the same State. Where such transport is open to foreign flags, transfers shall be free. [Footnote appeared in original text.]

[41] For definition of terms employed here and in the Remarks against C/6, see Note 2 at end of this Annex. [Footnote appeared in original text.]

[42] See Note 1 at end of this Annex. [Footnote appeared in original text.]

[43] For definition of terms employed here and in the Remarks against C/5, see Note 2 at end of this Annex. [Footnote appeared in original text.]

[44] Transaction shall be deemed to mean the conclusion of a direct insurance contract by a person in one Member State with an insurer in another Member State. [Footnote appeared in original text.]

[45] The provisions of this item do not apply to Canada which accordingly has neither obligations nor rights thereunder [OECD/C(61)89 of 12 December 1961 and C(63)154 (Final) of 3 March 1964]. [Footnote appeared in original text.]

[46] The items in this section apply to transfers only. [Footnote appeared in original text.]

[47] Transfers of capital and annuities certain in connection with life assurance contracts are governed by the Code of Liberalisation of Capital Movements (List A, item XII). [Footnote appeared in original text.]

[48] Idem. [Footnote appeared in original text.]

[49] The following transfers in particular are included under this item (the list is not exhaustive, but includes the most frequent cases of transfer of insurance indemnities):

- Transfers of indemnities payable by reason of the insured's liability;

- Transfers of indemnities to cover physical damage to a ship, aircraft, motor vehicle or any other means of transport;

- Transfers of indemnities under baggage insurance;

- Transfers in payment of benefits covered by accident insurance (including individual insurances) or sickness insurance;

- Transfers to fulfil commitments arising from marine insurance not covered by the above paragraphs (provisional or final contributions in respect of general average, paid by the insurer on behalf of the ship's owner or the consignee of the goods or his agent, the transfer of interest on any bank security substituted for a provisional contribution, transfer of interest in respect of provisional contributions, the transfer of remuneration of assistance and salvage, etc). [Footnote appeared in original text.]

[50] For the purposes of this Code, the term "financial guarantee" includes the assets constituting respectively the fixed or initial deposit, the adjustable deposit and the variable deposit, and also the technical reserves and any reserve of another description required under the respective national laws, insofar as the assets constituting such reserves are required to be kept in the country in which the insurer is carrying on business:

- the fixed or initial deposit is the amount which an insurer must constitute and lodge with a prescribed institution in the country in which he is operating, prior to any operation in one or more branches of insurance;

- the adjustable deposit is a deposit which is adjusted according to the amount of business written by the insurer and is not allowed to count towards his technical reserves;

- the variable deposit is a deposit which is adjusted according to the amount of business written by the insurer but is allowed to count towards his technical reserves;

- the technical reserves are the amounts which the insurer sets aside to cover his liabilities under contracts of insurance. [Footnote appeared in original text.]

[51] Any screen quotas as defined in this provision shall be calculated on the basis of screen time per cinema per year or the equivalent thereof. With the exception of screen time reserved for films of domestic origin, screen times shall not be allocated formally or in effect among sources of supply. [Footnote appeared in original text.]

[52] See Note below. [Footnote appeared in original text.]