annexes
	annex II

North American Free Trade Agreement - ANNEX I

Reservations for Existing Measures and Liberalization Commitments

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1. The Schedule of a Party sets out, pursuant to Articles 1108(1) (Investment), 1206(1) (Cross-Border Trade in Services) and 1409(4) (Financial Services), the reservations taken by that Party with respect to existing measures that do not conform with obligations imposed by:
   1. Article 1102, 1202 or 1405 (National Treatment),
   2. Article 1103, 1203 or 1406 (Most-Favored-Nation Treatment),
   3. Article 1205 (Local Presence),
   4. Article 1106 (Performance Requirements), or
   5. Article 1107 (Senior Management and Boards of Directors),
   and, in certain cases, sets out commitments for immediate or future liberalization.
2. Each reservation sets out the following elements:
   1. Sector refers to the general sector in which the reservation is taken;
   2. Sub-Sector refers to the specific sector in which the reservation is taken;
   3. Industry Classification refers, where applicable, to the activity covered by the reservation according to domestic industry classification codes;
   4. Type of Reservation specifies the obligation referred to in paragraph 1 for which a reservation is taken;
   5. Level of Government indicates the level of government maintaining the measure for which a reservation is taken;
   6. Measures identifies the laws, regulations or other measures, as qualified, where indicated, by the Description element, for which the reservation is taken. A measure cited in the Measures element
      1. means the measure as amended, continued or renewed as of the date of entry into force of this Agreement, and
      2. includes any subordinate measure adopted or maintained under the authority of and consistent with the measure;
   7. Description sets out commitments, if any, for liberalization on the date of entry into force of this Agreement, and the remaining non-conforming aspects of the existing measures for which the reservation is taken; and
   8. Phase-Out sets out commitments, if any, for liberalization after the date of entry into force of this Agreement.
3. In the interpretation of a reservation, all elements of the reservation shall be considered. A reservation shall be interpreted in the light of the relevant provisions of the Chapters against which the reservation is taken. To the extent that:
   1. the Phase-Out element provides for the phasing out of non-conforming aspects of measures, the Phase-Out element shall prevail over all other elements;
   2. the Measures element is qualified by a liberalization commitment from the Description element, the Measures element as so qualified shall prevail over all other elements; and
   3. the Measures element is not so qualified, the Measures element shall prevail over all other elements, unless any discrepancy between the Measures element and the other elements considered in their totality is so substantial and material that it would be unreasonable to conclude that the Measures element should prevail, in which case the other elements shall prevail to the extent of that discrepancy.
4. Where a Party maintains a measure that requires that a service provider be a citizen, permanent resident or resident of its territory as a condition to the provision of a service in its territory, a reservation for that measure taken with respect to Article 1202, 1203 or 1205 or Article 1404, 1405 or 1406 shall operate as a reservation with respect to Article 1102, 1103 or 1106 to the extent of that measure.
5. For purposes of this Annex:
   • CMAP means Clasificación Mexicana de Actividades y Productos (CMAP) numbers as set out in Instituto Nacional de Estadística, Geografía e Informática, Clasificación Mexicana de Actividades y Productos, 1988;
   • concession means an authorization provided by the State to a person to exploit a natural resource or provide a service, for which Mexican nationals and Mexican enterprises are granted priority over foreigners;
   • CPC means Central Product Classification (CPC) numbers as set out in Statistical Office of the United Nations, Statistical Papers, Series M, No. 77, Provisional Central Product Classification, 1991;
   • foreigners' exclusion clause means the express provision in an enterprise's by-laws stating that the enterprise shall not allow foreigners, directly or indirectly, to become partners or shareholders of the enterprise;
   • international cargo means goods that have an origin or destination outside the territory of a Party;
   • Mexican enterprise means an enterprise constituted under the law of Mexico; and
   • SIC means:
     1. with respect to Canada, Standard Industrial Classification (SIC) numbers as set out in Statistics Canada, Standard Industrial Classification, fourth edition, 1980; and
     2. with respect to the United States, Standard Industrial Classification (SIC) numbers as set out in the United States Office of Management and Budget, Standard Industrial Classification Manual, 1987.

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last updated on april 9, 05 by TMTM