NAFTA: Treaty | Page 7

goods from producers in its territory;
(b) to achieve a given level or percentage of domestic content;
(c) to relate in any way the volume or value of imports to the volume or
value of exports or to the amount of foreign exchange inflows
associated with such investment; or
(d) to restrict sales of goods or services in its territory that such
investment produces or provides by relating such sales in any way to
the volume or value of its exports or foreign exchange earnings.
4. Nothing in paragraph 3 shall be construed to prevent a Party from
conditioning the receipt or continued receipt of an advantage, in
connection with investments in its territory of investors of a Party or of
a non-Party, on compliance with a requirement to locate production,
provide a service, train or employ workers, construct or expand
particular facilities, or carry out research and development, in its
territory.
5. Paragraphs 1 and 3 do not apply to any requirements other than the
requirements listed in those paragraphs.
Article 1107: Senior Management and Boards of Directors
1. A Party shall not require that an enterprise of the Party that is an
investment of an investor of another Party appoint to senior

management positions individuals of any particular nationality.
2. A Party may require that a majority of the board of directors, or any
committee thereof, of an enterprise of the Party that is an investment of
an investor of another Party, be of a particular nationality, or resident in
the territory of the Party, provided that the requirement does not
materially impair the ability of the investor to exercise control over its
investment.
Article 1108: Reservations and Exceptions
1. Articles 1102, 1103, 1106 and 1107 do not apply to:
(a) any existing non-conforming measure that is maintained by:
(i) a Party at the federal level, as described in its Schedule to Annex I
or III,
(ii) a state or province, for two years after the date of entry into force of
this Agreement, and thereafter as described by a Party in its Schedule to
Annex I, or
(iii) a local government;
(b) the continuation or prompt renewal of any non-conforming measure
referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in
subparagraph (a) to the extent that the amendment does not decrease
the conformity of the measure, as it existed immediately before the
amendment, with Articles 1102, 1103, 1106 and 1107.
2. A Party shall have two years from the date of entry into force of this
Agreement to describe in its Schedule to Annex I any existing
non-conforming measure maintained by a state or province.
3. A Party shall not be required to describe in its Schedule to Annex I
any existing non-conforming measure that is maintained by a local
government.

4. To the extent indicated by a Party in its Schedule to Annex II,
Articles 1102, 1103, 1106 and 1107 do not apply to any measure
adopted or maintained by a Party with respect to the sectors, subsectors
or activities as described therein.
5. Any measure adopted by a Party in a manner consistent with
paragraph 4 shall not require an investor of another Party, by reason of
its nationality, to sell or otherwise dispose of an investment existing at
the time the measure becomes effective.
6. Articles 1102 and 1103 do not apply to any measure that is an
exception to, or derogation from, the obligations under Article 1703
(National Treatment) as specifically provided for in that Article.
7. Article 1103 does not apply to treatment accorded by a Party
pursuant to agreements or with respect to sectors described in Annex
IV.
8. Articles 1102, 1103 and 1107 do not apply to:
(a) procurement of goods or services by a Party or a state enterprise; or
(b) subsidies and grants provided by a Party or a state enterprise,
including government-supported loans, guarantees and insurance.
9. The provisions of:
(a) Article 1106(1)(a), (b) and (c), and (3)(a) and (b) do not apply to
qualification requirements for goods or services with respect to export
promotion and foreign aid programs;
(b) Article 1106(1)(b), (c), (f) and (g), and (3)(a) and (b) do not apply
to procurement of goods or services by a Party or a state enterprise; and
(c) Article 1106(3)(a) and (b) do not apply to requirements imposed by
an importing Party related to the content of goods necessary to qualify
for preferential tariffs or preferential quotas.
Article 1109: Transfers

1. Each Party shall permit all transfers and international payments
("transfers") relating to an investment of an investor of another Party in
the territory of the Party to be made freely and without delay. Such
transfers include:
(a) profits, dividends, interest, capital gains, royalty payments,
management fees, technical assistance and other fees, returns