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II SÉRIE-A — NÚMERO 35

gard to the supplementary treaty referred to in article 10, 4), the question of the importance of national legislation with respect to the issue of control as expressed in the Understanding to article 1, 6).

2 — With respect to articles 5 and 10, 11). — Australia notes that the provisions of articles 5 and 10, 11), do not diminish its rights and obligations under the GATT, including as elaborated in the Uruguay Round Agreement on Trade-Related Investment Measures, particularly with respect to the list of exceptions in article 5, 3), which it considers incomplete.

Australia further notes that it would not be appropriate for dispute settlement bodies established under the Treaty to give interpretations of GATT articles m and xi in the context of disputes between parties to die GATT or between an investor of a party to the GATT and another party to the GATT. It considers that with respect to the application of article 10, 11), between an investor and a party to the GATT, the only issue that can be considered under article 26 is the issue of the awards of arbitration in the event that a GATT panel or the WTO dispute settlement body first establishes that a trade-related investment measure maintained by the Contracting Party is inconsistent with its obligations under the GATT or the Agreement on Trade-Related Investment Measures.

3 — With respect to article 7. —The European Communities and their member Slates and Austria, Norway, Sweden and Finland declare that the provisions of article 7 are subject to the conventional rules of international law on jurisdiction over submarine cables and pipelines or, where there are ano such rules, to general international law.

They further declare that article 7 is not intended to affect the interpretation of existing international law on jurisdiction over submarine cables and pipelines, and cannot be considered as doing so.

4 — With respect to article 10. — Canada and the United States each affirm that they will apply the provisions of article 10 in accordance with the following considerations:

For the purposes of assessing the treatment which must be accorded to investors of other Contracting Parties and their investments, the circumstances will need to be considered on a case-by-case basis. A comparison between the treatment accorded to investors of one Contracting Party, or the investments of investors of one Contracting Party, and the investments or investors of another Contracting Party, is only valid if it is made between investors and investments in similar circumstances. In determining whether differential treatment of investors or investments is consistent with article 10, two basic factors must be taken into account.

The first factor is the policy objectives of Contracting Parties in various fields insofar as they are consistent with the principles of non-discrimination set out in article 10. Legimate policy objectives may justify differential treatment of foreign investors or their investments in order to reflect a dissimilarity of relevant circumstances between those investors and investments and their domestic counterparts. For example, the objective of ensuring the integrity of a country's financial system would justify reasonable prudential measures with respect to foreign investors or investments, where such measures would be unnecessary to ensure the attainment of the same objectives insofar as domestic investors or investments are concerned. Those foreign investors or their investments would thus not be «in similar circum-stances» to domestic investors or their investments. Thus, even if such a measure accorded differential treatment, it would not be contrary to article 10.

The second factor is die extent to which the measure is motivated by the fact that the relevant investor or investment is subject to foreign ownership or under foreign control. A measure aimed specifically at investors because they are foreign, without sufficient countervailing policy reasons consistent with the preceding paragraph, would be contrary to the principles of article 10. The foreign investor or investment would be «in similar circumstances» to domestic investors and their investments, and the measure would be contrary to article 10.

5— With respect to article 25. — The European Communities and their member States recall that, in accordance with article 58 of the Treaty establishing the European Community:

a) Companies of firms in accordance with the law of a member State and having their registered office, central administration or principal place of business within the Community shall, for the right of establishment pursuant to parte in, chapter 2 of the Treaty establishing the European Community, be treated in the same way as natural persons who are nationals of Members States; companies or firms which only have their registered office within the Community must, for this purpose, have an effective and continuos link with the economy of one of the member States;

b) «Companies and firms» means companies or firms constitued under civil or commercial law, including cooperative societies, and other legal persons governed by public or private law, save for those which are non-profitmaking.

The European Communities and their member States further recall that Community law provides for the possibility to extend the treatment described above to branches and agencies of companies or firms not established in one of the member States; and that, the application of article 25 of the Energy Charter Treaty will allow only those derogations necessary to safeguard the preferential treatment resulting from the wider process of economic integration resulting from the Treaties establishing the European Communities.

6 — With respect to article 40. — Denmark recalls that the European Energy Charter does not apply to Greenland and die Faroe Islands until notice to this effect has been received from the local governments of Greenland and the Faroe Islands.'

In this respect Denmark affirms that article 40 of the Treaty applies to Greenland and the Faroe Islands.

7 — With respect to annex G, 4):

a) The European Communities and the Russian Federation declare that trade in nuclear materials between them shall be governed, until they reach another agreement, by the provisions of article 22 of the Agreement on Partnership and Cooperation establishing a partnership between the European Communities and. their member States, of the one part, and the Russian Federation, of the other part, signed at Corfu on 24 June 1994, the exchange of letters attached thereto and the related joint declaration, and disputes regarding such trade will be subject to the procedures of the said Agreement;

b) The European Communities and Ukraine declare that, in accordance with the Agreement on Partnership and Cooperation signed at Luxembourg Oft 14 June 1994 and the Interim Agreemennt-thereto, ini-