U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Summary of Provisions 13
Chapter 12 of the FTA covers measures of the parties that affect cross-border services other
than financial services, air transport, and gambling and betting services. 14 The FTA would
guarantee national and MFN treatment for providers of the covered services, and it includes
measures adopted or maintained by all levels of government, as well as certain
nongovernmental bodies. Commercial presence is not required, and regulation of services
and qualification requirements may not be unduly burdensome. Chapter 12 also includes
regulatory transparency provisions beyond those delineated in the transparency chapter, 15
which would lay out requirements for the publication of proposed regulations and the input
of interested parties. 16 The parties would be permitted, but not required, to recognize
education, experience, licenses, or certifications obtained in particular nonparty countries.
As to market access, the chapter would bar measures that impose specific limitations, such
as numerical limits on the number of suppliers of a service.
The parties would commit to permit unfettered transfers and payments relating to the
cross-border supply of services, and must allow such transactions to occur in a freely usable
currency at the prevailing exchange rate on the date of transfer, subject to explicit
exceptions. The benefits of this chapter may be denied under limited circumstances if the
service supplier is controlled by persons of a nonparty.
FTA chapter 12 includes specific language on express delivery services that defines the
scope of coverage, confirms the desire to maintain market access no less favorable than that
in effect when the FTA was signed, and delineates the relationship between covered services
and each party’s postal monopoly. 17 Additionally, two side letters express Korea’s intention
to reform its postal system to reduce the number of services, including international delivery,
that may be provided solely by the Korean Postal Authority. The side letters also state that
Korea would, over time, ensure independent regulation of the postal and express delivery
systems.
Annex 12-C of the agreement would provide for consultations between the parties regarding
NCMs maintained by regional levels of government. Finally, a side letter included would
clarify that various regulations currently maintained by the parties are not inconsistent with
the agreement. These regulations include the prohibition of holding more than one license
to provide multiple services and various regulations governing educational institutions and
rail transportation.
Views of Interested Parties
Overall, U.S. industry representatives expressed satisfaction with the FTA provisions on
services and transparency. An industry representative views the FTA commitments regarding
13 For additional information on summary of provisions related to professional services and audiovisual
services, see the “Professional Services” and “Audiovisual Services” sections.
14 Gambling and betting services are excluded due to provisions included in a side letter. Air
transportation is covered by a separate bilateral “open skies” agreement. See
http://www.state.gov/e/eeb/tra/c66l.htm for additional information.
15 For additional information on the FTA chap. 21 covering transparency, see chap. 6 of this report.
16 USTR, “Final - United States - Korea FTA Texts, “ 2007, Chapter 12 Article 12.8, 12-4.
17 Ibid., Chapter 12 Annex 12-B, 12-11.
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