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

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of standards and criteria and on temporary licensing, as well as a preview of its future work program. The parties must review such recommendations within a reasonable time frame to determine consistency with the FTA. Upon a favorable review, each party commits to work with and encourage its respective bodies to implement the recommendations within a mutually agreed time. The annex would further require parties to review implementation of the provisions of the annex at least once every 3 years. The FTA includes Korean NCMs that apply to cross-border trade in professional services supplied by foreign lawyers, accountants, architects and engineers, and by others in numerous occupations identified by Korea as professional services. The most prevalent NCMs would require licensing and registration by Korean authorities and reserve the establishment of and investment in prescribed professional services entities solely to Koreanlicensed professionals. For example, only a registered Korean-licensed lawyer may supply legal services and establish and/or invest in any of four categories of legal entities. 83 Three categories of accounting and auditing entities in Korea, each able to be established only by a Korean certified public accountant (CPA), are the sole authorized suppliers of accounting and auditing services in Korea. 84 Suppliers of labor-affairs consulting services or customs-clearing services in Korea must be licensed in Korea and establish an office there. Another Korean NCM would require local presence in order to supply architectural, engineering, integrated engineering, urban planning, and landscape architectural services in Korea, except for a foreign architect in a joint contract with a Korean-licensed architect. 85 Korea’s NCMs would also preserve the right to adopt or maintain restrictions on foreign legal consultants (FLCs), CPAs, and certified tax accountants to a greater extent than in other free trade or trade preference agreements negotiated by the United States. Under the exception for FLCs, Korea can place any requirements on foreign-country-licensed lawyers or foreign law firms supplying any type of legal service in Korea, entering into any relationship with Korean law firms, or entering such relationships or hiring Korean-licensed lawyers, other legal practitioners, CPAs, certified tax accountants, and customs brokers. Korea would commit to a three-phase removal of certain restrictions on the activities of FLCs in Korea. Upon the FTA’s entry into force, Korea would allow a U.S. law firm to establish an FLC office in Korea and allow U.S.-licensed lawyers to supply legal advisory services on home-country law and international law as FLCs in Korea. Within 2 more years, Korea would allow FLC offices to conclude a cooperative agreement with a Korean law firm, to include profit sharing, in cases with mixed Korean and non-Korean legal affairs. Within 5 years of the FTA’s entry into force, Korea would allow the creation of joint ventures between U.S. and Korean law firms, which may include employing Korean-licensed lawyers as partners or associates, although Korea would preserve the right to impose restrictions on voting shares or equity interests. Similarly, Korea reserves the right to restrict the hiring of Korean-registered CPAs by foreign CPAs or non-Korean-registered accounting corporations, or the supply of auditing services in Korea by foreign CPAs. By or before the FTA’s entry into force, Korea would allow U.S.-registered CPAs or accounting corporations constituted under U.S. law to 83 Moreover, certified judicial scriveners and notaries public must establish in the jurisdiction of the court or public prosecutor’s office, respectively, in which they practice. 84 Only Korean-authorized CPAs working in one of two categories of establishment may provide auditing services on public companies in Korea. Similar requirements exist for certified tax accountants in Korea. 85 Local presence requirements also apply to the supply of safety and health management or diagnostic services, or related consulting services, to industrial workplaces. 4-18
establish offices in Korea to provide accounting consultancy services on U.S. or international accounting laws and standards. U.S. CPAs could also work in Korean accounting corporations. U.S. CPAs would be allowed to invest in a Korean accounting corporation within 5 years of the FTA’s entry into force, although a single U.S. CPA will be limited to less than 10 percent of voting shares or equity interests and Korean-registered CPAs would hold at least 51 percent. Korea included similar exceptions for restrictions and gradual, limited opportunities for participation with respect to foreign certified tax accountants. Views of Interested Parties The ITAC on Services and Finance Industries (ITAC 10) report stated that as the FTA opens the Korean legal services market to the United States for the first time, the FTA should afford a substantial opportunity to U.S. law firms. 86 The ITAC 10 report also stated that opportunities may include mutual recognition in legal services under provisions of the annex on professional services. Nevertheless, the ITAC 10 report also asserted that the effect of the three substantial new commitments by Korea (summarized previously) to open its legal services market is uncertain, due to a lack of clarity as to the types of requirements or limitations Korea retains the right to impose. 87 On the coverage of architectural and engineering services in the FTA, the ITAC 10 report stated that general provisions on the development of professional standards and criteria and temporary licensing and review provide for equity and reciprocity. Moreover, it noted with approval the absence of restrictions or exceptions relating to national treatment, MFN treatment, and market access; the absence of a local presence requirement on these particular services; and fair and transparent domestic regulation. 88 The ITAC 10 report stated that it accepted Korea’s current NCM on the practice of architecture and engineering because the sole criterion for the restriction is reciprocity. The ITAC 10 report noted support for tasking the Working Group on Professional Services with developing procedures on temporary licensing and according priority to developing such procedures for temporary licensing of engineers and architects at the group’s initial meeting. The ITAC 10 report also expressed support for the early conclusion of an agreement on temporary licensing of engineers. The Small and Minority Business (ITAC 11) report stated that while the FTA broadly enhances opportunities for cross-border trade and investment, it did not necessarily improve prospects for trade in legal, accounting and auditing, and tax accounting services. 89 The ITAC 11 report further stated that Korea’s current prohibition on investment in Korean law and accounting firms by non-Korean-licensed lawyers and accountants, respectively, is discriminatory and restrictive, and that Korea’s potential restriction on foreign-countrylicensed lawyers also discriminates against U.S. small, medium, and minority law firms by restricting their ability to supply services in Korea. The Advisory Committee for Trade Policy Negotiations (ACTPN) cited legal and accounting services among the important services sectors to be liberalized under the FTA. 90 A representative of the Coalition of Service Industries stated that the U.S.-Korea FTA provides 86 ITAC (10) on Services and Finance Industries, Advisory Committee Report, April 25, 2007. 87 Ibid. 88 Ibid. 89 ITAC (11) on Small and Minority Business, Advisory Committee Report, April 26, 2007, 5–6. 90 ACTPN, Report, April 26, 2007, 4. 4-19
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U.S. International Trade Commission
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This report was prepared principall
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CONTENTS-Continued Chapter 3. Secto
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CONTENTS—Continued Chapter 5. Imp
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CONTENTS-Continued Chapter 7. Liter
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CONTENTS-Continued Tables—Continu
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Abbreviations and Acronyms 3G third
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Abbreviations and Acronyms—Contin
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Abbreviations and Acronyms—Contin
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vehicles) would likely be diverted
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Sector-specific Assessments The U.S
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total increased fish imports from K
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Korea would likely limit the impact
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Intellectual property rights (IPR):
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sector barriers. 5 These merchandis
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Table 1.1 U.S.-Korea FTA: Location
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Table 1.2 Korean tariff rates on im
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Table 1.4 U.S.-Korea FTA: Summary o
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observed GDP for model regions). Th
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Box 2.1 Interpreting the model resu
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Table 2.1 U.S.-Korea FTA: Simulated
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2-8 This page has been updated to r
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Figure 2.2 U.S-Korea FTA: Simulated
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As shown in figure 2.2, the largest
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2-14 This page has been updated to
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Economy-wide Impact of Implementing
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Grain (Wheat, Corn, and Other Feed
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Korea imported 3.8 million mt of wh
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U.S. oilseed product exports to Kor
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Table 3.2 U.S. oilseed product expo
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Table 3.3 Animal feed exports to Ko
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consumed domestically by the U.S. l
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ates. For corn starch, the United S
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quota rates have been effectively e
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Noncitrus Fruit 87 Views of Interes
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3-20 Table 3.9 U.S.-Korea trade and
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Korean grapes are much more costly
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Potato Products 122 Assessment The
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ate is 304 percent ad valorem. 141
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Other Vegetables 162 Assessment The
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U.S. exports of other fresh and pro
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tariff concessions that could accru
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Dairy Products 215 Similarly, the p
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TRQ for food whey, 223 based on cur
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potential changes in trade based so
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Figure Figure 3.1 Korea: Beef and v
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Views of Interested Parties The inc
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are subject to the same food safety
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enefit under the provisions of this
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Box 3.2 Potential price and quantit
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50 percent, while the vegetable jui
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and major supplier, and U.S. tariff
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textiles and apparel through 2005.
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U.S. Exports The impact of the FTA
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passage. NCTO indicated that, even
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In its report, the ITAC on Distribu
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of the U.S. footwear market, with C
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Page 120 and 121: prohibit improper inducements by ph
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Page 124 and 125: U.S. exports of auto parts would be
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Page 128 and 129: Passenger Vehicles 433 Assessment U
Page 130 and 131: Table 3.16 Korean passenger vehicle
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Page 134 and 135: Box 3.4 Automotive-related FTA Prov
Page 136 and 137: access. The FTA affirms the parties
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Page 140 and 141: keep the products out.” 492 Mr. B
Page 142 and 143: these vehicles to Korea. The commit
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Page 146 and 147: goods; and high-technology medical,
Page 148 and 149: device pricing, reimbursement, and
Page 151 and 152: CHAPTER 4 Impact of Market Access P
Page 153 and 154: elative to GDP than do China, Japan
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Page 157 and 158: Box 4.2 Financial services: Competi
Page 159 and 160: Summary of Provisions Chapter 13 of
Page 161 and 162: national treatment, full establishm
Page 163 and 164: Box 4.4 Competitive conditions in t
Page 165 and 166: and cross-connect links 70 are more
Page 167: Box 4.5 U.S. legal services trade w
Page 171 and 172: Box 4.6 Competitive conditions in t
Page 173 and 174: equirements and foreign ownership r
Page 175 and 176: CHAPTER 5 Impact of Trade Facilitat
Page 177 and 178: publication and administration of t
Page 179 and 180: Views of Interested Parties In its
Page 181 and 182: Summary of Provisions This chapter
Page 183 and 184: use of TBTs to protect Korea’s au
Page 185 and 186: conformity assessment procedures el
Page 187 and 188: FTA Chapter 15-Electronic Commerce
Page 189: Views of Interested Parties The U.S
Page 192 and 193: quantities as to be a substantial c
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Page 196 and 197: Box 6.1 Foreign investment in Korea
Page 198 and 199: in the FTA. The awards made by any
Page 200 and 201: Table 6.1 U.S.-Korea FTA: Industry
Page 202 and 203: (ITAC 5) report cited as particular
Page 204 and 205: Section C of Chapter 11 and the lac
Page 206 and 207: practices, and violations of consum
Page 208 and 209: FTA Chapter 17—Government Procure
Page 210 and 211: Both the United States and Korea ar
Page 212 and 213: 8) 87 also expressed support for th
Page 214 and 215: Box 6.2 Recent conditions of IPR pr
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Views of Interested Parties A numbe
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GPHA stated in testimony before the
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Box 6.3 Labor market conditions in
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FTA Chapter 20—Environment 131 As
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trade measures are the least disrup
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FTA Chapter 22-Institutional Provis
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Views of Interested Parties The Ind
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CHAPTER 7 Literature Review and Sum
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7-3 Table 7.1 Model, liberalization
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terms. Much of the increase in U.S.
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Liberalization generated small incr
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Sander Levin, Member of the U.S. Ho
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Regarding footwear and travel goods
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Korea’s establishment as a region
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The California Table Grape Commissi
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order activity, and facilitate expa
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At the Commission’s hearing, Mr.
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Information Technology Industry Cou
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With respect to tariff and nontarif
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deterring illegal transshipments. I
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PhRMA identified what it views as t
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the TIA stated that it supports the
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access to the market. The Council a
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United States, Spain, Chile, Brazil
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Bibliography Advanced Medical Techn
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AT&T. “AT&T Reaction to Free Trad
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______. “Korea-U.S. Free Trade Re
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______. “Country Finance: South K
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Global Trade Information Services I
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International Labor Organization (I
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Jones, Laura E. Executive Director.
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Lee, Hyunok, and Daniel A. Sumner.
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Nam, In-Soo. “Helio's Losses To W
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Powers, Mark. Northwest Horticultur
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Smith, Brad. American Council of Li
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U.S.-Korea Business Council (USKBC)
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______. “Korea, Republic of Oilse
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U.S. International Trade Commission
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Ward, David. American Council on Ed
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APPENDIX A Request Letter from USTR
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APPENDIX B Federal Register Notices
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pwalker on PROD1PC71 with NOTICES 2
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APPENDIX C Hearing Participants
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ORGANIZATION AND WITNESS: PANEL 1 (
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APPENDIX D U.S.-Korea FTA: Chapter-
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fees and charges on trade in goods
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determines the tariff classificatio
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The transparency provisions would a
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necessary duties within 1 year of i
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technical regulation or conformity
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procedures), and practices of a par
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aviation, fisheries, or maritime ma
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of standards and criteria and on te
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of the FTA that impose unilateral o
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use of electronic authentication in
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parties’ rights and obligations u
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establishment of Uniform Domain-Nam
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government to take appropriate meas
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environmental laws. 102 In the U.S.
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not limited to, policies on commerc
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Economic indicators 2002 2006 Popul
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Table E.1 Leading U.S. exports to K
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APPENDIX F GTAP Model
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Updating the GTAP Database The curr
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Key Assumptions Agency. 4 The price
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Table F.2 U.S.-Korea FTA benchmark
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Measuring the Impacts of the FTA an
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General Effects of Trade Agreements
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APPENDIX H Tariff Equivalents in Ko
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Previous Literature The method for
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For the purposes of this report, a
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Table H.1 Tariff equivalents in Kor
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APPENDIX I Services Nonconforming M
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Table I.1 U.S.-Korea FTA: Korean se
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APPENDIX J Description of Possible
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are in effect import prices, and th
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APPENDIX K Overview of Agricultural
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Additionally, although current regu
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About This Report The United States
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