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

Summary of Provisions
The provisions that directly address audiovisual services are found in the NCMs for services
and investment in Annexes I and II and also in two side letters under chapter 18 (intellectual
property rights) of the FTA. Under Annex I, Korea has included two current NCMs relating
to broadcasting services and motion picture services. Under the detailed broadcasting
services reservation, foreign or Korean nationals may not serve as a principal senior officer
for both a foreign enterprise and a terrestrial, satellite, or cable broadcasting operator or a
similar type of program provider in Korea. All members of the boards of directors of public
broadcasters Korea Broadcasting System and Educational Broadcasting System must be
Korean nationals, and licenses to operate terrestrial, cable, or satellite broadcasts may only
be granted to or held by the Government of Korea or local Korean governments or persons.
Additionally, Korea stipulates various foreign equity limits for broadcasting and cable
operators and sets varying local content quotas for their programming. Examples of such
requirements include the following: no foreign government or person may hold an equity
interest in a terrestrial broadcaster, cable operator, or program provider that is engaged in
multigenre programming 99 or news reporting; 80 percent of quarterly programming hours
for terrestrial broadcasters or program providers must be Korean content; 45 percent of a
terrestrial broadcaster’s annual animation programming hours must be Korean content; and
20 percent of a cable system or satellite operator’s annual movie programming must be
Korean content. Under the motion picture services reservation, Korea would require that
Korean motion pictures must be projected for at least 73 days per year at each Korean screen.
Under Annex II, Korea has included broad NCMs for potential future measures relating to
audiovisual services. For example, Korea has reserved the right to adopt or maintain any
measure that accords differential treatment to persons of other countries involving the
sharing of direct-to-home and direct broadcasting satellite television services. 100 Korea has
likewise reserved the right to limit cross-ownership across media sectors and to adopt or
maintain any measure with respect to a supplier of subscription-based video services. Korea
has also listed potential reservations with regard to coproduction arrangements for film or
television productions, criteria to determine whether audiovisual programs are “Korean,”
measures dealing with digital audio or video services, and measures with respect to motion
picture promotion, advertising, or postproduction. Lastly, the U.S. and Korean governments
would also agree to two relevant side letters under chapter 18 (intellectual property rights)
of the FTA that impose unilateral obligations on the Korean government to prevent online
piracy, whether by amending its law or dedicating additional resources.
Views of Interested Parties
U.S. industry representatives are generally satisfied with the FTA provisions on audiovisual
services. The ITAC on Services and Finance Industries (ITAC 10) report said that the FTA
will provide a more favorable environment for cross-border trade and investment in Korean
audiovisual services by minimizing or freezing most quotas pertaining to local content
99 Multigenre programming refers to a program provider that offers a combination of news, entertainment,
drama, movies, music programming, etc. USTR, “Final - United States - Korea FTA Texts,” 2007.
100 The United States also made this reservation under Annex II. In addition, under Annex I, the United
States made a single reservation, which restricts investment in U.S. radiocommunications firms by foreign
governments. These were the only two NCMs the United States specified with regard to audiovisual services
in the FTA.
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