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

(ITAC 5) report cited as particularly significant the transparency provisions of the FTA
investment chapter, which require publication of ministerial guidance and relevant new legal
opinions. 32
Industry representatives stated that the FTA would serve as a positive model for other Asian
countries that may be considering FTA or bilateral investment treaty (BIT) negotiations with
the United States. 33 One industry representative noted that the United States is the only major
investment partner with which Korea does not have a BIT, and said that the investment
chapter of the FTA would lower the risk premium for U.S. investors in Korea, helping to
level the playing field between investors from the United States and other FDI source
countries. 34
Several ITAC reports identified as areas of concern the annexes related to taxation measures
(Annex F) and transfers of capital (Annex G), and the NCM related to the maintenance of
public order. 35 However, these reports also expressed the view that these measures are likely
to be used only in extraordinary circumstances and that, on balance, the investment
provisions of the FTA provide important protections to U.S. investors, and will lead to
significant new investment in Korea. 36
The ITAC 10 report expressed disappointment with Korea’s NCM, which provides
exceptions to certain obligations for services supplied under governmental authority. The
report said that the committee members would prefer that such a provision not be included
in future FTAs. 37 The ITAC 11 report, representing small and minority businesses, added
that limitations on investment in Korean law and accounting firms by professionals not
licensed in Korea will restrict their opportunities to invest under the FTA. It also noted that
Korea’s potential restrictions on the acquisition of farmland and control over software and
technology developed in Korea are seen to be significantly limiting for small and minorityowned
U.S. businesses. 38
The Motion Picture Industry Association cited several potentially troublesome NCMs related
to streaming Internet delivery of audiovisual products and services where Korea reserved the
right to impose some restrictions in the future. The Association said, however, that these
32 ITAC (5) on Distribution Services for Trade Policy Matters, Advisory Committee Report,
April 25, 2007.
33 Industry representative, telephone interview by Commission staff, June 4, 2007; USKBC, “Letter to
Susan Schwab, U.S. Trade Representative (May 25, 2007)”; and see the Korea Economic Profile in app. E.
34 Industry representative, telephone interview by Commission staff, June 5, 2007.
35 ITAC (2) on Automotive Equipment and Capital Goods, Advisory Committee Report, April 27, 2007;
ITAC (8) for Information and Communications Technologies, Services and Electronic Commerce, Report,
April 27, 2007; ITAC (10) on Services and Finance Industries, Advisory Committee Report, April 25, 2007;
AMCHAM in Korea, “AMCHAM Applauds Successful Conclusion of the U.S.-Korean FTA,” 2007; and
industry representatives, telephone interviews by Commission staff, May 31, 2007 and June 4, 2007.
36 ITAC (2) on Automotive Equipment and Capital Goods, Advisory Committee Report, April 27, 2007;
ITAC (8) for Information and Communications Technologies, Services and Electronic Commerce, Report,
April 27, 2007; ITAC (10) on Services and Finance Industries, Advisory Committee Report, April 25, 2007;
AMCHAM in Korea, “AMCHAM Applauds Successful Conclusion of the U.S.-Korean FTA.” 2007; and
industry representatives, telephone interviews by Commission staff, May 31, 2007 and June 4, 2007.
37 ITAC (10) on Services and Finance Industries, Advisory Committee Report, April 25, 2007.
38 ITAC (11) on Small and Minority Business, Advisory Committee Report, April 26, 2007.
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