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

Section C of Chapter 11 and the lack of a general environmental exception to the investment
chapter. 46
FTA Chapter 16—Competition-Related Matters
Assessment
The competition policy provisions of the U.S.-Korea FTA are likely to provide a systemic
benefit for all U.S. firms seeking to invest in Korea by providing greater investor certainty
through greater transparency and improved due-process procedures through which firms may
address concerns. Chapter 16 appears to address an overarching business concern about the
inadequate administration and enforcement of Korean competition laws, as well as the lack
of transparency in decision-making during antitrust investigations. A second business
concern, inconsistency in Korean competition laws and regulations, may be addressed
indirectly by the FTA by giving the U.S. government an institutionalized channel for
bilateral consultation and cooperation on competition-related matters.
The competition-related provisions in the agreement are more likely to affect trade and
investment in the Korean economy as a whole through a more competitive business
environment rather than in a sector-specific manner. Nonetheless, a number of U.S.
industries in the services sector in particular may benefit from the chapter’s competitionrelated
provisions. The advertising, finance, 47 media, 48 professional, 49 and marketing services
industries have all raised concerns about Korean nontariff barriers that cover commercial
prohibitions, restrictions, overregulation, and local preference requirements. 50 The software
technology and telecommunications industries have also voiced interest in stronger and more
transparent antitrust disciplines in Korea, anticipating that the principles and provisions in
chapter 16—such as national treatment, procedural rights and safeguards, transparency in
regulation, and a government commitment to enforce competition law—are likely to allow
U.S. companies to compete effectively in important high technology segments of the Korean
market. 51 In the manufacturing sector, the pharmaceutical and cosmetics industries have
raised concerns about nontransparent markets and discriminatory behavior; 52 and the
46 Center for International Environment Law, Separate Comments of TEPAC Members on the U.S.-Korea
Free Trade Agreement, contained in the TEPAC report, the U.S.-Korea Free Trade Agreement. TEPAC,
Advisory Committee Report, April 25, 2007.
47 These industries include electronic commerce, banking, and insurance service industries. In testimony,
one panelist noted that the national treatment provisions in the chapter appear to be prompting regulatory
changes that allow new entrants to provide not only a broader range of financial services, but also more
quickly than previously planned, reducing their company’s time frame for the introduction of certain
sophisticated forms of banking and securities services from a 5–9 year period down to a 2 year period. Lane,
hearing transcript, 74.
48 These industries include the broadcast television, cable television, and film industries.
49 These industries include the accounting, construction, engineering, insurance, and legal services
industries.
50 USITC, Office of Economics, NTM Database.
51 U.S. government official, interview by Commission staff, Washington, DC, June 11, 2007; and Reis,
testimony before the USITC, June 20, 2007, 28.
52 Ibid.
6-14