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

Summary of Provisions
Chapter 21 of the U.S.-Korea FTA is similar to the transparency chapters in recent FTAs.
As in recent agreements, the U.S.-Korea FTA would require each party to make publicly
available all laws, regulations, and procedures regarding any matter covered by the
agreement. Further, under the chapter, each party must establish or maintain procedures to
provide review and appeal capabilities to any entities that would be affected by actions,
rulings, measures, or procedures under the FTA. The agreement would also require the
adoption of transparency principles within specific industries, including financial and
telecommunication services. Applicable provisions also cover protection for U.S.
trademarks, procedures for government procurement contracts, and the administration and
enforcement of environmental laws. The U.S.-Korea FTA contains a prior notice and
comment period for all new laws and regulations. This chapter also includes anticorruption
provisions relating to trade and investment that would require each party to make corruption
a criminal offense and to establish penalty procedures for bribery and corruption.
Views of Interested Parties
In its report on the FTA, the Industry Trade Advisory Committee on Services and Finance
Industries (ITAC 10) stated that the agreement’s commitments will improve the business
climate in Korea, stimulate new investment, improve the operation of financial and other
markets, and reduce corruption. Further, it added that the FTA will result in greater
transparency in domestic regulation that would enhance the quality of the regulatory
environment, thereby creating new market opportunities for U.S. services providers. The
report remarked that transparency in domestic regulation is particularly important in the
services area, where government regulation is prevalent and where discriminatory regulatory
practices have been encountered in the past, essentially closing some services sectors to U.S.
participation. 146
Other ITAC reports, including those of the consumer goods and distribution service
industries, reached similar conclusions, although some cautioned that additional measures
are necessary to ensure the efficacy of transparency provisions under the FTA. 147 For
example, the report of the Industry Trade Advisory Committee on Small and Minority
Business (ITAC 11) stated that laws, regulations, and administrative rulings and procedures
should be required to be made available to all interested parties both in print form and
through publication on the Internet. 148 Nonetheless, before the House Committee on Ways
and Means, Tami Overby, the President and CEO of the American Chamber of Commerce
in Korea, said that the overall industry assessment of the transparency provisions included
in the U.S.-Korea FTA remain positive, with the agreement seen as an important opportunity
to advance regulatory reform in Korea. 149
146 ITAC (10) on Services and Finance Industries, Advisory Committee Report, April 25, 2007.
147 ITAC (4) on Consumer Goods, Report, April 26, 2007; and ITAC (5) on Distribution Services for
Trade Policy Matters, Advisory Committee Report, April 25, 2007.
148 ITAC (11) on Small and Minority Business, Advisory Committee Report, April 26, 2007.
149 Overby, testimony before the House Committee on Ways and Means, March 20, 2007, 4.
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