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

aviation, fisheries, or maritime matters. Under the fifth reservation, Korea would maintain
the right to impose restrictions on investment in services supplied by the government, such
as law enforcement and correctional services. This measure would not apply to investors that
supply such services through agreements with the Korean government, or to financial
services. Other reservations are limited to specific industries or sectors.
Horizontal reservations taken by the United States under Annex I would address the
programs of the Overseas Private Investment Corporation and the registration of public
offerings of securities, as well as existing NCMs at the regional (state) level. Appendix I-A
of Annex I for the United States provides an illustrative list of NCMs maintained at the
regional (state) level. 47 Under Annex II, the only horizontal reservation listed by the United
States that applies to investment mirrors the reservation taken by Korea, which would accord
differential treatment to countries under international agreements that have been signed prior
to the entry into force of the U.S.-Korea FTA.
The specific sectors for which investment-related reservations are listed in Annex I are
presented in table 6-1, and potential measures listed in Annex II are presented in table 6-2. 48
In several cases, the reservation indicates a potential constraint on foreign investment that
may not have a significant effect on investors’ activities or business results. Consequently,
the inclusion of a sector in an annex does not mean that the entire sector has been exempted
from coverage by the investment disciplines of the FTA.
FTA Chapter 12—Cross-Border Trade in Services
Chapter 12 of the FTA covers measures of the parties that affect cross-border services other
than financial services, air transport, and gambling and betting services. 49 The FTA would
guarantee national and MFN treatment for providers of the covered services, and it includes
measures adopted or maintained by all levels of government, as well as certain
nongovernmental bodies. Commercial presence is not required, and regulation of services
and qualification requirements may not be unduly burdensome. Chapter 12 also includes
regulatory transparency provisions beyond those delineated in the transparency chapter, 50
which would lay out requirements for the publication of proposed regulations and the input
of interested parties. 51 The parties would be permitted, but not required, to recognize
education, experience, licenses, or certifications obtained in particular nonparty countries.
As to market access, the chapter would bar measures that impose specific limitations, such
as numerical limits on the number of suppliers of a service.
The parties would commit to permit unfettered transfers and payments relating to the
cross-border supply of services, and must allow such transactions to occur in a freely usable
currency at the prevailing exchange rate on the date of transfer, subject to explicit
47 This list is provided for transparency purposes only, and is not meant to be binding on the U.S.
government or any state government.
48 Investment-related reservations related to financial services, including insurance, are listed in Annex
III, and are presented in appendix I of this report.
49 Gambling and betting services are excluded due to provisions included in a side letter. Air
transportation is covered by a separate bilateral “open skies” agreement. See
http://www.state.gov/e/eeb/tra/c661.htm for additional information.
50 For additional information on the FTA chap. 21 covering transparency, see chap. 6 of this report.
51 USTR, “Final - United States - Korea FTA Texts,” 2007, Chap. 12 Article 12.8, 12-4.
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