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

as an NCM a regulation 61 that requires a branch of a bank or securities company constituted
under the laws of another country to bring and maintain operating funds within Korea. 62
FTA Chapter 14—Telecommunications
The provisions of Chapter 14 would require each party to ensure that enterprises of the other
party have access to and use of any public telecommunication service offered in its territory
and/or across its borders on reasonable and nondiscriminatory terms and conditions.
Specifically, the chapter would obligate suppliers of public telecommunications services to
provide network interconnection, number portability, and dialing parity to
telecommunication service providers of the other party on reasonable and nondiscriminatory
terms and conditions. In addition, major suppliers of one party would be required to offer
telecommunication services to suppliers of the other party on terms and conditions no less
favorable than those accorded to their own subsidiaries, affiliates, and nonaffiliated service
suppliers, particularly regarding the availability, provisioning, rates, and quality of such
services. Major suppliers would also be subject to specific additional obligations related to
competitive safeguards, services resale, network unbundling, interconnection, leased circuits,
colocation, 63 and access to rights-of-way and submarine cable systems.
Chapter 14 would commit the governments of the United States and Korea to ensure the
independence of their respective telecommunications regulatory bodies and bestow such
entities with the authority to enforce compliance with FTA obligations. The parties to the
agreement also would be required to maintain transparent and nondiscriminatory procedures
related to licensing, allocation and use of scarce resources, and dispute resolution. A variety
of exclusions for mobile services providers, nonfacilities-based providers, and rural
telecommunication services are contained in Annex 14-A and Annex 14-B, while Annex 1
to the FTA would establish several restrictions on foreign investment in Korea’s
telecommunications sector. 64
FTA Chapter 15—Electronic Commerce
The provisions relating to electronic commerce within the U.S.-Korea FTA are similar to
those of previous FTAs. In general, the U.S.-Korea FTA (1) would provide for
nondiscriminatory and duty-free treatment of all digital products, whether delivered
electronically or in physical form; (2) contains commitments by both parties to facilitate the
61 This regulation is based on Korean legislation, namely The Banking Act and the Securities and
Exchange Act.
62 U.S. industry representatives contend that this requirement is reasonable. U.S. industry representative,
telephone interview with Commission staff, June 1, 2007.
63 Colocation is defined as physical access to space in order to install, maintain, and repair equipment at
premises owned, controlled, or used by a supplier of public telecommunications services.
64 Annex 1 to the FTA states that foreign ownership may not exceed 49 percent of the total voting shares
of facilities-based suppliers of public telecommunications established in Korea. Similarly, a license for
facilities-based telecommunication services will not be granted to entities in which foreign owners control
more than 49 percent of total voting shares. In addition, foreign owners may not be the largest shareholder in
Korea Telecom, unless foreign owners hold less than 5 percent of total voting shares. Two years after the
FTA enters into force, Korea shall permit foreign ownership of 100 percent of the total voting shares of a
facilities-based supplier of public telecommunication services (except for KT and SK Telecom), which in
turn may hold a license for facilities-based public telecommunication services.
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