EU Korea FTA The EU-Korea Free Trade Agreement Services
EUKoreaFTA
Structure of the presentation
1. Main principles of the Services Chapter 2. Introduction to the Modes of Supply 3. Introduction to the Korean list of
commitments 4. A closer look at the Korean commitments 5. Legal services – Phasing in of commitments
EUKoreaFTA
Market access
Sectors listed in the Korean list of commitments are subject to limitations therein
4 modes of supply Deals with existing and possible future quantitative limitations
- the number of service suppliers - The value of service transactions or assets - the number of operations or quantity of output - the number of natural persons supplying a service - the type of legal entity or joint venture - the participation of foreign capital
No backtracking Main idea – Legal certainty
EUKoreaFTA
National treatment
Same treatment as to own like services and service suppliers
Sectors listed in the Korean list of commitments subject to limitations therein
EUKoreaFTA
Most favoured nation (MFN) principle
Each party may maintain limited measures listed in and meeting the conditions of the Annex on MFN Exemptions.
The EU and Korea have to accord immediately to services and service
suppliers of each other treatment no less favourable than that it accords to like
services and service suppliers of any othercountry
EUKoreaFTA
Mode 1: Cross-border supply
receives servicein territory of any
other country
ServiceSupplier Service
Consumersupplies servicefrom territory of
one country
supplies servicefrom territory of
one countryreceives servicein territory of any
other country
EUKoreaFTA
Examples of cross-border trade in services
E-commerce in the narrow sense - whatever the delivery method: retail over internet, teleshops, mail-order
E-services and e-commerce in wider sense: e-banking, distance training etc, advice over media, delivery over media, cloud-services
EUKoreaFTA
Examples of cross-border trade in services
Outsourcing for serviceswhere presence is not necessary: back-office, programming, phone answering services, research and testing etc
International transport New services: e-health
including robot surgery, satellite monitoring, cross-border audio/digital guides
EUKoreaFTA
Examples of barriers for cross-border trade in services
To industry:• Prohibition to provide cross-border services• Requirement to establish• Authorisation requirements• Recognition of service providers or service outcome• Language and info requirements
To consumers: • Obligations to use locally established providers• Restrictions to payments• Restrictions to delivery• Restrictions to tax deductibility
EUKoreaFTA
Mode 2: Consumption abroad
receivesservice in the territory of supplier
ServiceSupplier
Service Consumer or property of
the consumer
Service Consumer
receivesservice in the territory of supplier
EUKoreaFTA
Examples of consumption abroad
Physical presence in the second country: • Tourism and service consumption while travelling• Medical tourism• Students abroad• Border-shopping
Does not cover limitations to consumers of other Members, only own consumers
Does not include downloading – mode 1
EUKoreaFTA
Examples of barriers for consumption abroad of services
To industry:• Prohibition/restrictions to provide services to
non-resident consumers
To consumers: • Obligations to use locally established providers• Restrictions to payments• Restrictions to delivery• Restrictions to tax deductibility
EUKoreaFTA
Mode 3: Commercial presence
ServiceSupplier
Service Consumer
establishes a commercial presence in the territory of another country
ServiceSupplier
EUKoreaFTA
Examples of commercial presence
Investment- Establishing a new company- Establishing a subsidiary - Establishing a direct branch,- Establishing a representative office- Acquisitions of existing companies- Joint-ventures and other cooperative projects
with presence
EUKoreaFTA
Examples of barriers to foreign invested companies
Activity (sectoral) restrictions Ownership restrictions Capital limitations Geographical restrictions Restrictions on profit usability Limitations for management and staff Technology transfer requirements Authorisation requirements
EUKoreaFTA
Mode 4: Movement of natural persons
Service Consumer
Service supplied through temporary presence
of posted natural persons of one country in the
territory of another country based on services contract
EUKoreaFTA
Mode 4 categories
Does not cover immigration and labour movement(GATS annex on mode 4)
Established company
Self-employedIndependant professionals
Business service sellers
Contractual service suppliers
Business visitors
Intracorporate transferees
Graduate trainees
Contractual relationship for service provision with
local persons
Subsidiary, branch or representative office
EUKoreaFTA
Examples of barriers Mode 4
Restrictions to service providers• Establishment requirements, local representative requirements• Nationality and residence requirements• Economic needs tests, labour market tests• Minimum wage etc related requirements• Qualification requirements, licensing, registration and
documentation requirements• Entry restrictions (visa, work permit)
Restrictions to consumers• Prohibitions/restrictions to use non-established service
providers• Tax related barriers
EUKoreaFTA
Right to regulate
Domestic regulation vs measures subject to trade liberalization
Right to regulate - introduce non-discriminatory regulation to enforce domestic policy objectives
Examples of public policy objectives:• Equitable access, regardless of income or location, to a service • Consumer protection, safety • Job creation in disadvantaged regions or labour market integration of
disadvantaged persons • Reduction of environmental impacts and other externalities • Macroeconomic stability • Avoidance of market dominance and anti-competitive conduct • Avoidance of tax evasion, fraud, etc.
EUKoreaFTA
List of specific commitments
Principle of positive listing Horizontal and sectoral limitations Sets out conditions and degree of market
access and national treatment (limitations) -gradual and partial liberalisation possible
EUKoreaFTA
Some service sectors with scheduled commitments by Korea
Legal
Accounting
TaxationEngineering
Architect.
VeterinaryComputer
R&D
Real estate ConsultingMarketing
Testing
Publishing Security
Courier
Satellite
Environment
Insurance
Education
Hotel
Travel
NewsFinancialShipping
Rail
EUKoreaFTA
Level of commitments
Full commitment “None”, i.e. no limitations except those in the horizontal limitations
Partial commitment
“None, except…”, i.e. exact limitation on what is NOT allowed. All else is allowed
“Unbound, except…” – i.e. what IS allowed.
“Unbound for…” – i.e. exact limitation on what is NOT allowed. All else is allowed
No commitmentSector not listed
“Unbound” – no binding
EUKoreaFTA
A closer look at the Korean commitments
The most ambitious services FTA ever concluded by the EU
Will significantly improve Korea’s current WTO-GATS commitments and its DDA offer in the ongoing negotiations.
Additionally covers the liberalisation of investment, both in most of the services and most of the non-services sectors.
The scope of the FTA includes diverse services sectors as transport, telecommunications, finance, legal services, environmental services and construction.
Audiovisual services are excluded from the chapter.
EUKoreaFTA
A closer look at the Korean commitments
Telecommunications• Ownership restrictions• Satellite services
Environmental services• Non-industrial waste waters
Shipping firms• Right of establishment• Access to facilities
EUKoreaFTA
A closer look at the Korean commitments
Construction services
Financial services
International express delivery services
Auxiliary air transport services
Law services
EUKoreaFTA
Legal services – phasing in of commitments
Phase 1: entry into force
Law firms of the EU can establish representative offices (Foreign Legal Consultant offices or FLC offices) in Korea
Lawyers licensed in the Member States of the EU can provide legal advisory services regarding
i) the jurisdiction in which they are licensed and ii) public international law
EUKoreaFTA
Legal services – phasing in of commitments
Phase 2: two years after entry into force
Korea will have to allow cooperative agreements with Korean law firms in order to
(i) be able to jointly deal with cases in which domestic and foreign legal issues are mixed and (ii) to share profits derived from such cases.
EUKoreaFTA
Legal services – phasing in of commitments
Phase 3: five years after entry into force
Korea will allow law firms of the EU to establish joint venture firms with Korean law firms.
*Korea may impose restrictions on the proportion of voting shares or equity interests of
the joint venture firms.