Korea-EU FTA

The Free Trade Agreement (FTA, 자유무역협정/自由貿易協定) between the Republic of Korea and the European Union has been effective since July 1, 2011.

Even though the Korea-EU FTA started negotiations after, and a large part of the contents were similar to, the Korea-U.S. FTA, the EU negotiations were completed earlier than expected. The EU FTA is its first free trade agreement with an East Asian nation. This FTA contains a variety of legal issues, of which 'competition' or fair trade calls for public attention.

Key words
Free Trade Ageement (FTA), competition, resale right, consultation procedure, dispute settlement mechanisms

Korea-EU FTA
The Korea-EU FTA consists of the following chapters and annexes. For the details, see the Korean full text and other explanatory articles.

Preamble

1. Objectives and General Definitions

2. National Treatment and Market Access for Goods
 * Annex 2-A Elimination of Customs Duties
 * Tariff Schedule of Korea & EU
 * Appendix 2-A-1 Korea
 * Appendix 2-A-2 The EU Party
 * Annex 2-B Electronics
 * Appendix 2-B-1, 2, 3, 4
 * Annex 2-C Motor Vehicles and Parts
 * Appendix 2-C-1, 2, 3
 * Annex 2-D Pharmaceutical Products and Medical Devices
 * Annex 2-E Chemicals

3. Trade Remedies
 * Annex 3 Schedule of Korea For Agricultural Safeguard Measures

4. Technical Barriers to Trade
 * Annex 4 TBT-Co-ordinator

5. Sanitary and Phytosanitary Measures

6. Customs and Trade Facilitation

7. Trade in Services, Establishment and Electronic Commerce
 * Annex 7-A Lists of Commitments
 * Annex 7-A-1 EU Party List of Commitments in Conformity with Article 7.7 (Cross-Border Supply of Services)
 * Annex 7-A-2 EU Party List of Commitments in Conformity with Article 7.13 (Establishment)
 * Annex 7-A-3 EU Party List of Reservations in Conformity with Articles 7.18 and 7.19 (Key Personnel and Graduate Trainees and Business Service Sellers)
 * Annex 7-A-4 Korea Schedule of Specific Commitments in Conformity with Articles 7.7, 7.13, 7.18 and 7.19
 * Annex 7-B MFN Treatment Exemption
 * Annex 7-C List of MFN Exemptions
 * Annex 7-D The Additional Commitment of Financial Services

Understandings
 * Understandings on the cross-border supply of insurance services as committed in the lists of commitments in Annex 7-A (List of Commitments)
 * Understanding on the Korean postal reform plan
 * Understanding concerning specific commitments on telecommunications services
 * Understanding on regulation relating to zoning, urban planning and environmental protection

8. Payments and Capital Movements

9. Government Procurement
 * Annex 9 BOT Contracts and Public Works Concessions

10. Intellectual Property
 * Annex 10-A Geographical Indications for Agricultural Products and Foodstuffs
 * Annex 10-B Geographical Indications for Wines, Aromatised Wines and Spirits

11. Competition

12. Transparency

13. Trade and Sustainable Development
 * Annex 13 Co-operation on Trade and Sustainable Development

14. Dispute Settlement
 * Annex 14-A Mediation Mechanism for Non-Tariff Measures
 * Annex 14-B Rules of Procedure for Arbitration
 * Annex 14-C Code of Conduct for Members of Arbitration Panels and Mediators

15. Institutional, General and Final Provisions

Protocols
 * Protocol Concerning the Definition of ‘Originating Products’ and Methods of Administrative Co-operation
 * Protocol on Mutual Administrative Assistance in Custom Matters
 * Protocol on Cultural Co-operation

FTA and Competition
FTA Chapter 11 provides for competition.

The pact requires the contracting parties to undertake:
 * - to apply their respective competition laws so as to prevent the benefits of the trade liberalization process in goods, services and establishment from being removed or eliminated by anti-competitive business conduct or anti-competitive transaction, and
 * - to remedy or remove distortions of competition caused by subsidies.

The FTA contains enforcement rules that go beyond the “Competition Agreement” between Korea and the European Community of 2009. Accordingly, Chapter 11 FTA broadens the scope of matters which had been subject to “prompt discussion” in consultation procedures at the request of either party.

Furthermore, as far as the competition matter and subsidy issue are concerned, the full range of dispute settlement mechanisms under the WTO Agreements are available.

Proposed Resale Rights of Visual Artists
EU and its member states have adopted the legislation of 'Droit de Suite' or 'Resale rights of visual artists' and raised such issue during the FTA negotiations with the Korean government.

Copyright, as an intangible property right, is freely tradable in the global international market, and value can be captured generally through a license in exchange for a royalty, and it gives economic rewards to artists. The value of artworks contributed by the original artist, however, does not captured by the foregoing way comparing to the other artists, such as writers or musicians etc., but through sale of original artworks and outright transfer for a contract price. Even if the 'original' artworks are traded in enormously increasing value, it is not linked to the rewards of original creator. The foregoing effect from transfer of value, shares contributed by artist, which is at the heart of the protection, is made available under the 'Resale right of visual artists' law.

Korea has not yet adopted the law concerning the 'Resale right of visual artists' so far. The issue was reserved by Section 10.10 of the FTA to start negotiation in two years from the date of the effectuation, July 1, 2011. In this connection, a specialist argues that adopting the 'Resale right of visual artists' in the Copyright Act is necessary not only for the full implementation of the Korean-EU FTA for instance or as a counterplan to further negotiation, but as protection of visual artists' rights in support of Korea’s overall efforts to rank to head with as an advanced socio-cultural economy and gain advanced country status in the global economy of the 21st century.