EU
Korea
FTA
The EU-Korea Free
Trade Agreement
Services
EU
Korea
FTA
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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
EU
Korea
FTA
1. Main principles of the
Services Chapter
EU
Korea
FTA
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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
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Market access
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
EU
Korea
FTA
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National treatment
Same treatment as to own like services and
service suppliers
Sectors listed in the Korean list of
commitments subject to limitations therein
EU
Korea
FTA
Most favoured nation (MFN)
principle
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 other
country
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Each party may maintain limited measures
listed in and meeting the conditions of the
Annex on MFN Exemptions.
EU
Korea
FTA
2. Introduction to the
Modes of supply
EU
Korea
FTA
Mode 1: Cross-border supply
Service
Supplier
supplies service
supplies service
from territory of
from territory of
one country
one country
Service
Consumer
receives service
receives service
in territory of any
in territory of any
other country
other country
EU
Korea
FTA
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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 ecommerce in wider
sense: e-banking,
distance training etc,
advice over media,
delivery over media,
cloud-services
EU
Korea
FTA
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Examples of cross-border trade
in services
Outsourcing for services
where 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
EU
Korea
FTA
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Examples of barriers for crossborder trade in services
To industry:
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Prohibition to provide cross-border services
Requirement to establish
Authorisation requirements
Recognition of service providers or service outcome
Language and info requirements
To consumers:
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Obligations to use locally established providers
Restrictions to payments
Restrictions to delivery
Restrictions to tax deductibility
EU
Korea
FTA
Mode 2: Consumption abroad
Service
Supplier
Service
Consumer
receives
receives
service in the territory of supplier
service in the territory of supplier
Service
Consumer or
property of
the consumer
EU
Korea
FTA
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Examples of consumption abroad
Physical presence in the second country:
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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
EU
Korea
FTA
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Examples of barriers for
consumption abroad of services
To industry:
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Prohibition/restrictions to provide services to
non-resident consumers
To consumers:
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Obligations to use locally established providers
Restrictions to payments
Restrictions to delivery
Restrictions to tax deductibility
EU
Korea
FTA
Mode 3: Commercial presence
Service
Supplier
Service
Supplier
establishes a
commercial presence in the
territory of another country
Service
Consumer
EU
Korea
FTA
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Examples of commercial
presence
Investment
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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
EU
Korea
FTA
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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
EU
Korea
FTA
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
EU
Korea
FTA
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Mode 4 categories
Does not cover immigration and labour movement
(GATS annex on mode 4)
Independant professionals
Self-employed
Business service sellers
Contractual service suppliers
Established
company
Contractual relationship
for service provision with
local persons
Business visitors
Intracorporate transferees
Graduate trainees
Subsidiary, branch or
representative office
EU
Korea
FTA
Examples of barriers Mode 4
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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
EU
Korea
FTA
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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.
EU
Korea
FTA
3. Introduction to the
Korean list of commitments
EU
Korea
FTA
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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
EU
Korea
FTA
Some service sectors with scheduled
commitments by Korea
Legal
Architect.
Real estate
Accounting
Publishing
Consulting
Marketing
Veterinary
Computer
Taxation
Testing
Engineering
Environment
R&D
Hotel
Insurance
Financial
Shipping
Security
Rail
Courier
Satellite
Education
News
Travel
EU
Korea
FTA
Level of commitments
Full commitment
Partial
commitment
“None”, i.e. no limitations except those in the
horizontal limitations
“None, except…”, i.e. exact limitation on what is
NOT allowed. All else is allowed
“Unbound for…” – i.e. exact limitation on what is
NOT allowed. All else is allowed
“Unbound, except…” – i.e. what IS allowed.
Sector not listed
No commitment
“Unbound” – no binding
EU
Korea
FTA
4. A closer look at the
Korean commitments
EU
Korea
FTA
A closer look at the Korean
commitments
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The most ambitious services FTA ever concluded by the EU
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Will significantly improve Korea’s current WTO-GATS commitments
and its DDA offer in the ongoing negotiations.
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Additionally covers the liberalisation of investment, both in most of the
services and most of the non-services sectors.
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The scope of the FTA includes diverse services sectors as transport,
telecommunications, finance, legal services, environmental services
and construction.
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Audiovisual services are excluded from the chapter.
EU
Korea
FTA
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Telecommunications
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A closer look at the Korean
commitments
Ownership restrictions
Satellite services
Environmental services
• Non-industrial waste waters
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Shipping firms
• Right of establishment
• Access to facilities
EU
Korea
FTA
A closer look at the Korean
commitments
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Construction services
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Financial services
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International express delivery services
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Auxiliary air transport services
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Law services
EU
Korea
FTA
5. Legal services
– Phasing in of
commitments
EU
Korea
FTA
Legal services – phasing in of
commitments
Phase 1: entry into force
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Law firms of the EU can establish representative offices (Foreign
Legal Consultant offices or FLC offices) in Korea
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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
EU
Korea
FTA
Legal services – phasing in of
commitments
Phase 2: two years after entry into force
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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.
EU
Korea
FTA
Legal services – phasing in of
commitments
Phase 3: five years after entry into force
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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.