WT/TPR/S/19
Page 26Trade Policy Review
III. POLICY DEVELOPMENTS AFFECTING TRADE AND INVESTMENT
(1) Main Features
1. Korea 'seconomic progress since 1992 isreflected in,andhascontributed to,acontinuous
process oftrade liberalization. Encouraged bytheUruguay Round negotiations, applied tariffs have
beenreduced byabout 15percentage points since1982tolessthan10percentin1996, andquantitative
restrictions andnon-automatic licensing requirements havebeencurbed oreliminated across virtually
allsectors. Thegradual phasing-out ofKorea 's"diversification programme" -consisting ofarange
ofunilateral restrictions onindustrial imports from Japan -appears toreflect bothbilateral policy
pressures andtheauthorities 'resolve toreplace import protection withexport promotion andindustrial
development measures. Remaining agricultural import restrictions, previously defended byKorea on
balance-of-payments grounds, arescheduled tobeeliminated inmid-1997, withtheexception ofcertain
beefproducts (January 2001).
2. Domestic support relies predominantly onindirect measures suchastaxbreaks andconcessional
interest rates, rather thanondirect payments. (This may, atleastinpart,beattributable topolicy
pressures stemming from Korea 'straditionally highrealinterest rates.) While thegreatest share of
government assistance seems devoted toagriculture andcoalmining, increasing attention isbeing paid
to"functionalassistance"focusingontechnology,humanresourceandregionaldevelopment.Inaddition,
theauthorities arepublicly committed topromoting export industries inareassuchasmachinery, where
sectoral trade deficits predominate.
3. Tradeliberalizationhasbeenaccompaniedbyeffortstoderegulatetheinternaleconomy,liberalize
investment procedures (Annex III.1) andstrengthen thecompetitiveness ofsmall andmedium-sized
enterprises. Avariety ofpolicy initiatives, including procurement priorities, aretargeted atSMEs.
Inaddition, therecent strengthening ofcompetition policy islikely toreduce market entry barriers
andencourage theformation ofnewbusinesses. However, given thecurrent rôleofafewlarge
conglomerates -theso-called chaebols -indynamic andinnovative industries, theauthorities maybe
facing apolicy conflict between short- andlonger-term growth andefficiency objectives.
4. Reducing government control andguidance isoneofthemain themes ofKorea 's1993-97
NewEconomy Planwhich, among other things, isintended toalign theregulatory framework with
international rulesandpractices. Focal areas inthiscontext include distribution, customs clearance,
foodsanitation andanimal/plant inspections, typeapprovals forindustrial products, foreign direct
investment, finance, andenvironmental regulations.1Theongoing negotiations onKorea 'saccession
totheOECD, which appear tobenearing conclusion, mayfurther helptoadvance reforms insome
ofthese areas.
1Details ofspecific measures arepresented intherelevant sections ofChapters IIIandIV.Republic ofKorea WT/TPR/S/19
Page 27
(2) Tariffs andTrade-related Taxes andCharges
(i) Border taxation
(a) Import tariffs
Main features
5. Steady tradeliberalization since the1980s hasresulted inKorea 'ssimple tariffaverage falling
fromnearly 24percentin1982(10percentin1992) toslightly over9percentby1996.2Justover
90percentoftariffs areatorbelow 10percent(Chart III.1). Theaverage tariffforindustrial products
is7.5percent,while thatforagricultural products reaches 19.3percent(notincluding tariffequivalents
forbalance-of-payments related quantitative restrictions, andspecific rates). Asatthetimeofthe1992
TPRReport, applied tariffs range fromzeroto100percentwhen adjustment duties (seebelow) are
included. Without these duties, thetariffpeakfallsto50percent. Theadjustment duties, 93intotal
attheHS10-digit level, concern pigmeat, vegetables, fruitandnuts(including prepared), andpepper.
Korea doesnotimpose anyexport tariffs, charges, taxes orlevies.
2Similar calculations provided bytheKorean authorities average 7.9percentfor1994. They arebased on
2,718 tariff rates, atseveral HSlevels, while theSecretariat calculations were made atthe10-digit level.WT/TPR/S/19
Page 28Trade Policy Review
6. Invoking developing country status, Korea isphasing initsUruguay Round-related tariff
reductions overa10-year period, i.e.by2004. Applied tariff ratesfor1995 and1996 arevirtually
identical tothe1994 rates, according totheauthorities, indicating thatmostreductions havealready
beenincorporated intotheapplied tariff. Atthetwo-digit HSlevel, arelatively small share ofcategories
willhaveafinaltariff average atorbelow thecurrently applied levels (Charts III.2andIII.3).3For
some manufactured products, suchasironandsteel, furniture, etc.,tariffs willbereduced tozero
overaperiod ofeither 5or10years.
7. Themostsignificant tariff-related aspect oftheUruguay Round wasthebinding ofvirtually
allagricultural tariffs (theexception being riceandriceproducts) andasharp increase, from about
10to90percent, inthebinding level forindustrial products.4This translates intoincreased
predictability oftheimport régime, protecting Korea 'strading partners fromsudden changes intariff
rates. Thereason fornotbinding theremaining 10percentofindustrial tariff lines, according tothe
authorities, wastoprovide temporary protection toeither ailing orpromising newindustries. Estimated
revenue fromcustoms duties forfiscal year1996 isW5.0trillion, equivalent tonearly 8percentof
totaltaxrevenues.
Tariff structure
8. Korea 'stariffisbased onthreestandard rates: general (statutory), temporary andconcessionary,
withthelatter primarily concerning WTO bound rates.5Inpractice, therateactually applied atthe
border -typically thegeneral ortemporary rate-maybesignificantly lower thantheconcessionary
rate. Temporary ratesmaybeadjusted byPresidential Decree, based onArticle 7oftheCustoms
Act,andtherefore areapplied insituations where some flexibility isdesired.6After asignificant decline
inthelate1980s, Korea 'suseoftemporary tariffs hasremained essentially unchanged. Inearly1996,
40tariff linesattheHS10-digit levelcarried suchrates, allofwhich werebelow thestatutory rate,
asagainst 39atthetimeofthe1992 Trade Policy Review.7
9. Tariff escalation isminimal within theKorean Tariff Schedule asawhole. Thetariffaverage
actually declines between thefirstandsecond stageofprocessing before increasing slightly onthethird
stage. Forsome manufacturing sectors suchastextiles andironandsteel, however, tariff escalation
remains significant (Table AIII.1). Specific ratesareapplied toonlytwofour-digit HStariffcategories,
cinematographic films andcertain recorded video tapes. Alternative duties arenotusedforapplied
tariffs, buthavebeenextensively incorporated intoKorea 'sbound rates, especially aftertariffication
inagriculture (Table AIII.2).
3Data presented inCharts III.3andIII.4concerning finalbound rates under theUruguay Round include the
above-quota ratesforitems subject totariffication. Inthecaseofalternate duties, onlytheadvalorem component
wastaken intoaccount.
4Notariff bindings existforsome fisheries products, wood, petroleum, chemicals (medicaments), apparel,
fabricatedmetals(ballbearings),machinery(gasturbines,electricmotorsandgenerators,refrigerationequipment,
dataprocessing units, etc.), electronics products (radio andtelevision receivers, capacitators, resistors), motor
vehicles, maritime vessels andphotographic equipment.
5Concessionary rates arealsoapplied inthecontext oftheGlobal System ofTrade Preferences (GSTP), the
Bangkok Agreement, theTrade Negotiations among Developing Countries (TNDC) andKorea 's"International
Cooperation Tariff" (Chapter II(3) and(4)).
6Procedures foradjustments toKorea 'stariff rates aredescribed inGATT (1992), p.43.
7GATT (1992), p.71.Republic ofKorea WT/TPR/S/19
Page 29
Republic ofKorea WT/TPR/S/19
Page 31
Tariff adjustments
10. Asoccasional measures, legislative provisions existfortheapplication ofretaliatory duties,
pricestabilization duties, emergency duties, adjustment duties and(autonomous) tariffquotas.8These
measures, collectively termed "Flexible Tariffs", arenotcurrently recorded inKorea 'sTariff Schedule.
They maybetemporarily implemented byPresidential Decree, ifdetermined tobenecessary bythe
Minister ofFinance andEconomy. Todate, retaliatory andprice stabilization duties havenotbeen
applied.
11. Adjustment duties involve achange intariff rateswithin thelimitofaWTO tariff binding.
Ofthe35adjustment duties (attheHSfour-digit level) ineffect inthefirsthalfof1996, 18areapplied
toagricultural andfisheries products, ninetolight industrial products andeight toother items.
Adjustment duties range ashighas100percentforcertain fisheries products (Table III.1), andin
many cases havebeenineffect almost continuously since 1992. While duties were adjusted onan
annual basis until 1995, subsequent changes have been effected every sixmonths. Aformal
announcement ismade intheOfficial Gazette three tofourdaysprior totheimplementation date.
Emergency duties, which involve thesuspension oftariff concessions under GATT/WTO safeguard
procedures, wereimposed andlaterremoved onthree items between 1990 and1993, namely canned
pigmeat (thetariff wasincreased from 30to50percent), L-LDPE film(from 8to25percent) and
talcum powder (from 5to30percent).9
(b) Tariff quotas
12. In1995, Korea introduced agricultural tariffquotas on67groups ofproducts, complying with
itscommitments totariffy quantitative import restrictions under theWTO Agreement onAgriculture
andincorporating thephase-out ofrestraints previously maintained onbalance-of-payments grounds
(Table AIII.2).10Quotas alsocover formerly prohibited imports, mostnotably rice. Inlieuoffixing
import tariffs forrice,Korea undertook toexpand itsminimum access commitment; riceimports will
risefrom 1to4percentofdomestic consumption overa10-year period. Administration oftariff
quotas forthe67product groups hasoftenbeendelegated toagricultural associations, implying potential
conflicts ofinterest (Chapter IV(2)(iv)).
8Authorization forthese tariffs isbased onArticles 11,15,12,12-2and16,respectively, oftheCustoms
Act.Retaliatory duties maybeimposed insituations where trading partners havetaken actions adversely affecting
Korean exports; price stabilization duties maybeauthorized when sharp fluctuations ininternational price levels
areconsidered likely toaffect domestic price stability.
9Seealsosection (iv)(b).
10Details ofthephase-out process arepresented insection (3)(ii) concerning licensing. These measures are
notsubject totariffication during thephase-out period and,asaresult, notariff ratesarespecified forabove-quota
imports (Table AIII.2).WT/TPR/S/19
Page 32Trade Policy Review
Table III.1
Adjustment duties, January toJune 1996
(Percent)
HS
(4-digit)Description Rate WTO bound rate
1996General Adjustment
0301 Seabream 10 100 Unbound
Seabass 10 100 Unbound
Loaches 10 100 Unbound
Rock trout 10 50 Unbound
0303 Alaska pollack 10 30 Unbound
Seabream 10 16 Unbound
Puffers 10 40 Unbound
Roes ofAlaska pollack 10 16 16
0304 Fillets ofAlaska pollack 10 30 Unbound
0306 Shrimps andprawns 20 35 Unbound
0307 Poulp squid (frozen) 20 40 Unbound
0709 Oakmushrooms 30 98%orW1,769/kg.
whichever isgreater98%orW1,769/kg.
whichever isgreater
0712 Radishes 35 58%orW242/kg.
whichever isgreater58.8% orW246/kg.
whichever isgreater
0709-0712 Bracken 30 40%orW1,096/kg.
whichever isgreater98%orW2,685/kg.
whichever isgreater
1212 Undaria pinnatifida 20 26 26
1605 Baitopshell 20 50 Unbound
1701 Sugar 8 60 92.7% orW218/kg.
whichever isgreater
1902 Chinese vermicelli 8 58%orW458/kg.
whichever isgreater58.8% orW465/kg.
whichever isgreater
2103 Maojoo 8 50%orW201/kg.
whichever isgreater58.8% orW237/kg.
whichever isgreater
Mixed seasonings 8 50 58.8
3920 Plastic films 8 15 21.3
4412 Plywood, veneered panels andsimilar
laminated wood8 15 Unbound
4419 Chopsticks ofwood orbamboo 8 30 Unbound
4421 Toothpicks 8 23 23.2
4409 Wood pieces fortoothpicks 8 20 20.2
4601 Mats 8 23 23.2
5002 White silk 8 20 22.6% or
W7,008/kg.
whichever isgreater
5111
5112
5515Woven fabrics ofwool 8 13-17 30
5208 Woven fabrics ofcotton 8 26 26.6
5803 Cotton gauze 8 26 26.6
6116 Gloves, ofcotton 8 30 31.2
6302 Toilet linen andkitchen linen, of
cotton8 30 30
6601 Umbrellas 8 23 23.2
6603 Umbrella parts 8 20 20.2
8482 Ballbearings 8 20 Unbound
8506 Primary batteries 8 20 23.2
8533 Varistors 8 20 Unbound
9001 Spectacle lenses, ofplastic 8 15 15.2
Source: Government ofKorea.Republic ofKorea WT/TPR/S/19
Page 33
13. Inaddition, Korea hastraditionally made extensive useofautonomous tariff quotas, usually
forrawmaterials andsemi-processed goods, tostabilize domestic prices. Quota levels aresetbythe
related ministries andadministered bytheMinistry ofFinance andEconomy (MOFE). Theministries
alsoallocateimportrights,typicallybasedonrecommendationsfromtheindustryassociationsconcerned.
In1992, 79HStariff categories (four-digit level) were involved, affecting about 1percentoftotal
imports bynumber oftarifflinesand,reflecting theinclusion ofpetroleum, nearly 18percentbyvalue.
By1996, thiswasreduced to47tariffcategories (Table III.2), accounting forabout 22510-digit tariff
linesand15percentofimport value. Thein-quota tariff ratesaregenerally setbelow theprevailing
applied tariff. Forbananas, carrying abound rateof98percent,thefirst20,000 tonnes enter under
a30percenttariff while anyadditional quantities aredutiable at70percent(situation until
7June1996).11
Table III.2
Tariff quotas, January toJune 1996
(Percent)
HS Description Quota level
(tonnes)Tariff rate WTO bound rate
1996
General
(temporary)In-quota
0404 Whey powder 12,650 20 7/10 45.1/89.1a
0406 Cheese 2,500 40 20 29.2/45.1
0714 Manioc chips 78,000 20 10 966.3a
0803 Bananas 20,000 30 70 98
0901 Coffee, notroasted Unlimited 3 2 58.8
1001 Wheat 436,000 5(3) 1 11.2
1002 Rye 450,000 3 1 118.4a
1003 Unhulled barley 50,000 5 1 352.8% or
W355/kg. whichever
isgreatera
1003 Malting barley 55,686 30 5 558.6a
1005 Maize (corn) 4.36million 5(3) 1 357.6a
1007 Grain sorghum 436,000 3 2 848.7a
1107 Malt 31,500 30 10 293a
1201 Soybeans 780,000 5(3) 2 530.2% or
W1,041/kg.
whichever isgreater
1214 Alfalfa Unlimited 20 2 109.5a
1514 Rape oil Unlimited 30 15 45.1
1519-3808 Technical material foragrochemicals 20,000 8 2 17.3/23.3
2207 Roughly distilled alcohol forbeverages 47,000 kl. 30 10 294a
2709 Petroleum oilsandoilsobtained from
bituminous minerals, crude (fornaphtha)40million
barrels5 3 Unbound
2711 Propane andbutanes Unlimited 5 2 5
2825 Vanadic pentaoxide 800 8 2 17.1
2841 Tungstates Unlimited 8 5 17.1
2915 Vinyl acetate Unlimited 8 4 17.1
3102 Urea 130,000 8 4 17.3
Table III.2 (cont'd)
11Therelativelyhighratesassessedonbananasareintended,accordingtotheauthorities,tolimitthesubstitution
effect withdomestically produced fruits suchasapples andpears. Forthesecond halfof1996, theimport tariff
quota wasincreased byanadditional 20,000 tonnes.WT/TPR/S/19
Page 34Trade Policy Review
HS Description Quota level
(tonnes)Tariff rate WTO bound rate
1996
General
(temporary)In-quota
3204 Disperse dyesandpreparations based thereon
Acid dyesandpreparations based thereon
Mordant dyesandpreparations based thereon
Reactive dyesandpreparations based thereon400
75
50
1008
8
8
86
6
6
614.2
14.2
14.2
14.2
4403 Tropical woods Unlimited 2 1 6.8
5201 Cotton, notcarded orcombed Unlimited 2 1 8.4
5202 Cotton waste Unlimited 2 1 8.4
5203 Cotton, carded orcombed Unlimited 2 1 8.4
5205 Cotton yarn 10,000 8 2 18.6
5403 Artificial filament yarnofviscose rayon 7,000 8 2 26.6/30
5504 Artificial staple fibres ofviscose rayon Unlimited 8 2 18.6
7207 Slabs
BilletsUnlimited 5
52.5
28
8
7213 Barsandrods, hot-rolled, inirregularly
wound coils, ofironornon-alloy steel120,000b8 4 16
7218 Stainless steelinblooms, billets, slabs 60,000 5 2.5 8
7219;7220 Flat-rolled products ofstainless steel 100,000 8 6 16
7224 Billets 1.3million 5 2 8
7225 Non-grain-oriented silicon steel Unlimited 8 4 16
7227 Barsandrods, hot-rolled, inirregularly
wound coils, orother alloy steel120,000b8 4 8
7228 Barsandrods, ofhigh-speed steel 1,000 8 4 8
7402 Unrefined copper Unlimited 3 1 16
7601 Unwrought aluminium 400,000 5 3 8
7606 Aluminium plates, sheets andstrip 30,000 8 6 16
8105 Cobalt powders Unlimited 5 2.5 14
8411 Turbo-jets, turbo-propellers andother gas
turbines andparts (foraircraft)Unlimited 5 3 5
9032 Automatic regulating orcontrolling
instruments andapparatus (foraircraft)Unlimited 8 5 15.2
... Notavailable.
a Above-quota rateforitems subject totariffication.
b Quota levels foritems 7213 and7227 combined.
Source: Government ofKorea.
(c) Surcharges
14. Korea in1992initiated surcharges ofUS$1.70 perbarrel oncrude oilimports andproportionate
charges onimports ofpetroleum products. Thesurcharges areintended toraise funds formarket
stabilization purposes, e.g.forthefinancing ofstocks. According totheauthorities, there areno
immediate plans forchanges. Noexport surcharges areimposed.Republic ofKorea WT/TPR/S/19
Page 35
(d) Tariff concessions andexemptions
15. Since 1992, there havebeennosignificant changes inKorea 'stariff reduction andexemption
system. Tariff reductions onthegeneral tariffrateareoffered for8810-digit items related topollution
control andrecycling (80percent); 181items imported byhigh-tech industries andthedefence sector
(30percent); certain animals andseeds foruseinagriculture (100percent); andcertain equipment
forR&D purposes (80-90 percent). Korea alsomakes useofdutydrawbacks onmaterial usedin
theproduction ofexports (either directly orindirectly); according totheauthorities, therebates remain
slightly below theactual import duties. Intheperiod 1992-95, therebate levelasashare oftotalimports
declined from about 1.5percentto1.2percent, andfrom about 23to21percentoftotalimport
duties collected.
16. Recognizing theeconomic distortions involved, theKorean authorities areseeking tolimit
tariff concessions (reductions andexemptions) toafewcases deemed justified forindustrial and
socio-cultural reasons. Tariff reductions forseveral industries willbeeliminated by1998.12Prompted
bytheWTO Agreement onSubsidies andCountervailing Measures, Korea intends torefocus itstariff
concessions from anindustry- toafunction-specific approach, encouraging forexample R&D or
anti-pollution measures regardless oftheirsectoral context.
(ii) Internal taxation
17. Value-added taxisKorea 'slargest single source ofgovernment revenue (Table III.3). The
standard taxrate,10percent,hasremained unchanged since 1992. Certain product groups, mainly
unprocessed foodstuffs, books andnewspapers, aregenerally exempted, regardless oftheirorigin and
finaldomestic use. There isnorefund procedure fortaxpaidoninputs insuchcases. Inaddition,
theVAT onallexports andinputs forexport production iszero-rated.
18. Since 1992, Korea hasreduced theratesofmostexcise taxes (Table AIII.3).13Liquor taxes
arecurrently assessed atrates ranging from 5to150percent, tobereduced to130percentin
January1997(ChartIII.4).Excisetaxesonautomobiles,leviedonthebasisofenginesize,varybetween
10and20percent, down from apeakof25percentin1995 (Chapter IV(3)(vii)). Bycontrast, the
ratesforgasoline, diesel oilandother energy products, aswellasforelectric washing machines and
crystal glassware, wereraised significantly after1994forenvironmental andfiscal reasons. Tostabilize
revenue, advalorem ratesforenergy products were replaced byspecific rates.
19. Aspartofbudgetaryreforms,Koreaplanstocontinuereducingtheheavyrelianceofgovernment
revenue onindirect taxation.
12Nodetails were available onthesectoral focus envisaged.
13Exempt from excise taxation are,among others, military supplies, supplies fordiplomats andoilimports
foragricultural use. Fortobacco, aconsumption taxisapplied onalocal basis.WT/TPR/S/19
Page 36Trade Policy Review
Table III.3
Estimated taxrevenue bymain revenue category, FY1996
(Wbillion, percent)
Classification Revenue Percentage
Total 64,468.0 100
Internal tax 48,637.5 75.4
Personal income tax 14,503.4 22.5
Corporate income tax 9,254.1 14.4
Inheritance tax 1,274.8 2.0
Revaluation tax 90.2 0.1
VAT 16,020.5 24.9
Special excise tax 3,093.2 4.8
Liquor tax 2,291.9 3.6
Telephone tax 588.8 0.9
Securities transaction tax 661.0 1.0
Stamp tax 357.7 0.6
Custom duties 5,049.5 7.8
Traffic tax 4,770.4 7.4
Defence tax 33.0 0.1
Education tax 4,387.6 6.8
Special agricultural taxforrural development 1,590.0 2.5
Source: Government ofKorea.
Republic ofKorea WT/TPR/S/19
Page 37
(3) Other Policies Directly Affecting Trade
(i) Customs procedures
20. Amendments totheCustoms Act,intended tostreamline procedures andimplement WTO
commitments, entered intoforceinJuly1996. Therevisions areexpected bytheauthorities toaddress
concerns voiced bytrading partners about procedural delays, inparticular forimports involving sanitary
andphytosanitary inspections.14Under theamendments, thetimeneeded forcustoms clearance of
airandmaritime cargoes isscheduled tocome down totwoorthreedaysfromthecurrent 15-day average
(i.e.from shiparrival togoods departure).15Thecurrent average clearance timeforaircargo is
eight days.
21. Prior toJuly1996, importers weregenerally required tofileanapplication withcustoms after
goods hadbeenstored inabonded area, andpayduties toobtain animport permit. Therevisions
include: conversion oftheimport andexport permit system intoalesstime-consuming declaration
system; abolition ofarequirement tostoregoods inbonded warehouses during theprocessing period;
conversionofthepre-clearancepaymentsystemintoapost-clearancepaymentsystem;andthepossibility
offiling import declarations before arrival ifgoods require prompt clearance.16Commencing in
July1996, theKorean Customs service willextend itsElectronic DataInterchange (EDI)-type clearance
system, usedsince December 1995 forexports, toinclude import clearance. Inaddition, aspartof
itsSocial Overhead Capital (SOC) plan, theGovernment intends toimplement various port-related
infrastructural improvements.
22. Theprimary basisforcustoms valuation inKorea, accounting forover99percentofallcases,
isthetransaction value. Insome instances where thebuyer andseller arecommercially related, a
"deductive value method" maybeusedinaccordance withtheprovisions oftheWTO Agreement.17
Recent applications ofthedeductive value method include certain electronic goods, pharmaceuticals,
lubricants andassembled toys. Revisions ofsome parts oftherelevant domestic legislation wereto
beeffective from July1996. Theauthorities undertook tosubmit thefulltextsoftherelevant laws
andregulations totheWTO. Theprocedures governing administrative orjudicial appeals ofcustoms
decisions haveremained basically unchanged since 1992.18
14SeeGATT (1992), Vol. II,p.5;andsection (4)(i)(c) andTable AIII.8 forcurrent measures.
15Economic Bulletin, October 1995, p.17.According totheauthorities, about twoorthree months would
berequired after entry intoforce oftherevisions toreach thetargeted clearance times.
16Apreshipment valuation system (theScheduled Import Declaration System) hadbeenintroduced in1991,
withcoverage limited togoods forgovernment use,rawmaterials forexport useandcertain machinery andraw
materials required formanufacturing industries. Theaverage annual share ofimport declarations since 1992
using thissystem increased from 1to1.6percentbetween 1993 and1995.
17AsKorea hadalready participated intheTokyo Round Agreement onCustoms Valuation, itwasnotentitled
toinvoke developing country status under thenewWTO Agreement todelay implementation.
18These procedures aredetailed inGATT (1992), pp.83-84. Thenumber ofcustoms-related complaints
filed hasaveraged about 40annually since 1992, ofwhich about fivewere upheld.WT/TPR/S/19
Page 38Trade Policy Review
(ii) Licensing requirements
23. Korea 'sabolition ofquantitative import restrictions hasbeen governed mainly bya1989
agreement tophase outrestraints maintained onbalance-of-payments grounds. Under theagreement,
initially tobeimplemented by1997, Korea eliminated non-automatic licensing requirements foratotal
of220agricultural andfisheries products between 1992andJuly1996.19Restrictions on73additional
items aretoberemoved inJuly1997, while liberalization oftheremaining items, eight categories
ofbeefandcattle, wasextended under theUruguay Round negotiations to1January 2001. Thiswas
compensated byincreased quota levels andarelatively lowfinaltariff rate.
24. In1996, non-automatic export licenses (i.e.export recommendations) areapplied to855items,
down from1,262 in1992.20Current requirements include export quotas under theWTO Agreement
onTextiles andClothing (770items atthesix-digit HSlevel), products subject tovoluntary export
restraints (7items) anditems prohibited forexport (14items).
25. In1997, Korea intends toconvert present export andimport licensing requirements from a
"positive" toa"negative" system. While automatic licensing -currently required formost imports
andexports -willbeeliminated, non-automatic licences (Import/Export Recommendations, etc.)will
bemaintained foralimited number ofproducts deemed sensitive, forexample forreasons ofnational
security, environmental conservation andpublic health. Trade-related procedures andrequirements
forthese items aredetailed intheConsolidated Public Notice based upon theForeign Trade Act
(Table AIII.4)21;Table III.4summarizes changes inimport-related provisions since the1992TPR.22
According totheauthorities, theConsolidated Public Notice hastwomainchapters relating toimports
andexports, respectively, which areverysimilar inmany respects.23TheNotice covers about 3,000
import-related items outofatotalof10,859 tariff items (at10-digit HSlevel).
19Many oftheitems concerned bythephase-out arealsocovered byUruguay Round-related tariff quotas
(Table AIII.2).
20Oneitemissubject tobothnon-automatic export licensing andanexport prohibition; 20items were added
duetoHSreclassification. TheSecretariat 'sprevious TPRreport stated thatasizeable share ofnon-automatic
licensingrequirementswereatleastpartiallyintendedtoensuretheavailabilityofrawandsemi-processedproducts
fordomestic producers (p.123).
21Imports ofindustrial waste, ascovered bytheBasel Convention, arenotincluded intheNotice. They
require import permission from MOTIE.
22TheSecretariat 's1992 Report stated thattheuseofnon-automatic licensing hadfallen toabout 3percent
oftariff lines by1991, andwasscheduled todecline further toabout 1.5percentby1994 (pp.86-87).
23Contents oftheexport-related chapter were notavailable.Republic ofKorea WT/TPR/S/19
Page 39
Table III.4
Changes since 1992 inimport-related technical andprocedural requirements
Ministry ofTrade, Industry andEnergy
Items subject tosafety inspection under theQuality Management Promotion Act:3added, 4removed (1992-93).
Items subject toapproval orreporting under theElectric Appliances Safety Control Act: model andtypeapproval -20added,
85removed; import report -84added, 61removed (1992-96).
Ministry ofAgriculture, Forestry andFisheries
Agrochemicals Management Law: approval requirement replaced byregistration requirement formanufacturing orimport
businesses.
Plant Protection Act: introduced theconcepts of"Quarantine Pest" and"Pest RiskAnalysis".
Major Agricultural Crop Seeds Act: requirement forimport recommendation replaced byimport report (1995).
Seedlings Management Act: abolished import eligibility restriction (1995).
Livestock Act: requirement forimport recommendation replaced byimport report (1994).
Pharmaceutical Act(veterinary medicine): import recommendation replaced byimport report (1995).
National Forestry Administration
Introduced measures concerning endangered wildlife species regulated under CITES (1993).
National Fisheries Administration
Validation required forblue-fin tunastatistical documentation.
Ministry ofFinance andEconomy
Ginseng Business Act: scheduled tobeabolished inJuly1996.
Ministry ofHealth andWelfare
Food Sanitation Act: introduced expedited clearance system, pre-report system andtheHazard Analysis Critical Control Point
(HACCP); decreased range offoodproducts subject tolaboratory tests.
Ministry ofLabour
Harmful orhazardous machinery andequipment: excluded airpressure vessels (1994).
Protective equipment: added airmasks andheatradiation clothes (1995).
Ministry ofCulture andSports
ActRelating toImport andDistribution ofForeign Publications: electronic publications included (1993).
Note: Import recommendation refers tonon-automatic licensing; import report implies anotification requirement.
Source: Government ofKorea.
(iii) Trade controls, prohibitions andsanctions
26. Korea currently applies trade embargoes against Iraq(imports andexports); Libya (exports
ofweapons andrelated materials, equipment forcrude oilproduction andrefining, aswellasaircraft
services); Liberia (exports ofweapons andwarsupplies); andAngola (exports ofweapons andcrude
oiltotheregions occupied byUNITA). Sanctions ontheformer Republic ofYugoslavia werelifted
inMarch 1996.WT/TPR/S/19
Page 40Trade Policy Review
(a) Import-related measures
27. Inaddition togeneral import restrictions forsecurity, environmental andhealth reasons, Korea
prohibits imports ofspecific Japanese products inthecontext ofitsImport Diversification Programme.
TheProgramme, which appears intended mainly toredress Korea 'spersistent bilateral trade deficit,
involved 258items atthe10-digit HSlevelin1993. Over 100items havesince beenliberalized in
stages: 28items (including ethylacetate andvideo tuners) inJanuary 1994, 26items (including camera
lensesandwordprocessors)inJanuary1995,17itemsinJuly1995,25items(includingportablepersonal
computers,printers,wirelesscarphonesandsometypesofautomobile)inJanuary1996andanadditional
10items inJuly1996.24Table AIII.5 reflects thecoverage oftheProgramme following thechanges
inJanuary 1996. Theauthorities announced inmid-1996 thattheyintended tocontinue phasing out
theprogramme withaviewtoitscompletion byend-1999. Annual reductions, intwosteps, would
exceed 10percentoftheinitial number ofrestrictions.
28. TheKoreanGovernmenthasallowedvariousexceptionstotheImportDiversificationProgramme.
These havebeengranted forproduction facilities, partsandcomponents inconnection withtheForeign
Investors Industrial Parks; sample products fordomestic production; andmaterials forproducing
exports.
(b) Measures affecting exports
29. Export prohibitions, primarily forenvironmental reasons, arecurrently ineffect for14items
atthesix-digit HSlevel, including forwhale meatandnatural granite. Other export prohibitions and
controls areapplied under theCustoms Act(public security) andtheForeign Trade Act(protection
ofintellectual property rights).25
30. Inaddition toexport quotas under theWTO Agreement onTextiles andClothing
(Chapter IV(3)(ii)), Korea operates voluntary export restraints (VERs) onseven products. In
August 1995, Korea notified theWTO thatfiverestraints would beeliminated ineither December 1997
or1998; theyconcerned microwave ovens andcolour picture tubes (European Union), stainless steel
flatware(GermanyandtheUnitedKingdom),oystersincontainers(allcountries)andchestnuts(Japan).26
Theremaining twoVERs apply tosilkyarns andfabric, which areregulated under abilateral agreement
between Korea andJapan27,andpolyester exports toPanama andcertain Asian countries, which have
beencovered toprevent "export disorder".
31. Korea 'sexports ofawide range ofproducts arecurrently subject toanti-dumping and
countervailing duties; Table AIII.6 provides anoverview. In1995, approximately 6.7percentof
Korea 'smanufactured exports weresubject toanti-dumping orcountervailing measures, including price
undertakings.
24InJanuary 1994, Korea agreed toallow 24additional items tobeimported bytechnologically advanced
foreign companies (MITI -Industrial Structural Council, 1995, p.133).
25GATT (1992).
26WTO document G/SG/N/5/KOR, 15August 1995.
27WTO document G/TMB/N/82, 28April 1995.Republic ofKorea WT/TPR/S/19
Page 41
(iv) Trade defence mechanisms
(a) Anti-dumping andcountervailing dutyactions
32. Korea adopted theTokyo Round Agreements onAnti-Dumping andonSubsidies and
Countervailing Measures in1986. Anumber ofrecent changes todomestic legislation wereintended
toimplement results oftheUruguay Round.28Thechanges affected theForeign Trade Act,theCustoms
Actandtherelevant Enforcement Decrees andresulted, interalia,inareduction ofprocedural delays
andtheintroduction ofapreliminary determination stage during which provisional measures canbe
taken.29Thedecisionperiodforopeninginvestigationswasreducedfrom90to30days,theinvestigation
period wasdivided intoa90-day preliminary phase anda90-day finalphase, andtheperiod forrendering
thedefinitive decision wasreduced from90to30days. Asunset clause limits theimposition ofduties
toafive-year period unless otherwise specified. TheMinistry ofFinance andEconomy isthemain
administrative agency, withtheKorean Trade Commission (KTC) conducting theinvestigation.
33. Ofthe10anti-dumpinginvestigationsinitiatedbetween1992and1995,fiveresultedindefinitive
anti-dumping duties (Table III.5). Three cases wereunder investigation asatmid-1996: ethanolamime
(initiated February 1995); lithium primary batteries (March 1996); andchlorine chloride (April 1996).
Bycontrast, nocountervailing dutypetitions haveeverbeenfiledinKorea. Itremains tobeseen,
however, whether recent legislative changes willaffect theindustry 'spropensity toseekprotection
from allegedly dumped orsubsidized imports.
Table III.5
Anti-dumping cases, 1992-95
(A)Actions taken
Year Cases initiated Final determinationaCases withdrawn
Definitive duty Price undertaking Noinjury
1992 3 2(93) - - 1(92)
1993 4 2(93), 1(94) - 1(94) -
1994 2 - - 2(94) -
1995 1 - - - 1(95)
Total 10 5 - 3 2
a Theyearofthefinaldetermination isindicated inparentheses.
28InFebruary 1992, aPanel wasestablished under theTokyo Round Agreement onAnti-Dumping toexamine
Korea 'simposition ofanti-dumping duties onimports ofpolyacetal resins from theUnited States. Thereport
ofthePanel (GATT document ADP/92, 2April 1993) found Korea 'sinjury determination tobeinconsistent
withvarious articles oftheAgreement, andrecommended thatKorea bring itsmeasures intoconformity. The
report wassubsequently adopted (GATT document ADP/M/40, 15September 1993).
29Korea Institute forInternational Economic Policy (1993c), p.31.Korea notified itsanti-dumping laws
totheWTO inSeptember 1995 (WTO document G/ADP/N/1/KOR/1). ByNovember 1995, Korea hadreceived
about130questions,withalargepartaskinghowitensuredconformitywiththeWTOAgreemen tonAnti-Dumping
(WTO document G/ADP/W/74).WT/TPR/S/19
Page 42Trade Policy Review
(B)Products andcountries affected
Product Exporting country Final outcome
H-acid China, India, Japan Withdrawal
Phosphoric acid China Definitive duty, 40.5%-54.3%
Ballbearings Thailand Definitive duty, 6.27%
Soda acid China Definitive duty, 66.1%a
Pre-sensitized printing plates Japan Definitive duty, 24.5%-38.2%
E-glass fibre United States, Japan, Chinese Taipei Definitive duty, 10.3%-58.7%b
Disintegrated calcium phosphates Russia Noinjury
Sodium hydroxide United States, China, Belgium, France Noinjury
Zincingots China, Kazakhstan, Uzbekistan,
RussiaNoinjury
Copper foil Japan Withdrawal
a Includes price undertakings andreduction ofexports.
b Includes price undertakings withamarkup ofbetween 23.2% and26.4%.
Source: Government ofKorea.
(b) Safeguard measures
34. Criteria andprocedures forsafeguard measures havebeenrevised asaresult oftheUruguay
Round and,ingeneral, follow those foranti-dumping.30Under Article 10oftheWTO Agreement
onSafeguards, Korea notified twopre-existing Article XIXmeasures, namely licensing requirements
forimports from China ofsalt-fermented shrimp (imposed in1988) andofhotbeanpaste (1989).
Inaddition tothese measures under Article XIX, Korea hasresorted totemporary tariff increases in
fivesafeguard-type situations since theearly 1990s. However, inthese cases, nobindings existed or
theincreases remained below therelevant bound rates.31
35. Since 1992, atotal ofseven petitions foradjustment relief have been filed. Ofthese,
fourpetitions werewithdrawn (including forballbearings, matsofvegetable materials andsoybean
oil),onereceived anegative determination (frozen red-horsehead) andtwoanaffirmative determination
(soybean mealandsoybean oil).32Ofthese, theKTC recommended thattheMinistry ofAgriculture,
Forestry andFisheries givedomestic suppliers andconsumers ofsoybean mealtheopportunity toconsult
30Korea hasrecently made anumber ofnotifications ofitssafeguard régime andprovided written answers
toquestions from trading partners (e.g. WTO documents G/SG/N/1/KOR/1, 6April 1995, andG/SG/W/109,
26January 1966). These hadvoiced concern about various provisions, including those forsuspending orbanning
imports,promotingpurchaseagreemen tsbetweendomesticmanufacturersandusers,andencouraging"adjustment
talks" between foreign exporters anddomestic firms requesting protection (MITI -Industrial Structural Council,
1995, pp.82-83).
31Theproducts concerned were canned pork(May 1990 toJanuary 1993), L-LDPE film(October 1990 to
September 1992), wooden chopsticks (April 1991 toMarch 1995), talcum powder (July 1991 toJune 1993),
andvermicelli (January 1992 toDecember 1994).
32KIEP (1996), p.134, andWTO document G/SG/N/6/KOR, 29September 1995.Republic ofKorea WT/TPR/S/19
Page 43
foradjustment, while inthecaseofsoybean oilrecommending remedial measures bytheMinistry
ofFinance andEconomy intheform ofatariff increase within thelimits ofthebound rate.33
(v) Origin criteria andrelated requirements
36. SinceJanuary1992,therehavebeennosignificantchangesinKorea'srulesoforigin,asspecified
intheForeign Trade Act. According totheauthorities, therules areapplied equally toalltrade
measures. Origin status isconferred onthecountry inwhich aproduct hasbeenwholly produced
orreceived itslastsubstantial transformation leading toachange intariff classification (atsix-digit
HSlevel), except for40items towhich avalue-added criterion isapplied. FortheJapanese products
currently restricted under theImport Diversification Programme, theauthorities statethatnoseparate
origin criterion areused.
37. Korea applies a"marks oforigin" requirement toimports of678items attheHSfour-digit
level, upfrom530items atthetimeofthe1992TPRReport.34According totheauthorities, theincrease
wasnecessary toprotect consumers from "failing torecognize theorigins ofagricultural products"
atatimeofsteady import liberalization. Thestated purpose oftherequirement istohelpthepublic
judge foodquality, especially ifsubtle differences inquality existbetween products from different
countries.35
(vi) Local-content provisions
38. According totheauthorities, Korea hasnopolicy toencourage oroblige purchasers tochoose
Korean goods orservices overimports, ortoachieve aminimum Korean content. Allocation ofany
scarce resources isnotmade contingent ontheuseofKorean goods orservices. However, various
"localization" schemes havebeenimplemented since1986inorder toencourage thedomestic production
ofcertain capital andother goods withahighimport level.36
33ForsoybeanoilimportsfromtheUnitedStates,thetariffrateappliedisbasedonaRecordofUnderstanding.
TheGovernment ofKorea hasproposed arateincrease, andnegotiations arecurrently under waywiththe
United States.
34DuringKorea's1992TradePolicyReview,tradingpartnerscomplainedthatthemarksoforiginandlabelling
requirements were burdensome fortraders, without contributing toconsumer protection (GATT, 1992, Vol. II,
p.6).Therequirements were subsequently revised twice and,according totheKorean authorities, problems
haveeased considerably since. False labelling iswidespread inregard toorigin markings, theauthorities state,
involvingagriculturalproductsusuallyimportedfromChinaaswellasimportsdestinedonlyforsimpleprocessing
inKorea.
35KIEP (1996), p.188.
36AccordingtoJapan'sMinistryofTradeandIndustry,prohibitionsundertheImportDiversificationProgramme
maybewaived iftheitems concerned areusedascomponents inproducts promoted under localization schemes,
provided thatthemanufacturer submits a"domestic production promotion plan" (Industrial Structural Council,
1996, p.153). Theauthorities state thatsuchmeasures arenotintended toaccelerate localization, butrather
toavoid rigidities andunwarranted sideeffects from theImport Diversification Programme andtoderegulate
theapplication ofthelocalization scheme.WT/TPR/S/19
Page 44Trade Policy Review
(vii) Export andimport facilitation andpromotion policies
(a) Export subsidies
39. According totheauthorities, Korea doesnotgrant anydirect export subsidies forindividual
sectors, producers orproducts. Rather, export-related assistance isbased onmeasures such as
post-shipment export loans, export-related tax-free reserves andpreferential access toexport credit
(seebelow). Korea recently notified twoexport-related subsidies totheWTO Committee onSubsidies
andCountervailing Measures: reserves forexport losses andreserves foroverseas market development.
Bothschemes relyontaxconcessions.37
(b) Export financing
40. Thebasic structure ofKorea 'sprogrammes forpost-shipment export loans, tax-free reserves
andexport credits hasremained unchanged since the1992Trade Policy Review. InMarch 1992, the
ceilings ofcertain three, fourandfive-year loans wereincreased andinMarch 1995 theloanperiods
wereadjusted inaccordance withtheOECD Guidelines forOfficially Supported Export Credit. The
levelofpost-shipment export loans outstanding between 1992and1995(atyear-end) wasW700billion,
535billion, 1.1trillion and1.3trillion, respectively. However, theshare oftotaldomestic credit
extended forexport financing decreased between end-1992 andend-1995 from about 1.9percentto
1.5percent; export financing forsmall andmedium-sized enterprises alone represented 1.7and
1.3percent, respectively.
41. InJanuary 1993, theinterest rateapplied toexport credits discounted bytheBank ofKorea
wasreduced from 7to6percent, andlowered further to5percentinMarch 1993. According to
theauthorities, thereductions reflected amore flexible monetary policy stance topromote economic
recovery. InMarch 1994, theBankofKorea replaced anautomatic rediscount facility withanaggregate
credit ceiling tobeallocated toindividual banks onthebasis ofperformance indicators. Thiswas
followed bytheliberalization ofinterest ratesforforeign trade financing inJuly1995 (Chapter II).
(c) Export insurance
42. InJuly1992, theKorea Export Insurance Corporation (KEIC) wasestablished astheexclusive
provider ofexport insurance andoverseas investment insurance inKorea. Previously, export insurance
hadbeenfurnished through theKorea EXIM Bank onbehalf ofMOTIE. Deficits exceeding KEIC 's
reserves arefunded through thegovernment budget; fortheyears 1992-95, thefunding varied between
W16and25billion annually. While, between 1992 and1994, export insurance coverage rosefrom
3.2to6.4percentofthevalue oftotalexports andforeign construction projects, itjumped to
11.3percentin1995. Thesudden increase wasattributed bytheauthorities toagreater share ofexports
going toformer Socialist countries.
(d) Export andimport promotion andmarketing assistance
43. TheKorea Trade-Investment Promotion Agency (KOTRA), formerly acting astheKorea Trade
andPromotion Corporation, isKorea 'smain export promotion agency. Since themid-1980s ithas
alsosupported import activities ofKorean companies. InJanuary 1996, KOTRA 'srôlewasfurther
37WTO document G/SCM/N/3/KOR/Rev.1, 25April 1996. Details ofthenotification arepresented in
section (4)(iii).Republic ofKorea WT/TPR/S/19
Page 45
expanded toinclude thepromotion ofbothinward andoutward foreign direct investment through the
establishment of"Investment Information Centres". According totheauthorities, there arecurrently
noexport promotion activities inservices areas. KOTRA 'sannual budget expanded between 1992
and1996, from about W60billion tonearly W80billion.
(4) Policies Influencing Investment, Growth andTrade
44. Asnoted inChapter II,Korea hassought inrecent years toaddress avariety ofregulatory
andotheradministrativemeasuresconsideredtoconstrainmarketflexibility,hampernewentrantsand/or
affect trade relations withmajor partners. While these initiatives cover awidearray ofpolicy areas,
regulatory issues andadministrative units, theirimplementation appears tohaveperformed smoothly,
withnosignificant setbacks orslippages. Asummary ofmain measures, asviewed bytheKorean
authorities, isgiven inTable AIII.7. Policy changes affecting foreign directs investment areexplained
inAnnex III.1.
(i) Standards, technical regulations andsimilar measures
(a) General policy orientation
45. Korea hasbeenamember oftheInternational Standards Organization since 1963, actively
participating initstechnical committees, andacceded totheTokyo Round Agreement onTechnical
Barriers toTrade in1980. According totheauthorities, about 500Korean standards areidentical with
international standards.38
46. IndustrialstandardsinKoreaaresetbytheNationalInstituteofTechnologyandQuality(NITQ).
According totheauthorities, Korea hasonlyabout onefifththenumber oftechnology standards
(9,425 in1996) usedinternationally; industry initiatives aretherefore welcome tofilltheperceived
gap. Inaneffort topromote standardization forthecapital goods industry, theNITQ hasafive-year
planthrough theyear2000 tounify standards foratotalof600capital goods.39Foreign products
carrying Korea 's"KS" standards mark areexempt from individual type-approval requirements; to
date, approvals havebeengranted for24products from 28companies inninedifferent countries.
Asatmid-1996, Korea hadconcluded amemorandum ofunderstanding withNewZealand onmutual
recognition, andhadcommenced discussions withPoland andMalaysia.40
47. Improvements totheGovernment 'stype-approval system areenvisaged for23categories of
manufactured goods, involving 11ministries and30regulatory statutes. Themainthrust isonabolishing
requirements notdirectly connected withconsumer safety orenvironmental protection; extending or
making permanent thevalidity oftypeapprovals; authorizing self-testing forfirms possessing testing
38Recent initiatives included research intovarious international standards andthecross referencing ofKorean
andinternational standards. About 800standards have been translated intoEnglish.
39According toanIAAofficial, "ifdomestic products aretoreplace imports, especially theJapanese ones,
ithelps tohaveunified standards formanufacturers getting intothemarket" (Korea Herald, 25January 1996).
40Korea's1995agreemen twiththeUnitedStatesinvolvingautomobilesincludeschangesintechnicalregulations
(Chapter IV(3)(vii)). InFebruary 1996, Korea notified theestablishment ofstandards andprocedures formutual
recognition oftestresults issued byauthorized sanitation inspection agencies (WTO document G/SPS/N/KOR/24,
12February1996).Theproductsconcernedarefood,foodadditives,apparatusforfoodpackaging,andcontainers
forfood.WT/TPR/S/19
Page 46Trade Policy Review
facilities; andcurtailing unnecessary testing regulations andprocedures.41Approval procedures for
electricalappliances,forexample,aretobeharmonizedbytheendof1997withtherelevantinternational
requirements. Inturn, astronger international focus ofKorea 'sstandards andapproval régime may
helptoreduce thepotential fortrade frictions thathasbecome evident inrecent years.42
(b) Initiatives forenvironmental reasons
48. TheMinistry ofEnvironment setsandmonitors environmental regulations forindustrial
production withaviewtocontrolling, forexample, airandwater quality, noise levels andvibration.
InDecember 1995, legislative approval wasreceived forthe"Act Relating toPromotion of
Environmentally Friendly Industry"; measures toencourage recycling areimplemented under the"Act
Relating toPromotion ofResource Saving andRe-utilization". Loans andtaxsubsidies areavailable
forenterprises investing inanti-pollution equipment, including long-term low-interest loans forSMEs.
Korea iscurrently considering theintroduction ofacarbon tax.
(c) Sanitary andphytosanitary regulations
49. Current initiatives inthesanitary andphytosanitary areacentre upon theintroduction of
scientifically-based control measures intotheproduction anddistribution chain andthestrengthening
ofexpostfactocontrols. By2000, Korea intends tocomplete theharmonization ofitsfoodsanitation
inspection systems withinternational standards, guidelines orrecommendations asspecified under the
WTO Agreement ontheApplication ofSanitary andPhytosanitary Measures. Forexample, the
Government recently revised thePlant Protection ActandtheLivestock Epidemics Prevention and
Control Acttomake themcompatible withstandards oftheInternational Plant Protection Convention
andtheInternational Office ofEpizootics. Additional changes anticipated bytheauthorities include
reinforcing thepersonnel andfacilities related toinspection systems aswellasstreamlining regulations.
50. Underthe"GreenCardSystem"forimportedagriculturalproducts,introducedin1993,importers
areencouraged toreport thetypes andapplication periods ofanypesticides orherbicides usedduring
cultivation, storage ortransport.43Changes tofacilitate sanitary inspection procedures forfoodimports,
introduced inApril 1995, aresummarized inTable AIII.8. Forexample, theexpedited inspection
andclearance system forfreshfruitandvegetables hasreduced thetimerequired toobtain aninspection
certificate tooneortwodays, following laboratory testing which istobeconducted within fivedays.
While current testing procedures forfoodproducts generally involve complete sampling44,random
sampling andtesting wastobeintroduced inthesecond halfof1996. InOctober 1995,
government-mandated time periods forshelf-life indications on207products were replaced by
41Economic Bulletin, February 1994, p.23.Import-related technical requirements aresummarized in
Table AIII.4. Type approval criteria fortelecommunications equipment aresummarized inBoxIV.1.
42SeeAnnex II.2.
43KIEP (1996), p.186.
44Certain products aresubject onlytodocument inspection.Republic ofKorea WT/TPR/S/19
Page 47
manufacturer-determined periods45;byend-1998, mostremaining products aretobecovered bythe
newsystem.46
(ii) Government procurement
51. Korea isoneoftheeight signatories totheWTO Agreement onGovernment Procurement
(GPA).47Korea 'sthreshold levels under theGPAgenerally correspond tothose forother signatories,
withtheexception ofrelatively highlevels, SDR15million, inAnnexes 2and3forconstruction services
(i.e.sub-central government entities andallother entities).
52. ExtensivelegislativechangeswillberequiredtoimplementtheGPAinKoreaby1997,primarily
intheformofaPresidential Decree scheduled tobeissued inOctober 1996. Thecurrent draftdecree
would extend theprevious 10-day announcement period forinternational bidsto40days; lower the
minimum contract sizesubject tocompetitive bidding fromW10billion to5.5billion forconstruction
projects andto1.5billion forgoods andservices; andestablish acouncil toarbitrate disputes over
international contracts. Alsoconsidered wastheabolition ofajointregional procurement system and
ofrestrictions onjointprocurement bythechaebols.48
53. GPAprovisions donotapply tosingle tendering under the"ActRelating toContracts towhich
theState isaParty" (anditsenforcement decrees), affecting inparticular small andmedium-sized
enterprises (SMEs), nortocentral government procurement ofagricultural, fishery andlivestock
products. Moreover, forthefirstfiveyears afterapplication inKorea, theGPA isnotextended to
theprocurement ofsatellites under theAviation andSpace Industry Development Promotion Law.
While anumber ofmajor Stateenterprises havebeenincluded byKorea inAnnex 3oftheAgreement,
notcovered aretheprocurement ofelectrical transformers, switches andinsulated cables bytheKorea
ElectricPowerCorporation,andtelecommunicationproductsandnetworkequipmentbyKoreaTelecom.49
Inthecaseofservices, Korea hasmade atleastpartial commitments inmany oftheservice categories
covered byAnnexes 4and5oftheGPA, withbasic telecommunications andairtransport services
45TheUnited States complained inearly 1996 about fourmajor sanitary andphytosanitary barriers totrade:
expanded residue inspections andlimited testing facilities; lackoftransparent food code rules; unscientific
fumigation requirements; andgovernment-mandated shelf-life requirements. Korean officials responded that
these complaints were outdated: Korea hadtaken steps tofacilitate customs clearance offruits andfishwithin
twodaysofreceiving thedocumentation; only112items were subject toresidue examinations, contrasting with
157productsundertheCodexAlimentarius;foodcommoditieshadbeenreclassifiedundertheharmonizedsystem;
andshelf-life regulations for207items hadbeen liberalized (Korea Herald, 21February 1996).
46According totheauthorities, thetiming wasbased onanassessment oftherelative safety ofeachproduct,
reflecting distribution conditions inKorea.
47Asatransition measure, Korea 'saccession willbeeffective January 1997. Previously, Korea hadbeen
negotiating accession totheTokyo Round Agreement onGovernment Procurement.
48KoreaEconomicWeek ly,7March1996.Thejointregionalprocurementsystem,accordingtotheauthorities,
wasdesigned topromote the"balanced development" ofthedomestic construction industry.
49According totheauthorities, thelatter categories were withdrawn from Korea 'soffer listasaresult of
thefailure oftheUnited States, theEuropean Union andother major trading entities toagree oncoverage within
thetelecommunications sector.WT/TPR/S/19
Page 48Trade Policy Review
among themost notable exclusions. Theopening ofKorea 'sgovernment procurement markets for
services under Annex 4iscontingent onreciprocity bytheother signatories.50
54. TheOffice ofSupply (OSROK), formerly under theEconomic Planning Board, butnowunder
MOFE, administers central andlocalgovernment procurement ofallgoods andservices worth over
W50million aswellasallcentral government construction projects above W2billion Asageneral
policy principle, priority isgiven tobidsfrom SMEs, mainly through theinclusion ofco-operatives
representing suchenterprises51,andwarveterans. According totheauthorities, supplies under priority
conditions account forsome 30to40percentoftotalpublic purchasing, withafocus onproducts
notnormally manufactured bybigger companies. Thecontract values aretypically below therelevant
GPA threshold. Guidelines adopted inJanuary 1992 wereaimed atincreasing thescope forforeign
participation ingovernment procurement.52Theguidelines allow foreign suppliers toparticipate in
government procurement onareciprocal basis.
55. Since 1990, themostnotable trend ingoods procurement hasbeenasharp decline inrestricted
tendering infavour ofopentendering (Table III.6). Single tendering ofgoods, however, hasslightly
increased from already highlevels.53
56. Topenalize bid-rigging, acompany 'seligibility fortendering mayberestricted forperiods
ofonemonth totwoyears. There weretwosuchcases in1994and18in1995. Inaddition, theKorea
FairTrade Commission imposed significant sanctions ("surcharges").54
50GPA Appendix I-Korea, General Notes, No.3.
51This hasbeen thecase, forexample, forelectrical components andcement.
52The1992 Secretariat report stated thatforeign suppliers were eligible totender onlyforitems notproduced
inKorea.
53Single tendering includes bidsonbehalf ofindustry associations, including co-operatives ofSMEs.
54Seesection (v)(b).Republic ofKorea WT/TPR/S/19
Page 49
Table III.6
Government procurement bytheOffice ofSupply, 1990-95
(US$ million, percent)
1990 1991 1992 1993 1994 1995
US$m.
(percent)US$m.
(percent)US$m.
(percent)US$m.
(percent)US$m.
(percent)US$m.
(percent)
Goods 3,917
(100)4,200
(100)5,320
(100)5,493
(100)5,590
(100)5,603
(100)
Origin:
Domestic 3,367
(85.9)3,761
(89.5)4,773
(89.7)5,045
(91.8)4,939
(88.4)5,116
(91.3)
Foreigna551
(14.1)439
(10.5)547
(10.3)448
(8.2)651
(11.6)487
(8.7)
Tender procedure:
Single 1,783
(45.5)1,865
(44.4)2,438
(45.8)2,461
(44.8)2,557
(45.7)2,746
(49.0)
Restricted 1,000
(25.5)699
(16.6)377
(7.1)193
(3.5)305
(5.5)342
(6.1)
Open 1,134
(29.0)1,636
(39.0)2,505
(47.1)2,839
(51.7)2,728
(48.8)2,515
(44.9)
Construction 3,816
(100.0)3,683
(100)4,836
(100)6,664
(100)7,332
(100)5,674
(100)
Single tendering 523
(13.7)408
(11.1)453
(9.4)596
(8.9)887
(12.1)357
(6.3)
a Mainly medical equipment, machinery, laboratory equipment andagricultural products.
Note: Exchange rateused: W780/US$.
Source: Office ofSupply, Government ofKorea.
(iii) Financial assistance toindustry
57. According totheauthorities, Korea doesnotgrant anysubsidies intheformofdirect payments
toindustry.55Rather, government assistance isextended primarily viataxbreaks andinterest-rate
concessions onlending. Thelatterformofassistance, termed policy-based lending, continues toaccount
forasubstantial share ofprivate sector credit, although declining inpercentage terms (Table III.7).
After falling fromnearly 40percentoftotalprivate credit in1985to26percentin1990, itdecreased
more slowly tounder 20percentby1995. Thiswasduemainly toadecline inindustrial loans, while
lending forhousing andagriculture hasexpanded. Among theinstitutions concerned, therôleofthe
BankofKoreahasdiminishedinrelativeterms,fallingfromthelargesttothefifth-largestlenderbetween
1985 and1995.56
55The1992 Secretariat Report noted thattheGovernment hadgenerally abandoned thefirm-specific approach
infavour ofsupporting broader private-sector initiatives toincrease productivity andupgrade technology.
56Policy based lending isdefined asallloans anddiscounts extended bythespecialized banks andtheBank
ofKorea. Thisincludes general loans, overdrafts, loans onmutual instalments, etc.which arenot,according
totheauthorities, policy-based inanarrow sense. Therefore, theimportance of"policy-based" lending may
beoverstated.WT/TPR/S/19
Page 50Trade Policy Review
Table III.7
Policy-based lending, 1985-95a
(A)Lending bysector
1985 1990 1991 1992 1993 1994 1995
(Wbillion)
Industrial loansb23,595 35,771 42,833 49,793 54,974 59,027 63,249
Other sectoral loansc6,015 16,848 20,190 24,235 28,848 33,288 38,789
Total 29,610 52,620 63,023 74,028 83,823 92,315 102,038
(percentofprivate sector credit)
Industrial loans 31 18 17 17 16 13 12
Other sectoral loans 8 8 8 8 8 8 7
Total 39 26 25 25 24 21 19
a Comprises allloans anddiscounts extended byspecialized banks andtheBank ofKorea, including general loans, overdrafts,
loans onmutual instalments, etc.which maynotbeconsidered policy-based inastrict sense.
b Includes loans extended bytheIndustrial Bank ofKorea, theKorea Development Bank, theEXIM Bank, theLong-Term Credit
Bank, aswellasloans anddiscounts oftheBank ofKorea.
c Includes loans extended bytheKorea Housing Bank andCredit Co-operatives forAgriculture, Livestock andFisheries.
(B)Lending bybank
(Wbillion)
1985 1990 1991 1992 1993 1994 1995
Bank ofKorea 9,641 11,605 13,551 16,999 16,488 14,025 11,649
Korea Development Bank 2,728 6,693 7,806 8,942 10,617 12,388 13,941
Industrial Bank ofKorea 6,914 12,738 15,690 17,740 20,057 22,398 25,437
EXIM Bank 3,350 2,367 2,931 2,480 3,261 4,076 5,135
Long-Term Credit Bank 962 2,368 2,855 3,631 4,551 6,139 6,907
Korea Housing Bank 2,319 6,911 8,717 10,943 13,158 15,009 17,035
Credit Cooperatives forAgriculture, Livestock and
Fisheries3,696 9,938 11,473 13,292 15,690 18,279 21,754
(C)Funds forsmall andmedium-sized enterprises
(Wbillion)
1992 1993 1994 1995
Loans forrelocating small andmedium sizeenterprises intorural areas 27.2 80 80 80
Loans fornewly established small andmedium-sized firms 10 5 5 10
Source: Bank ofKorea, Economic Statistics Yearbook.Republic ofKorea WT/TPR/S/19
Page 51
58. Despite theGovernment 'sstated objective ofpromoting newindustrial andtechnical activities,
internal support forthese areas continues tobedwarfed byassistance foragriculture andcoalmining.
Inits1996notification under theWTO Agreement onSubsidies andCountervailing Measures, Korea
listed 26programmes, divided intosixcategories (Table III.8).57While manufacturing accounts for
thelargest number ofmeasures, agriculture represents thegreatest share byvalue. Ofthe
26programmes, 5reportedly involve prohibited subsidies, 17concern actionable subsidies and4are
considered toimply non-actionable subsidies.58Notincluded inthenotification were anadditional
72non-actionable subsidies. Korea plans tophase outtheprohibited subsidies by2002, under the
developing country provisions oftheWTO Agreement.
59. Tostrengthen competition andhelpbalance Korea 'sindustrial structure, emphasis isplaced
onthedevelopment ofsmall andmedium-sized companies. Taxbreaks andreduced-interest loans
aregiven toSME'sstarting newbusinesses in,orrelocating to,rural areas. TheSmall Business
Administration (SBA), established inFebruary 1996, provides technical advice, assists inlabour supply,
grants financial support, aidsrural SMEs andhelps tomodernize distribution. Asnoted in
section (2)(vii)(b)), SMEs receive byfarthelargest share ofdomestic funds forexport financing.
60. Other recent initiatives include therestructuring, in1994, oftheRural Development Fund and
itsintegration intoaSpecial Budget fortheStructural Improvement ofRural Areas.59TheIndustrial
DevelopmentFundandtheStructuralAdjustmentFundforSmallandMediumEnterpriseswerereplaced
byanIndustrial Foundation Fund andaSME Start-up andPromotion Fund, respectively. In1995,
aspecialdepreciationclauseandatemporarytaxcreditfornewinvestmentwereabolished,andadditional
government funds were discontinued orrestructured.60
61. The1992Five-Year PlanforLocalization ofMachinery, PartsandMaterials provided indirect
assistance forthedevelopment ofproduct prototypes, introduction ofproduction technologies andthe
collection oftechnology-related information. Doubts overtheeffectiveness oftheplanledtothe
formation ofanewprogramme inMay1995. According toauthorities, contrasting withthe1992
Five-Year Plan, the1995 Localization Scheme fortheCapital Goods Industry isaimed at"balanced
tradeexpansion through increasing exports, rather thanimport substitution". Thefocus isonimproving
conditions forinvestment, quality enhancement andR&D.61
57WTO document G/SCM/N/3/KOR/Rev.1, 25April 1996.
58Korea Herald, 26April 1996. Among thesubsidies notincluded inthenotification arethose related to
energy andtheenvironment (Chapter IV).
59In1992 and1993, W1.25 trillion and1.71 trillion, respectively, were allocated totheFund.
60Thefigures inTable III.7include theIndustrial Foundation Fund andtheSME Start-up andPromotion
Fund. TheFunds, which have notbeen included inKorea 'ssubsidies notification (Table III.8), according to
theauthorities, either involve non-actionable subsidies ornosubsidies atall.
61According toHoKim, theGovernment intends "tofoster thecapital goods industry asanexport-strategic
industry" by(i)concentrating theprovision ofsupport on"strategic highvalue added fields which aremost
influential andcanspread theeffects overabroad base"; (ii)creating aconsistent andcomprehensive system
ofsupport from technology development tomarket opening andimprovements inmanpower andinformation
systems; and(iii)introducing more advanced technologies through inward foreign investment. (Mr. Kimis
Deputy Director, Economic Research Division ofMOFE). Economic Bulletin, July1995, pp.2-5.
According totheauthorities, theprogrammes have notbeen notified under WTO provisions asnoindustry- or
technology-specific support isinvolved; items eligible forcapital goods industry promotion arenotspecificallyWT/TPR/S/19
Page 52Trade Policy Review
Table III.8
Subsidies notified under WTO provisions, 1992-95
(Wbillion)
Subsidy amount
1992 1993 1994 1995
Agriculture
Foodgrain Management Programmea1,810.0 1,796.5 1,805.5 ...
Livestock Support Programme 0.4 10.6 12.6 ...
Sericulture Development Programme 2.5 3.0 3.0 ...
Government Purchase ofRapeseed 3.2 1.6 1.5 ...
Marketing Improvement Programme forFruits andFlowers 0.8 0.5 1.2 ...
Forestry
Plywood andBoard Assistance Programme 0 0 0.4 ...
Forest Products Utilization Assistance Programme 0.3 0.3 0.3 ...
Fishery
Support forDevelopment ofDeep-Sea Fishery 0.8 1.8 2.9 ...
Support forFishProducts Processing Development 1.2 2.6 2.7 ...
Fund forSupporting Fishing Activities 19.2 20.9 22.5 ...
Support forDeveloping Aquaculture Fishery 0.7 0.7 2.4 ...
Reduction inLocal Taxation onBuilding andAcquisition ofVessels for
Deep-Sea Fishery... ... ...
Coal Industry
Support Programme fortheCoalIndustry 444.6 575.4 528.6 ...
Manufacturing Industry
Reserves forExport Losses 23.4 25.4 30.3 ...
Reserves forOverseas Market Development 30.2 23.2 36.3 ...
Facility Investment Loans Provided bytheSMEs Foundation Formation
Fundn.a. n.a. 17.6 15.2
TaxCredit forInvestment inFacilities 35.1 56.3 102.6 ...
TaxReduction andExemption forForeign Invested Enterprises 9.1 13.6 1.6 ...
Reduction inCustoms Duty onParts ofAircraft andVessels 15.8 15.1 5.1 ...
Support Programme forMaintenance ofFarm Machinery 1.0 1.0 1.3 ...
Assistance Programme toPromote theSpread ofDomestically Produced
Mini-Computersn.a. 1.1 1.1 ...
Supporting Fund forQuarrying Industry 0.7 0.5 0.9 ...
Research andDevelopment
Research andDevelopment Activities forLowEmission Vehicles n.a. n.a. 1.0 ...
Research andDevelopment Activities Supported bytheInformation and
Communication Promotion Fundn.a. 3.0 6.8 ...
Environment Engineering andTechnological Development Programme 3.9 8.7 12.9 ...
Promotion Fund forScience andTechnology ... 59.3 112.5 ...
... Notavailable.
n.a. Notapplicable.
a Expenditures forfoodgrain purchases.
Source: Government ofKorea.
designated, butgenerally described interms ofindustries; thefocus isonindirect assistance such asquality
inspection, human resource development andinformation-related support; andpurchases ofparticular equipment
donoqualify foranypreferences.Republic ofKorea WT/TPR/S/19
Page 53
62. Under thelocalization scheme, foreign-currency lending isextended atfavourable rates(7-8per
cent), including forpurchases oflocally made machinery, andmachinery manufacturers areallowed
toformsalesconsortiums. Delayed-payment export funds fortheindustry aretoreach W3.55trillion
in1996, upfrom 2.8trillion in1995. Theindustry alsobenefits from "upfront investment funds"
setatW200billion for1996, compared to120billion in1995, andincreased ceilings forloans from
fournewtechnology project banks. Taxcredits willbeincreased. Complementary initiatives inthe
areasofstandardizationandqualitypromotionincludetheestablishmentofa"QualityGuaranteeCentre".
63. Also inMay 1995, thegovernment announced animport substitution initiative covering
105products (Table AIII.9). According totheauthorities, theproduct listisacomposite ofitems
thatprivate companies haveexpressed aninterest indeveloping; assistance isprovided solely forthe
development ofaproduct prototype, andthere arenospecial measures toinhibit imports orpromote
exports ofthese products.
(iv) Support forresearch anddevelopment
64. Atthetimeoftheinitial TPRreport onKorea, theGovernment aimed toincrease research
anddevelopment (R&D) spending to3.5percentofGDP by1995, from about 2.0percent. This
goalsubsequently proved somewhat over-ambitious andwasscaled backtoarange of3.0to4.0percent
by1998. Theactual figure for1995 isestimated at2.7percentwithabout 84percentaccounted
forbytheprivate sector. Thelarge majority ofR&D spending continues tobeallocated toapplied
rather thanbasic research. Intheindustrial sector, theemphasis ofpublic support hasshifted from
prototype development tosuchareas ashuman resource development andtechnical support forSMEs
(Table III.9).
Table III.9
Public support forindustrial research anddevelopment, 1991-96
(Wmillion)
Year 1991 1992 1993 1994 1995 1996
Industry Development Fund
Prototype development 32,480 39,000 60,000 106,500 130,000 200,000
Industrial high-technology development 52,020 52,000 40,000 52,000 54,500 54,500
Total 84,500 91,000 100,000 158,500 184,500 254,500
Industrial Generic Technology Development
Total 71,200 72,700 88,700 141,000 188,800 232,310
Industrial Infrastructure Promotion Programme
Human resource development n.a. n.a. n.a. n.a. 3,000 14,700
Dissemination oftechnology information n.a. n.a. n.a. n.a. 300 300
Expansion ofR&Dfacilities n.a. n.a. n.a. n.a. 4,000 9,500
Reinforcement ofinternational technology co-operation
basen.a. n.a. n.a. n.a. 600 150
Technical support forSMEs n.a. n.a. n.a. n.a. 1,000 11,300
Promotion oftechnical industrial standardization n.a. n.a. n.a. n.a. 600 1,400
Total n.a. n.a. n.a. n.a. 9,500 37,350
n.a. Notapplicable (theIndustrial Infrastructure Promotion Programme waslaunched in1995).
Source: Government ofKorea.WT/TPR/S/19
Page 54Trade Policy Review
(v) Competition policy
(a) Recent developments
65. Korea hasmade extensive changes toitscompetition lawsince 1992. Provisions oftheFair
Trade Actoneconomic concentration havebeenstrengthened, controls oninternational contracts eased,
andsanctions tightened. Other amendments were designed toincrease theKorean FairTrade
Commission 's(KFTC) supervision ofcontracts involving technology services (e.g. computer
programming), strengthen therights ofsubcontractors regarding payments, andenhance consumer
protection. InDecember 1994thestatus oftheKorean FairTrade Commission (KFTC) wasenhanced
tothatofanindependent administrative agency, andinMarch 1996 theposition ofKFTC chairman
wasupgraded fromthevice-ministerial totheministerial level.62Atthesame time, theCommission
wasreorganized andsignificantly enlarged, toover380employees.
66. In1992, theKFTC imposed limitations ondebtguarantees forchaebol-affiliated companies
andincreased sanctions, intheformofsurcharges, onanti-competitive practices bychaebols.63Other
measures inthiscontext included areduction intheequity ceiling, from40to25percentoftotalassets,
permitted forinvestments innon-affiliated subsidiaries.64Since December 1994, international contracts,
including technology transfer contracts, copyright contracts andimport agency contracts, havenolonger
beensubject toreporting requirements. Instead, asystem wasintroduced where companies could request
theKFTC toexamine thelegality ofsuchcontracts. (Under theFairTrade Actexclusive supply
contracts arepermitted provided theydonotact"inrestraint oftrade".) Atthesame time, asystem
ofsurcharges ofupto2percentofsalesforviolations ofinternational contracts wasintroduced.
67. Import andexport cartels inKorea aregenerally prohibited under theFairTrade Act,but
exceptions maybeauthorized bytheMinister ofTrade andIndustry. Authorizations maybegranted,
according totheauthorities, withaviewtomaintaining order inimports andexports. Inaddition,
under Article 47oftheForeign Trade Actagreements ontrade conditions maybeconcluded among
traders, butaresubject toapproval. However, therehavebeennosuchcasestodateandthegovernment
considers abolishing therelevant provisions.
(b) Enforcement
68. Unfairtradepractices,includinganyactivitythatrestrictscompetition,aresubjecttoinvestigation
bytheKFTC under theenforcement provisions oftheFairTrade Act. While theKFTC mayimpose
penalties oninfringing companies ofupto5percentofturnover, additional sanctions maybedecided
bycourts. Between 1992and1995, over3,000 investigations wereconducted, outofatotalofabout
8,000 initiations, withthelargest share concerning resale price maintenance (Table III.10). Ofthese
62Previously theKFTC wasunder theauthority oftheEconomic Planning Board (now dissolved). In1993,
theKFTC began participating intheOECD Committee onCompetition LawandPolicy asanobserver.
63TheFairTradeActimposesprohibitionsonthefollowingactivitiesofmarket-dominatingfirms:unreasonably
determining, maintaining oraltering commodity prices orservice charges; unreasonably controlling thesale
ofcommodities orprovision ofservices; unreasonably interfering withthebusiness activities ofother enterprises;
unreasonably barring theentry ofnewcompetitors; andunreasonably disrupting themarket bysubstantially
restricting competition ordamaging theinterests ofconsumers.
64Since 1987, Korea hasprohibited cross-capital investments bythechaebol andimposed aceiling onthe
level ofinvestments.Republic ofKorea WT/TPR/S/19
Page 55
investigations, themajority resulted inwarnings; surcharges wereimposed, however, inover200cases
andcriminal charges were brought in42cases.65
Table III.10
Activities oftheKorea FairTrade Commission, 1992-95
(Number ofcases)
Type Year Total
1992 1993 1994 1995
Investigations
Resale price maintenance 292 397 430 356 1,475
Unfair subcontracting transactions 149 223 220 383 975
Unfair international contracts 57 65 55 43 220
Unfair trade activities 45 50 52 39 186
Unfair standardized contracts 8 34 83 51 176
Violations ofbusiness combinations andeconomic concentration 19 24 13 23 79
Anticompetitive activities oftrade associations 9 16 20 26 71
Undue collaborative acts 37 5 12 3 57
Abuse ofmarket-dominant enterprises 6 2 1 3 12
Total 622 816 886 927 3,251
Corrective actions
Warnings 416 458 503 566 1,943
Recommendations 39 70 102 122 333
Requests 0 3 7 0 10
Orders
(Surcharges)159
(15)277
(33)261
(103)226
(51)923
(202)
Accusations 8 8 13 13 42
Total 622 816 886 927 3,251
Source: Government ofKorea.
69. TheFairTrade Act,asrevised in1994, specifies cases inwhich ministries mustconsult the
KFTC before introducing legislative provisions. In1995, 205draftbillswerediscussed inthiscontext;
theKFTC expressed anopinion on93billsandachieved changes in61cases.66Inaddition, the
Commission in1994called on48industrial associations torevise theirrulesandrequirements, followed
byanadditional 218requests in1995. Allrequests havesince beenimplemented.
70. Thenumber ofreviews ofinternational supply contracts peaked in1994, at768, with
55corrections required. Following thechange ofsystem in1995, thenumber ofreviews declined
farmore strongly (to288)thanthenumber ofcorrections (to43).In1995, surcharges ofW873million
were imposed. According totheauthorities, since 1994, extensive efforts havealsobeenmade by
theKFTC toeliminate bid-rigging ingovernment projects andprocurement. Charges werebrought
65Thevalue ofsurcharges imposed fortheyears 1992-95 wasW3.4,1.1,2.6and4.9billion, respectively.
66Intheevent ofpolicy conflicts, finaldecisions maybereached atmeetings extending uptocabinet level.WT/TPR/S/19
Page 56Trade Policy Review
against 16construction companies inthecaseofabridge construction project, andagainst 42companies
inthecaseofroadexpansion projects in1994.
71. TheKFTC prepares anannual listing ofmarket-dominating firms, i.e.ofcases where asingle
company withaturnover exceeding W50billion commands amarket share ofover50percentor
thetopthree companies over75percent. In1994, 332enterprises were designated asdominant,
followed by316firms in1995. Food production isthesector inwhich market-dominating firms are
mostheavilyconcentrated.Insomemarkets,suchasforcertainferrousalloyproductsbetween1993-94,
thedecline intheshare ofthedominating firmwasattributed toincreased imports.
(c) Restrictions onmarket entry andprice setting
72. Inaddition tolimits oninward foreign direct investment, Korea haslongoperated licensing
restrictions onnewmarket entrants andcapacity expansions inindustries deemed torepresent important
public interests. Current licensing requirements areconfined totheoilrefining, petroleum retailing
andpower generation industries.67Petroleum-product pricing willbeliberalized in1997, together
withoilretailing andexport-import businesses. By1999, newentrants mayenter theoilrefining
industry, andforeign direct investment willbepermitted throughout thesector.68
73. According totheauthorities, public utility fares, petroleum products andbriquets aretheonly
goods andservices currently subject topricesurveillance orprice regulation. Adjustments torailway
fares, electricity charges, telephone tariffs andpostal charges aredecided bythecentral government.
PetroleumpricesareregulatedinaccordancewithprevailingpricesinSingapore,andbriquetsaresubject
toaprice ceiling.
(d) Distribution
74. Korea 'sdistribution sector issaidtoberelatively inefficient, withalarge number ofshops
relative topopulation size,mostofwhich aresmall-scale operations.69TheGovernment hasgradually
beenopening thesector toforeign investment since 1988; theprevious foreign ownership limitof
20shops, eachwithafloor space nottoexceed 3,000 square metres, waslifted inJanuary 1996.70
Foreign landownership restrictions havealsobeeneased. Sales ofclothing, electronic products,
cosmetics andtoysareexpected tobenefit most from these changes.
67Inoilrefining, MOTIE currently seeks toavoid capacity expansions thatwould exceed 130percentof
projected domestic demand.
68TheGovernment willmaintain aregistration system foroilretailing, refining andexport-import businesses
toensure thatcompanies meet minimum qualification levels.
69Korea Business Review, October 1995, p.30.
70Before July1993, foreign investment wasonlyapproved, under the"Regulations onForeign Investment"
oftheForeign Capital Inducement Act,forfloor areas ofunder 1,000 square metres andfor20orfewer outlets
(MITI -Industrial Structural Council, 1995, p.299).Republic ofKorea WT/TPR/S/19
Page 57
75. InKorea 'sGATS Schedule, cross-border supply andconsumption abroad ofbothwholesale
andretailtradeservicesareunbound.71An"economicneedstest"appliestoforeigncommercialpresence
inwholesale markets andstores withafloor space over3,000 square metres, aswellasinforeign
tradeservices. Foreign commercial presence indepartment stores andshipping centres wasprohibited
untilJanuary 1996.
(e) Exclusivity arrangements
76. Under Article XVII oftheGATT, Korea notified theactivities ofeight State-trading
organizations: theMinistry ofAgriculture, Forestry andFisheries (riceandbarley); Agricultural
andFishery Marketing Corporation (beans, buckwheat, soybeans, potatoes, onions, garlic, ginger,
ground nuts,sesame seeds andfruitofthegenus capsicum); Livestock Products Marketing Organization
(beef);NationalLivestockCooperativesFederation(naturalhoney);ChejuCitrusGrowers'Agricultural
Cooperative (oranges andcitrus fruit); National Ginseng Cooperative Federation (ginseng products);
National Forestry Cooperatives Federation (pine-nuts); andKorea RawSilkExporters Association
(rawsilk)(Table AIII.10). While several ofthese organizations exercised monopoly import rights
prior totheWTO Agreement onAgriculture, theycurrently conduct theimport allocation foritems
subject totariffication withaviewtomaintaining "market order".72
77. Mirroring current arrangements inother WTO number countries, Korean lawconfers certain
exclusivity rights onproviders ofessential, public orinfrastructural services such asbasic
telecommunications, railorairtransport.
(vi) Intellectual property rights
78. Korea isamember oftheWorld Intellectual Property Organization (WIPO) andtheParisUnion,
andhassigned avariety ofinternational conventions governing theprotection ofintellectual property
rights.73Theadministrationoftheserightsfallswithinthecompetenceofseveralministriesandagencies.
While theKorean Industrial Property Office (KIPO), under MOTIE, isresponsible forpatents,
trademarks andother industrial property rights, copyright isunder theauthority oftheMinistry of
Culture andSports, andcomputer programme protection under theMinistry ofInformation and
Communications.
71MITI saysthatpastrestrictions onJapanese trading companies -limits onexport transactions from and
import prohibitions intoKorea -haveresulted inalossofexport opportunities forKorean products. Revisions
totheForeign Investment Lawareexpected tocompletely deregulate trading services (including imports) in1997
(MITI -Industrial Structural Council, 1996, pp.218-220).
72Following thescheduled elimination oftheGinseng Business ActinJuly1996, theNational Ginseng
Cooperative Federation istocontinue asaState-trading organization responsible foradministering thetariff quota
inthesector.
73Korea became aparty totheParis Convention fortheProtection ofIndustrial Property in1980, followed
bythePatent Cooperation Treaty (1984); theConvention fortheProtection ofProducers ofPhonograms Against
Unauthorized Duplication ofTheir Phonograms (1987); theBudapest Treaty ontheInternational Recognition
oftheDeposit ofMicro-organisms forthePurposes ofPatent Procedure (1988); andtheBerne Convention for
theProtection ofLiterary andArtistic Works (May 1996). Korea hasnotyetbecome aparty totheRome
Convention(InternationalConventionfortheProtectionofPerformers,ProducersofPhonogramsandBroadcasting
Organizations) andtheTreaty onIntellectual Property inRespect ofIntegrated Circuits.WT/TPR/S/19
Page 58Trade Policy Review
79. According toWIPO data, Korea ranks among theworld 'stopfivecountries interms of
applicationsforindustrialpropertyrights.74Dependingonthearea,foreignnationalsaccountforbetween
half(patents) andlessthanonetenth (utility models andindustrial designs) oftheapplications filed
andregistrations granted (Table III.11). Thecurrent application process forpatents isshown in
Chart III.5.
80. Recent revisions toKorean legislation covered virtually allareas ofintellectual property
protection.75Amendments inJuly1994 totheCopyright Law included extending theprotection for
neighbouring rights from 20to50years, introducing rental rights forsound recordings, extending
explicit protection todatabases, andraising thepenalty ceiling forinfringements from W3million
to30million. Subsequent revisions extended copyright protection forforeign works andphonograms
from 1987 backto1957, expanded protection ofneighbouring rights forforeign performance and
broadcasting, andabolished compulsory licensing provisions fortranslations.76Under therevised Patent
Law, effective fromJuly1996, patent duration isextended from15years frompublication to20years
from application, andthedefinition forworking apatent istoinclude the"offering forassigning or
leasing". Under trademark legislation, colours arenowcovered asacomponent oftrademarks. Thus,
according totheauthorities, mostofthelegislative measures required toimplement Uruguay Round
obligations areinplace.77Although Korea hasnotformally notified theWTO ofanimplementation
dateunder theWTO Agreement onTrade-Related Aspect ofIntellectual Property Rights (TRIPS),
theauthorities havestated thatevery effort isbeing made toliveuptotherequirements fordeveloped
countries under theAgreement.78
81. Under intellectual property legislation, foreign producers andKorean importers arefreein
principle toconclude exclusive sales arrangements. However, theyhave nolegal means tobar
unauthorized (parallel) imports ofproducts circulated abroad withtheproducer 'sapproval79;theKorea
FairTrade Commission would actonanti-competitive practices ("restraints totrade") designed tocurb
suchimports. Inaddition, theKFTC seeks toprevent exclusive arrangements fromimposing restrictions
on,forexample, salesterritories, quantities, customers orthesourcing ofcomponents.
74KIPO (1995).
75Revisions were made tothePatent Law, Utility Model Law, Design Law, Trademark Law, Copyright
Law, Agrochemicals Management Act,Seed Industry LawandtheComputer-Software Protection Act.
76Therevised Copyright Lawprovides forgrace periods: reproductions ofworks (whose protection hasbeen
restored) made prior to1January 1995 maybedistributed untilend-1996, andderivative works (using restored
works asoriginals) made prior to1January 1995 maybecirculated untilend-1999. Right holders havetheright
toclaim equitable remuneration foruseafter these periods.
77Nofurther changes arecurrently planned inKorea 'sIPR-related legislation inrelation totheTRIPS
Agreement.
78According toArticle 65(1) oftheAgreement, noMember isobliged toimplement before 1January 1996,
while developing-country Members areafforded anadditional fouryears. Inthecontext ofa1996 Framework
Agreement between theEUandKorea theparties agreed toimplement theTRIPS Agreement notlater than
1July1996, except fortheAgrochemicals Management LawandSeedlings Management Lawwhich, dueto
legislative procedures, willenter intoforce on1January 1997 and1July1998, respectively.
79In1995, MOFE reinterpreted theprovisions ofthePatent, Copyright andTrademark laws, infavour of
permitting parallel imports.Republic ofKorea WT/TPR/S/19
Page 59
WT/TPR/S/19
Page 60Trade Policy Review
Table III.11
Applications andregistrations ofindustrial property rights, 1985-94a
Year Total Patents Utility models Industrial designs Trademarks
Applications
1985 74,153
(16,760)10,587
(7,884)18,548
(933)18,949
(836)26,069
(7,107)
1990 114,069
(32,296)25,820
(16,738)22,654
(993)18,759
(1,363)46,826
(13,262)
1991 120,736
(30,077)28,132
(14,879)25,895
(770)20,097
(1,284)46,612
(13,144)
1992 127,810
(29,012)31,073
(15,121)28,665
(742)22,948
(1,188)45,124
(11,961)
1993 155,870
(30,147)36,491
(15,032)32,218
(713)27,568
(1,368)59,593
(13,034)
1994 187,132
(35,353)45,712
(18,148)39,806
(574)29,033
(1,369)72,581
(16,262)
Registrations
1985 27,298
(8,176)2,268
(1,919)2,327
(454)8,250
(653)14,453
(5,149)
1990 54,325
(16,038)7,762
(5,208)8,846
(950)13,927
(1,559)23,790
(8,321)
1991 54,659
(16,446)8,690
(6,137)8,370
(911)13,723
(1,404)23,876
(7,994)
1992 62,305
(17,893)10,502
(6,932)7,870
(778)13,635
(1,159)30,298
(9,024)
1993 62,563
(18,016)11,446
(6,901)7,592
(778)13,133
(1,054)30,392
(9,283)
1994 58,604
(14,261)11,683
(5,909)7,817
(538)13,695
(887)25,409
(6,927)
a Thefigures inparentheses indicate thenumber ofapplications andregistrations involving foreigners.
Source: Government ofKorea.
82. Asaresult ofanInter-Ministerial TaskForce established in1992tocombat counterfeit goods,
aJoint Investigation Team wasestablished bytheProsecutor 'sOffice in1993 tocarry outraids.
Subsequently, according totheauthorities, alarge number ofshops dealing incounterfeit goods have
beenclosed. In1995, nearly 1million items wereseized andnearly 3,400 individuals werecharged
withinfringement. KIPO activities for1995 included encouraging "voluntary" compliance withIPR
legislation; surveys ofmanufacturers, distributors andconsumers; public relations; andthe
strengthening ofraids. Violations ofindustrial property legislation candraw significant sanctions,
reaching uptoW20million orfiveyears imprisonment fortrademarks andW30million orthree years
imprisonment forcopyrights andcomputer programmes. While expressing concern about some
substantive provisions ofKorean legislation, theInternational Intellectual Property Alliance, a
private sector interest group intheUnited States, acknowledged thattheauthorities hadbeensuccessful
incracking down oncounterfeit recordings andvideos.80
80Korea Herald, 22February 1996.Republic ofKorea WT/TPR/S/19
Page 61
Annex III.1
Foreign Direct Investment Policies
1. TheKoreanauthoritieshavelongregardedinwardforeigndirectinvestment(FDI)asanimportant
toolforovercoming domestic resource constraints inthedevelopment process and,inparticular,
facilitating thetransfer oftechnology.80Inasimilar vein, FDIisseenasinstrumental insupporting
localization programmes forcapital goods production, thereby helping toreduce thechronic tradedeficit
inthisarea(Chapter IV).Bycontrast, thereseems tohavebeensomewhat lessemphasis onincreasing
FDIinservices sectors, despite highpotential productivity gains.81
2. TheGovernment recently expressed concern about theriskoffaltering competitiveness vis-à-vis
neighbouring countries receiving much higher levels ofinward investment.82Thiswascorroborated,
toacertain extent, byforeign business complaints about difficulties inacquiring plant sites, gaining
access tonecessary information andovercoming residency restrictions (including limitations onthe
residential period, andonaccess tobankloans andcredit cards).83Reference hasalsobeenmade to
labourdisputes,highdistributionandstoragecosts,aswellashighwagelevels.84ToremoveFDI-related
barriers,however,Koreahassince1993streamlinedadministrativeprocedures(investmentinliberalized
sectors, forexample, nowrequires onlynotification rather thanpriorapproval), established a"one-stop"
service system andincreased support regarding taxation, financing andtheselection offactory sites.
Since foreign exchange banks havebeenentitled toaccept investment notifications, from 1994, the
processing period hasbeenreduced from20-30 daystonomore thanthree hours inmostcases. For
investment applications subject toapproval requirements, theprocessing period hascome down from
30tofivedays(15daysifconsultations between ministries arerequired). Thismayhavecontributed,
according totheauthorities, torekindling FDIinthemanufacturing section; inflows in1995 greatly
increased overtheprevious year'sleveltoreach US$1.4 billion.
3. Under current provisions, according totheauthorities, investment determinations takeinto
account thedevelopment levelofthedomestic industry concerned aswellastherelevance oftheproject
todomestic andforeign economic policies, following consultations withtheMinistries concerned.
80According toIlSakong (1993), theprimary objective oftheGovernment 'sFDIpolicy hasbeentechnology
transfer, counterbalanced bythefearofforeign domination ofKorean industry. TheForeign Capital Inducement
Act,which isactually aspecial lawunder theForeign Exchange Management Act,isthebasic lawregulating
FDIinKorea. TheActissupported andenforced through aPresidential Decree, theRegulation onForeign
Direct Investment andanenforcement ordinance.
81According totheauthorities, norecent information wasavailable concerning therôleofFDIintheKorean
economy.
82Economic Bulletin, November 1994, p.2.
83Many local equity participation requirements imposed byindividual laws, aswellasanyperformance
requirements,wereeliminatedfollowinga1989bilateralinvestmentagreemen twiththeUnitedStates.Remaining
requirements aretobemostly abolished from 1997, according totheauthorities.
84Korea Business Review, December 1995. TheSecretariat 'sprevious TPRreport noted thatthescope of
permittedFDIhadbeenexpandedsincethemid-1980s,andapprovalproceduressimplified.About200industries,
i.e.20percentofthetotal, were reported asclosed in1992 (GATT, 1992, Vol. I,p.58).WT/TPR/S/19
Page 62Trade Policy Review
Maximum permitted foreign equity ratios for1996 arepresented inAnnex Table III.1.85Until
January 1996, entry into30businesses, including 28construction activities, required theformation
ofajointventure withalocallicence holder, while another fiveindustries, including insurance, required
theformation ofajointventure withalocalenterprise.86Among thebusinesses inthefirstcategory,
thejointventure requirement waslifted forall28construction activities.
Annex Table III.1
Maximum allowable foreign equity ratios inrestricted businesses, 1996
Business Equity limit
Offset printing Notexceeding 50%.
Commercial printing bystencil paper plates orsimilar plates Lessthan50%.
Electric power generation Lessthan50%.
Automotive service stations Lessthan50%.
Coastal water passenger transport Lessthan50%.
Coastal water freight transport Lessthan50%.
Scheduled airtransport Notexceeding 20%
Non-scheduled airtransport Notexceeding 20%
Airplane rental withoperator Lessthan50%.
Airfreight andlandfreight handling Lessthan50%.
Airplane ground management Lessthan50%.
Wireless telegraph andtelephone Notexceeding 1/3.
Consumer credit cardlending Notexceeding 49%.
Trusts andtrustcompanies Lessthan50%inanexisting domestic security investment
trustcompany (andnotexceeding 10%perforeign investor).
Securities dealing Incaseofinvestment inanexisting domestic securities
company: notexceeding 50%. Fornewjoint-venture
securities companies: more than40%andlessthan50%.
Other activities auxiliary tofinancial intermediation Investment inanexisting domestic investment advisory
company: lessthan50%overall andnotexceeding 10%per
investor.
Credit rating services Notexceeding 10%(5%perinvestor).
Vocational training schools Notexceeding 49%.
Preliminary training courses Notexceeding 49%.
Wire broadcasting Notexceeding 15%(allowed onlyforprogramme supply
businesses).
Source: Government ofKorea.
4. UndertheMay1996ForeignDirectInvestmentLiberalizationPlan,theGovernmentiscommitted
toatleastpartially liberalize, between January 1997 and2000, 47ofthe81businesses stillsubject
85InJuly1993 theceiling forforeign equity investment waseliminated forcompanies (joint ventures) that
were50percentormore foreign owned (Economic Bulletin, November 1994, p.5).Eligible investment sectors
andmaximum permitted foreign equity ratios were determined bytheMOFE.
86With thelatter category, thejoint venture requirement waseliminated inthecaseofcereal milling.Republic ofKorea WT/TPR/S/19
Page 63
torestrictions.87Thiswillincrease theaverage liberalization ratetoover98percentbytheyear2000,
including a99percentrateforthemanufacturing sector (Annex Table III.2). Other deregulation
measures wereannounced inApril 1995under theForeign Direct Investment Environment Improvement
Plan, withtheobjective ofaligning theFDIsystem withinternational standards andpractices, notably
those ofOECD countries (Annex Table III.3). Main elements areimprovements tothe"one-stop"
service system, increased taxbreaks andfinancial assistance forhigh-tech businesses, ataskforce on
labour disputes, industrial sitesexclusively forforeign-invested enterprises, stricter enforcement of
intellectual property rights andextension ofexpatriate residency periods.88Bytheyear2000, thenumber
ofcompletely restricted sectors willbereduced to18,withanadditional 26sectors subject topartial
restrictions (Annex Table III.4).
5. Inregard toinvestment incentives, high-technology businesses arenoweligible forfive-year
corporation andbusiness taxexemptions, followed bya50percentreduction foranadditional three
years.89Other businesses inexport freezones areeligible forthree-year corporation andbusiness tax
exemptions, followed bya50percentreduction foranadditional twoyears. Inrecent years the
Government hascreated twonewindustrial estates, theKwangju Pyongdong Industrial Estate andthe
Chonan Industrial Estate, primarily fortheuseofforeign-owned orjoint-venture enterprises focusing
onhightechnology. Amain feature ofbothestates istheavailability oflong-term, low-rate leases
forfactory sites.
87PreviousliberalizationmeasuresincludedtheFive-YearForeignInvestmentLiberalizationPlanfor1993-97,
the1994 Reform PlanfortheImprovement intheForeign Investment Environment andthe1995 Five-Year
Liberalization Plan forForeign Direct Investment.
88ConcerningoutwardFDI,liberalizationappearstohavefocusedonreducingthenumberofrestrictedindustries
andsimplifying approval procedures.
89Foreign-investment enterprises (FIEs) havealsobeenfreesince 1994 (high-technology-related firms since
1993) topursue short-term overseas borrowing ofupto50percentofforeign-invested equity.WT/TPR/S/19
Page 64Trade Policy Review
Annex Table III.2
Liberalization schedule forforeign direct investment, 1995-2000
Agriculture,
fisheries and
miningManufacturing Services Total
Total number ofbusinesses 68 585 495 1,148
1995
Fullrestriction 18 10 79 107
Liberalization 50
(8)575
(15)416
(65)1,041
(88)
Liberalization ratio(%) 73.5 98.3 84.0 90.7
1996
Fullrestriction 14 4 40 58
Liberalization 54
(6)581
(15)455
(41)1,090
(62)
Liberalization ratio(%) 79.4 99.3 91.9 95.0
1997
Fullrestriction 4 3 23 30
Liberalization 64
(0)582
(6)472
(18)1,118
(24)
Liberalization ratio(%) 99.1 99.5 95.4 97.4
1998
Fullrestriction 4 1 16 21
Liberalization 64
(0)584
(7)479
(22)1,127
(29)
Liberalization ratio(%) 94.1 99.8 96.8 98.2
1999
Fullrestriction 4 1 15 20
Liberalization 64
(0)584
(4)480
(20)1,128
(24)
Liberalization ratio(%) 94.1 99.8 97.0 98.3
2000
Fullrestriction 3 1 14 18
Liberalization 65
(0)584
(4)481
(21)1,130
(26)
Liberalization ratio(%) 95.6 99.8 97.2 98.4
Note: Figures inparentheses indicate partially liberalized businesses inaddition tothetotalnumber listed asliberalized. Thisincludes
investments subject toapproval orjointbusiness requirements andbusinesses withforeign equity limitations under other laws.
Source: Government ofKorea.Republic ofKorea WT/TPR/S/19
Page 65
Annex Table III.3
Liberalization ofinvestment measures, 1995-97
Classification Necessary measures Implementation date
Transfer ofapproval authority forforeign
investment, aswellasanyfollow-up
responsibilities, tothespecific ministries
concerned.Amendment ofForeign Capital Inducement Actandits
Enforcement Decree.
Amendment ofRegulations onForeign Investment.September 1995
Approval ofFDIinvolving friendly mergers
andacquisitions.Amendment ofForeign Capital Inducement Act. January 1997
Consolidation ofFDIconcept, i.e.
classification ofFDI-related long-term loans
together withFDI.Amendment ofForeign Capital Inducement Act. January 1997
Abolition ofapproval system forforeign
investment andreplacement withnotification
system for43businesses.Amendment ofForeign Capital Inducement Act.
Amendment ofRegulations onForeign Exchange
Management Control.January 1997
Simplification ofpost- screening procedures
forforeign investment, including notification
requirements related toshare acquisitions or
changes inshare ownership.Amendment ofForeign Capital Inducement Act.
Amendment ofRegulations onForeign Investment.January 1997
Streamlining ofthetaxreduction and
exemption process forFIEs, including
reduction ofprocessing periods.Amendment ofRegulations onForeign Investment. November 1995
Abolition ofunreasonable restrictions on
foreign investors subject totaxreduction and
exemption.Amendment ofRegulations onForeign Investment. November 1995
Rationalization oftaxation procedures and
standards.Amendment ofindicator forforeign andforeign
investment corporation inspection (notification tothe
National Taxation Administration Office).
Management oftheadministration ofrelated ministries.
Amendment oftheKorean Trade Promotion
Corporation Act.December 1995
Promotion ofefficient foreign investment
inducement andpublicity.Annually
Source: Government ofKorea.WT/TPR/S/19
Page 66Trade Policy Review
Annex Table III.4
Listofrestricted businesses after theyear2000
Completely restricted
(18businesses)Growing ofcereal grains
Inshore fishing
Coastal fishing
Manufacture oftobacco products
Collection, purification anddistribution ofwater
Wholesaling ofmeat
Supporting airtransport activities, n.e.c.
Other credit granting, n.e.c.
Stable-fund management companies
Medical careinsuranceWorkman 'saccident compensation insurance and
other social security insurance
Commodity exchanges
Rental ofrealestate, n.e.c.
Land development
Radio broadcasting
Television broadcasting
Horse racing track andsimilar stadium operation
Gambling
Partially liberalized
(26businesses)Farming ofcattle
Manufacture ofbiological products
Publishing ofbooks, brochures, musical books
andother publications
Publishing ofnewspapers
Publishing ofperiodicals
Electric power generation
Coastal water passenger transport
Coastal water freight transport
Seaandcoastal water transport, n.e.c.
Scheduled airtransport
Non-scheduled airtransport
Wire telegraph andtelephone
Wireless telegraph andtelephoneTelecommunications, n.e.c.
Domestic banking
Investment companies andinvestment trust
Securities dealing activities
Other activities auxiliary tofinancial
intermediation, n.e.c.
Rental ofresidential buildings
Rental ofnon-residential buildings
Subdividing residential buildings
Subdividing non-residential building
Credit rating services
Golfcourse operation
Wire broadcasting
News agency activities