. /.WORLD TRADE
ORGANIZATIONWT/WGTI/W/70
30 March 1999
(99-1282)
Working Group on the Relationship
between Trade and InvestmentOriginal:  English
COMMUNICATION FROM KOREA
The following communication, dated 19 March 1999, has been received from the Permanent
Mission of Korea with the request that it be circulated to Members.
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A Benefit of Multilateral Investment Rules:  Enhanced Transparency
I. THE NEED FOR TRANSPARENCY AND INTERNATIONAL INVESTMENT
RULES
1. Providing a high level of transparency is crucial to creating a favorable climate for foreign
investment as it enables foreign investors to make decisions under minimum uncertainty and reduced
risk.  Foreign investors are unlikely to invest in a country where they cannot precisely ascertain the
laws, regulations, administrative practices and procedures that would apply to their investments.  
2. For individual countries, enhancing the transparency of their investment institutions involves
making public all the rules and regulations affecting investment. Not only will a clear list of relevant
regulations make investing a less risky proposition, but also reviewing and compiling a list of its own
investment regulations may provide a country with a better understanding of their scope, effect and
shortfall.
3. Most bilateral investment treaties (BITs) do not explicitly address the issue of transparency.
While there are several BITs which have provisions for transparency, BITs have been, by and large,ineffective in dealing with the transparency issue.
4. Compared to bilateral investment treaties, multilateral investment rules  may provide a unified
set of regulations regarding the transparency of investment régimes. The negotiating process on
multilateral investment rules in itself could lead to  increased transparency in the area of investment
rules of each participating country.
II. KOREA'S EXPERIENCE
5. Negotiations leading to Korea's accession to the OECD in 1996 and its subsequent
participation in the negotiations on the Multilateral Agreement on Investment (MAI) provided Korean
Government officials with invaluable experience and knowledge regarding the transparency of
investment laws and regulations.
6. In the past, Korea's investment régime contained a number of confusing and often
contradictory laws and regulations. However, with valuable inputs and efforts from the OECD, Korea
was able to establish a comprehensive, yet focused list of the rules and regulations affecting
investments in Korea. Had it not been for Korea's accession to the OECD and its experience in theWT/WGTI/W/70
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MAI negotiations, it is likely that the Korean Government would not have taken the initiative to
undertake such a comprehensive review of its investment régime and would have failed to gain a full
grasp of the difficulties foreign investors face when attempting to understand Korea's investment
regulatory framework.
7. Furthermore, preparation for the MAI negotiations necessitated and facilitated inter-agency
coordination among different ministries. Such preparation and coordination made inefficiencies in the
Korean investment régime evident to Korean po licy makers. In turn, the increased inter-agency
cooperation within the government created an environment conducive for policy makers to the
formulation of remedies for such inefficiencies.
III. SUGGESTION: PROVIDING TECHNICAL ASSISTANCE TO DEVELOPING
COUNTRIES
8. Korea's experience suggests that implementing reforms aimed at enhancing transparency for
foreign investors is indeed a daunting task for developing countries. While it is true that many
countries would benefit from providing a clear and comprehensive list of its rules and regulations
governing investment, it remains that providing all the necessary information to foreign investors is
simply beyond the capacity of the governments of many developing countries.
9. A multilateral investment treaty should thus include a provision on technical assistance to aid
countries to set up a comprehensive, yet focused li st of all regulations and rules governing foreign
investment. Moreover, transparency provisions as a core component of a multilateral investment
treaty would serve as a valuable reference to countries desiring to enhance the overall level of
transparency of their investment régime.
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