WT/TPR/S/268/Rev.1 Trade Policy Review 
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  II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
(1) INTRODUCTION  
1. During the period under review (2008-12), no major changes have been made to the structure 
of trade policy formulation in Korea.  The regul atory reform framework was strengthened to help 
stimulate economic growth, and action was taken to, inter alia,  revise, suspend or mitigate the 
implementation of some burdensome regulations. 
2. While remaining committed to multilateralism a nd a successful outcome of the Doha Round 
negotiations, Korea has intensively pursued comprehensive free-trade agreements (FTAs) with major trading partners or regional groups (ASEAN, India, the EU, Peru, the United States) and continues or 
is planning negotiations with several others, to establish an FTA network w ith large economic blocs 
and newly emerging markets.  Nevertheless, agricu lture remains only partly covered, and sensitive 
agricultural items (e.g. rice) are excluded from the FT A-driven liberalization;  adjustment measures to 
compensate domestic producers and companies that seem seriously injured by FTA-created import competition were strengthened while investigatio ns are under way to ensure that FTA-driven 
liberalization benefits final consumers rather  than firms.  Korea, a major donor for WTO 
Trade-Related Technical Assistance and aid for trade,  has continued to provide duty-free treatment to 
most imports from least developed countries (LDCs).  To protect its trade interests, it has been 
involved in dispute settlement cases at the WTO.  
3. While inflows of foreign direct investment (FD I) remain considerably lower in Korea than in 
most other OECD countries
1, the authorities recognize that FDI is of vital importance to economic 
growth and structural adjustment.  Accordingly,  several tax and other incentives are reserved for 
foreign-invested companies.  Moreover, action ha s been taken to improve the business environment 
for foreign-invested companies although limits we re introduced on cumulative tax incentives that may 
be claimed, as in the case of domestic investment.  FDI in a few sectors remains partially or fully restricted (television and radio broadcasting, nuclear power generation). 
(2) G
ENERAL CONSTITUTIONAL AND INSTITUTIONAL FRAMEWORK  
4. Since its previous Review, Korea's constitutio nal, executive, legislative, judicial, and 
administrative framework has changed little.  
5. A democratic unitary republic, Korea has a presidential parliamentary system.  The 
300-member (as of 2012) National Assembly (Parlia ment) exercises legislative power by enacting 
laws and monitoring state administration, including control of the Budget.  Executive authority rests 
with the President and the State Council (Cabinet), which is chaired by the President and comprises 
the Prime Minister and all ministers.2  The current President was elected in December 2007 and took 
office in February 2008; the next presidential election is due in December 2012.  The last 
parliamentary elections were held on 11 April 2012 and are due again in four years, April 2016.  
6. Legislation is mainly introduced into the Na tional Assembly by th e executive, through 
relevant ministers.3  Korea's legislative framework distingui shes between these acts and subordinate 
                                                      
1 OECD FDI statistics online.  Viewed at:  h ttp://www.oecd.org/document/8/0,3746,en_2649_33763_ 
40930184_1_1_1_1,00.html [13 February 2012]. 
2 The President appoints the Prime Minister (subject to approval by the National Assembly), and 
ministers on the recommendation of the Prime Minister regardless of whether they belong to his party.   
3 Members of the National Assembly may also introduce bills (Article 52 of the Constitution). Republic of Korea WT/TPR/S/268/Rev.1 
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  statutes issued under authority delegated by specific le gislation.  In hierarchical order, these consist of 
presidential decrees, ordinances, and administrativ e rules (called directives, regulations or public 
notices).  The State Council endorses presidential decre es.  Ordinances are issued by the responsible 
minister, including the Prime Minister.  Administrative rules, published by the relevant ministry, 
govern public administration.  When issued under sp ecific legislation or subordinate statutes, these 
rules are generally regarded as supplementary laws.  The President must promulgate bills passed by 
the National Assembly within 15 days by publication in the Official Gazette , unless vetoed by 
him/her.4  Subordinate statutes are also gazetted.  Laws and subordinate statutes generally enter into 
force 20 days after publication. 
7. Treaties concluded and promulgated under the C onstitution, and generally recognized rules of 
international law have the same effect as domestic laws.  Proposed treaties must be deliberated on by 
the State Council.  The National Assembly has the ri ght to consent to the conclusion and ratification 
of treaties, including on trade, and the President must ratify them.   
8. Korea has an independent judiciary.  Judicial power is vested in the Supreme Court, the 
highest court, 5 high courts, and 20 district courts, which oversee 43 branch courts and 101 municipal 
courts.  The President appoints the Chief Justice of the Supreme Court with the consent of the 
National Assembly for a single term of six years, as well as other justices (on the recommendation of 
the Chief Justice).  A specialized Patent Court and Administrative Court also exist (Chapter III(4)(v));  
a Constitutional Court is responsible for consti tutional matters, especi ally jurisdiction over 
judgements on the constitutionality of laws, impeach ment, dissolution of political parties, competence 
disputes, and constitutional complaints.   
9. Korea has 17 provincial governments and 227 lo wer-level municipalities;  although they are 
empowered to collect local taxes and fees, lo cal autonomy remains limited in certain areas.5  
Provincial governments (headed by an elected governor) serve mainly as administrative intermediaries between the Cent ral Government and lower-level municipalities.  The State has 
constitutional power to "foster, regul ate and coordinate" foreign trade.   
(3) S
TRUCTURE OF TRADE POLICY FORMULATION  
(i) Executive branches of government 
10. There was an overall restructuring of government ministries and agencies in early 2008.  At 
present there are 15 executive ministries.  Two fu rther ministries (Government Legislation, and 
Patriots and Veterans Affairs) are under the Prime Minister's responsibility.  Trade policy formulation 
and implementation involves several ministries:  th e Ministry of Foreign Affairs and Trade (MOFAT) 
has primary responsibility for international trade negotiations, including FTAs, and formulation and 
implementation of trade policies6;  other ministries are involved according to their spheres of 
responsibility, and provide expertise in their resp ective fields.  The Ministry of Knowledge Economy 
(MKE) incorporates several elements that were pr eviously the responsibility of other ministries 
                                                      
4 If vetoed, the bill is returned to the National As sembly and re-considered.  If passed again by the 
National Assembly (two-thirds majority of at least half of the members) the bill becomes law within 20 days.   
5 The Special Act on Decentralization Promotion, fully  amended in February 2008, provides for greater 
transfer of authority and financial resources from the Central Government to local governments.   
6 MOFAT has two Ministers;  the Minister of Foreign Affairs and Trade and the Minister for Trade.  
While in principle the Minister of Foreign Affairs and Tr ade is responsible for trade matters, in practice, such 
authority is effectively delegated to the Minister for Trade.  MOFAT's work has been focused on FTA issues.   WT/TPR/S/268/Rev.1 Trade Policy Review 
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  (i.e. Information and Communications, Science and Technology, Finance and Economy) to provide a 
vast array of expertise in creating synergies,  spurring innovation, and upgrading the economy.7   
11. The National Economic Advisory Council (NEAC), advises the President (its chairman) on 
development policies, including domestic and in ternational economic issues affecting national 
welfare;  its Sub-committee on Trade and Industry, which also involves private sector representatives 
(including two foreign representatives) and academ ics, advises on such policies and may launch 
related research projects.  
(ii) Advisory, planning, and other bodies 
12. While no independent statutory body public ly assesses trade or assistance policies from a 
national welfare perspective, trade-related policy fo rmulation is open, fostering greater public debate 
and broader community input.  Many ministries,  including MOFAT and MKE, solicit public views on 
trade-related policies, including over the Internet.  The Government interacts with the private sector, 
especially through consultations with the bus iness community.  MOFAT's Trade Negotiation 
Advisory Council, a branch of the Policy Advi sory Council, consults on general trade policy 
directions and strategies twice a year and whenever necessary.  It also organizes regular "enlarged 
meetings to promote trade and investment" to consu lt with the private sector, including foreign firms, 
on trade and investment policy.  Foreign firms ar e also represented on the Advisory Council for 
Foreign Investment under Invest Korea (sectio n (7)), which advises government on foreign 
investment policy.   
13. Several public research institutes publish wi dely on trade-related matters, including on 
multilateral and bilateral policy issues, such as  assessing the impact of bilateral free-trade 
arrangements on Korea.  They include the government-funded think-tank Korea Institute for International Economic Policy (KIEP), the Korean  Institute for Industrial Economics and Trade 
(KIET), the Korea Development Institute (KDI), the Korea Economic Research Institute, and the 
Korea Rural Economic Institute (KREI).  The Instit ute for International Trade, run by the Korea 
International Trade Association, works closely with the public sector to develop private sector 
strategies and to promote public debate on Korea's trade policies.   
(4) T
RADE POLICY OBJECTIVES  
14. Korea's general trade policy objective is to build a free and open economy based on market 
principles.  Since its previous Trade Policy Review, Korea's principal trade policy objective has remained virtually unchanged;  this has been to promote international competitiveness of its 
businesses and economic growth through openness and reforms.  To meet the challenges of 
globalization and unlimited competition, Korea is pur suing economic and trade diplomacy to build an 
advanced trading country by focusing on the creati on of new growth potential, improved access to key 
markets (through participation in multilateral nego tiations and negotiation of  more FTAs) and close 
economic cooperation with its trading partners.  To help meet the Gove rnment's growth target, a core 
policy objective of the MKE, has been to incr ease the trade volume to US$1 trillion, making Korea 
one of the world's top eight traders;  a new goal of US$2 trillion by 2020 is now in place.
8  Korea's 
trade volume exceeded US$1 trillion for the first time in December 2011.9  
                                                      
7 MKE online information.  Viewed at:  http://w ww.mke.go.kr/language/eng/about/history.jsp and 
http://www.mke.go.kr/languag e/eng/about/responsibilities. jsp [6 December 2011]. 
8 MKE online information.  Viewed at:  http://mke.go.kr/policy/core/core0105.jsp [6 December 2011]. 
9 Yonhap  online article "S. Korea's trade tops USD 1 tln mark", 5 December 2011.  Viewed at:  
http://english.yonhapnews.co.kr/business/2011/12/05/0502000000AEN20111205004300320.HTML. Republic of Korea WT/TPR/S/268/Rev.1 
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  15. During the period under review, trade policy obj ectives have reflected those pursued at 
sectoral level.  For example, despite a move towa rds more market-oriented protection in agriculture, 
disproportionately high levels of border protection have been maintained for a number of sensitive 
items, mainly in the form of tariffs (Chapter IV (2)(ii)).  Concessional entry and autonomous tariff 
quotas for inputs have been used to reduce production costs in certain industri es (Chapter III(2)(iii)), 
and compensation or adjustment support was pr ovided to farmers and manufacturers adversely 
affected by bilateral FTAs (section (6)(iii), Chapte rs III(4)(ii)(b) and IV(2)(ii)).  Domestic support 
with potential trade implications is made available vi a the revival of the "picking winners" strategy in 
the context of a green growth and new growth engi ne industries strategy (section (5), Chapters I, 
IV(4) and IV(5).   
(5) TRADE LAWS AND REGULATIONS  
16. Korea has continued to improve its regulatory framework (section (2)).10  Regulatory reform 
was aimed at stimulating the economy, job crea tion measures tailored for people from different 
income brackets, and a win-win policy for small and medium-sized enterprises and conglomerates 
(chaebols ) (Chapters I and III(4)).11  Action was taken to overhaul ol d regulations and to implement 
institutional and system improvements to enhance regulatory quality and performance in several 
trade-related areas.12  In 2009, a temporary waiver, the Temporary Regulatory Relief (TRR), was 
introduced on the implementation of burdensome regulations to help overcome the global economic 
crisis;  the TRR suspends or mitigates the impl ementation of some burde nsome regulations for a 
certain period (1-2 years).13  At the same time a Regulatory Reform for New Growth Engine 
Industries was launched to clear regulatory barriers to the development of future growth industries 
such as new and renewable energy, and green technolo gy.  As of 2009, the scope of the sunset clause 
legislation14 governing the termination of a regulation w as expanded to cover all existing regulations.  
In 2009, a Regulatory Information System was introd uced to manage the development of regulations 
(from introduction to termination);  the system enab les the authorities to ex amine existing regulations 
more accurately, and enhanced effici ency of regulatory reform processes.15  In 2009, the Regulatory 
Reform Committee (RRC) under the Prime Minister 's Office registered 5,487 provisions as 
                                                      
10 Regulations are sometimes referred to as "hidden taxes", indicating their huge impact on corporate 
investment, while hardly watched and monitored by th e people and the National Assembly compared to tax 
(PCNC, 2009). 
11 OECD (2011e). 
12 These areas comprise:  land utilization and startin g a business;  environment and labour;  tax and 
financial systems;  customs matters (tariff, entry and depa rture, and logistics);  the services sector;  competition 
and copyright protection;  foreign direct investment incentives and free economic zones;  and the living 
environment (PCNC, 2009).   
13 The TRR focuses on increasing investment in the creation of new business, reducing business 
burden, and reducing hardships for SMEs and citizens.  As a result of the TRR, existing factories and plants in a 
so-called "preservation zone" were allowed to construct additional facilities up to 40% (currently 20%) of their 
business building coverage without requiring a separate building permit.  Various forms of administrative investigations, such as factory inspections, were to be performed far less often.  In addition, the rental rate 
applied to leasing governmental properties for small business was to be reduced from 5% to 3% (APEC, 2010;  
and Regulatory Reform Committee online information.  Viewed at:  http://www.rrc.go. kr [6 December 2011]). 
14 The 1997 sunset mechanism (or sunset for termination) made a newly established or enforced 
regulations invalid after a certain period.  Under the new system, by 2009 about 20% of the existing regulations 
were to be reviewed on a regular basis (about every 3 to 5 years) and become invalid once found to lack feasibility (Regulatory Reform Committee online info rmation.  Viewed at:  http://www.rrc.go.kr. 
[6 December 2011]). 
15 APEC (2010). WT/TPR/S/268/Rev.1 Trade Policy Review 
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  regulations (out of 12,486) requiring transparency improvements.16  Under the Easy-to-Understand 
Statute Project of the Ministry of Government Le gislation (MOLEG, see below), which modifies long 
and complex sentences in the Statutes to simple and clear sentences, between 2006 and 2011, 776 laws were refined, and a (2006-13) project is under way to improve and revise sub-laws.
17  Under 
the same Ministry's Customized Legal Information Service Project, which, inter alia,  provides clear 
interpretations of complicated la ws and regulations, action was ta ken on 200 consum er-related areas 
from 2008 to 2011.  No details were available from the authorities on the cost of regulatory barriers to 
the economy and trade.  
17. Because treaties constitutionally have the same effect as domestic laws, Korea's multilateral 
commitments became enforceable domestically when the Government promulgated the WTO 
Agreement in December 1994.18  WTO provisions may, in principle, be invoked in domestic courts.  
There has been no such case during the period und er review, although there are still conflicting 
debates on whether the WTO rules have direct effect on domestic matters.19  
18. Korea attaches high priority to making laws transparent and readily accessible, including by 
foreigners.  Many Korean laws are available in English, and are obtainable on the Internet from 
websites maintained by relevant ministries and ag encies.  The MOLEG makes laws and regulations 
available on its Internet homepage in Eng lish (http://www.moleg.go.kr/English/) and Chinese.20  I t  
also publishes a monthly periodical, Legislation,  which contains the list of all laws and regulations 
enacted or amended during the month, as well as any ot her important news relating to legislation.  An 
agency's legislative plan, proposed laws and regulat ions are also disclosed on MOLEG's website;  
while all the regulations under current law are op en to the public through the website of the 
Regulatory Reform Committee, ordinary citizens may post their opinions.  However, accessibility of 
legislation and "sub-legal" requirements in E nglish remains a significant issue for foreign 
stakeholders;  while MOLEG has provided English tr anslations of many Korean laws online, many 
"sub-legal" regulations remain av ailable only in Korean.  MOLEG is working to increase the number 
of "sub-legal" regulations availa ble in English.  The MKE publishes regulations (mainly certification 
requirements) affecting foreign trade in the Consolidated Public Notice on Guidelines of Exports and 
Imports , which is revised whenever required (last revision in 29 December 201121).   
19. In the period under review, Korea has made ma ny notifications to the WTO (Table II.1).  
Nevertheless, notifications in certain areas (state tr ading, special safeguard (SSG), agricultural export 
subsidies, government procurement)  have been subject to long submi ssion gaps and the preparation of 
this TPR appears to have had the effect of a remi nder (Chapter III).  Korea submits tariff and trade 
                                                      
16 Regulatory Reform Committee online information.  Viewed at:  http://www.rrc.go.kr 
[6 December 2011]. 
17 MOLEG online information.  Viewed at:  http ://www.moleg.go.kr/english/majorPromotionPolicies 
[3 February 2012]. 
18 The Special Act on the Implementation of the Agr eement Establishing the World Trade Organization 
of 1 January 1995, gazette d on 31 December 1994, was last revi sed on 14 December 2007 to simplify its 
original text.  
19 It seems that there has been only one such case, where an ordinance on school lunches requiring the 
use of local agricultural products for school meals was found to be in violation of WTO law and rendered 
ineffective by the Supreme Court in 2005 (No-Hyung Park, 2006). 
20 MOLEG is responsible for legislative affairs and reviews all draft acts and subordinate statutes to 
ensure their necessity, constitutionality, and legal relevance, consistency, and clarity. 
21 MKE online information.  Viewed at:  http:// mke.go.kr/law/order/gosiView.jsp?pCtx=1&seq=59433 
[6 December 2011]. Republic of Korea WT/TPR/S/268/Rev.1 
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  data annually to the WTO Integrated Data Base;  th e latest tariff and trade data submitted were for 
2012 and 2010, respectively.22  
Table II.1 
Latest WTO notifications, end-May 2012 
Agreement Requirement/content Periodicity WTO document and date  
(latest document if recurrent) 
Agreement on Agriculture 
Articles 10 and 
18.2 Tables ES.1 and ES.3 – Export subs idies Annual G/AG/N/KOR/42, 04/10/2010 
Article 18.2 Table MA.1 – Administration of tariff 
quotas Annual G/AG/N/KOR/21/Corr.1, 02/03/2009 
Article 18.2 Table MA.2 – Imports under tariff 
quotas Annual G/AG/N/KOR/41, 31/08/2010 
Articles 5.7 and 
18.2 Tables MA.3 and MA.5 – Special 
safeguards Ad hoc G/AG/N/KOR/46, 30/03/2012 
G/AG/N/KOR/45, 31/01/2012 
Article 18.2 Table DS.1  – Domestic Support Annual G/AG/N/KOR/43/Corr.1, 25/01/2012 
Article 18.3 Table DS.2 – New or modified domestic 
support measures exempt from reduction  G/AG/N/KOR/44, 16/09/2011 
Agreement on Implementation of Article VI of the GATT 1994 (Anti-dumping) 
Article 5.8 Time-period for determination of 
negligible import volumes Ad hoc G/ADP/N/100/KOR, 13/02/2003 
Article 16.4 Reports concerning anti-dumpi ng actions Ad hoc G/ADP/N/228, 08/05/2012 
 Semi-annual reports of anti-dumping 
actions (taken within the preceding 
six months) Semi-annual G/ADP/N/223/KOR, 22/03/2012 
Article 18.5 Laws and regulations Once by 03/1995, then 
changes G/ADP/N/1/KOR/6, 23/03/2011 
Articles 16.5 Competent authority to initiate anti-
dumping investigations Once, then changes G/ADP/N/14/Add.32, 14/10/2011 
Agreement on Implementation of Articl e VII of the GATT 1994 (Customs valuation) 
Article 22.2 Changes in laws, regulations and 
administration Ad hoc G/VAL/N/1/KOR/2, 27/04/2001 
GATT 1994 Article XVII:4(a) (State trading) 
Article XVII:4(a) 
of the GATT 1994 
and Paragraph 1 of 
the Understanding on the 
Interpretation of 
Article XVII Updates or new and full notifica tions  G/STR/N/3/KOR, 16/12/2010 
G/STR/N/5/KOR, G/STR/N/6/KOR, 
G/STR/N/8/KOR, G/STR/N/9/KOR, 
16/12/2010 G/STR/N/11/KOR, G/STR/N/12/KOR, 
G/STR/N/13/KOR, 02/07/2010 
G/STR/N/7/KOR, G/STR/N/10/KOR, 27/08/2009 
Agreement Implementation of Article XX IV:7(a) of the GATT 1994 (Free-trade areas)  
Article XXIV of the 
GATT 1994 and 
Article V:7(a) of 
the GATS Free-trade area for trade in goods and 
trade in services Ad hoc WT/REG311/N/1 – S/C/N/621, 16/03/2012 
WT/REG217/N/1/Add.6, 16/01/2012 
WT/REG298/N/1 – S/C/N/598, 10/08/2011
WT/REG296/N/1 – S/C/N/594, 08/07/2011S/C/N/560/Add.1, 03/05/2011 
S/C/N/559/Add.1, 03/05/2011 
WT/REG287/N/1 – S/C/N/559, 08/07/2010WT/REG286/N/1 – S/C/N/558, 01/07/2010 
General Agreement on Tariffs and Trade (GATT) 1994  
Article XXVIII:5 Reservation of  right to modify schedule 
of concessions for a three year period Triennial G/MA/269, 01/12/2011 
Table II.1 (cont'd) 
                                                      
22 WTO document G/MA/IDB/2/Rev.35, 20 April 2012. WT/TPR/S/268/Rev.1 Trade Policy Review 
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  Agreement Requirement/content Periodicity WTO document and date  
(latest document if recurrent) 
General Agreement on Trade in Services 
Article III:4 and 
IV:2 Contact and enquiry points Within two years from 
entry into force of 
WTO, then changes S/ENQ/78/Rev.9, 01/12/2006 
Article XXI:1(b) Claim of interest in members' proposed 
modification of schedules Ad hoc S/L/226, 27/05/2005 
Agreement on Import Licensing Procedures  
Article 7.3 Replies to questionnaire on import 
licensing procedures Annual for 
questionnaire G/LIC/N/3/KOR/10, 27/09/2011 
Agreement on Government Procurement 
Article XIX:5 Government procurement statistics  GPA/108/Add.3, 02/12/2011 
Article XXIV:6(a) Modifications to Appendi ces I to IV Ad hoc GPA/W/284, 13/11/2003 
Annex 3 Threshold values in nationa l currencies  GPA/W/309, 28/02/2011 
Agreement on Import Licensing Procedures 
Articles 5.1, 5.2, 
5.3 Notification of an automatic import 
licensing programme for certain steel 
products Ad hoc G/LIC/N/2/KOR/ 1/Rev.1, 27/07/2009 
Article 7.3 Replies to questionnaire on important 
licensing procedures  G/LIC/N/3/KOR/10, 27/09/2011 
Agreement on Rules of Origin 
Articles 5.1 and 5.2 Judicial decisions and administrative 
rulings and modifications of rules of origin Ad hoc G/RO/N/63, 18/09/2009 
Agreement on Safeguards  
Article 12.1(a) – 
(c), and Article 9.1, 
footnote 2 Investigations, findings, and decisions 
related to safeguard measures Ad hoc G/SG/N/11/KOR/2/Suppl.1, 07/08/2000 
Article 12.5  Consultations  Ad  hoc G/SG/N/12/KOR/1, 16/05/2002 
Article 12.5 and 
Article 7.4 Mid-term review of safeguard measur es Ad hoc G/SG/N/13/KOR/2, 23/07/2001 
Article 12.6 Laws and regulations Once by /03/ 1995, 
then changes G/SG/N/1/KOR/5, 26/10/2001  
Agreement on the Application of Sanitary and Phytosanitary Measures  
Article 7 and 
Annex B Laws, regulations and emergency 
measures 
Enquiry points Ad hoc 
 
Ad hoc G/SPS/N/KOR/414, 16/05/2012 
G/SPS/ENQ/26, 11/03/2011 
Agreement on Subsidies a nd Countervailing Measures  
Article 25.1 to 25.6 Annual report on subs idies Annual G/SCM/N/220/KOR, 23/09/2011  
Article 25.11 Semi-annual report on countervailing 
duty actions Semi-annual G/SCM/N/235/Add.1, 24/04/2012 
Article 25.12 Competent authority to initiate 
countervailing investigations Ad hoc G/SCM/N/18/Add.32, 14/10/2011 
Article 32.6 Laws and regulations Once by 03/1995, then 
changes G/SCM/N/1/KOR/4, 25/04/2001 
Agreement on Technical Barriers to Trade  
Articles 10.1 and 
10.3 Enquiry points  Once, then changes G/TBT/ENQ/38/Rev.1, 08/07/2011  
Article 10.6 Proposed and adopted technical 
regulations Ad hoc G/TBT/N/KOR/368, 30/05/2012 
Annex 3C Acceptance of code of good pr actice Ad hoc G/TBT/CS/N/139, 30/01/2002 
Agreement on Text iles and Clothing 
Articles 2.8(b) and 
2.11 Products to be integrated in third stage At least 12 months 
before entry into effect G/TMB/N/390, 01/03/2001 
Table II.1 (cont'd) Republic of Korea WT/TPR/S/268/Rev.1 
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  Agreement Requirement/content Periodicity WTO document and date  
(latest document if recurrent) 
Agreement on Trade-Related Aspect s of Intellectual Property Rights  
Article 63.2 Laws and regulations  Once, then changes IP/N/1/KOR/2, 01/03/2011;  
IP/N/1/KOR/C/3, IP/N/1/KOR/D/3, 
IP/N/1/KOR/G/1, IP/N/1/KOR/T/3, 
IP/N/1/KOR/G/2, IP/N/1/KOR/L/2, 
IP/N/1/KOR/U/3, 10/10/2011 IP/N/1/KOR/P/4, 03/03/2011 
Article 69 Contact points Once, then changes IP/N/7/Rev.3, 17/02/2010 
Agreement on Trade-Rela ted Investment Measures  
Article 6.2 Publications Once, then changes G/TRIMS/N/2/Rev.13, 21/02/2005 
Source:  WTO Secretariat. 
20. With a view to fighting corruption23, Korea is a signatory to the 1997 OECD Convention on 
Combating Bribery of Foreign Public Officials in International Business Transactions, whose 
39 parties (as of April 2012) are required to make foreign bribery a crime.24  It is also a signatory to 
the 2005 UN Convention against Corruption, th e first global comprehensive international 
anti-corruption agreement, whose 161 parties are requir ed to establish criminal and other offences to 
cover a wide range of acts of corruption;  Kor ea ratified the convention on 27 March 2008.  The 
legislation (Criminal Act, Act on the Aggravated Punishment, etc. of Specific Crimes, Act on the 
Regulation and Punishment of Concealment of Ga ins from Crimes) provides criminal penalties for 
official corruption, and the government generally impl emented these laws effectively;  public servants 
above a certain rank must register their assets, in cluding how they were accumulated, thereby making 
their holdings public.  The penalties for bribery of public officials may attain life imprisonment (for bribery of not less than ₩ 100 million), and fines ranging from 2 times to 5 times the amount of the 
accepted bribery.  Penalties for a Korean national who offers a bribe to a foreign government official 
consist of up to five years imprisonment w ith prison labour or by a fine not exceeding ₩ 20 million 
(or the equivalent to double the pecuniary advant age).  In the case of "foreign bribery", a maximum 
fine of ₩ 1 billion is imposed on corporations.  The ga ins from crimes are seized.   According to the 
Korea Anti-Corruption and Civil Rights Commission (ACRC) the overall "integrity level" of public 
sector organizations for 2011 was 8.43 points out of 10, a slight increase from 2008 (8.2) but a decline 
compared to 8.51 in 2009.
25  According to the Ministry of Justice, 4,067 government officials were 
prosecuted for abuse of authority, bribery, embezz lement or misappropriation, and falsification of 
                                                      
23 Korea ranked 43rd out of 183 countries in 2011 on Transparency International's Corruption 
Perceptions Index (CPI), which measures the perceived level of public sector corruption.  Korea ranks 22nd 
(24th in 2007/08) among 48 economies based on the 2009 Opacity Index, which measures the degree to which 
they lack clear, accurate, easily dis cernible, and widely accepted practic es governing the relationships among 
governments, businesses, and investors.  The Opacity Index consists of five components that may be thought of as "negative social capital":  corru ption, legal system inadequacies, economic and enforcement policies, 
accounting standards and corporate gove rnance, and regulation.  Korea's sc ore in corruption was particularly 
high (i.e. worse) compared with those obtained in the other four components/areas (Milken Institute, 2009).  
According to the Transparency International Global Corruption Barometer 2010, only 2% of Koreans asked said 
they had paid bribe to at least one of nine different service providers (in customs, education, the judiciary, land 
related services, medical services, the police, registry & permit services, tax authorities, and utilities) in the past 12 months.  Of the 21 economies surveyed in the Asia Pacific, Korea enjoyed the lowest percentage along with 
Australia (Transparency International, 2011).  Korea's ranking was 43
rd out of 179 in 2007. 
24 Online information viewed at:  http://www.oecd.org/dataoecd/59/13/40272933.pdf and 
http://www.unodc.org/unodc/en/treaties/CAC/signatories.html. 
25 The 2011 ACRC integrity assessment covers 670 public organizations, 2,600 areas of public service 
prone to corruption, and replies of about 201,986 respondents public service users, public officials, experts, etc. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 26 
  
  official documents.26  The National Assembly reported that  out of the 250 law-makers facing 
indictment, 15 were prosecuted for corruption and 12  were awaiting trial.  The ACRC seeks to enact a 
bill on the prevention of illegal solicitations  and conflicts of interest in 2012.  
(6) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) Korea and the WTO 
21. Korea participates actively in the WTO and is co mmitted to the multilateral trading system.  It 
supports a strong rules-based system that secur es market access to promote global economic growth 
and development.  Korea accords at least MFN tr eatment to trading partners, including 22 non-WTO 
members, 4 of these under bilateral agreements.27  Korea regards trade with North Korea as 
intra-Korean commerce in accord ance with the 1992 Agreement on Reconciliation, Non-aggression 
and Exchange and Cooperation.  Such trade is ther efore exempt from tariffs.  Trade with North Korea 
requires approval from the Minister of Unification of the kind of products traded, the type of transaction, and the settlement method, but as from 24 May 2010 it has been prohibited except for goods manufactured in the Gaesung Industria l Complex (located in North Korea) 
(Chapter III(2)(vi)(c));  the Gaesung products qualif y for preferential treatment under Korea-EFTA 
FTA but not under the Korea-United States FTA (sections (iii)(d) and (iii)(e)).
28  
22. Korea is an export-dependent country and one of  the biggest beneficiaries of the multilateral 
trading system.  It attaches high priority to the successful conclusion of the Doha Development Agenda (DDA) and views the impasse of the DDA as a crisis of confidence to overcome.
29  It has 
participated actively in the negotiations and has de veloped detailed positions in  all negotiating areas.  
Korea is keen to ensure that  the DDA achieves a balanced outcome between developed and 
developing Member interests.  The value added cr eated by trade liberalization should be divided 
equitably at the national and intern ational levels.  Korea believes in the benefits of multilateralism and 
has developed through trade;  it considers that th e 241.5-fold (2010), and 820-fold (2011) rise in its 
GDP and foreign trade respectively since 196 7 is partly due to its accession to the GATT.30  
                                                      
26 Online information viewed at:  http://www.globa lsecurity.org/military/world/rok/corruption.htm. 
27 The non-WTO members are:  Afghanistan, Bhutan, Lao PDR, Iran, Iraq, Lebanon, Syrian Arab 
Republic, Yemen, Nauru, Vanuatu, Union of the Comoros, Liberia, Ethiopia, Somalia, Andorra, Monaco, 
San Marino, and the Vatican City;  the 4 bilaterals are with:  Sudan, Kazakhstan, Uzbekistan, and Belarus.   
28 The Agreement on intra-Korean Transaction based on Clearing Settlement System (22 April 2004) 
has not been implemented, reportedly due to a disagreemen t over the target items and lack of will on the part of 
North Korea.  Although a relevant agreement was signed between South and North Korean banks, its 
implementation was delayed.  Between 2009 and 2010, "commercial" trade increas ed from US$1.6 billion 
(97.8% of total intra-Korean trade)  to US$1.9 billion (98.4%), while "non-commercial" trade (i.e. government 
and non-government assistance,  social and cultural cooperation, and li ght water reactor project) dropped from 
US$36.96 million to US$23 million.  Between 2010 and 2011, "commercial" trade fell from US$1.9 billion (98.4% of total intra-Korean trade) to US$1.7 billion (99.3%), and "non-commercial" trade from US$23 million 
to US$11.53 million.  In 2011, textiles, electrical and electronic goods, agricultural, forestry and fishery 
products, and machinery accounted for most of intra-Korean trade.  It is thought that South Korean businesses maintain indirect transactions through Chinese intermediaries to avoid various business risks (Ministry of 
Unification, 2010 and 2011;  and online data.  Viewed at:  http://eng.unikorea.go.kr/CmsWeb/viewPage.req? 
idx=PG0000000541 [3 February 2012]). 
29 WTO document WT/MIN(11)/ST/21, 16 December 2011. 
30 WTO documents WT/MIN(09)/ST/14, 1 December 2009, and WT/MIN(11)/ST/21, 
16 December 2011. Republic of Korea WT/TPR/S/268/Rev.1 
 Page 27 
 
 
  23. Korea remains a major donor for WTO Trad e-Related Technical Assistance (TRTA) 
activities.  In December 2011, Korea donated US$350,000 (about SwF 321,000) to the Doha Development Agenda Global Trust Fund (DDAGTF);  this brought Korea's total contribution to WTO 
trust funds to SwF 3.3 million;  it is to finance technical assistance programmes and training activities 
for developing and least developed countries as well as economies in transition.  Korea considers that 
the role of aid for trade has become more cr itical in fostering in the development process.
31  Following 
a 67% increase in its funds for aid for trade, Ko rea was among the top ten donors (US$935 million) in 
2009.32  Korea divided its support between Africa and Asia;  in Sub-Saharan African LDCs, Korea's 
aid for trade is targeted toward building the foundation for production and strengthening trade 
capacity.  In 2010, when Korea became a member of the OECD Development Assistance Committee 
(DAC), its Official Development Aid (ODA) amount ed to US$1.17 billion, representing 0.12% of its 
Gross National Income (GNI), and it is committed to triple this amount to US$3 billion or 0.25% of its GNI by 2015.  In 2010, ODA consisted of bila teral (76.7%) and multilatera l (23.3%) aid delivered 
in the form of grants and loans.
33  Korea hosted the Fourth High Level Forum on Aid Effectiveness, 
held from 29 November to 1 December 2011.   
24. Korea has continued to protect its trade inte rests and prevent allegedly unreasonable import 
restrictions of other countries through effec tive use of the multilateral dispute settlement 
mechanism.34  Between its last Review in 2008, and end-April 2012 Korea was directly involved in 
four disputes, three as a complainant35 and one as a respondent.36  It also participated as a third party 
in 19 cases.37  
                                                      
31 WTO document WT/MIN(11)/ST/21, 16 December 2011. 
32 The World Bank, Korea and the United Kingdom pr ovided almost 60% of total aid for trade in 
communications in 2009 (OECD/WTO, 2011). 
33 Bilateral aid was delivered in the form of grants (64%) and loans (36%) (MOFAT online 
information.  Viewed at:  http://www.mofat.go.kr/ENG/policy/oda/index.jsp?menu=m_20_110 
[3 February 2012];  and OECD DAC online informati on.  Viewed at:  http://stats.oecd.org/Index.aspx? 
DatasetCode=TABLE1 [13 February 2012]). 
34 MOFAT online information.  Viewed at: h ttp://www.mofat.go.kr/ENG/policy/wto/overview/ 
index.jsp?menu=m_20_90_10 [3 February 2012]. 
35 These disputes involved:  (i) the establishment of a compliance panel concerning the dispute over 
countervailing duties imposed by Japan on certain Dynamic Random Access Memories (DRAMs) from Korea;  
(ii) the use by the United States of zeroing in three anti-dumping cases involving certain products from Korea, 
namely, stainless steel plate in coils, stainless steel sheet and strip in coil s, and diamond saw blades and parts 
thereof;  and (iii) a number of anti- dumping measures imposed by the United States on corrosion-resistant 
carbon steel flat products from Korea.   In the first case, the compliance panel suspended its work at the request 
of Korea, while in the third case, Korea withdrew its request for the es tablishment of a panel (WTO online 
information.  Viewed at:  http://www.wto.org/e nglish/tratop_e/dispu_e/cases_e/ds402_e.htm, and 
http://www.wto.org/english/tratop_e/dispu_e /cases_e/ds420_e.htm [27 April 2012]). 
 36 On 9 April 2009, Canada requested consultations with Korea concerning measures affecting the 
importation of bovine meat and meat products from Canada and a panel was established on 31 August 2009;  on 
4 July 2011, upon Canada's request, the panel decided to suspend its work and Canada circulated to the DSB a copy of a communication it had sent to  Korea on 25 June 2011, in relation to  the suspension of the proceedings.  
On 20 June 2012, Canada and the Republic of Korea subm itted a notification of a mutually agreed solution in 
their dispute (WTO online information.  Viewed at:  http://www.wto.org/english/tratop_e/dispu_e/ 
cases_e/ds391_e.htm [6 February 2012]). 
37 WTO online information.  Viewed at:  http://www.wto.org/english/thewto_e/countries_e/ 
korea_republic_e.htm [27 April 2012]. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 28 
  
  (ii) Regional agreements 
(a) Asia-Pacific Economic  Cooperation (APEC)  
25. Korea has been an APEC member since 1989;  it has intended to meet A PEC's target of free 
and open trade, including in services and investment by 2020 as envisaged for developing economies 
(2010 for developed economies) at the Bogor Goals.   APEC member economies agreed to simplify 
the review process of Individual Action Plan (IAPs) for Bogor Goals, by adopting the Bogor Goals Progress Report Guidelines in 2011.  In addition, to better inform the business community and other 
stakeholders of this work, members agreed to  continue to develop a "dashboard" of easy-to-
understand figures to summarize advances in areas critical to promoting greater regional economic 
integration.  At their November 2011 meeting in  Honolulu, APEC Leaders agreed to promote 
economic growth and improve the quality of life in the region by: strengthening regional economic 
integration and expanding trade, including a Free  Trade Area of the Asia-Pacific (FTAAP);  
promoting green growth;  and advanci ng regulatory cooperation and convergence.
38  They also agreed 
to, inter alia :  work to develop in 2012 a list of envi ronmental goods on which they will reduce 
applied tariffs to 5% or less by 2015, taking into  account the specific economic circumstances of each 
Member;  eliminate non-tariff barriers to the trad e of environmental goods and services, including 
trade-distorting local-content requirements;  phase-out inefficient fossil fuel subsidies;  and work to 
prohibit trade in illegally harvested forest produc ts and combat illegal logging and associated trade. 
26. Supporting the multilateral trading system and th e conclusion of the Doha Round remains a 
high priority for APEC economies.  APEC has e ngaged in extensive work on RTAs/FTAs and is 
developing "model measures" (or chapters).  In 2008, the Committee on Trade and Investment (CTI) 
completed its work on 15 "model measures", whic h would serve as a reference for member economies 
seeking to negotiate RTAs/FTAs and assist in pr omoting consistency in RTAs/FTAs across the 
region.39  In 2009, the Convergences/Divergences St udy of APEC FTAs was updated by expanding 
the scope from 30 to 42 intra-APEC FTAs/RTAs.  In  2009, in cooperation with China, Australia, and 
New Zealand, Korea led a study on the economic im pact of a possible FTAAP, and identified specific 
benefits involving economic we lfare gains worth US$636 billi on, and challenges for APEC 
economies.40  At the 23rd APEC Ministers Meeting in 2011, Ministers welcomed Korea's Capacity-
Building Needs Initiative (CBNI) aimed at narrowing the gap of FTA-related capabilities among members under an Action Plan Framework for the pe riod 2012-14;  Korea is to initiate multi-year 
projects to strengthen and deepen regional ec onomic integration, including the FTAAP.   
                                                      
38 APEC (2012). 
39 These "model measures" include:  safeguards, competition policy, environment, temporary entry for 
business persons, customs administration and trade facilita tion, electronic commerce, rules of origin and origin 
procedures, sanitary and phytosanitary measures, trade in goods, technical barriers to trade, transparency, 
government procurement, cooperatio n, dispute settlement, and trade f acilitation (APEC, 2008;  and APEC 
online information.  Viewed at:  http://apec.org/Gr oups/Other-Groups/ FTA_RTA. aspx [6 December 2011]). 
40 The report recommended the development of detailed action plans and implementation of a 
tailor-made programme for capacity-building, possibly in cooperation with relevant international organizations, such as OECD, IDB, UNCTAD, ESCAP, WTO, and AD B to facilitate the work process and maximize the 
effects.  The recommendations will be taken up by  the CTI (APEC online information.  Viewed at:  
http://apec.org/Groups/Other-Groups/FT A_RTA.aspx [6 December 2011]). Republic of Korea WT/TPR/S/268/Rev.1 
 Page 29 
 
 
  (b) Association of Southeast Asian Nations (ASEAN) 
ASEAN+3 
27. Korea attaches high priority to closer trade relations and other ties with ASEAN.41  T h e  
ASEAN+3 members (China, Japan, and Korea (Rep . of)) agreed in November 2002 to study and 
formulate options to gradually establish an East Asia Free Trade Area. (EAFTA).  A Joint Expert 
Group (JEG) for Feasibility Study on EAFTA submitted its 2006 report ( Towards an East Asia FTA:  
Modality and Roadmap ), to the ASEAN Economic Ministers+3 Meeting in 2007.  It recommended 
mainly that:  the EAFTA process should start w ithin the ASEAN+3 framework;  the EAFTA should 
be comprehensive in scope with substantial libera lization in all sectors;  and economic development 
cooperation initiatives with specific action plans mu st be an integral part of EAFTA.  The 
14th ASEAN+3 Economic Ministers summit, in August 2011, noted the progress of the four ASEAN 
Plus Working Groups (APWGs) that were tasked to look into the recommendations of the EAFTA 
and Comprehensive Economic Partners hip in East Asia (CEPEA) Studies, relevant to rules of origin, 
tariff nomenclature, customs pro cedures, and economic cooperation.42  The ASEAN Framework for 
Regional Comprehensive Economic Pa rtnership, adopted at the 19th ASEAN Summit in 
November 2011, is to help broaden and deepen  the regional economic integration process and 
maintain the momentum created by the EAFTA and CEPEA.  In 2012, new working groups are to be 
established on goods and services, with the ultimate goal of adopting a template for a region-wide 
FTA.   
ASEAN 
28. The ASEAN and Korea (Rep. of) Free Trade Ag reement on goods, which entered into force 
on 1 June 2007 for Korea, Si ngapore, and Malaysia (goods)43, and on 1 May 2009 for Korea, Brunei 
Darussalam, Malaysia, Myanmar, the Philippines, Singapore and Viet Nam (services)44, was notified 
to the WTO under GATT Article XXIV, the Enabling Clause, and GATS Article V, and has not been 
considered by the WTO Committee on Regiona l Trade Agreements (as at February 2012).45  Under 
the agreement, Korea's tariff rates on 90.8% (4,742 items) of all products were reduced gradually to 
zero in 2010, and the rates on 5.4% (282 items) of items will be reduced to a range from zero to 5% 
by 2016.  Trade in 3.1% (160 items) of tariff items  are liberalized in four ways:  50% tariff rate 
capping;  tariff reduction by 20%;  tariff reduction by 50%;  or tariff quota system.  The remaining 
0.77% of tariff items (40 items, including rice) are to be exempted from tariff concessions.  As a result of the goods agreement, ASEAN became Korea's 2
nd largest trading partner after China in 2010, up 
from 5th in 2006;  two-way merchandise trade increased by 102%, and exports grew by 124%, while 
imports rose by 79% between 2006 and 2011.46  The level of Korea's commitments under the services 
                                                      
41 ASEAN members are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the 
Philippines, Singapore, Thailand, and Viet Nam. 
42 ASEAN online information.  Viewed at:  http ://www.asean.org/26593.htm  [6 December 2011]. 
43 For the remaining members the goods part of th e agreement entered into force as follows:  for 
Viet Nam on 29 June 2007;  Indonesia, 1 July 2007;  Myanmar, 23 November 2007;  the Philippines, 1 January 2008;  Brunei Darussalam, 1 July 2008;  Lao PDR, 1 October 20 08;  Cambodia, 1 November 2008;  
and Thailand, 1 January 2010. 
44 For the remaining members the services part of the agreement entered into force as follows:  for 
Cambodia on 29 November 2009;  Thailand, 1 January 2010;  Lao PDR, 4 June 2010;  and Indonesia, 
14 October 2010. 
45 WTO online information.  Viewed at:  h ttp://rtais.wto.org/UI/PublicShowMemberRTAID 
Card.aspx?rtaid=169 [6 February 2012].  
46 Data of the Korea Internationa l Trade Association.  MOFAT onlin e information.  Viewed at:  
http://www.fta.go.kr /new/ftakorea/broadpsd.asp?count ry_idx=14 [6 December 2011]. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 30 
  
  agreement was similar to its offer in the Doha Round, which exceeds its GATS commitments.  The 
number of the sectors or subsectors open to fore ign suppliers increased, and limitations on both 
market access and national treatment in certain sectors or subsectors decreased.  A Korea-ASEAN 
FTA in Trade in Investment was signed on 2 June 2009 and entered into force in September 2009 for 
Korea and Singapore.47  
(c) Asia-Pacific Trade Agreement (APTA) 
29. Korea is a party to the APTA (previously ca lled the Bangkok Agreement), which is aimed at 
achieving trade liberalization among the less devel oped members of the United Nations Economic and 
Social Commission for Asia and the Pacific (UNESC AP).  The APTA, which entered into force on 
1 September 2006, was notified to the WTO under the Enabling Clause 2007 and was subject to 
questions and replies in the WTO Committee on Trade and Development.48  Following China's 
accession in 2001, members undertook a revitalization pr ocess, including a third and fourth round of 
negotiations (2009) with the objective of deepening and widening concessions.  The APTA contains a 
consolidated list of tariff concessions (resulting from the rounds of trade negotiations) for members.  
Under this agreement, China and Korea (Rep. of) grant concessions on 1,697 eight-digit HS items and 
1,367 ten-digit HS items, respectively.  In De cember 2009, APTA members committed to expanding 
their cooperation into investment and trade facilita tion by signing formal framework agreements;  a 
framework agreement on trade in services was also finalized and was to be signed in early 2010.49  No 
recent information on this agreement wa s available from the authorities.   
(d) Asia-Europe Meeting (ASEM)50 
30. The ASEM informal process of dialogue and cooperation among 48 members, addresses 
political, economic, social, and other issu es to strengthen regional relationships.51  A Trade 
Facilitation Action Plan (TFAP) aims to reduce non-tariff barriers, increase transparency, and 
promote trade opportunities between the two regions.  It specifies bi-annual "concrete goals" in the 
priority areas of customs, standards and confor mity assessment, public procurement, quarantine and 
SPS, intellectual property, mobility of business people,  and other trade activities, such as market 
access in distribution.     
(e) Asia Cooperation Dialogue (ACD) 
31. The ACD, launched in June 2002, aims to serve  as a "missing link" for all Asian sub-regions 
to create strategic partnerships and cooperation by drawing upon and combining Asia's diverse 
                                                      
47 For the remaining members the agreement entered into force as follows:  for Thailand on 
31 October 2009;  Viet Nam, 11 November 2009;  Myanmar, 28 November 2009;  Brunei Darussalam, 
6 February 2010;  Malaysia, 24 April 2010;  the Philippines, 29 April 2010;  Indonesia, 20 May 2010;  Cambodia, 17 October 2010;  and Lao PDR, 19 Novemb er 2010 (MOFAT online information.  Viewed 
at:  http://www.mofat.go.kr/ENG/policy/fta/status/e ffect/asean/index.jsp?menu=m_20_80_10&tabmenu=t_2& 
submenu=s_4 [6 December 2011]). 
48 WTO online information.  Viewed at:  http://r tais.wto.org/UI/PublicS howMemberRTAIDCard.aspx? 
rtaid=140 [6 February 2012]. 
49 UNESCAP Press Release No. G/104/2009, "Six Asian Economies Announce Tariff Reductions and 
Broader Co-operation", 15 December 2009.  Viewed a t:  http://www.unescap.org/unis/press/ 2009/dec/g104.asp 
[6 December 2011]. 
50 Europa online information.  Viewed at:  http://ec.europa.eu/external_relations/asem/intro/index.htm. 
51 The members are EU States, the EC, the ASEAN Secretariat, 16 Asian countries, the Russian 
Federation, Australia, and New Zealand (ASEM online in formation.  Viewed at:  http://www.aseminfoboard. 
org/page.phtml?code=Abou t [6 December 2011]). Republic of Korea WT/TPR/S/268/Rev.1 
 Page 31 
 
 
  strengths so as to position it as a viable partner for other regions.  The 31-country ACD has rapidly 
enhanced cooperation on dialogue and projects.52  ACD ministerial meetings have been held annually 
to discuss developments, issues of regional coope ration, and ways to enhance and solidify Asian 
unity.  The 10th Ministerial Meeting was held on 10 October 2011 in Kuwait City.53  Many countries 
have proposed to be "prime and co-prime movers " in 19 areas of cooperation, including energy, 
agriculture, biotechnology, tourism, poverty allevi ation, information technology development, 
e-education, and fi nancial cooperation.   
(iii) Bilateral agreements 
32. Korea continued its vigorous pursuit of FTAs durin g the period under review.  It views these 
agreements and their negotiation as drivers of reform and deregulation, and as beneficial to all of its 
trading partners.54  However, certain Members in the CRTA ha ve raised concerns about protection of 
agriculture in Korea's FTAs and argued that system atic protection of agriculture excluded the sector 
from competition and made multilateral liberalization efforts more difficult.55  In its FTAs Korea also 
tends to liberalize depending on the extent of reciprocal market access by its FTA partners.56  There 
are no areas or agreements where services or other co mmitments were multilateralized, in order to be 
applied to all WTO Members, except for copyright protection, which is to be raised to 70 years for 
WTO Members on a reciprocal basis.  Certain comp etition-related matters, including competition law 
and anti-competitive business conduct, public enterpri ses and enterprises entrusted with special or 
exclusive rights (including designated monopoli es), differences in pricing, transparency, 
confidentiality, and cross-border cons umer protection, are also covered to a varying degree in all these 
agreements.  Korea's level of services commitments varies from one agreement to another:  the 
Korea-EU FTA, a positive-list type of FTA, is the mo st extensive in terms of sectoral coverage, while 
the Korea-EFTA FTA is the least (Chapter IV(6)( iii)).  Studies conducted by Korean academics and 
research institutions confirm that trade with FTA partners substantially increased and that this 
increase is due to trade diversion/trade creation effects.   
33. Despite the expected benefits from liberali zation through FTAs, their negotiation remains 
contentious, and the authorities have been obliged to  maintain and strengthen adjustment measures in 
support of domestic producers and companies that  seem seriously injured by FTA-created import 
competition (Chapters III(4)(ii)(b) and IV(5)).  Si nce November 2011, beneficiaries of adjustment 
support have been farmers whose annual revenue from farming falls  below their standard gross 
income (i.e. 90% of the average of gross inco me over a three-year period) because of import 
competition57;  and fishing households, where the product' s average price per weight/unit drops below 
its standard price (i.e. 90% of the average price over three years).  Both activities are compensated 
                                                      
52 Members are Bahrain, Bangladesh, Bhutan, Brunei  Darussalam, Cambodia, China, India, Indonesia, 
Iran, Japan, Kazakhstan, Republic of Korea, Kuwa it, Lao PDR, Malaysia, Mongolia, Myanmar, Oman, 
Pakistan, the Philippines, Qatar, Russian Federation, Sa udi Arabia, Singapore, Sri Lanka, Tajikistan, Thailand, 
United Arab Emirates, Uzbekistan, and Viet Nam. 
53 ACD online information.  Viewed at:  http://www.acddialogue.com/news/news.php. 
[6 December 2011]. 
54 See WT/TPR/S/204/Rev.1, 4 December 2008. 
55 WTO documents WT/REG210/M/1, 28 September 2009, and WT/REG217/M/1, 1 May 2009. 
56 For instance, in its FTA with Singapore, by the end of the implementation period Korea will 
liberalize 68.3% of agricultural tariff lines, but with EFTA the extent of liberalization of agriculture ranges from 
only 19.6% to 23.3% (WTO documents WT/REG210/3, 30 June 2009, and WT/REG217/2/R.1, 9 July 2009). 
57 MOFAT online information.  Viewed at:  http://www.ftahub.go.kr/kr/support/damage/01/ 
[6 December 2011]. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 32 
  
  for 90% of their losses.58  Support is also available to domes tic manufacturers and related services 
providers seriously injured by a substantial incr ease in imports from FTA partners, whose sales or 
production are reduced by more than 20% because of  import competition.  Support measures take the 
form of loans, consulting and informa tion services, and re-employment assistance.59  Since 2008, 
about ₩ 1.8 billion in trade adjustment assistance has been provided to support domestic 
manufacturers and related service providers.  By Apr il 2012, investigations were under way to ensure 
that FTA-driven liberalization benefits final consumers as well as firms (Chapter III(4)(iv)).  
34. Total trade between Korea and its FTA partners amounted to US$266.2 billion in 2011, of 
which US$145.7 billion in exports and US$120.4 in imports.  FTA si gnatories accounted for 26.3% of 
Korea's total exports and 23.0% of total imports.60  The FTA with Chile is the most utilized, at rates of 
90.5% of Korea's imports from this  partner, and 96.9% of its expor ts;  the EFTA (42.5% of imports) 
and ASEAN (27% of imports, 14.4% of exports) are less utilized.  
(a) Korea-Chile FTA 
35. The agreement entered into force on 1 April 2004.  Korea undertook to eliminate tariffs on 
over 96% of its tariff lines within ten years, under a phased elimination schedule.61  
36. According to the authorities, the dramatic rise in bilateral trade reported during the 
agreement's first seven years (by 287% amounting to US$7.17 billion) is due to a substantial increase 
in Korea's exports to Chile (by 462% amounting to US$2.95 billion), and to the increase in Korea's 
imports from Chile (by 218% amounting to US$4.22 b illion), due mainly to the increase in the prices 
of copper and other metals over the period.62 
(b) Korea-Singapore FTA 
37. The agreement with Singapore, which entered into force in March 2006, included immediate 
duty-free entry into Singapore for all of Korea's e xports, and liberalization of 59.7% of Korea's goods 
imports from Singapore.  The agreement was cons idered in the WTO Committee on Regional Trade 
Agreements (CRTA) based on a factual presentati on by the WTO Secretariat on 15 September 2009.63 
(c) Korea-EFTA FTA 
38. Under this agreement, which ente red into force on 1 September 200664, the parties undertook 
to eliminate all tariffs on substantially all trade in goods with the exception of agricultural goods, 
                                                      
58 The average price per unit/weight is calculated by dividing the value of the annual production by the 
volume of the annual output (MOFAT online information.   Viewed at:  http://www.ftahub.go.kr/kr/support/ 
damage/02/ [6 December 2011]). 
59 MOFAT online information.  Viewed at:  http://www.ftahub.go.kr/kr/support/damage/03/ 
[6 December 2011]. 
60 Online data viewed at:  http://www.kita.net;  and Maeil Business,  "S. Korea's trade with FTA 
signatories on rapid rise", 24 January 2012.  Viewed at:  http://news.mk.co.kr/english/newsRead. 
php?sc=30800003&cm=Economy&year=2012&no=5028 7&selFlag=sc&relatedcode=&wonNo=&sID=308 
[9 February 2012]. 
61 See WT/TPR/S/204/Rev.1, 4 December 2008. 
62 MOFAT online information.  Viewed at:  h ttp://www.fta.go.kr/new/ftakorea/broadpsd.asp? 
country_idx=11 [6  December 2011]. 
63 WTO document WT/REG210/3/Rev.1, 19 October 2009. 
64 Korea and the EFTA states jointly notified th e KEFTA FTA to the WTO under GATT Article XXIV 
and GATS Article V in August 2006 (WTO documents WT/REG217/N/1 and S/C/N/373, 28 August 2006). Republic of Korea WT/TPR/S/268/Rev.1 
 Page 33 
 
 
  which are subject to separate agreem ents with each member state.  Korean exports will enter EFTA 
duty free and Korea will eliminate tariffs on 88%-88.5%  of its tariff lines (excluding basic agricultural 
items) by 2016.65  The agreement covers most services,  as well as dispute resolution procedures, 
government procurement, competition, strengthening intellectual property rights including geographic 
indications, and detailed rules of origin.  Korea' s services commitments under this agreement, almost 
equivalent to its DDA revised offer, are exceeding those under GATS.  The agreement was considered 
by the WTO CRTA on 20 April 2009.66  
(d) Korea-United States (KORUS) FTA 
39. The KORUS FTA signed in June 2007, was followed by a related agreement, effected by an 
exchange of letters, signed on 10 Febr uary 2011; the KORUS FTA was ratified on 
22 November 2011, and entered into force on 15 March 2012.67 
40. Under this agreement (announced early to the WTO), Korea undertook to eliminate tariffs on 
96% of its non-agricultural tariff lines within five year s, with virtually all remaining tariffs eliminated 
within ten years.68  Tariffs and quotas on a broad range of agricultural products will be eliminated 
immediately or phased out;  40% of Korea's agricult ural product tariff lines or almost two thirds (by 
value) of its agriculture imports from the Unite d States became duty free upon entry into force.69  The 
KORUS FTA phases out the 40% Korean customs ta riff on beef over a 15-year period;  however, 
sanitary restrictions on U.S. exports of cattle over 30-months old remain in place.  Special safeguards 
are provided for Korea's most sensitive agricultura l items, including oranges, soybeans, potatoes, 
powdered milk, and natural honey.70  Rice is exempt from any tariff obligation.  Concerning 
automobiles, Korea undertook, inter alia,  to amend taxes whose rates vary according to engine 
displacement, such as the individual consumption tax and the annual vehicle tax (Chapter III(4)(i)(a)). 
41. According to the 2011 exchange of letters, originating motor vehicles produced by a U.S. 
manufacturer who sold no more than 25,000 origina ting motor vehicles in Korea during the previous 
calendar year will be deemed to comply with Korean  safety standards if the manufacturer certifies that 
the motor vehicle complies with U.S. federal safety standards.  The Un ited States is to retain its 2.5% 
tariff on most Korean car imports until the fifth y ear after implementation of the agreement;  Korea 
will cut import duty on U.S. cars from 8% to 4% upon implementation of the agreement, and to zero 
as from the fifth year.71  The U.S. 25% truck tariff will remain in place for seven years and will be 
phased out completely after ten years;  Korea is to eliminate its 10% duty on U.S. trucks immediately.  
Other sectoral arrangements involve textiles, pharmaceuticals, and numerous services sectors, 
including financial, telecommunications, and e-co mmerce.  The two countries agreed to liberalize 
trade in services by opening up their markets beyo nd their GATS commitments.  The agreement also 
improves conditions with respect to trade reme dies, outward processing, government procurement 
                                                      
65 According to the authorities, as of April 2012, Korea had eliminated tariffs on imports of EFTA 
origin on 94% of its tariff lines (WTO docum ent REG217/2/R.1, 9 July 2009, paragraph 24). 
66 WTO document WT/REG217/2/Rev.1, 9 July 2009. 
67 The modifications to the original  agreement included changes in phase-out periods for tariffs on 
autos, a new safeguard provision on autos, and concessions allowing a larger number of U.S. cars into Korea under U.S. safety standards than under the original provisions (Congressional Research Service, 2011). 
68 USTR (2011). 
69 USTR (2011). 
70 MOFAT (2010a). 
71 EIU Viewswire , "KORUS of approval", 24 November 2011.  Viewed at:  http://www.eiu.com/ 
index.asp?layout=VWArticleVW 3&article_id=978617482&rf=0. [6 December 2011]. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 34 
  
  (reduction of minimum procurement value), intell ectual property rights (extension of copyright 
protection to 70 years), competition, regulatory transp arency, and labour and environmental standards.  
42. According to a joint study by ten research in stitutions (published in 2011), the KORUS FTA 
could increase Korea's GDP by 5.66% within ten ye ars of its entry in force, create 351,300 jobs, and 
improve its trade balance vis-à-vis  the United States and the world.  These institutions estimated that 
this FTA would increase bilateral trade by an annu al average of US$2.4 billion for 15 years after its 
entry into force, adding up to US$1.3 billion to Korea's exports to the United States and up to 
US$1.1 billion to its imports fro m this trading partner.   
(e) Korea-India Comprehensive Economic  Partnership Agreement (CEPA) 
43. This agreement was signed on 7 August 2009 an d entered into force on 1 January 2010.  
Korea eliminated or reduced immediately tariffs on 93% of tariff items and 90% of the trade value of 
Indian goods, while India will eliminate or reduc e tariffs on 85% of Korean goods on the basis of 
tariff items and trade value.72  Trade liberalization excludes highly  sensitive agriculture, fisheries and 
forestry.73  The agreement covers all services except for air services and related services in support of 
air services74, and public services.  Korea's commitments under the agreement exceed its GATS 
commitments.  Similarly it provides for dispute settlement procedures, detailed rules of origin, 
competition, intellectual property rights, and bilate ral cooperation on various fields such as energy, 
health care, and government procurement.  The agreement, which was notified to the WTO under 
GATT Article XXIV, the Enabling Clause and GATS V on 23 June 2010, had not been examined by 
the WTO CRTA by February 2012.75  
44. Reportedly, there has been substantial increase in bilateral trade volume since the entry into 
force of the agreement (by 70%, amounting to US$20.6 billion between 2009 and 2011);  the rise 
reflects a 57.8% increase in Korea's exports (amoun ting to US$12.7 billion) and a 90.6% increase in 
imports (amounting to US$7.9 billion).  
(f) Korea-EU FTA76 
45. Under this agreement, signed on 6 October 201 0, ratified on 4 May 2011 and applied as of 
1 July 2011, the parties undertook to eliminate all ta riffs on substantially all trade in goods with the 
exception of most sensitive agricultural goods for Korea.77  By the end of the implementation period 
(2031), 11,843 of Korea's tariff lines (99.5%) will be  duty free for imports from the EU, representing 
more than 99.99% of the value of Korea's imports from the EU;  9,251 tariff lines (99.5%) of the EU's tariff lines will be duty free for imports from Korea, representing 99.9% of the value of its imports 
                                                      
72 MOFAT online information, "Korea-India CEPA To Be Officially Signed In Seoul", 6 August 2009.  
Viewed at:  http://www.mofat.go.kr/ENG/policy/fta/pressreleases/index.jsp?menu=m_20_80_20 
[6 December 2011]. 
73 MOFAT online information.  Viewed at:  h ttp://www.mofat.go.kr/english/econtrade/fta/issues/ 
index.jsp and http://www.mofat.go.kr/ ENG/press/pressreleases/index.jsp? menu=m_10_20 [6 December 2011]. 
74 Related services in support of air services excl ude aircraft repair and maintenance services, the 
selling and marketing of air transport services, and computer reservation system services. 
75 Korea notified the FTAs with India and ASEAN under Article XXIV and GATS V only, while India 
and ASEAN notified them under the Enabling Clause and GATS V (WTO information online.  Viewed at: 
http://rtais.wto.org/UI/PublicShowMemberRTAIDC ard.aspx?rtaid=715 [7 February 2012]). 
76 More information about this ag reement is available online at:  http://ec.europa.eu/trade/creating-
opportunities/bilateral-relations/countries/korea/. 
77 MOFAT (2010b). Republic of Korea WT/TPR/S/268/Rev.1 
 Page 35 
 
 
  from Korea.78  When considering both industrial and ag ricultural products, Korea and the EU will 
eliminate 98.7% of duties, in trade value,  within five years of entry into force.79  The majority of 
customs duties on goods were removed upon its entry into force;  practically all customs duties on industrial goods will be fully rem oved within the first five years of implementation.  A limited 
number of highly sensitive agricultural and fisheries products have transitional periods longer than 
seven years.  Similarly to the KORUS FTA, Korea’ s 40% customs duty on beef is to be phased out 
over a period of 16 years.  Rice and a few other agri cultural products (57 tariff lines), of which the EU 
is not a significant exporter, are excluded from the agreement. 
46. The agreement is the first FTA to include speci fic sectoral disciplines on non-tariff barriers to 
trade;  four sector-specific annexes address re gulatory and other barriers affecting consumer 
electronics, automotive products, pharmaceuticals, a nd chemicals.  The agreement covers diverse 
services sectors including transport, telecommunications, finance, legal services, environmental services, and construction;  audiovisual services are excluded.
80  Korea's commitments under the 
agreement exceed its GATS commitments and they ar e seen as an opportunity for improving the latter 
and its offer in the DDA negotiations.  Dispute settlement, government procurement, intellectual 
property rights (including geographic indications ), competition, rules of origin, and trade and 
sustainable development issues are also covered.   Consideration in the WTO CRTA of this agreement, 
which was notified under GATT Artic le XXIV and GATS Article V on 7 July 2011, was tentatively 
scheduled for June 2012.81  
47. Reportedly, there was an increase in bilateral trade volume during the six months of 
implementation in the second half of 2011, compared with the same period in 2010 (by 3.9%, 
amounting to US$49.5 billion);  the authorities attribute this to the rise in Korea's imports, as exports grew by only 0.8% from July to September 2011 compared with the same period in 2010.   
(g) Korea-Peru FTA 
48. Under this agreement, which was signed on 21 March 2011 and entered into force on 
1 August 2011, all tariffs on the items currently tr aded between the two countries will be eliminated 
within ten years.
82  Both parties agreed to exclude rice fro m all concessions.  Korea limits preferential 
treatment on several other sensitive agricultural goo ds with seasonal tariffs or safeguard measures, 
while Peru agreed to eliminate all other agri cultural tariffs in accordance with its schedule.83  T h e  
agreement contains provisions on market access, rules of origin, customs procedures and trade 
facilitation, sanitary and phytosanitary measures, technical barriers to trade, trade remedies, 
investment, cross-border trade in services, financial services, telecommunications, electronic 
                                                      
78 WTO document WT/REG296/1, 29 March 2012. 
79 More specifically Korea will eliminate or reduce tariffs on 93.6% and 97% of EU goods on the basis 
of products and trade value respectively in five years, wh ile the EU will eliminate or reduce tariffs on 99.6% and 
all of Korean goods on the basis of products and trade value respectively in five years (MOFAT, 2010b;  and 
European Commission, 2010).  
80 The authorities indicated that the exclusion of the audiovisual services is without prejudice to the 
rights and obligations derived from the parts of audiovisual services, such as co-productions, included in the 
Protocol on Cultural Co-operation, which is an integral part of the Korea-EU FTA (European Commission, 
2010). 
81 WTO online information.  Viewed at:  http://r tais.wto.org/UI/PublicS howMemberRTAIDCard.aspx? 
rtaid=167 [7 February 2012]. 
82 MOFAT online information, "Korea-Peru FTA to enter into force on August 1", 1 August 2011.  
Viewed at:  http://www.mofat.go.kr/ENG/policy/fta/pressreleases/index.jsp?menu=m_20_80_20 
[7 February 2012]. 
83 MOFAT online information.  Viewed at:  http ://www.fta.go.kr/new/pds/fta_korea/peru/peru1.pdf. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 36 
  
  commerce, competition, government procurement, in tellectual property rights, and dispute settlement.   
Consideration in the WTO CRTA of this agreem ent, which was notified to the WTO under GATT 
Article XXIV and GATS Article V on 9 Augus t 2011, is scheduled for September 2012.84  
(h) FTA negotiations and plans  
49. Korea continues to pursue negotiations with its  major trading partners to establish an FTA 
network with large economic bloc s and newly emerging markets, with a view to becoming an FTA 
hub (i.e. FTAs with countries that do not have FTAs with each other).85  It is currently negotiating 
with Australia, New Zealand, Ca nada, China, Indonesia, Mexico, and Viet Nam as well as the Gulf 
Co-operation Council (GCC) countries.  FTA negotiations  with Japan have been in a deadlock since 
2004;  Korea has consulted with Japan to create a favourable environment for the resumption of the 
negotiations. 
50. Prior to launching official negotiations, Korea completed feasibility studies with prospective 
FTA partners including China, Japan, MERCOSUR, Is rael, and Central America, though no decision 
has been made in respect.  A feasi bility study for a Korea-Malaysia FTA is under way. Furthermore, 
FTAs with the Russian Federation, Mongolia, and the South African Customs Union (SACU) were 
under consideration as a long-run prospect at end 2011.  China, Japan, and Korea have been 
conducting a joint study for a possible trilateral FTA among government officials, business, and academic participants since 2010;  this study was concluded as scheduled in December 2011 and 
Korea was to map out its action plans on this FTA before a meeting of the heads of State from the participating countries in May 2012.
86  According to the Korea Trad e-Investment Promotion Agency 
(KOTRA), an FTA between China and Korea could precede the trilateral agreement.87  
51. Despite the benefits seen by Korea, negotiati on of numerous FTAs is likely to make the 
Korean trade regime more complex, involving for ex ample different tariffs being applied to the same 
imports from various sources (Chapter III(2)(iii)(g)).  This is likely to reduce economic efficiency by 
undermining the transparency of Korea's trade protection in unpredictable ways and introducing 
economic distortions.  Economic dist ortions are likely to be exacerbated by the continued exclusion of 
certain agricultural products from any tariff liberalizat ion under the various FTAs.  Despite the use of 
adjustment measures in support of domestic producer s (section (6)(iii)), the authorities indicate that 
Korea has not yet witnessed any negative side-e ffects due to FTAs, and recognize that their 
administration is the key to their success.  They also indicated that both trade diversion and trade creation effects account for changes in trade volume,  but their precise respective impact has not yet 
been calculated.  
                                                      
84 WTO online information.  Viewed at:  http://r tais.wto.org/UI/PublicS howMemberRTAIDCard.aspx? 
rtaid=645 [7 February 2012]. 
85 See BBC Monitoring Asia Pacific Broadcasting Cor poration, "South Korea trade minister stresses 
need for new free trade deal w ith China", 29 January 2012. 
86 It seems that the damage to Korea's farming industry from an FTA with China might reach 
US$2.8 billion.  Korea and China plan to hold preliminary negotiations to address sensitive issues prior to officially launching free-trade talks ( Yonhap  online articles, "S. Korea to pr epare action plans on FTA with 
Japan, China", 20 December 2012.  Viewed at:  http://english.yonhapnews.co .kr/business/2011/12/20/ 
0502000000AEN20111220007400320.HTML;  "Damage to farming from China FTA could reach US$2.8 bln", 12 January 2012.  Viewed at:  http://english.yonhapnews.co.kr/business/2012/01/12/0502000000AEN2012011 
2002000320.HTML;  "Seoul, Beijing to tackle sensitive i ssues first in free trade talks", 12 January 2012.  
Viewed at:  http://english.yonhapnews.co.kr/business/2012/01/12/0502000000AEN201201120088003 20.HTML;  and MOFAT online information.  Viewed at:  http://www.mofat.go.kr/ENG/policy/fta/status/ 
overview/index.jsp?menu=m_20_80_10 [6 February 2012]. 
87 China Daily,  "China - South Korea pact 'first on agenda'", 6 April 2012.  Republic of Korea WT/TPR/S/268/Rev.1 
 Page 37 
 
 
  (iv) Unilateral and other trade preferences 
52. Korea has unilaterally expanded preferen tial duty-free access on dutiable imports of 
9,071 ten-digit HS2012 tariff items (5,522 ten- digit HS2007 in 2008) from 48 UN-defined least 
developed countries (Presidential Decree on Pref erential Tariff for Least-Developed Countries) 
(Table III.2).88  Korea has not invoked provisions enabling these preferences to be suspended in 
respect of imports causing or threatening to cause injury to domestic industries.  
53. Over the years Korea's MFN tariff reductions have  eroded its long-standing reciprocal tariff 
preferences.  At present, out of 22 ten-digit HS2012 tariff items subject to tariff preferences for 44 countries under the Global System of Trade Preferences Among Developing Countries (GSTP), 
only 6 are subject to a rate lower than the MFN a pplied rate.  Similarly, under the GATT Protocol 
Relating to Trade Negotiations Among Developing Countries (TNDC), out of 30 ten-digit HS2012 
tariff items only 9 are subject to a rate lower than  the MFN applied rate, for 12 countries.  In 2010, 
annual imports subject to actual preferential ra tes under these schemes were:  US$129.2 million or 
0.02% of total imports (GSTP), and US$7.4 million or 0.001% (TNDC).  No recent data were 
available from the authorities.
89  
54. Korea receives developing country status pr eferences only from Canada, Norway, and the 
Russian Federation.90  The practical effects of retaining this status are limited for Korea.  Korea opts 
to retain developing country status, a highly sen sitive economic and political issue, in the WTO and 
other relevant international fora.91  
(7) FOREIGN INVESTMENT REGIME  
55. Korea remains an important source of FDI for the rest of the world (Chapter I).  It views 
inward FDI as vital to the economy's growth, providing necessary financial and technological 
resources.  FDI is seen as a means of technology and know-how transfer as well as a major 
contributor to export and employment growth;  foreign-capital-invested companies play a vital though somewhat lesser role in the economy, compared with 2005.
92  Despite the officially favourable 
attitude towards FDI and recent improvements to the ease of doing business, the business environment 
allegedly remains somewhat difficult by the standards of competitor countries, largely because of the 
continuing complexities of registration, notif ication, licensing, and approval requirements93;  other 
problems include turf wars between government mi nistries, which frequently delay approvals.   
                                                      
88 In 2012, imports of items under 1,162 ten-digit HS2 012 tariff lines (9.5% of total lines) originating in 
LDCs were dutiable;  for the remaining tariff lines, duty-fre e treatment is either LDC-specific or available on an 
MFN basis.  These estimates are based on the tari ff data provided by the Korean authorities.   
89 Estimates based on trade data supplied by the Korean authorities. 
90 In the past the utilization rate under Norway's G SP scheme was 83.7%.  No recent utilization data 
were available from the authorities.  
91 It appears that the main rationale for retaining developing country status is linked to concerns that 
agriculture remains vulnerable.  According to an APEC repo rt, Korea appears to retain this status to benefit from 
the timeframe for developing countries for fulfilling the APEC Bogor goal (section (6)(ii)(a)). 
92 In 2005, foreign-invested co mpanies accounted for 6.1% of em ployment in manufacturing and 
contributed to 12.1% of total domestic sales and 16.9% of total exports.  As of 2010, foreign-invested 
corporations accounted for 11.6% of Korea's exports, and 4.7% of employment in Korea.  
93 According to the World Bank's Doing Business 2012  report, Korea's rank improved from 15th (2011) 
to 8th (2012) out of 183 countries in overall terms of the ease of doing business (Chapter I(2).  It ranked 24th in 
terms of the ease of starting a business, up from 59th in the 2011 report, and 133rd in the 2009 report.  According 
to the 2012 report, entrepreneurs have to go through 5 steps to start a business, which takes an average of WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 38 
  
  56. Korea's 2011 FDI Promotion Policy, develope d in cooperation with other concerned 
ministries/agencies and provincial governments, consists of, inter alia :  bringing FDI policy into line 
with industrial development strategies;  stre ngthening activities to attract FDI from emerging 
economies;  and establishing a nationwide system to attract FDI.  It aimed for at least US$15 billion in 
notified investment for 2011, mainly in green and new growth-engine i ndustries and value-added 
service industries.  During the period under review, Korea implemented measures to promote FDI in specialized zones and location support;  on the othe r hand, limits were introduced on the maximum of 
cumulative tax incentives that may be claimed by foreign investors as in the case of domestic 
investors (Chapter III(4)(i)(c)).
94  Since 2010, the "earned surplus -reserve" (i.e. retained earnings 
reinvested in the core business) of foreign-inv ested companies has been accepted as FDI, whenever 
these companies apply for incentives granted under the Foreign Investment Promotion Act (FIPA, see 
below).  At that time (April 2010), the FDI threshold (US$10 million) required to benefit from cash grants (since 2009) equivalent to 5% or more (up to 30%) of total investment in Korea was 
eliminated, enabling small amounts of FDI in advanced  technologies to become eligible for cash grant 
incentives.
95  Korea's share in total global FDI rose from 0.48% in 2008 to 0.65% in 2010, but remains 
below its 2004 level (1.2%).  Between 2008 and 2010,  FDI inflows dropped by 18.3%, due to the 
global investment depression, but inward FDI surged  in 2011 (Chapter I(6) and FDI pledges rose by 
4.6% (year on year basis) to US$13.67 billion for 2011 (US$11.71 billion in 2008).96  These 
developments seem to be, inter alia,  due to the manufacturing sector's relatively weak record in 
attracting FDI, and consequent regulatory obstacles to  this type of investment.  The Korea-EU and 
Korea-US FTAs are expected to cont ribute to the growth of FDI in Korea and the revitalization of the 
Korean mergers and acquisitions market.97   
57. The Foreign Investment Promotion Act (FIPA) permits all FDI types.98  Korea abides by 
OECD Codes of Liberalization of Capital Movement s and of Current Invisible Operations, and the 
National Treatment Instrument.  
58. MKE has responsibility for FDI inflows, and MO SF for outflows.  The Foreign Investment 
Committee makes all major policy decisions on FDI.99  The Korea Trade-Investment Promotion 
                                                                                                                                                                     
7 days;  in the OECD area, the average is 5 procedures and 12 days (World Bank/IFC, 2011a;  EIU, 2011a;  and 
World Bank/IFC, 2012). 
94 EIU (2011a). 
95 Where foreign investment satisfies certain conditions, the central and local governments provide cash 
grants for the construction of a new factory, etc.  Th ese conditions consist of whether the relevant foreign 
investment accompanies high technology, the effect of technology transfer, th e size of job creation, whether the 
foreign investment overlaps with domestic investment, the "propriety of the location" in which the foreign 
investment is made, etc.  The exact cash grant ratio is determined through negotiations with the investor.  To be 
eligible for cash grants, a foreign investor must own at l east 30% of the equity (Invest Korea online information.  
Viewed at:  http://www.investkorea.org/InvestKore aWar/work/ik/eng/bo/bo_01.jsp?code=102030303, and 
http://www.investkorea.org/Invest KoreaWar/work/ik/eng/bo/cont ent_print.jsp?code=102010201 
[23 March 2012]). 
96 MKE online Press Release, "Forei gn Investment Figures for 2011", 20 January 2011.  Viewed at:  
http://www.mke.go.kr/language/eng/news/news_view.jsp?t ableNm=E_01_01&seq=1080# [9 February 2012];  
UNCTAD (2011b),  Annex Table I.1;  and WTO document WT/TPR/S/204/Rev.1, 4 December 2008. 
97 Sang Hyuk Park and Gene Oh Kim (undated). 
98 The legislation also recognizes foreign ownership of below 10% as FDI, where the investor enters 
agreements concerning officer's dispat ch or appointment;  a t echnical licence or joint re search/development;  or 
the supply and purchase of products /raw materials exceeding one year. 
99 The CFDI consists of representatives of variou s agencies and ministries, such as MOSF and MKE, 
and heads of relevant local and city governments. Republic of Korea WT/TPR/S/268/Rev.1 
 Page 39 
 
 
  Agency (KOTRA), which facilitates and promotes FDI, operates 111 Korea Business Centers (KBCs) 
worldwide.  Its main promotional arm, Invest Korea,  serves as a "one-stop shop" for foreign investors. 
59. Under MKE's 2nd three-year plan for foreign investment (2011-13), the Government intends 
to undertake investment attraction activities, and to  revise and improve the incentive system and other 
related systems to grant more incentives to foreign- invested companies that bring more benefits to 
Korea.  It will also strengthen private and pub lic sector cooperation, and will expand investment 
attraction activities to emerging nations (such as China and the Russian Federation) as well as 
countries of the Middle East.  The plan is to attract US$30 billion and cr eate 170,000 jobs by 2015.100  
No data on the estimated cost of implementing this  plan (i.e. budgetary outlays, forgone tax revenue) 
were available from the authorities.   
60. Korea's investment regime is applied on an MFN basis despite the inclusion of investment 
and GATS-related provisions in Korea's FTAs.  Foreign investors enjoy more favourable tax 
treatment and selection of business sites than na tionals, and are assured national treatment and 
freedom in performing FDI activities, except as provi ded in other laws.  No FDI restrictions are 
allowed, unless they threaten national security , public order, public health, environmental 
preservation, or social morals, or are restricted by  the FIPA or under other legislation, such as the 
Fisheries Act, Maritime Act, and Telecommunicati ons Business Act.  Under the Foreigner's Land 
Acquisition Act (1998, fully revised), foreigners , including non-residents, are now given national 
treatment in the acquisition of land, without limits on land use or land size.   
61. Korea provide a range of tax incentives for FDI (Table II.2), for limited periods, and on an 
MFN basis to foster a more favourable business climate for new foreign-invested companies, 
particularly during the initial stages of their invest ment in Korea.  These generally consist of:  full and 
partial corporate income tax concessions for up to  seven years (since 2005);  similar concessions on 
various local taxes (acquisition, property, and pr operty taxes);  and full exemptions from customs 
duties (customs, special excise, and value-added taxes) on imported capital goods for up to three 
years.  Following the 2010 amendment to the Special  Tax Treatment Control Law, the cumulative tax 
incentive is limited to an aggregate of 50%-70% of the investment amount and ₩ 10 million per new 
employee (up to a maximum of 20% of the investment amount).101  The incentives apply to 
"greenfield" FDI (where no previous investment exists)102, and foreign stock acquisitions in eligible 
advanced-technology investments and industry-suppor ting service industries.  The number of eligible 
industries was raised from 578 to 674 in 2010 (FIPA and the Regulations on Tax Reduction or 
Exemption Concerning Foreign Investment of 2010) .  Minimum FDI levels for these tax incentives 
apply to firms established in foreign investment zones (FIZs), free-trade zones (FTZs), free economic 
zones (FEZs), etc. (Table II.2).  The scope of these incentives was expanded as of January 2011, to 
cover the services sector activities in these special economic zones103;  furthermore, the MKE aims to 
extend tax incentives to the services sector by th e end 2012 by amending relevant legislation. 
                                                      
 100 Invest Korea online information, "Government to focus on attracting foreign invested companies 
with high technology and high job creation potential (MKE)", 8 August 2011.  Viewed at:  
http://www.investkorea.org/InvestKo reaWar/work/ik/eng/bo/bo_01_mc ore.jsp?no=009290004&bno=10808002
4&sort_num=20&code=102050801&mode=bbs&url_i nfo=.%2Fbbs_read.jsp&l_unit=90202&page=1.  
101 Previously, the Special Tax Treat ment Control Law waived corporate income tax for certain types 
of high-tech FDI and investment in certain foreign-investment zones.  The waiver was full exemption for the 
first five years, with a 50% waiver in the sixth and seventh years (EIU, 2011a). 
102 The number of FDI-driven greenfield projects concluded in Korea increased from 88 in 2008 to 112 
in 2010 (UNCTAD, 2011b). 
103 The Government has long pushed for the expansion of tax incentives to the services sector, 
including the medical industry, in order to encourage inward FDI in the sector (MKE information, "Free WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 40 
  
  Table II.2 
Summary of FDI tax incentives, 2012 
(a)  National tax (corporation tax, income tax) and local taxa (acquisition tax, property tax) reduction 
Business category Investment amount Reduction period and details Remarks 
1.  Industry support service & high degree technology business Seven years in total according to 
the following ratio (amount 
multiplied by the foreign 
investment ratio) 
- 100% for five y ears after income 
creation 
-  50% for next two years With more than ten employees 
with Master's degree or above 2.  Businesses in stand-alone-type foreign investment zones (FIZ)b 
Manufacturing Over US$30 million 
Tourism Over US$20 million 
Logistics Over US$10 million 
R&D Over US$2 million 
3.  Businesses in complex-type foreign investment zones (FIZ)  
Five years in total according to the 
following ratio (amount multiplied by the foreign investment ratio) 
- 100% for three years after 
income creation  
- 50% for next two years  
Manufacturing Over US$10 million  
4.  Businesses in free-trade zones (FTZ)   
Logistics Over US$5 million  
5.  Businesses in free economic zones   
Manufacturing Over US$10 million  
Tourism Over US$10 million  
Logistics Over US$5 million  
Medical institution Over US$5 million  
6.  Free economic zone (FEZ) developer   
– Over US$30 million;  over 50% of foreign 
shares and US$500 million on business costs  
7.  Businesses in business city development zone   
Manufacturing Over US$10 millionc  
Engineering  
Additional communication  
Information processing & other 
computer operation-related 
businesses  
Science & technology service  
Tourism  
Culture industry  
Various facilities  
Renewable energy generation  
R&D Over US$2 milliond  
Logistics Over US$5 millione  
8.  Business city developer   
– Over US$30 million;  over 50% of foreign 
shares and US$500 million on business costs  
JEJU INTERNATIONAL FREE CITY    
9.  Businesses in Jeju high-tech science and technology complex  
Five years in total (unrelated to 
foreign investment ratio) 
-  100% for three years after 
income creation 
-  50% for next two years On condition of entry by 
31 December 2012, reduction 
only for national tax Bio engineering  
Information communication  
Culture industry  
High-tech and products  
10.  Businesses in Jeju investment promotion district  
On condition of entry by 
31 December 2012 Tourism 
Over US$5 million Culture industry 
Various facilities 
Renewable energy generation 
Electronics, electrical, 
information, new material, and 
bio engineering industries 
Foreign educational institutionsf 
Medical institutions 
   Table II.2 (cont'd)
                                                                                                                                                                     
Economic Zone Promotion Plan", 1 September 2010, and "Modification of the Enforcement Decree on the FDI 
Act", 5 October 2010, cited in UNCTAD, 2011b). Republic of Korea WT/TPR/S/268/Rev.1 
 Page 41 
 
 
  Business category Investment amount Reduction period and details Remarks 
11.  Businesses in free-trade zones  
On condition of entry by 
31 December 2012 Manufacture Over US$10 million with more than 
100 full-time employees 
Logistics Over US$5 million 
12.  Jeju investment promotion district developers  Five years in total according to the 
following ratio (amount multiplied 
by the foreign investment ratio) 
-  100% for three years after 
income creation 
-  50% for the next two years  
– Over 50% of foreign shares and 
US$100 million on business costs  
– Over US$10 million  
 
(b)  Exemption of tariffs, special excise tax, value-added tax, etc. 
Business category Taxes Items Remarks 
Industry support service & high degree 
technology business Tariff;  special excise tax;  
value-added tax 
Capital goods imported with invested 
cash or as investment object On condition of import within  
five years from the day of declaring foreign investment Businesses in stand-alone type foreign invested zones (FIZ) Tariff;  special excise tax;  
value-added tax 
Businesses in complex-type foreign invested zones (FIZ) 
Tariff Businesses in free trade zones (FTZ) 
Businesses in free economic zones (FEZ) 
Free economic zone (FEZ) developer 
Jeju International free city    
Businesses in Jeju high-tech science and 
technology complex Tariff Tariff reduced goods under Item 5, 
paragraph 1, Article 90 of the 
Customs Law for use in R&D 
On condition of import by 
31 December 2012 Businesses in Jeju investment promotion district Tariff Goods for which import declarations 
are made within three years from the 
day of designation as Jeju investment 
promotion district, which has been checked by the director of the Jeju International Free City Development Center 
a According to the local government regulations, the period of lo cal tax reduction may be extended up to 15 years, or the reduc tion 
ratio may be increased. 
b Free-export zones (Iksan, Massan) are considered as stand-al one-type foreign investment zones, with no limitations on 
investment amount for establishing factory facilities. 
c On condition of entry before 31 December 2012, a choice is give n between this reduction and the business city development zon e 
related reduction of national and local tax "regardless of foreign investme nt ratio" upon an investment of over ₩ 10 billion. 
d On condition of entry before 31 December 2012, a choice is give n between this reduction and the business city development zon e 
related reduction of national and local tax "regardless of foreign investme nt ratio" upon an investment of over ₩ 2 billion. 
e On condition of entry before 31 December 2012, a choice is give n between this reduction and the business city development zon e 
related reduction of national and local tax "regardless of foreign investme nt ratio" upon an investment of over ₩ 5 billion. 
f Foreign education institution and international high school. 
Source: WTO document WT/TPR/S/204/Rev.1, 4 De cember 2008;  and information provided by the Korean authorities.   
62. Considerable assistance is available under the local governments' Foreign Investment Support 
Policy in the form of location support (rent deducti on on exclusive rental estate, rental of public 
property), subsidy for industrial site (for purchase or rental of land), subsidy for employment 
(education and training), cash grant, facilities support, etc.104  Following the July 2009 amendments to 
the implementing ordinance of FIPA, the Govern ment offers rent-free land to foreign parts 
manufacturers with US$5 million or more in FDI opera ting in parts and materials complexes allocated 
to foreign businesses.  
                                                      
104 Invest Korea online information.  Viewed at:  http://www.investkorea.org/InvestKoreaWar/ 
work/ik/eng/bo/bo_01.jsp?code=102010703#article3 [6 December 2011]. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 42 
  
  63. According to the authorities, tax concessions can  be decisive in attracting FDI among similar 
countries;  most beneficiaries in Korea indi cate that these incentives have facilitated foreign 
investment.  However, these results do not take into account whether such investment would have 
been undertaken without the incentives.  All inv estment incentives (whether assisting foreign or 
domestic investors) risk subsidizing efficient inv estments, which need no such assistance and would 
have been undertaken anyway (thereby providing windf all gains to investors at taxpayers' expense), or 
worse, making some inefficient investments profitabl e.  Tax incentives, therefore, may contribute to 
inefficient allocation of resources in Korea.105  The cost effectiveness of tax incentives is also 
questionable.106  Care is needed to ensure that the fi nancial and efficiency costs of investment 
incentives do not exceed their stated benefits.  In an effort to prevent excessive tax exemptions and 
reductions compared with the invested amount, Ko rea has established the limit on cumulative tax 
incentives (see above and Chapter III(4)(i)(c)).  In orde r to improve transparency of the tax system, as 
from 2011, an annual report on tax expenditure for th e previous, current, and following years is to be 
published (Chapter III(4)(i)(c));  the system requires tax expenditure reports to be submitted to a 
regular session of the National Assembly a nd related documents to be made public. 
64. Government approval of FDI is not required.  Prior notification by foreign investors is 
needed, and may be made at domestic or foreign ba nk offices in Korea, Invest Korea or at any of 
KOTRA's overseas trade centres.107  Foreign-capital-invested compan ies must also register to be 
eligible for incentives.  MKE approval is still required for investment in 95 designated Korean 
defence-related companies, when obtaining managerial  dominance through acquisition of stock;  this 
requirement applies regardless of the nationality of the investor.   
65. As of 31 May 2010, out of a total 1,145 business sectors (based on the Korea Standard 
Industrial Classification) only three sectors remained fu lly closed to foreign investment (over-the-air 
television and radio broadcasting, and nuclear pow er generation), and a further 26 were partially 
restricted (including rice and barley growing) (Table II.3).108  Foreign companies may establish 
subsidiaries subject to notification and registration as a foreign-investment company, maintained for 
statistical and procedural purposes.  Foreign financ ial institutions are subject to approval requirements 
under the Banking Act, Insurance Business Act, a nd Financial Investment Services and Capital 
Market Act.  Public sector infrastructure projects are open to greater private sector participation, including by foreigners, who, according to authoriti es, have the same access as domestic investors.   
66. To ensure a more transparent foreign investment climate, FIPA provisions require MKE to 
publish FDI restrictions regularly in English in the Consolidated Public Notice .
109  In addition to FIPA 
restrictions, it contains restrictions on:  fore igners' capital transactions, including acquisition of 
securities, establishment of domestic branches by fore ign companies, foreign investment by business 
sectors;  registration of ships and aircraft;  "leg ally monopolistic" businesses;  acquisition of domestic 
qualifications by foreigners (pilots, lawyers, arch itects, and public performances);  and on foreigners' 
entry and residence in Korea.  Restrictions on fore ign investment in telecommunications and media, 
                                                      
105 Even where the market is claimed to have faile d to finance enough efficient investment due to 
"externalities" (social benefits from the investment that ar e not fully reflected in private costs), such as in R&D, 
it is unclear whether tax incentives can ef fectively address such "market failure". 
106 Experience of other OECD economies suggests that  tax incentives are seldom cost-effective.  Most 
econometric studies show that forgon e tax revenues exceed incremental inve stment induced from tax incentives.  
Tax holidays in particular are an ineffec tive incentive, compared  with tax credits. 
107 Post-notification is allowed within 30 days for stock transfers related to mergers and acquisitions. 
108 FDI is allowed in 26 (of the 29) partially restricted sectors when certain permission criteria are met 
(Invest Korea, 2010). 
109 Also available at Invest Korea online informa tion.  Viewed at:  http://www.investkorea.org. 
[6 December 2011]. Republic of Korea WT/TPR/S/268/Rev.1 
 Page 43 
 
 
  for example, are subject to annual revi ew and notice under the FIPA requirement.110  Invest Korea 
frequently publishes updated information on adjustments in its foreign investment policy.   
Table II.3 
FDI restricted sectors, 2012 
Sector/business  FDI limitation 
A.  Closed  
Radio broadcasting Wholly closed 
Ground-wave broadcasting Wholly closed 
Nuclear power generation Wholly closed 
B.  Partially closed  
Growing of cereal crops and other crops for 
food Allowed except for rice and barley growing  
Farming of beef cattle  Less than 50% foreign equity 
Coastal and inshore fishing Less than 50% foreign equity 
Manufacture of other basic inorganic chemi cals Allowed, excluding the manufacture and s upply of fuel for nuclear power generati on 
Manufacture of smelting, refining, and alloys of 
non-ferrous metals The same restrictions that apply to the ma nufacture of other basic inorganic chemicals 
also apply to this sector 
Publishing of newspapers Less than 30% foreign equity 
Publishing of magazines and periodi cals Less than 50% foreign equity 
Hydraulic power generation, thermal power 
generation, other elect ric power generation Foreign nationals may purchase from the KEPCO (Korea Electric Power Corporation) 
no more than 30% of all domestic power generation facilities 
Transmission and distribution of electric power Allowed provided total foreign equity is less than 50% and the largest shareholder is 
Korean  
Wholesale of meat Less than 50% foreign equity 
Coastal water passenger transport Allowed between South and North Korea;  a nd less than 50% foreign equity:  foreign 
investors must enter into joint ventur es with domestic shipping companies 
Coastal water freight transport  Allowed between South and North Korea;  a nd less than 50% foreign equity:  foreign 
investors must enter into joint ventures  with domestic shipping companies  
Scheduled air transport Less than 50% foreign equity 
Non-scheduled air transport and airplane rental 
with operator Less than 50% foreign equity 
Satellite telecommunications (1) Facilities-based:  No more than 49% foreign equity  
(2) Non-facilities-based:  Up  to 100% foreign equity 
Wired telecommunications (1) Facilities-based:  No more than 49% foreign equity  
(2) Non-facilities-based:  Up  to 100% foreign equity 
Wireless telecommunications (1) Facilities-based:  No more than 49% foreign equity  
(2) Non-facilities-based:  Up  to 100% foreign equity 
Other telecommunications  (1) Facilities-based:  No more than 49% foreign equity  
(2) Non-facilities-based:  Up  to 100% foreign equity 
Domestic commercial banking Allowed only for commercial and local banking 
Radioactive waste disposal Permitted except for radioac tive waste management under the Electricity Business Act 
Broadcasting via satellite and others  No more than 49% foreign equity 
Cable networks No more than 49% foreign equity 
Program providing No more than 49% foreign equity 
News agency activities Less than 25% foreign equity 
Source: Information provided by the Korean authorities. 
67. Foreigners, regardless of residence status, may purchase land subject to the same restrictions 
as Korean nationals.111  Exclusions are limited to land of military, cultural or environmental 
                                                      
110 EIU (2011a). 
111 Foreign land ownership may be denied to nationals of countries that do not allow Koreans to 
purchase land.  However, such reciprocity conditions have not been used. WT/TPR/S/268/Rev.1 Trade Policy Review 
Page 44 
  
  significance, and farmland designated for rice and barley.112  Foreign ownership of Korean land 
increased 15.7% from 2008 to 2011, due to expande d business ventures and investment as well as a 
higher number of foreigners residing in the country;   in September 2011, foreign-owned land was at 
229.29 million square meters (198.16 million square meters in 2007) or 1.2% of the nation's land 
(0.18% in 2007).113  Nationals and foreigners receive the sa me treatment for land expropriated by the 
State for public works (Act on Acquisition of and Compensation for Lands to be Used for Public 
Works, which replaced the Land Expropriations Act).   
68. The independent Foreign Investment Ombudsman, appointed by the President, located within 
KOTRA and staffed with personnel from Invest Ko rea, handles specific grievances encountered by 
foreign investors established in Korea, and in conj unction with Invest Korea, operates an Investment 
Home Doctor Service that provides one-to-one service.114  Korea is a member of the International 
Center for Settlement of Investment Disputes (IC SID) and the Multilateral Investment Guarantee 
Agency (MIGA).   
69. Korea's FTAs contain clauses protecting all forms of investment, including enterprises, debt, 
concessions, contracts, and intellectual property rights (section (6)(iii)).  Agreements contain 
comprehensive rules for all forms of investment: national treatment and MFN treatment;  disciplines 
stronger than the WTO rules on performance requirements (e.g. domestic content) that distort trade and investment;  free transfer of funds and saf eguard measures;  protection from expropriation 
without prompt, adequate, and effective compensa tion;  a minimum standard of treatment;  and 
freedom in hiring senior managers.
115  Since its previous TPR, Korea's FTAs (except with the EU) 
have minimized investment performance requirements.    
70. As of March 2012, Korea maintained bilateral investment agreements (including FTAs) for 
the protection of FDI with 98 countries of which four (Colombia, Rwanda, Uruguay, Zimbabwe) were 
signed in 2009 and 2010;  92 are in forc e and all of them contain an MFN clause.116  Foreign investors 
are not subject to double taxation as long as their ho me country is a signatory to a double taxation 
avoidance convention (DTAC) with Korea;  83 c ountries have signed conventions with Korea, of 
which 4 (Colombia, Estonia, Panama, Uruguay) were  concluded during the review period, 78 are in 
force, and 32 contain "tax sparing" provisions.117 
                                                      
112 To acquire other farmland, foreigners, like Koreans, must be directly involved in farming. 
113 Yonhap  online article, "Foreign ownership of S. Korean land rises 1.2 pct in Q3", 
29 November 2011.  Viewed at:  http://english.yonhapnews.co.kr/business/2011/11/28/0502000000AEN 
2011112800950 0320.HTML [6 December 2011]. 
114 From 2000 to end 2010, the Om budsman received more than 4,116 grievance cases from foreign-
invested firms in Korea covering issues including customs, construction, financial affairs, labour, taxation, legal 
matters, and investment procedures (Invest Korea online information.  Viewed at:  
http://www.investkorea.org/InvestKo reaWar/work/ombsman/eng/au/inde x.jsp?num=3 [6 December 2011]). 
115 The Korea-EU FTA does not contain an investment protection clause.  Some investment issues are 
covered in Chapter Seven (Trade in Services, Estab lishment and Electronic Comm erce) of the agreement. 
116 UNCTAD online information. Viewed at:  http://www.unctad.org/Templates/Page.asp? 
intItemID=2344&lang=1[6 December 2011]. 
117 As of March 2012, DTACs with Bangladesh, Braz il, Bulgaria, China, the Czech Republic, Egypt, 
Fiji, Greece, India, Indo nesia, Ireland, Israel, Italy, Jordan, Kuwa it, Malaysia, Mexico, Malta, Pakistan, Papua 
New Guinea, the Philippines, Portugal, Qatar, Saudi Arab ia, Sri Lanka, Slovakia, Slovenia, Singapore, Turkey, 
Thailand, Tunisia, and Viet Nam contained "tax sparing"  provisions whereby a contracting state agrees to grant 
relief from residence taxation with respect to source taxes that have not actually been paid (i.e. taxes that have 
been 'spared') (UNCTAD online information. Viewed  at:  http://www.unctad.o rg/Templates/Page.asp? 
intItemID=4505&lang=1 [6 December 2011]).