WT/REG311/2  
 
31 October 2014  
(14-6338)  Page: 1/6  
Committee on Regional Trade Agreements  Original: English  
 
  
FREE TRADE AGREEMENT BETWEEN UNITED STATES AND THE REPUBLIC OF KOREA  
(GOODS AND SERVICES) 
QUESTIONS AND REPLIES 
 The following communication, dated 30 October 2014, is being circulated at the request of 
the delegations of United States and the Republic of Korea. 
 
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 This document reproduces the questions addressed to the Parties and the responses 
submitted. 
Questions from the delegation of Canada: 
1.1.  Paragraph 4.69 of the Factual Presen tation (page 34) describes the measures 
adopted by Parties relating to licensing or  certification of professional services 
suppliers. Could the Parties please describe  any work that has been done under the 
Professional Services Working Group since the ratification of the FTA? 
Under the Working Group on Professional Se rvices, Korea and the United States have 
exchanged information on the standards and criteria for the licensing and certification of engineering, architectural, veterinary and acco unting services and agreed to exchange contact 
information for the relevant bodies. Supplementing  the work of the Working Group, the Korean 
Professional Engineers’ Association (KPEA) has held meetings with its respective U.S. counterparts in several states, i.e., Texas, California, Oregon, Washington and Alaska; and entered into 
negotiations toward a mutual recognition agreement with the Texas Board of Professional 
Engineers. 
1.2.  Paragraph 3.27: Given the nature of the North American automobile manufacturing 
industry, why are provisions on automobile standards only  applicable to originating 
vehicles? More particularly, the Parties ag reed to language permitting vehicles 
originating in the United States of America to  be self-certified to Federal Motor Vehicle 
Safety Standards (FMVSS) and enter the Korean market without the need to be certified 
to Korean safety standards; why was this ac commodation not extended to cover vehicles 
built to FMVSS standards el sewhere in North America? 
While some provisions of the KORUS FTA, notably provisions related to good regulatory 
practices, are applied on a Most-Favored Nation basis, KORUS is a bilateral trade agreement. As 
such, provisions related to trade in goods are applied bilaterally and are intended to facilitate and increase trade between the Parties. 
1.3.  Paragraph 4.4: Has the investor-state  dispute mechanism been invoked under this 
FTA?  If so, could you please provide us with any details? 
The ISDS has not been invoked. WT/REG311/2 
 
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  Question from the delegation of Japan: 
1.4.  Paragraph 5.37: Regarding both civ il and criminal cases on patent rights 
infringements brought to courts in past 3 years, we would like Korea and the US 
respectively to provide us with the number of the cases in which the courts found 
infringement, and the number of the cases in which the courts subsequently ordered the 
destruction of the patent right infringing goods. 
The U.S. Government does not systematically collect and analyze the outcomes of patent 
infringement litigation, so cannot provide statistics that are responsive to this question. We would 
direct the Government of Japan to various publicly  available reports and online resources, such as 
docketnavigator.com and lexmachina.com that may contain information responsive to the questions raised. 
As patent infringement is not criminalized in the United States, we have no statistics to 
report on criminal cases. 
Korea does not maintain such data as Japan requested. However, data regarding patent 
cases including the number of patent cases filed to the Patent Court of Korea is available at 
http://www.scourt.go.kr/portal/justicesta/Justices taListAction.work?gubun= 10 (Korean) or at 
http://eng.scourt.go.kr/eng/resources/statistics (English). 
Questions from the delegation of Thailand: 
1.5.  Paragraph 3.24 of the Report indica ted that "In Chapter 8, - Sanitary and 
Phytosanitary Measures - the Parties reaffirm their existing rights and obligations under the WTO Agreement on Sanitary and Phytosa nitary (SPS) measures. The Chapter does 
not create new SPS rights and obligations; there is no recourse to the Agreement’s 
dispute settlement mechanism for SPS matters". 
Thailand would like to seek further clarif ication on what will be the alternative 
mechanism to be used to resolve any disputes  that may arise in the future regarding SPS 
issues.   
Both Parties shall consult on SPS matters in the Committee on Sanitary and Phytosanitory 
Matters (SPS Committee) to resolve the SPS ma tters on the basis of scientific evidence in 
accordance with Article 8.3.3 (c) of the KORUS FTA SPS Chapter. Other than the SPS Committee, the existing bilateral channels between the comp etent authorities of the Parties and any other 
consultation channels are also available. If both Parties failed to resolve a SPS matter, there is the 
recourse to the DSU procedure according to the WTO SPS Agreement. 
1.6.  Paragraph 3.28 of the Report indicate d that "The Agreement provides for special 
safeguard measures for trade in ag ricultural products and textiles". 
Thailand would like to seek greater in formation that since the KORUS FTA was 
implemented on March 2012, whether safeguard measures for agricultural products and 
textiles have been applied by the Parties or not. If yes, please kindly provide more 
information on the case. 
There have been four safeguard measures for agricultural products (ASG measures) applied 
to the goods originating in the United States in accordance with Annex 3-A of the KORUS FTA after the FTA entered into force. Three ASG measures have been imposed on popcorn 
(HSK 1005.90.2000) in 2012, 2013 and 2014, respectively, and one measure on maize 
(HSK 1005.90.9000) in 2014. With regard to the above mentioned goods, the respective Intermediate Safeguard Duty applied to the quan tities entered above the Intermediate Safeguard 
Trigger Level and at or below the Main Safeguard Trigger Level in accordance with the Annex. 
The safeguard measures for textiles have not been applied by either Party. 
1.7.  Paragraph 3.29 stated that a bilateral safeguard measure "may be introduced only 
if, as a result of the reduction or elimin ation of a tariff under the Agreement, an 
originating good is imported in such increa sed quantities, either in absolute terms or 
relative to domestic production, and under  such conditions that the imports are a 
substantial cause of serious injury or th reat thereof to the domestic industry…". WT/REG311/2 
 
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  Could the United States and South Kore a please clarify how the investigating 
authorities evaluate/determine what cause is considered to be substantial to the point 
at which a bilateral safeguard measure should be applied? 
The United States and Korea appreciate the question from Thailand.   
As Thailand may be aware, as of this time, there have been no bilateral safeguard 
investigations conducted by the U.S. and Korean  competent authorities under Chapter 10 of the 
KORUS FTA. Thus, we cannot refer you to any written reports from the investigating authorities of 
either FTA party that explain the approach taken in an actual case in evaluating and determining 
whether increased imports “constitute a substantial cause of serious injury, or threat thereof” to a domestic industry. 
In the absence of written reports from the competent authorities, we would call your 
attention to the text of Chapter 10, Section A, of the KORUS FTA, which covers safeguard 
measures. The text sets out definitions of key terms that relate to the conditions that the 
competent authorities must find to be satisfied in order to apply a safeguard measure, as well as 
the substantive and procedural requirements th at the competent authorities must satisfy in 
making a determination and applying a safeguard measure.  For example, Article 10.6 of KORUS 
FTA defines the terms “substantial cause,” “serious injury,” and “threat of serious 
injury.”Article 10.2 of the Agreement incorporates into and makes part of the KORUS FTA the text 
of Article 3 of the WTO Safeguards Agreement, which pertains to the conduct of investigations by competent authorities, the reports the competen t authorities must publish that set out their 
findings and reasoned conclusions on all pertinent issues of fact and law, and the protection of 
confidential information.  Article 10.2 also inco rporates and makes part of the FTA the text of 
Articles 4.2(a) and (c) of the WTO Safeguards Agreement that sets out the factors the competent authorities must consider and the detailed analysis of the case that they must provide in their 
report.  
1.8.  Paragraph 3.32 of the Report indicate d that "the Parties agreed on alternative 
safeguard provisions specific to motor ve hicles of heading 8703 or 8704. The motor 
vehicle-specific safeguard provisions includ e the ability to extend the safeguard by two 
years, rather than one. The special motor vehicle safeguard is available for 10 years 
beyond the full elimination of tariffs for each auto product". 
Thailand would like to seek greater in formation that since the KORUS FTA was 
implemented on March 2012, whether special motor vehicle safeguard have been 
applied by the Party or not. If yes, please kindly provide more information on the case. 
No, the special motor vehicle safeguard has not been applied by either Party. 
1.9.  Paragraph 3.34: Stated that "The Party shall afford due consideration to the other 
Party or the exporters of the Party regard ing proposed undertakings on price or, as 
appropriate, on quantity after an affi rmative preliminary determination in an 
antidumping or countervailing duty investigation". 
Could the United States and South Korea pl ease clarify the rational of having a 
quantity undertaking which is not allowed und er the WTO agreements in this context? 
Article 10.7 of the KORUS FTA was drafted to permit, “as appropriate,” the “due 
consideration” of proposed undertakings based on  quantity. There is no requirement that the 
relevant investigating authority accept such a proposed undertaking. It is the view of the United States and Korea that Article 10.7 is consistent with the Agreement on Subsidies and 
Countervailing Measures. 
1.10.  Paragraph 5.33: Stated that "The Agr eement inter alia expands the definition of 
trademark to include protection for non-visu ally perceptible marks such as sounds and 
scents. The term of protection for trademarks is ten years (seven under the 
TRIPS Agreement)". 
Could the United States and South Kore a provide additional information on 
challenges arising from registration  and protection of scent marks? 
According to Article 2 of the Trademark Act, applicants who want to file scent mark 
applications should symbolically express or physically describe their scent marks by using a sign, WT/REG311/2 
 
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  letter, figure, or any other visual means. Other than the written description, applicants are also 
required to submit scent samples via enclosed boxes or scent patches. 
Difficulties arise as it is not easy to preserve indefinitely the scents submitted and for 
examiners to decide whether or not the written description or expression of each scent truly 
corresponds with the samples submitted by the applicants.  
Questions from the delegation of the Sepa rate Customs Territory of Taiwan, Penghu, 
Kinmen, and Matsu: 
 
Part I：Regarding the Secretariat Factual Presentation (WT/REG311/1) 
 
1.11.  According to Table 4.2 and paragr aph 4.52 of the WTO Secretariat’s Factual 
Presentation, in communications services, Kore a has liberalized the conditions for other 
facilities-based suppliers of public teleco mmunications services compared to its GATS 
schedule. 
According to the FTA, Korea allows foreign investors to hold up to 100% of the 
total voting shares of facilities-based pub lic telecommunications services other than KT 
and SKT. We would like to know the status of foreign investment in the 
telecommunications market as well as some specific cases. 
There were 109 fa cilities-based public tele communications service suppliers in Korea as of 
February 2014. Among them, the voting shares of 10 facilities-based service suppliers are held by 
foreigners. For example, 48.02% of SK Telecom voting shares are held by foreigners; for 
KT 38.88%, for LGU+ 26.94%, and for the rest, 5 to 15%.  
1.12.  According to paragraph 4.7  of the WTO Secretariat’s Factual Presentation, a Party 
may deny the benefits of the relevant chap ters to a service supplier, investor, or 
investments of that investor of the ot her Party pursuant to Articles 11.11 and 
Article 12.11, if that person is an enterp rise owned or controlled by persons of a 
non-Party and the denying Party (i) does not maintain "normal economic relations" with 
the third party or (ii) adopts or maintains measures with respect to the non-Party or a person of the non-Party that prohibit transact ions with the enterprise or that would be 
violated or circumvented if the benefits of that Chapter were accorded to the enterprise. 
In addition, the benefits of both Chapters ma y be denied by a Party to a service supplier 
or investor of the other Party if the supplie r or investor is an enterprise owned or 
controlled by persons of a non-Party or th e denying Party and the enterprise has no 
substantial business activities in the territory of the other Party.  
If a Party denies the benefits of the "rel evant" chapters pursuant to Article 11.11 
and Article 12.11, what does "t he relevant chapters" refer to ？ 
The KORUS FTA includes respective denial of benefits clauses in the investment chapter 
(Chapter 11) and cross-border trade in the services chapter (Chapter 12).  
1.13.  What is the rationale for the Parties’ agreement to authorize that a Party may 
deny benefits of a relevant chapter if th e denying Party does not maintain “normal 
economic relations” with a thir d Party? Also, what are the cr iteria for or characteristics 
of “normal economic relations" ？ 
Korea and the United States agreed to use the term “normal economic relations” instead of 
“diplomatic relations” in order to separate the economic agreement from any political implication.  
When an investor of a non-Party that has no diplomatic relations but has normal economic 
relations with the host country makes investment into the host country, denial of benefits provisions may prevent the host country from denying benefits of the agreement to that investor 
solely on the basis of whether the host country and the non-Party has diplomatic relations or not. 
Instead, this could contribute to securing investment inflows by guaranteeing benefits to that investor.  
What are the reasoning and criteria for the provision "(ii) ad opts or maintains 
measures with respect to the non-Party or a person of the non-Party that prohibit 
transactions with the enterprise…" ？ WT/REG311/2 
 
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  Articles 11.11.1(b) and 12.11.1(b) are intended  to enable a host country to deny the 
benefits to corporations whose owners reside in the other Party with whom the host country is sanctioning through measures such as UN Security Council sanctions or sanctions against terrorism. 
1.14.  What are the criteria for determ ining "substantial business activities" ？ 
The notion of “substantial business activities” is introduced to safeguard against the 
potential problem of “free rider” investors and service providers, i.e. sham companies. In this 
sense, the establishment of a shell affiliate or subsidiary is not sufficient to have “substantial business activities.” An investor or a service supplier should be engaged in actual business operations such as employment or sales in th e territory of the other Party. The notion of 
“substantive business operations” used in the definition of juridical person in Article XXVIII of 
GATS can be considered. 
1.15.  According to paragraph 4.17 of the WT O Secretariat’s Factual Presentation, there 
is no separate chapter on the movement of natural persons in the Agreement. Paragraph 
12.1.7 of the Agreement states that nothing in the Agreement may be construed to impose any obligation on a Party regard ing its immigration measures, including 
admission or conditions of admission for te mporary entry. The Parties agree to consult 
on this issue within two years of the Agr eement's entry into force, and at two-year 
intervals afterwards, unless otherwise agreed.  
We would like to ask whether there has been any change in the licensing of 
medical personnel or certification of serv ices suppliers in the U.S. or Korea. 
We presume Chinese Taipei is referring to changes to licensing and certification that may 
have resulted from the Agreement rather than th e normal process of updating or improving such 
policies and procedures.  There have been no change s with regard to the licensing or certification 
of service suppliers in the United States or Korea. 
Part II：Regarding the Free Trade Agreement between Un ited States and the Republic of Korea 
1.16.  According to ANNEX II" Non-Conformi ng Measures for Services and Investment" 
of the Agreement, Korea reserves the righ t to adopt or maintain any measure with 
respect to human health services, and indica tes that the entry shall not apply to the 
preferential measures provided in the Ac t on Designation and Management of Free 
Economic Zones and the Special Act on Esta blishment of Jeju Special Self-Governing 
Province and Creation of Free International City. 
What are "Free Economic Zones," "Jeju Sp ecial Self-Governing Province" and "Free 
International City" systems? What are their major targets and incentives for foreign 
investment ？ Could Korea please provide more detailed information? 
"Free Economic Zones" means, according to the Act, the zone which is developed with the 
aim of improving the management environment for foreign-invested enterprises and living conditions of foreigners. The purpose of the Zones is to facilitate foreign investment and seek the 
balanced development among regions. In the Zone s, the national and local government may grant 
foreign-invested enterprises the reduction or the exemption of national and local taxes, as well as financial aid.  
"Jeju Special Self-Governing Province" is, by the definition of the Special Act, a local 
government that procures the autonomous gove rning right based on responsibility, autonomy, 
diversity, and creativity, with effort to make the best of regional, historical, and humanistic 
characteristics of Jeju and, at the same time, designated as a “Free International City”, the 
purpose of which is to enhance the quality of life and guarantees the maximum convenience for the free flow of people, goods and capital and for tax free business activities. Investment 
incentives that Jeju provides in clude benefits regarding tax, permanent residency, visa, etc.  WT/REG311/2 
 
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  Intellectual Property Rights 
1.17.  According to Paragraph 6(a) of Article 18.8 (Page 413) of this FTA, each Party, at 
the request of the patent owner, shall adjust  the term of a patent to compensate for 
unreasonable delays that occur in gran ting the patent. For purposes of this 
subparagraph, an unreasonable delay shall at le ast include a delay in the issuance of the 
patent of more than four year s from the date of filing of the application in the territory 
of the Party, or three years after a request for examination of the application, whichever 
is later. Periods attributable to actions of the patent applicant need not be included in 
the determination of such delays.  
To our knowledge, the Republic of Korea, in response to the implementation of this 
FTA, has amended its Patent Act to include provisions regarding patent term extension 
due to unreasonable delays. Have there been many requests for extension of patent 
term since the new Act took effect? What types of patent applications are being 
requested the most? In practice, what have b een the difficulties, if any, encountered in 
the examination of extension? 
There have been no requests for extension of patent term extension due to unreasonable 
delays. 
 
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