WORLD TRADE  
ORGANIZATION  WT/REG210/5 
9 October 2009 
 (09-4909) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF KOREA  
AND SINGAPORE (GOODS AND SERVICES) 
 
Questions and Replies
 
 
 
 The following communication, dated 6 October 2009, is being circulated at the request of the delegations of the Republic of Korea and Singapore.   This document reproduces the follow-up
 questions addressed to the Parties following the 
54th Session of the CRTA and the responses submitted. 
 
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  Question from the Delegation of the EC
 
 
1. With reference to footnote 4 in page 1 of the Factual Presentation regarding the 
discrepancy in trade data due to use of differen t accounting methods, could the Parties explain 
the methodology behind the methods and explain how this can be addressed, especially when 
considering important issues such as safeguard measures.  Further, have the Parties further 
harmonised their statistical methods? 
 Considering the trade of Singapore is largely b ased on intermediary trade, the main reason for 
the discrepancy in trade data reported by Korea and Singapore to Comtrade seems to be related to the 
extent of re-export trade.  While exports are reco rded according to countries of destination, imports 
are recorded according to countries of origin.  For example, when Singapore re-exports US$5 million 
of goods whose country of origin is Malaysia to Ko rea, Korea would record this trade flow as imports 
from Malaysia and not imports from Singapore.  Singa pore, on the other hand, would record this flow 
as part of its re-exports to Korea.  This would gi ve rise to a very large difference in reported trade 
statistics by Korea and Singapore. 
 Injury of safeguards measures are calculated based on the statistics of import country. 
 Korea and Singapore have not harmonized their statistical methods. 
Questions from the Delegation of the United States  
 
Goods  
 
2. According to Table A.3 on page 46 of the Factual Presentation, 35% of the tariff lines 
comprising Singapore’s top 25 exports to Korea  remain dutiable under the Agreement.  We 
would appreciate a better understanding from Korea as  to how the exclusions of  such priority 
items can be consistent with the spirit  of a so-called free trade agreement.  WT/REG210/5 
Page 2  
 
   While it is important to examine an FTA from th e perspective of liberalizing “substantially all 
the trade” as in GATT Article XXIV, a concrete de finition of “substantially all the trade” does not 
exist in the WTO yet.  It would be ideal if the Parties can liberalize 100% or very close to 100% of 
trade, but many times the reality does not allow it.   For Korea the difficulties arise in the sensitive 
products such as agricultural products and petroleum products.  When it is impossible to completely 
eliminate tariffs across all the products lines, it is  a policy judgement whether to fail the negotiations 
or conclude them by granting an exception to the sen sitive items.  With regard to the Agreement with 
Singapore, Korea believed that the latter option is better in terms of accelerating Korea’s current and 
future market opening and thereby helping Korea integrate more deeply into the multilateral trade 
regime.  Korea believes that such  deficiencies in agricultural and petroleum products do not make the 
Free Trade Agreement inconsistent with GATT Artic le XXIV, as overall it maintains a very high 
level of liberalization across goods, services, investme nt, intellectual property rights, and government 
procurement. 
Services
 
 
Transfers / Balance of Payments  
 
3. Could the Parties please comment on the note  in on page 25 of the Factual Presentation, 
paragraph 74 that the Agreement “encourage[s]” Parties to take safeguard measures?  Is this 
an accurate characterization of Art. 10.12 of the Agreement?  If it is not accurate, the 
United States recommends that the Factual Presentation be revised.  
 Article 10.12 of the Agreement permits Parti es to take safeguard measures in the event of 
serious balance of payments or external fina ncial difficulties or threat, or in exceptional 
circumstances, payments and capital movements be tween the Parties cause or threaten to cause 
serious difficulties for the operation of monetary policy or exchange rate policy in either Party.  The 
Factual Presentation is thus not an accurate charac terization, and should be changed to “… a Party 
may take safeguard measures…” 
Non-Conforming Measures  
 
4. On page 25 of the Factual Presentation, pa ragraph 75 notes that “domestic regulation 
shall not apply to the non-conforming  measures in Annexes 9A and 9B.” 
 Can the Parties please clarify whether Art. 9.6.3 of their Agreement allows Parties to 
schedule specific exceptions to the Agreement’s do mestic regulations obligations; or is Art. 9.6.3 
intended to automatically suppress application of the domestic regulations obligations in any 
sector, area, or activity otherwise scheduled in  Parties’ non-conforming measures Annexes? 
 
 Art. 9.6.3 provides for the non-application of Article 9.11 to (i) the existing non-conforming measures maintained by a Party as set out in Annex 9A, and (ii) to the existing or new measures that a 
Party adopts or maintains with respect to sector s, subsectors or activities as set out in Annex 9B. 
 
Further Liberalization
 
 
5. Have the Parties entered into or concluded any negotiations on deeper liberalization, 
pursuant to Arts. 9.8 or 10.10 of the Agreement? 
 Parties have yet to enter into further liberali zation, but are considering further liberalization 
pursuant to Art 9.8 and 10.10. 
 
  WT/REG210/5 
 Page 3 
 
 
  Communication Services  
 6. On page 34 of the Factual Presentation, Pa ragraph 83 notes that, under the Agreement, 
Singapore restricts foreign equity in faciliti es-based basic telecommuni cations services to 49%, 
whereas its GATS schedule permits foreign equity in this sector of up to 73.99%. 
 Can the Parties please confirm that it was their intention to include less liberalizing 
commitments for Singapore in this Agreement than  in Singapore’s GATS schedule, with respect 
to foreign investment in facilities- based basic telecommunications services? 
 
 Singapore's GATS commitments allows 73.99% fo reign shareholding, based on 49% direct 
investment and 24.99% indirect investment. Based on mutual agreement by both Parties, the said 
reservation is set out in Singapore's Reservations fo r Future Measures, and does not mean that the 
existing commitments by Singapore are less liberal in this agreement.  
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