WORLD TRADE WT/TPR/M/19/Add.1
30April 1997
ORGANIZATION(97-1877)
Trade Policy Review Body
30September -1October 1996
TRADE POLICY REVIEW
MINUTES OFMEETING
Addendum
Answers toWritten Questions
Thefollowing communication wasreceived from theDelegation oftheRepublic ofKorea
responding towritten questions submitted bythedelegations ofAustralia, European Union, Canada,
Hong Kong, NewZealand, Switzerland, Japan, United States andArgentina attheTrade Policy Review
Body forthereview ofKorea andtoquestions raised bythediscussants during thereview meeting.
_______________
TheAdditional Reply toThematic Issues Raised bytheMembers
(Trade Policy Review oftheRepublic ofKorea)
1. Australia
Q1. CanKorea advise whatlaws, regulations andadministrative procedures relating toagriculture
remain toberevised tobring them intolinewiththeWTO agreement, andthetimetable by
which suchrevisions aretobeeffected?
Withregard totheimplementation oftheWTO Agreement onAgriculture, 15lawsincluding
theFoodGrainManagementAct,LivestockFarmingAct,andSericultureLawhavealreadybeenrevised
in1994 and1995.
Q2. What aretheKorean Government 'sintentions intheperiod upto2001-2004 forderegulating
theagricultural sector ofitseconomy, particularly thebeefindustry, andopening upthesector
toglobal competition onthesame basis asother sectors oftheeconomy?
"Please refertoParagraph 110oftheDraft Statement ofReply toThematic Issues Raised by
Members (hereinafter referred toas"Paragraph")." TheDraft Statement isattached totheendof
thisMaterial (ANNEX).WT/TPR/M/19/Add.1
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Q3. What aretheGovernment 'sintentions regarding theoperation ofstatetrading enterprises,
particularly theirrôleinprice stabilization?
TheKorean government isoperating astatetrading system for19items according totheNote 4
andNote 5intheCountry Schedule.
Designated State-trading agencies arethesoleimporting anddistributing agencies forTRQs
ofrelevant items onlytoensure domestic market order ofimported goods which havewidegapsbetween
domestic andinternational prices.
Q4. CanKorea explain thedelay inmoving tomanufacturer determined shelf lifeforcertain
products?
Korea 'smanufacturer-determined shelflifesystem could notbeintroduced inasingle stroke.
However, theKorean government hasalready liberalized 75percentofallfooditems listed inthe
Korean Food Code. Theremaining willbeliberalized by1998, withtheexception ofhighly perishable
foodproducts.
Q5. What measures doestheKorean Government propose toputinplace tobring domestic prices
intolinewithinternational prices?
"Please refertoParagraphs 93and94."
Q6. CanKorea elaborate ontheimpact oftheauctioning system applied inrespect oftariff quotas
onthefinalprice ofimported goods?
"Please refertoParagraph 99."
Q7. CanKorea elaborate onthenature offoodsecurity considerations inlinewithwhatsheintends
topursue further market liberalization ofagricultural, forestry andfisheries products?
Responded toattheTPRoftheRepublic ofKorea.
Q8. What areKorea 'sintentions concerning itsstatus infuture WTO negotiations? Would Korea
notaccept thatitcould, infuture WTO negotiations, reach acceptable outcomes insensitive
areas through thenegotiating process (ashaveother WTO members) rather thanresorting to
claiming developing country status insome WTO agreements?
"Please refertoParagraph 16."
Q9. OnwhatbasisdoestheKorean Government apply thisrequirement thathealth certificates issued
forinedible materials suchaswool besigned anddated byagovernment veterinarian before
thedateofdeparture ofthevessel carrying theshipment?
"Please refertoParagraph 111."
Q10. Onwhatbasis doestheKorean Government refuse topermit access forgame meat?
Thedecision onwhether toapprove theimportation ofgame meatsuchaskangaroo forhuman
consumption isnotsolely based onthesafety ofthemeat. Whether ornotthemeathasbeentraditionally
orcommonly usedforhuman consumption inKorea isalsotaken intoconsideration.WT/TPR/M/19/Add.1
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Q11. What isbeing donetoimprove thetransparency ofimport management regimes andtoensure
allareas ofthebureaucracy areoperating toimplement Korea 'sinternational commitments?
Toimprove thetransparency ofimport management regimes, theimport procedures required
forenvironmental, health, sanitary andsafety reasons, which usedtobescattered across 50separate
laws, arenowincluded intheConsolidated Notice.
TheKorean government hasmade every effort toeducate allareas ofbureaucracy onrelevant
regulations andglobalization.
Q12. How willthenewinspection andclearance system forfresh fruitandvegetables operate?
Throughtheintroductionofthe"ExpeditedInspectionSystem"inApril1995,customsclearance
procedures forperishable fruits andvegetables havebeencompleted without anydelay assoon as
possible. Thus, theprocedure normally takes 5daysfrom therequest under normal conditions.
Q13. Howwould theimposition ofthecarbon taxaffect theeconomic growth projections forKorea?
What effect would thishaveonthegrowth ofthemanufacturing sector, returns from which
arecrucial tohelpstemthegrowth inthecurrent account deficit? IsKorea concerned about
theeffect thattheimposition ofacarbon taxwould haveonattracting independent power
producers tothecountry?
Responded toattheTPRoftheRepublic ofKorea.
Korea currently imposes aneducation tax,avalue added tax,andaspecial excise taxonenergy
prices inorder toregulate energy consumption.
-Inparticular, thereduction ofenvironmental pollution resulting from energy consumption
isachievedthroughtheimpositionofenvironmentalpreservationchargesoncirculationandconsumption
facilities aswellasdiesel cars,while alsoimposing emission charges onmanufacturing andproduction
facilities.
Inthisregard, adding acarbon taxtothecurrent energy consumption taxsystem would create
anexcessive burden onenergy consumption, which could inturnprovoke priceincreases andsluggish
economic activity. Therefore, thegovernment believes thatthismatter should bereviewed carefully
before implementation.
Q14. Could Korea advise ofthereasons foradopting thephasing inoflimitations ontheamount
ofsulphur contained inimported coals? Were otheroptions suchasdesulphurisation equipment
considered? HasKorea beenabletoassess thecostandeffects onthesecurity ofsupply caused
byseverely limiting thenumber ofsuppliers byusing thisapproach?
TheKorean government isnotimposing limitations ontheamount ofsulphur contained in
imported coal.
But,thegovernment levies anemission charge based onthetotalamount ofemission from
theuseofsulphur-containing materials inaccordance withtheAirQuality Preservation Actandits
Enforcement Decree announced onAugust 31,1996.
Thesystem ofemission charges based onthetotalamount ofemission willpromote the
establishmentofde-sulphurizingfacilities.Theseemissionchargesareimposedwhenthelevelofsulphur
emission isabove acertain level, withitsamount positively correlated tothedeviation fromthatcertain
level, evenifthelevelofsulphur emission iswithin therange allowed bythegovernment.WT/TPR/M/19/Add.1
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Q15. CanKorea advise which products areproposed tobecome subject toimport quotas instead
ofparity price tariffs andseasonal tariffs?
"Please refertoParagraphs 61and65."
Additional Q1.Wewould beinterested inimprovements inmarket access inareas across allservices
sectors, suchasinvestment, acquisition oflandandmovement ofnatural persons.
Responded attheTPRoftheRepublic ofKorea.
TheKorean government hascontinuously increased thescope offoreigners 'landacquisition.
Inthefuture, weplantocontinue toidentify unnecessary obstacles anddifficulties andeliminate them,
thusenabling foreign investors toconveniently conduct theirbusiness activities.
Additional Q2.What scope isthere fortheremoval orreduction offoreign equity restrictions aspart
oftheliberalization ofthetelecoms services market? Isthere anyscope forthedatefor
permitting resale overthepublic telecommunications network tobebrought forward?
"Please refertoParagraph 115."
Additional Q3.Arethere plans, inthenearfuture, toreview thefactthattherequirement forseparate
capitalization ofbank branches andtheregulations which arebased onthiscapital place
significant constraints ontheoperations offoreign banks?
Under thecurrent Korean banking system, aforeign bankbranch isregarded asanindependent
domestic bank. Inother words, there isnosubstantial difference between aforeign bankbranch and
abanksubsidiary.
Inaddition tothat,sincetheparents offoreign bank branches arelocated outside thejurisdiction
ofKorean supervisory authorities, itisdifficult tosupervise them adequately. Forthepurpose of
management soundness anddepositor protection, Korea doesnotrecognize theglobal capital forfunding
andlending purposes offoreign bankbranches.
Moreover, thegovernment hasmade various efforts toeasethelending andfunding constraints
thatforeign bank branches might experience. Thegovernment usesthesumofcapital ofmultiple
branches incalculating various operational ceilings, andincludes retained earnings initsdefinition
ofcapital.
Additional Q4.Isliberalization planned intherecruitment andemployment ofinsurance professionals?
Restrictionsonrecruitinginsurancesolicitorsaremaintainedtodiscourageexcessivecompetition
inmanpower scouting, assuchexcessive competition mayresult inhighexpenditures ofinsurance
companies.
ConsideringthattheKoreaninsuranceindustryisfacingsolvencydifficultiescausedbyexcessive
expenditures, theKorean government hasnoposition toabolish thecurrent restrictions.WT/TPR/M/19/Add.1
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Additional Q5.Does Korea planareview ofthemarket access barrier regulations intheprofessional
services sector?
"Please refertoParagraph 116."
Additional Q6.Formaritime transport, arethere plans toremove cargo preferences, particularly for
ironore,coalandliquified gas?
Korea 'ssystem (Designated astheCargo Reservation System) mandating priority tonational
vessels (including BareBoatCharter/Hire Purchase Vessels) forthetransportation ofcertain cargos
(ironore,coalandliquefied gas)willbefullyliberalized bytheendof1998, thusallowing thecomplete
abolishment ofthesystem.
2. European Union
Q1. Which enterprises other thanKorea Telecom willbewholly orpartially privatized andwhat
isthetimetable forimplementation? Will there beanylimits onforeign ownership?
(WT/TPR/S/19, p.3,par.94)
Theprivatization ofpublic enterprises isbeing implemented pursuant tothe1993privatization
plan, which envisaged theprivatization of58public enterprises between 1994 and1998, including
Korea Telecom. Bytheendof1995, theprivatization of15enterprises hadbeencompleted. The
timetable fortheprivatization oftheremaining 43public enterprises willbedetermined inconsideration
ofKorea 'smacroeconomic andstock market situations.
Asforforeign participation intheprivatization process, theKorean government willmake
itsbesteffort toaccord national treatment toforeign investors intheprivatization. However, the
provision ofnational treatment intheprivatization ofeachpublic enterprise willbedetermined, on
acasebycasebasis, duetothespecial characteristic ofeachenterprise.
Q2. Would youexplain onthebasisofwhich criteria Korea intends todecide bywhich dateitwill
relinquishtheclaimofdevelopingcountrystatusinrespectoffuturenegotiationsonliberalization
oftrade, andmore particularly ontheliberalization oftrade inagricultural products?
(WT/TPR/S/19, p.18,par.8)
"Please refertoParagraph 16."
Q3.a Please describe which "localization" schemes havebeenimplemented since1986intheKorean
telecommunications equipment procurement sector. What action hastheKorean government
taken? What havebeentheeffects ofthese schemes?
Since 1986, theKorean government hasnever implemented alocalization scheme for
telecommunications equipment, noristheresuchascheme intheKorean telecommunications equipment
procurement sector.WT/TPR/M/19/Add.1
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Q3.b IsKorea Telecom (KT) obliged tofollow thegovernment 'sprocurement policy withregard
to"foreign-currency procurement" and"domestic currency procurement"? Onwhatlegalbasis
isKTobliged todoso?
KThasnoobligation tocomply withthegovernment 'sprocurement policy.
KTpurchases telecommunications network equipment according toitsowndecision.
Q3.c Isitcorrect thatforeign suppliers cannot participate in"domestic currency procurement" by
KTunless Korea hasconcluded abilateral agreement withtheforeign country?
Yes,itis.Tothepurchase ofKT,theWTO Agreement onGovernment Procurement and
bilateral agreements areapplied.
Pursuant totheMFN principle, bilateral talksbetween Korea andtheEUareunder way,aimed
atmarket opening inthefieldoftelecommunications equipment procurement.
Q3.d Whoestablishes which products aresubject tothe"domestic currency procurement" régime?
Theanswer issame asthatofQ3.c.
Q3.e HastheKorean government 'spolicy inthetelecom equipment sector changed since 1992?
Indicate whatchanges havebeenmade.
TheKorean government 'spolicy inthetelecom equipment sector hasnotchanged. Andthe
telecom market wasopened toU.S.based onthebilateral agreement withU.S.inMarch, 1992. The
Korean government willcontinue opening thedomestic telecom market through bilateral talkswith
other countries.
Q3.f Does theKorean government ortheKorean Development Bank grant anysubsidies forthe
production oftelecommunications network equipment?
Neither theKorean government northeKorean Development Bank grants subsides for
telecommunications network equipment.
Q3.g, hWhen supporting financially theconstruction oftelecommunications infrastructure, doesthe
Koreangovernment(theKoreanDevelopmentBank)imposeanyconditionsontheselectionofequipment
suppliers? Isanoperator which requests financial support forinfrastructure investment required to
indicate fromwhich source equipment willbepurchased before adecision onitsapplication istaken?
TheKoreangovernmentdoesnotimposeconditionsregardingtheselectionofequipmentsuppliers
ontheservice suppliers. Theservice suppliers select equipment suppliers ontheirown.
Although thegovernment isproviding financial assistance toenterprises fortheestablishment
ofinfrastructure, thepurchase ofequipment isdetermined bytheenterprises themselves.WT/TPR/M/19/Add.1
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Q3.i Does theKorean government grant interest ratesubsidies totelecommunications equipment
manufacturers)?
TheKoreangovernmentdoesnotgrantsubsidestotelecommunicationequipmentmanufacturers.
Q3.j How doesKorea define a"small andmedium sized" enterprise (SME). Canforeign SMEs
participate inKT'spurchasing programme forSMEs? (WT/TPR/S/19, p.25,par.5)
Thedefinition ofsmall andmedium-sized enterprises isstipulated intheArticle 2,ofThe
Framework ActonSmall andMedium Enterprises.
-Itisdetermined bytaking intoaccount thetypeofindustry, number ofpermanent employees,
andthevolume ofassets.
-Regarding themanufacturing sector, thenumber ofpermanent employees isnormally
below 300.
Foreign small andmedium-sized companies located inKorea canparticipate intheKT'sscheme
topurchase products from small andmedium-sized enterprises.
Q4. DotheKorean authorities intend toabandon policy loans inthemedium termand,ifso,will
theyseektoreplace them byanyother instrument having similar effects onthesectoral
distribution ofinvestments? (WT/TPR/S/19, p.26,par.2;p.49,par.57)
Toincrease theautonomy offinancial institutions andtheefficiency ofmonetary policy, the
government hasreduced theoverall amount ofpolicy loans.
-Nonewpolicy loans havebeencreated since 1995.
-Byintegrating anaggregate ceiling forBOK rediscounts, thegovernment restrained thetotal
amount ofloans andliberalized theloanrate.
-BOK-backed loantoundeveloped areassuchasagriculture, forestry andfisheries isgradually
being replaced bybudget.
Q5. Could youprovide thedetailed reasons fornotbinding 10percentoftheindustrial tarifflines?
(WT/TPR/S/19)
"Please refertoParagraph 60."
Q6. Could youexplain whyitisnecessary thattheadministration oftariff quotas foragricultural
products isattributed toassociations ofagricultural producers inseveral cases andwhatisdone
toensure fairandimpartial administration ofquotas giving dueprotection totheforeign interests
involved? (WT/TPR/S/19, p.31,par.12)
"Please refertoParagraph 99."WT/TPR/M/19/Add.1
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Q7. Please provide alistoftariff concessions, reductions andexemptions andexplain thecriteria
usedforgranting them. Which aretheindustrial andsocio-cultural reasons justifying tariff
concessions? (WT/TPR/S/19, p.35,par.15and16)
"Please refertoParagraph 67."
Q8. Could youexplain thereasons forthedifference thereisstillinLiquor TaxratesandEducation
Taxratesapplied towhisky, brandy, white spirits, liqueurs, ontheonehand, andsojuonthe
other, andindicate howthisdifference willbereduced infuture? Which aretheobjectives
oftheEducation Tax? (WT/TPR/S/19, p.35,par.24)
Responded toattheTPRoftheRepublic ofKorea.
Q9. Please provide alistofitems subject tonon-automatic export licences andexport prohibition
(including, inparticular, rawmaterials andsemi-processed products). (WT/TPR/S/19, p.37,
par.24).
AsofJanuary 1997, thenumber ofitems subject tonon-automatic export licenses was836,
which areclassified under HS6digitstandards. Inaddition, 14items areprohibited from exports.
Listofexport prohibited items
020890(Whales), 021090(Whales), 121220(Gelidium Amansil, Tenella, Irish-moss, Sewing Thread,
SilkFabric, Hypanaeoides), 251611,251612,251621,251622,251690,430180,430190,4302 19,
4302 20,4302 30(FurSkinofDog), 4303 90(FurGoods ofDog)
Q10. Could youexplain whyitisnotpossible toaccept thatproducts aremarked (Made intheEC",
taking account oftheexistence ofcommon rulesintheEC?AretheKorean authorities willing
tomake anewassessment upon theimplementation oftheTRIPs provisions ofprotection of
geographical indications forwines, etc.? (WT/TPR/S/19, p.43,par.37)
"Please refertoParagraph 71."
Concerning protection ofgeographical indications, theKorean government believes thatKorea 's
current'TrademarkLaw'and'UnfairCompetitionProtectionLaw'canprotectthegeographicalindication
totheextent stipulated intheTRIPs Agreement.
Q11. Would itbepossible toprovide acopy ofthememorandum ofunderstanding onmutual
recognitioninthefieldofstandardandcertification,concludedbetweenKoreaandNewZealand?
Please provide thelistof24categories ofmanufactured goods forwhich improvements inthe
typeapproval system areenvisaged. (WT/TPR/S/19, p.45,par.46-47)
TheMOU between theKorea Laboratory Accreditation Scheme andtheTesting Laboratory
Registration Council ofNew Zealand dated April 19,1996 canbeprovided.WT/TPR/M/19/Add.1
Page9
While thegovernment maintains theapproval system, itexpedites theimprovement ofthat
system, including thereduction ofitems fortesting, theshortening oftimelimits, andthesimplification
ofrequested documents.
The24categories ofmanufactured goods forwhich improvements inthetypeapproval system
areenvisaged areasfollows:
-typeapproval onmotor vehicles;
-aircraftairworthinessandtypecertificationmachines-typeapprovalonconstructionequipment;
-EMIregistration;
-verification ofprotective gear;
-inspection ofhigh-pressure gascylinders;
-typeapproval onelectrical appliances.
Q12. Which measures havebeentaken todatetoimplement boththeMay1995Localization Scheme
fortheCapital Goods Industry andtheImport Substitution Initiative, andwhich measures are
duetobetaken intheyears tocome? (WT/TPR/S/19, p.51,par.61;p.52,par.63)
"Please refertoParagraphs 29-31."
Q13. Could youexplain when andhowforeign right holders andthepublic areinformed ofthe
existence ofanapplication forpatent registration andofthedecisions togrant apatent right?
Arethere anyplans toextend theextremely short opposition period oftwomonths?
(WT/TPR/S/19, p.59)
Foreign rights-holders areinformed about theirpatent applications through thePatent Gazette
within 18months from thefiling dateoftheirapplication.
When theexaminer finishes thesubstantive examination, applications forpublic inspection
arepublished inthePatent Gazette: through thispublication, thepatent-holder canknow thatthe
granting ofapatent isnear.
Iftheopposition tothegranting ofapatent isaccepted, thepatent isnotgranted.
Granting ofthepatent canbeconfirmed inthePublic Gazette attheendoftheyear, when
itcarries thelistsofthepatents registered during theyear.
Revision ofthecurrent opposition system, including thelengthening oftheopposition period,
isbeing considered andfinalresults willcome outbytheendof1997.
Q14. Please explain howtheimport mark-up Korea hasreserved theright toapply onseveral
agricultural products willbecalculated andunder which circumstances itwillapplied?
(WT/TPR/S/19, p.74,par.17)
Aswespecified inNote4ofColumn 7ofSection I-BofPartIofKorea 'sCountry Schedule,
thattheKorean Government imposes animport mark-up ondomestic salesoftheproducts imported
astariffquotas. Theimport mark-up iscalculated insuchamanner astodeduct miscellaneous expenses
which canoccur intheprocess ofimport anddomestic salesfrom thedifferences between domestic
andinternational prices.WT/TPR/M/19/Add.1
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Q15. Isthere anaggregate orspecific limitapplicable tothefunding theGovernment guaranteed
tofinance theconstruction ofnewvessels? Areshipbuilders entitled topolicy loans for
investment inshipbuilding capacity? Ifso,istheamount oftheseloans subject toanaggregate
orspecific (sectoral) limit?
Couldyouexplainforwhichreasonstherecentbidforamassiveprogrammefortheconstruction
ofLNG carriers wasrestricted toKorean shipbuilders? (WT/TPR/S/19, p.86,par.53)
"Please refertoParagraph 49-51."
TheKorea GasCorporation hasrecently made along-term agreement withadomestic maritime
transport company which hassupplied LNG for25years. Inthecourse ofthisagreement, therecent
program fortheconstruction ofLNG carriers merely reflects theplans ofdomestic shipbuilders.
Q16. What istherelationship between theParmaceutical ActandtheConvention onInternational
Trade inendangered Species?
Korea 'sPharmaceutical Actanditsenforcement decree provide controls overtheexport and
import ofpharmaceuticals which fallunder CITES species. Inthisregard, theexport ofCITES-related
pharmaceuticals isallowed withthepermission ofthegovernment under theActanditsEnforcement
Decree.
Additional Q1.Regarding therevision oftwoActsconcerning services, which measures wererepeated?
(WT/TPR/G/19, p.7,par.35)
Thecurrent Licensed Architects Act,which wasrevised inJanuary 1995 andputintoeffect
inJanuary 1996, allowed forthefirsttimetheprovision ofarchitectural design services byforeign
licensed architects through contracts fortheirjointoperation withadomestic established office of
architects withlicense.
TheTaxAccountants Actwasrevised andputintoeffect todelete thenationality requirement
from thequalifications oftaxaccountants inDecember 1995.
Additional Q2. Could Korea supply acomprehensive listofthe14restricted services sectors?
(WT/TPR/G/19, p.18,par.79)
Collection, purification anddistribution ofwater
Wholesaling ofmeat
Supporting airtransport activities, n.e.c.
Other credit granting, n.e.c.
Stable-fund management companies
Medical careinsurance
Workman 'saccident compensation insurance andother social security insurance
Commodity exchanges
Rental ofrealestate, n.e.c.
Land development
Radio broadcastingWT/TPR/M/19/Add.1
Page11
Television broadcasting
Horse racing track andsimilar stadium operation
Gambling
Please refertotheWTO Secretariat 'sReport, Annex, Table III.4.
3. Canada
Q1.a What isthecurrent clearance timeforfresh fruits andvegetables? What istheanticipated
clearance timewhen Korea fullyimplements alltheimprovements described andwhen does
Korea estimate thattheanticipated clearance timewillbeachieved?
TheKorean government introduced arandom sampling scheme inDecember 1996inaddition
totheintroduction oftheexpedited clearance system forfresh fruits andvegetables onApril 3,1995.
Thus, under normal circumstances, sanitary inspections endwithin fourorfivedays.
Q1.b What isthesituation withrespect toother fresh products, suchasfresh/chilled meat? How
much product canclear customs atatime? Areanyimprovements infacilities tohandle
thistypeofproduct anticipated? What isthecurrent customs clearance timefortheseproducts?
Arethere anyanticipated improvements?
"Please refertoParagraphs 69,103,104and106."
Q1c. What isthecurrent andanticipated clearance timeforlessperishable products?
"Please refertotheanswer toQ1.a ofCanada."
Q2. Could Korea indicate onwhatdateitwilleliminate therequirement tospecify thepercentage
share ofallingredients?
"Please refertoParagraph 107."
Q3. Korea isinstituting random sampling formany products asofOctober 1,1997; Isthisdate
stillvalid? Isbottled water oneoftheproducts thatwillbesubject torandom sampling after
October 1?Does Korea havealistofproducts thataremoving torandom testing?
Pursuant toArticle 23oftheDrinking Water Management Actanditsrelated provisions, the
Korean government hasalready conducted random sampling testswithregard toimported bottled water
since May1,1995.
"Please refertoParagraph 104regarding foodproducts."WT/TPR/M/19/Add.1
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Q4. Could Korea explain what"adjustment duties" are?Howareadjustment duties determined?
Whyhavetheymoved frombeing determined onanannual basistoevery sixmonths? (p.31,
par.11).
"Please refertoParagraph 63."
Q5. HasKorea applied animport mark-up toanyoftheproducts listed inTable AIII.2? (p.75,
par.17)
"Please refertotheanswer toQ14ofE.U."
Q6. DoesKoreamaintainanytypeofcontrolsovernon-conferencelinersthroughtheKoreaMaritime
andPortAdministration ?
Korea doesnothaveanyregulation thatdiscriminates against non-conference liners.
Q7. Cartels areprohibited butweunderstand thatcertain exceptions maybegranted. Could you
describe whattypeofagreement ontrade condition maybepermitted under theFairTrade
Act?
TheKorean government iscurrently working torevise itsForeign Trade Act,theresults of
which willabolish allexceptions regarding cartel-type arrangements asofMarch 1,1997. However,
cartels suchasconservation measures fornatural resources willbepermitted under GATT Article XX.
TheKorean government alsoallows cartels agreed upon under theWTO Agreement onTextiles and
Clothing, various agreements between governments andbilateral contracts between companies.
4. Hong Kong
Q1. Wewould liketoknow howKorea willphase initsURcommitments inrespect oftariff
reduction, andifKorea hasanyfurther tariff reduction planbeyond itsURcommitments?
"Please refertoParagraph 67."
Q2. Wewould liketohavealistofthesome 3,000 imported-related items which willstillbesubject
tonon-automatic licensing in1997 andthedetails oflicensing requirement.
"Please refertoParagraph 70."
Q3. Wewould liketoknow details ontheplans, time-tables etc.onhowKorea intends toopen
upservice sectors forforeign investment.
"Please refertoParagraphs 81-83."WT/TPR/M/19/Add.1
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Q4. Onfinancial services, therearelimits onthetotalforeign share ownership inKorea; itwould
beuseful toknow thejustifications fortheinvestment ceiling andthedifficulty which prevents
Korea from totalabolition oftheinvestment ceiling before 2000.
"Please refertoParagraphs 80,82,114and115."
Q5.a Weareinterestedtoknowsomeofthemajorde-regulationinitiativesthathaveimportantimpacts
onthelivesofthegeneral Koreans.
TheKoreangovernmenttookactionstofacilitatetheimportdeclarationprocedure.Thisallowed
theimporter tosubmit animport notice before, rather thanafter, storing goods intheBonded Area.
Thismeasure, known astheImport Pre-filing System, means thattheimporter isabletowithdraw
goods from foreign trade vessels upon unloading. (July, 1996).
Thepresent method ofdutycollection wasreplaced withaPost-Clearance Duty Collection
System, which allows theimporter topayproduct duties subsequent toclearance (July, 1996).
Theconsent required fromtherelevant minister, when attempting totransform theuseofpasture
landtootherpurposes, willbeabolished inorder toremove anyinconveniences totheprivate landowner.
(endof1996).
Q5.b Weareinterested toknow howmany authorized exceptions totheprohibition ofimport and
export cartels arenowinforce andwhether there areanyperiodic review/renewal forsuch
exceptions.
TheKorean government iscurrently working torevise theForeign Trade Act,theresult of
which willbethatallexceptions regarding cartel-type arrangement shall beabolished asof
March 1,1997.
Q5.c Willallcases withpenalties forunfair practices imposed beexamined bythecourt, orwill
thejudiciary consider onlytheserious cases among them?
TheFairTrade Commission takescorrective measures, which includes filing reports andissuing
corrective orders, corrective recommendations andwarnings, etc.,orimposes surcharges. Forreported
cases, penalties aredetermined bycourt rulings.
Those whoobject tothemeasures taken bytheCommission mayraise objection atthe
Commission andfileasuitatthecourt. Insuchacase, thecourt reviews thecases filed.
Q5.d Arethere anybuilt-in safeguards inthebidding process toprevent suchanti-competitive
practices? WilltheKorean FairTrade Commission playamonitoring rôleinallmajor
government biddings orrather itwillonlybeinvolved intheevent ofcomplaint?
"Please refertoParagraph 87."WT/TPR/M/19/Add.1
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Q6. Could Korea clarify whyanotification ontherevision oftheCustoms ActandEnforcement
Decree toimprove itsanti-dumping system inDecember 1995 wasnotmade?
Korea ismaking various efforts toimplement theWTO Anti-Dumping Agreement.
- December 1993 Revision oftheCustoms Act
- December 1994Revision oftheEnforcement Decree andRegulation ofCustoms Act
- July1995 Revision oftheCustoms ActandEnforcement Decree inaccordance with
theresults ofthereview oftheWTO Anti-Dumping Committee
- December 1995 Revision oftheCustoms ActandEnforcement Decree based onthe
recommendationoftheWTOAnti-DumpingCommittee(putintoeffectonJuly1,1996)
Korea isnowpreparing tomake anotification onthese revisions.
5. NewZealand
Q1. What isKorea 'sposition ontheappropriate rôleofsafeguard mechanisms inthecontext of
itsliberalization programme arising fromitsUruguay Round commitments anddisinvocation
ofBalance ofPayments restrictions?
"Please refertoParagraphs 42,43and48".
Q2. Intheinterests ofcertainty, canKorea giveanindication oftheapproximate schedule of
liberalization fortheproducts which haveyettoshifttotheproducer mandated shelf-life régime?
"Please refertoParagraph 103."
TheKorean government hasalready liberalized 75percentofallfooditems listed intheKorean
Food Code.
Additional Q1.Thereport states thatKorea made regulatory changes between April 1995andMay1996
that"shorten theperiod required forcustoms clearance" (p.24,par.3).
Additional Q1.a What isthecurrent clearance timeforfresh fruits andvegetables? What isthe
anticipated clearance timewhen Korea fullyimplements alltheimprovements described and
when doesKorea estimate thattheanticipated clearance timewillbeachieved?
"Please refertotheanswer toQ1.a ofCanada."
Additional Q1.b What isthesituation withrespect toother freshproducts, suchasfresh/chilled meat?
Howmuch product canclearcustoms atatime? Areanyimprovements infacilities tohandle
thistypeofproduct anticipated? What isthecurrent customs clearance timefortheseproducts?
Arethere anyanticipated improvements?
"Please refertoParagraphs 69,103,104and106."WT/TPR/M/19/Add.1
Page15
Additional Q1.c What isthecurrent andanticipated clearance timeforlessperishable products?
"Please refertotheanswer toQ1.c ofCanada."
Additional Q2.Itisindicated thatKorea agreed toabolish therequirement tospecify thepercentage
share ofingredients asacondition forimport clearance under itsnational inspection system
(p.24,par.4).Could Korea indicate onwhatdateitwilleliminate therequirement tospecify
thepercentage share ofallingredients?
"Please refertoParagraph 107."
Additional Q3. Itisnoted thatKorea willintroduce random sampling forlaboratory tests(p.4,
par.4).Thisissue isofinterest toCanada, particularly withrespect tobottled water.
- Weunderstand thatithasbeenarequirement thateachshipment ofbottled water be
tested. Wealsounderstand thatKorea isinstituting random sampling formany products
asofOctober 1,1997. Isthisdatestillvalid? Isbottled water oneoftheproducts
thatwillbesubject torandom sampling afterOctober 1?Ifnot,whatistherationale
forkeeping bottled water onthelistformandatory testing? Does Korea havealist
ofproducts thataremoving torandom testing?
"Please refertotheanswer toQ3ofCanada."
Additional Q4.Could Korea please explain what"adjustment duties" are.Howareadjustment duties
determined? Whyhavetheymoved from being determined onanannual basis toevery six
months? (p.31,par.11).
"Please refertoParagraph 63."
Additional Q5.HasKorea applied animport mark-up toanyoftheproducts listed inTable AIII.2?
(p.75,par.11).
Among theproducts listed inTable AIII.2, theproducts asfollowing donotrequire origin
marking:
- Theproducts forwhich origin marking isimpracticable including liveanimal, fodder
roots, residues ofsesamum seeds, modified starches, silk-worm cocoons andrawsilk,
etc.
- Incases where theneedtomark theorigin isrelatively weak interms ofdomestic
distribution.WT/TPR/M/19/Add.1
Page16
6. Switzerland
Q1. Withregard tothedeterioration ofKorea 'scurrent account deficit, please provide some further
details onthemeasures envisaged (such astheannounced austerity policy).
"Please refertoParagraphs 8and9."
Q2. Intheprocess ofacceding totheOECD Korea haspromised toreview thecurrent application
ofsystems related torulesoforigin by31December 1996, taking adequately intoconsideration
theviews ofitstrading partners. Could thedelegation ofKorea inform about theintended
result ofthisreview, towhat number theaffected products willpossibly bereduced andin
which sectors?
"Please refertoParagraph 71."
Q3. Could Korea comment onitsexperience withtheimplementation ofthe1992Five-Year Plan
forLocalization ofMachinery, Parts andMaterials sofar?What further measures arebeing
envisaged?
"Please refertoParagraphs 29-31."
7. Japan
Q1. Concerning Korean position forWTO implementation, doweunderstand thattheRepublic
ofKorea willassume allWTO obligations asanindustrialized country except intheagricultural
field?
"Please refertoParagraphs 14-18."
Q2.a Maywehaveaconcrete schedule oftheabolishment oftheImport Diversification Program?
"Please refertoParagraph 24."
Q2.b Concerning Import Diversification Program, aredaily consumption goods suchaswoollen
textiles, watches, hotwater potsorelectrical goods suchasmagnetic switches, alsosubject
tothisprogram?
"Please refertoParagraph 24."
Q3.a Wehope thattheKorean Government doesn 'tlinktheRules ofOrigin with Import
Diversification Program.
"Please refertoParagraph 24."WT/TPR/M/19/Add.1
Page17
Q3.b Korea applies "marks oforigin" requirements toimport of678items, butsome companies
complain thattheyareobliged tosupply asignificant number ofdocuments toclarify origins
oftheirmerchandise. Maywewishsome improvements?
"Please refertoParagraphs 28and74."
Q4.a, bImport restrictions onusedgoods system hasbeenalleviated since 1January 1996 butstill
thedoubt onconsistency withWTO obligation remains. TheKorean Government announced
thattoderegulate thissystem, onlysome reasons suchasnational security, sanitary ordefence
stillbeapplied inconformity withinternational rules, butusedcarsorusedmachinery which
arenotsubject tothese criteria remain restricted. Wehopethatfurther deregulation willbe
achieved soon.
Besides, wewould liketodrawattention tothefactthatthese measures canbeagreatobstacle
fortheforeign direct investment incentive which isoneofthemain policies oftheKorean
Government.
Responded tointheTPRoftheRepublic ofKorea.
Q5.a TheSecretariat 'sreport states thatvoluntary export restraints onchestnuts toJapan willbe
abolished in1997orinDecember 1998. However, either atagovernmental orprivate level,
weneither made anyagreement norrequest, onquantitative restrictions onthisitem. Ifthe
Korean Government conducts thismeasures, wethink thatitisatotally unilateral action from
Korea.
Thevoluntary export restraints onchestnuts isaunilateral action tomaintain acertain level
ofquality. Korea willeliminate itbytheendof1998.
Q5.b Does theForeign Trade Actregulate anyimport banwhich isnotallowed bySafeguards
Agreement?
"Please refertoParagraph 48."
Q5.c DoestheForeign Trade Actdetermine anymeasures forthegovernment toencourage contracts
between national suppliers andnational buyers soastokeepacertain levelofnational product
purchase?
"Please refertoParagraph 48."
Q5.d Itseems thattheForeign Trade Actregularizes co-ordination andconsultation between business
sectors.DoestheKoreanGovernmentthinkthatthesemeasuresarecompatiblewithArticle11.3
ofSafeguard Agreement?
InDecember 1996, theKorean Government abolished theprovisions oftheForeign Trade
Actconcerning agreements between domestic trade businessmen andagreements between domesticWT/TPR/M/19/Add.1
Page18
export associations andforeign producer 'sorganization onprice, quantity, quality, andotherconditions
oftrade, effective asofMarch 1,1997.
Inaddition, theKorean Government plans toabolish theprovision ofthePresidential Decree
oftheForeign Trade Actconcerning thelocalproducts purchase promotion agreement between domestic
manufacturers andusers, effective asofMarch 1,1997.
Q6.a Concerning tariff reduction aftertheUruguay Round Negotiations, what isthesituation of
Korean bound ratesandapplied ratesonfisheries?
Korea hasbeen faithfully implementing itsconcessions made during theUruguay Round
negotiations.
-Theliberalization offishery products willgradually takeplace according toKorea 's
liberalization planby1997. 18fisheries items werealready liberalized inJuly1996, andtheremaining
31items willbefullyliberalized bytheendof1997, thusresulting incomplete liberalization.
Q6.b Itseems that16goods willbeexceptions oftariffication ofagricultural products after2001.
However, wenotethatontheKorean schedule thereare14products relating toricearesubject
toexceptions totariffication. What aretheremaining twoproducts?
"Please refertoParagraph 100."
There areonly14products relating toricethataresubject toexceptions totariffication. The
number ofproducts were reduced from 16goods to14goods duetoHSre-classification.
Q6.c What willbetheconcrete information which thedatabasetheKorean Government willcreate
ondomestic andforeign foodbefore 1997 willtreat? Willtheaccess offoreign countries to
thisdatabase beallowed?
Korea 'splanned imported foodnetwork isadatabase forinformation related toimported food,
andincludes health andhygiene information.
Wehavenotyetdecided whether toallow foreigners access tothisdatabase.
Q7. What aretheproducts which aresubject tothecompulsory acceptance orreport based onthe
Electric Appliances Safety Control Act?
Forthepurpose ofprotecting consumers frominjury resulting frominferior electric appliances,
theElectric Appliances Safety Control Actstipulates that234products, suchaselectric ranges and
refrigerators, arerequired toobtain typeapproval, andthat66products suchaselectric musical
instruments andflashlights aretobenotified totheauthority concerned.
Q8.a, bSome private associations formed byagroup ofcompanies seem abletoobtain mandates
totakerestriction measures oninternational tradenocertain products, which arealsoproduced
bythesame companies. Wefindmany similar cases andrequest some improvement inthis
situation.WT/TPR/M/19/Add.1
Page19
Since thecriteria of"import recommendations" isnotclearly defined, therearesome problems
oftransparency related tothesystems. Thelegitimacy ofthissystem ischallenged.
"Please refertoParagraphs 32-36."
Q9.a IftheKorean Government requires thesubmission ofplans ofnationalisation ofcertain products
forexemption ofapplication ofImport Diversification Program, wethink itmeans request
oflocalcontent. What istheopinion oftheKorean Government?
OnJuly1,1996,theKoreangovernmentrevisedrelatedprovisionsoftheImportDiversification
System and,accordingly, abolished therequirement tosubmit localization plans toallow imports of
excepted items.
Q9.b Wehavesome information thattheKorean Government requires local-content condition to
thesubsidies tobuytractors oflessthan50h.p.Isthisinformation correct, andifso,what
isthejustification withtheWTO obligations?
Government subsidies forthepurchase ofagricultural machinery wereintroduced in1993 to
reduce agricultural production coststhrough mechanized farming, andtohelpsolve thelabour shortage
ofrural communities foralimited period (until theendof1997).
Thelocal-content requirement onpurchasing agricultural machinery withgovernment subsidies,
50percentormoreforsmall-sized machinery and20percentormoreforlarge-sized items, wasapplied
from1993to1995forthepurpose offacilitating technology development appropriate totheagricultural
conditions Korea andtofacilitate convenient after-service ofspare parts.
However, theKorean government abolished these local-content requirements forsubsidies
effective January 1,1996 soastoavoid discrimination against imported agricultural machinery.
Q10. Korean Anti-Dumping regulates notonlyprice undertakings withexport companies butalso
quantity undertakings. What istheconsistency withArticles 8and18.1ofAnti-Dumping
Agreement?
"Please refertoParagraph 41."
Q11.a, b,cWeheard thatconcerning import activity ontheKorean market byJapanese trading
companies, afterJanuary 1997 therestrictions based onthepermission regulated byforeign
investors ruleswillbelifted andgeneral tradeactivities including imports andinvestments will
betotally liberalized. What isthecomplete schedule ofthisliberalization?
Arethereanyregulations todetermine trading companies other thanForeign Investors Rules?
Concerning Foreign Trade Act,what istherecent movement ontheamendment, arethere
anyplans forfurther amendment, ifsowhatarethecontents?
Regarding theroleandacceptance ofGeneral Trading Companies, thelimited entry offoreign
company 'strading business willbeeliminated byMarch 1,1997, andtherevision oftheForeign Trade
Actwhich contains theelimination oflimits isnowbeing processed.WT/TPR/M/19/Add.1
Page20
Q12.a, bTheKorean export incentives based onpost-shipment export loans, export-related tax-free
reserves, preferential access toexport credit, butwethinkthattheKorean Government notified
twomeasures onreserves forexport losses andreserves foroverseas market development to
theWTO Subsidies Committee. Arethereanyother concrete export subsidies other thanthese
twomeasures?
Weknew byanewspaper anewexport incentives planwaspublished inJuly1996. What
isitsconcrete content?
Along withthesetwo,Korea regards theFacility Investment Fundasaformofexport subsidies
among thesubsidies notified tothecommittee onsubsidies.
Thesubstance ofexport measures announced inthelatter halfofthisyear:
- Onfourseparate occasions thisyear,theKorean government devised plans toalleviate
therecent increase inthecurrent account deficit.
- Theseincludemeasurestopromotethedevelopmentofdesignandindustrialtechnology,
deregulation inorder toalleviate costs borne byenterprises tosupport marketing
activities ofSMEs andstrengthen thehuman resources system ofSMEs, gradual tariff
reduction toensure price stability ofrawmaterials, promotion ofdevelopment of
prototypes andstrategic technical cooperation withadvanced enterprises.
Q13.a TheSecretariat 'sreport establishes alistofsubsidies notified under WTO provisions atthe
Table III.8. Canwehave clarification onthistable, especially concerning thedifference
between "prohibited subsidies" and"actionable subsidies"?
Among thesubsidies notified totheWTO, there arefiveprohibited subsidies including three
export subsidies,and theTaxforInvestment inFacilities, which isanimport-substitution subsidy.
TheKorean government regards thatthesubsidies other thanthefourtypes ofsubsidies which
areclassified asfiveR&D subsidies (fiveprohibited subsidies), fallunder actionable subsidies.
Q13.b Ifthe"localization scheme forthecapital goods industry" introduced inMay1995 hasthe
objective tobalance trade expansion through increasing exports, weareafraid ofits
effects oftrade restrictions. HowwilltheKorean Government findcompatibility withWTO
obligations? Particularly arethere anyreasons tojudge thatthismeasure doesn 'tcorrespond
toexportsubsidiesregulatedbyWTOSubsidiesAgreement?Ifonlynationalcompaniesreducing
machinery benefit fromlowinterest loans, isitnotcompatible withArticle 3ofGATT 1994?
"Please refertoParagraphs 29-31."
Q14. InJuly1991 thedecree "Control onOrigins ofProducts" wascreated anditobliges tomark
onproducts necessary inform bothinKorean andEnglish languages inawaythattheconsumer
mayclearly see,etc.After that,inMayandJuly1993 thisdecree inquestion wasamended
andwenotesome improvements, buthowever, some OEM products became more severely
controlled andadditional goods arealsoinvolved. InNovember 1995, thesenumbers increased
to678,thissystem involves tooheavy charges andhasatrade restrictive effect, weareafraidWT/TPR/M/19/Add.1
Page21
aboutthecompatibilitywithArticle2.2ofTBTAgreement.IstheKoreanGovernmentprepared
toimprove thissystem?
"Please refertoParagraph 71."
Q15. What istheKorean Government position vis-à-vis alleviation ofcompulsory shelf-life labelling
requirement?
Korea 'scurrent shelf-life labelling system adheres totheinternational standards under CODEX.
Thus, theKorean government hasnotconsidered easing theshelf-life labelling system.
Q16. CantheKorean Government giveusamore detailed information onlawsandregulations
amended withimplementation ofGovernment procurement?
"Please refertoParagraph 74."
Q17.a WenotethattheKorean Government finalized internal legal reform toimplement TRIPS
Agreement 1995. Mayweunderstand thatalltheobligations ofTRIPS Agreement arealready
totally enforced?
"Please refertoParagraph 76."
Q17.b TheKorean Government report states thatpatent justice court willbecreated inMarch 1998,
butwhatistheconcrete schedule andthesituation oflegalreorganization?
"Please refertoParagraph 78."
Q18. What istheconcrete andrecent result offoreign operators 'access tothefinancial and
telecommunication services aftertheapplication oftherespective liberalization plan?
Invalue-added services completely opened from January 1995, there arepresently, over
800service providers competing inthevalue-added telecom market. Inthewireless telecommunication
service,whereforeigninvestmentispermittedupto1/3oftotalequity,therearejointventures,including
Shinsegi Mobile Co.
8. TheUnited States ofAmerica
Q1. Isitnotaccurate thatthegeneral limitation offoreign shareholding iscurrently 18percent,
not15percent, anditwillbefurther raised to20percentonOctober 1?Isitcorrect that
theceiling willbecompletely eliminated in2000?
"Please refertoParagraph 80."WT/TPR/M/19/Add.1
Page22
Q2. IsKorea taking measures toensure thatitsregulatory régime comports withtheobjective of
aligning Korean standards withinternational standards andnotcreating unnecessary barriers
tointernational trade?
"Please refertoParagraph 73."
Q3. Regarding Table II.2,whydidKorea notinclude inthischart itsnotifications ofchanges to
itsshelf-life requirements anditsimport clearance procedures?
InlinewiththeWTO Agreement, theKorean government notified theWTO ofitsimprovement
measures forshelf-life liberalization anditsimported food management system. However, this
information hasbeenexcluded from Table II.2oftheSecretariat 'sReport.
Q4. WenotethattheSecretariat Report indicates thatKorea didnotclaim developing country status
under theSPSAgreement. Isthiscorrect?
"Please refertoParagraphs 16-18."
Q5. IsKorea advocating theestablishment ofapreferential freetradeareaamong APEC members?
Ifyes,would thismean thedevelopment ofAPEC preferential rules oforigin?
Responded attheTPRoftheRepublic ofKorea.
Q6. Were theliberalizations made inMarch 1996 liberalizations thatKorea hadcommitted to
implementing (under theJuly1995 Agreement) byOctober 1,1995?
Theliberalization of10items, including milkpowder, onMarch 29,1996 wastheresult of
consultations between Korea andtheU.S.towards harmonizing differences ininterpretations ofthe
July1995 Agreement.
Q7. Itisunclear toWTO members through Korea 'srevised August 9notification thatKorea has
liberalized shelf-life restrictions onfresh/chilled vacuum-packed beefandpork. Does Korea
plantoclarify thisambiguity byrevising itsAugust 9submission andsubmitting another
notification totheWTO?
InAugust 1996, Korea classified theshelf-life liberalization items made inJuly1996according
totheHScode, andnotified them totheWTO.
Theform oftheAugust 1996 notification wasthesame asthatoftheOctober 1,1995
liberalization items.
Thereason whyKorea notified liberalization items according totheHS4-digit codewasdue
tothefactthatitcovers all6-digit items.
Thenotification made inAugust 1996includes alltheitems which wereagreed between Korea
andtheU.S.in1995.WT/TPR/M/19/Add.1
Page23
Q8. HasKorea eliminated theexception totheshelf-life liberalizations provided forunder the1995
Agreement?
Theorder bytheMinistry ofHealth andWelfare totheRegional Food andPharmaceuticals
Administration inMay1996regarding fooddistribution period wasmade aftertheU.S.request (during
C.Lund'svisittotheMinistry) toensure thatcustoms clearance isnotdelayed forproducts under
thefreedistribution period.
Thismeasure bytheMinistry ofHealth andWelfare wastaken tohonour itspromise tothe
U.S.toensure thatcustoms clearance isnotdelayed duetotherequest bytheinspection authorities
tosubmit unnecessary materials forproducts ofwhich thedistribution period isliberalized.
Theconcluding partoftheinstruction document means thatinspection officials candemand
information only"when themanufacturing dateorshelf-life oftheproduct labelled bythemanufacturer
oftheproduct isnotdiscernible". Itisdifferent from theU.S. translation, "when itisdifficult to
recognize themanufacturing dateorshelf-life oftheproduct". Therefore, theinstruction isconveyed
nottogrant arbitrary discretion toworking levelofficials buttoprevent importers fromcounterfeiting
theshelf-lives ofproducts thelabels ofwhich weretooblurred tobeseenorwhich werenotlabelled.
Inaddition, theinformation represents themanufacturers determined manufacturing dateorshelf-life
oftheproduct regardless ofitsform.
Q9. What isKorea 'starget sampling rateif100percentsampling requirements forlaboratory tests
istobeeliminated? When willarandom sampling system takeeffect inKorea? Willsuch
areform bemake through legislative orregulatory means, Ministerial orPresidential decrees,
internalguidance?Oncompliancesamplingfor"new-to-market"products,willKorearecognize
asthesameproduct allsubsequent shipments ofthesameproduct brand fromthesamecountry
ororigin ofpackage size,plant, importer, exporter?
"Please refertoParagraph 104."
Q10. Does Korea require product tobeheldinoneplace untilcompletion oflabtests? Isthere an
appeal process forimporters/exporters tocontest Government labresults? Incaseofnegative
labresults, doesKorea require thatallproduct berecalled anddestroyed?
"Please refertoParagraph 103".
Q11. When willtheabolition ofmandatory sorting requirements beeffective? Willmandatory sorting
requirements beabolished bothaspartoftheimport clearance process andasabehind-the
border requirement? Isthere amandatory sorting requirement ondomestically produced
horticultural products? Ifyes,which Korean agency administers thisrequirement? Willsuch
areform bemake through legislative orregulatory means, Ministerial orPresidential decrees,
internal guidance?
"Please refertoParagraph 106".WT/TPR/M/19/Add.1
Page24
Q12. Itisnoted intheSecretariat 'spaper thatKorea willabolish itscurrent obligation forspecification
ofpercentage share ofallingredients. When willthisreform takeeffect? WillKorea continue
torequire specification ofpercentage share foranyingredients, asacondition ofimport
clearance? Ifyes,whatisthescientific basis forrequiring suchinformation?
"Please refertoParagraph 107."
Q13. Onwhatscientific basisdoesKorea claim riskfromtheinternationally recognized Medfly-free
areas ofCalifornia?
"Please refertoParagraph 105."
Q14. Does Korea intend tocontinue itsrequirement fortreatment ofimported products forpests
already found inKorea? Onwhatscientific basisdoesKorea maintain thisrequirement? Which
pestsearlier requiring treatment byKorea willnolonger require treatment under thenewpolicy?
"Please refertoParagraph 107."
Q15. After numerous discussions overmany years, andnumerous WTO notifications, Korea has
failed toimplement several import inspection measures which arecritical toconformity with
common international practices.
"Please refertoParagraphs 113,104,105,106,107."
Q16. These areindications ofacertain protectionist attitude; sometime embodied ingovernment-
sponsored anti-import campaigns orharassment offoreign business interests thatseekassistance
from theirgovernment. What comments hasKorea onthese issues?
"Please refertothesecond partofParagraph 11".
Q17. What areKorea 'sintentions withrespect toexceptionally highduties onalarge number of
high-value agricultural andfisheries products?
"Please refertoParagraph 113".
Q18. With respect todistilled spirits, doesKorean taxcodediscriminate against imported liquors?
Responded toattheTPRoftheRepublic ofKorea.
Q19. Whyisthere nomention ofthedisparity intheliquor andeducation taxes between sojuand
alikeproduct, whisky?
Responded toattheTPRoftheRepublic ofKorea.WT/TPR/M/19/Add.1
Page25
Q20. Beside theliquor taxratechart, there should alsobeaseparate chart fortheeducation tax.
Thischart would show thatthere isa30percenteducation taxonwhisky, brandy, liqueurs
andmixtures ofbrandy andwhisky, a10percenttaxonsojuand"zero" taxonyakju and
takju.
Education taxes areassessed notonlyonliquor, butalsoongross receipts ofbanking and
insurance business, liquor taxamount payable pursuant totheLiquor TaxLaw,special excise taxamount
payable pursuant totheSpecial Excise TaxLaw, inhabitant taxamount payable pursuant totheLocal
TaxLaw,registration taxamount payable pursuant totheLocal TaxLaw,horse racetaxamount payable
pursuant totheLocal TaxLaw, property taxamount payable pursuant totheLocal TaxLaw, aggregate
landtaxamount payable pursuant totheLocal TaxLaw, automobile taxamount payable pursuant to
theLocal TaxLaw, tobacco consumption taxamount payable andtransportation taxamount payable
pursuant totheTransportation TaxLaw. Therefore, theeducation taxisimposed differently fromthe
liquor tax.
Thedifferences intheeducation taxratesaretoprovide equity interms oftaxburden among
different income classes.
Q21. When willKorea reduce customs clearance to2-3daysforfoodproducts asisthecaseinsimilar
markets?
Itisimpracticable toreduce thetimeforclearance to2-3days. However, itisexpected that
thetimewillbereduced when theimported foodcomputer network isoperated, along withtherandom
sampling system.
Q22. Regarding licensing, whatarethefoodproducts Korea deems tobe"sensitive"?
There isnofood product which issubject torestrictions such asimport andexport
recommendation.
Q23. What areKorea 'sintentions foreliminating theimport diversification requirements, including
atimetable thatindicates theschedule forelimination onaproduct-specific basis?
"Please refertoParagraphs 22-24."
Q24. With respect tosoybean oil,didKorea notnotify theWTO onMarch 12,1996 thatitwas
dropping itsinvocation ofArticle XIXdated December 12,1995?
Concerning thesafeguard investigation ofsoybean oil,Korea notified thatitwould notinvoke
Article XIXoftheGATT 1994. Korea understands thetariff increase within thelimits ofthebound
rate,which wasrecommended asaremedial measure, isnotameasure pursuant toArticle XIXof
theGATT 1994.WT/TPR/M/19/Add.1
Page26
Q25. Must importers agree toholdproduct inaspecific location pending labtestresults andtothen
sellordestroy theproduct according tothelabtestresult?
Responded toattheTPRoftheRepublic ofKorea.
Q26. Under whatcircumstances would anticompetitive behaviour beregarded asreasonable? Can,
forexample, firms argue thatsuch conduct isreasonable ifnecessary toavoid"ruinous"
competition orensure recoupment ofinvestments? Does thelawprotect competitors, aswell
asconsumers, incertain circumstances?
"Please refertoParagraphs 85and91."
Q27. Howandtowhatextent ifanyhavethe1992 changes toKorea 'scompetition lawaltered the
structure orbehaviour ofthechaebols?
"Please refertoParagraph 86."
Q28. Withregard tomonopoly import rights andimport allocation among State-trading organizations,
whatisthespecific criteria applied indetermining "market order"? What isthecriteria for
authorizing import/export cartels inorder tomaintain market order? Isthere aconflict with
theprovisions orpurposes ofcompetition policy setoutintheFairTrade Act?
TheKorean government isoperating astatetrading system for19agricultural items according
totheNote 4andNote 5intheCountry Schedule. Designated state-trading agencies arethesole
importing anddistributing agencies forTRQs administration aswenotified totheWTO Committee
onAgriculture andCouncil forTrade inGoods. AstheTRQs haveadualtariff system, quota rents
willeventually occur anditcancause domestic market disorder. There isaconceptual misunderstanding
between designated state-trading enterprises andauthorizing import export cartels.
KoreaiscurrentlyrevisingitsForeignTradeAct,theresultsofwhichwillabolishallexceptional
issues relating totheimport-export cartel agreements byMarch 1,1997. Thus, therewillbenoconflict
withcompetition policy.
Q29. Thestatistics inTable III.10 show that45percentoftheKorean FairTrade Commission 's
enforcementactivitiesduringtheperiod1992-1995weredirectedagainstresalepricemaintenance
(RPM). Areallsucharrangements prohibited? Ifnot,whatcircumstances justify RPMS?
Firstofall,thelinkbetween "type" and"investigations" inTable III.10 prepared bytheWTO
Secretariat ismistaken; thus, itshould bemodified asfollows (seeTable III.10).
Between 1992 and1995, unfair trade activities accounted for45percentofthe1,474 cases
corrected. Resale price maintenance, which isatypeofunfair trading activity, accounted foronly
52individual cases. Fortheprovisions ontheprohibition ofresale pricemaintenance onitsexemption
clause, please refertoParagraph 88.WT/TPR/M/19/Add.1
Page27
Table III.10
Activities oftheKorea FairTrade Commission, 1992-95 -(Number ofcases)
TypeYearTotal
1992 1993 1994 1995
Investigations
Unfair trade activities 292397 430 356 1,475
(Resale price maintenance)(16) (17) (7) (12) (52)
Unfair subcontracting transactions149 223 220 383 975
Unfair international contracts57 65 55 43 220
Anticompetitive activities oftrade associations45 50 52 39 186
Unfair standardized contracts8 34 83 51 176
Violations ofbusiness combinations19 24 13 23 79
Undue collaborative acts9 16 20 26 71
Violation ofeconomic concentration37 5 12 3 57
Abuse ofmarket-dominant enterprises6 2 1 3 12
Total622 816 886 927 3,251
Corrective actions
Warnings416 458 503 566 1,943
Recommendations39 70 102 122 333
Requests0 3 7 0 10
Orders159 277 261 226 923
(Surcharges)(15) (33) (103) (51) (202)
Accusations8 8 13 13 42
Total622 816 816 927 3,251
Q30. TheUnited States notes thatKorea hasintroduced arevised patent lawon1July1996 inan
attempt toimplement theTRIPS agreement, which takes effect (fordeveloped countries) on
1January 1996. Isitcorrect thatthenewlawwillextend protection from 15to20years,
butwillnotextend thislonger termtopatents thatexpire inthefirstsixmonths of1996?
"Please refertoParagraph 77."
Q31. What stepsarebeing taken toprovide pre-1957 retroactive protection ofcopyrighted material?
Nothing isconsidered.
TheKoreanCopyrightLawprovidesretroactiveprotectionforforeigncopyrightedworkswhose
author isstillalive ordiedinorafter1957. Thisprovision isbased onArticle 18(3) oftheBerneWT/TPR/M/19/Add.1
Page28
Convention. Theprecedents setbytheUSandJapan intheirlegislation fortheimplementation of
theTRIPs Agreement alsosupport ourstance.
Ashasfrequently beenexplained, itisKorea 'sposition thatthedifferent points ofviewbetween
thetwosidesresult fromthefactthatthereisnoconsistent andofficial interpretation totheArticle 18
oftheBerne Convention untilnow.
Therefore, disputes regarding thismatter could beresolved through consultations forauniform
interpretation between therelated international organizations, i.e.theWTO andWIPO, andother
countries concerned.
Q32. TherecentSupremeCourtrulingregardingtheprotectionoffamousmarksinfavourofaKorean
defendant defies anyinternational intellectual property norms. Does Korea intend to
correct thissituation?
TheKorean government iswilling toreview thepossibility ofamending itscurrent Unfair
Competition Prevention Law: when necessary tofurther effectively protect famous trade marks.
TheKorean government 'slegalframework fortheprotection oftradesecrets isuptoparwith
theinternational standards duetotheamendment oftheUnfair Competition Prevention Lawin1992.
Under suchalegalframework, whether ornotaspecific tradesecret canbeprotected willbedetermined
bythecourts.
Q33. What efforts arebeing made toupgrade trade secrets protection?
Korea 'slegal framework fortheprotection oftrade secrets isuptoparwithinternational
standards following theamendment oftheUnfair Competition Prevention Lawin1992.
Under suchlegalframework, whether aspecific tradesecret canbeprotected willbedetermined
bythecourts.
Q34. Whatanti-piracyenforcementeffortshavebeentakenwithrespectwithsoftwareend-userpiracy?
From1996,Prosecutors,governmentofficialsoftheMinistryofInformationandCommunications
andsoftware programmers periodically visitlarge companies andpirate institutes foranti-piracy
enforcement (before 1996, anti-piracy enforcement wasfocused onthesoftware market)
Furthermore, officials alsovisitlarge users toexplain various program forprotection and
importance ofsoftware IPR,periodically inover10cities.
Q35. DoestheKoreangovernmentproposetoliberalizemeasuressuchasrequirementsthataminimum
ratio oflandbeusedforthestated investment purpose, thatdiscriminate against foreign
investors? Does theKorean government propose toliberalize these measures?
TheKorean government hascontinuously increased thescope offoreigners 'landacquisition.
Inthefuture, weplantocontinue toidentify unnecessary obstacles anddifficulties andeliminate them,
thusenabling foreign investors toconveniently conduct theirbusiness activities.
Thepurpose ofKorea 'ssystem relating totheacquisition oflandbyforeigners istoefficiently
utilize thelimited national land.Inotherwords, thegovernment strives toinduce thepositive utilization
ofacquired landinviewofthelimited areaofnational landandthefeatures ofthedomestic realestate
markets inwhich thestateofspeculative mindremains. Inthefuture, however, theKorean governmentWT/TPR/M/19/Add.1
Page29
willincrease thescope offoreigner 'slandacquisition onastep-by-step basisinorder toenable foreign
investors toconveniently conduct theirbusiness activities.
Q36. Paragraph 2.DoestheKorean government haveanyplans toeliminate its"going public" policy
bywhich companies withlessthan50percentforeign ownership canberequired toofferat
least30percentoftheirstock tothepublic?
Actually, theKorean government hasnotimplemented this"going public" policy since 1990.
Furthermore, wewillcompletely abolish thispolicy through arevision oftheSecurities and
Exchange Lawfrom April nextyear.
Q37. Does Korea intend tocorrect thedeficiency initssecond notification totheWTO regarding
theshelf-life dispute?
"Please refertoParagraph 109."
Q38. Please explain howtheROK intends toimprove administration oftheTRQ.
"Please refertoParagraph 99."
Q39. TheUnited States believes thatthereisstrong evidence thattheKorean taxcodediscriminates
against imported liquors, asaresult oftheWTO caseagainst Japan, therefore thatan(ix)section
titled "Alcoholic Beverages" under IV(3)should beadded.
Responded toattheTPRoftheRepublic ofKorea.
Q40. Licensing restrictions intheareas ofoilrefining andpetroleum retailing aretobereplaced
bya"simple restriction system". Whyisaregistration system necessary ifcontrols arebeing
removed?
Theregistration system seeks tosecure oil-storing facilities.
Q41. TheSecretariat report points outthatadministration oftariff quotas byState-trading entities
raises potential conflicts ofinterest. HowdoesKorea justify thisarrangement inlightofits
WTO obligations? Arethere anyplans torevise thissystem?
TheKorean government isoperating astatetrading system for19agricultural items according
totheNote 4andNote 5intheCountry Schedule. Designated state-trading agencies arethesole
importing anddistributing agencies forTRQs administration aswenotified totheWTO Committee
onAgriculture andCouncil forTrade inGoods.WT/TPR/M/19/Add.1
Page30
Q42. TheUnitedStatesnotesthatthereareseriousproblemsintheKoreantelecommunicationsmarket
withalackofgoods andservices access andalackofIPRprotection. CanKorea comment
generally onthese observations?
TheKorean government introduces pro-competition principles, together withcontinuous
promotion ofderegulation.
- TheKorean government does notimpose anytelecommunications sector-specific
domestic procurement recommendations orrequirements ontelecommunications
suppliers. TheBilateral Agreements isapplied onlyforthepurchases bytheKorean
government orKorea Telecom.
- Telecommunications services:
Value-added service market iscompletely open, starting fromJanuary 1995. Thebasic
telecommunications services market willbegradually opened from January 1998,
according totheresults oftheWTO/GBT.
- TheKorean government protects IPRaccording toitsIPR-related laws, suchasthe
Copyright Act,Computer Program Protection Act,etc.
Q43. Please describe therange oflicensing criteria thataremaintained, including those defined by
theMinistry ofInformation andCommunication as"morality" criteria.
Current Licensing System:
Thecurrent licensing system applies "approval" tobasictelecommunication service providers
and"notification" tovalue-added service providers. After theMinistry ofInformation and
Communication 'sannouncement forrequest- for-proposal (REP), basic telecommunication
service providers submit theirproposals. Ifaproposal forapproval conforms totheexamination
standards described inthefollowing, alicence willbegranted:
- validity ofplanforproviding thetelecommunications services.
- validity ofthetelecommunications facilities scale
- financial andtechnological capability
- achievements intechnology development relevant tothetelecommunications services
tobeprovided
- planfortechnology development relevant tothetelecommunications services
- plan fortechnology development appropriate tothesound development of
telecommunications
- other requirements forproviding thetelecommunications services
General items suchasqualifications forbasic telecommunications service providers shallbe
stipulated intheapplicable ordinance, anddetails suchasexamination standards andprocedures for
application shallbestipulated intheapplicable notification, inorder toencourage theactive participation
oftheprivate sector inthetelecommunications business.
The"morality" criteria refers toillegal records which were decided bythecourt.WT/TPR/M/19/Add.1
Page31
Q44. Please explain whyitisnecessary forapplicants seeking wireless communications licenses to
provide information regarding theorigin andcommercial priceofthenetwork equipment they
propose toprocure, andhowthisinformation requirement related totheprohibition onlocal
content requirements oftheTRIMs agreement.
TheKorean government hasnever asked theapplicants forwireless communications licenses
toprovide information regarding theorigin andcommercial priceofthenetwork equipment theywant
toprocure. (Ifacertain applicant hadprovided it,itwasvoluntarily provided anddidnotaffect the
results.)
Q45. ItistheviewoftheUnited States thatKorea canandshould domore toreduce government
control andguidance through regulatory reform, andshould affirmatively statethat. Isthis
theviewoftheGovernment ofKorea?
TheKorean government attaches great importance to"progressive liberalization inlinewith
aneconomic development", andtheKorean government willcontinually make effort topromote
deregulation.
Q46. Please explain thefunction andrôleoftheKorean Communications Commission, andthenature
ofitsrelationship withtheMinistry ofInformation andCommunication.
TheKorean Communications Commission isinvolved in:
(a) formulating overall telecom policies;
(b) drafting/introducing commercial ortechnical regulations;
(c) issuing licences;
(d) negotiation orapproving accounting rates; and
(e) anyenforcement functions
- Thetwomainfunctions served bytheKorean Communications Commission arereview
anddecision-making functions. Review actions taken bytheCommission include the
establishment oftelecommunications policies, licensing ofbasic telecommunication
service providers, andrectification ofunfair practices. Decision-making activities
include settlement ofdisputes related tointerconnectivity andprovision offacilities
between service providers, andresolving conflicts between service providers andusers.
- TheCommission iscomposed oflessthanninemembers appointed bythePresident
ontherecommendation oftheMinister ofInformation andCommunication.
- Pre-review oftheestablishment ofcommunications policies andintroduction ofnew
regulations isanoptional duty, andlicensing ofbasic telecommunication service
providers andrectification ofunfair practices mustbeapproved bytheCommission.
TheCommission doesnotinterfere withtariff negotiation, orauthorization matters,
other thanreadjusting interconnection feesrequested bytheservice providers.WT/TPR/M/19/Add.1
Page32
Q47. HastheMinistry ofInformation andCommunication considered issuing apublic statement
affirming itsverbal policy regarding theinappropriateness ofgovernment intervention in
procurement bytelecommunications entities?
TheKorean government hasnever exercised undue influence intheequipment procurement
decisions oftelecommunications service providers.
Q48. Does there existaneutral arbiter orombudsman towhich complaints byprivate andforeign
telecommunications entities canregistered?
After thelegalseparation oftheMinistry ofInformation andCommunication (MIC) andKorea
Telecom (KT) in1982, MIC hasbeensolely responsible formaking policy andregulations inthe
telecommunication sector withanunbiased manner.
Ifservice providers object toregulations setbyMIC, ortotheunfair practices ofother service
providers, they canappeal totheKorean Communication Commission (KCC) aswellastheMIC.
Ifservice providers alsoobject totheKCC'sresponse, appeals canbemade tothehighcourt
ofjustice.
Q49. What isthestatus oflegislation insuchareas asunionization ofpublic officials andschool
teachers, thirdparty intervention, andtheuseofemergency provisions? Isthere anagenda
formaking further progress inthese andother areas oflabour policy? Ifso,please explain
whatitis.
Forthepastsixmonths, extensive discussions onlabor lawreform wereheldatthePresidential
Commission onIndustrial Relations Reform, which waslaunched onMay9,1996 andcomposed of
representatives from labor, management andthegeneral public, listening topublic opinions and
coordinating positions taken bylabor andmanagement.
- Based onaconsensus thatitwasessential toreform theexisting systems andpractices
ofindustrial relations, inorder toenhance worker 'sliving standards andlabor market flexibility, the
Commission reached anagreement onasubstantial number ofissues. Nevertheless, labor and
management failed toagree onseveral keyissues. Asaconsequence, theCommission ended its
discussions withthose keyissues remaining unresolved, andreported theresult tothegovernment
accordingly.
After receiving theCommission 'sReport, thegovernment, judging thattheimportant issue
ofnational management should notbesubjected toanyfurther delays, decided tolayoutitsproposal
andsubmitted ittotheNational Assembly inaswift manner.
- AnIndustrial Relations Reform Promotion Commission headed bythePrime Minister,
andparticipated inby14Ministers including theMinister ofLabour, wasestablished.
- TheIndustrial Relations Reform Promotion Commission laidoutagovernment plan,
which wasdesigned topromote thenation 'sprosperity andtobenefit thepublic, based onthereport
presented bythePresidential Commission onIndustrial Relations Reform.
- After thenotification period oftheenactment oflegislation from 3to9December,
theCommission submitted therevision billoflabour-related laws totheNational Assembly on
10December 1996.
Following apartial modification, therevised billwaspassed bytheNational Assembly on
26December 1996. Thenewlawwaspromulgated on31December 1996.WT/TPR/M/19/Add.1
Page33
Therevised labour-related lawsareaconsiderable stepforward towards progress, inthatthey
respect theILOlabour standards andatthesame timereflect thespecial Korean situation.
Thenewlawsincomparison withtheoldones, wereastepintherightdirection, inthatthey
promote further freedom ofassociation byallowing multiple trade unions andbyabolishing the
provisions 'prohibition ofthirdpartyintervention andtradeunions 'political activities, while increasing
flexibility inthelabour market.
Asstrong demand fromlabour groups arose, aChung-Wa-Dae (Presidential house), meeting
among theheads oftheruling andopposition parties, washeldon21January 1997. Anagreement
toreopen debate overthelabour lawissues attheNational Assembly wasreached atthismeeting.
Therefore, discussions overtheprovisions ofthenewlabour lawsconcerning Freedom ofAssociation
andother issues arescheduled tobeheldattheNational Assembly.
9. Argentina
Q1. Which aretheparticular "situations" envisaged inthelegislation regarding "retaliatory duties"?
Which would bethesortofactions taken bytrading partners thatcould eventually leadtothe
application ofretaliatory duties? What'sthecoverage ofthistypeofmeasures interms of
products? Dotheyapply toallkindofproduct orjusttocertain products designated inthe
legislation? Aretheycovered byWTO rules? Ifso,which?
"Please refertoParagraph 66."
Q2. Which isthelegaljustification ofcertain provisions ofKorea 'ssafeguard régime, suchasthe
suspension orbanning ofimports, thepromotion ofpurchase agreements between domestic
manufacturers andusers, andthe"adjustment talks" between foreign exporters anddomestic
firms requiring protection?
"Please refertotheanswer toQ5dofJapan."
Q3. Could youprovide more information about theoperation ofthe"various localization schemes"
andabout howtheyareapplied? Could youexplain theorigin andfuture ofthistypeof
schemes?
"Please refertoParagraphs 29-31."
Q4. Could youprovide more detailed information about the"import substitution initiative" that,
according totheSecretariat 'sReport, waslaunched inMay1995 andcovers 105products?
Howdoesitoperate? What kindofassistance isgiven tothese products? Wasthisinitiative
notified totheWTO? Ifso,when?
Under Korea 's"Five-Year PlanfortheLocalization ofMachinery, Parts andMaterials",
implemented inJanuary 1992, theKorean government hasprovided indirect assistance forthe
development ofprototypes before making newproducts, theintroduction ofproduction technologies
onproduction lines, andthecollection oftechnology-related information.WT/TPR/M/19/Add.1
Page34
TheKoreangovernmentintegratedthisPlanintothe"LocalizationSchemefortheCapitalGoods
Industry".
-Thescheme focuses onincentives interms ofraising demand, improving theR&D climate,
andattracting foreign investment through theexpansion ofdemand, aswellasquality enhancement,
rather thanassistance inactual production.
Concrete measures under the"Localization Scheme fortheCapital Goods Industry" aresuch
asbelow:
R&D Measures
Assistance forthedevelopment ofprototypes
-70items W58billion(95), 214items W183billion(96)
Standardization for600items by2000
-50items in1996
Taxincentives forR&D
-Increased ceiling onreserves fortechnology development(3 percent, 5percent)
Quality Improvement
Granting "EM" mark for236items in1996
Manpower Development
Increase theenrolment quotas forengineering colleges.
Promotion ofForeign Investment inCapital Goods Industry
Aforeign investment promotion mission willbedispatched lowering theacquisition costs of
landforplant construction byforeign invested firms.
Promotion ofDemand forCapital Goods
Initiation offoreign currency loans amounting toUS$1.3billion in1996.
-Foreigncurrencyloanswereavailableonlyfortheimportofoverseasmanufacturedmachinery.
Establishment offinance company inApril 1996 withthecapacity tofinance W500billion
within thisyear.
Future measures havenotyetbeenspecified, butefforts willbemade toensure thatsuch
measures areWTO consistent.WT/TPR/M/19/Add.1
Page35
ANNEX
Draft Statement ofReply toThematic Issues Raised bytheMembers
(Trade Policy Review oftheRepublic ofKorea)
Thank you,Madam Chair,
Firstofall,onbehalf oftheKorean delegation, Iwould liketoextend mysincere thanks and
appreciation toourtwoeminent discussants andallthedelegations fortheirinsightful comments and
questions onKorea ’strade policy.
I. Rapid economic development, anditsconsequences
1. Following Korea ’sfirstTPRin1992, theeconomic growth rateoftheKorean economy dropped
offsubstantially from the9percentlevelof1990 and1991, toamore sluggish rateof5.1percent
in1992and5.8percentin1993. Suchgrowth ratesareconsidered disappointing byKorean standards,
andasense ofeconomic crisis ensued.
2. Iwould alsoliketothank theSecretariat fortheir assistance inagreeing upon athematic
framework fortoday'ssession.
3. Accordingly, Iwillattempt toincorporate many ofthepoints raised bytheMembers under
thefollowing fourgeneral headings:
i. Macro-economic developments andimplications ofrapid economic expansion.
ii. Policies related totariff andnon-tariff measures, including:
a) General policy orientation
b) Tariffs
c) Non-tariff policies
iii. TRIPs, TRIMs andindustrial competition policy issues.
iv. Sectoral issues, including agriculture, fisheries andservices.
4. TorestoreKorea’seconomicdynamism,the"Five-YearPlanfortheNewEconomy"wasdrafted
in1993, forimmediate implementation. Themainthrusts ofthisplanfocused onmarket opening and
deregulation. ThePlancreated apractical mechanism foreconomic development byencouraging
ingenuity andparticipation among economic actors.
5. KoreaactivelyparticipatedintheUruguayRoundnegotiations.Koreaovercametheconsiderable
difficulties posed bytheopening oftheagricultural sector, andnever backed away fromitsconsistent
pursuit ofmarket opening, liberalization, andderegulation. Korea subsequently returned tohigher
growth rates, reaching alevelof8.6percentin1994, and9.3percentin1995.
6. AshasbeenKorea ’sprevious experience, theprimary factor behind thisrenewed growth was
international trade. In1992, Korea ’scontribution ratioofexports togrowth was13.7percent. ByWT/TPR/M/19/Add.1
Page36
1994, thatfigure hadincreased to29.1percent,andby1995itwas47.3percent.Similarly, theshare
oftrade toGNP alsoincreased to51.9percentin1992 and57.6percentin1995.
7. Increasedtradethroughconsistentmarketopening,tradeliberalization,andderegulationmeasures
wasattherootofthisrapid recovery andcontinued economic sophistication. Increased Korean
international gcompetitiveness wasthepositive result ofthisprocess.
8. These positive economic developments havebeenovershadowed, however, byKorea ’scurrent
account imbalance. Adrastic fallintheinternational price ofmemory-chip typesemi-conductors has
exacerbated thisproblem.
9. Governmental efforts tocontrol thecurrent account deficit havefocused onmedium andlong
termmeasure toenhance thegrowth potential oftheKorean economy, asopposed toshort-term price
distorting solutions.
10. Theexpansion ofsocial overhead capital, manpower development through educational reform,
R&D assistance, andincreased exposure ofthefinancial sector toforeign anddomestic competition
havebeenundertaken asfundamental andstructural measures tostrengthen Korea ’scompetitiveness.
Foreign direct investment andoutward investment arepromoted. Under these environments, itis
anticipated thathighvalue andadvanced industries willbegenerated inlarge numbers.
11. Newfinancial instruments withtaxincentives havebeencreated toincrease national savings
tostabilize price levels andimprove thecurrent account deficit. However, theKorean Government
willnotresort toorpromote “anti-import ”campaigns orimport discriminating austerity policies.
12. Korea isactively participating intheactivities ofthemultilateral trading organizations. This
participation isverycrucial fortheKorean economy because trade, investment, anditstransactions
withtheworld economy willdetermine thefuture growth andprosperity ofKorea.
13. Although Korea participated intheUruguay Round negotiations asadeveloping country and
elected toundertake theimplementation ofitscurrent Uruguay Round Commitments inthatcapacity
inconsiderationofitseconomicandpoliticalenvironments,Koreaismakingitsutmosteffortstoexpedite
itsimplementation within itscapabilities.
14. Bytheendof1995, Korea hadcompleted theenactment andrevision ofalllegislation necessary
toreflect theTRIPs Agreement. Although alllegislated lawswere notputintoforce bythetime
developed countries arerequired todoso,mostoftheimportant lawsrelated withTRIPs arenowin
effect, wellahead oftheschedule designated fordeveloping countries.
15. Concerning theSCM Agreement, Korea willabolish alloftheprohibited subsidies notified
totheWTO bytheendof1998, oneyearbehind theallowable grace period fordeveloped countries.
16. Atpresent itisdifficult forKorea tocollectively giveupitsdeveloping country status inall
sectors offuture negotiations within theWTO. Forexample, Korea willmaintain itsdeveloping country
status intheagriculture sector.WT/TPR/M/19/Add.1
Page37
17. KoreahasactivelyaffiliateditselfwithAPECsinceitsinception,andKoreaisstronglycommitted
tothetenetofopen regionalism. Likewise, theOECD hasemerged asanorganization withwhich
Korea wishes todevelop newrelations asafullMember. Korea expects tobeinvited tojointheOECD
quite soon.
18. However, Korea doesnotbelieve thataccession automatically carries withitthestatus offully
developed OECD members. Korea regards accession totheOECD asastarting point foritsreinforced
efforts forliberalization andderegulation oftheKorean economy foritsfulldevelopment.
II. Policies related totariff andnon-tariff measures
II.a General Policy Orientation
19. Sincethemid-1980s,KoreahaspursuedtheliberalizationofKoreanmarketsfortheimprovement
ofdomestic industrial competitiveness, themaintenance ofharmonious trade relations withtrading
partners andperformance ofcorresponding responsibility androleasamember oftheInternational
community.
20. During theUruguay Round negotiations, Korea actively participated ininternational tariff
consultations. Asaresult, thenumber ofconcessionary tariff items reached 9,580 outof10,859 (HS
10digitbase) andtheaverage concessionary tariff rateformanufactured products wasreduced aslow
as8.2percent.
21. Withthelaunch ofFive-Year PlanforaNewEconomy (1993-97), which callsfortheabolition
ofunnecessary government regulations andrestrictions, Korea hasmade aneffort toincrease the
transparency oftrade-related policies andtoconform thedomestic regulation intoInternational standard.
Korea isfaithfully implementing theUruguay Round agreements, andeven trying toexpedite its
obligations insome possible areas.
Korea 'stradepolicy isrooted intheexpansion offreetradeandKorea makes asincere effort toachieve
thefollowing purposes forpromotion oftrade:
- Balanced expansion oftrade based onthefreetrade principle.
- Internationalization ofdomestic trade-related institutions andregulations.
- Contribution tomaintenance anddevelopment ofmultilateral trade system.
- Enhancementofinternationalcompetitionandadjustmentofdomesticindustrialstructure.
- Solution andeasing ofinternational trade friction.
22. TheImport Diversification Programme wasfirstintroduced in1978torelieve thechronic and
structural trade imbalance withJapan andtoreduce Korea 'sexcessive reliance onthatcountry inthe
areaoftrade andindustry.
23. Korea hasnever recorded atrade surplus withJapan inanyofthepastthirty-five years, and
in1995 thesizeofourbilateral trade deficit amounted tooneandhalftimes thetotaltrade deficit of
Korea.WT/TPR/M/19/Add.1
Page38
24. TheProgram primarily aimstoshiftKorean companies 'out-sourcing toother foreign countries
inorder topromote ageographically balanced import structure byreducing theheavy import reliance
onJapan. Recently, Korea decided toabolish theProgram bytheendof1999, despite thefactthat
ourdeficit withJapan continues toincrease evenatthiscurrent time. Thenumber ofitems under the
Program willbephased outonasemi-annual basis. There isnolinkbetween theRules ofOrigin
withtheProgram.
25. Korea 'srulesoforigin framework, adopts twocriteria forthedetermination ofrulesoforigin
forproducts imported intoKorea.
26. Onecriteria isthechange ofthenumber oftheHSclassification system. Ifaproduct belongs
toacertain HSnumber ona6-digit levelchanges thenumber intoanother onethrough manufacturing
process inaparticular country, theproduct isdeemed tobeoriginated inthecountry.
27. Thesecond criteria isthatofvalue-added. Ifaproduct isprocessed inaparticular country
withtheresulting value added ofmore than35percentoftheproduct 'stotalvalue inthatcountry,
thecountry isregarded asanoriginating country.
28. Toreflect theresults ofongoing works ofWCO andforthesimplified operation oftherule
oforigin, Korea reduced thenumber ofproducts subject tovalue-added criteria from40to30byHS
10-digit base. Korea willcontinue torevise itssystem inaccordance withtheresults ofWCO works
ontheharmonization oftherules oforigin.
29. Under the"Five-Year PlanforLocalization ofMachinery, Parts andMaterials" implemented
inJanuary 1992, theKorean government hasprovided indirect assistance forthedevelopment of
prototypes before making newproducts, theintroduction ofproduction technologies onproduction
lines, andthecollection oftechnology-related information.
30. TheKoreangovernmentintegratedthisPlanintothe"LocalizationSchemefortheCapitalGoods
Industry" inMay1995.
- Thescheme focuses onincentives interms ofraising demand, improving theR&D
climate, andattracting foreign investment through expansion ofdemand, aswellas
quality enhancement, rather thanassistance inactual production.
31. Concrete measures under the"Localization Scheme fortheCapital Goods Industry" aresuch
asbelow:
R&D Measures
Assistance forthedevelopment ofprototype
- 70items W58billion (95)213items W172 billion (96)
Standardization for600items by2000
- 50items in1996
Taxincentives forR&D
- Increased ceiling onreserve fortechnology development (30percent, 5percent)WT/TPR/M/19/Add.1
Page39
Quality Improvement
Granting "EM" mark for201itembyAugust 1996
Manpower Development
Increase theenrolment quota forengineering college
Promotion ofForeign Investment inCapital Goods Industry
Aforeign investment promotion mission willbedispatched lowering acquisition costsoflands
fortheplant construction offoreign invested firms.
Promotion ofDemand forCapital Goods
Initiation offoreign currency loans amounting toUS$2.5 billion inJuly1996.
- Foreign currency loans wereavailable onlyfortheimport ofoverseas manufactured
machinery Establishment offinance company inApril 1996 with the
capacity tofinance W500 billion within thisyear
Future measures havenotyetbeenspecified, butefforts willbemade toensure thatthose
measures areWTO consistent.
32. There are81items which should receive import recommendation. Mostofthemareagricultural
products, except for8items including 3saltitems, 1anthracite item, and4silkitems.
33. Themotivation istoprovide amandate torecommend imports ofcertain products, suchas
silkfabrics, toprivate associations isthattheyhavespecial knowledge onthose items.
34. Toincrease thetransparency oftheadministration andsmooth operating ofimport
recommendations oftheprivate associations, theKorean government audits them periodically in
compliance withtheForeign Trade Act.
35. TheKorean Government willliberalize allitems, except for8cowandbeefitems in1997.
These items will,however, beunder automatic approval without restriction from 2001.
36. Thereason thattherecommendation requirement ismandated inthecaseofsilkfabric until
1997 isbecause domestic producers ofsilkfabric needacertain period fortheadaptation toimport
liberalization.
37. Anti-dumping duties willbeimposed bytheMinister ofFinance andEconomy when theKorean
Trade Commission determines thataforeign product issoldindomestic market ataprice lower than
normal value, andthatadomestic industry ismaterially injured, ortaxtheestablishment ofanindustry
ismaterially retarded, byreasons ofimports ofproduct.
38. Korea'sefforttoimplementtheURAnti-dumpingCodebeganimmediatelyaftertheintroduction
oftheDunkel Draft, which acted asthefoundation forthebasic principles ofthenewAnti-dumping
Code. On31December 1993, theCustoms Actwasamended sothatitcould more easily adopt the
results oftheURnegotiations, andthePresidential Decree wasmodified tomake itcompatible withWT/TPR/M/19/Add.1
Page40
theDunkel Draft. On31December 1994, aftertheestablishment ofthenewAnti-dumping Code, the
Presidential Decree andEnforcement Regulations oftheCustoms Actwere amended toimplement
theWTO Anti-dumping Code.
39. InJuly1995, theWTO Committee onAnti-dumping practices reviewed Korea 'sAnti-dumping
System tomonitor theimplementation oftheAgreement.
40. InDecember 1995, Korea revised theCustoms ActandEnforcement Decree toimprove its
Anti-dumping system based ontherecommendations oftheCommittee.
41. Quantity restrictions wereexcluded from theforms ofundertakings, pursuant totherevised
Presidential Decree, which wasputintoforce onJuly1,1996.
42. TheKorean government believes thatintheprocess ofrapid andconsistent implementation
ofKorea ’sliberalization programme, safeguard mechanisms arenecessary notonlyforthesakeof
preventing serious injury tothedomestic industry affected butalsoforthesakeofestablishing general
environment forfacilitating theliberalization processes.
43. TheKorean Government isfullycommitted totheimplementation ofsafeguard mechanisms
inatransparent andWTO consistent manner. Toreflect theresults oftheURnegotiations, theForeign
Trade ActanditsPresidential Decree were amended inDecember 1994, andJuly1995.
44. InNovember1995,theCommitteeonSafeguardsreviewedtheWTOconsistencyofthesafeguard
mechanisms oftheKorean Government. Toreflect theoutcome ofthereview, theKorean Government
amended theCustoms ActinDecember 1995, andtheForeign Trade Actisintheprocess ofrevision
which istobecompleted bytheendof1996.
45. Since 1992, therehavebeen7petitions fortheapplication ofthesafeguard mechanisms 4cases
outofthe7were withdrawn, 1outofthe7gotanegative decision and2cases were subject to
affirmative rulings.
46. Concerning themilkpowder blend case,thepetition forinvestigation wasfiledinMayofthis
year. Theproducts (HSK 0404.90.000, 1901.90.2000) were subject toimport liberalization during
theperiod from January 1993 toJanuary 1995.
47. Advance notice forthepublic hearing onthecasewasmade onJuly25,1996. Thepublic
hearing washeldonAugust 20,1996.
48. Again, itshould beemphasized thatthesafeguard mechanisms oftheKorean Government will
bestrictly enforced infullcompliance withthetransparent legalprocedures thatareconsistent with
theWTO framework.
49. Korea hasabandoned itsindustrial development policy oftargeting specific fieldofindustry
in1985, theyearKorea adopted itsIndustrial Development Law. Present Government programs can
bebroadly categorized asassistance fortechnological andhuman capital development, development
ofdisadvantaged regions, andinvestments inenvironmental preservation.WT/TPR/M/19/Add.1
Page41
50. TheKorean Government operates these programs withasmuch objectively andtransparency
aspossible. In1995, theKorean Government abolished thespecial depreciation clause aswellas
thetemporary taxdeduction ofnewinvestment clause inaneffort tobring thelevelofsupport into
conformity withtheOECD guideline.
51. Thetypical program fortechnology development inthefieldofhigh-tech industry istheHighly
Advanced National Program (HAN program). Thisprogram targets notatthespecific sector butat
thecritical technologies ofthefuture.
52. Theshare ofpolicy-based lending isdefined intheWTO Secretariat 'sReport asthatofprivate
sector credit made upbyallloans anddiscounts extended bythespecialized banks aswellastheBank
ofKorea. Thiskindofmethod inevitably leadstotheoverestimation oftheshare ofpolicy-based lending
because alargeproportion oflending extended byspecial banks consists ofgeneral loans, overdrafts,
loans onmutual instalments, etc.These arenot,strictly speaking, policy-based lending butcommercial
banking operations.
53. Inparticular, therewasnopolicy-based lending forinvestments inshipbuilding capacity. The
Government hasnever given direct public assistance orguarantee offinancing forconstruction ofnew
vessels. TheGovernment hassetalimittoaminimum extent onforeign financing tomaintain optimum
money supply andprice stabilization.
54. Small andmedium sizebusinesses inKorea areresponsible for69.1percentofemployment,
48.1percentoftotalproduction, and42.4percentofexports.
55. TheKorean population related directly orindirectly toSMEs hasrecently beencalculated as
26million, therefore difficulties facing SMEs arerecognized associally andpolitically important, even
beyond simple economic matters.
56. Also, SMEs havethefunction fundament ofindustry because theysupplement ordisplace the
large companies inmany areas which thelarge onecould notafford. Currently, SMEs endure many
difficulties suchashighlabour cost,highinterest rate,shortage oflabour andsoon.
57. Toresolve thedifficulties ofSMEs, theroleoftheGovernment iscentred onthesoftlanding
ofouroverall restructuring ofindustry through assistance ofvoluntary information ofSMEthemselves,
forexample, giving themsome advice ofbusiness activities, information regarding financial matters,
market trend andtechnology development.
58. Inaccordance withWTO agreements, theIndustrial Development Fund wasconverted tothe
Industrial Foundation Fund, which utilized tofirst,support Research andDevelopment forproductivity
andvalue added enhancement and,secondly, toeaseamodernization ofdistribution system, and,finally,
toharden thebasisofthegrowth ofsmall andmedium enterprises. Thetotalamount ofloans granted
under theFund in1995 was261.5 billion won. Financial assistance bytheGovernment isregarded
asnon-actionable subsidy because theyhavenospecificity.WT/TPR/M/19/Add.1
Page42
II.b Tariffs
(1) Tariff reductions
59. Steady tradeliberalization sincethe1980s hasresulted inasignificant reduction oftheaverage
general tariff ratefrom 21.9percentin1984 to7.9percentin1994. Asof1995, lowtariff rates
of1-3percentwereimposed onrawmaterials, while most manufactured products arenowsubject
toan8percenttariff rate. General tariff ratesfor1995 and1996 arevirtually identical tothe1994
rates. Atpresent, Korea hasnoplantorevise general tariff rates.
(2) Uruguay Round Tariff Concessions
60. Korea made asubstantial contribution totheUruguay Round negotiations byoffering anumber
oftariff concessions. Asfortariff bindings, Korea hasincreased thebinding ratioto91.2percent
in1995 from thepre-UR binding ration of7percentbymaking concessions totheWTO on9,580
items ofthetotal10,502 HS10-digit tariff items. With anaverage tariff reduction of54.2percent
onatrade-value weighted basis --significantly higher thanthe33percentminimum reduction rate
agreed upon during theUR--Korea 'saverage concessionary rateformanufactured products will
decrease from 17.9percentin1986 to8.2percentbytheyear2004. Factors forconsideration in
theprocess ofnegotiating thebinding oftariff linesinclude thelevelofdevelopment oftheindustry
andtheleveloftariff tobebound.
Korea willimplement theWTO agreement on"zero forzero" initiatives according toitstariffconcession
schedule. Forexample, thetariffratesfor28HS4-digit items, including electronic integrated circuits,
micro-assemblies, andcranes, etc.,willbereduced tozeroby1999. Korea alsoharmonized itstariff
levels forchemical products according toitstariff concession schedule.
(3) Variations between bound andapplied tariff rates
61. Korea 'sbound tariff ratesareinmostcases higher thanthose currently applied. Thereason
forthisisasfollows: itisnotthatthelevelofKorea 'sbound tariff ratereduction wasinsufficient,
butthatthelevelofapplied tariff (general tariff) reduction achieved bythetariff reduction planfor
1989-1994 wascomparatively higher thanthatofthebound tariff rate.
During theURtariff negotiations thestandard rateusedforreduction wasthe1986 tariff rate. The
minimum reduction rateestablished formember countries was33percentfrom the1986 standard
tariff rate.Having participated actively intheURtariff negotiations, Korea reduced itsbound tariff
ratsby54percent,thereby meeting andexceeding theminimal requirements forreduction. Korea 's
number ofbound tariff items increased from 7percentpre-UR to90percentpost-UR.
NotonlydidKorea actively participated intheURnegotiations, butweplanned andimplemented a
voluntary tariffreduction planfrom1989-1994. Asaresult ofitsvoluntary tariffreduction plan,Korea
reduced itsaverage applied tariff rate(general tariffrate)by60.3percentfrom19.9percentin1986
to7.9percentin1994.WT/TPR/M/19/Add.1
Page43
Before theconclusion oftheURnegotiations, Korea already implemented avoluntary tariffreduction
planwithrates lower thanthose settled upon attheURnegotiations. Thisshows Korea 'sfirm
commitment toanopen-door policy toforeign countries.
(4) Flexible Tariff System
62. Topromptly meet thechanges initseconomic environment, Korea hasemployed asystem
offlexibletariffratesonspecificgoodswithinthescopeandlimitationoftheCustomsAct.TheCustoms
Actprescribes tenflexible tariff rates, including price-stabilization duties. Among the10flexible
duties, however, countervailing duties, retaliatory duties andseasonal customs duties havenever been
imposed. Furthermore, price-stabilization duties were only applied inthefirsthalfof1984.
Anti-dumping duties, emergency duties andspecial emergency duties, which serveasremedial measures
forindustrial injury, arebased ontherelevant WTO Agreements. Price-stabilization duties willbe
eliminated from 1997, because itcanbereplaced byTariff Quota orAdjustment Duties.
Flexible Tariffs maybetemporarily implemented byPresidential Decree, ifdetermined tobenecessary
bytheMinister ofFinance andEconomy. Todateretaliatory andprice stabilization duties havenot
beenapplied.
Adjustment Duties
63. Ifanincrease intheimport ofaspecific goodmight disturb thedomestic market ofthatgood
orcollapse thedomestic market 'sindustrial foundations, etc.,thenacustoms duty(theAdjustment
Duty) maybeimposed within thelimitofURconcessionary ratesinorder tocorrect andprevent such
astate.
Inapplying adjustment duties Korea nowemploys a6-month basisasopposed totheannual basiswhich
wasapplied priorto1995. Thischange wasimplemented because ashorter period based determination
ismore appropriately reflects changes ineconomic circumstances. Theshorter period based
determinationisreasonable,too,becausewhentheapplicationoftheadjustmentdutyforanitembecomes
unnecessary according tothechange oftheeconomic circumstances, thetimecanbeexcluded from
theadjustment dutylistmore quickly.
Ingeneral, information ontheadjustment duties ispublicly known onemonth prior totheofficial
announcement during theconsensus building process. Itwould bedesirable tolevytheadjustment
duties inoneperiod. However, theperiod could beextended when thepurpose oflevying theadjustment
duties isnotfulfilled. Inthiscase, theduties arelowered gradually soastoinduce self-efforts.
Emergency Duties
64. Ifanincrease intheimportation ofaspecified good causes orcould cause serious injury to
adomesticindustrywhichproducesthesamekindofgoodsorcompetitivegoods,thecustomsauthorities
could suspend theobligations oftheWTO Agreement andtariffconcessions, andmayimpose acustoms
duty(theEmergency Duty) according totheWTO/Agreement onSafeguards within thelimits necessary
fortheprevention ortheredress ofsuchaninjury orthepromotion ofadjustments (amended Customs
ActonDecember 6,1995 which willputintoforce from July1,1996).WT/TPR/M/19/Add.1
Page44
Before theamendment oftheCustoms ActonDecember 6,1995, iftheincrease intheimport ofa
specified good caused orcould cause damages orinjury todomestic producers, thenacustoms duty
(theEmergency Duty) could beimposed atarateequivalent tothedifference between thedomestic
andforeign prices. According totheCustoms Actbefore its1995 amendment, theEmergency Duty
wasapplied tothefollowing 3items untilJune30,1993. Since then, theEmergency Duty hasnot
beenapplied.
Concerning theapplication procedures, aninvestigation andadecision bytheKorean Trade Commission
identifying serious injury tothedomestic market isrequired inorder toimpose theEmergency Duty.
Ontheother hand, fortheimposition oftheAdjustment Duty, suchprocedures arenotrequired.
Tariff Quota
65. Thetariff quota system isdesigned tostabilize domestic commodity markets. According to
thecurrent system, customs duties maybeadjusted foracertain quantity ofimported goods within
thelimits ofthegeneral rate,plusorminus 40percent. However, inthecaseoftheagricultural,
forestry, marine andlivestock products, customs duties maybeimposed within thelimitoftherate
calculated byadding aratecorresponding tothemargin ofdomestic andforeign price ofthesame
orsubstitute goods tothegeneral rate.AsofDecember 1995, therewere46items withcustoms duties
lower thanthegeneral rates. Thesoleitemwitharatehigher thanthegeneral ratewasbananas.
Retaliatory Duty
66. Ifother country 'stradepractices infringe onKorea 'stradeinterests through thefollowing acts
against goods, etc.exported byKorea, thenacustoms duty(theRetaliatory Duty) maybeimposed
ongoods imported fromthatcountry uptoanamount equivalent tothatofthedamage; where itdenies
orrestricts therights andinterests which accorded toKorea byinternational agreements oncustoms
ortrade, orabilateral customs andtrade convention, etc.; andwhere ittakes unreasonable or
discriminatingmeasuresagainstKorea.TheimpositionofRetaliatoryDutyisdecidedbythePresidential
Decree. Retaliatory Duty hasnotbeenapplied untilnow.
(5) Tariff Reduction andExemption System
67. Korea hasmade useoftheTariff Reduction andExemption System inalimited number of
cases. Ithasbeenapplied when itwasdifficult toapply general ratesinthefieldofindustrial policy,
orsocio-cultural objectives, orinternational custom. Since 1992, there hasbasically beennochanges
intheTariff Reduction andExemption System.
KoreaplanstotransfertotheReductionandExemptionSystemincorrespondencewiththebasicdirection
ofWTO Agreement onsubsidies andcountervailing measures. Inother words, Korea willchange
fromitscurrent system ofassisting thespecific industries toasystem which focuses onthefunctions
ofresearch anddevelopment, anti-pollution, prevention ofenvironmental pollution, etc.
Asof1996, tariff reductions toassist specific industries apply onlytorepair parts forairplanes. In
addition, eventhetariff reductions forthose partswillbeeliminated bytheendof1997. Also, tariff
reductions fornon-specific industries suchasfactory automation, high-tech industries, etc.,willbe
eliminated bytheendof1997.WT/TPR/M/19/Add.1
Page45
Tariff Reductions andExemptions forindustrial purposes areapplicable todefense industry items,
aircraft repairement parts, research anddevelopment items, factory automation items etc.Tariff
Reductions andExemptions forsocial purposes involve items forthehandicapped, anti-pollution, and
recycling etc.,andTariff Reductions andExemptions forcultural purposes include items forpromoting
culture, etc.
II.c Non-tariff policies
68. Letmenowturntothesubject ofKorea ’snon-tariff policies, which haveoften beencitedas
asource ofconcern bytheMembers. Inthisregard, Korea ’snon-tariffpolicies arerequired toensure
consumers ’safety, public health, andenvironmental protection, etc.TheKorean government,
nevertheless, hasimplemented andwillimplement suchpolicies inaccordance withtheWTO rules,
andbased onrecognized international standards, where possible.
Customs clearance procedures
69. Concerning customs clearance, theKorean government revised theCustoms Actandits
EnforcementDecreeinDecember1995,inordertostreamlinecustomsclearanceprocedures.Previously,
importers were usually required tofileanapplication withthecustoms aftergoods hadbeenstored
inabonded area, andpayduties toobtain animport permit. However, arevised system hasbeen
implemented,includingthereplacementoftheimportpermitsystembyatime-savingdeclarationsystem;
abolition ofarequirement tostore goods inabonded warehouse during theprocessing period;
conversionofthepre-clearancepaymentsystemintoapost-clearancepaymentsystem;andthepossibility
offiling import declarations before arrival, ifgoods require prompt clearance. Since July1996, the
Electronic DataInterchange System hasbeeninoperation, andcontributes torapid import clearance
procedures.Throughthissystem,importerscanmakeanimportdeclarationbycomputerwithoutvisiting
thecustoms house. Asaresult, under therevised systems, thenumber ofdaysforwhich theimported
goods stayataportofarrival hasbeenreduced to2or3daysfrom 15daysaverage.
Import licensing
70. Withregard toimport licensing, about 3,100 ofthetotal10,859 items attheHS10-digit level
aresubject toapproval orinspection forimports. Thegreat partofthese items areregulated by49
lawswhich arelisted intheConsolidated Public Notice. In1997, Korea intends toconvert present
import licensing requirements fromapositive system toanegative system. While automatic licensing
-currently required formostimports -willbeeliminated, non-automatic licenses willbemaintained
foralimited number ofproducts deemed sensitive, forexample forreasons ofnational security,
environmental conservation andpublic health.
Rules andmarks oforigin
71. Theorigin-marking system, introduced inJuly1991 inKorea, aimstoensure thefairimport
order andtoprotect domestic consumers byproviding themwithaccurate information about products.
Itisapplied indiscriminately toimports onthebasis ofArticle 9ofGATT 1994. Korea doesnot
discriminate against anycountry, andconducts origin-marking under theMFN treatment principle.WT/TPR/M/19/Add.1
Page46
Atpresent, theKorean government makes itmandatory tomark rules oforigin on678items atthe
HS4-digit level, upfrom530items in1992. Thisincrease wasnecessary toprotect consumers from
increasing counterfeit origin-marking onlow-quality imports, inparticular, onthegrowing imports
oftheagricultural products from acertain country. Inanycase, Korea willmanage itsrules of
origin-marking system inlinewiththeprinciple ofArticle 9ofGATT 1944, which stipulates thatrules
oforigin should nothamper trade excessively. Tothisend,theKorean government intends toreview
thecurrent application ofsystems related torules oforigin bytheendofthisyear.
Local content requirements
72. Regarding Korea ’slocalcontent requirements, infact,Korea hasnopolicy toencourage or
oblige purchasers tochoose domestic goods orservices overimports, orachieve aminimum local
content. Noresource allocation iscarried out,onthecondition oftheuseofKorean goods orservices.
Standards, testing andinspection procedures
73. Withrespecttostandards,thenationalstandardsofKoreaisKS,i.e.KoreanIndustrialStandards
only, which isavoluntary standard. TheMinistry ofTrade, Industry, andEnergy isincharge ofthis
system. Besides theKS,thestandards which areestablished byother government authorities arenot
standards buttechnical regulations. These regulations arebased ontheAgreement onTechnical Barriers
toTrade. Theestablishment ofregulations byrelevant government authorities isbeing doneinmost
ofallcountry oftheworld. Since 1995, theKorean government hastaken awiderange ofactions
toreduce theperiod forthefoodinspection. Anditwillalsotakerelevant measures toharmonize Korean
system withtheinternational foodtesting standards, inparticular, random sampling scheme forfood
testing willbeintroduced thisyear.
Eco-labelling
74. TheKorean Eco-Mark Association, aprivate organization wasfounded inJune1994tofacilitate
theeffective implementation ofKorea ’seco-labelling programme, afterinterim arrangements between
1992and1994. Themanagement oftheprogramme hasthusbeenledbytheprivate sector inKorea,
theEco-Mark Committee, thetechnical sub-committee, andSecretariat arethemainorganizations for
themanagementoftheKoreanprogramme.Asoftheendof1995,198selectedproductsfrom33product
categories manufactured by110companies wereauthorized tocarry theEco-Mark. According tothe
existing awarding procedures, thereisnoestablished rulesforinviting anyinputfromoutside including
foreign companies sofar.However, theKorean Eco-Mark programme isstillevolving, andwillenhance
thetransparency intheproduct group selection andawarding procedure. Inthisregard, therehasnever
beenanyrequest fromforeign companies fortheselection orawarding procedures. Ontheother hand,
thevery issue whether ornottheeco-labellings arecovered bytheTBT disciplines areunder
consideration incurrent debate oftheWTO/CTE. Korea willtakeaposition onthismatter, after
decision ontheapplicability ofTBTdisciplines totheeco-labellings would bemade either inWTO/CTE
orintheWTO panel ondispute settlement. Korea alsotakesnoteofthefactthatonlyoneWTO member
notified itseco-labelling scheme totheWTO while other members thatoperate eco-labelling programs
didnot.WT/TPR/M/19/Add.1
Page47
Procurement conditions
75. Concerning procurement condition, thesupply ofmaterials andconstruction contracts should
bebased onanopencompetitive tendering procedure. Korea 'slimited competitive tendering procedure
meets alltherequired conditions oftheWTO Agreement. Fortimely procurement, thegovernment
publicizes ashort ormid-term procurement planatthebeginning ofeachyear. Under thisplan, the
opencompetitive tendering procedure hasbeenpromoted. currently, purchasing offoreign procurement
materials isbeing carried outthrough world-wide sourcing.
III. TRIPs, TRIMs, industrial andcompetition policy issues
76. Korea hasbeenconsistently committed toimproving intellectual property rights protection in
Korea. Thispolicy direction isbased upon ourownbelief thatproper protection ofIPRsisvitalfor
achieving oureconomic development, byencouraging technological innovation andtheactive exchange
oftechnology withforeign countries. Under thispolicy, mygovernment took, priortoandimmediately
aftertheentry intoforce oftheWTO Agreements, aseries oflegislative measures aimed atbringing
itsIPR-related lawsintofullconformity withtheWTO/TRIPs Agreement asearlyaspossible. Korea
didnotexercise thelonger implementation period provided forintherelevant provisions oftheTRIPs
Agreement. Korea 'sefforts forearly implementation weremade voluntarily, without prejudice to
ourrights under theTRIPs Agreement. Korea 'sinitiative isnotdirected byitsobligation under the
WTO Agreement, butbyitsownpolicy needs.
77. Questions concerning theduration ofpatent protection forpatents granted before WTO
implementation:
- ThenewPatent Law, which wasamended toreflect theTRIPS provisions andwent
intoeffect onJuly1thisyear,provides foratwenty-year protection fromtheapplication
ofthepatents which remained validorpending onandafterthedateoftheentry into
force oftheLaw. Inother words, theextended 20yearprotection from application
isinaccordance withtherelevant provision oftheTRIPs Agreement.
78. Question relating tothepatents court:
- TheKorea patents court willbeestablished byMarch 1,1998.
- Thepatents court willstand atthelevelofanappellate court under theSupreme Court.
Thiscourt willtakeupIPR-related cases when adecision onthesecases attheKorean
Industrial Property Office isappealed.
79. Question ofborder measures toenforce IPRs
- TheKorean Customs Lawwasamended in1994 tointroduce procedures relating to
theenforcement ofborder measures asprovided forinSection 3,PartIIIoftheTRIPs
Agreement.
- Specific measures tobetaken andprocedures tobefollowed, inorder toprevent import
orexport ofgoods thatinfringe trademarks orcopyright arestipulated intheLawandWT/TPR/M/19/Add.1
Page48
itsimplementation decree. These provisions areinfullconformity withtherelevant
provisions oftheTRIPs Agreement.
80. Limitation onforeign shareholders
Theceiling wasalready raised to18percentfrom15percentinApril, andwillbeincreased
to20percentinOctober 1996. Furthermore, theceiling willbecompletely eliminated in
theyear2000.
81. Foreign Direct Investment Liberalization Plan
AccordingtoKorea's"ForeignDirectInvestmentLiberalizationPlan",announcedinMay1996,
47business sectors outof81restricted sectors willbefullyorpartially opened asof1January
1997, onagradual basisuntiltheyear2000. Inparticular, 28business categories willbefully
orpartially opened in1997.
97.1 98.1 99.1 200.1 Total Restricted sectors
liberalized
-full
-partial
-total27
1
284
7
116
-
6-
2
237
10
47fully restricted 18
partially restricted
26
82. 28business categories tobeopened in1997 areasfollows:
- Primary sectors: theretail saleofgrain, thewholesale selling ofgrain, themanufacturing
ofstarch andstarch products;
- Financial services: mutual credit companies, other financial intermediation, other activities
auxiliary tofinancial intermediation (partially liberalized);
- Transport sector: airorlandfreight handling services, ground handling ofaircraft services,
inner-city bustransportation;
- Communication andculture sector: vocational training schools, preliminary training schools,
theretail saleofartsandantiques, offset printing, commercial printing bystencil plates or
similar plates;
- Miscellaneous services: employment agencies, jobplacement services, detective services,
security andguard services;
- Themanufacturing ofexplosives andpyrotechnic products.
83. Regarding rôleandacceptance ofGeneral Trading Companies, thelimited entry offoreign
company 'strading business willbeeliminated byJuly1,1997, andtherevision oftheForeign Trade
Actwhich contains theelimination oflimits isnowbeing processed.
84. Competition Policy
Theimportance ofCompetition policy hasincreased duetotherapid paceofglobalization in
thepostURworld. Inreflection ofthissituation, thestatus androleoftheKorea FairTrade
Commission hasbeenelevated toministerial level. Thisyear, theCommission ispursuing arevision
oftheFairTrade Actinorder tocarry outitsadvocacy rolemore efficiently. Thecurrent revisionWT/TPR/M/19/Add.1
Page49
isalsoaimed toensure thecommissions 'active participation ininternational talksofconverging
competition policies.
85. Fortheexamination ofabusive actsofmarket-dominating enterprises, therearemajor criteria
asfollows:
- Incasethepriceofspecified goods orservices hassubstantially risenordeclined onlyslightly
foraconsiderable period oftimewithout justifiable reason, compared tofluctuations insupply
anddemand orthechanges incosts necessary forthesupply thereof.
- Greatly reducing theproduction, salesquantity andincreasing theinventory ofthegoods without
anyjustifiable reason inlightofrecent trends.
- Preventing orhindering other enterprises frompurchasing therawmaterials necessary forthe
production ofthegoods concerned bydrastically purchasing morerawmaterials thanisrequired
without anyjustifiable reason, orforcing orpersuading thesupplier ofrawmaterials notto
provide other enterprises withthesame rawmaterials.
- Preventing orhindering thebusiness ofanyothercompeting enterprises bymaking adefamatory
orslanderous statement against thesaidenterprises based uponfalseoruncertain information.
86. Nocorporation belonging toaLarge Business Group (chaebols) shallcause thetotalbalance
ofdebtguarantees issued infavour ofitsdomestic affiliated corporations toexceed twohundred per
centofitsshareholder 'sequity.
- Asaresult ofintroducing thissystem, theaverage ratioofdebtcross-guarantees ofchaebols
totheshareholder 'sequity decreased from 342.4 percentin1993 to55.9percentin1996,
reflecting areduction oftheconcentration ofeconomic power.
87. There isnospecial provision intheFairTrade Acttoprevent bid-rigging ingovernment projects
andprocurement. However, suchbid-rigging canbemonitored bygathering every kindofinformation
provided byother government agencies responsible forauditing andprosecuting andsoon.
88. Noenterprisethatproducesorsellsacommodityshallengageinresalepricemaintenance(RPM)
under theFairTrade Act.Thisprovision shallnotapply tothepublications defined intheCopyright
Actor tocommodities which meetsomeconditions andwhich theFairTrade Commission hasdesignated
inadvance asbeing eligible forresale price maintenance. However, todatenocommodity hasbeen
designated assuchbytheFairTrade Commission.
89. Noenterprise shallagree withanother enterprise bycontract oranyother means, tojointly
engage inanyoftheactswhich substantially restrict competition inarelevant areaoftrade. This
prohibition shall notapply ifsuchanacthasbeen authorized bytheFairTrade Commission in
accordance withtheprovisions ofthePresidential Decree forthepurpose ofrationalizing theindustry,
promotingresearchandtechnologydevelopment,overcomingeconomicdepression,promotingindustrial
restructuring andsoon.Todate, there hasbeennocaseauthorized bytheFairTrade Commission.WT/TPR/M/19/Add.1
Page50
90. Regarding thedivision oflabour between theKorean FairTrade Commission andthecourt,
ifanunfair collaborative actoccurs inviolation ofcartel provision, theCommission may, initially,
impose asurcharge notexceeding fivepercent(5percent) ofthesalesrevenue posted between the
datetheviolation occurred andthedatetheviolation ceased. However, ifanenterprise which isordered
bytheFairTrade Commission tosuspend suchviolation actdoesnotdoso,thisenterprise maybe
liable forimprisonment ofuptothree years orafineofuptotwohundred million Won.
91. Inorder toaccommodate enterprises which argue thattheirconduct isreasonable, interested
parties mayattend ahearing oftheCommission tostatetheirviews orpresent necessary materials.
Thefinaldecision ismade bytheCommission, which iscomposed ofseven commissioners suchas
attorneys andeconomists andsoon.Inaddition, anyparty which desires tofilealawsuit withrespect
toanymeasure taken bytheCommission pursuant tothisActshalldosowithin thirty daysfromthe
dateonwhich theparty isnotified oftheCommission 'sresponse totheobjection filed.
IV. Sectoral Issues
IV.a Agriculture
92. Aswasmentioned yesterday, theKorean agriculture sector remains inatransitional period.
Korean agriculture, which isforthemostpartdominated byriceproduction, ischaracterized bysmall
farms withanaverage farm sizeofaround 1.3ha.Korean agriculture typically suffers from low
productivity andunder-developed infrastructure. Accordingly, itisinevitable thattheprices ofKorean
agricultural products arehigher thanthose ofother agricultural exporting countries.
93. Themainpolicy objectives, therefore, havebeenpricesupports coupled withimport restrictions
including hightariffs, quotas andother measures, administered byextensive government intervention
inthissector.
94. However,withthelaunchoftheWTOAgreementthegovernmenthasimplementedawidespread
reform ofitsagricultural policies, adopting amore market-oriented direction. Increased efficiency
andcompetitiveness, withaparticular emphasis onlong-term structural adjustment andimprovement,
ishoped toreduce reliance ontraditional price-support policies insuchawayastoallaytheconcerns
expressed byother members.
95. Aseriesofongoingmeasures,includingfarmmechanization,farmsizeenlargement,thefostering
ofyoung farmers, andincreasing exports, arebeing undertaken asameans ofpromoting the
competitiveness ofKorean agriculture.
96. TheKorean Government willcontinue tomake strenuous efforts tomake agricultural sector
more competitive andefficient. Ofcourse, wewillfaithfully implement ourWTO commitments under
theframework oftheexisting Agreement.WT/TPR/M/19/Add.1
Page51
Current andminimum access commitments
97. Ingeneral, theKorean Government hasfaithfully implemented itsWTO commitments. Korea ’s
commitment toimplementation isreflected bythefactthatofthe190commodities specified inthe
Country Schedule, 149items were fullyimported in1995. Interms ofvolume, about 90percent
ofimports werefulfilled lastyear. More specifically, ofthe67products (product groups) under Korea ’s
TAs, 48items werequota filled atorabove thecommitted level, and8items filled about 80percent
oftheirquotas. Only11minor products suchasbirds eggsandsilkworm eggs, werenotquota filled
withmore orlessthan10percentoftheTRA. Inaddition, auctioning seems veryefficient.
98. Inaddition, Korea hasalready revised itslawsandregulations relating toagriculture. Inthe
agricultural sector, atotalof15lawsandregulations havebeenrevised since 1944, suchastheFood
Grain Management Act,thePlant Protection Act...Korea willcontinue tomake every effort forthe
faithful implementation oftheWTO Agreement. TheGovernment periodically monitor itsperformance.
Administration ofTRQs
99. AshasbeenfrequentlydiscussedintheCommitteeonAgriculture,TRAmanagement(operations)
hasbothadvantages anddisadvantages inKorea. However, onanoverall basis, Korea ’sTRA system
hasbeenasuccess, based ontheactual achievement of1995, andother relevant data. Some minor
problems, suchasunfilled quotas havearisen fromadverse market conditions (i.e.,lowdomestic prices),
rather thanfromtheTRA management itself orfrominsufficient notice orrestrictive measures. My
Government iscommitted totheimprovement ofoursystem, andtheeventual elimination ofany
remaining technical problems, inlinewiththeconcerns expressed bytheMembers, andinconformity
withtherules andspirit oftheWTO.
Exceptions toTariffication other thanRice
100. Korea willapply tariffs oragriculture products within thescope ofitscountry schedule and
incompliance withtheWTO principles. Inthecaseoftheagricultural sector, almost allthecommodities
arelisted intheCountry Schedule, andareaccordingly subject totariffication by2004withtheexception
ofrice.
Safeguard onLiberalized Items (Blended milkproducts)
101. InKorea, safeguard measures havebeentaken forspecial products based ontheWTO/Safeguard
Agreement.
Inthecaseofmilkpowder blends (0404.90.0000, 1901.90.0000), serious problems werecreated by
therapid import ofsuchproducts, including thedistortion ofthedairy trade, sharp increase inmilk
powder stocks, thedrastic importation ofdairy products, andasharp dropindomestic cattle prices.
Theresult serious injuries tothedairy industry necessitated safeguard actions intheviewoftheKorean
Government.
- Imports ofmilkpowder blends: (93)3,217 MT,(94)15,561, MT(384percent), (95)
28,006 MT(80percent)WT/TPR/M/19/Add.1
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Theinvestigation ofinjuries tothemilkpowder blends wasinitiated inMaythisyear, andtheprocess
isunder way.Whether theKorean Government willtaketheSafeguard measures depends onthedecision
oftheKTC (Korean Trade Commission). Nosubstantial negative impact ofsuchansafeguard action
could befound among theaffected countries. However, Korea willcontinue toendeavour tomake
itsmeasures consistent withtherules andprinciples oftheWTO.
Other Issues
102. Given thetimeconstraint andthenature oftechnical issues concerned, wehavebeenunable
toanswer allthese questions indetails. However, despite substantive difficulties athome, Korea has
introduced aserious ofreform policies inthese areas, resulting inasignificant expedition ofimport
clearances procedures. Sofar,wehaveonlylimited success, butwillcontinue tomake every effort
toshorten thetimeperiod needed fortheclearance.
SPSandFood Sanitation Standards
103. Mygovernment attaches particular importance totheimprovement ofitssanitary and
phytosanitary regulations andstandards initspursuit ofderegulation.
InMay1995, Korea established anambitious overall Sanitary andPhytosanitary Measures Improvement
Plan, designed toenhance efficiency insanitary andphytosanitary administration. Wehavemade
substantive progress, asmentioned bymany delegates atyesterday ’smeeting. Letmename afew
oftheimprovements which were introduced under thisoverall plan.
- Weintroduced anexpedited customs clearance procedure forperishable agricultural products
inApril 1995.
- Inconformity withtheIPPC, theconcept ofquarantine pestwasintroduced through therevision
ofthePPActinDecember 1995.
- Toexpedite custom clearance, theMinisterial Ordinance oftheFoodSanitation Actwasrevised
inAugust 1995. Thechanges brought ininclude, among other things, theintroduction ofa
pre-arrival application system andrecognition ofoverseas testresults. Applications forsanitary
inspection cannowbesubmitted 5dayspriortothearrival oftheshipment, andthetestresults
offoreign inspection/testing institutions canbeaccepted upon review bytheappropriate
authorities.
- TheFood Sanitation Actitselfwasfurther revised inDecember 1995, whereby aretest system
wasintroduced totheexisting system. Iftheimporter requests aretest withthesupport of
testresults fromdomestic and/or overseas testing institutions, theauthorities should notify the
importer, upon review oftherequest ofitsdecision ontheneedforaretest.
- Lastbutnotleast, Korea hasdevised andimplemented aphased plantogradually convert the
government designated shelf-life system intoamanufacturer determined system by1998.WT/TPR/M/19/Add.1
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Ontopofthese already implemented measures, weareplaning thefollowing further reforms inthe
sanitary andphytosanitary sector bytheendofthisyear.
Introduction ofarandom sampling scheme
104. TheKorean government willintroduce arandom sampling scheme withaviewtoreducing
theratioofitems subjected tolaboratory testing andenhancing theefficiency ofinspection. Under
theplan,samples willbeclassified intotwocategories: "surveillance" and"compliance". Mandatory
laboratory testing willapply onlytocompliance sample groups. Onlyrandom sampling willbeapplied
tothesurveillance group, which consists ofallproducts notspecifically delineated bythecompliance
sample group criteria. Thecriteria defining thecompliance sample groups areenvisaged asfollows:
- New-to-market products
- Products withprior information ofsanitary riskinand/or outofKorea
- Same products from thesame producer which havearecord ofviolation
- Products falling under thehealth supplementary products orGinseng product categories
- Shipmentsforwhichproblemsarefoundduringorganoleptictestingorpostmarketsurveillance.
Therandomsamplingschemeisplannedtobeimplementedasearlyas(today?)October1,1996,through
therevision oftheMinisterial Regulation oftheFood Sanitation Act.
Abolition offumigation requirements forcosmopolitan pests
105. Having introduced theconcept ofquarantine pestsinDecember 1995, theKorean government
isnowpreparing aspecific listof"Quarantine Pests" based onPestRiskAnalysis consistent withthe
IPPC. Thislistwillbepublished aspartoftheMinisterial Regulation ofthePlant Protection Actand
quarantine requirements oncosmopolitan pests isplanned tobeabolished from December 7,1996,
when therevised Plant Protection Acttakes effect.
Abolition ofthemandatory sorting requirements forspoiled agricultural products
106. Therequirement thatspoiled agricultural products besorted forfoodsanitation purposes is
planned tobeabolished asofOctober 1,1996. Therevised draftoftheMinisterial Regulation ofthe
Food Sanitation Acthasalready beenpublished forpublic comment. Thesorting requirements for
quarantine purposes arealsotobeabolished beginning fromDecember 7,1996, when therevised Plant
Protection Actcomes intoeffect.
Improvement ofthereporting requirement forallingredients percentages
107. TheKorean government currently requests theimporters offoodproducts toreport ofall
ingredients andtheirpercentages. Thisrequirement istofacilitate thedetermination ofadherence to
the"same product fromthesame producer" category interms ofexemption from laboratory testing.
However, thisreporting requirement isplanned tobeamended asofOctober 1,1996, through arevision
oftheMinisterial Regulation oftheFood Sanitation Act. Under thenewly envisaged system, the
reporting ofthepercentage ofthemain ingredient willstillberequired, while onlythenames ofallWT/TPR/M/19/Add.1
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other ingredients arenecessary. Such aminimum levelofreporting isdeemed necessary toconfirm
andidentify thecategorization ofproducts.
108. Concerning thedisease-free status, letmereiterate thatKorea fullyrecognizes theconcepts
ofdisease-free areas. Asforthespecific caseofthemedfly-free areas ofCalifornia, letmeremind
theU.S. delegation thatmyauthorities areready tostudy thecomprehensive report ontheMedfly
eradication inCalifornia
109. Withregard tothespecific questions raised intheU.S.questionnaire, wewishtoremind the
U.S.delegation thatsome ofitselements were already presented during theMay25meeting ofthe
SPSCommittee andthereafter weasked foraclarification inJune. Itwould beuseful iftheU.S.
delegation could provide uswiththeseclarification before werespond more categorically tothespecific
questions.
Before Iconclude onthissection ofourpresentation, letmenotethefactthatmany oftheconcepts
intheSPSAgreements haveyettobedefined, andinternational standards havenotyetbeendeveloped.
Itwasdespite these uncertainties thatKorea hasintroduced changes toitsshelf-life requirements and
import clearance procedures.
Beefderegulation
110. Inthecaseofthebeefindustry, several kinds ofregulations willbeeased andlifted according
tothebeefmarket opening schedule agreed upon theU.R. Asstated intheCountry Schedule, Korea
willmaintain quantitative import restrictions onbeefuntiltheyear2000. From theyear2001, beef
imports willbesubjected totariffs only. Therefore, many oftherelated rules andregulations will
berevised andeliminated according totheWTO Agreements.
Conditions forinedible products suchaswool
111. Concerning thematerials subjected toanimal quarantine, bothedible andinedible materials
mustbeinspected. Korea requires animal health certificates forsuchmaterials according totheCode
ofOIE(International Animal Health Code Article 1.5.2.6. andPart5Model Certificate). Such
inspections arealsoundertaken inmany other countries.
However, inthecaseofwool, ifsuchproducts areimported from disease freecountries (which are
permitted bytheKorean Government) andthusmeetcertain requirements (e.g.:thereisnopossibilities
ofinfectious diseases), theKorean Government doesnotrequire theanimal health certificate. Products
inarawstate(e.g.: greasy wool) aresubject totherequirements ofveterinarian certification ofhealth.
BanonGame Meat
112. Inthecaseofgame meat, itisverydifficult toverify whether ornotproducts comply with
health requirements. InKorea, suchwildanimal meat isnottraditionally employed asfoodstuff.
Therefore, suchproducts were notlisted intheKorean Food Act.WT/TPR/M/19/Add.1
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Certain game meatproducts (such askangaroo, crocodile, ape,etc.)arenotclassified asfoodstuffs
inKorea. Wehavenothadanyconcrete concept ofgame meatwithin ourGovernment (thatissuewill
bediscussed inmore details intheMinistry ofHealth andWelfare). Ifsuchproducts comply with
international standards (e.g.:theCodex), andiftheexporting countries submit relevant dataconcerning
sanitary requirements, wewillconsider those products asarelevant category ofKorean foodstuffs.
IV.b Fisheries
113. Concerning thetariff ratesforfishery products, atthisstage, wehavenotcommitted toany
schedule forlowering tariff ratesforfishery products.
Theliberalization offishery product, willgradually takeplace according toKorea ’sliberalization plan
by1997. Bytheendofthisyear, 18fisheries items willbefullyliberalized. 30additional items will
befullyliberalized bytheendof1997.
IV.c Services Issues
114. With respect tothecommercial presence intheServices area, Korea imposed restrictions on
foreign portfolio investment inKorean stock limiting individual foreign investors to3percentofeach
company ’stotalstock, while aggregate foreign investment cannot exceed 10percentpercompany.
Inorder toachieve further liberalization, asof1stOctober 1996, theceiling forforeign portfolio
investments instock willberaised to5percentforindividual investors andupto20percentfor
aggregate foreign investors, through phased inliberalization.
115. Inaddition tothissignificant liberalization measure, wehavebeentaking unilateral liberalization
actions inseveral specific sectors.
- Asforthefinancial services, itshould benoted thattheKorean government isfirmly
committedtotheimplementationofallconcessionsprovidedinthefinancialnegotiations
in1995.
- Inthemaritime transport services sector, inspiteoftheundesirable suspension ofthe
extended negotiations, wenotonlycontinue tomaintain theURcommitments butalso
plantocutdown coverage ofthecargo preference system from8items inourschedule
toonly3items (coal, ironandliquefied gas)bytheendofthisyear.
- Inthetelecommunications sector, thevalue-added telecommunications services market
hasbeencompletely openfromJan.1995. Thebasictelecommunication service market
willbegradually opened fromJan.1998, according totheresults oftheWTO/GBT.
Korea ’sGATS draftschedule ofcommitments, which isverydifferent fromthestatus
quo,covers various telecommunications services including international service and
satellite telecommunication services. Foreign equity ownership would beincreased
from 0percentto33percentintelephony services. Noeconomic needs testwould
beimposed. Under suchasystem, aforeigner could bethepresident oramemberWT/TPR/M/19/Add.1
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oftheboard ofdirectors. Resale ofbasic telecommunications services would be
permitted.
However, voice resale services willonlybepermitted from 2001. Thereason why
voice resale would bepermitted lateristhatthepriority ofKorean telecommunications
policy isfocused onestablishing facility-based network fornation-wide
telecommunications infrastructure assoonaspossible.
116. Regarding professional services, wehavealsobeenfullyimplementing ourcommitment in
thissector. Korea revised relevant lawsinorder toallow theservices offoreign architects through
jointcontracts witharchitects licensed under Korean law,from 1stJanuary, 1996, according tothe
additional commitments inourschedule. Korea hasalsoeliminated thenationality requirements for
taxaccountants.