Services Sector

An Expert's View about Travel, Tourism and Food Services in South Korea

Posted on: 11 Jun 2012

Korea’s commitments provide U.S. service suppliers with new opportunities and greater assurance of their rights and privileges in the robust Korean market.

U.S. Department of Commerce International Trade Administration The U.S.-Korea Trade Agreement: Opportunities for the U.S. Services Sector The U.S.-Korea Trade Agreement would provide signicant commercial opportunities for U.S. exporters: • Korea’s commitments provide U.S. service suppliers with new opportunities and greater assurance of their rights and privi- leges in the robust Korean market. • The U.S.-Korea Trade Agreement will set new, higher standards for addressing regulatory issues and includes a strong nan- cial services chapter which would create a more level playing eld for U.S. nancial rms in Korea. • The trade agreement’s services provisions are structured to ensure coverage of new services areas without new negotia- tions. Services Sector Overview U.S. Services Exports to Korea Averaged • The U.S. services sector accounted for 69 percent of total U.S. GDP in 1 2009 and was valued at $9.8 trillion. $12.4 Billion • The U.S. services sector employed over 98 million workers in 2009, with services accounting for approximately 83 percent of private non- $13.0 2 farm employment. $12.5 • Services accounted for over $12 billion in U.S. exports to Korea over 3 2007-09 (average). $12.0 • The Korean market oers areas of opportunity for U.S. exporters, particularly in travel, tourism, education, legal, insurance, technology, $11.5 audiovisual, distribution, express delivery, environmental, profes- 4 sional, and nancial services. $11.0 Improved Market Access for U.S. Services Exporters 2007 2008 2009 to Korea Overarching Services Provisions: • Korea signicantly improved upon its WTO commitments in services, providing meaningful market access commitments that extend across virtually all major service sectors and include services supplied both cross-border (such as through electronic means) as well as through a commercial presence. • The trade agreement provides a “ratchet” clause under which liberalization undertaken autonomously by Korea will be cap- tured and bound under the trade agreement. The Agreement also ensures that the United States will have the benet of any trade concessions made by Korea in trade agreements concluded after the U.S.-Korea Trade Agreement enters into eect. Specic Services Outcomes under the U.S.-Korea Trade Agreement: • Express Delivery Services: Expedited customs clearance commitments would facilitate greater access to international delivery services and complement Korea’s commitments to maintain an open and unrestricted market with a level playing eld for private express carriers. • Legal and Accounting Services: The trade agreement would allow access for the rst time to foreign legal consulting services and over time permit U.S. law rms to enter into cooperative agreements with local rms, establish joint ventures, and hire local lawyers. Korea would also allow U.S.-registered CPAs or accounting corporations constituted under U.S. law to establish oces to provide consultancy services on U.S. and international accounting laws and standards; allow U.S. CPAs to work for Korean accounting corporations; and within 5 years, permit U.S. CPAs to invest in Korean accounting corporations. • Healthcare and Education Services: Korea would guarantee access to the higher education and distance adult education market, as well as to the health care market in special economic zones. 1 U.S. Department of Commerce, Bureau of Economic Analysis, Services references BEA denition of private services-producing industries. 2 U.S. Department of Commerce, Bureau of Economic Analysis, Services references BEA denition of private services-producing industries. 3 U.S. Department of Commerce, Bureau of Economic Analysis. 2009 is the latest year available for U.S. services exports to Korea. 4 U.S. Department of Commerce, U.S. & Foreign Commercial Service, 2010 Country Commercial Guide for Korea. April 2011 Additional information available at: Billions of USD • Audio-Visual Services: The trade agreement would: (1) improve market access for U.S. broadcasting and audiovisual service providers, e.g., through a commitment by Korea to allow, within three years, 100 percent foreign ownership of program providers for U.S. rms that establish a Korean subsidiary; (2) lead to a decrease in Korean TV content quotas for lm and animation and an increase in the allowable content from a single country; (3) lock in all other Korean content requirements at the least restrictive level allowed under current law, including the motion picture screen quota; and (4) result in a commitment by Korea to permit U.S. investment in IPTV and the binding of Korean content quotas in the platform. • Other Professional Services: Korea oered guaranteed access in other areas, including research and development services, ser- vices incidental to mining, maintenance and repair of equipment, and environmental services. • Financial Services: Under the trade agreement, U.S. nancial institutions would be able to establish or acquire nancial institutions in Korea and choose the corporate form that best meets their business needs. The trade agreement also ensures that U.S. nan- cial regulators would continue to have exibility to take action in order to ensure the integrity and stability of nancial markets or address a nancial crisis. U.S. nancial services suppliers would also have the ability to supply a clearly dened list of nancial services “cross-border”, including portfolio management services for investment funds. Additionally, Korea would implement several reforms that would contribute to transparency of rules and procedures in the sector including regional integration of data processing. In the insurance sector, Korea has committed to begin the process of ensuring that the same rules and regulations ap- ply equally to both cooperatives selling insurance and Korea Post as well as to private insurers. • Telecommunications: In addition to removing foreign ownership limitations, providing for cost-oriented access to facilities and networks, and safeguarding technology choice, the agreement would also expand Korea’s commitments on mobile services and includes a provision to guarantee that the regulatory body is independent from any public telecom services supplier and impartial to all market players. • E-Commerce: As well as ensuring non-discriminatory and duty-free treatment of all digital products, outlining principles that ensure consumers’ reasonable access to the Internet, and facilitating the use of electronic authentication, the agreement would recognize the importance of cross-border data ows and encourages Parties to refrain from imposing or maintaining unnecessary barriers to electronic information ows. In addition, the agreement acknowledges the importance of on-line consumer protection and provides for enforcement cooperation. Foreign Competition in the Korean Market • Korea signed a trade agreement with the EU in 2009, which is scheduled to enter into force in July 2011. Korea presently has FTAs in force with ASEAN, Chile, India, Singapore, and EFTA. It also recently signed an FTA with Peru, which is also scheduled to enter into force this year. In addition, Korea is negotiating new agreements with Australia, Canada, Colombia, New Zealand, and Turkey; is considering launching FTA negotiations with China; and is exploring re-launching its stalled negotiations with Japan. Other Key U.S.-Korea Trade Agreement Commitments for the Services Sector • Government Procurement: Korea and the United States are members of the WTO Agreement on Government Procurement and already enjoy open and trans- parent access to each other’s government procurement markets. The U.S.-Korea Trade Agreement enhances this relationship by increasing the procurements to which U.S. suppliers will be ensured non-discriminatory access by reducing the goods and services threshold to $100,000 from $203,000 for central government entities. The Agreement also incorporates important improvements that reect the emerging practices in procurement, such as reducing the tendering period for “o-the-shelf” goods and services and encouraging the use of electronic tenders. • Customs Procedures: The U.S.-Korea Trade Agreement requires transparency through the publication of customs measures to ensure that the U.S. and Korean private sectors have access to customs laws and regulations. To the extent possible, those interested will be given an op- portunity to comment on generally applicable customs regulations proposed by the United States or Korea. The trade agreement requires simplied customs procedures for the timely and ecient release of goods in order to facilitate “just-in-time” supply chain logistics systems, as well as procedures intended to reduce delays in customs clearance. • Investment: The U.S.-Korea Trade Agreement establishes a stable legal framework for U.S. investors and investments in Korea, backed by a transparent, binding international arbitration mechanism. All forms of investment are protected under the Agreement. With few exceptions, U.S. investors would be treated as well as Korean investors (or investors of any other country) in the establishment, acquisition, and operation of investments in Korea. • Transparency: The U.S.-Korea Trade Agreement includes strong transparency obligations, with commitments that the national governments of both parties would to the extent possible publish proposed regulations in advance, allow a reasonable opportunity to com- ment, address signicant substantive comments received, publish nal regulations in an ocial journal of national circulation, and provide sucient time between publication of the nal regulation and implementation of the regulation to allow stakeholders to adjust. The U.S.-Korea Trade Agreement also includes strong anticorruption provisions obligating the Parties to adopt and main- tain anti-bribery measures in international trade and investment. Parties further commit to maintain appropriate penalties and procedures to enforce such anticorruption rules, and to protect persons who report any of the criminal acts comments received, and publish nal regulations in an ocial journal of national circulation. Provisions that address corruption in international trade and investment are also included. April 2011 Additional information available at: U.S. Department of Commerce International Trade Administration The International Trade Administration - Your Global Business Partner The International Trade Administration (ITA) – a division of the U.S. Department of Commerce – strengthens the competitiveness of U.S. industry, promotes trade and investment, and ensures fair trade through the rigorous enforcement of our trade laws and agreements. ITA also utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. For more information on exporting to Korea, please contact: • The ITA office of the U.S. Embassy in Korea at or 82-2-397-4535, or by visiting our website • The ITA trade specialist in the U.S. nearest you by visiting For more information on the U.S.- Korea Trade Agreement, please visit and For more information on industry-specific issues, please visit
Posted: 11 June 2012

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