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Topic : KORUS-FTA & Investor-State claim and the legal market of Korean society
Participants : Sunjeong Hwang, Sunghoon Park,Kyongho Lee, Soohyun Lee
Presenter: Sunghoon Park
Coordinator: Soohyun Lee
contents:
* Summary
KORUS-FTA: What it really means?
1. Two rosy opinions on KORUS FTA
Promises and Problems of FTA Talks
http://times.hankooki.com/lpage/opinion/200605/kt2006050718545954330.htm
- This article has 4 points why we have to make KORUS-FTA done.
“The ultimate goal of an FTA is to set a zero percent tariff. … Korea’s U.S. market share has dwindled to 2.6 percent as of last year, in contrast to China’s increase of 14.6 percent. If the tariff barrier were removed, … a “KORUS FTA” would eventually increase Korea’s GDP by 2 percent and its export to the U.S. by 15 percent, …”
“… raising manufacturing jobs by 6.5 percent in the country to help ease the problem of socio-economic polarization.”
“Another point of argument is that an FTA will accelerate investment in Korea.”
“The government also cites some positive empirical data that supports the success of FTAs signed with the United States.”
2. Korea-US Free Trade Agreement Could Boost the Two Economies and Catalyze Additional Trade Reforms in the Asia-Pacific Region
http://www.iie.com/publications/newsreleases/newsrelease.cfm?id=64
“Most US gains come from preferential access to the more highly protected Korean market. By contrast, Korea benefits more from the increased efficiency of Korean firms spurred by the liberalization of its own policies than from preferential access to the relatively open US market.”
“… strong political opposition in both countries. In Korea, the most vociferous resistance would come from the heavily subsidized agricultural interests. Steel and electronics industries also would likely object if the pact did not reduce their exposure to US antidumping and countervailing duty cases. But reforms of US unfair trade laws would precipitate strong opposition from some US industries and key members of Congress. The US textile and apparel industries also would resist granting tariff preferences to highly competitive Korean firms.”
3. Investor-State claim
The South Korea-U.S. FTA: what does it truly mean?
http://english.hani.co.kr/arti/english_edition/e_business/144965.html
“When Korea was negotiating with Chile on an FTA, of course it created some controversy, but it was not on the scale of dividing the entire nation on opinion fault lines. … Why is only the South Korea-U.S. FTA getting such tough domestic resistance?”
The World Bank divides FTAs into three categories
American model
- maximum market opening
- ratchet model. Only one way to go – opening
- a comprehensive Minimum Treatment and MFN status
- all sectors are open in principle, unless specially stated otherwise.
- example: the North American Free Trade Agreement (NAFTA).
à “…reduces the role of government involvement in environmental protection and the public service sector.
European model
- only opening up areas that are specifically agreed to between two nations
- example: the FTAs between South and Chile
Developing nation model
- focusing on goods trade
- normally including clauses on service, investment, and intellectual property rights.
- example: The Common South American Market (MERCOSUR) and the Association of South East Asian Nations (ASEAN)
"Among all three models, the American model is looked as the most comprehensive and deeply integrated, while the developing nation model is regarded as a relatively low impact agreement."
Adopting American model will cause drastic change in legal and social practices.
Investor-State claim
"One good example illustrating that the U.S. FTA model would incur changes in legal and social practices is that it provides the investor the right to directly sue the State. ... first adopted by the NAFTA and has also been included in the ongoing Seoul-Washington negotiations, ... According to this clause, American investors, not the U.S. government, can directly file suit against the Korean government for violations of the FTA. ... In addition, the legal bodies that handle this kind of litigation will not be a South Korean court but rather a variety of international tribunals, including the International Centre for Settlement of Investment Dispute (ICSID) of the World Bank or the United Nations Commission on International Trade (UN-CITRAL). That is why some see it as a violation of the state’s legal sovereignty."
4. Issues to consider in NAFTA ch.11
- indirect expropriation
- taking measures tantamount to nationalization or expropriation
- letter of intent à regulatory chill
- clandestine state of due process(international private law)
- arbitration court in 3rd country à arbitration court haven
Metalclad Co. vs. Mexico case
“ … a local government in Mexico rejected plans by an American company, Metalclad Co., to build a hazardous waste disposal facility. The local government designated the field surrounding the factory site as an environment protection area. Metalclad Co. brought the case to an international court by suing the local government for violating the NAFTA. The court ruled the local government’s act a violation of the FTA, and said that the governemnt had to pay Metalclad Co. 16 million USD.” – “reasonably-to-be expected economic benefit”
“The Korean government looks at it differently. … to protect the interests of foreign investors against discrimination. … South Korean investors can also sue the American government.” – folks from Government consider it as a kind of market fairness, but…
“… this fairness only applies as a textbook example, not in reality. As of November 2004, most of the 85 pending cases at the ICSID were brought by American companies, with one exception.”
5. Legal market issue
Korea poised to admit foreign lawyers with FTA
http://www.bilaterals.org/article.php3?id_article=6415
- Opposing to the title of this article, it is not going well for foreign lawyers. One of the documents issued by Government to review FTA prospects with US, I found nothing about the opening of legal market in the section of professional jobs and, according to one of the Pressian articles written by Song, Ki-Ho(a professional in international law), the reason why people with legal professions don’t resist to FTA could be the concession between government and legal society about that Government would not open the legal market of Korea with FTA agreement.
Along with the issue of reformation in judiciary system, it would be an outrageous movement if there were any concession between Government and legal society. In respect of this article,
“South Korea, Asia’s third-largest economy, has about 8,000 lawyers serving 48.8 million people — or one lawyer for every 6,100 people, according to Korean Bar Association data. By comparison, the United States has one lawyer for every 268 people, based on data from the American Bar Association website.”
Besides this deteriorated circumstances of legal service in Korean society, the negotiation ability will be definitely hampered in the international disputes.
6. Questions for discussion
- What do you think about KORUS-FTA? Do you think KORUS-FTA will provide this society with fair opportunities to grow economically?
- Did you hear of anything about the conditions of countries committed in NAFTA? What do you find in their situations?
- We have many controversies on KORUS-FTA. “Is the controversy surrounding a free trade agreement with the U.S. based on the uncertainty of its future or a fear of the world’s number one economic power? Or is it being generated by some social and political groups that harbor anti-American sentiment?”
- Did you hear of this ‘Investor-State claim’ thing in the past? What do you find in this system? Is it only a system to guarantee investors the fairness in the market against discrimination or ‘taking’?
- What is your opinion on the opening of legal market? And what is your sentiment on the folks in legal society if they had any kind of privileges like slow opening of their field compared to other professions like medicine?
- What the hell are this FTA stuffs related to peace in general?
Participants : Sunjeong Hwang, Sunghoon Park,Kyongho Lee, Soohyun Lee
Presenter: Sunghoon Park
Coordinator: Soohyun Lee
contents:
* Summary
KORUS-FTA: What it really means?
1. Two rosy opinions on KORUS FTA
Promises and Problems of FTA Talks
http://times.hankooki.com/lpage/opinion/200605/kt2006050718545954330.htm
- This article has 4 points why we have to make KORUS-FTA done.
“The ultimate goal of an FTA is to set a zero percent tariff. … Korea’s U.S. market share has dwindled to 2.6 percent as of last year, in contrast to China’s increase of 14.6 percent. If the tariff barrier were removed, … a “KORUS FTA” would eventually increase Korea’s GDP by 2 percent and its export to the U.S. by 15 percent, …”
“… raising manufacturing jobs by 6.5 percent in the country to help ease the problem of socio-economic polarization.”
“Another point of argument is that an FTA will accelerate investment in Korea.”
“The government also cites some positive empirical data that supports the success of FTAs signed with the United States.”
2. Korea-US Free Trade Agreement Could Boost the Two Economies and Catalyze Additional Trade Reforms in the Asia-Pacific Region
http://www.iie.com/publications/newsreleases/newsrelease.cfm?id=64
“Most US gains come from preferential access to the more highly protected Korean market. By contrast, Korea benefits more from the increased efficiency of Korean firms spurred by the liberalization of its own policies than from preferential access to the relatively open US market.”
“… strong political opposition in both countries. In Korea, the most vociferous resistance would come from the heavily subsidized agricultural interests. Steel and electronics industries also would likely object if the pact did not reduce their exposure to US antidumping and countervailing duty cases. But reforms of US unfair trade laws would precipitate strong opposition from some US industries and key members of Congress. The US textile and apparel industries also would resist granting tariff preferences to highly competitive Korean firms.”
3. Investor-State claim
The South Korea-U.S. FTA: what does it truly mean?
http://english.hani.co.kr/arti/english_edition/e_business/144965.html
“When Korea was negotiating with Chile on an FTA, of course it created some controversy, but it was not on the scale of dividing the entire nation on opinion fault lines. … Why is only the South Korea-U.S. FTA getting such tough domestic resistance?”
The World Bank divides FTAs into three categories
American model
- maximum market opening
- ratchet model. Only one way to go – opening
- a comprehensive Minimum Treatment and MFN status
- all sectors are open in principle, unless specially stated otherwise.
- example: the North American Free Trade Agreement (NAFTA).
à “…reduces the role of government involvement in environmental protection and the public service sector.
European model
- only opening up areas that are specifically agreed to between two nations
- example: the FTAs between South and Chile
Developing nation model
- focusing on goods trade
- normally including clauses on service, investment, and intellectual property rights.
- example: The Common South American Market (MERCOSUR) and the Association of South East Asian Nations (ASEAN)
"Among all three models, the American model is looked as the most comprehensive and deeply integrated, while the developing nation model is regarded as a relatively low impact agreement."
Adopting American model will cause drastic change in legal and social practices.
Investor-State claim
"One good example illustrating that the U.S. FTA model would incur changes in legal and social practices is that it provides the investor the right to directly sue the State. ... first adopted by the NAFTA and has also been included in the ongoing Seoul-Washington negotiations, ... According to this clause, American investors, not the U.S. government, can directly file suit against the Korean government for violations of the FTA. ... In addition, the legal bodies that handle this kind of litigation will not be a South Korean court but rather a variety of international tribunals, including the International Centre for Settlement of Investment Dispute (ICSID) of the World Bank or the United Nations Commission on International Trade (UN-CITRAL). That is why some see it as a violation of the state’s legal sovereignty."
4. Issues to consider in NAFTA ch.11
- indirect expropriation
- taking measures tantamount to nationalization or expropriation
- letter of intent à regulatory chill
- clandestine state of due process(international private law)
- arbitration court in 3rd country à arbitration court haven
Metalclad Co. vs. Mexico case
“ … a local government in Mexico rejected plans by an American company, Metalclad Co., to build a hazardous waste disposal facility. The local government designated the field surrounding the factory site as an environment protection area. Metalclad Co. brought the case to an international court by suing the local government for violating the NAFTA. The court ruled the local government’s act a violation of the FTA, and said that the governemnt had to pay Metalclad Co. 16 million USD.” – “reasonably-to-be expected economic benefit”
“The Korean government looks at it differently. … to protect the interests of foreign investors against discrimination. … South Korean investors can also sue the American government.” – folks from Government consider it as a kind of market fairness, but…
“… this fairness only applies as a textbook example, not in reality. As of November 2004, most of the 85 pending cases at the ICSID were brought by American companies, with one exception.”
5. Legal market issue
Korea poised to admit foreign lawyers with FTA
http://www.bilaterals.org/article.php3?id_article=6415
- Opposing to the title of this article, it is not going well for foreign lawyers. One of the documents issued by Government to review FTA prospects with US, I found nothing about the opening of legal market in the section of professional jobs and, according to one of the Pressian articles written by Song, Ki-Ho(a professional in international law), the reason why people with legal professions don’t resist to FTA could be the concession between government and legal society about that Government would not open the legal market of Korea with FTA agreement.
Along with the issue of reformation in judiciary system, it would be an outrageous movement if there were any concession between Government and legal society. In respect of this article,
“South Korea, Asia’s third-largest economy, has about 8,000 lawyers serving 48.8 million people — or one lawyer for every 6,100 people, according to Korean Bar Association data. By comparison, the United States has one lawyer for every 268 people, based on data from the American Bar Association website.”
Besides this deteriorated circumstances of legal service in Korean society, the negotiation ability will be definitely hampered in the international disputes.
6. Questions for discussion
- What do you think about KORUS-FTA? Do you think KORUS-FTA will provide this society with fair opportunities to grow economically?
- Did you hear of anything about the conditions of countries committed in NAFTA? What do you find in their situations?
- We have many controversies on KORUS-FTA. “Is the controversy surrounding a free trade agreement with the U.S. based on the uncertainty of its future or a fear of the world’s number one economic power? Or is it being generated by some social and political groups that harbor anti-American sentiment?”
- Did you hear of this ‘Investor-State claim’ thing in the past? What do you find in this system? Is it only a system to guarantee investors the fairness in the market against discrimination or ‘taking’?
- What is your opinion on the opening of legal market? And what is your sentiment on the folks in legal society if they had any kind of privileges like slow opening of their field compared to other professions like medicine?
- What the hell are this FTA stuffs related to peace in general?
