Article 23.3. TAXATION
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. (a) Nothing in this Agreement shall affect the rights and obligations of either Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency.
(b) In the case of a tax convention between the Parties, the competent authorities under that convention shall have sole responsibility for determining whether any inconsistency exists between this Agreement and that convention.
3. Notwithstanding paragraph 2:
(a) Article 2.2 (National Treatment) and such other provisions of this Agreement as are necessary to give effect to that Article shall apply to taxation measures to the same extent as does Article III of GATT 1994; and
(b) Articles 2.11 (Export Duties, Taxes, or Other Charges) and 2.12 (Engine Displacement Taxes) shall apply to taxation measures.
4. Subject to paragraph 2:
(a) Articles 12.2 (National Treatment), 13.2 (National Treatment), and 13.5.1 (Cross-Border Trade) shall apply to taxation measures on income, on capital gains, or on the taxable capital of corporations that relate to the purchase or consumption of particular services, except that nothing in this subparagraph shall prevent a Party from conditioning the receipt or continued receipt of an advantage relating to the purchase or consumption of particular services on requirements to provide the service in its territory; and
(b) Articles 11.3 (National Treatment) and 11.4 (Most-Favored-Nation Treatment), Articles 12.2 (National Treatment) and 12.3 ( Most-FavoredNation Treatment), and Articles 13.2 (National Treatment) and 13.3 (Most-Favored-Nation Treatment) shall apply to all taxation measures, other than those on income, on capital gains, or on the taxable capital of corporations, or taxes on estates, inheritances, gifts, and generation skipping transfers;
except that nothing in the Articles referred to in subparagraphs (a) and (b) shall apply:
(c) any most-favored-nation obligation with respect to an advantage accorded by a Party pursuant to a tax convention;
(d) to a non-conforming provision of any existing taxation measure;
(e) to the continuation or prompt renewal of a non-conforming provision of any existing taxation measure;
(f) to an amendment to a non-conforming provision of any existing taxation measure to the extent that the amendment does not decrease its conformity, at the time of the amendment, with any of those Articles;
(g) to the adoption or enforcement of any taxation measure aimed at ensuring the equitable or effective imposition or collection of taxes (as permitted by Article XIV(d) of GATS); or
(h) to a provision that conditions the receipt, or continued receipt, of an advantage relating to the contributions to, or income of, a pension trust or pension plan on a requirement that the Party maintain continuous jurisdiction over the pension trust or pension plan.
5. Subject to paragraph 2 and without prejudice to the rights and obligations of the Parties under paragraph 3, paragraphs 2, 3, and 4 of Article 11.8 (Performance Requirements) shall apply to taxation measures.
6. (a) Article 11.16 (Submission of a Claim to Arbitration) shall apply to a taxation measure alleged to be an expropriation or a breach of an investment agreement or an investment authorization.
(b) Article 11.6 (Expropriation and Compensation) shall apply to taxation measures. However, no investor may invoke Article 11.6 as the basis for a claim where it has been determined pursuant to this subparagraph that the measure is not an expropriation. An investor that seeks to invoke Article 11.6 with respect to a taxation measure must first refer to the competent authorities, at the time that it gives its notice of intent under Article 11.16.2 (Submission of a Claim to Arbitration), the issue of whether that taxation measure is not an expropriation. If the competent authorities do not agree to consider the issue or, having agreed to consider it, fail to agree that the measure is not an expropriation within a period of 180 days of such referral, the investor may submit its claim to arbitration under Article 11.16.3.
(c) For purposes of this paragraph, competent authorities means:
(i) in the case of Korea, the Deputy Minister for Tax and Customs, Ministry of Finance and Economy; and
(ii) in the case of the United States, the Assistant Secretary of the Treasury (Tax Policy).
7. For purposes of this Article, "taxes" and "taxation measures" do not include:
(a) a customs duty as defined in Article 1.4 (Definitions); or
(b) the measures listed in exceptions (b) and (c) of that definition.
Article 23.4. DISCLOSURE OF INFORMATION
Nothing in this Agreement shall be construed to require a Party to furnish or allow access to confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or which would prejudice the legitimate commercial interests of particular enterprises, public or private.
Chapter Twenty-Four. FINAL PROVISIONS
Article 24.1. ANNEXES, APPENDICES, AND FOOTNOTES
The Annexes, Appendices, and footnotes to this Agreement constitute an integral part of this Agreement.
Article 24.2. AMENDMENTS
The Parties may agree, in writing, to amend this Agreement. An amendment shall enter into force after the Parties exchange written notifications certifying that they have completed their respective applicable legal requirements and procedures, on such date as the Parties may agree.
Article 24.3. AMENDMENT OF THE WTO AGREEMENT
If any provision of the WTO Agreement that the Parties have incorporated into this Agreement is amended, the Parties shall consult to consider amending the relevant provision of this Agreement, as appropriate, in accordance with Article 24.2.
Article 24.4. ACCESSION
1. Any country or group of countries may accede to this Agreement subject to such terms and conditions as may be agreed between the country or group of countries and the Parties and following approval in accordance with the applicable legal requirements and procedures of each Party and acceding country.
2. This Agreement shall not apply as between any Party and any acceding country or group of countries if, at the time of the agreement described in paragraph 1, one of them does not consent to such application.
Article 24.5. ENTRY INTO FORCE AND TERMINATION
1. This Agreement shall enter into force 60 days after the date the Parties exchange written notifications certifying that they have completed their respective applicable legal requirements and procedures or on such other date as the Parties may agree.
2. This Agreement shall terminate 180 days after the date either Party notifies the other Party in writing that it wishes to terminate the Agreement.
3. Within 30 days after a Party provides notice under paragraph 2, either Party may request the other Party in writing to enter into consultations regarding whether any provision of this Agreement should terminate on a date later than that provided under paragraph 2. The consultations shall begin no later than 30 days after the Party delivers its request.
Article 24.6. AUTHENTIC TEXT
The English and Korean texts of this Agreement are equally authentic.
Conclusion
IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed this Agreement.
DONE at Washington, D.C., this 30th day of June, 2007, in duplicate, in the Korean and English languages.
FOR THE GOVERNMENT OF THE REPUBLIC OF KOREA:
FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA:
Attachments
Annex I. EXPLANATORY NOTES
1. The Schedule of a Party to this Annex sets out, pursuant to Articles 11.12 (Non- Conforming Measures) and 12.6 (Non-Conforming Measures), the Partyâs existing measures that are not subject to some or all of the obligations imposed by:
(a) Article 11.3 (National Treatment) or 12.2 (National Treatment);
(b) Article 11.4 (Most-Favored-Nation Treatment) or 12.3 (Most-Favored- Nation Treatment);
(c) Article 12.5 (Local Presence);
(d) Article 11.8 (Performance Requirements);
(e) Article 11.9 (Senior Management and Boards of Directors); or
(f) Article 12.4 (Market Access).
2. Each Schedule entry sets out the following elements:
(a) Sector refers to the sector for which the entry is made;
(b) Obligations Concerned specifies the article(s) referred to in paragraph 1 that, pursuant to Articles 11.12.1(a) and 12.6.1(a), do not apply to the non- conforming aspects of the law, regulation, or other measure, as set out in paragraph 3;
(c) Level of Government (1) indicates the level of government maintaining the scheduled measure(s);
(d) Measures (2) identifies the laws, regulations, or other measures for which the entry is made. A measure cited in the Measures element:
(i) means the measure as amended, continued, or renewed as of the date of entry into force of this Agreement; and
(ii) includes any subordinate measure adopted or maintained under the authority of and consistent with the measure; and
(e) Description sets out commitments, if any, for liberalization on the date of entry into force of the Agreement, and the remaining non-conforming aspects of the measure for which the entry is made.
3. In the interpretation of a Schedule entry, all elements of the entry shall be considered. An entry shall be interpreted in light of the relevant articles of the Chapters against which the entry is made. To the extent that:
(a) the Measures element is qualified by a liberalization commitment from the Description element, the Measures element as so qualified shall prevail over all other elements; and
(b) the Measures element is not so qualified, the Measures element shall prevail over all other elements, unless any discrepancy between the Measures element and the other elements considered in their totality is so substantial and material that it would be unreasonable to conclude that the Measures element should prevail, in which case the other elements shall prevail to the extent of that discrepancy.
4. In accordance with Articles 11.12.1(a) and 12.6.1(a), and subject to Articles 11.12.1(c) and 12.6.1(c), the articles of this Agreement specified in the Obligations Concerned element of an entry do not apply to the non-conforming aspects of the law, regulation, or other measure identified in the Measures element of that entry.
5. Where a Party maintains a measure that requires that a service provider be a citizen, permanent resident, or resident of its territory as a condition to the provision of a service in its territory, a Schedule entry for that measure taken with respect to Article 12.2 (National Treatment), 12.3 (Most-Favored-Nation Treatment), or 12.5 (Local Presence) shall operate as a Schedule entry with respect to Article 11.3 (National Treatment), 11.4 (Most-Favored-Nation Treatment), or 11.8 (Performance Requirements) to the extent of that measure.
6. For Korea, a foreign person means a foreign national or an enterprise organized under the laws of another country.
7. For greater certainty, Local Presence (Article 12.5) and National Treatment (Article 12.2) are separate disciplines and a measure that is only inconsistent with Local Presence (Article 12.5) need not be reserved against National Treatment (Article 12.2).
Annex I. SCHEDULE OF KOREA
Sector: Construction
Obligations Concerned: Services Local Presence (Article 12.5)
Measures: Framework Act on the Construction Industry (Law No. 7196, December 29, 2005), Articles 9 and 10
Enforcement Decree of the Framework Act on the Construction Industry (Presidential Decree No. 19513, June 12, 2006), Article 13
Enforcement Regulations of the Framework Act on the Construction Industry (Ordinance of the Ministry of Construction and Transportation No. 530, August 7, 2006), Articles 2 and 3
Information and Communication Construction Business Act (Law No. 7817, December 30, 2005), Article 14
Fire Fighting System Installation Business Act (Law No. 7982, September 22, 2006), Articles 4 and 5
Enforcement Decree of the Fire Fighting System Installation Business Act (Presidential Decree No. 19846, January 24, 2007), Article 2 (Table 1)
Enforcement Regulations of the Fire Fighting System Installation Business Act (Ordinance of Ministry of Government Administration and Home Affairs No. 368, January 9, 2007), Article 2
Description: Cross-Border Trade in Services
A person that supplies construction services in Korea must, prior to the signing of the first contract related to such services, establish an office in Korea.
A compulsory subcontract system is applied to contractors registered as general contractors. Such compulsory subcontract system will be abolished from January 1, 2008.
Sector: Leasing, Rental, Maintenance, Repair, Sales, and Disposal Services Related to Construction Machinery and Equipment
Obligations Concerned: Local Presence (Article 12.5)
Measures: Construction Machinery Management Act (Law No. 7545, May 31, 2005), Article 21
Enforcement Decree of the Construction Machinery Management Act (Presidential Decree No. 19507, June 12, 2006), Articles 13, 14, 15, and 15-2
Enforcement Regulations of the Construction Machinery Management Act (Ordinance of the Ministry of Construction and Transportation No. 530, August 7, 2006), Articles 57 through 63, 65-2, and 65-3
Description: Cross-Border Trade in Services
A person that supplies leasing, rental, maintenance, repair, sales, and disposal services related to construction machinery and equipment must establish an office in Korea.
Sector: Transportation Services - Automobile Maintenance, Repair, Sales, Disposal, and Inspection Services; Automobile License Plate Issuing Services
Obligations Concerned: Market Access (Article 12.4) Local Presence (Article 12.5)
Measures: Automobile Management Act (Law No. 8254, January 19, 2007), Articles 20, 44, 45, and 53
Enforcement Regulations of the Automobile Management Act (Ordinance of the Ministry of Construction and Transportation No. 551, March 19, 2007), Articles 7, 8, 83, 87, and 111
Description: Cross-Border Trade in Services
A person that supplies automobile management services (which includes used car sales, maintenance, repair, and disposal services) must establish an office in Korea and obtain authorization from the head of the si/gun/gu (municipal authorities), which is subject to an economic needs test, as appropriate.
A person that supplies automobile inspection services that is designated as a "designated repair facility" must establish an office in Korea.
A person that supplies license plate manufacturing, delivery, and seal services that is designated as a "license plate issuing agency" must establish an office in Korea.
Sector: Distribution Services - Wholesale and Retail Distribution of Tobacco and Liquor
Obligations Concerned: Market Access (Article 12.4) Local Presence (Article 12.5)
Measures: Tobacco Business Act (Law No. 8365, April 11, 2007), Articles 12, 13, and 16
Enforcement Decree of the Tobacco Business Act (Presidential Decree No. 18445, June 29, 2004), Articles 4 and 5
Enforcement Regulations of the Tobacco Business Act (Ordinance of the Ministry of Finance and Economy No. 512, July 5, 2006), Articles 5, 6-2, and 7
Liquors Act (Law No. 7841, December 31, 2005), Articles 8 through 10
Enforcement Decree of the Liquors Act (Presidential Decree No. 19336, February 9, 2006), Article 9
Notice of National Tax Service, 2005-5 and 2005-8 (January 21, 2005)
Description: Cross-Border Trade in Services
A person that supplies tobacco wholesale (including importation) or retail distribution services must establish an office in Korea.
Only designated tobacco retailers may sell tobacco to retail buyers. The sale of tobacco to retail buyers by mail or in electronic commerce is prohibited.
The distance between places of business of tobacco retailers must be at least 50 meters.
A person that supplies liquor wholesale distribution services must establish an office in Korea and obtain authorization from the head of the relevant tax office, which is subject to an economic needs test.
The sale of liquor by telephone or in electronic commerce is prohibited.
Sector: Agriculture and Livestock
Obligations Concerned: National Treatment (Article 11.3)
Measures: Foreign Investment Promotion Act (Law No. 8380, April 11, 2007), Article 4
Enforcement Decree of the Foreign Investment Promotion Act (Presidential Decree No. 19826, January 5, 2007), Article 5
Consolidated Public Notice for Foreign Investment (No. 2007-69, February 28, 2007, Ministry of Commerce, Industry and Energy), Appendix 1
Description: Investment
Foreign persons may not: (i) invest in an enterprise engaged in rice or barley farming; or (ii) hold 50 percent or more of the equity interest of an enterprise engaged in beef cattle farming.
Sector: Business Services - An-gyung-sa (Optician and Optometry) Services
Obligations Concerned: Market Access (Article 12.4) Local Presence (Article 12.5)
Measures: Market Access (Article 12.4) Local Presence (Article 12.5)
Medical Technicians Act (Law No. 7148, January 29, 2004), Article 12
Enforcement Regulations of the Medical Technicians Act (Ordinance of the Ministry of Health and Welfare No. 333, October 17, 2005), Article 15
Description: Cross-Border Trade in Services
Only a natural person that is a licensed an-gyung-sa (optician or optometrist) that has established an office in Korea may engage in optician or optometry services.
An an-gyung-sa (optician or optometrist) may not establish more than one office.
Sector: Wholesale and Retail Distribution Services
Obligations Concerned: Market Access (Article 12.4) Local Presence (Article 12.5)
Measures: Pharmaceutical Affairs Act (Law No. 8035, October 4, 2006), Articles 34 and 37
Decree on the Facility Standards of Pharmacy, Manufacturer, Importer and Distributor of Pharmaceuticals (Presidential Decree No. 18401, May 25, 2004), Articles 7 and 9
Supply, Demand and Distribution of Oriental Medicinal Herbs Regulations (Notice of the Ministry of Health and Welfare No. 2006-69, September 5, 2006), Articles 4 and 13
Medical Devices Act (Law No. 8037, October 4, 2006), Article 14
Enforcement Regulations of the Medical Devices Act (Ordinance of the Ministry of Health and Welfare No. 366, July 27, 2006), Article 19
Functional Foods Act (Law No. 8033, October 4, 2006), Article 6
Enforcement Regulations of the Functional Foods Act (Ordinance of the Ministry of Health and Welfare No. 300, December 10, 2004), Articles 2 and 5
Food Sanitation Act (Law No. 8005, September 27, 2006), Articles 18, 21 and 22
To supply the following services a person must establish an office in Korea: