Title
FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF KOREA AND THE REPUBLICS OF CENTRAL AMERICA
Preamble
THE REPUBLIC OF KOREA, hereinafter referred to as "Korea"; in the one part, and
THE REPUBLIC OF COSTA RICA;
THE REPUBLIC OF EL SALVADOR;
THE REPUBLIC OF HONDURAS;
THE REPUBLIC OF NICARAGUA;
And
THE REPUBLIC OF PANAMA;
Hereinafter referred to as the "Republics of Central America", on the other,
STRENGTHENING the special bonds of friendship and cooperation between them;
CONVINCED that a free trade area will create an expanded and secure market for goods and services in their territories and a stable and predictable environment for investment, thus enhancing the competitiveness of their firms in global markets while recognizing the differences in their levels of development and the size of their economies;
DESIRING to raise living standards, promote economic growth and stability, create new employment opportunities, and improve the general welfare in their territories, by liberalizing and expanding trade and investment between their territories;
SEEKING to establish clear and mutually advantageous rules governing their trade and investment, to reduce or eliminate the barriers to trade and to facilitate the investment between their territories;
RECOGNIZING that this Agreement should be implemented with a view to promoting sustainable development in a manner consistent with environment protection and conservation;
BUILDING on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization and other multilateral, and bilateral instruments of cooperation to which they are parties; and
PRESERVING their flexibility to safeguard the public welfare;
HAVE AGREED as follows:
Body
Chapter 1. INITIAL PROVISIONS AND GENERAL DEFINITIONS
Section A. Initial Provisions
Article 1.1. ESTABLISHMENT OF A FREE TRADE AREA
Consistent with Article XXIV of GATT 1994 and Article V of GATS, the Parties hereby establish a free trade area.
Article 1.2. OBJECTIVES
The objectives of this Agreement are to:
(a) encourage expansion and diversification of trade between the Parties;
(b) eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties;
(c) promote conditions of fair competition in the free trade area;
(d) substantially increase investment opportunities in the territories of the Parties;
(e) provide adequate and effective protection and enforcement of intellectual property rights in each Party’s territory;
(f) create effective procedures for the implementation and application of this Agreement, for its joint administration, and for the resolution of disputes; and
(g) establish a framework for further bilateral, regional, and multilateral cooperation to expand and enhance the benefits of this Agreement
Article 1.3. RELATION TO OTHER AGREEMENTS
1. The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and other agreements to which such Parties are party.
2. For greater certainty, this Agreement shall not be construed to derogate or nullify from any international legal obligation between the Parties that provides for more favorable treatment of goods, services, investments, or persons than that provided for under this Agreement.
3. Unless otherwise provided in this Agreement, in the event of any inconsistency between this Agreement and other agreements to which both Parties are party, the Parties may consult with each other with a view to finding a mutually satisfactory solution.
Article 1.4. EXTENT OF OBLIGATIONS
Each Party shall ensure within its territory the observance and fulfillment of all obligations and commitments under this Agreement by all levels of government, except as otherwise provided in this Agreement.
Article 1.5. SCOPE
Unless otherwise provided, the provisions of this Agreement apply between Korea and Costa Rica, El Salvador, Honduras, Nicaragua and Panama, considered individually. This Agreement does not apply between Costa Rica, El Salvador, Honduras, Nicaragua and Panama.
Section B. General Definitions
Article 1.6. DEFINITIONS
For the purposes of this Agreement, unless otherwise specified:
AD Agreement means the Agreement on Implementation of Article VI of the GATT 1994, contained in Annex 1A to the WTO Agreement;
covered investment means, with respect to a Party, an investment, as defined in Article 9.29 (Definitions), in its territory of an investor of the other Party that is in existence as of the date of entry into force of this Agreement or established, acquired, or expanded thereafter;
customs duty includes any duty or charge of any kind imposed on or in connection with the importation of a product of the other Party, including any form of surtax or surcharge imposed on or in connection with such importation, but does not include any:
(a) charge equivalent to an internal tax imposed consistently with Article III:2 of the GATT 1994, or any equivalent provision of a successor agreement to which both Parties are party;
(b) antidumping, countervailing, or safeguard duty that is applied in accordance with a Party’s law and consistently with Chapter 7 (Trade Remedies);
(c) fee or other charge in connection with importation commensurate with the cost of services rendered; or
(d) duty imposed pursuant to any agricultural safeguard measure taken under the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement.
Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
days means calendar days;
enterprise means any entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, or other association;
enterprise of a Party means an enterprise constituted or organized under the law of a Party;
existing means in effect on the date of entry into force of this Agreement;
freely usable currency means “freely usable currency” as determined by the International Monetary Fund under its Articles of Agreement;
GATS means the WTO General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;
GATT 1994 means the WTO General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
goods of a Party means domestic products as these are understood in GATT 1994 or such goods as the Parties may agree, and includes originating goods of that Party;
government procurement means the process by which a government obtains the use of or acquires goods or services, or any combination thereof, for governmental purposes and not with a view to commercial sale or resale or use in the production or supply of goods or services for commercial sale or resale;
Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, and Chapter Notes, as adopted and implemented by the Parties in their respective tariff laws;
Import Licensing Agreement means the Agreement on Import Licensing Procedures, contained in Annex 1A to the WTO Agreement;
Joint Committee means the Joint Committee established under Article 21.1 (Joint Committee);
local level of government means:
(a) for Korea, a local government as defined in the Local Autonomy Act; and
(b) for the Republics of Central America, the municipalities;
measure includes any law, regulation, procedure, requirement, or practice;
MFN means Most Favored Nation;
national means a natural person who has the nationality of a Party according to Annex 1-A;
originating means qualifying under the rules of origin set out in Chapter 3 (Rules of Origin and Origin Procedures);
Parties means the Republics of Costa Rica, El Salvador, Honduras, Nicaragua and Panama, referred to as the “Republics of Central America” on one hand, and the Republic of Korea, on the other;
Party (1) (2) means any State for which this Agreement is in force;
person means a natural person or an enterprise;
person of a Party means a national or an enterprise of a Party;
preferential tariff treatment means the duty rate applicable under this Agreement to an originating good;
SCM Agreement means the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement;
SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measure, contained in Annex 1A to the WTO Agreement;
state enterprise means an enterprise that is owned, or controlled through ownership interests, by a Party;
TBT Agreement means the Agreement on Technical Barriers to Trade, contained in Annex 1A to the WTO Agreement;
territory means for a Party the territory of that Party as set out in Annex 1-A;
TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement;
WTO means the World Trade Organization; and
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on April 15, 1994.
Chapter 2. NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS
Article 2.1. SCOPE
Except as otherwise provided in this Agreement, this Chapter shall apply to trade in goods of a Party.
Section A. National Treatment
Article 2.2. NATIONAL TREATMENT
1. Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994, including its interpretative notes. To this end, Article III of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.
2. Paragraph 1 shall not apply to the measures set out in Annex 2-A.
Section B. Elimination of Customs Duties
Article 2.3. CLASSIFICATION OF GOODS
The classification of goods in trade between the Parties shall be that set out in each Party’s tariff nomenclature in conformity with the Harmonized System.
Article 2.4. ELIMINATION OF CUSTOMS DUTIES
1. Except as otherwise provided in this Agreement, neither Party may increase any existing customs duty, or adopt any new customs duty, on an originating good.
2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Schedule to Annex 2-B.
3. If at any moment a Party reduces its applied MFN customs duty rate after the date of entry into force of this Agreement, that duty rate shall apply as regards trade covered by this Agreement if and for as long as it is lower than the customs duty rate calculated in accordance with its Schedule included in Annex 2-B.
4. On the request of either Party, the Parties shall consult to consider accelerating the elimination of customs duties set out in their Schedules to Annex 2-B. Notwithstanding Article 21.1 (Joint Committee), an agreement between the Parties to accelerate the elimination of a customs duty on a good shall supersede any duty rate or staging category determined pursuant to their Schedules to Annex 2-B for such good when approved by such Partiesin accordance with their applicable legal procedures. After such Parties conclude an agreement under this paragraph, they shall notify the other Republics of Central America of the terms of that agreement.
5. For greater certainty, a Party may:
(a) raise a customs duty to the level established in its Schedule to Annex 2-B following a unilateral reduction; or
(b) maintain or increase a customs duty as authorized by the Dispute Settlement Body of the WTO.
Section C. Special Regimes
Article 2.5. WAIVER OF CUSTOMS DUTIES
1. Except as otherwise provided in this Agreement, neither Party may adopt any new waiver of customs duties, or expand with respect to existing recipients or extend to any new recipient the application of an existing waiver of customs duties, where the waiver is conditioned, explicitly or implicitly, on the fulfillment of a performance requirement.
2. Neither Party may, explicitly or implicitly, condition on the fulfillment of a performance requirement the continuation of any existing waiver of customs duties.
3. Honduras and Nicaragua may each maintain measures inconsistent with paragraphs 1 and 2 for such time as it is an Annex VII country for the purposes of the SCM Agreement. Thereafter, Honduras and Nicaragua shall maintain any such measures in accordance with Article 27.4 of the SCM Agreement.
Article 2.6. TEMPORARY ADMISSION OF GOODS
1. Each Party shall grant duty-free temporary admission for the following goods, regardless of their origin:
(a) professional equipment, including equipment for the press or television, software, and broadcasting and cinematographic equipment, necessary for carrying out the business activity, trade, or profession of a person who qualifies for temporary entry, pursuant to the laws of the importing Party;
(b) goods intended for display or demonstration;
(c) commercial samples and advertising films and recordings; and
(d) goods admitted for sports purposes.
2. Each Party shall, at the request of the person concerned and for reasons its customs authority considers valid, extend the time limit for temporary admission beyond the period initially fixed.
3. Neither Party may condition the duty-free temporary admission of a good referred to in paragraph 1, other than to require that the good:
(a) be used solely by or under the personal supervision of a national or resident of the other Party in the exercise of the business activity, trade, profession, or sport of that person;
(b) not be sold or leased while in its territory;
(c) be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the good;
(d) be capable of identification when exported;
(e) be exported on the departure of the person referenced in subparagraph (a), or within such other period related to the purpose of the temporary admission as the Party may establish, or within one year, unless extended;
(f) be admitted in no greater quantity than is reasonable for its intended use; and
(g) be otherwise admissible into the Party’s territory under its law.
4. If any condition that a Party imposes under paragraph 3 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on the good plus any other charges or penalties provided for under its law.
5. Each Party, through its customs authority, shall adopt or maintain procedures providing for the expeditious release of goods admitted under this Article. To the extent possible, such procedures shall provide that when such a good accompanies a national or resident of the other Party who is seeking temporary entry, the good shall be released simultaneously with the entry of that national or resident.
6. Each Party shall permit a good temporarily admitted under this Article to be exported through a customs port other than that through which it was admitted.
7. Each Party shall provide that the importer or other person responsible for a good admitted under this Article shall not be liable for failure to export the good on presentation of satisfactory proof to the importing Party that the good has been destroyed within the original period fixed for temporary admission or any lawful extension.
8. Subject to Chapters 9 (Investment) and 10 (Cross-Border Trade in Services):
(a) each Party shall allow a container used in international traffic, that enters its territory from the territory of the other Party, to exit its territory on any route that is reasonably related to the economic and prompt departure of such container;
(b) neither Party may require any security or impose any penalty or charge solely by reason of any difference between the port of entry and the port of departure of a container;
(c) neither Party may condition the release of any obligation, including any security, that it imposes in respect of the entry of a container into its territory on its exit through any particular port of departure; and
(d) neither Party may require that the carrier bringing a container from the territory of the other Party into its territory, be the same carrier that takes the container to the territory of the other Party.
Article 2.7. GOODS RE-ENTERED AFTER REPAIR OR ALTERATION
1. Neither Party may apply a customs duty to a good, regardless of its origin, that reenters its territory after that good has been temporarily exported from its territory to the territory of the other Party for repair or alteration, regardless of whether the repair or alteration:
(a) could be performed in the territory of the Party from which the good was exported for repair or alteration; or
(b) has increased the value of the good.
2. Neither Party may apply a customs duty to a good, regardless of its origin, admitted temporarily from the territory of the other Party for repair or alteration.
3. For the purposes of this Article, “repair or alteration” does not include an operation or process that:
(a) destroys a good’s essential characteristics or creates a new or commercially different good; or
(b) transforms an unfinished good into a finished good.
Article 2.8. DUTY-FREE ENTRY OF COMMERCIAL SAMPLES OF NEGLIGIBLE VALUE AND PRINTED ADVERTISING MATERIALS
Each Party shall grant duty-free entry to commercial samples of negligible value, and to printed advertising materials, imported from the territory of the other Party, regardless of their origin, but may require that:
(a) the samples be imported solely for the solicitation of orders for goods, or services provided from the territory, of the other Party or a non-Party; or
(b) the advertising materials be imported in packets that each contain no more than one copy of each such material and that neither the materials nor the packets form part of a larger consignment.
Section D. Non-Tariff Measures
Article 2.9. IMPORT AND EXPORT RESTRICTIONS
1. Except as otherwise provided in this Agreement, neither Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation of any good destined for the territory of the other Party, except in accordance with Article XI of GATT 1994 and its interpretative notes, and to this end, Article XI of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.
2. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, a Party from adopting or maintaining:
(a) export and import price requirements, except as permitted in enforcement of countervailing and antidumping duty orders and undertakings;