Title
FREE TRADE AGREEMENT
between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part
Preamble
THE KINGDOM OF BELGIUM,
THE REPUBLIC OF BULGARIA,
THE CZECH REPUBLIC,
THE KINGDOM OF DENMARK,
THE FEDERAL REPUBLIC OF GERMANY,
THE REPUBLIC OF ESTONIA,
IRELAND,
THE HELLENIC REPUBLIC,
THE KINGDOM OF SPAIN,
THE FRENCH REPUBLIC,
THE ITALIAN REPUBLIC,
THE REPUBLIC OF CYPRUS,
THE REPUBLIC OF LATVIA,
THE REPUBLIC OF LITHUANIA,
THE GRAND DUCHY OF LUXEMBURG,
THE REPUBLIC OF HUNGARY,
MALTA,
THE KINGDOM OF THE NETHERLANDS,
THE REPUBLIC OF AUSTRIA,
THE REPUBLIC OF POLAND,
THE PORTUGUESE REPUBLIC,
ROMANIA,
THE REPUBLIC OF SLOVENIA,
THE SLOVAK REPUBLIC,
THE REPUBLIC OF FINLAND,
THE KINGDOM OF SWEDEN,
THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,
CROATIA,
Contracting Parties to the Treaty on European Union and the Treaty on the Functioning of the European Union, hereinafter referred to as the "Member States of the European Union",
and
THE EUROPEAN UNION,
of the one part, and
THE REPUBLIC OF KOREA, hereinafter referred to as "Korea",
of the other part,
RECOGNISING their longstanding and strong partnership based on the common principles and values reflected in the Framework Agreement;
DESIRING to furtherstrengthen their close economic relationship as part of and in a manner coherent with their overall relations, and convinced that this Agreement will create a new climate for the development of trade and investment between the Parties;
CONVINCED that this Agreement will create an expanded and secure market for goods and services and a stable and predictable environment for investment, thus enhancing the competitiveness of their firms in global markets;
REAFFIRMING their commitment to the Charter of the United Nations signed in San Francisco on 26 June 1945 and the Universal Declaration of Human Rights adopted by the General Assembly of the United Nations on 10 December 1948;
REAFFIRMING their commitment to sustainable development and convinced of the contribution of international trade to sustainable devel- opment in its economic, social and environmental dimensions, including economic development, poverty reduction, full and productive employment and decent work for all as well as the protection and preservation of the environment and natural resources;
RECOGNISING the right of the Parties to take measures necessary to achieve legitimate public policy objectives on the basis of the level of protection that they deem appropriate, provided that such measures do not constitute a means of unjustifiable discrimination or a disguised restriction on international trade, as reflected in this Agreement;
RESOLVED to promote transparency as regards all relevant interested parties, including the private sector and civil society organisations;
DESIRING to raise living standards, promote economic growth and stability, create new employment opportunities and improve the general welfare by liberalising and expanding mutual trade and investment;
SEEKING to establish clear and mutually advantageous rules governing their trade and investment and to reduce or eliminate the barriers to mutual trade and investment;
RESOLVED to contribute to the harmonious development and expansion of world trade by removing obstacles to trade through this Agreement and to avoid creating new barriers to trade or investment between their territories that could reduce the benefits of this Agreement;
DESIRING to strengthen the development and enforcement of labour and environmental laws and policies, promote basic workersâ rights and sustainable development and implement this Agreement in a manner consistent with these objectives; and
BUILDING on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organisation, done on 15 April 1994 (hereinafter referred to as the "WTO Agreement") and other multilateral, regional and bilateral agreements and arrangements to which they are party,
HAVE AGREED AS FOLLOWS:
Body
Chapter ONE. OBJECTIVES AND GENERAL DEFINITIONS
Article 1.1. Objectives
1. The Parties hereby establish a free trade area on goods, services, establishment and associated rules in accordance with this Agreement.
2. The objectives of this Agreement are:
(a) to liberalise and facilitate trade in goods between the Parties, in conformity with Article XXIV of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as "GATT 1994");
(b) to liberalise trade in services and investment between the Parties, in conformity with Article V of the General Agreement on Trade in Services (hereinafter referred to as "GATS");
(c) to promote competition in their economies, particularly as it relates to economic relations between the Parties;
(d) to further liberalise, on a mutual basis, the government procurement markets of the Parties;
(e) to adequately and effectively protect intellectual property rights;
(f) to contribute, by removing barriers to trade and by developing an environment conducive to increased investment flows, to the harmonious development and expansion of world trade;
(g) to commit, in the recognition that sustainable development is an overarching objective, to the development of international trade in such a way as to contribute to the objective of sustainable devel- opment and strive to ensure that this objective is integrated and reflected at every level of the Parties' trade relationship; and
(4) to promote foreign direct investment without lowering or reducing environmental, labour or occupational health and safety standards in the application and enforcement of environmental and labour laws of the Parties.
Article 1.2. General Definitions
Throughout this Agreement, references to:
the Parties mean, on the one hand, the European Union or its Member States or the European Union and its Member States within their respective areas of competence as derived from the Treaty on European Union and the Treaty on the Functioning of the European Union (hereinafter referred to as the "EU Party"), and on the other hand, Korea;
the Framework Agreement mean the Framework Agreement for Trade and Cooperation between the European Community and its Member States, on the one hand, and the Republic of Korea, on the other hand, signed at Luxembourg on 28 October 1996 or any agreement updating, amending or replacing it; and
the Customs Agreement mean the Agreement between the European Community and the Republic of Korea on Cooperation and Mutual Administrative Assistance in Customs Matters, signed at Brussels on 10 April 1997.
Chapter TWO. NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS
Section A. Common Provisions
Article 2.1. Objective
The Parties shall progressively and reciprocally liberalise trade in goods over a transitional period starting from the entry into force of this Agreement, in accordance with this Agreement and in conformity with Article XXIV of GATT 1994.
Article 2.2. Scope and Coverage
This Chapter shall apply to trade in goods (1) between the Parties.
Article 2.3. Customs Duty
For the purposes of this Chapter, a customs duty includes any duty or charge of any kind imposed on, or in connection with, the importation of a good, including any form of surtax or surcharge imposed on, or in connection with, such importation (2). A customs duty does not include any:
(a) charge equivalent to an internal tax imposed consistently with Article 2.8 in respect of the like domestic good or in respect of an article from which the imported good has been manufactured or produced in whole or in part;
(b) duty imposed pursuant to a Party's law consistently with Chapter Three (Trade Remedies);
(c) fee or other charge imposed pursuant to a Party's law consistently with Article 2.10; or
(d) duty imposed pursuant to a Party's law consistently with Article 5 of the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement (hereinafter referred to as the "Agreement on Agriculture").
Article 2.4. Classification of Goods
The classification of goods in trade between the Parties shall be that set out in each Party's respective tariff nomenclature interpreted in conformity with the Harmonised System of the International Convention on the Harmonised Commodity Description and Coding System, done at Brussels on 14 June 1983 (hereinafter referred to as the "HS").
Section B. Elimination of Customs Duties
Article 2.5. Elimination of Customs Duties
1. Except as otherwise provided in this Agreement, each Party shall eliminate its customs duties on originating goods of the other Party in accordance with its Schedule included in Annex 2-A.
2. For each good, the base rate of customs duties, to which the successive reductions are to be applied under paragraph 1, shall be that specified in the Schedules included in Annex 2-A.
3. If at any moment a Party reduces its applied most-favoured-nation (hereinafter referred to as "MFN") customs duty rate after the 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-A.
4. Three years after the entry into force of this Agreement, on the request of either Party, the Parties shall consult to consider accelerating and broadening the scope of the elimination of customs duties on imports between them. A decision by the Parties in the Trade Committee, following such consultations, on the acceleration or broa- dening of the scope of the elimination of a customs duty on a good shall supersede any duty rate or staging category determined pursuant to their Schedules included in Annex 2-A for that good.
Article 2.6. Standstill
Except as otherwise provided in this Agreement, including as explicitly set out in each Partyâs Schedule included in Annex 2-A, neither Party may increase any existing customs duty, or adopt any new customs duty, on an originating good of the other Party. This shall not preclude that either Party may raise a customs duty to the level estab- lished in its Schedule included in Annex 2-A following a unilateral reduction.
Article 2.7. Administration and Implementation of Tariff-rate Quotas
1. Each Party shall administer and implement the tariff-rate quotas (hereinafter referred to as "TRQs") set out in Appendix 2-A-1 of its Schedule included in Annex 2-A in accordance with Article XII of GATT 1994, including its interpretative notes and the Agreement on Import Licensing Procedures, contained in Annex 1A to the WTO Agreement.
2. Each Party shall ensure that:
(a) its procedures for administering its TRQs are transparent, made available to the public, timely, non-discriminatory, responsive to market conditions, minimally burdensome to trade, and reflect end-user preferences;
(b) any person of a Party that fulfils the importing Party's legal and administrative requirements shall be eligible to apply and to be considered for a TRQ allocation by the Party. Unless the Parties otherwise agree by decision of the Committee on Trade in Goods, any processor, retailer, restaurant, hotel, food service distributor or institution, or any other person is eligible to apply for, and to be considered to receive, a TRQ allocation. Any fees charged for services related to an application for a TRQ allocation shall be limited to the actual cost of the services rendered;
(c) except as specified in Appendix 2-A-1 of its Schedule included in Annex 2-A, it does not allocate any portion of a TRQ to a producer group, condition access to a TRQ allocation on the purchase of domestic production, or limit access to a TRQ allocation to processors; and
(d) it allocates TRQs in commercially viable shipping quantities and, to the maximum extent possible, in the amounts that importers request. Except as otherwise stipulated in the provisions for each TRQ and the applicable tariff line in Appendix 2-A-1 of a Party's Schedule included in Annex 2-A, each TRQ allocation shall be valid for any item or mixture of items subject to a particular TRQ, regardless of the item's or mixture's specification or grade, and shall not be conditioned on the item's or mixture's intended end-use or package size.
3. Each Party shall identify the entities responsible for administering its TRQs.
4. Each Party shall make every effort to administer its TRQs in a manner that allows importers to fully utilise TRQ quantities
5. Neither Party may condition application for, or utilisation of, TRQ allocations on the re-export of a good.
6. On the written request of either Party, the Parties shall consult regarding a Party's administration of its TRQs.
7. Except as otherwise provided in Appendix 2-A-1 of its Schedule included in Annex 2-A, each Party shall make the entire quantity of the TRQ established in that Appendix available to applicants beginning on the date of entry into force of this Agreement during the first year, and on the anniversary of the entry into force of this Agreement of each year thereafter. Over the course of each year, the importing Partyâs admin- istering authority shall publish, in a timely fashion on its designated publicly available Internet site, utilisation rates and remaining quantities available for each TRQ.
Section C. Non-tariff Measures
Article 2.8. National Treatment
Each Party shall accord national treatment to goods of the other Party in accordance with Article I of GATT 1994, including its interpretative notes. To this end, Article I of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.9. Import and Export Restrictions
Neither Party may adopt or maintain any prohibition or restriction other than duties, taxes or other charges on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, in accordance with Article XI of GATT 1994 and its interpretative notes. To this end, Article XI of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.10. Fees and other Charges on Imports
Each Party shall ensure that all fees and charges of whatever character (other than customs duties and the items that are excluded from the definition of a customs duty under Article 2.3(a), (b) and (d)) imposed on, or in connection with, importation are limited in amount to the approximate cost of services rendered, are not calculated on an ad valorem basis, and do not represent an indirect protection to domestic goods or taxation of imports for fiscal purposes.
Article 2.11. Duties, Taxes or other Fees and Charges on Exports
Neither Party may maintain or institute any duties, taxes or other fees and charges imposed on, or in connection with, the exportation of goods to the other Party, or any internal taxes, fees and charges on goods exported to the other Party that are in excess of those imposed on like goods destined for internal sale.
Article 2.12. Customs Valuation
The Agreement on Implementation of Article VII of GATT 1994 contained in Annex 1A to the WTO Agreement (hereinafter referred to as the "Customs Valuation Agreement"), is incorporated into and made part of this Agreement, mutatis mutandis. The reservations and options provided for in Article 20 and paragraphs 2 through 4 of Annex II of the Customs Valuation Agreement shall not be applicable.
Article 2.13. State Trading Enterprises
1. The Parties affirm their existing rights and obligations under Article XVII of GATT 1994, its interpretative notes and the Under- standing on the Interpretation of Article XVII of GATT 1994, contained in Annex 1A to the WTO Agreement which are incorporated into and made part of this Agreement, mutatis mutandis.
2. Where a Party requests information from the other Party on indi- vidual cases of state trading enterprises, the manner of their operation and the effect of their operations on bilateral trade, the requested Party shall have regard to the need to ensure maximum transparency possible without prejudice to Article XVII.4(d) of GATT 1994 on confidential information
Article 2.14. Elimination of Sectoral Non-tariff Measures
1. The Parties shall implement their commitments on sector-specific non-tariff measures on goods in accordance with the commitments set out in Annexes 2-B through 2-E.
2. Three years after the entry into force of this Agreement and on the request of either Party, the Parties shall consult to consider broadening the scope of their commitments on sector-specific non-tariff measures on goods.
Section D. Specific Exceptions Related to Goods
Article 2.15. General Exceptions
1. The Parties affirm that their existing rights and obligations under Article XX of GATT 1994 and its interpretative notes, which are incor- porated into and made part of this Agreement, shall apply to trade in goods covered by this Agreement, mutatis mutandis.
2. The Parties understand that before taking any measures provided for in subparagraphs (i) and (j) of Article XX of GATT 1994, the Party intending to take the measures shall supply the other Party with all relevant information, with a view to seeking a solution acceptable to the Parties. The Parties may agree on any means needed to put an end to the difficulties. If no agreement is reached within 30 days of supplying such information, the Party may apply measures under this Article on the good concerned. Where exceptional and critical circum- stances requiring immediate action make prior information or exam- ination impossible, the Party intending to take the measures may apply forthwith the precautionary measures necessary to deal with the situation and shall inform the other Party immediately thereof.
Section E. Institutional Provisions
Article 2.16. Committee on Trade In Goods
1. The Committee on Trade in Goods established pursuant to Article 15.2.1 (Specialised Committees) shall meet on the request of a Party or of the Trade Committee to consider any matter arising under this Chapter and comprise representatives of the Parties.
2. The Committee's functions shall include:
(a) promoting trade in goods between the Parties, including through consultations on accelerating and broadening the scope of tariff elimination and broadening of the scope of commitments on non-tariff measures under this Agreement and other issues as appro- priate; and
(b) addressing tariff and non-tariff measures to trade in goods between the Parties and, if appropriate, referring such matters to the Trade Committee for its consideration,
in so far as these tasks have not been entrusted to the relevant Working Groups established pursuant to Article 15.3.1 (Working Groups).
Article 2.17. Special Provisions on Administrative Cooperation
1. The Parties agree that administrative cooperation is essential for the implementation and the control of preferential tariff treatment granted under this Chapter and underline their commitments to combat irregularities and fraud in customs and related matters.
2. Where a Party has made a finding, on the basis of objective information, of a failure to provide administrative cooperation and/or irregularities or fraud, on the request of that Party, the Customs Committee shall meet within 20 days of such request to seek, as a matter of urgency, to resolve the situation. The consultations held within the framework of the Customs Committee will be considered as fulfilling the same function as consultation under Article 14.3 (Consultations).
Chapter THREE. TRADE REMEDIES
Section A. Bilateral Safeguard Measures
Article 3.1. Application of a Bilateral Safeguard Measure
1. If as a result of the reduction or elimination of a customs duty under this Agreement, originating goods of a Party are being imported into the territory of the other Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to a domestic industry producing like or directly competitive goods, the importing Party may adopt measures provided for in paragraph 2 in accordance with the conditions and procedures laid down in this Section.
2. The importing Party may take a bilateral safeguard measure which:
(a) suspends further reduction of the rate of customs duty on the good concerned provided for under this Agreement; or
(b) increases the rate of customs duty on the good to a level which does not exceed the lesser of:
(i) the MFN applied rate of customs duty on the good in effect at the time the measure is taken; or
(ii) the base rate of customs duty specified in the Schedules included in Annex 2-A (Elimination of Customs Duties) pursuant to Article 2.5.2 (Elimination of Customs Duties).
Article 3.2. Conditions and Limitations
1. A Party shall notify the other Party in writing of the initiation of an investigation described in paragraph 2 and consult with the other Party as far in advance of applying a bilateral safeguard measure as practicable, with a view to reviewing the information arising from the investigation and exchanging views on the measure.
2. A Party shall apply a bilateral safeguard measure only following an investigation by its competent authorities in accordance with Articles 3 and 4.2(c) of the Agreement on Safeguards contained in Annex 1A to the WTO Agreement (hereinafter referred to as the "Agreement on Safeguards") and to this end, Articles 3 and 4.2(c) of the Agreement on Safeguards are incorporated into and made part of this Agreement, mutatis mutandis.
3. In the investigation described in paragraph 2, the Party shall comply with the requirements of Article 4.2(a) of the Agreement on Safeguards and to this end, Article 4.2(a) of the Agreement on Safeguards is incorporated into and made part of this Agreement, mutatis mutandis.
4. Each Party shall ensure that its competent authorities complete any such investigation within one year of its date of initiation.