(d) natural person means a national of Korea or one of the Member States of the European Union according to its respective legislation;
(e) juridical person means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;
(f) juridical person of a Party means:
(i) a juridical person set up in accordance with the laws of one of the Member States of the European Union or of Korea respectively, and having its registered office, central administration (1) or principal place of business in the territory to which the Treaty on European Union and the Treaty on the Functioning of the European Union apply, or of Korea respectively. Should the juridical person have only its registered office or central administration in the territory to which the Treaty on European Union and the Treaty on the Functioning of the European Union apply or of Korea, it shall not be considered as a juridical person of the European Union or of Korea respectively, unless it engages in substantive business operations (2) in the territory to which the Treaty on European Union and the Treaty on the Functioning of the European Union apply or of Korea respectively; or
(Ii) in the case of establishment in accordance with Article 7.9(a), a juridical person owned or controlled by natural persons of the EU Party or of Korea respectively, or by a juridical person of the European Union or of Korea identified under subparagraph (i) respectively.
A juridical person is:
(i) owned by persons of the EU Party or of Korea if more than 50 percent of the equity interest in it is beneficially owned by persons of the EU Party or of Korea respectively;
(ii) controlled by persons of the EU Party or of Korea if such persons have the power to name a majority of its directors or otherwise to legally direct its actions;
ii) affiliated with another person when it controls, or is controlled by, that other person; or when it and the other person are both controlled by the same person;
(g) Notwithstanding subparagraph (f), shipping companies established outside the EU Party or Korea and controlled by nationals of a Member State of the European Union or of Korea respectively, shall also be covered by this Agreement, if their vessels are registered in accordance with the respective legislation of that Member State of the European Union or of Korea and carry the flag of a Member State of the European Union or of Korea (1);
(h) economic integration agreement means an agreement substantially liberalising trade in services and establishment pursuant to the WTO Agreement in particular Articles V and V bis of GATS;
(i) aircraft repair and maintenance services means such activities when undertaken on an aircraft or a part thereof while it is withdrawn from service and do not include so-called line maintenance;
(j) computer reservation system (hereinafter referred to as "CRS") services means services provided by computerised systems that contain information about air carriersâ schedules, availability, fares and fare rules, through which reservations can be made or tickets may be issued;
(k) selling and marketing of air transport services means opportunities for the air carrier concerned to sell and market freely its air transport services including all aspects of marketing such as market research, advertising and distribution. These activities do not include the pricing of air transport services, nor the applicable conditions; and
(l) service supplier means any person that supplies or seeks to supply a service, including as an investor.
Article 7.3. Committee on Trade In Services, Establishment and Electronic Commerce
1. The Committee on Trade in Services, Establishment and Elec- tronic Commerce established pursuant to Article 15.2.1 (Specialised Committees) shall comprise representatives of the Parties. The principal representative of the Parties for the Committee shall be an official of its authority responsible for the implementation of this Chapter.
2. The Committee shall: (a) supervise and assess the implementation of this Chapter;
(b) consider issues regarding this Chapter that are referred to it by a Party; and
(c) provide opportunities for relevant authorities to exchange information on prudential measures with respect to Article 7.46.
Section B. Cross-border Supply of Services
Article 7.4. Scope and Definitions
1. This Section applies to measures of the Parties affecting the cross-border supply of all service sectors with the exception of:
(a) audio-visual services (1);
(b) national maritime cabotage; and
(c) domestic and international air transport services, whether scheduled or non-scheduled, and services directly related to the exercise of traffic rights, other than:
(i) aircraft repair and maintenance services;
(ii) the selling and marketing of air transport services;
(ii) CRS services; and
(iv) other services auxiliary to air transport services, such as ground handling services, rental service of aircraft with crew and airport management services.
2. Measures affecting the cross-border supply of services include measures affecting:
(a) the production, distribution, marketing, sale and delivery of a service;
(b) the purchase, payment or use of a service;
(c) the access to and use of, in connection with the supply of a service, networks or services which are required by the Parties to be offered to the public generally; and
(d) the presence in a Party's territory of a service supplier of the other Party.
3. For the purposes of this Section:
(a) cross-border supply of services is defined as the supply of a service:
(i) from the territory of a Party into the territory of the other Party; and
(ii) in the territory of a Party to the service consumer of the other Party;
(b) services includes any service in any sector except services supplied in the exercise of governmental authority, and
(c) a service supplied in the exercise of governmental authority means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.
Article 7.5. Market Access
1. With respect to market access through the cross-border supply of services, each Party shall accord to services and service suppliers of the other Party treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in the specific commitments contained in Annex 7-A.
2. In sectors where market access commitments are undertaken, the measures which a Party shall not adopt or maintain either on the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in Annex 7-A, are defined as:
(a) limitations on the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirement of an economic needs test (1);
(b) limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test; and
(c) limitations on the total number of service operations or on the total quantity of service output expressed in the terms of designated numerical units in the form of quotas or the requirement of an economic needs test (1).
Article 7.6. National Treatment
1. In the sectors where market access commitments are inscribed in Annex 7-A and subject to any conditions and qualifications set out therein, each Party shall accord to services and service suppliers of the other Party, in respect of all measures affecting the cross-border supply of services, treatment no less favourable than that it accords to its own like services and service suppliers.
2. A Party may meet the requirement of paragraph 1 by according to services and service suppliers of the other Party, either formally identical treatment or formally different treatment to that it accords to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of services or service suppliers of a Party compared to like services or service suppliers of the other Party.
4. Specific commitments assumed under this Article shall not be construed to require any Party to compensate for any inherent competitive disadvantages which result from the foreign character of the relevant services or service suppliers.
Article 7.7. Lists of Commitments
1. The sectors liberalised by each Party pursuant to this Section and, by means of reservations, the market access and national treatment limitations applicable to services and service suppliers of the other Party in those sectors are set out in the lists of commitments included in Annex 7-A.
2. Neither Party may adopt new, or more, discriminatory measures with regard to services or service suppliers of the other Party in comparison with treatment accorded pursuant to the specific commitments undertaken in conformity with paragraph 1.
Article 7.8. MFN Treatment (1)
1. With respect to any measures covered by this Section affecting the cross-border supply of services, unless otherwise provided for in this Article, each Party shall accord to services and service suppliers of the other Party treatment no less favourable than that it accords to like services and service suppliers of any third country in the context of an economic integration agreement signed after the entry into force of this Agreement.
2. Treatment arising from a regional economic integration agreement granted by either Party to services and service suppliers of a third party shall be excluded from the obligation in paragraph 1, only if this treatment is granted under sectoral or horizontal commitments for which the regional economic integration agreement stipulates a significantly higher level of obligations than those undertaken in the context of this Section as set out in Annex 7-B.
3. Notwithstanding paragraph 2, the obligations arising from paragraph 1 shall not apply to treatment granted:
(a) under measures providing for recognition of qualifications, licences or prudential measures in accordance with Article VI of GATS or its Annex on Financial Services;
(b) under any international agreement or arrangement relating wholly or mainly to taxation; or
(c) under measures covered by the MFN exemptions listed in Annex 7-C.
4. This Chapter shall not be so construed as to prevent any Party from conferring or according advantages to adjacent countries in order to facilitate exchanges limited to contiguous frontier zone of services that are both locally produced and consumed.
Section C. Establishment
Article 7.9. Definitions
For the purposes of this Section:
(a) establishment means:
(i) the constitution, acquisition or maintenance of a juridical person (2); or
(ii) the creation or maintenance of a branch or representative office
within the territory of a Party for the purpose of performing an economic activity;
(b) investor means any person that seeks to perform or performs an economic activity through setting up an establishment (1);
(c) economic activity includes any activities of an economic nature except activities carried out in the exercise of governmental authority, ie. activities carried out neither on a commercial basis nor in competition with one or more economic operators;
(d) subsidiary of a juridical person of a Party means a juridical person which is effectively controlled by another juridical person of that Party; and
(e) branch of a juridical person means a place of business not having legal personality which has the appearance of permanency, such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties so that the latter, although knowing that there will, if necessary, be a legal link with the parent body, the head office of which is abroad, do not have to deal directly with such parent body but may transact business at the place of business constituting the extension.
Article 7.10. Scope
With a view to improving the investment environment, and in particular the conditions of establishment between the Parties, this Section applies to measures by the Parties affecting establishment (2) in all economic activities with the exception of:
(a) mining, manufacturing and processing (3) of nuclear materials;
(b) production of, or trade in, arms, munitions and war material (1);
(c) audio-visual services (2);
(d) national maritime cabotage; and
(e) domestic and international air transport services, whether scheduled or non-scheduled, and services directly related to the exercise of traffic rights, other than:
(i) aircraft repair and maintenance services;
(ii) the selling and marketing of air transport services;
(ii) CRS services; and
(iv) other services auxiliary to air transport services, such as ground handling services, rental service of aircraft with crew and airport management services.
Article 7.11. Market Access
1. With respect to market access through establishment, each Party shall accord to establishments and investors of the other Party treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in the specific commitments contained in Annex 7-A.
2. In sectors where market access commitments are undertaken, the measures which a Party shall not adopt or maintain either on the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in Annex 7-A, are defined as:
(a) limitations on the number of establishments whether in the form of numerical quotas, monopolies, exclusive rights or other estab- lishment requirements such as economic needs test;
(b) limitations on the total value of transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(c) limitations on the total number of operations or on the total quantity of output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test (3);
(d) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholdings or the total value of individual or aggregate foreign investment;
(e) measures which restrict or require specific types of legal entity or joint ventures through which an investor of the other Party may perform an economic activity, and
(f) limitations on the total number of natural persons, other than key personnel and graduate trainees as defined in Article 7.17, that may be employed in a particular sector or that an investor may employ and who are necessary for, and directly related to, the performance of the economic activity in the form of numerical quotas or the requirement of an economic needs test.
Article 7.12. National Treatment (1)
1. In the sectors inscribed in Annex 7-A, and subject to any conditions and qualifications set out therein, with respect to all measures affecting establishment, each Party shall accord to estab- lishments and investors of the other Party treatment no less favourable than that it accords to its own like establishments and investors.
2. <A Party may meet the requirement of paragraph 1 by according to establishments and investors of the other Party, either formally identical treatment or formally different treatment to that it accords to its own like establishments and investors.
3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of establishments or investors of the Party compared to like establishments or investors of the other Party.
4. Specific commitments assumed under this Article shall not be construed to require any Party to compensate for any inherent competitive disadvantages which result from the foreign character of the relevant establishments or investors.
Article 7.13. Lists of Commitments
1. The sectors liberalised by each Party pursuant to this Section and, by means of reservations, the market access and national treatment limitations applicable to establishments and investors of the other Party in those sectors are set out in the lists of commitments included in Annex 7-A.
2. Neither Party may adopt new, or more, discriminatory measures with regard to establishments and investors of the other Party in comparison with treatment accorded pursuant to the specific commitments undertaken in conformity with paragraph 1.
Article 7.14. MFN Treatment (1)
1. With respect to any measures covered by this Section affecting establishment, unless otherwise provided for in this Article, each Party shall accord to establishments and investors of the other Party treatment no less favourable than that it accords to like establishments and investors of any third country in the context of an economic integration agreement signed after the entry into force of this Agreement (2).
2. Treatment arising from a regional economic integration agreement granted by either Party to establishments and investors of a third party shall be excluded from the obligation in paragraph 1, only if this treatment is granted under sectoral or horizontal commitments for which the regional economic integration agreement stipulates a significantly higher level of obligations than those undertaken in the context of this Section as set out in Annex 7-B.
3. Notwithstanding paragraph 2, the obligations arising from paragraph 1 shall not apply to treatment granted:
(a) under measures providing for recognition of qualifications, licences or prudential measures in accordance with Article VI of GATS or its Annex on Financial Services;
(b) under any international agreement or arrangement relating wholly or mainly to taxation; or
(c) under measures covered by an MFN exemption listed in Annex 7-C.
4. This Chapter shall not be so construed as to prevent any Party from conferring or according advantages to adjacent countries in order to facilitate exchanges limited to contiguous frontier zone of services that are both locally produced and consumed.
Article 7.15. Other Agreements
Nothing in this Chapter shall be deemed to:
(a) limit the rights of investors of the Parties to benefit from any more favourable treatment provided for in any existing or future international agreement relating to investment to which one of the Member States of the European Union and Korea are party; and
(b) derogate from the international legal obligations of the Parties under those agreements that provide investors of the Parties with more favourable treatment than that provided for under this Agreement.
Article 7.16. Review of the Investment Legal Framework
1. With a view to progressively liberalising investments, the Parties shall review the investment legal framework (1), the investment environment and the flow of investment between them consistently with their commitments in international agreements no later than three years after the entry into force of this Agreement and at regular intervals thereafter.
2. In the context of the review referred to in paragraph 1, the Parties shall assess any obstacles to investment that have been encountered and shall undertake negotiations to address such obstacles, with a view to deepening the provisions of this Chapter, including with respect to general principles of investment protection.
Section D. Temporary Presence of Natural Persons for Business
Article 7.17. Scope and Definitions
1. This section applies to measures of the Parties concerning the entry into, and temporary stay in, their territories of key personnel, graduate trainees, business services sellers, contractual service suppliers and independent professionals subject to Article 7.1.5.
2. For the purposes of this Section:
(a) key personnel means natural persons employed within a juridical person of a Party other than a non-profit organisation and who are responsible for the setting up or the proper control, administration and operation of an establishment. Key personnel comprise business visitors responsible for setting up an establishment and intra-corporate transferees;
(i) business visitors means natural persons working in a senior position who are responsible for setting up an establishment. They do not engage in direct transactions with the general public and do not receive remuneration from a source located within the host Party; and
(ii) intra-corporate transferees means natural persons who have been employed by a juridical person of a Party or have been partners in it (other than as majority shareholders) for at least one year and who are temporarily transferred to an establishment (including subsidiaries, affiliates or branches) in the territory of the other Party. The natural person concemed shall belong to one of the following categories.
Managers
Natural persons working in a senior position within a juridical person, who primarily direct the management of the establishment, receiving general supervision or direction principally from the board of directors or shareholders of the business or their equivalents, including:
(A) directing the establishment or a department or sub-division thereof;
(B) supervising and controlling the work of other supervisory, professional or managerial employees; and
(C) having the authority personally to recruit and dismiss or recommend recruiting, dismissing or other personnel actions.
Specialists
Natural persons working within a juridical person who possess uncommon knowledge essential to the establishment's production, research equipment, techniques or management. In assessing such knowledge, account will be taken not only of knowledge specific to the establishment, but also of whether the person has a high level of qualification referring to a type of work or trade requiring specific technical knowledge, including membership of an accredited profession.
(b) graduate trainees means natural persons who have been employed by a juridical person of a Party for at least one year, who possess a university degree and who are temporarily transferred to an estab- lishment in the territory of the other Party for career development purposes or to obtain training in business techniques or methods (1);