1. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of the latter Party and to its investments if the enterprise is owned or controlled by an investor of a non-Party and the denying Party:
(a) does not maintain normal economic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments.
2. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of the latter Party and to its investments if the enterprise is owned or controlled by an investor of a non-Party or of the denying Party, and the enterprise has no substantial business activities in the territory of the latter Party.
Article 12.16. Environmental Measures
Each Party recognizes that it is inappropriate to encourage investment by investors of the other Party by relaxing its environmental measures. To this effect each Party should not waive or otherwise derogate from such environmental measures as an encouragement for the establishment, acquisition or expansion of investments in its territory.
Article 12.17. Committee on Investment
1. The Parties hereby establish a Committee on Investment (hereinafter referred to in this Article as the "Committee") with a view to accomplishing the objectives of this Chapter. The functions of the Committee shall be:
(a) to discuss and review the implementation and operation of this Chapter;
(b) to discuss other investment-related matters concerning this Chapter, including the scope of the existing non-conforming measures referred to in paragraphs 2 and 3 of Article 12.3; and
(c) to consult any matter arising under this Agreement that affects establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments from an investor of a Party in the territory of the other Party.
2. The Committee may, as necessary, decide to make appropriate recommendations to the Parties for the more effective functioning or the attainment of the objectives of this Chapter.
3. The Committee shall be composed of representatives of the Governments of the Parties and may decide to invite representatives of relevant entities other than the Governments of the Parties with the necessary expertise relevant to the issues to be discussed. The Committee shall decide on the modalities of its operation as necessary.
4. Any decision of the Committee shall be made by consensus. 5. Unless otherwise decided by the Parties, the Committee shall convene once a year.
Article 12.18. Services-investment Linkage (44)
1. Articles 12.5 (Minimum Standard of Treatment), 12.9 (Expropriation and Compensation), 12.10 (Transfers), 12.11 (Subrogation), 12.12 (Settlement of Investment Disputes between a Party and an Investor of the other Party) and Annexes 12-A (Customary International Law), 12-B (Expropriation) and 12-C (Transfers) of this Agreement shall apply, mutatis mutandis, to any measure affecting the supply of service by a service supplier of a Party through commercial presence in the territory of the other Party pursuant to the Chapter 8 (Trade in Services), only to the extent that they relate to a covered investment.
2. Articles 12.5 (Minimum Standard of Treatment), 12.9 (Expropriation and Compensation), 12.10 (Transfers), 12.11 (Subrogation), 12.12 (Settlement of Investment Disputes between a Party and an Investor of the other Party), 12.13 (Special Formalities and Information Requirements), 12.15 (Denial of Benefits) and Annexes 12-A (Customary International Law), 12-B (Expropriation), 12-C (Transfers) of this Agreement shall apply, mutatis mutandis, to any measure affecting the supply of financial service by a financial service supplier of a Party through commercial presence in the territory of the other Party pursuant to the Chapter 9 (Financial Services), only to the extent that they relate to a covered investment.
Article 12.19. Contact Points for Improving Investment Environment
1. For the purpose of improving investment environment and promoting investment in its territory, each Party designates contact points respectively, to receive the complaints from investors of the other Party with regard to its administrative action of governments and to provide assistance in resolving difficulties of investors of the other Party. The contact points from the Parties will endeavor to provide advisory services available with regard to establishment, liquidation, investment promotion activities as much as possible.
2. The contact points are:
(a) for China, the Investment Promotion Agency of Ministry of Commerce or its successors; and
(b) for Korea, the Ministry of Trade, Industry and Energy/Korea Trade-Investment Promotion Agency (KOTRA) or their successors.
3. Further to the contact points referred to in paragraphs 1 and 2, a Party shall maintain the local contact points at the level of local governments (45) in its territory in order to promptly respond to the complaints and difficulties of investors of the other Party.
4. Neither Party shall have recourse to Chapter 20 (Dispute Settlement) and Article 12.12 for any matter arising under this Article.
Annex 12-A. CUSTOMARY INTERNATIONAL LAW
The Parties confirm their shared understanding that “customary international law” generally and as specifically referenced in Article 12.5 results from a general and consistent practice of states that they follow from a sense of legal obligation. With regard to Article 12.5, the customary international law minimum standard of treatment of aliens refers to all customary international law principles that protect the economic rights and interests of aliens.
Annex 12-B. EXPROPRIATION
The Parties confirm their shared understanding that:
1. An action or a series of actions by a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right in a covered investment.
2. Article 12.9.1 addresses two situations. The first is direct expropriation, where investments are nationalized or otherwise directly expropriated through formal transfer of title or outright seizure.
3. The second situation is indirect expropriation, where an action or a series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.
(a) The determination of whether an action or a series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers, among other factors,:
(i) the economic impact of the action or series of actions, although the fact that such action or series of actions has an adverse effect on the economic value of investments, standing alone, does not establish that an indirect expropriation has occurred;
(ii) the extent to which the action or series of actions interferes with distinct and reasonable expectations arising out of investments; and
(iii) the character and objectives of the action or series of actions, including whether such action is proportionate to its objectives.
(b) Except in rare circumstances, such as when an action or a series of actions by a Party is extremely severe or disproportionate in light of its purpose, non-discriminatory regulatory actions adopted by the Party for the purpose of legitimate public welfare do not constitute indirect expropriation.
Annex 12-C. TRANSFERS
1. Nothing in this Chapter, Chapter 8 (Trade in Services), or Chapter 9 (Financial Services) shall be construed to prevent a Party from adopting or maintaining temporary safeguard measures with regard to payments and capital movements:
(a) in the event of serious balance of payments or external financial difficulties or threat thereof; or
(b) where, in exceptional circumstances, payments and capital movements cause or threaten to cause serious difficulties for the operation of monetary policy or exchange rate policy in either Party.
2. The measures referred to in paragraph 1:
(a) shall not exceed a period of one year; however, if extremely exceptional circumstances arise such that a Party seeks to extend such measures, the Party will coordinate in advance with the other Party concerning the implementation of any proposed extension;
(b) shall be consistent with the Articles of the Agreement of the International Monetary Fund;
(c) shall not exceed those necessary to deal with the circumstances described in paragraph 1;
(d) shall avoid unnecessary damage to the commercial, economic, or financial interests of the Parties;
(e) shall not otherwise interfere with investors’ ability to earn a market rate of return in the territory of the Party on any restricted assets;
(f) shall be temporary and phased out progressively as the situation described in paragraph 1 improves;
(g) shall not be confiscatory;
(h) shall promptly be notified to the other Party;
(i) are applied in a manner consistent with Articles 12.3 and 8.4 (National Treatment) and Articles 12.4 subject to the Schedule of Specific Commitments; and
(j) shall not constitute a dual or multiple exchange rate practice.
3. Nothing in this Chapter, Chapter 8 (Trade in Services) or Chapter 9 (Financial Services) shall be regarded to affect the rights enjoyed and obligations undertaken by a Party as a party to the Articles of the Agreement of the International Monetary Fund.
Chapter 13. Electronic Commerce
Article 13.1. General
The Parties recognize the economic growth and opportunity that electronic commerce provides, the importance of promoting its use and development, and the applicability of the WTO Agreement to measures affecting electronic commerce.
Article 13.2. Relation to other Chapters
In the event of any inconsistency between this Chapter and other Chapters, the other Chapters shall prevail to the extent of the inconsistency.
Article 13.3. Customs Duties (46)
Each Party will maintain the current WTO practice (47) of not imposing customs duties on electronic transmissions. (48)
Article 13.4. Electronic Authentication and Electronic Signatures
1. Neither Party may adopt or maintain legislation for electronic signature that would deny a signature legal validity solely on the basis that the signature is in electronic form.
2. Each Party shall maintain domestic legislation for electronic signature that permits:
(a) parties to electronic transaction to mutually determine the appropriate electronic signature and authentication method;(49) (50) and
(b) electronic authentication agencies to have the opportunity to prove in judicial or administrative authorities a claim that their electronic authentication to electronic transaction comply with legal requirements with respect to electronic authentication.
3. Each Party shall work towards the mutual recognition of digital certificates and electronic signatures.
4. Each Party shall encourage the use of digital certificates in the business sector.
Article 13.5. Protection of Personal Information In Electronic Commerce
Recognizing the importance of protecting personal information in electronic commerce, each Party shall adopt or maintain measures which ensure the protection of the personal information of the users of electronic commerce and share information and experience on the protection of personal information in electronic commerce.
Article 13.6. Paperless Trading
1. Each Party shall endeavour to make trade administration documents available to the public in electronic form.
2. Each Party shall explore the possibility of accepting trade administration documents submitted electronically as the legal equivalent of the paper version of those documents.
Article 13.7. Cooperation on Electronic Commerce
1. The Parties agree to share information and experience on issues related to electronic commerce, including, inter alia, laws and regulations, rules and standards, and best practices.
2. The Parties shall encourage cooperation in research and training activities to enhance the development of electronic commerce.
3. The Parties shall encourage business exchanges, cooperative activities and joint electronic commerce projects.
4. The Parties shall actively participate in regional and multilateral fora to promote the development of electronic commerce in a cooperative manner.
Article 13.8. Definitions
For the purposes of this Chapter:
electronic authentication means the process or act of providing authenticity and reliability verification for the parties involved in electronic signature to ensure integrity and security of electronic communication or transaction;
electronic signature means data in electronic form that is in, affixed to, or logically associated with a data message, which may be used to identify the signatory in relation to the data message and to indicate the signatory's approval of the information contained in the data message.
data message means information generated, sent, received or stored by electronic, optical or similar means; and
trade administration documents means forms a Party issues or controls that must be completed by or for an importer or exporter in connection with the import or export of goods.
Article 13.9. Non-application of Dispute Settlement
Neither Party shall have recourse to Chapter 20 (Dispute Settlement) for any matter arising under this Chapter.
Chapter 14. Competition
Article 14.1. Objectives
Each Party understands that proscribing anti-competitive business practices of enterprises, implementing competition policies and cooperating on competition issues contribute to preventing the benefits of trade liberalization from being undermined and to promoting economic efficiency and consumer welfare.
Article 14.2. Competition Laws and Authorities
1. Each Party shall maintain or adopt competition laws that promote and protect the competitive process in its market by proscribing anti-competitive business practices. Each Party shall maintain an authority or authorities responsible for the enforcement of its national competition laws.
2. Each Party shall also take appropriate actions, according to each Party's relevant laws and regulations with respect to anti-competitive business practices, which will prevent the benefits of trade liberalization from being undermined.
Article 14.3. Principles In Law Enforcement
1. Each Party shall be consistent with the principles of transparency, non-discrimination, and procedural fairness in the competition law enforcement.
2. Each Party shall treat persons who are not persons of the Party no less favorably than persons of the Party in like circumstances in the competition law enforcement.
3. Each Party shall ensure that:
(a) a person subject to an investigation to determine whether conduct violates its competition laws or what administrative sanctions or remedies should be ordered for violation of such laws is afforded the opportunity to present opinion or evidence in its defense in the investigation process.
(b) persons subject to the imposition of a sanction or remedy for violation of its competition laws should be given the opportunity to seek review of the sanction or remedy through administrative reconsideration and/or administrative lawsuit in accordance with each Party's laws.
Article 14.4. Transparency
1. Each Party shall make public, including on the Internet, its laws and regulations concerning competition policy, including procedural rules for an investigation.
2. Each Party shall ensure that all final administrative decisions finding a violation of its competition laws are in written form and set out any relevant findings of fact and legal basis on which the decision is based.
3. Each Party shall endeavor to make public the decisions and any orders implementing them in accordance with its own laws and regulations. The version of the decisions or orders that the Party makes available to the public shall not contain business confidential information or other information that is protected by its law from public disclosure.
Article 14.5. Application of Competition Laws
1. This Chapter applies to all undertakings of each Party.
2. Nothing in this Chapter shall be construed to prevent a Party from establishing or maintaining a public enterprise, entrusting enterprises with special or exclusive rights or maintaining such rights.
3. With respect to public enterprises and enterprises entrusted with special rights (51) or exclusive rights:
(a) neither Party shall adopt or maintain any measure contrary to the principles contained in Article 14.2; and
(b) the Parties shall ensure that such enterprises are subject to the competition laws set out in Article 14.13, in so far as the application of these principles and competition laws does not obstruct the performance, in law or in fact, of the particular tasks assigned to them.
Article 14.6. Cooperation In Law Enforcement
1. The Parties recognize the importance of cooperation and coordination in competition field, to promote effective competition law enforcement. Accordingly, the Parties shall cooperate through notification, consultation, exchange of information, and technical cooperation.
2. The Parties recognize the importance of cooperation on matters related to their consumer protection laws. Accordingly, the Parties may exchange and communicate consumer protection information for the purpose of better protecting consumer's rights and interests.
Article 14.7. Notification
1. Each Party, through its competition authority or authorities, shall notify the other Party of an enforcement activity if it considers that such enforcement activity may substantially affect the other Party's important interests.
2. Provided that it is not contrary to the Parties' competition laws and does not affect any investigation being carried out, the Parties shall endeavor to notify at an early stage and in a detailed manner which is enough to permit an evaluation in the light of the interests of the other Party.
3. The Parties undertake to exert their best efforts to ensure that notifications are made in the circumstances set out above, taking into account the administrative resources available to them.
Article 14.8. Consultation
1. To foster understanding between the Parties, or to address specific matters that arise under this Chapter, each Party shall, on request of the other Party, enter into consultations regarding representations made by the other Party. In its request, the Party shall indicate, if relevant, how the matter affects trade or investment between the Parties.
2. The Party to which a request for consultations has been addressed, shall accord full and sympathetic consideration to the concerns raised by the other Party.
3. To facilitate discussion of the matter that is the subject of the consultations, each Party shall endeavor to provide relevant non-confidential information to the other Party.
Article 14.9. Exchange of Information
1. Each Party shall endeavor to, upon request of the other Party, provide information to facilitate effective enforcement of their respective competition laws, provided that it does not affect any ongoing investigation and is compatible with the laws and regulations governing the agencies possessing the information.
2. Each Party shall maintain the confidentiality of any information provided as confidential by the competition authority of the other Party and shall not disclose such information to any entity that is not authorized by the Party providing information.
3. On request of a Party, each Party shall make available to the other Party public information concerning its exemptions and immunities to its competition laws, provided that the request specifies the particular goods or services and markets of concern, and includes indicia that the exemption or immunity may hinder trade liberalization between the Parties.
Article 14.10. Technical Cooperation
The Parties may promote technical cooperation, including exchange of experiences, capacity building through training programs, workshops and research collaborations for the purpose of enhancing each Party's capacity related to competition policy and law enforcement.
Article 14.11. Independence of Competition Law Enforcement
This Chapter should not intervene with the independence of each Party in enforcing its respective competition laws.
Article 14.12. Dispute Settlement
1. If a Party considers that a given practice continues to affect trade in the sense of this Chapter, it may request consultation to the other Party in the Joint Commission with a view to facilitating a resolution of the matter.
2. Neither Party shall have recourse to Chapter 20 (Dispute Settlement) for any matters arising under this Chapter.
Article 1413. Definitions
For the purposes of this Chapter:
anti-competitive business practices means business conduct or transactions that adversely affect competition in the territory of a Party, such as:
(a) agreements between enterprises, decisions by associations of enterprises and concerted practices, which have as their object or effect the prevention, restriction or distortion of competition in the territory of either Party as a whole or in a substantial part thereof;
(b) any abuse by one or more enterprises of a dominant position in the territory of either Party as a whole or in a substantial part thereof; or
(c) concentrations between enterprises, which significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position in the territory of either Party as a whole or in a substantial part thereof;
competition laws means:
(a) for China, Anti-monopoly Law and its implementing regulations and amendments; and
(b) for Korea, the Monopoly Regulation and Fair Trade Act and its implementing regulations and amendments;
consumer protection laws means:
(a) for China, Consumer Protection Law and its implementing regulations and amendments; and
(b) for Korea, Chapters III, IV.3, IX, and X of the Framework Act on Consumer and its implementing regulations and amendments;
undertakings means natural persons, legal persons and any other organizations that are in engagement of commodities production, operation or service provision.