(k) "owned", "controlled" and "affiliated"; and
(l) "direct taxes".
Article 3.4. Most Favoured Nation Treatment
1. Without prejudice to measures taken in accordance with Article VII of the GATS, and except as provided for in its List of MFN-exemptions contained in Annex VII, a Party shall accord immediately and unconditionally, in respect of all measures affecting the supply of services, to services and service suppliers of another Party treatment no less favourable than the treatment it accords to like services and service suppliers of any non-Party.
2. Treatment granted under other agreements concluded by one of the Parties and notified under Article V or Article V bis of the GATS shall not be subject to paragraph 1.
3. If a Party enters into an agreement of the type referred to in paragraph 2, it shall upon request from another Party afford adequate opportunity to that Party to negotiate the benefits granted therein.
4. The rights and obligations of the Parties in respect of advantages accorded to adjacent countries shall be governed by paragraph 3 of Article Il of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 3.5. Market Access
Commitments on market access shall be governed by Article XVI of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 3.6. National Treatment
Commitments on national treatment shall be governed by Article XVII of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 3.7. Additional Commitments
Additional commitments shall be governed by Article XVIII of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 3.8. Domestic Regulation
The rights and obligations of the Parties in respect of domestic regulation shall be governed by Article VI of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 3.9. Recognition
1. Where a Party recognises, by agreement or arrangement, the education or experience obtained, requirements met or licenses or certifications granted in the territory of a non-Party, that Party shall accord another Party adequate opportunity to negotiate its accession to such an agreement or arrangement, whether existing or future, or to negotiate a comparable agreement or arrangement with it. Where a Party accords recognition autonomously, it shall afford adequate opportunity for another Party to demonstrate that the education or experience obtained, requirements met or licenses or certifications granted in the territory of that other Party should also be recognised.
2. Any such agreement or arrangement or autonomous recognition shall be in conformity with the relevant provisions of the WTO Agreement and, in particular, Article VII of the GATS.
3. Annex IX applies to mutual recognition of, inter alia, education or experience, qualifications, licenses, certification or accreditation of service suppliers.
Article 3.10. Movement of Natural Persons
The rights and obligations of the Parties in respect of the movement of natural persons of a Party supplying services shall be governed by the GATS Annex on Movement of Natural Persons Supplying Services, which is hereby incorporated into and made part of this Chapter.
Article 3.11. Monopolies and Exclusive Service Suppliers
The rights and obligations of the Parties in respect of monopolies and exclusive service suppliers shall be governed by paragraphs 1, 2 and 5 of Article VII of the GATS, which are hereby incorporated into and made part of this Chapter.
Article 3.12. Business Practices
The rights and obligations of the Parties in respect of business practices shall be governed by Article IX of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 3.13. Payments and Transfers
1. Subject to its specific commitments and except under the circumstances envisaged in Article 3.14, a Party shall not apply restrictions on international transfers and payments for current transactions relating to the supply of a service with another Party.
2. Nothing in this Chapter shall affect the rights and obligations of the Parties under the Articles of the Agreement of the International Monetary Fund (IMF), including the use of exchange actions which are in conformity with the Articles of the Agreement of the IMF, provided that a Party shall not impose restrictions on capital transactions inconsistently with its specific commitments, except under Article 3.14 or at the request of the IMF.
Article 3.14. Restrictions to Safeguard the Balance of Payments
1. The Parties shall endeavour to avoid the imposition of restrictions to safeguard the balance of payments.
2. The rights and obligations of the Parties in respect of such restrictions shall be governed by paragraphs 1 to 3 of Article XII of the GATS, which are hereby incorporated into and made part of this Chapter.
3. A Party adopting or maintaining such restrictions shall promptly notify the Joint Committee thereof.
Article 3.15. Exceptions
The rights and obligations of the Parties in respect of general and security exceptions shall be governed by Articles XIV and XIV bis of the GATS, which are hereby incorporated into and made part of this Chapter.
Article 3.16. Schedules of Specific Commitments
1. Each Party shall set out in a Schedule the specific commitments it undertakes under Articles 3.5, 3.6 and 3.7. With respect to sectors where such specific commitments are undertaken, each Schedule shall specify the elements set forth in paragraphs (a) to (d) of paragraph 1 of Article XX of the GATS.
2. Measures inconsistent with both Articles 3.5 and 3.6 shall be dealt with as provided for in paragraph 2 of Article XX of the GATS.
3. The Parties' Schedules of specific commitments are set out in Annex VI.
4, Particular aspects of market access, national treatment and additional commitments applicable to telecommunications services and to co-production of broadcasting programmes are dealt with in Annexes X and XI.
Article 3.17. Modification of Schedules
The Parties shall, upon written request by a Party, hold consultations to consider any modification or withdrawal of a specific commitment in its Schedule of specific commitments. The consultations shall be held within three months after the requesting Party made its request. In the consultations, the Parties shall aim to ensure that a general level of mutually advantageous commitments not less favourable to trade than that provided for in the Schedule of specific commitments prior to such consultations is maintained. Modifications of Schedules are subject to the procedures set out in Article 8.1.
Article 3.18. Transparency
The rights and obligations of the Parties in respect of transparency shall be governed by paragraphs 1 and 2 of Article II and by Article IM bis of the GATS, which are hereby incorporated into and made part of this Chapter.
Article 3.19. Review
With the objective of further liberalisation of trade in services between them, the Parties commit themselves to review every two years their Schedules of specific commitments and their Lists of MFN-exemptions. The first review shall take place not later than three years after the entry into force of this Agreement.
Article 3.20. Annexes
The following Annexes attached to this Agreement form an integral part of this Chapter:
- Annex VII (Schedules of Specific Commitments);
- Annex VIII (Lists of MFN-exemptions);
- Annex IX (Mutual Recognition);
- Annex X (Telecommunications Services); and
- Annex XI (Co-production of Broadcasting Programmes).
Chapter 4. Financial Services
Article 4.1. Scope and Coverage
1. This Chapter applies to measures affecting trade in financial services taken by central, regional or local governments and authorities as well as by non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities.
2. Articles 4.4, 4.5 and 4.6 shall not apply to laws, regulations or requirements governing the procurement by government agencies of financial services purchased for governmental purposes and not for commercial resale or for use in the supply of services for commercial sale.
3. Chapter 3 applies to measures described in paragraph 1 where this is specifically provided for by this Chapter.
Article 4.2. Incorporation of Provisions from the Gats
Article 3.2 shall apply to this Chapter.
Article 4.3. Definitions
1. Except for its paragraph 1(c), Article 3.3 shall apply to this Chapter.
2. The following definitions of the GATS Annex on Financial Services are incorporated into and made part of this Chapter:
(a) "services supplied in the exercise of governmental authority" (paragraphs 1 (b) and (c) of the Annex);
(b) "a financial service" (paragraph 5 (a) of the Annex); (c) "financial service supplier" (paragraph 5 (b) of the Annex); and
(d) "public entity" (paragraph 5 (c) of the Annex).
Article 4.4. Most Favoured Nation Treatment
Article 3.4 shall apply to this Chapter.
Article 4.5. Market Access
Commitments on market access shall be governed by Article XVI of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 4.6. National Treatment
1. Commitments on national treatment shall be governed by Article XVII of the GATS, which is hereby incorporated into and made part of this Chapter.
2. In addition, under terms and conditions that accord national treatment, each Party shall grant to financial service suppliers of another Party established in its territory access to payment and clearing systems operated by public entities and to official funding and refinancing facilities available in the normal course of ordinary business. This paragraph is not intended to confer access to a Party's lender of last resort facilities.
3. Where membership or participation in, or access to, a self-regulatory body, securities or futures exchange or market, clearing agency, or any other organisation or association is required by a Party in order for financial service suppliers of any other Party to supply financial services on an equal basis with financial service suppliers of the Party, or where the Party provides directly or indirectly such entities with privileges or advantages in supplying financial services, the Party shall ensure that such entities accord national treatment to financial service suppliers of any other Party established in its territory.
Article 4.7. Additional Commitments
Additional commitments shall be governed by Article XVIII of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 4.8. Domestic Regulation
1. The rights and obligations of the Parties in respect of domestic regulation shall be governed by Article VI of the GATS, which is hereby incorporated into and made part of this Chapter.
2. Nothing in this Chapter shall be construed to prevent a Party from adopting or maintaining reasonable measures for prudential reasons, including for:
(a) the protection of investors, depositors, policy-holders, policy- claimants, persons to whom a fiduciary duty is owed by a financial service supplier, or any similar financial market participants; or
(b) ensuring the integrity and stability of a Party's financial system.
Where such measures do not conform with the provisions of this Chapter, they shall not be used as a means of avoiding the Party's commitments or obligations under such provisions. Such measures shall not be more burdensome than necessary to achieve their aim.
3. Nothing in this Chapter shall be construed to require a Party to disclose information relating to the affairs and accounts of individual consumers or any confidential or proprietary information in the possession of public entities.
Article 4.9. Recognition
1. Article 3.9 shall apply to this Chapter.
2. In addition, where a Party recognises prudential measures of a non-Party in determining how the Party's measures relating to financial services shall be applied, that Party shall afford adequate opportunity for another Party to negotiate its accession to such agreement or arrangement, or to negotiate a comparable agreement or arrangement with it, under circumstances in which there would be equivalent regulation, oversight, implementation of such regulation and, if appropriate, procedures concerning the sharing of information between the parties to the agreement or arrangement. Where a Party accords such recognition autonomously, it shall afford adequate opportunity for another Party to demonstrate that such circumstances exist.
Article 4.10. Movement of Natural Persons
The rights and obligations of the Parties in respect of the movement of natural persons of a Party supplying services shall be governed by the GATS Annex on Movement of Natural Persons Supplying Services, which is hereby incorporated into and made part of this Chapter.
Article 4.11. Monopolies and Exclusive Service Suppliers
The rights and obligations of the Parties in respect of monopolies and exclusive service suppliers shall be governed by paragraphs 1, 2 and 5 of Article VII of the GATS, which are hereby incorporated into and made part of this Chapter.
Article 4.12. Business Practices
The rights and obligations of the Parties in respect of business practices shall be governed by Article IX of the GATS, which is hereby incorporated into and made part of this Chapter.
Article 4.13. Payments and Transfers
Article 3.13 shall apply to this Chapter.
Article 4.14. Restrictions to Safeguard the Balance of Payments
Article 3.14 shall apply to this Chapter.
Article 4.15. Exceptions
The rights and obligations of the Parties in respect of general and security exceptions shall be governed by Articles XIV and XIV bis of the GATS, which are hereby incorporated into and made part of this Chapter.
Article 4.16. Schedules of Specific Commitments
Each Party shall set out in its schedule referred to in Article 3.16 the specific commitments it undertakes for services defined under paragraph 2(b) of Article 4.3 in accordance with the provisions of paragraphs 1 to 3 of Article 3.16.
Article 4.17. Modification of Schedules
Article 3.17 shall apply to this Chapter.
Article 4.18. Transparency
1. The rights and obligations of the Parties in respect of transparency shall be governed by paragraphs 1 and 2 of Article II and by Article III bis of the GATS, which are hereby incorporated into and made part of this Chapter.
2. In addition, each Party commits to promote regulatory transparency in financial services. Accordingly, the Parties undertake to consult, as appropriate, with the goal of promoting objective and transparent regulatory processes in each Party, taking into account:
(a) the work undertaken by the Parties in the GATS and the Parties' work in other fora relating to trade in financial services; and
(b) the importance of regulatory transparency of identifiable policy objectives and clear and consistently applied regulatory processes that are communicated or otherwise made available to the public.
Article 4.19. Review
Article 3.19 shall apply to this Chapter.
Article 4.20. Sub-committee on Financial Services
1. A Sub-Committee on Financial Services (hereinafter referred to as "the Sub- Committee") is to be set up under the Joint Committee. The principal representative of each Party shall be from an authority competent for this Agreement or from a financial authority.
2. The mandate of the Sub-Committee shall be:
(a) to supervise the implementation of this Chapter, assess its functioning, and oversee its further elaboration; and
(b) to consider issues regarding financial services that are referred to it by a Party.
3. The Sub-Committee shall meet in conjunction with Joint Committee meetings, or as otherwise agreed upon between the Parties.
4. The Sub-Committee shall be chaired jointly by Korea and one of the EFTA States. It shall act by consensus.
Article 4.21. Dispute Settlement
1. Relevant Articles in Chapter 9 shall apply to the settlement of disputes arising under this Chapter as modified by this Article.
2. Consultations regarding financial services held pursuant to Chapter 9 shall include officials from an authority competent for this Agreement or from a financial authority. The Parties shall report the results of their consultations to the Sub- Committee.
3. Article 9.4 shall apply, with the following modifications:
(a) where the Parties to the disputes so agree, the arbitration panel shall be composed entirely of individuals meeting the qualifications in paragraph 4; and
(b) in any other case,
(i) each Party to the dispute may select individuals meeting the qualifications set out in paragraph 7 of Article 9.5; and
(ii) if the Party complained against invokes Article 4.8, the chair of the panel shall meet the qualifications set out in paragraph 4, unless the Parties to the dispute agree otherwise.
4. Unless otherwise provided for in this Chapter, financial services panellists shall:
(a) meet the qualifications set out in Article 9.5; and
(b) have expertise or experience in financial services law or practice, which may include the regulation of financial institutions.
5. With regard to paragraph 5 of Article 9.10, the following shall apply wherever practical. Where the measure under dispute affects:
(a) only the financial services sector, the complaining Party shall first seek to suspend benefits only in the financial services sector;
(b) the financial services sector and any other sector, the complaining Party shall first seek to suspend benefits in the respective sectors and with an effect equivalent to the effect of the measure complained against in each sector; or
(c) only a sector other than the financial services sector, the complaining Party shall seek to avoid suspending benefits in the financial services sector.
Chapter 5. Competition
Article 5.1. Rules of Competition Concerning Enterprises
1. The Parties recognise that anti-competitive business conduct may frustrate the benefits arising from this Agreement. Such conduct is therefore incompatible with the proper functioning of this Agreement in so far as it may affect trade between an EFTA State and Korea.
2. For the purposes of this Agreement, "anti-competitive business conduct":
(a) means all agreements between enterprises, decisions by associations of enterprises and concerted practices between enterprises, as well as abuse by one or more enterprises of a dominant position in the territories of the Parties as a whole or in a substantial part thereof, which have, as their object or effect, the prevention, restriction or distortion of competition; and
(b) may occur with regard to trade in goods or services. Such conduct may be effected by private or public enterprises, or by enterprises to which special or exclusive rights have been granted unless the particular tasks assigned to them are obstructed.
3. The provisions of paragraphs 1 and 2 shall not be construed to create any direct obligations for enterprises.
4. The Parties undertake to apply their respective competition laws with a view to removing anti-competitive business conduct. To that end, they shall notify each other of relevant enforcement activities and exchange information. No Party shall be required to disclose information that is confidential according to its laws.
5. Upon request, competition authorities and/or other relevant authorities of the Parties shall enter into consultations in order to facilitate the removal of anti- competitive business conduct. The Party addressed shall accord full and sympathetic consideration to that request.
6. Upon request, consultations shall also be held in the Joint Committee if a Party considers that an anti-competitive business conduct in the territory of another Party continues to affect trade between them. Consultations shall be held within 30 days of receipt of the request. The Parties concerned shall give to the Joint Committee all the support and information in order for the Joint Committee to examine the case and to assist the Parties concerned in removing the conduct objected to and, where appropriate, in re-establishing the balance of rights and obligations under this Agreement.
Chapter 6. Government Procurement
Article 6.1. Scope and Coverage
1. The rights and obligations of the Parties in respect of government procurement shall be governed by the WTO Agreement on Government Procurement (hereinafter referred to as "the GPA").
2. The Parties agree to co-operate in the Joint Committee with the aim of increasing the mutual understanding of their respective government procurement systems, and achieving further liberalisation and mutual opening up of their government procurement markets.
Article 6.2. Exchange of Information
To facilitate communication between the Parties on any matter regarding government procurement, contact points, responsible for providing information on the tules and regulations in the field of government procurement, are listed in Annex XII.
Article 6.3. Further Negotiations
1. Upon conclusion of bilateral negotiations between the Parties on further liberalisation of their respective government procurement markets in the framework of the negotiations aimed at amending the GPA, such liberalisation, including provisions from the agreement amending the main part of the GPA in so far as they are relevant for these additional liberalisations, shall be included in this Agreement. The Joint Committee shall take a decision to this effect within three months after conclusion of these bilateral negotiations. This decision shall be subject to ratification or acceptance by the Parties.
2. If a Party grants to a non-Party, after the entry into force of this Agreement, additional benefits with regard to the access to its government procurement markets, this Party shall agree to enter into negotiations on the possible extension of these benefits to another Party on a reciprocal basis.
Chapter 7. Intellectual Property
Article 7.1. Protection of Intellectual Property
1. The Parties shall grant and ensure adequate, effective and non-discriminatory protection of intellectual property rights, and provide for measures for the enforcement of those rights against infringement, including counterfeiting and piracy, in accordance with this Article as well as Annex XIII and the international agreements referred to therein.