S. Korea, U.S. hold first-ever consultations under FTA on competition issue

2019.07.10 09:24:19

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South Korea and the United States (U.S.) held their first-ever consultations under the bilateral free trade deal after Washington in March requested to discuss competition hearing procedures of the Korea Fair Trade Commission (KFTC).

The Ministry of Trade, Industry and Energy said on Tuesday that the two countries held consultations on competition-related matters of the Korea-U.S. free trade agreement (FTA) in Seoul. The consultations were led by Kim Seung-ho, head of new commerce strategy division at trade ministry, and Michael Beeman, assistant U.S. Trade Representative (USTR) for Japan, Korea, and Asia-Pacific Economic Cooperation.

The meeting came after the USTR asked the Korean government for consultations under Chapter 16 of the Korus FTA on competition-related matters. It was the first time in seven years for any of the two countries to hold consultations on resolving competition-related issues since the Korus agreement took effect in 2012, although the USTR in the past had raised objections on KFTC investigation procedures several times in the past.

Industry insiders noted that the consultations request was sparked by the KFTC’s ruling against U.S.-based global semiconductor giant Qualcomm in December 2016, in which the Korean anti-trust agency imposed 1.03 trillion won ($871.1 million) in fine for monopolizing patent rights and hindering normal competition by abusing its dominant market position. Qualcomm filed an appeal with the Seoul court, arguing that the investigation procedure did not guarantee sufficient defending rights.

The USTR suggested that such KFTC’s investigation procedure did not compile with Korus Article 16.1.3, which states that a party in a competition-related hearing should “have a reasonable opportunity to… review and rebut the evidence and any other collected information on which the determination may be based.”

The trade ministry, meanwhile, said that the consultations were held under the Korus agreement that stipulates that a state party should come forward upon request from another party. The ministry, however, said that there is no obligation to embrace issues raised by the U.S.

By Lim Sung-hyun and Lee Eun-joo

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