KITA News and Reports
  • Need to Request Real Market Access to China’s Tourism, Construction, Cultural Contents
    2018-03-21

    Need to Request Real Market Access to China’s Tourism, Construction,

    Cultural Contents 

    - KITA issued a report ‘The Meaning and Issues of the Follow-up Korea-China FTA Negotiations for Service and Investment”… need measures to protect investors -

     

    Despite the fact that the Korea-China Free Trade Agreement came into force in 2015, the effectiveness of market opening has been insignificant in the fields of tourism, construction and cultural contents due to China's regulations. Therefore, some point out that Korea needs to request a real market access in service and investment sectors during the follow-up negotiations for the Korea-China free trade agreement.   

     

    According to the report titled, ‘The Meaning and Issues of the Follow-up Korea-China FTA Negotiations for Service and Investment,’ released by the Korea International Trade Association (Chairman, Kim Young-joo) on March 20, despite of the fact that Chinese market has been opened up since the effectuation of the bilateral FTA in 2015, there still are invisible regulations and the different provinces and cities have varied level of implementation. Thus, during the follow-up negotiation, it is necessary to work on the measures to make sure that the Korea-China FTA, including the real opening of the service sector, etc., will be properly carried out. In particular, since Korean companies are suffering from the difficulties to enter into Chinese market as it is difficult to acquire licenses for cultural content such as online games, dramas, and movies, it is necessary to make efforts in the follow-up negotiation to make the real market opening in China.

     

     

    It is also urgent to provide protection measures for investors so that they will not have similar damages for other reasons that Korean companies experienced due to THAAD issue. It is also required to set up a negotiation mechanism which mandates the two countries to consult upon the request of either side of the two countries in order to find a mutually agreeable solution in the event of a situation that negatively affects the trade and investment between the two countries.

     

     

    According to the report, the follow-up negotiations are based on the negative approach, so that a high level of liberalization can be achieved by opening all but the contents of each party’s Schedule. In addition, the Korea-China free trade agreement clearly states that the follow- up negotiations will include future most-favored-nation treatment in service trade. Therefore, in the future, if China additionally opens up this sector in the free trade agreement negotiations with other countries, China is likely to equally open up the market to Korea.

      

    Park Jin-woo, head of the Center for Trade Studies and Cooperation at the Korea International Trade Association, said, "This follow-up Korea-China FTA negotiations for service and investment will focus on three chapters relating to investment, including service trade, financial services, and investment services." He also mentioned, Korea needs to monitor the other free trade agreements that China is negotiating with at the moment, such as the US-China bilateral investment treaty (BIT), to envision negotiation strategies and provide appropriate protection measures for sensitive service industry in Korea." 

     

     

     

     

     

    < Service areas that Korea and China have different opening levels  >

    Area

    Major inequalities

    Construction

    (China) Does not accept the headquarters' performance of the Korean construction companies investing in China

    (Korea) Accepts the   headquarters'  performance of   the Chinese

     construction companies investing in Korea

    Game

    (China) Not able to provide direct local service, Discrimination between Chinese and foreign companies regarding the issuance of license

    (Korea) Able to provide direct local service, No discrimination between Korean companies and foreign companies regarding game contents distribution license  

    Tourism

    (China) Korean companies operating in China are not allowed to practice outbound sales for Chinese people

    (Korea) Chinese companies operating in Korea are allowed to practice outbound sales for Korean people (ex. Ctrip, CITS, etc.)

    Source: The Korea International Trade Association

     

     

     

     

     

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