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USTR Requests First-Ever Consultations Under the U.S.-Korea Free Trade Agreement (KORUS)

03/15/2019

Washington, DC – The Office of the U.S. Trade Representative (USTR) today requested the first ever consultations with the Republic of Korea under the chapter on Competition-Related Matters (Chapter 16) of the United States-Republic of Korea Free Trade Agreement (KORUS).  Through these consultations, the United States will attempt to resolve concerns regarding procedures in competition hearings held by the Korea Fair Trade Commission (KFTC).  Some of these KFTC hearings have denied U.S. parties certain rights, including the opportunity to review and rebut the evidence against them.  Denial of this fundamental right undermines their ability to defend themselves.

At issue is Korea’s non-compliance with KORUS Article 16.1.3, which states, in relevant part, that a party in an administrative hearing related to competition must “have a reasonable opportunity to... review and rebut the evidence and any other collected information on which the determination may be based.”  Following extensive efforts to resolve this concern, USTR is requesting consultations at this time because recently drafted amendments to Korea’s “Monopoly Regulations and Fair Trade Act” fail to address U.S. concerns that KFTC hearings continue to deny U.S. firms due process rights under the KORUS agreement that are necessary to secure a fair competition hearing in Korea.

Background:

The United States has worked intensively with Korea to address issues related to opaque KFTC hearing procedures regarding a respondent’s lack of access to evidence, including evidence used to bring allegations against it.  USTR held multiple meetings with Korean counterparts, exchanged letters with them, and sent formal comments conveying the United States’ recommendations to Korea.  Although Korea received the United States’ concerns and recommendations, the Korean Government’s proposed changes to access to evidence procedures in KFTC hearings, reflected in draft amendments to the “Monopoly Regulations and Fair Trade Act,” do not rectify the problem, address the United States’ concerns, or comply with KORUS obligations.  USTR seeks changes from Korea necessary to meet the KORUS obligation while protecting business confidential information and other appropriate materials from disclosure to third parties.

Click here to read the KORUS Competition Chapter.

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