Financial Services in the U.S.-Korea Trade Agreement

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The financial services chapter in the U.S.-South Korea trade agreement provides extensive market access into South Korea for American financial services firms – supplementing and modifying the agreement’s rules on investment and services without undermining the right of U.S. financial regulators to take action to ensure the integrity and stability of financial markets or address a financial crisis. Importantly, South Korea commits to treat U.S. financial institutions comparably to their competitors in the South Korean market.


  • Under this agreement, U.S. and South Korean financial institutions will be able to establish or acquire financial institutions in each other’s markets and may choose whether to establish that institution as a subsidiary or a branch, based on what best fits their business models. The United States and South Korea agreed to some limited exceptions to this commitment, for example, in order to preserve U.S. laws regarding financial services. In every case, all financial institutions must comply with capital requirements, licensing requirements and other regulations set out by financial authorities.

  • The Insurance Information Institute estimated the South Korean insurance market to be $97 billion in 2008, making every one-percent increase in U.S. market share worth $970 million. The agreement sets out a number of significant steps that South Korea has agreed to take toward creating a level playing field for U.S. insurance companies competing with government-owned South Korea Post and cooperative insurance suppliers, such as giving South Korea’s insurance regulatory agency – which also regulates American companies selling insurance in South Korea – a greater role in the supervision of South Korea Post.

  • U.S. and South Korean firms will be able to supply a clearly defined set of financial services into each other’s markets. In banking and securities, this is limited to advisory services, financial information and data processing, and portfolio management services for investment funds. In insurance, these services include marine, aviation and transport insurance; insurance for goods in international transit; reinsurance and retrocession; services necessary to provide insurance, such as actuarial services or claims settlement; and, the ability for an insurance service supplier to serve as an agent or broker for a large commercial risk – such as, insuring a shipping fleet and the goods it carries. Neither the United States nor South Korea makes any commitment to allow the cross-border sale of core banking, securities or insurance services.

  • The agreement requires South Korea to improve transparency in its financial regulation. In line with U.S. practice, South Korea agreed to generally publish proposed financial services regulations in advance and give interested persons a reasonable opportunity to comment on them. In addition, the agreement requires South Korea to be more transparent about how its regulatory regime and application processes work, and what financial activities or services are allowed. The agreement also locks in a recently enacted South Korean policy to provide financial services companies with guidance in writing.

  • The agreement requires South Korea to allow financial institutions to transfer data into and out of its territory, allowing for more efficient data processing.

  • The agreement establishes a framework for the United States and South Korea to discuss issues of concern regarding financial services, and in particular to review future developments in the market for insurance and in competitive conditions affecting the sector.