The EU-Korea Free Trade Agreement
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- Carmel Gregory
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1 The EU- Free Trade Agreement Services
2 Structure of the presentation 1. Main principles of the Services Chapter 2. Introduction to the Modes of Supply 3. Introduction to the n list of commitments 4. A closer look at the n commitments 5. Legal services Phasing in of commitments
3 1. Main principles of the Services Chapter
4 Market access Sectors listed in the n list of commitments are subject to limitations therein 4 modes of supply Deals with existing and possible future quantitative limitations - the number of service suppliers - The value of service transactions or assets - the number of operations or quantity of output - the number of natural persons supplying a service - the type of legal entity or joint venture - the participation of foreign capital No backtracking Main idea Legal certainty
5 National treatment Same treatment as to own like services and service suppliers Sectors listed in the n list of commitments subject to limitations therein
6 Most favoured nation (MFN) principle The EU and have to accord immediately to services and service suppliers of each other treatment no less favourable than that it accords to like services and service suppliers of any other country Each party may maintain limited measures listed in and meeting the conditions of the Annex on MFN Exemptions.
7 2. Introduction to the Modes of supply
8 Mode 1: Cross-border supply Service Supplier supplies service supplies service from territory of from territory of one country one country Service Consumer receives service receives service in territory of any in territory of any other country other country
9 Examples of cross-border trade in services E-commerce in the narrow sense - whatever the delivery method: retail over internet, teleshops, mail-order E-services and e- commerce in wider sense: e-banking, distance training etc, advice over media, delivery over media, cloud-services
10 Examples of cross-border trade in services Outsourcing for services where presence is not necessary: back-office, programming, phone answering services, research and testing etc International transport New services: e-health including robot surgery, satellite monitoring, cross-border audio/digital guides
11 Examples of barriers for crossborder trade in services To industry: Prohibition to provide cross-border services Requirement to establish Authorisation requirements Recognition of service providers or service outcome Language and info requirements To consumers: Obligations to use locally established providers Restrictions to payments Restrictions to delivery Restrictions to tax deductibility
12 Mode 2: Consumption abroad Service Supplier Service Consumer receives receives service in the territory of supplier service in the territory of supplier Service Consumer or property of the consumer
13 Examples of consumption abroad Physical presence in the second country: Tourism and service consumption while travelling Medical tourism Students abroad Border-shopping Does not cover limitations to consumers of other Members, only own consumers Does not include downloading mode 1
14 Examples of barriers for consumption abroad of services To industry: Prohibition/restrictions to provide services to non-resident consumers To consumers: Obligations to use locally established providers Restrictions to payments Restrictions to delivery Restrictions to tax deductibility
15 Mode 3: Commercial presence Service Supplier Service Supplier establishes a commercial presence in the territory of another country Service Consumer
16 Examples of commercial presence Investment - Establishing a new company - Establishing a subsidiary - Establishing a direct branch, - Establishing a representative office - Acquisitions of existing companies - Joint-ventures and other cooperative projects with presence
17 Examples of barriers to foreign invested companies Activity (sectoral) restrictions Ownership restrictions Capital limitations Geographical restrictions Restrictions on profit usability Limitations for management and staff Technology transfer requirements Authorisation requirements
18 Mode 4: Movement of natural persons Service Consumer Service supplied through temporary presence of posted natural persons of one country in the territory of another country based on services contract
19 Mode 4 categories Does not cover immigration and labour movement (GATS annex on mode 4) Self-employed Independant professionals Business service sellers Contractual service suppliers Contractual relationship for service provision with local persons Established company Business visitors Intracorporate transferees Graduate trainees Subsidiary, branch or representative office
20 Examples of barriers Mode 4 Restrictions to service providers Establishment requirements, local representative requirements Nationality and residence requirements Economic needs tests, labour market tests Minimum wage etc related requirements Qualification requirements, licensing, registration and documentation requirements Entry restrictions (visa, work permit) Restrictions to consumers Prohibitions/restrictions to use non-established service providers Tax related barriers
21 Right to regulate Domestic regulation vs measures subject to trade liberalization Right to regulate - introduce non-discriminatory regulation to enforce domestic policy objectives Examples of public policy objectives: Equitable access, regardless of income or location, to a service Consumer protection, safety Job creation in disadvantaged regions or labour market integration of disadvantaged persons Reduction of environmental impacts and other externalities Macroeconomic stability Avoidance of market dominance and anti-competitive conduct Avoidance of tax evasion, fraud, etc.
22 3. Introduction to the n list of commitments
23 List of specific commitments Principle of positive listing Horizontal and sectoral limitations Sets out conditions and degree of market access and national treatment (limitations) - gradual and partial liberalisation possible
24 Some service sectors with scheduled commitments by Architect. Legal Publishing Security Real estate Consulting Accounting Courier Veterinary Marketing Satellite Taxation Computer Testing Engineering Environment R&D Education Hotel Insurance Shipping Financial Rail News Travel
25 Level of commitments Full commitment Partial commitment None, i.e. no limitations except those in the horizontal limitations None, except, i.e. exact limitation on what is NOT allowed. All else is allowed Unbound for i.e. exact limitation on what is NOT allowed. All else is allowed Unbound, except i.e. what IS allowed. No commitment Sector not listed Unbound no binding
26 4. A closer look at the n commitments
27 A closer look at the n commitments The most ambitious services ever concluded by the EU Will significantly improve s current WTO-GATS commitments and its DDA offer in the ongoing negotiations. Additionally covers the liberalisation of investment, both in most of the services and most of the non-services sectors. The scope of the includes diverse services sectors as transport, telecommunications, finance, legal services, environmental services and construction. Audiovisual services are excluded from the chapter.
28 A closer look at the n commitments Telecommunications Ownership restrictions Satellite services Environmental services Non-industrial waste waters Shipping firms Right of establishment Access to facilities
29 A closer look at the n commitments Construction services Financial services International express delivery services Auxiliary air transport services Law services
30 5. Legal services Phasing in of commitments
31 Legal services phasing in of commitments Phase 1: entry into force Law firms of the EU can establish representative offices (Foreign Legal Consultant offices or FLC offices) in Lawyers licensed in the Member States of the EU can provide legal advisory services regarding i) the jurisdiction in which they are licensed and ii) public international law
32 Legal services phasing in of commitments Phase 2: two years after entry into force will have to allow cooperative agreements with n law firms in order to (i) be able to jointly deal with cases in which domestic and foreign legal issues are mixed and (ii) to share profits derived from such cases.
33 Legal services phasing in of commitments Phase 3: five years after entry into force will allow law firms of the EU to establish joint venture firms with n law firms. * may impose restrictions on the proportion of voting shares or equity interests of the joint venture firms.
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