한국법제연구원 KLRI

Ⅰ. Background and purpose
□ Background:
- Vietnam is the largest market among the Southeast Asian countries. In line with this relationship, Korea is a commercial partner as well as a one of the leading foreign investors in Vietnam. Therefore, the leaders of the two countries have agreed to strengthen the bilateral trade relations between the two countries with the goal of achieving a turnover of USD 20 billion by 2015.
- Vietnam and Korea are members of the World Trade Organization (WTO). Both of sides are also bound by the Framework Agreement on the setting up of the free trade area known as the AKFTA.
- In addition to the free trade area established under the AKFTA, Vietnam and Korea also wish to establish a free trade area under the bilateral relationship between the two countries.
□ Purpose of this study:
- To analyze Vietnam’s legal framework and commercial interests at the time of negotiation in VKFTA.
- To analyze international commitments of Vietnam on the issues which can be negotiate in VKFTA .
- To clarify current and future commercial targets as well as the specific contents of the legal issues that are to be proposed in the negotiations on the establishment of the VKFTA.

Ⅱ. Main Contents
A. The background to the Free Trade Area (FTA) between Vietnam and Korea
□ Premises of the VKFTA
- The bilateral relationship between the two countries has been profoundly developed in all political, economic cultural, educational areas. In 2009, both sides agreed to upgrade the current “comprehensive cooperative partnership” to a “strategic co-operative partnership”.
- In terms of commodity trade, Korea is the fourth largest trade partner of Vietnam. Meanwhile, Vietnam is ranked as the tenth export market of Korea.
- Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea (AKFTA) has laid an important institutional and technical foundation for further trade liberalization with the Vietnam ? Korea Free Trade Agreement (VKFTA).
□ Vietnam ’s position on regionalization
 According to the drafting the Vietnam’s FTA policy (the principles and objectives for FTA negotiation in the period up until 2020), the FTA negotiation will have to meet the following criteria:
- To comply with the medium- and long-term strategy of socio?economic development;
- To promote the growth of foreign trade;
- To create the momentum for domestic production;
- To facilitate the process of restructuring the economy as an industrialized, modernized economy based on sustainable development.
B. The legal system and trade policies of Korea
□ Overview of the legislation and policies on trade in Korea
□ Overview of legislations and polices on investment in Korea
□ Evaluating the potential of trade liberalization
C. Legal Issues and Negotiating Objectives in the VKFTA - from Vietnam’s perspective
□ Trade in Goods
- Vietnam and Korea should focus discussion around the level of reduction of tariff lines of special interest. It must be ensured that the final minimum tax cut committed to is not less favorable than the rate for other partners to the signed FTA. Vietnam should also negotiate quotas for certain agricultural and aquatic products which are now managed by tariff rate quotas in Korea.
- Vietnam has made significant progress in eliminating non-tariff barriers (NTBs) under the WTO, AKFTA and the other agreements. As a result, Vietnam has eliminated and has committed to not reintroducing any quantitative restrictions on imports or other non-tariff measures. While a full list of specific NTBs is difficult to make, the practical way for VKFTA then is to establish some kind of NTB-related dispute settlement mechanism.
□ Trade Remedies
- According to AKFTA, it only stipulates detailed provisions on the safeguard measure. Thus, the anti?dumping measure and the anti?subsidy measure will be applied between the countries according to the respective agreements of the WTO.
- Under Agreement on comprehensive economic cooperation between the governments of Vietnam and Japan (VJEPA), Vietnam and Japan can apply safeguard measures.
- Korea used to apply such trade remedies to Vietnamese products. On the Vietnamese side, although it has promulgated regulations on trade remedies, the application of these remedies is still limited. Arguably, the actual use of trade remedies by Vietnam is too small; besides, imported goods from Vietnam easily fall into the commodity group subject to safeguard measures such as agricultural and aquatic products.
- Thus, the parties to the VKFTA negotiation can select only one trade remedy measure as a safeguard measure with similar contents stipulated in the Agreement on Trade in Goods between ASEAN and Korea (AKTIG).
□ Trade in services
- Upon joining the WTO, Vietnam committed to the open services market based on legal provisions which are classified into the following three groups:
  The Schedule of Specific Commitments on Trade in Services;
  The commitment to transparency and nondiscrimination; and
  GATS.
- The ASEAN - Korea Agreement on Trade in Services (AKTIS) has laid the groundwork for further opening the services market to the service providers of the ASEAN countries and Korea. According to AKTIS, the parties including Korea and Vietnam will negotiate the list of opening markets, the additional commitments on issues such as qualification, standards and licenses related to the services under the list of commitments.
- Both sides will exchange requests/offers concerning service sectors of interest to them. Korea could be more active than Vietnam in service negotiation as Korea has a more competitive service industry.
□ The movement of natural persons
- Concerning the issue of the presence of natural persons, Vietnam has made some commitments, such as the WTO and VJEPA commitments.
- Vietnam may be interested in the issue of movement of natural persons as this may help her to promote the export of Vietnamese laborers to the Korean market.
□ Intellectual Property
- Vietnam and Korea are both members of the WTO, the World Intellectual Property Organization (WIPO) and the International Union for the Protection of New Varieties of Plants (UPOV); thus, the policies on the protection of intellectual property rights (IP rights) of the two countries under multilateral commitments are similar.
- Vietnam is also a member of other important multilateral international treaties of the WIPO system in the field of intellectual property.
- The current IP laws of Vietnam have been fully converted from the provisions of the international treaties. In the field of protection of intellectual property rights, the principles of national treatment and MFN will be applied.
- The parties’ negotiations should depend more on the protection of the objects of intellectual property rights - such as inventions (i.e. exploitation and evaluation of inventions, invention data exchange), the layout designs of integrated circuits, and cooperation in exploiting some objects of copyright and the related rights including rights to cinematographic works, performers’ rights, sound and image recording organization rights, etc. relating to the increasing rate of cultural exchange activities between Vietnam and Korea.
□ Investment
- As Vietnam and Korea are members of the WTO, they have to comply with the Agreement on Trade Related Investment Measures (TRIMs) and the Commitments on Services Market Opening (relating to investment).
- Vietnam and Korea joined the AKFTA and are bound by the Agreement on Investment under the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Member Countries of the ASEAN nations and the Republic of Korea.
- The two sides also signed the Vietnam-Korea Agreement for the promotion and protection of investments in 2003 (effective as of June 5, 2004). Being bound by such legal ties, the negotiation contents will conform to and may be at a higher level than what the parties have committed to foreign investment.

Ⅲ. Expected Effect
□ This study clarified the legal analyses of VKFTA - from Vietnam’s perspective.
□ From the analyses laid out in the content of the study, the following factor may be taken into account regarding the launch of the FTA negotiations:
- Currently, Vietnam and Korea already have a reasonably suitable legal background for trade and investment, including legal documents within the bilateral and/or ASEAN and partners’ frameworks. A high proportion of trade in goods, services and investment has been liberalized. So, both sides may set higher standards under a new trade agreement that corresponds to their declaration of a strategic partnership.
- The VKFTA should be comprehensive. It may cover trade in goods, services, investment , intellectual property and labor.

Chapter I. The background to the FTA betweenVietnam and Korea 21
1.1. Premises of the Vietnam - Korea FTA 21
1.2. Korea’s position on regionalization 24
1.3. Vietnam’s position on regionalization 33

Chapter Ⅱ. The legal system and trade policies of Korea 41
2.1. Overview of the legislation and policies on trade in Korea 41
2.2. Overview of legislations and polices on investment in Korea 53
2.3. Evaluating the potential of trade liberalization 63

Chapter Ⅲ. Legal Issues and Negotiating Objectives in the VKFTA from Vietnam’s perspective 65
3.1. Trade in Goods 65
3.2. Trade Remedies 77
3.3 Trade in services 80
3.4. The movement of natural persons 87
3.5. Intellectual Property 96
3.6. Investment 101

Conclusion 113

References 119