Yul Kwon:
The free trade agreement between South Korea and the United States has finally taken effect five years after the deal was signed. But disagreements still remain. Critics are focusing on something called Investor-State Dispute, which allows a company in one country to sue the government of another country. Koreans allege that the international arbitration body deciding these cases tends to favor the United States. Here’s MBC with the story.

Reporter:
A free trade agreement between Canada and the US took effect in 1994. Six years later, UPS, an American shipping company, sued the Canadian government based on ISD, or an Investor-State Dispute. UPS sought USD$160 million in damages based on allegations that the Canadian government subsidized Canada Post’s shipping business. The Korea-US free trade agreement also includes an ISD clause, which allows Korean and US companies to file lawsuits against the respective governments. For example, if a Walmart opens in South Korea, regulations are put in place on their hours of business to protect small grocers. Violations of these limitations could be grounds for a lawsuit. Currently, the private sector must contribute funds to redeveloping public schools or governmental institutions. And, unlike other countries, profits from redevelopment are taxable under South Korean law. Under ISD, these laws could be challenged in court, liable under South Korea’s private property laws, which no other country has.

Ko Jong-wan, Real Estate Consultant:
Regulations on real estate are complex and strict compared to other countries, so they can be the subjects for suits based on ISD.

Reporter:
Government-subsidized gas stations and Korea Post insurance also can be the subjects of lawsuits. On these kinds of issues, Australia and Israel are among the 18 countries enjoying an FTA with the US who exclude ISD. In the South Korea-US FTA, there are exceptions in sensitive sectors, like the medical, and security industries, and on laws to stabilize real estate prices. The government is preparing to renegotiate the ISD. Negotiations are set to begin within 90 days after the FTA goes into effect. But there is a dispute between the ruling party and the opposition on whether the ISD should be removed altogether, so the controversy continues.