Korea-Japan to Treat Investors From the Other Country Same as Local Business

Korea and Japan concluded the bilateral investment treaty (BIT) on Saturday, which includes the equal treatment of the investors from the other country. The treaty was concluded in 3 years after the two governments agreed to push forward with the treaty in November 1998. The treaty is anticipated to become effective during the first half of next year after the draft goes through final adjustment and the ratification of the National Assembly.

The two governments agreed on the draft at the plenary session of the ninth bilateral negotiation in Tokyo on Saturday. This will become Korea`s first investment accord as well as regional economic accord with another country.

The BIT will not discriminate against investors from the other country by treating them the same as local businesses from the beginning of the investment. Accordingly, the countries will form regulations that will guarantee protection of the foreign investors` rights both during peace and during legal conflicts.

In order to guarantee flexible investment activities of foreign investors, the two countries decided to outlaw imposition of obligations, such as exporting duties, using parts made by domestic companies, and transferring technologies.

According to the agreement, investors, managers of the investing companies, and technicians will have the right to enter and stay in other country temporarily.

Along with this, the two countries agreed to guarantee the domestic and oversea remittance of the principle for the foreigners` investment and the loss following this. According to the agreement, in the case that the host government has to nationalize or expropriate an investor`s property for public goals, the country will have to pay compensation according to international law standards.

However, the two countries agreed to exempt the following sectors from the open door investment policy: screen quota, national defense, media (newspaper and broadcasting), fisheries, and some agricultural industries like grain and barley farming and cattle breeding.

With regard to labor, which has remained the difficult issue throughout the talks, the two countries decided to include a declaration draft in the BIT. Regarding the financial area, the two countries also decided not to subject the investment related disputes, such as temporary restriction of remittance (safe guard) during the foreign exchange crisis and measures to maintain the balance of financial market, to the procedures that are applied to solve the international dispute.

The government expected that the BIT would bring investment from Japan, activate the Korean companies` entering in Japan, and improve economic cooperation in the East Asia by impacting positively on the Korea-Japan free trade agreement (FTA), which is currently discussed in private level.

The treaty is constituted of 22 articles, an agreed record of proceedings which clarifies the interpretation of the BIT, and the attachment that states the sectors which are exempted from foreign investment, as well as measures.

Young-Ee Lee ysshin@donga.com · Yeon-Su Sin yes202@donga.com