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Heated controversies are currentloy going on regarding the introduction of new legislation by the National Assembly in which Super Super Markets (“SSMs”), small scale regional outlets of large whole sale distributors, are to be strictly regulated. Currently, multiple legislation bills have been submitted for the deliberation in the National Assembly to regulate the SSMs. Although the specific contents of the bills differ, they possess one obvious commonality: all of them are based on the notion that the SSMs are undermining the traditional commercial activity in traditional markets in various regions and the government needs to do something. Small scale businessmen in these regional areas are not able to compete with these SSMs and they are bound to be driven out of the market, which in turn may further bolster the dominance of the SSMs. As the maintenance of overall economic stability in the whold country is one of the major legitimate functions of any government, this concern and effort to address the situation are appreantly legitimate governmental activity of a WTO Member. The governments of WTO Members are indeed allowed to intervene in the private sector to remedy a social or economic problem. The problem is that these bills now introduce the concedpt of “Traditional Commercial Activity Protection Zone” to achieve this goal. This broadly defined concept and direct involvement of the government in protection a group of market participants may lead to a claim of a violation of Korea’s obligations under the WTO Agreements, particularly the General Agreement on Trade in Services (“GATS”). Article 6 of the GATS does allow each Member to adopt and implement “domestic regulation.” Designation of “Traditional Commercial Activity Protection Zone” ostensibly appears to fall under the category of zoning regulation, which is one of the examples of the legitimate domestic regulation. But the issue of whether a particular measure of a Member does fall uunder legitimate domestic regulation depends on whether the measure does satisfy all the requirements laid out in Article 6, rather than whether the Member officially designates the measure as domestic regulation or zoning regulation. Given the fact that (1) the nature of the proposed “Traditional Commercial Activity Protection Zone” is to allow the government to tip the balance in the market in favor of domestic industry in a direct manner, (2) the meaning of the “Traditional Commercial Activityy Protection Zone” is not clear enough, thus vulnerable to the abusive utilization of the government officials in charge, (3) in effect, foreign service providers are to be more negatively affected vis-à-vis domestic service providers, and (4) this measure virtually rises to the situation where a significant portion of the Korean service market is now being excluded from foreign penetration which has not been reasonably expected by other trading partners, this new measure seems to pose the problem of possible violation of various GATS provisions. In order to avoid or minimize the possibility of such violation of the GATS, the bills should be more narrowly tailored with clear definition and guidelines. Some of the safety mechanism in the bills may help Korea avoid the possible complaints of its trading partners in the future. By all means, the impression that the government is trying to intervene in the domestic market in an effort to rescue domestic businessmen from the foreign competition should be avoided.


Heated controversies are currentloy going on regarding the introduction of new legislation by the National Assembly in which Super Super Markets (“SSMs”), small scale regional outlets of large whole sale distributors, are to be strictly regulated. Currently, multiple legislation bills have been submitted for the deliberation in the National Assembly to regulate the SSMs. Although the specific contents of the bills differ, they possess one obvious commonality: all of them are based on the notion that the SSMs are undermining the traditional commercial activity in traditional markets in various regions and the government needs to do something. Small scale businessmen in these regional areas are not able to compete with these SSMs and they are bound to be driven out of the market, which in turn may further bolster the dominance of the SSMs. As the maintenance of overall economic stability in the whold country is one of the major legitimate functions of any government, this concern and effort to address the situation are appreantly legitimate governmental activity of a WTO Member. The governments of WTO Members are indeed allowed to intervene in the private sector to remedy a social or economic problem. The problem is that these bills now introduce the concedpt of “Traditional Commercial Activity Protection Zone” to achieve this goal. This broadly defined concept and direct involvement of the government in protection a group of market participants may lead to a claim of a violation of Korea’s obligations under the WTO Agreements, particularly the General Agreement on Trade in Services (“GATS”). Article 6 of the GATS does allow each Member to adopt and implement “domestic regulation.” Designation of “Traditional Commercial Activity Protection Zone” ostensibly appears to fall under the category of zoning regulation, which is one of the examples of the legitimate domestic regulation. But the issue of whether a particular measure of a Member does fall uunder legitimate domestic regulation depends on whether the measure does satisfy all the requirements laid out in Article 6, rather than whether the Member officially designates the measure as domestic regulation or zoning regulation. Given the fact that (1) the nature of the proposed “Traditional Commercial Activity Protection Zone” is to allow the government to tip the balance in the market in favor of domestic industry in a direct manner, (2) the meaning of the “Traditional Commercial Activityy Protection Zone” is not clear enough, thus vulnerable to the abusive utilization of the government officials in charge, (3) in effect, foreign service providers are to be more negatively affected vis-à-vis domestic service providers, and (4) this measure virtually rises to the situation where a significant portion of the Korean service market is now being excluded from foreign penetration which has not been reasonably expected by other trading partners, this new measure seems to pose the problem of possible violation of various GATS provisions. In order to avoid or minimize the possibility of such violation of the GATS, the bills should be more narrowly tailored with clear definition and guidelines. Some of the safety mechanism in the bills may help Korea avoid the possible complaints of its trading partners in the future. By all means, the impression that the government is trying to intervene in the domestic market in an effort to rescue domestic businessmen from the foreign competition should be avoided.


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