Subsidization Under the Korea-EU FTA: Broader Scope and New Ways of Enforcement

Korean Journal of EU Studies, Vol. 17, No. 1, August 2012

14 Pages Posted: 11 Oct 2012

See all articles by Simon Baier

Simon Baier

Attorney at Law; Independent

Date Written: June 18, 2012

Abstract

On 1 July 2012 it was one year since the Free Trade Agreement between the Republic of Korea and the European Union took effect. The trade pact dedicates Chapter 11 to competition in a broad sense and disallows and sanctions certain practices and transactions involving goods or services which distort competition and trade between Korea and the EU. Section B of Chapter 11 is exclusively concerned with the issue of subsidization.

This article is an analysis of the FTA’s rules on subsidies and the ways how to enforce these rules. It shows that the FTA outlaws specific forms of subsidization and thereby goes beyond general WTO obligations. The article argues that although unlawful subsidization is in general subject to three alternative ways of enforcement available to both Korea and the EU, dispute settlement under the FTA regime remains restricted to alleged subsidization pursuant to Art 11.11 FTA.

The article also investigates possibilities of private party action against illegal subsidies and concludes that rights under Chapter 11 FTA can be enforced by European companies by means of the European 'Trade Barrier Regulation'. In addition, Korean companies can be entitled to lodge complaints against subsidies to the European Commission where they amount to illegal 'state aid' and affect the trade between EU member states.

Keywords: dispute settlement, Korea-EU FTA, subsidization, subsidy, trade barrier regulation

JEL Classification: K21, K33

Suggested Citation

Baier, Simon, Subsidization Under the Korea-EU FTA: Broader Scope and New Ways of Enforcement (June 18, 2012). Korean Journal of EU Studies, Vol. 17, No. 1, August 2012. Available at SSRN: https://ssrn.com/abstract=2142337

Simon Baier (Contact Author)

Attorney at Law

Wien
Austria

Independent ( email )

No Address Available

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