【Research Center for the Legal System of Intellectual Property】

Activities

Free Trade Agreement (FTA) and Intellectual Property Right

Research Associate Yeyoung Lea CHANG

On April 2, 2007, South Korea and the United States have agreed on the negotiation of the bilateral free trade agreement. The negotiation had been conducted since last February and finally the South Korea - U.S. FTA was reached between two nations.

This comprehensive agreement includes various trade sectors such as products, trade remedies, investments, services, competition, intellectual property rights, government procurement, labor, and environmental issues. It would mark the world's largest FTA since the North American Free-Trade Agreement (NAFTA). In addition, the economy size of South Korea and the U.S. is the world's third largest after EU and NAFTA if two economies are combined (about $14.1 trillion for Korea + U.S., about $15.1 trillion for NAFTA (US +Canada + Mexico), about $15.3 trillion for EU, based on 2006 GDP).

The South Korea - U.S. FTA is expected to have positive effect on overall economy. For example, it benefits Korean companies entering into the U.S. market, one of the world's largest economies as well as increases foreign investments by proving higher reliability of the market. However, on the other hand, the final agreement includes unequal clauses due to power balance of the two nations. For some clauses, there is a growing chorus of opposition fearing some of the clauses might jeopardize domestic industries.

Especially the issue is the clause of the FTA on intellectual property right matter.

This agreement provides for the extension of patent terms to compensate for delays in granting the original patent if the registration of the patent is delayed by more than three years. It also provides the system to investigate whether generic drugs infringe patents when they are approved to be marketed. There is fear that this would have a negative impact on Korean domestic pharmaceutical industry and also affect Korean public policy for public health.

For the copyrighted works, the two nations agreed to extend terms of protection for the copyrighted works from fifty years after the death of the author to seventy years ( with two-year transition period after the FTA is enacted). It is expected that additional economic burdens on Korea will be over 200 billion won (about 25.6 billion yen) because of the acceptance of the agreement to extend terms of protection, which is also under criticism in the United States.

In addition, the agreement adopted the system of statutory damages to limit the maximum and minimum amount of compensation.

Thus, in the area of intellectual property rights, Korea accepted almost of all requests from the U.S. except several issues in dispute. Of course, a negotiation must be eventually reached after each party considers each benefit. However, is it just my imagination that the agreement seems to be met through the use of economically superior position?

Considering some other examples of the nations such as Australia, Bahrain, and Singapore that concluded the FTA with the U.S., the area of intellectual property rights was the U.S.'s core request from the beginning. The U.S. captures the world's market in the entertainment industry and pharmaceutical industry. It seems that the U.S. makes use of free trade agreements by its vast economic power as a weapon when it has a difficulty to carry out its demand through international agreements. It seems that intellectual property rights are now beyond the original mission and are used as a tool for diplomatic policy by a powerful nation intending to maintain and expand its economic power.