A Research On The Legal Issues Of Outward Processing Provisions In South Korea FTAs

Outward processing provisions widely exist in the Korean FTAs,and the majority of Korean FTAs contain outward processing provisions or provisions agreed to negotiate about outward processing provisions in future.The emergence of foreign processing terms have triggered changes in the rules of origin,outward processing provisions in South Korea FTAs represent the weakening of the principle of territoriality,China is also in its impact.With the signing of China-South Korea FTA,China FTA also appeared outward processing provisions.The emergence and development of outward processing provisions also brings a series of legal issues.This paper analyzes the reasons and the course of the development of outward processing provisions and legal issues related,as well as the impact on China,by studying the outward processing provisions in the South Korean FTAs.The main contents of this paper are as follows: the origin and development of the overseas processing clause of the FTA in Korea,the status of the text,the change of the rules of origin,the violation of the WTO law,the application of the dispute settlement procedure,and the impact on China.This paper mainly uses the method of literature analysis,comparative analysis and case analysis to compare and analyze the outward processing provisions by comparing and analyzing the FTA texts and the FTA texts in China,and the case of WTO dispute settlement mechanism.The legal issues brought about by the terms and the impact on China.In addition to the introduction,this paper consists of the following five parts:The first part is an overview of outward processing provisions.First,to analyze the origin and development of outward processing provisions of South Korea,for South Korea,outward processing provisions have been a basic strategy to conclude a free trade agreement,its origin and development are closely related to the establishment of Kaesong Industrial Park;Then this part finished the text analysis and classification of outward processing provisions in South Korean FTAs.South Korea FTA outward processing provisions generally include two parts,the first part of the provisions provide the exemption from the application of territoriality principle,the second part is the conditions for particular goods listed to acquire the status of state of origin of the state party based on the value-added test.The second part discusses the changes in the rules of origin triggered by outward processing provisions.The outward processing provisions has its rationality on the one hand,which can,to a certain extent,reduce the trade distortions caused by the principle in territoriality.The appearance of the outward processing provisions also represents that the rules of origin are changing and the exception of the territorial principle makes the rules of origin softened in certain extent.The third part mainly discusses whether the outward processing provisions of the FTA in Korea violates the WTO law and whether it can apply the WTO dispute settlement procedure.Through the analysis of the legality of the outward processing provisions,it can be found that the outward processing provisions is likely to violate the WTO law.The MFN preferential treatment in the Tariff and Trade Agreement,and the third country is likely to sue Korea's FTA contracting partner by WTO dispute settlement procedure.The dispute arising from the outward processing provisions between South Korea and its FTA contracting parties may be resolved either through the bilateral dispute settlement procedure in the FTA or by resorting to the WTO dispute settlement procedure,but the foreign processing clause is not included in the WTO of the non-preferential rules of origin is applicable to the WTO dispute settlement process will also be controversial,there is also a point need to note that in the WTO practice,even in the FTA ruled out the WTO dispute settlement procedures,WTO dispute procedures still possibly have jurisdiction over the matter in question.The fourth part mainly discusses the influence of outward processing provisions on China.For China,outward processing provisions first appear in China-South Korea FTA,which also is the only FTA containing outward processing provisions for China.outward processing provisions can contribute to China's overseas processing trade.In the future,whether the increase in the number of FTA contracting countries with outward processing provisions or the increase in the number of outward processing areas,there is likely to be a further development for the outward processing provisions of China.The fifth part is a summary of the full text of the views of outward processing provisions,outward processing provisions break the principle in territoriality,it's rational in certain extent,but it should be noted that according to the existing WTO law,it is likely to violate the WTO law.A third country is possible to resort to the WTO dispute settlement procedures,to prosecute the Korean FTA contract partners in violation of the GATT under the MFN principle.China-South Korea FTA also contain outward processing provisions,China should actively use the outward processing provisions to develop foreign processing trade,at the same time,China also need pay attention to avoid the legal risks that may arise from outward processing provisions.