Permission upon Accession

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the mutual accession to the United Nations seems to imply bilateral as well as international recognition of a “state” status for both parties. Therefore, it is very likely that both parties are treated as independent members in the context of WTO Agreements unless they are substantially reunified. Moreover, considering UN membership, the MFN requirement based on treatment accorded to the other “country” would also be applied.¹⁶⁹

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upon after the never-ending rounds of negotiations and thus, strictly monitored and obeyed without an exception. In other words, if one wants to acquire a special exception, it is very important to earn the permission or agreement of the all others – or at least two-thirds of the majority likely through negotiations.

The year 1994 was the monumental year – the very transition of a half-century-old multilateral trading system from the GATT to the WTO. It was the year when South Korea, the already-GATT contracting party, signed the Uruguay Round, renewing its membership under the new WTO system as well. Now looking back the moment, linking it to the current issue of the inter- Korean trade and its MFN controversy, it is understood that it was the best time for South Korea to officially lead speculation to the world’s level and seek for the permission of all¹⁷² for this very special and unique case.

If South Korea is the one missed the chance under the WTO, Germany in contrast successfully utilized the opportunity under the GATT. In fact, it is understandable why South Korea failed to bring the issue on. As known, it was because South Korea back then had some other ‘more domestic’ issues to harshly negotiate for the permission of international society like the acquisition of the grace period for the opening of the rice market. Thus, the issue of the inter-Korean trade was hardly dealt with or even bring on.¹⁷³

The past German case is very similar to South Korea’s present inter-

172 Ahn, Dukgeun and Jeongjoon James Park (2014) “A Study on Internal Trade between South/North Korea in the WTO System and Gaesung Industrial Complex,” Review on International and Area Studies (Vol. 23, No.4), p. 154. (In Korean)

173 Ibid.

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Korean trade and its MFN controversy. It surely has some future implications for the case. Though Korean peninsula is the only divided nation on the globe now, Germany was in the same situation until its re-unification in 1990. From 1949 to 1990, the modern-day Germany consisted of East and West Germany, two different nations, for 41 years. It was recalled that:

The Federal Republic of Germany (West Germany) and the German Democratic Republic (East Germany) were simultaneously admitted as members to the United Nations on 18 September 1973.¹⁷⁴ Yet, the two German States had maintained a free trade relationship exempting all customs duties. Accordingly, MFN treatment for other GATT contracting parties was a potentially very controversial issue in international trade, particularly for West Germany.¹⁷⁵

During then, inter-German trade, also originally called Innerdeutscher Handel¹⁷⁶, however, was more legitimate and approved by the other GATT contracting parties unlike the case of inter-Korean trade. That could happen by Germans wisely justifying their economic activities under the GATT Article 33, Accession which is stated as follows:¹⁷⁷

174 Ahn, Dukgeun (2005) “Legal Issues for Korea’s “Internal Trade” in the WTO System,” Multilateral and Regional Frameworks for Globalization: WTO and Free Trade Agreements, Korea Development Institute, p. 369: Through the accession of the German Democratic Republic to the Federal Republic of Germany, effective from 3 October 1990, the two German States have united to form one sovereign State, Germany.

175 Ibid.

176 Ibid.: The legal foundation for intra-(inter-)German trade was the Berlin Agreement of 20 September 1951, concluded between the two German States, whereby they committed themselves to not impose any customs duties, or charges having equivalent effect on mutually-traded goods originating in one of the two respective countries. (GATT, C/M/244,16 (dated July 31, 1990)) Customs duties or charges having equivalent effect had thus never been levied on intra-(inter-)German trade – trade in goods originating in West Berlin being regarded as trade in goods originating in the Federal Republic of Germany. (GATT, C/M/244,16 (dated July 31, 1990))

177 Ahn, Dukgeun and Jeongjoon James Park (2014) “A Study on Internal Trade between South/North

57 Article XXXIII

Accession

A government not party to this Agreement, or a government acting on behalf of a separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement, may accede to this Agreement, on its own behalf or on behalf of that territory, on terms to be agreed between such government and the CONTRACTING PARTIES.

Decisions of the CONTRACTING PARTIES under this paragraph shall be taken by a two-thirds majority.¹⁷⁸

Following the Article 33,

at the time of accession to the GATT, West Germany secured agreement of the Contracting Parties that the retention of arrangement for intra-German trade was in conformity with Article I of the General Agreement, and that goods originating in the western sectors of Berlin would be treated as originating in the Federal Republic of Germany.¹⁷⁹

Marrakesh Agreement establishing the World Trade Organization has a very similar provision. Considering the German experience of having inter- German trade permitted, justifying inter-Korean trade under the Article 12 of the Agreement seems very plausible. In the Agreement, it is written as

Korea in the WTO System and Gaesung Industrial Complex,” Review on International and Area Studies (Vol. 23, No.4), p. 154. (In Korean)

178 World Trade Organization, Legal Text, p. 467.

179 Ahn, Dukgeun (2005) “Legal Issues for Korea’s “Internal Trade” in the WTO System,” Multilateral and Regional Frameworks for Globalization: WTO and Free Trade Agreements, Korea Development Institute, p. 369: In addition, it is said in the same paper that “upon establishment of the European Economic Community (hereinafter referred to as the EEC), the parties to the Treaty had stated in the Protocol of 25 March 1957 on German Internal Trade and Connected Problems that the EEC Treaty required no change in the system of intra-(inter-)German trade.” “In the State Treaty of 18 May 1990 between the Federal Republic of Germany and the German Democratic Republic, Article 12(1) provided that intra-(inter-)German trade in goods originating in either of the two German States would continue to be free of customs duties or charges.”

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follows:¹⁸⁰

Article XII Accession

1. Any State or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO. Such accession shall apply to this Agreement and the Multilateral Trade Agreements annexed thereto.

2. Decisions on accession shall be taken by the Ministerial Conference. The Ministerial Conference shall approve the agreement on the terms of accession by a two-thirds majority of the Members of the WTO.

3. Accession to a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.¹⁸¹

It seems to be a thin argument pushing South Korea, already a WTO member, to utilize such provision to persuade other members now. It is not impossible, however, as long as South Korea somehow seeks the way to earn two-thirds of ‘yes.’ But then, like one of the three key principles of the WTO, reciprocity, South Korea must yield some other parts related to their trading system to continuously maintain the favor to North Korea. Assuming that this will be very burdening to the South diplomatically and economically, it is

180 Ahn, Dukgeun and Jeongjoon James Park (2014) “A Study on Internal Trade between South/North Korea in the WTO System and Gaesung Industrial Complex,” Review on International and Area Studies (Vol. 23, No.4), p. 153. (In Korean)

181 World Trade Organization, The Legal Texts, p. 12.

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somewhat unrealistic.¹⁸²

North Korea has a better chance in this way since they are yet to apply for the WTO membership. The qualification and prospect of North Korean accession to the WTO is to be further and more thoroughly discussed in Chapter IV, yet, simply speaking North Korea can clearly explain their special relation with South Korea upon their accession, indicate their intention to maintain the current treatment and ask for the permission on Ministerial conference. It does not necessarily mean North Korea does not have to concede and transform their current economic and trading system. Based upon the philosophy of reciprocity, once they decide to join the WTO, it is taken for granted that a certain degree of resignation is nothing they can avoid. Chapter IV will further discuss the prospects of North Korea’s WTO accession in this regard.