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Agreement between the Government of Canada and the Government of the Republic of Korea on the Procurement of Telecommunications Equipment [2001] CATSer 22 (1 September 2001)

E103267 - CTS 2001 No. 24

AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF KOREA ON THE PROCUREMENT OF TELECOMMUNICATIONS EQUIPMENT

THE GOVERNMENT OF CANADA (hereinafter “Canada”), of the one part, and THE GOVERNMENT OF THE REPUBLIC OF KOREA (hereinafter “Korea”), of the other part (hereinafter collectively referred to as the “Parties” and singularly as a “Party”),

RECOGNIZING the vital role played by telecommunications services and infrastructures in promoting and sustaining economic growth;

REAFFIRMING the Parties’ obligations under the World Trade Organization (“WTO”) agreements, including the WTO Agreement on Government Procurement (the “AGP”), the Ministerial Declaration on Trade in Information Technology Products (the “ITA”) and the WTO Fourth Protocol to the General Agreement on Trade in Services (the “GATS”), also referred to as the WTO Agreement on Basic Telecommunications (“the GBT Agreement”);

CONSIDERING the Parties’ commitment to liberalize their respective telecommunications equipment, government procurement and basic telecommunications service markets to foreign competition in accordance with GATT 1994, the AGP and the GBT Agreement, respectively;

UNDERSTANDING that the increased competition resulting from the implementation of these WTO agreements by Canada and Korea will encourage telecommunications equipment manufacturers and service providers to compete vigorously with one another and to offer the best goods and services for the most competitive prices possible;

SEEKING to extend reciprocal, transparent and non-discriminatory access for the Parties’ telecommunications equipment manufacturers and service providers to procurement by entities covered by this Agreement; and

AFFIRMING that the competitiveness of suppliers and service providers, not government intervention, should be the principal determinant of industrial success and international trade;

HAVE AGREED as follows:

ARTICLE 1

Objective, Definitions and Scope of the Agreement

1. The purpose of this Agreement is to secure reciprocal, transparent and non-discriminatory access for the Parties’ suppliers and service providers to the procurement of goods and incidental services by the entities listed in Annex 1(a) and 1(b) (hereinafter collectively referred to as the “entities” and singularly as an “entity”).

2. For the purpose of this Agreement:

(a) “goods” means:

(i) telecommunications (wireline and wireless) equipment and materials originating in the territories of the Parties that are components of telecommunications networks, including switching, transmission, access and terminal equipment, or that are used in the development, configuration, installation, operation, maintenance, repair and management of telecommunications networks; and

(ii) research and development equipment, testing and measurement equipment and training equipment that are included in a tender for the procurement of telecommunications equipment and materials covered by this Agreement.

(b) “incidental service” means any service that is included in a tender for the procurement of a good covered by this Agreement.

(c) “territory” means:

(i) with respect to Korea, the territory of Korea as well as those maritime areas, including the seabed and subsoil adjacent to the outer limit of the territorial areas over which Korea exercises, in accordance with international law, sovereign rights or jurisdiction for the purpose of exploration and exploitation of natural resources of such areas.

(ii) with respect to Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international law and its domestic laws, Canada may exercise rights with respect to the seabed and subsoil and their natural resources;

3. This Agreement applies to any laws, regulations, procedures or practices of the Parties relating to procurement:

(a) by entities listed in Annex 1(a) in the case of Korea and Annex 1(b) in the case of Canada;

(b) of goods and incidental services; and

(c) where the value of the contract to be awarded is a minimum of 130,000 SDR (Special Drawing Rights).

4. The value of SDR in Korean Won and Canadian Dollars shall be fixed in accordance with the procedures established by the WTO Committee on Government Procurement and specifically the Decision on Procedural Matters under the AGP (1994) Modalities for Notifying Threshold Figures in National Currencies (GPA/1 - Annex 3).

5. This Agreement does not apply to the following contracts:

(a) procurement of goods and services with a view to commercial resale or use in the production of goods for commercial sale;

(b) for Korea:

- single tendering procurement involving set-asides for small and medium-sized businesses;

- procurement of satellites pursuant to Korea’s Aviation and Space Industry Development Promotion Law for a five-year period commencing on January 1, 1997 on which Korea’s accession to the AGP became effective; and

(c) for Canada:

- procurement in respect of set-asides for small and minority businesses;

- procurement for the Departments of Transport, Fisheries and Oceans, and Communications respecting Federal Supply Classifications 36, 70 and 74.

ARTICLE 2

Market Access and Principles of Non-discrimination

With respect to the procurement of goods and incidental services by the entities, each Party shall provide to the goods and incidental services of the other Party, and to the suppliers of such goods and incidental services of the other Party, treatment no less favourable than that accorded to its own goods, incidental services and suppliers, and the goods, incidental services and suppliers of any third country.

ARTICLE 3

Procurement Procedures

1. Subject to paragraph 2 of this Article, the Parties agree, for the entities’ procurement covered by this Agreement, to incorporate into this Agreement by reference the following articles of the AGP, as amended from time to time, mutatis mutandis, except to the extent that the procedures and practices contained therein are modified by this Agreement:

Article II Valuation of Contracts
Article IV Rules of Origin
Article VI Technical Specifications
Article VII Tendering Procedures
Article VIII Qualification of Suppliers
Article IX Invitation to Participate Regarding Intended Procurement
Article X Selection Procedures
Article XI Time-limits for Tendering and Delivery
Article XII Tender Documentation
Article XIII Submission, Receipt and Opening of Tenders and awarding of Contracts
Article XIV Negotiation
Article XV Limited Tendering
Article XVII Transparency
Article XVIII Information and Review as Regards Obligations of Entities
Article XIX Information and Review as Regards Obligations of Parties
Article XXIII Exceptions to the Agreement

2. The Parties agree that, for the purposes of AGP Article IX and XVIII incorporated by reference into this Agreement, notice shall be published in the appropriate publication listed in Annex 3 of this Agreement.

3. In the qualification and selection of suppliers, goods and incidental services, evaluation of bids and award of contracts:

(a) the entities shall not, either explicitly or implicitly, impose, seek or consider offsets ⁽¹⁾; and

(b) the private sector telecommunications operators in the territories of the Parties shall not be required or encouraged by the Parties, explicitly or implicitly, to impose, seek or consider offsets.

4. A Party or an entity of a Party may limit suppliers who qualify to those that can demonstrate that accepting their bid will not result in incompatibility, technical difficulty or disproportionately high costs in the operation and maintenance of the network of the Party or the entity of the Party. Such a limitation of suppliers may not be applied to avoid maximum possible competition or to constitute a means of discriminating against suppliers of the other Party or protecting domestic suppliers.

ARTICLE 4

Bid Challenge Procedures

With respect to procurement by the entities, the Parties shall provide non-discriminatory, timely, transparent and effective procedures enabling suppliers and service providers to challenge alleged breaches of this Agreement arising in the context of procurement in which they have, or have had, an interest. Consultation and challenge procedures involving the entities and bodies reviewing bid challenges shall include, as a minimum, those procedures set out in Article XX of the AGP, mutatis mutandis. The entities shall normally follow the recommendations of their respective review bodies.

ARTICLE 5

Consultations and Dispute Settlement

1. Unless otherwise mutually agreed, the Parties shall meet no less than once a year to discuss any matter affecting the operation and implementation of this Agreement, including a review of the Annexes to this Agreement, with a view to updating the Annexes to reflect changes in the Parties’ telecommunications services and equipment markets, as well as any other issue relating to this Agreement.

2. Where necessary, either Party may request a consultation to discuss any aspect of this Agreement. When a Party requests consultations on any matter affecting the operation of this Agreement, such consultations shall be held not later than 30 days following the date on which the request is received, unless otherwise mutually agreed by the Parties.

3. To the extent necessary to ensure effective implementation of this Agreement, the Parties shall, upon the request of either Party, exchange information on legislation, other measures or imminent changes affecting or likely to affect procurement policies or practices of entities covered by this Agreement.

4. Each Party shall give sympathetic consideration to the concern of the other Party and work to reach a mutually acceptable resolution of any issue arising in connection with the interpretation or application of this Agreement.

5. If either Party considers that any benefit accruing to it, directly or indirectly, under this Agreement is being nullified or impaired, it may request consultations under this Article.

6. In the event of a dispute under this Agreement, the Parties shall endeavour to resolve the dispute by means of consultations within 90 days of the date of the initial request for consultations. The consultation period can be extended upon the mutual agreement of the Parties.

7. If a dispute is not resolved through consultations between the Parties within 90 days of the date of the initial request for consultations or such other period of time as may be mutually agreed upon, either Party may initiate an arbitration proceeding. The arbitration proceeding shall be initiated and governed according to the Arbitration Procedures set forth in Annex 2 to this Agreement.

ARTICLE 6

Application of Other Agreements

The Parties affirm their rights and obligations pursuant to the WTO, the AGP and other multilateral agreements negotiated under the auspices of the WTO. In the event of any inconsistency between this Agreement and any agreement between the Parties other than those multilateral agreements mentioned above, this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement or agreed by the Parties in writing.

ARTICLE 7

Final Provisions

1. This Agreement shall enter into force on the first day of the month following the date on which the Parties have notified each other that their implementation process has been completed.

2. The Parties may agree on any modification of, or addition to, this Agreement, including the updating of the list of the entities of the Parties due to, among other things, a change in the legal status of an entity, by mutual consent.

3. When so agreed and approved in accordance with the applicable legal procedure of each Party, a modification or addition shall constitute an integral part of this Agreement.

4. If a Party wishes to terminate this Agreement, it shall notify the other Party in writing of such intention, and the termination of this Agreement will take effect 180 days after the date on which the notification is received.

5. The Annexes attached to this Agreement shall form an integral part of this Agreement.

6 The provisions of this Agreement shall apply to the entities’ successors.

IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed this Agreement.

DONE in duplicate at Ottawa, this 5th day of July 1999, in the English, French and Korean languages, each text being equally authentic.

Sergio Marchi

FOR THE GOVERNMENT OF CANADA

Hong Soon-young

FOR THE GOVERNMENT OF THE REPUBLIC OF KOREA

ANNEX 1

Entity Coverage

ANNEX 1 a) Korea

Entities which procure in accordance with the provisions of this Agreement

Korea Telecom (KT)

ANNEX 1 b) Canada

Entities which procure in accordance with the provisions of this Agreement

Department of Agriculture
Department of Communications
Department of Consumer and Corporate Affairs
Department of Employment and Immigration
Immigration and Refugee Board
Employment and Immigration Commission
Department of Energy, Mines and Resources
Atomic Energy Control Board
National Energy Board (on its own account)
Department of the Environment
Department of External Affairs
Canadian International Development Agency (on its own account)
Department of Finance
Office of the Superintendent of Financial Institutions
Canadian International Trade Tribunal
Municipal Development and Loan Board
Department of Fisheries and Oceans
Department of Forestry
Department of Indian Affairs and Northern Development
Department of Industry, Science and Technology
Science Council of Canada
National Research Council of Canada
Natural Sciences and Engineering Research Council of Canada
Department of Justice
Canadian Human Rights Commission
Statute Revision Commission
Supreme Court of Canada
Department of Labour
Canada Labour Relations Board
Department of National Health and Welfare
Medical Research Council
Department of National Revenue
Department of Public Works
Department of Secretary of State of Canada
Social Science and Humanities Research Council
Office of the Coordinator, Status of Women
Public Service Commission
Department of the Solicitor General
Correctional Service of Canada
National Parole Board
Department of Supply and Services (on its own account)
Canadian General Standards Board
Department of Transport (except the Canadian Coast Guard)
Treasury Board Secretariat and the Office of the Controller General
Department of Veterans Affairs
Veterans Land Administration
Department of Western Economic Diversification (on its own account)
Atlantic Canada Opportunities Agency (on its own account)
Auditor General of Canada
Federal Office of Regional Development (Quebec) (on its own account)
Canadian Centre for Management Development
Canadian Radio-Television and Telecommunications Commission (on its own account)
Canadian Sentencing Commission
Civil Aviation Tribunal
Commissioner for Federal Judicial Affairs
Competition Tribunal Registry
Copyright Board
Emergency Preparedness Canada
Federal Court of Canada
Grain Transportation Agency (on its own account)
Hazardous Materials Information Review Commission
Information and Privacy Commissioners
Investment Canada
Department of Multiculturalism and Citizenship
The National Archives of Canada
National Farm Products Marketing Council
The National Library
National Transportation Agency (on its own account)
Northern Pipeline Agency (on its own account)
Patented Medicine Prices Review Board
Petroleum Monitoring Agency
Privy Council Office
Canadian Intergovernmental Conference Secretariat
Commissioner of Official Languages
Public Service Staff Relations Board
Office of the Secretary to the Governor General
Office of the Chief Electoral Officer
Federal Provincial Relations Office
Procurement Review Board
Statistics Canada
Tax Court of Canada, Registry of the
Agricultural Stabilization Board
Canadian Aviation Safety Board
Canadian Centre for Occupational Health and Safety
Canadian Transportation Accident Investigations and Safety Board
Director of Soldier Settlement
Director, The Veterans Land Act
Fisheries Prices Support Board
National Battlefields Commission

ANNEX 2

Arbitration Procedures

1. In the event of a dispute under this Agreement which the Parties are unable to resolve within 90 days of the date of the initial request for consultations or such other period of time as may be mutually agreed upon, either Party may initiate an arbitration proceeding, pursuant to Article 5, paragraph 7 of this Agreement. Such proceedings shall be subject to the procedures set out in this Annex.

2. Within 60 days after receipt of a request for arbitration through diplomatic channels, an arbitral panel shall be constituted by each Party appointing one member to the arbitral panel. The two members shall then select a national of a third party country who, upon approval by the Parties, shall be appointed the Chairman of the arbitral panel. The Chairman shall be appointed within 60 days from the date of appointment of the other two members of the arbitral panel.

3. If, within the periods specified in paragraph 2 of this Annex, the necessary appointments have not been made, either Party may, in the absence of any other agreement, invite the President of the International Court of Justice to make the necessary appointments. If the President is a national of either Party or is otherwise prevented from discharging the said function, the Vice President shall be invited to make the necessary appointments. If the Vice President is a national of either Party or is prevented from discharging the said function, the Member of the International Court of Justice next in seniority, who is not a national of either Party, shall be invited to make the necessary appointments.

4. The arbitral panel shall determine its own procedures. The arbitral panel shall reach its decision by a majority of votes. Such decision shall be binding on both Parties. Unless otherwise agreed, the decision of the arbitral panel shall be rendered within 180 days of the appointment of the Chairman in accordance with paragraphs 2 or 3 of this Annex.

5. Each Party shall bear the costs of its own member of the panel and of its representation in the arbitral proceedings; the costs related to the Chairman and any remaining costs shall be borne equally by the Parties. The arbitral panel may, however, in its decision direct that a higher proportion of costs shall be borne by either of the Parties, and this award shall be binding on both Parties.

6. The Parties shall implement the panel decision. If either Party cannot agree on the manner for resolution of the dispute, it will notify the other Party within 30 days of the rendering of the panel decision. The non-complying Party may propose compensation or other remedial action to the other Party and to the panel. If the other Party cannot agree to such proposed compensation or other remedial action within 60 days after the rendering of the panel decision, it may propose to the panel the suspension or withdrawal of equivalent benefits under this Agreement. Such suspension or withdrawal shall take effect 30 days after it is proposed, unless the panel disapproves such action; in the latter event, the panel shall make a ruling binding on the Parties respecting suspension or withdrawal of equivalent benefits.

ANNEX 3

Publications Utilized

Korea -
Major daily newspapers of national circulation
Planned internet homepage of KT
Contact point: The Quality Assurance and Logistics Support Group of KT

Canada -
Government Electronic Tendering System

ANNEX 4

Origin of Goods and Services

1. The Parties agree to review their existing non-preferential rules of origin regimes for the purpose of establishing mutually acceptable rules of origin governing the scope of goods subject to this Agreement, as referenced in Article 1.2(a), within 180 days after the signing of this Agreement. In establishing such rules of origin, the Parties shall take into account principles applied in the normal course of international trade, such as the use of changes in tariff classification to reflect substantial transformation.

2. The Parties agree, for the entities’ procurement covered by this Agreement, to incorporate into this Agreement by reference Article IV, paragraph 1 of the AGP.

3. The Parties agree to examine the results of the work programme for the harmonization of rules of origin for goods currently underway under the Agreement on Rules of Origin in Annex l A of the WTO Agreement and the negotiations regarding trade in services with the objective of adopting those results as the rules of origin for the purpose of implementing their commitments under this Agreement.

4. For the purpose of the provision of an incidental service, each Party shall grant temporary entry to service suppliers of the other Party who qualify according to its immigration laws and regulations and are otherwise qualified for entry under applicable measures relating to public health and safety and national security.

5. Incidental services shall be deemed to originate in the territory of a Party if at least 50% of the value of such incidental services is provided by a person or persons of that Party.

6. For the purposes of this Agreement, “person” has the same meaning as in Article XXVIII of the GATS.

7. If a Party or an entity of a Party is unable to verify the origin of goods or services tendered in a procurement subject to this Agreement, pursuant to the rules of origin established by the Parties under this Annex, that Party or the entity of that Party may refuse to consider the tender.

⁽¹⁾ For the purpose of this Agreement, offsets include measures used to encourage local development or improve the balance of payments accounts by means of domestic content, licensing and/or transfer of technology, counter-trade, investment requirements, or similar requirements.