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Chapter Fourteen: Government Procurement – Text of the Canada-Korea Free Trade Agreement

Article 14.1: Objectives

The Parties affirm their interest in further expanding bilateral trading opportunities in each Party’s government procurement market.

Article 14.2: Existing Rights and Obligations

1. The Parties affirm their rights and obligations under the GPA.

2. This Chapter is not to be construed to derogate from any rights or obligations of the Parties under the GPA.

Article 14.3: Scope

1. This Chapter incorporates by reference the rights and obligations as listed in the Annex to the WTO Protocol Amending the GPA (hereinafter referred to as the “revised GPA”), with the exception of Articles V and XVIII through XXII. These rights and obligations apply mutatis mutandis to the procurement covered by Annexes 14-A through to 14-G.

2. For the purpose of promoting consistency with the revised GPA, should further revisions be made to the revised GPA that affect the rights and obligations that are incorporated into this Agreement pursuant to paragraph 1, the revisions shall be incorporated in this Agreement, except as agreed by the Parties pursuant to the amendment procedure referred to in Article 23.2 (Amendments).

Article 14.4: Modifications and Rectifications

1. A Party shall notify the other Party of a proposed rectification of Annex 14-A, withdrawal of an entity from Annex 14-A, or other modification of Annex 14-A (hereinafter referred to as the “modification”). The Party proposing the modification (hereinafter referred to as the “modifying Party”) shall include in the notification:

• (a) for a proposed withdrawal of an entity from Annex 14-A in the exercise of its rights on the grounds that government control or influence over the entity’s covered procurement has been effectively eliminated, evidence that such government control or influence has been effectively eliminated; or
• (b) for any other proposed modification, information as to the likely consequences of the change for the mutually agreed coverage provided under this Chapter.

2. If the other Party objects to the proposed modification, it shall notify the modifying Party of its objection within 30 days of the notification of the proposed modification and include the reasons for its objection.

3. The Parties shall seek to resolve any objection through consultations. In such consultations, the Parties shall consider the proposed modification and, in the case of a notification pursuant to paragraph 1(b), any claim for compensatory adjustments, with a view to maintaining a balance of rights and obligations and a comparable level of mutually agreed coverage provided in this Chapter prior to such notification.

4. If a Party proposes a modification pursuant to paragraph 1(b), the modifying Party shall offer to the other Party appropriate compensatory adjustments, if such adjustments are necessary to maintain a level of coverage comparable to that which existed prior to the modification. Such modification shall become effective if the other Party does not notify the modifying Party of any objection to the proposed modification within 30 days of the notification. A Party need not provide compensatory adjustments if the Parties agree that the proposed modification covers a procuring entity over which a Party has effectively eliminated its control or influence over the entity’s covered procurement.

5. The Commission shall adopt a proposed modification only when the other Party:

• (a) does not object in writing to the proposed modification within 30 days of the notification provided pursuant to paragraph 1; or
• (b) submits to the modifying Party a written notice withdrawing the objection.

Article 14.5: Further Negotiations

If, after the entry into force of this Agreement, a Party accords to a non-party greater access to its government procurement market than the access that is accorded to the other Party, that Party may, at the request of the other Party, enter into negotiations regarding the extension of the same access to the other Party on a reciprocal basis.

Article 14.6: Committee on Government Procurement

1. Recognising the ongoing work of the WTO Committee on Government Procurement, the Parties shall endeavour to cooperate in pursuing issues of mutual interest.

2. For issues of a bilateral nature, the Parties hereby establish a Committee on Government Procurement, which shall meet as mutually agreed to address matters such as:

• (a) facilitating cooperation to increase mutual understanding of each Party’s government procurement system;
• (b) exchanging relevant information;
• (c) exploring market access expansion; or
• (d) any other matter related to the operation of this Chapter.

3. For the purpose of paragraph 2, each Party hereby designates the following governmental authority as its enquiry point to facilitate communication between the Parties on any matter regarding government procurement:

• (a) for Korea, the Ministry of Trade, Industry, and Energy; and
• (b) for Canada, the Department of Foreign Affairs, Trade and Development, or their respective successors.

Article 14.7: Entry into Force

This Chapter enters into force on the later of the date of entry into force of the revised GPA for both Parties or the date of entry into force of this Agreement pursuant to Article 23.4 (Entry into Force).

Annex 14: Annex 14-A

Schedule of Korea – Central Government Entities

Thresholds:

100,000,000 Korea Won - Goods

100,000,000 Korea Won - Services

5,000,000 SDR - Construction Services

List of Entities:

1. Anti-corruption and Civil Rights Commission of Korea

2. Board of Audit and Inspection

3. Cultural Heritage Administration

4. Defense Acquisition Program Administration

5. Fair Trade Commission

6. Financial Services Commission

7. Korea Coast Guard (except purchases for the purpose of maintaining public order, as provided in Article III of the revised GPA)

8. Korea Communications Commission

9. Korea Customs Service

10. Korea Forest Service

11. Korea Intellectual Property Office

12. Korea Meteorological Administration

13. Military Manpower Administration

14. Ministry of Agriculture, Food and Rural Affairs

15. Ministry of Culture, Sports and Tourism

16. Ministry of Education

17. Ministry of Employment and Labor

18. Ministry of Environment

19. Ministry of Food and Drug Safety

20. Ministry of Foreign Affairs

21. Ministry of Gender Equality and Family

22. Ministry of Government Legislation

23. Ministry for Health and Welfare

24. Ministry of Justice

25. Ministry of Land, Infrastructure and Transport

26. Ministry of National Defense

27. Ministry of Oceans and Fisheries

28. Ministry of Patriots and Veterans Affairs

29. Ministry of Science, ICT and Future Planning

30. Ministry of Security and Public Administration

31. Ministry of Strategy and Finance

32. Ministry of Trade, Industry and Energy

33. Ministry of Unification

34. Multifunctional Administrative City Construction Agency

35. National Emergency Management Agency

36. National Human Rights Commission of Korea

37. National Police Agency (except purchases for the purpose of maintaining public order, as provided in Article III of the revised GPA)

38. National Tax Service

39. Office for Government Policy Coordination

40. Prime Minister’s Secretariat

41. Public Procurement Service (Note 3)

42. Rural Development Administration

43. Small and Medium Business Administration

44. Statistics Korea

45. Supreme Prosecutors’ Office

Korea’s Notes to Annex 14-A

1. The above central government entities cover their “subordinate linear organizations”, “special local administrative agencies”, and “attached organs”, as prescribed in the relevant provisions of the Government Organization Act of the Republic of Korea. Any entity with a separate legal personality that is not listed in this Annex is not covered.

2. This Chapter does not apply to any set-asides for small-and medium-sized businesses according to the Act Relating to Contracts to Which the State is a Party and its Presidential Decree, and the procurement of agricultural, fishery, and livestock products according to the Grain Management Act, the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, and the Livestock Industry Act.

3. Public Procurement Service: This Chapter covers only those procurements carried out by the Public Procurement Service on its own behalf or for the entities listed in this Annex.

Schedule of Canada – Federal Government Entities

Unless otherwise specified, this Chapter covers procurement by entities listed in this Annex, subject to the following thresholds:

Thresholds:

Can$100,000 - Goods

Can$100,000 - Services

5,000,000 SDR - Construction Services

List of Entities:

1. Atlantic Canada Opportunities Agency (on its own account)

2. Canada Border Services Agency

3. Canada Employment Insurance Commission

4. Canada Industrial Relations Board

5. Canada Revenue Agency

6. Canada School of Public Service

7. Canadian Centre for Occupational Health and Safety

8. Canadian Food Inspection Agency

9. Canadian Human Rights Commission

10. Canadian Institutes of Health Research

11. Canadian Intergovernmental Conference Secretariat

12. Canadian International Trade Tribunal

13. Canadian Nuclear Safety Commission

14. Canadian Radio-television and Telecommunications Commission (on its own account)

15. Canadian Transportation Accident Investigation and Safety Board

16. Canadian Transportation Agency (on its own account)

17. Copyright Board

18. Correctional Service of Canada

19. Courts Administration Service

20. Department of Agriculture and Agri-Food

21. Department of Canadian Heritage

22. Department of Citizenship and Immigration

23. Department of Employment and Social Development

24. Department of Finance

25. Department of Fisheries and Oceans

26. Department of Foreign Affairs, Trade and Development

27. Department of Health

28. Department of Indian Affairs and Northern Development

29. Department of Industry

30. Department of Justice

31. Department of National Defence

32. Department of Natural Resources

33. Department of Public Safety and Emergency Preparedness

34. Department of Public Works and Government Services (on its own account)

35. Department of the Environment

36. Department of Transport

37. Department of Veterans Affairs

38. Department of Western Economic Diversification (on its own account)

39. Director of Soldier Settlement

40. Director, The Veterans’ Land Act

41. Canada Economic Development for Quebec Regions

42. Immigration and Refugee Board

43. Library and Archives of Canada

44. National Battlefields Commission

45. National Energy Board (on its own account)

46. National Farm Products Council

47. National Parole Board

48. National Research Council of Canada

49. Natural Sciences and Engineering Research Council

50. Northern Pipeline Agency (on its own account)

51. Office of the Auditor General

52. Office of the Chief Electoral Officer

53. Office of the Commissioner for Federal Judicial Affairs

54. Office of the Commissioner of Official Languages

55. Office of the Coordinator, Status of Women

56. Office of the Governor General’s Secretary

57. Offices of the Information and Privacy Commissioners of Canada

58. Office of the Superintendent of Financial Institutions

59. Parks Canada Agency

60. Patented Medicine Prices Review Board

61. Privy Council Office

62. Public Health Agency of Canada

63. Public Service Commission

64. Public Service Labour Relations Board

65. Registrar of the Supreme Court of Canada

66. Registry of the Competition Tribunal

67. Royal Canadian Mounted Police

68. Royal Canadian Mounted Police External Review Committee

69. Royal Canadian Mounted Police Public Complaints Commission

70. Social Sciences and Humanities Research Council

71. Statistics Canada

72. Transportation Appeal Tribunal of Canada

73. Treasury Board Secretariat

Canada’s Note to Annex 14-A

No entity listed in Annex 14-A has the power to create subordinate entities.

Annex 14-B: Goods

Schedule of Korea

1. This Chapter covers procurement of all goods procured by the entities listed in Annex 14-A, unless otherwise specified in this Chapter.

2. Subject to the decision of the Korean Government under the provisions of paragraph 1, Article III of the revised GPA, for procurement by the Ministry of National Defense and the Defense Acquisition Program Administration, this Chapter covers the following FSC categories only.

Schedule of Canada

1. Unless otherwise specified and subject to paragraph 2, this Chapter covers all goods.

2. Subject to the application of paragraph 1 of Article III of the revised GPA, with respect to procurement by the Department of National Defence, the Royal Canadian Mounted Police, and the Department of Fisheries and Oceans for the Canadian Coast Guard, this Chapter covers only the goods described in the Federal Supply Classifications (FSC) listed below:

Annex 14-C: Services

Schedule of Korea

Of the Universal List of Services, as contained in document MTN.GNS/W/120, the following services are covered:

Korea’s Note to Annex 14-C

Asterisks (*) designate “part of” as described in detail in the Revised Conditional Offer of the Republic of Korea Concerning Initial Commitments on Trade in Services.

Schedule of Canada

1. Unless otherwise specified, this Chapter covers the services specified in paragraph 2. Such services are identified in accordance with the United Nations Provisional Central Product Classification (CPC). For the purposes of implementation of this Chapter for federal entities, Canada will use the “Common Classification System”.

2. This Chapter covers the following services:

Canada’s Notes to Annex 14-C

1. This Chapter is subject to the terms and conditions set out in Canada’s Schedule to the GATS.

2. Canada’s coverage in telecommunications services is limited to enhanced or value added services for the supply of which the underlying telecommunications facilities are leased from providers of public telecommunications transport networks.

3. This Chapter does not cover procurement of the following:

• (a) services for the management and operation of government facilities or privately owned facilities used for government purposes, including federally-funded research and development;
• (b) public utilities;
• (c) architectural and engineering services related to airfield, communications and missile facilities;
• (d) shipbuilding and repair and related architectural and engineering services;
• (e) all services, with reference to those goods purchased by the Department of National Defence, the Royal Canadian Mounted Police, and the Department of Fisheries and Oceans for the Canadian Coast Guard which are not covered by this Chapter; and
• (f) services procured in support of military forces located overseas.

Annex 14-D: Construction Services

Schedule of Korea

Definition:

1. A construction services contract is a contract which has as its objective the realisation by whatever means of civil or building works, in the sense of Division 51 of the Central Product Classification. Such a contract includes a build-operate-transfer (hereinafter referred to as “BOT”) contract, to which the BOT threshold applies.

2. A BOT contract is any contractual arrangement the primary purpose of which is to provide for the construction or rehabilitation of physical infrastructures, plants, buildings, facilities, or other government-owned works and under which, as consideration for a supplier’s execution of a contractual arrangement, a procuring entity grants to the supplier, for a specified period of time, temporary ownership or a right to control and operate, and demand payment for the use of such works for the duration of the contract.

Thresholds: 5,000,000 SDR for entities set out in Annex 14-A

BOT Thresholds: 5,000,000 SDR for entities set out in Annex 14-A

Korea’s Note to Annex 14-D

This Chapter does not apply to any set-asides for small-and medium-sized businesses according to the Act on Private Participation in Infrastructure.

Schedule of Canada

1. Unless otherwise specified and subject to paragraph 2, this Chapter covers all construction services identified in Division 51 of the United Nations Provisional Central Product Classification (CPC).

2. This Chapter does not cover procurement of the following:

• (a) dredging services; and
• (b construction services procured by or on behalf of the federal Department of Transport.

Annex 14-E: General Notes

Schedule of Korea

1. A service listed in Annex 14-C is covered with respect to the other Party only to the extent that the other Party has included that service in Annex 14-C.

2. This Chapter does not cover procurement in furtherance of human feeding programmes.

3. For greater clarity, procurement for airports is not covered under this Chapter.

Schedule of Canada

Unless otherwise specified, the following General Notes apply to this Chapter, including to Annexes 14-A through 14-D.

1. This Chapter does not cover procurement of:

• (a) shipbuilding and repair;
• (b) urban rail and urban transportation equipment, systems, components and materials incorporated therein as well as all project related materials of iron or steel;
• (c) FSC 58 (communications, detection and coherent radiation equipment);
• (d) agricultural goods made in furtherance of agricultural support programmes or human feeding programmes; and
• (e) transportation services that form a part of, or are incidental to, a procurement contract.

2. This Chapter does not apply to:

• (a) set-asides for small and minority owned businesses;
• (b) any measure adopted or maintained with respect to Aboriginal peoples. It does not affect existing aboriginal or treaty rights of any of the Aboriginal peoples of Canada under section 35 of the Constitution Act, 1982; and
• (c) contracts under an international agreement and intended for the joint implementation or exploitation of a project.

3. For greater certainty, this Chapter shall be interpreted in accordance with the following:

• (a) Procurement in terms of Canadian coverage is defined as contractual transactions to acquire goods or services for the direct benefit or use of the government. The procurement process is the process that begins after an entity has decided on its requirement and continues through to and including contract award. It does not include procurements between one government entity or government enterprise and another government entity or government enterprise;
• (b) Where a contract to be awarded by an entity is not covered by this Chapter, this Chapter is not to be construed to cover any good or service component of that contract; and
• (c) Any exclusion that is related either specifically or generally to Federal entities in Annex 14-A will also apply to any successor entity or entities, or enterprise or enterprises, in such a manner as to maintain the value of this offer.

Annex 14-F: Publication of Notices

For Korea: Korea ON-line E-Procurement Systems (KONEPS) at , or if necessary, Electronic Gazette at

For Canada: The Government Electronic Tendering Service (GETS) at

Annex 14-G: Threshold Adjustment

1. Thresholds for goods and services referred to in Annex 14-A shall be adjusted, as necessary, based on consultations between the Parties.

2. Thresholds for construction services referred to in Annex 14-A shall be adjusted in accordance with the formula in the WTO Committee on Government Procurement Decision GPA/1, Annex 3.

3. The Parties agree that the threshold for construction services shall be adjusted every two years, commencing with the first adjustment date applicable under the GPA, following the entry into force of the WTO Protocol Amending the GPA.