Professional Documents
Culture Documents
A. Text of Article I
(footnote original) 1 For each Party, Appendix I is divided into five Annexes:
- Annex 3 contains all other entities that procure in accordance with the
provisions of this Agreement.
1. Paragraph 1
2. Appendix 1
2
2. With respect to the interpretation of the Korean Annex 1 in the Panel on Korea –
Procurement, see paragraphs 24-28 below.
3. Paragraph 4
III. Article II
A. Text of Article II
(footnote original) 2 This Agreement shall apply to any procurement contract for which the contract
value is estimated to equal or exceed the threshold at the time of publication of the notice in
accordance with Article IX.
3. The selection of the valuation method by the entity shall not be used,
nor shall any procurement requirement be divided, with the intention of
avoiding the application of this Agreement.
If there is any doubt, the second basis for valuation, namely (b), is to be
used.
3
B. Interpretation and Application of Article II
V. Article IV
A. Text of Article IV
4
Article IV: Rules of Origin
VI. Article V
A. Text of Article V
Objectives
5
government procurement, facilitate increased imports from developing
countries, bearing in mind the special problems of least-developed countries
and of those countries at low stages of economic development.
Coverage
Agreed Exclusions
6
8. Each developed country Party shall, upon request, provide all
technical assistance which it may deem appropriate to developing country
Parties in resolving their problems in the field of government procurement.
- any other problem which the Party making the request and another
Party agree to deal with in the context of this assistance.
Information Centres
13. Each developed country Party shall, upon request, provide assistance
which it may deem appropriate to potential tenderers in least-developed
countries in submitting their tenders and selecting the products or services
which are likely to be of interest to its entities as well as to suppliers in least-
developed countries, and likewise assist them to comply with technical
regulations and standards relating to products or services which are the
subject of the intended procurement.
Review
7
including in particular Article III, and having regard to the development,
financial and trade situation of the developing countries concerned, the
Committee shall examine whether exclusions provided for in accordance with
the provisions of paragraphs 4 through 6 of this Article shall be modified or
extended.
VII. Article VI
A. Text of Article VI
(footnote original) 3 For the purpose of this Agreement, a technical regulation is a document which lays
down characteristics of a product or a service or their related processes and production methods,
including the applicable administrative provisions, with which compliance is mandatory. It may also
include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as
they apply to a product, service, process or production method.
(footnote original) 4 For the purpose of this Agreement, a standard is a document approved by a
recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for
products or services or related processes and production methods, with which compliance is not
mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or
labelling requirements as they apply to a product, service, process or production method.
4. Entities shall not seek or accept, in a manner which would have the
effect of precluding competition, advice which may be used in the
preparation of specifications for a specific procurement from a firm that may
have a commercial interest in the procurement.
8
B. Interpretation and Application of Article VI
A. Text of Article V II
1. Each Party shall ensure that the tendering procedures of its entities
are applied in a non-discriminatory manner and are consistent with the
provisions contained in Articles VII through XVI.
9
the procurement process, complete the qualification
procedures;
(c) the process of, and the time required for, qualifying
suppliers shall not be used in order to keep suppliers of
other Parties off a suppliers’ list or from being
considered for a particular intended procurement.
Entities shall recognize as qualified suppliers such
domestic suppliers or suppliers of other Parties who
meet the conditions for participation in a particular
intended procurement. Suppliers requesting to
participate in a particular intended procurement who
may not yet be qualified shall also be considered,
provided there is sufficient time to complete the
qualification procedure;
10
(h) nothing in subparagraphs (a) through (g) shall preclude
the exclusion of any supplier on grounds such as
bankruptcy or false declarations, provided that such an
action is consistent with the national treatment and
non-discrimination provisions of this Agreement.
X. Article IX
A. Text of Article IX
11
(c) any date for starting delivery or completion of delivery
of goods or services;
12
(c) the period of validity of the lists, and the formalities
for their renewal.
However, when the duration of the qualification system is three years or less,
and if the duration of the system is made clear in the notice and it is also
made clear that further notices will not be published, it shall be sufficient to
publish the notice once only, at the beginning of the system. Such a system
shall not be used in a manner which circumvents the provisions of this
Agreement.
11. Entities shall make clear, in the notices referred to in this Article or in
the publication in which the notices appear, that the procurement is covered
by the Agreement.
XI. Article X
A. Text of Article X
13
of additional suppliers permitted to participate shall be limited only by the
efficient operation of the procurement system.
XII. Article XI
A. Text of Article XI
General
(b) Each Party shall ensure that its entities shall take due account
of publication delays when setting the final date for receipt of tenders
or of applications to be invited to tender.
Deadlines
14
3. The periods referred to in paragraph 2 may be reduced in the
circumstances set out below:
4. Consistent with the entity’s own reasonable needs, any delivery date
shall take into account such factors as the complexity of the intended
procurement, the extent of subcontracting anticipated and the realistic time
required for production, de-stocking and transport of goods from the points of
supply or for supply of services.
15
XIII. Article XII
(d) the closing date and time for receipt of tenders and
the length of time during which any tender should be
open for acceptance;
16
not Parties to this Agreement, but which apply the
procedures of that Article, will be entertained.
Article XIII: Submission, Receipt and Opening of Tenders and Awarding of Contracts
Receipt of Tenders
17
2. A supplier shall not be penalized if a tender is received in the office
designated in the tender documentation after the time specified because of
delay due solely to mishandling on the part of the entity. Tenders may also be
considered in other exceptional circumstances if the procedures of the entity
concerned so provide.
Opening of Tenders
Award of Contracts
Option Clauses
18
(a) in the context of procurements in which they have
indicated such intent, namely in the notice referred to
in paragraph 2 of Article IX (the invitation to suppliers
to participate in the procedure for the proposed
procurement); or
XVI. Article XV
A. Text of Article XV
1. The provisions of Articles VII through XIV governing open and selective
tendering procedures need not apply in the following conditions, provided
that limited tendering is not used with a view to avoiding maximum possible
competition or in a manner which would constitute a means of discrimination
among suppliers of other Parties or protection to domestic producers or
suppliers:
19
(a) in the absence of tenders in response to an open or
selective tender, or when the tenders submitted have
been collusive, or not in conformity with the essential
requirements in the tender, or from suppliers who do
not comply with the conditions for participation
provided for in accordance with this Agreement, on
condition, however, that the requirements of the
initial tender are not substantially modified in the
contract as awarded;
(footnote original) 5 It is the understanding that “existing equipment” includes software to the extent
that the initial procurement of the software was covered by the Agreement.
(footnote original) 6 Original development of a first product or service may include limited production
or supply in order to incorporate the results of field testing and to demonstrate that the product or
service is suitable for production or supply in quantity to acceptable quality standards. It does not
extend to quantity production or supply to establish commercial viability or to recover research and
development costs.
20
construction services may not exceed 50 per cent of
the amount of the main contract;
(footnote original) 7 Offsets in government procurement are measures used to encourage local
development or improve the balance-of-payments accounts by means of domestic content, licensing of
technology, investment requirements, counter-trade or similar requirements.
21
2. Nevertheless, having regard to general policy considerations, including
those relating to development, a developing country may at the time of
accession negotiate conditions for the use of offsets, such as requirements for
the incorporation of domestic content. Such requirements shall be used only
for qualification to participate in the procurement process and not as criteria
for awarding contracts. Conditions shall be objective, clearly defined and
non-discriminatory. They shall be set forth in the country’s Appendix I and
may include precise limitations on the imposition of offsets in any contract
subject to this Agreement. The existence of such conditions shall be notified
to the Committee and included in the notice of intended procurement and
other documentation.
4. The 1996 Singapore Ministerial Conference decided to establish a working group “to
conduct a study on transparency in government procurement practices, taking into account
22
national policies, and, based on this study, to develop elements for inclusion in an
appropriate agreement.”(5)
23
4. However, entities may decide that certain information on the contract
award, contained in paragraphs 1 and 2(c), be withheld where release of such
information would impede law enforcement or otherwise be contrary to the
public interest or would prejudice the legitimate commercial interest of
particular enterprises, public or private, or might prejudice fair competition
between suppliers.
1. Each Party shall promptly publish any law, regulation, judicial decision,
administrative ruling of general application, and any procedure (including
standard contract clauses) regarding government procurement covered by this
Agreement, in the appropriate publications listed in Appendix IV and in such a
manner as to enable other Parties and suppliers to become acquainted with
them. Each Party shall be prepared, upon request, to explain to any other
Party its government procurement procedures.
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entities; for entities in Annexes 2 and 3, statistics on
the estimated value of contracts awarded above the
threshold value on a global basis and broken down by
categories of entities;
To the extent that such information is available, each Party shall provide
statistics on the country of origin of products and services purchased by its
entities. With a view to ensuring that such statistics are comparable, the
Committee shall provide guidance on methods to be used. With a view to
ensuring effective monitoring of procurement covered by this Agreement, the
Committee may decide unanimously to modify the requirements of
subparagraphs (a) through (d) as regards the nature and the extent of
statistical information to be provided and the breakdowns and classifications
to be used.
1. Paragraph 5
XXI. Article XX
A. Text of Article XX
25
Article XX: Challenge Procedures
Consultations
Challenge
3. Each Party shall provide its challenge procedures in writing and make
them generally available.
26
provide that overriding adverse consequences for the
interests concerned, including the public interest, may
be taken into account in deciding whether such
measures should be applied. In such circumstances,
just cause for not acting shall be provided in writing;
1. Paragraph 1
27
XXIII. Article XXII
3. The DSB shall have the authority to establish panels, adopt panel and
Appellate Body reports, make recommendations or give rulings on the matter,
maintain surveillance of implementation of rulings and recommendations, and
authorize suspension of concessions and other obligations under this
Agreement or consultations regarding remedies when withdrawal of measures
found to be in contravention of the Agreement is not possible, provided that
only Members of the WTO Party to this Agreement shall participate in
decisions or actions taken by the DSB with respect to disputes under this
Agreement.
4. Panels shall have the following terms of reference unless the parties to
the dispute agree otherwise within 20 days of the establishment of the panel:
In the case of a dispute in which provisions both of this Agreement and of one
or more other Agreements listed in Appendix 1 of the Dispute Settlement
Understanding are invoked by one of the parties to the dispute, paragraph 3
shall apply only to those parts of the panel report concerning the
interpretation and application of this Agreement.
28
on which the composition and terms of reference of the panel are agreed.
Consequently, every effort shall be made to reduce also the periods foreseen
in paragraph 1 of Article 20 and paragraph 4 of Article 21 of the Dispute
Settlement Understanding by two months. Moreover, notwithstanding the
provisions of paragraph 5 of Article 21 of the Dispute Settlement
Understanding, the panel shall attempt to issue its decision, in case of a
disagreement as to the existence or consistency with a covered Agreement of
measures taken to comply with the recommendations and rulings, within 60
days.
1. Paragraph 2
11. The Panel on Korea – Procurement then held that the question in the case before it was
“whether or not there was a reasonable expectation of an entitlement to a benefit that had
accrued pursuant to the negotiation rather than pursuant to a concession”:
“In this case, the United States has asserted that measures it claimed violated
the GPA (that is, the imposition of inadequate bid-deadlines; the imposition
of certain qualification requirements; the imposition of certain domestic
partnering requirements; and the failure to establish effective domestic
challenge procedures engaged in by KAA [Korea Airports Authority] and its
successors in relation to the IIA [Inchon International Airport] project) nullify
or impair benefits accruing to the United States under the GPA, pursuant to
Article XXII:2 of the GPA. A key difference between a traditional non-violation
case and the present one would seem to be that, normally, the question of
‘reasonable expectation’ is whether or not it was reasonably to be expected
that the benefit under an existing concession would be impaired by the
measures. However here, if there is to be a non-violation case, the question
is whether or not there was a reasonable expectation of an entitlement to a
benefit that had accrued pursuant to the negotiation rather than pursuant to
a concession.”(16)
12. Noting that non-violation is an exceptional concept within the WTO dispute settlement
system, stemming from the public international law principle of pacta sunt servanda, the
Panel however specified that it was not implying that “a complainant [must] affirmatively
prove actual bad faith on the part of another Member”:
29
“[U]pon occasion, it may be the case that some actions, while permissible
under one set of rules (e.g., the Agreement on Subsidies and Countervailing
Measures is a commonly referenced example of rules in this regard), are not
consistent with the spirit of other commitments such as those in negotiated
Schedules. That is, such actions deny the competitive opportunities which are
the reasonably expected effect of such commitments. However, we must also
note that, while the overall burden of proof is on the complainant, we do not
mean to introduce here a new requirement that a complainant affirmatively
prove actual bad faith on the part of another Member. It is fairly clear from
the history of disputes prior to the conclusion of the Uruguay Round that such
a requirement was never established and there is no evidence in the current
treaty text that such a requirement was newly imposed. Rather, the
affirmative proof should be that measures have been taken that frustrate the
object and purpose of the treaty and the reasonably expected benefits that
flow therefrom.”(17)
13. With reference to the case at hand, the Panel subsequently held that an error in treaty
negotiation can also be addressed under Article 26 of the DSU and Article XXII:2 of the
Agreement on Government Procurement:
“One of the issues that arises in this dispute is whether the concept of non-
violation can arise in contexts other than the traditional approach
represented by pacta sunt servanda. Can, for instance the question of error in
treaty negotiation be addressed under Article 26 of the DSU and Article XXII:2
of the GPA? We see no reason why it cannot. Parties have an obligation to
negotiate in good faith just as they must implement the treaty in good faith.
It is clear to us (as discussed in paragraphs 7.110 and 7.121 below) that it is
necessary that negotiations in the Agreement before us (the GPA) be
conducted on a particularly open and forthcoming basis.
Thus, on the basis of the ample evidence provided by both parties to the
dispute, we will review the claim of nullification or impairment raised by the
United States within the framework of principles of international law which
are generally applicable not only to performance of treaties but also to treaty
negotiation.(18) To do otherwise potentially would leave a gap in the
applicability of the law generally to WTO disputes and we see no evidence in
the language of the WTO Agreements that such a gap was intended. If the
non-violation remedy were deemed not to provide a relief for such problems
as have arisen in the present case regarding good faith and error in the
negotiation of GPA commitments (and one might add, in tariff and services
commitments under other WTO Agreements), then nothing could be done
about them within the framework of the WTO dispute settlement mechanism
if general rules of customary international law on good faith and error in
treaty negotiations were ruled not to be applicable.”(19)
14. After examination of the facts of the case, the Panel on Korea – Procurement found
that while Members had a “right to expect full and forthright answers to their questions
submitted during negotiations”, they had to protect their own interests “as well”:
“Members have a right to expect full and forthright answers to their questions
submitted during negotiations, particularly with respect to Schedules of
affirmative commitments such as those appended to the GPA. However,
Members must protect their own interests as well and in this case the United
States did not do so. It had a significant amount of time to realize,
particularly in light of the wide knowledge of KAA’s role, that its
understanding of the Korean answer was not accurate. Therefore, we find
that, even if the principles of a traditional non-violation case were applicable
in this situation the United States has failed to carry its burden of proof to
establish that it had reasonable expectations that a benefit had
accrued.”(20)
30
15. With regard to the possible error in treaty formation, the Panel held that it would
consider “whether the United States was induced into error about a fact or situation which it
assumed existed in the relation to the agreement being negotiated regarding Korea’s
accession to the GPA”:
“[W]e […] first recall our finding that there is a particular duty of
transparency and openness on the ‘offering’ party in negotiations on
concessions under the GPA. The negotiations between the Parties under the
GPA do not benefit from a generally accepted framework such as the
Harmonized System with respect to goods or even the Central Product
Classification in services. The Annexes to the GPA which contain the entities
whose procurement is covered by the Agreement are basically self-styled
Schedules whose interpretation may require extensive knowledge of another
country’s procurement systems and governmental organization. Therefore,
we believe that transparency and forthright provision of all relevant
information are of the essence in negotiations on GPA Schedules.
In our view, as discussed fully in the previous section, Korea’s response to the
US question was not as forthright as it should have been. Indeed, the response
could be characterized as at best incomplete in light of existing Korean
legislation and ongoing plans for further legislation. However, when
addressing this problem, rather than asking whether there was a nullification
or impairment of expectations arising from a concession, it might be better to
inquire as to whether the United States was induced into error about a fact or
situation which it assumed existed in the relation to the agreement being
negotiated regarding Korea’s accession to the GPA. In this case, it clearly
appears that the United States was in error when it assumed that the
IIA project was covered by the GPA as a result of the entity coverage offered
by Korea.”(21)
16. The Panel noted that Article 48(1) of the Vienna Convention provides that “[a] State
may invoke an error in a treaty as invalidating its consent to be bound by the treaty if the
error related to a fact or situation which was assumed by that State to exist at the time when
the treaty was concluded and formed an essential basis of its consent to be bound by the
treaty”. The Panel then went on to recall that, in the course of the negotiations on the
Annexes to the Agreement on Government Procurement:
“[T]he United States believed that the IIA project was covered. As we have
found in section VII:B of these Findings, that was not correct. The IIA project
procurement was the responsibility of a non-covered entity. Hence the US
error related to a fact or situation which was assumed by the US to exist at
the time when the treaty was concluded. In our view, it also appears from the
behaviour of the United States that this purported concession arguably
formed an essential basis of its consent to be bound by the treaty as finally
agreed. Hence the initial conditions for error under Article 48(1) of the
Vienna Convention seem to us to be satisfied.”(22)
17. After making the finding referenced in paragraph 16 above, the Panel then turned to
the second paragraph of Article 48, which states that “Paragraph 1 shall not apply if the State
in question contributed by its own conduct to the error or if the circumstances were such as
to put that State on notice of a possible error”. The Panel ultimately found that the United
States error was not excusable:
“This raises the question of whether the exclusionary clause of the second
paragraph of Article 48 can be overcome. Although we have indicated above
that the duty to demonstrate good faith and transparency in GPA negotiations
is particularly strong for the ‘offering’ party, this does not relieve the other
negotiating partners from their duty of diligence to verify these offers as best
as they can. Here again the facts already recounted in the previous sub-
section demonstrate that the United States has not properly discharged this
burden. We do not think the evidence at all supports a finding that the United
31
States has contributed by its own conduct to the error, but given the
elements mentioned earlier (such as the two and a half year interval between
Korea’s answer to the US question and its final offer, the actions by the
European Community in respect of Korea’s offer, the subsequent four-month
period, of which at least one month was explicitly designated for verification,
etc.), we conclude that the circumstances were such as to put the United
States on notice of a possible error. Hence the error should not have subsisted
at the end of the two and a half year gap, at the moment the accession of
Korea was ‘concluded.’ Therefore, the error was no longer ‘excusable’ and
only an excusable error can qualify as an error which may vitiate the consent
to be bound by the agreement.”(23)
18. With respect to non-violation claims under the GATT 1994 in general, see the Chapter
on GATT 1994, paragraphs 539-540.
19. The following table lists the disputes in which panel and/or Appellate Body reports
have been adopted where the provisions of the Agreement on Government Procurement were
invoked:
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Article XXIV: Final Provisions
This Agreement shall enter into force on 1 January 1996 for those
governments(8) whose agreed coverage is contained in Annexes 1 through 5 of
Appendix I of this Agreement and which have, by signature, accepted the
Agreement on 15 April 1994 or have, by that date, signed the Agreement
subject to ratification and subsequently ratified the Agreement before 1
January 1996.
(footnote original) 8 For the purpose of this Agreement, the term “government” is deemed to include
the competent authorities of the European Communities.
2. Accession
3. Transitional Arrangements
(b) During the period between the date of entry into force
of this Agreement and the date of its application by
Hong Kong, the rights and obligations between Hong
Kong and all other Parties to this Agreement which
were on 15 April 1994 Parties to the Agreement on
Government Procurement done at Geneva on
12 April 1979 as amended on 2 February 1987 (the
“1988 Agreement”) shall be governed by the
substantive(9) provisions of the 1988 Agreement,
including its Annexes as modified or rectified, which
provisions are incorporated herein by reference for
that purpose and shall remain in force until
31 December 1996.
(footnote original) 9 All provisions of the 1988 Agreement except the Preamble, Article VII and
Article IX other than paragraphs 5(a) and (b) and paragraph 10.
(d) Article XXII shall not enter into force until the date of
entry into force of the WTO Agreement. Until such
time, the provisions of Article VII of the 1988
Agreement shall apply to consultations and dispute
settlement under this Agreement, which provisions are
33
hereby incorporated in the Agreement by reference for
that purpose. These provisions shall be applied under
the auspices of the Committee under this Agreement.
4. Reservations
5. National Legislation
6. Rectifications or Modifications
34
Committee, provided that the meeting is no sooner
than 30 days from the date of notification and no
objection has been made. In the event of an objection,
the matter may be pursued in accordance with the
procedures on consultations and dispute settlement
contained in Article XXII. In considering the proposed
modification to Appendix I and any consequential
compensatory adjustment, allowance shall be made for
the market-opening effects of the removal of
government control or influence.
(b) Not later than the end of the third year from the date
of entry into force of this Agreement and periodically
thereafter, the Parties thereto shall undertake further
negotiations, with a view to improving this Agreement
and achieving the greatest possible extension of its
coverage among all Parties on the basis of mutual
reciprocity, having regard to the provisions of Article V
relating to developing countries.
8. Information Technology
9. Amendments
Parties may amend this Agreement having regard, inter alia, to the
experience gained in its implementation. Such an amendment, once the
Parties have concurred in accordance with the procedures established by the
Committee, shall not enter into force for any Party until it has been accepted
by such Party.
10. Withdrawal
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(a) Any Party may withdraw from this Agreement. The
withdrawal shall take effect upon the expiration of 60
days from the date on which written notice of
withdrawal is received by the Director-General of the
WTO. Any Party may upon such notification request an
immediate meeting of the Committee.
This Agreement shall not apply as between any two Parties if either of
the Parties, at the time either accepts or accedes to this Agreement, does
not consent to such application.
13. Secretariat
14. Deposit
15. Registration
1. Paragraph 2
21. In June 2000, with respect to the process of accession to the Agreement on
Government Procurement, the Committee on Government Procurement adopted a Checklist
of issues for the provision of information by applicant governments.(27)
36
2. Paragraph 3
22. At its meetings of 18 February and 25 June 1998, the Committee on Government
Procurement discussed the legal and procedural aspects of the relationship of the Tokyo
Round Agreement on Government Procurement to the 1994 Agreement on Government
Procurement on the basis of a Note prepared by the Secretariat in response to the
Committee’s request.(28)
3. Paragraph 5
23. At its meeting on 4 June 1996, the Committee on Government Procurement adopted
the Procedures for the Notification of National Implementing Legislation.(29)
XXVI. Appendix I
24. The Panel on Korea – Procurement examined whether several entities concerned at
successive stages with the procurement of airport construction in Korea, specifically the
Korean Airport Construction Authority (KOACA), Korea Airports Authority (KAA) and the Inchon
International Airport Corporation (IIAC) were within the scope of Korea’s list of “central
government entities” as specified in Annex 1 of Korea’s obligations in Appendix I of the
Agreement on Government Procurement. The United States contended that the practices of
these entities were inconsistent with Korea’s obligations under the Agreement on
Government Procurement. In this regard, the Panel noted:
26. In light of the fact that the Ministry of Construction and Transportation (“MOCT”) was
included in the list of central government entities in Annex 1 to Korea’s Schedule, the Panel
went on to consider whether “there exists the possibility of the inclusion of certain
procurements of an entity which is not listed, due to its relationship with a listed entity”:
37
27. The Panel eventually rejected the United States’ argument that KAA could be
considered a part of MOCT because it was controlled, at least for the purposes of the IIA
project, by MOCT. The Panel noted in this respect that:
“There is no use of the term ‘direct control’ or even ‘control’ in the sense
that the United States wishes to use it. It has not been defined in this manner
either in the context used in the Tokyo Round Agreement or elsewhere. We
cannot agree with the overall US position that a ‘control’ test should be read
into the GPA. However, we also do not think that it is an entirely irrelevant
question. We think the issue of ‘control’ of one entity over another can be a
relevant criterion among others for determining coverage of the GPA, as
discussed below.
[W]e do believe that entities that are not listed in an Annex 1 to the GPA
whether in the Annex list or through a Note to the Annex, can, nevertheless,
be covered under the GPA. We believe that this flows from the fact that an
overly narrow interpretation of ‘central government entity’ may result in less
coverage under Annex 1 than was intended by the signatories. On the other
hand, an overly broad interpretation of the term may result in coverage of
entities that were never intended to be covered by signatories.”(33)
28. The Panel on Korea – Procurement then put forward two criteria for answering the
question referenced in paragraph 27 above:
“In the present case, our view is that the relevant questions are: (1) Whether
an entity (KAA, in this case) is essentially a part of a listed central
government entity (MOCT) – in other words, are the entities, legally unified?
and (2) Whether KAA and its successors have been acting on behalf of MOCT.
The first test is appropriate because if entities that are essentially a part of,
or legally unified with, listed central government entities are not considered
covered, it could lead to great uncertainty as to what was actually covered
because coverage would be dependent on the internal structure of an entity
which may be unknown to the other negotiating parties. The second test is
appropriate because procurements that are genuinely undertaken on behalf
of a listed entity (as, for example, in the case where a principal/agent
relationship exists between the listed entity and another entity) should
properly be covered under Annex 1 because they would be considered legally
as procurements by MOCT. In our view, it would defeat the objectives of the
GPA if an entity listed in a signatory’s Schedule could escape the Agreement’s
disciplines by commissioning another agency of government, not itself listed
in that signatory’s Schedule, to procure on its behalf.”(34)
29. With respect to the first question, the Panel, persuaded on balance by the indicia of
independence of KAA and its successors, found that KAA was not legally unified with or a part
of MOCT, basing itself on the following criteria:
30. With regard to the question whether or not KAA and its successors were acting on
behalf of MOCT, at least with respect to the IIA project (i.e., whether the IIA project was
really the legal responsibility of MOCT), the Panel, after having reviewed the laws governing
construction of the IIA as well as other factual evidence regarding involvement of MOCT in the
IIA project, found that:
38
“[T]here certainly is a role under Korean law for MOCT in the IIA project. It
appears to be a role of oversight. We do not think oversight by one
governmental entity of a project which has been delegated by law to another
entity (which we have already found to be independent and not covered by
GPA commitments) results in a conclusion that there is an agency relationship
between them.”(36)
(c) the Member interested in accession would hold consultations with the
Parties on the terms for its accession to the Agreement;
(f) prior to the date of entry into force of the WTO Agreement, the above
procedures would apply mutatis mutandis to contracting parties to the
GATT 1947 interested in accession, and the tasks assigned to the
Director-General of the WTO would be carried out by the Director-
General to the CONTRACTING PARTIES to the GATT 1947.
39
B. Interpretation and application of the Decision
XXVIII. Notes
Notes
Article 1, paragraph 1
40