United States-Korea Free Trade Agreement (FAR Case 2012-004)
Summary:
FAC 2005-57 includes an interim rule amending the Federal Acquisition Regulation (FAR) to implement the United States-Korea Free Trade Agreement. The Republic of Korea is already party to the World Trade Organization Government Procurement Agreement, but this trade agreement implements a lower procurement threshold.
Supplementary Information:
I. Background
This interim rule amends FAR part 25 and the corresponding provisions and clauses in part 52 to implement the United States-Korea Free Trade Agreement (see the United States-Korea Free Trade Agreement Implementation Act (Pub. L. 112-41) (19 U.S.C. 3805 note)).
The Republic of Korea is already party to the World Trade Organization Government Procurement Agreement (WTO GPA). This Free Trade Agreement (FTA) now covers acquisition of supplies and services between $100,000 and the current WTO GPA threshold of $202,000, lowering the threshold for-
• Waiver of the applicability of the Buy American statute (41 U.S.C. chapter 83) for some foreign supplies and construction materials from the Republic of Korea; and
• Applicability of specified procurement procedures designed to ensure fairness in the acquisition of supplies and services (see FAR 25.408). These obligations include, among others, that an agency shall not impose the condition that, in order for an offeror to be allowed to submit an offer or be awarded a contract, the offeror has been previously awarded one or more contracts by an agency of the United States Government or that the offeror has prior work experience in the United States (see FAR 15.305(a)(2)(iv)).
II. Discussion and Analysis
This interim rule adds the Republic of Korea to the definition of "Free Trade Agreement country" in multiple locations in the FAR. The Republic of Korea was already listed as a designated country because it is party to the WTO GPA. The excluded services for Korea FTA are the same as for the WTO GPA.
By implementation of this Korea FTA, eligible goods and services from Korea are now covered when valued at or above $100,000, rather than at or above the WTO GPA threshold of $202,000. The threshold for the Korea FTA for construction is the same as the threshold for the WTO GPA for construction.
The Korea FTA $100,000 threshold for supplies and services is higher than the threshold for supplies and services for most of the FTAs ($77,494), but not as high as the Bahrain, Morocco, Oman, and Peru FTA threshold for supplies and services ($202,000). Therefore, new alternates are required for the Buy American Act-Free Trade Agreements-Israeli Trade Act provision and clause (FAR 52.225-3 and 52.225-4) to cover acquisitions that are valued at $77,494 or more but less than $100,000. In that dollar range, all FTAs are applicable except for the Bahrain, Korea, Morocco, Oman, and Peru FTAs.
Because the Korea FTA construction threshold of $7,777,000 is the same as the WTO GPA threshold, no new clause alternates are required for the Buy American Act-Construction Materials under Trade Agreements provision and clause (FAR 52.225-11 and 52.225-12) or the Recovery Act clauses at FAR 52.225-23 and 52.225-24.
Some minor editorial type corrections are also included in this rule to-
• Include the public law number and 19 U.S.C. reference for all Free Trade Agreements;
• Correct references to 41 U.S.C. chapter 83 and 41 U.S.C. 1907 (based on the recent positive law codification of title 41);
• Delete an unnecessary definition of "Canadian end product" in FAR 25.003 (term is only used in the provisions and clauses, and is defined at FAR 52.225-3 Buy American Act-Free Trade Agreements-Israeli Trade Act); and
• Provide consistency in paragraph (c) of FAR 52.225-3 between basic clause and alternates, except to the extent that a change is required due to the applicability of trade agreements. This consists of adding to Alternates I and II the statement that the Buy American Act provides a preference for domestic goods, and that the component test of the Buy American Act has been waived for end products that are commercially available off-the-shelf items, in accordance with 41 U.S.C. 1907.
Dates:
Effective Date:
The Effective Date for this interim rule is 15 March 2012.
Comment Date:
Interested parties should submit written comments to the Regulatory Secretariat on or before 7 May 2012 to be considered in the formulation of a final rule.
Click here to read the entire Federal Register notice for this rule.