United States-Korea Free Trade Agreement (DFARS Case 2012-D025)
Summary:
DCN 20120522 includes an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement the United States-Korea Free Trade Agreement. The Republic of Korea is already party to the World Trade Organization Government Procurement Agreement.
Supplementary Information:
I. Background
This interim rule amends DFARS part 225 and the corresponding provisions and clauses in DFARS part 252 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 DFARS. 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, and Peru FTA threshold for supplies and services ($202,000). Therefore, new alternates are required for the provision and clause for acquisition of photovoltaic devices (DFARS 252.225-7017 and 252.225-7018) and the Buy American Act--Free Trade Agreements--Balance of Payments Program provision and clause (DFARS 252.225-7035 and 252.225-7036) 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, 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 Balance of Payments Program--Construction Material under Trade Agreements clause (DFARS 252.225-7045).
There are also conforming changes to the clause prescriptions at DFARS 225.1101, Alternate A, Annual Representations and Certifications, and DFARS 252.212-7001, Contract Terms and Conditions required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items.
A minor correction was made to paragraph (c) of DFARS 252.225-7036, Buy American Act--Free Trade Agreements--Balance of Payments Program to add Peruvian end products to the list of end products not covered by the clause. The definition of "Peruvian end products" had been added to paragraph (a), but was not then added in paragraph (c). This makes paragraph (c) consistent with the trade agreement thresholds specified in FAR 25.402(b), as already implemented in paragraph (c) of Alternate II to DFARS 252.225-7036, as well as in the basic provision at DFARS 252.225-7035 and its Alternate II.
Dates:
Effective Date: The Effective Date for this interim rule is 22 May 2012.
Comment Date: Comments on the interim rule should be submitted in writing on or before 23 July 2012 to be considered in the formulation of a final rule.
Click here to read the entire Federal Register notice for this rule.
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