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.