RESTRICTED  WORLD TRADE  
ORGANIZATION  GPA/W/250 
17 February 2003 
 (03-0988) 
Committee on Government Procurement Original:   English 
  
 
PROPOSED MODIFICATIONS TO APPEND IX I OF THE REPUBLIC OF KOREA 
 
Notification from the Republic of Korea under Article XXIV:6
1 of the GPA  
  
 The following notification from the Perman ent Mission of the Republic of Korea was 
received on 12 February 2003 with the request that it be circulated to the Parties to the Agreement on 
Government Procurement.  
_______________ 
 
  
I. INTRODUCTION 
 Pursuant to Article XXIV:6 of the Agre ement on Government Procurement (GPA), the 
Republic of Korea wishes to notify the Committe e on Government Procurement of the following 
modifications relating to Annex 3 of Appendix I of the GPA. 
  These proposed modifications reflect the ongoing economic restructuring and privatization efforts of the Korean Government.  II. PROPOSED MODIFICATIONS 
 Modifications are proposed to the Annex 3 list of "All Other Entities which Procure in 
Accordance With the Provisions of this Agreement":  (1) Delete "Housing & Commercial Bank" (H&CB):  
                                                     
 
1 Article XXIV:6(a) reads as follows:  "Rectifications , transfers of an entity from one Annex to another 
or, in exceptional cases, other modifications relating to Appendices I through IV shall be notified to the 
Committee, along with information as to  the likely consequences of the change for the mutually agreed coverage 
provided in this Agreement.  If the rectifications, transfers or other modifications are of a purely formal or minor 
nature, they shall become effective provided there is no  objection within 30 days.  In other cases, the Chairman 
of the Committee shall promptly convene a meeting of the Committee.  The Committee shall consider the proposal and any claim for compensato ry adjustments, with a view to maintaining a balance of rights and 
obligations and a comparable level of mutually agreed coverage provided in this Agreement prior to such 
notification.  In the event of agr eement not being reached, the matter may be pursued in accordance with the 
provisions contained in Article XXII." 
Article XXIV:6(b) reads as follows:  "Where a Party wi shes, in exercise of its rights, to withdraw an 
entity from Appendix I on the grounds that government control or influence over it has been effectively 
eliminated, that Party shall notify th e Committee.  Such modification shall become effective the day after the 
end of the following meeting of the 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 procedur es on consultations and dispute settleme nt contained in Article XXII.  In 
considering the proposed modification to Appendix I and any consequential co mpensatory adjustment, 
allowance shall be made for the market-opening effects of the removal of government control or influence." GPA/W/250 
Page 2  
 
 
  (a) Pursuant to Article XXIV:6(a) of the GP A, the Republic of Korea wishes to notify the 
Committee on Government Procurement of th e modification relating to Annex 3 of 
Appendix I of the GPA. 
  (b) This modification is based on the fact that H&CB merged with the Kookmin Bank, 
1 November 2001, which is already listed in Annex 3 of Appendix I of the GPA. 
 
 (c) Accordingly, the Government of Korea considers this change to be 
inconsequential with regard to the mutua lly agreed coverage provided in the GPA. 
 
 (d) Attachment C2 provides a summary of modifications proposed by Korea to Annex 3 
of Appendix I.  Attachment D2 indicates how Annex 3 of Appendix I would appear 
after the proposed modifications have been made. 
 (2) Withdraw "Korea Tobacco & Ginseng Corporation" (KT&G): 
 
 (a) Pursuant to Article XXIV:6(b) of the GPA, the Republic of Korea wishes to notify 
the Committee on Government Procurement of  the modification relating to Annex 3 
of Appendix I of the GPA. 
  (b) This modification is based on the fact that the Korea Tobacco & Ginseng Corporation 
(KT&G, henceforth) has been privatized, the Government having sold the last of its 
stocks in October 2002.  KT&G announced the completion of the privatization process at a shareholders meeting held on 27 December 2002. 
  (c) It should be noted that KT&G is now  a private company in accordance with the 
Korean Commercial Law.  The Government of Korea has no legal means to influence 
procurement decisions of KT&G.  Therefor e, KT&G should be deleted from Annex 3 
of Appendix I of the GPA. 
  (d) Attachment A provides further details  concerning the privatization of KT&G.  
Attachment C provides a summary of modifi cations proposed by Korea to Annex 3 of 
Appendix I.  Attachment D indicates how A nnex 3 of Appendix I would appear after 
the proposed modifications have been made. 
 (3) Withdraw "Daehan Printing and Publishing Co. Ltd":  
 (a) Pursuant to Article XXIV:6 of the GP A, the Government of Korea wishes to notify 
the Committee on Government Procurement of  the modification relating to Annex 3 
of Appendix I of the GPA. 
  (b) The National Textbook Ltd., which had b een listed in Annex 3 of Appendix I in 
1996, was purchased by the Daehan Printing and Publishing Co. Ltd. on 3 May 1999. 
 
 (c) The Daehan Printing and Publishing Co . Ltd. was established as a private company 
in 1948.  It is completely free of governme nt influence in its management decisions, 
including those on purchases. 
 
 
                                                     
 
2 Attachments C and D are in English only.  GPA/W/250 
 Page 3 
 
 
 
  (d) Further details regarding the Daehan Pr inting and Publishing Co. Ltd. are provided in 
Attachment B.  Attachment C provides a summary of modifications proposed by Korea to Annex 3 of Appendix I.  Attachment D indicates how Annex 3 of Appendix I would appear after the proposed modifications have been made. 
 GPA/W/250 
Page 4  
 
 
  
ATTACHMENT A 
 
KOREA TOBACCO & GINSENG CORPORATION (KT&G) 
  
 
1. Introduction 
 
 As part of its plan to privatize state enterp rises, the Government of Korea sought to convert 
Korea Tobacco & Ginseng Corporation (KT&G, he nceforth) from a government-invested enterprise 
to a private company.  The Government of Korea began selling its shares in KT&G in September 1999, and completed the sale of its  stock in the company in October 2002. 
  KT&G, as a government-invested enterprise, wa s subject to both the "Commercial Act" and 
the "Act on Corporate Governance Improvement and Pr ivatization of State Enterprises" (Privatization 
Act, henceforth).  With the sale of all remaini ng government owned shares, however, KT&G has been 
transformed into a fully private company free from th e coverage of the Privatization Act, and subject 
only to the Commercial Act as is the case with other private entities.   As such, KT&G, a fully private company both  from legal and practical viewpoint, conducts 
procurement solely on the basis of commercial consid erations. It  is, therefore, reasonable to delete 
KT&G from the WTO GPA concession list. 
 
2. Current Shareholder Status 
 
 Table 1 shows the composition of KT&G sh areholders as of 21 November 2002.  As 
indicated, the Government of Korea does not have a stake in KT&G anymore. 
  
Table 1 
Breakdown of Current Shareholders 
 
(%) Gov't Foreign Issued 
Exchangeable 
Bond (EB) Domestic 
Shareholder Foreign 
Shareholder Treasury 
Stock etc.* Total 
Shares 0 19,510,480 51,166,784 48,808,030 61,957,203 181,442,497 
% 0.0 10.7 28.2 26.9 34.2 100.0 
 
* This includes EBs to be open to domestic (15.2%) as well as foreign buyers (8.4%). 
 
 
3. Current Legal Status 
 
 Before privatization was comple ted, KT&G had been subject to the Privatization Act.  Since 
KT&G completed its privatization process, it ca n be excluded from further coverage of the 
Privatization Act pursuant to the provisions  set out in Article 21 of the said Act. 
  Thus, KT&G is no longer subject to laws or  regulations that cover government-invested 
enterprise.  The legal rights and obligations of KT&G are now identical to those of other private 
companies.  KT&G is now only subject to the Commer cial Act as is the case with other private firms.   GPA/W/250 
 Page 5 
 
 
 
 Thus, the Government of Korea no longer has any control over the management decisions of KT&G, 
including those related with procurement. 
 
4. Management and Legal Independence 
 
 According to the Privatization Act of Oc tober 1997, the Government of Korea insured 
independence of KT&G in every respect, including hu man resource management and financial affairs, 
despite the fact that it still owned a substantial portion of KT&G stock.  The recent sale of the 
remaining government-owned KT&G shares, and th e resulting exclusion of KT&G from the coverage 
of the Privatization Act, mean that the Govern ment of Korea no longer has any means or legal 
grounds to intervene in KT&G's management decisions, in particular purchasing decisions. 
 
 Thus, KT&G is now an entirely private company from a legal and a practical viewpoint, and is therefore entitled to base its procurement practices  on commercial considerations.  Having taken all 
these considerations into account, Korea would like to delete KT&G from Annex 3 of Appendix I of 
the GPA. GPA/W/250 
Page 6  
 
 
 ATTACHMENT B 
 
DAEHAN PRINTING AND PUBLISHING CO. LTD.  
 
 
 
1. Introduction 
 
 As part of its plan to privatize state enterp rises, the Government of Korea sought to convert 
National Textbook Ltd. from a government-invested enterprise to a private company.  The 
Government of Korea and Korea Development Bank began selling their shares, 40% and 46.5% 
respectively, from 10 December 1998 and 26 December 1998.  When the sale of government shares was completed, however, National Textbook Ltd. was bought up by Daehan Printing and Publishing 
Co. Ltd. (Daehan, henceforth).  Consequently , National Textbook Ltd. as a legal entity was 
extinguished. 
 
 Daehan was established as a private compan y in 1948.  The Government of Korea has 
ensured the independence of Daehan in every respect, including human resource management and financial affairs.  As such, Daehan is an entir ely private company both from a legal and practical 
viewpoint, in that its procurement is based entirely on commercial considerations.  Therefore, Korea wishes to delete Daehan from the WTO GPA concession list. 
 
2. Current Shareholder Status 
 
 Table 1 shows the composition of Daehan shar eholders as of December 2002.  As indicated, 
the Korean Government or governme nt-owned institutions no longer have a stake in Daehan.  Daehan 
is owned completely by private shareholders. 
  
Table 1 
Breakdown of Current Shareholders (%) 
 
Government and Public 
Agencies Securities 
firms Other Domestic 
Shareholders Foreign Shares Total 
0.0 0.0 100.0 0.0 100.0 
 
3. Current Legal Status 
 
 The status of Daehan as an entirely private co mpany signifies it is not subject to any law or 
regulation that covers government-invested enterp rise and state enterprises.  The legal rights and 
obligations of Daehan are identical to those of ot her private companies in ev ery respect.  Daehan is 
only subject to the Commercial Act as is the case with other private firms.  Thus, the Korean 
Government has no means of control over Daehan management decisions. 
 
  GPA/W/250 
 Page 7 
 
APPENDIX I KOREA  ANNEX 3 Page 1/2
 
 
14 September 2001 (WT/Let/401)  ATTACHMENT C 
 
KOREA 
 
(Authentic in the English language only) 
 
ANNEX 3 
 
All Other Entities which Procure in Accordance 
With the Provisions of this Agreement  
 
Supplies  
 Threshold : 450,000 SDR 
 List of Entities : 
 - Korea Development Bank 
- Industrial Bank of Korea 
- Kookmin Bank -
 Housing and Commercial Bank (H&CB)  
- Korea Tobacco &  Ginseng Corporation  
- Korea Minting and Security Printing Corporation 
- Korea Electric Power Corpor ation (except purchases of pr oducts in the categories of 
HS Nos. 8504, 8535, 8537 and 8544) 
- Korea Coal Corporation - Korea Resources Corporation - Korea National Oil Corporation - Korea General Chemical Corporation 
- Korea Trade-Investment Promotion Agency 
- Korea Highway Corporation - Korea National Housing Corporation - Korea Water Resources Corporation - Korea Land Corporation 
- Korea Agriculture and Rural Infrastructure Corporation 
- Agricultural and Fishery Marketing Corporation -
 Korea Telecom (except purchases of common telecommunications commodity products and 
telecommunications network equipment)3 
- Korea National Tourism Organization -
 Daehan Print ing and Publishing Co. Ltd.  
- Korea Labor Welfare Corporation 
- Korea Gas Corporation  
Construction Services  
 Threshold : 15,000,000 SDR 
 List of Entities which Procure Services Specified in Annex 5 :   
                                                     
 
3 Notified in GPA/W/207, dated 11 September 2002. GPA/W/250 
Page 8  
APPENDIX I KOREA  ANNEX 3 Page 2/2
 
 
14 September 2001 (WT/Let/401)   
Same as "Supplies" section 
 
Notes to Annex 3  
 
1. This Agreement does not apply to the products and services procured with a view to resale or to 
use in the production of goods or provision of services for sale.   
 
2. This Agreement does not apply to the singl e tendering procurement including set-asides for 
small- and medium-sized businesses accordi ng to the Government Invested Enterprise 
Management Law and Accounting Regulations  on Government Invested Enterprise. 
 3. This Agreement does not apply to the procurem ent of satellites according to the Aviation and 
Space Industry Development Promotion Law for five years from its entry into force for Korea. 
 
  GPA/W/250 
 Page 9 
 
APPENDIX I KOREA  ANNEX 3 Page 1/2
 
 
… 2001 (WT/Let/…) ATTACHMENT D 
 
KOREA 
 
(Authentic in the English language only) 
  
ANNEX 3 
 
All Other Entities which Procure in Accordance 
With the Provisions of this Agreement  
 
 Supplies  
 
Threshold : 450,000 SDR 
 List of Entities : 
 
- Korea Development Bank - Industrial Bank of Korea - Kookmin Bank - Korea Minting and Security Printing Corporation 
- Korea Electric Power Corpor ation (except purchases of pr oducts in the categories of 
HS Nos. 8504, 8535, 8537 and 8544) 
- Korea Coal Corporation - Korea Resources Corporation - Korea National Oil Corporation - Korea General Chemical Corporation 
- Korea Trade-Investment Promotion Agency 
- Korea Highway Corporation - Korea National Housing Corporation - Korea Water Resources Corporation - Korea Land Corporation 
- Korea Agriculture and Rural Infrastructure Corporation 
- Agricultural and Fishery Marketing Corporation . Korea Telecom (except purchases of comm on telecommunications commodity products and 
telecommunications network equipment) 
- Korea National Tourism Organization - Korea Labor Welfare Corporation 
- Korea Gas Corporation 
  
Construction Services  
 Threshold : 15,000,000 SDR 
 List of Entities which Procure Services Specified in Annex 5 :   
 Same as "Supplies" section GPA/W/250 
Page 10  
APPENDIX I KOREA  ANNEX 3 Page 2/2
 
 
… 2001 (WT/Let/…)  Notes to Annex 3  
 1. This Agreement does not apply to the products and services procured with a view to resale or to 
use in the production of goods or provision of services for sale.   
 2. This Agreement does not apply to the singl e tendering procurement including set-asides for 
small- and medium-sized businesses accordi ng to the Government Invested Enterprise 
Management Law and Accounting Regulations  on Government Invested Enterprise. 
 3. This Agreement does not apply to the procurem ent of satellites according to the Aviation and 
Space Industry Development Promotion Law for five years from its entry into force for Korea. 
 
__________