RESTRICTEDWORLD TRADE
ORGANIZATIONGPA/W/266
13 June 2003
(03-3066)
Committee on Government Procurement Original:  English
RESPONSES TO QUESTIONS FROM THE UNITED STATES
RELATING TO KOREA TELECOM (KT)
Communication from the Republic of Korea
Please find below Korea's responses to questions from the United States (GPA/W/242)
regarding Korea's notification to the Committee on Government Procurement on the withdrawal of
Korea Telecom (KT Corporation) from Annex 3 of Appendix Ι of the GPA (GPA/W/207).
_______________
1. Please provide a copy of the law(s) or other measures that authorized the ROKG to sell its
shares in KT and that transformed KT from a government entity into a private entity.
As explained during the bilateral consultations with the United States, KT was privatized in
accordance with the following law:
- Act on Restructuring and Privatization of State Enterprises (hereinafter referred to as
Privatization Act).*
2. Please describe all laws, regulations and ot her measures that the ROKG enacted or adopted
to ensure that KT's procurement is consistent with  the Agreement.  What measures would be required
to alter such regulation of KT's procurement if it is withdrawn from GPA coverage?  Please provide a
copy of the procurement procedures that KT used before and after the ROKG sold its shares in KT.
ROKG adopted "the Special Rule on Procurement Contracts of Specific Items (Prime
Minister's Decree 603, hereinafter referred to as Special Rules)" to ensure that  KT's procurement is
consistent with the GPA.  For that purpose, KT also adopted "KT Special Rules on InternationalContracts (hereinafter referred to as Contract Rules)":
(i) The Special Rules stipulate special procedures related to the government procurement
of specific telecommunications items (including communication network equipments
and other communication devices) conceded by mutual agreement with foreign
countries.
(ii) The Contract Rules stipulate what procedures KT should take when it procures items
covered by the GPA.
**
                                                     
* For details, please refer to Attachment 1 of this document.
** For details, please refer to Attachment 2 of this document.GPA/W/266
Page 2
In the event that KT is withdrawn from GPA coverage, the next step will be simply to exclude
KT from the list of "entities that procure specific items in accordance with special procurement
contracts" of the Special Rules.
With regard to the procurement procedures of KT, since the enactment of the Privatization
Act in 1997, KT, as a commercial corporation identical with other private companies, has
independently made its accounting and procurement decisions free from any government control or
influence.  And such a procurement procedure hasn't changed at all even after the government
completely sold off its shares in KT.
3. In the three years prior to the ROKG's sale of its shares in KT, what percentage of KT's
purchases were from foreign suppliers?  Please provide details on the size of these procurements andthe goods and services procured.
Before ROKG fully sold off its shares in KT, KT's purchases from foreign suppliers
represented 9.8 per cent in 1999, 4.9 per cent in 2000, 1.8 per cent in 2001 and 2.1 per cent in 2002.
The complete replacement of switching system and the global slowdown in the IT sector havecontributed to the decline.  Major foreign items procured are as follows:
- Y2K Solution from Lucent Technologies, Sagem SA, Ericsson Telecom AB;
- Wide Band Digital Equipment from Marconi Communications;
- Digital Circuit Multiplication from ECT Telecom Ltd.;- DSR from General Instrument.
4. It is our understanding that KT is regulated by the Ministry of Information and
Communications.  Does the Ministry review the corporate plans of KT or require or encourage KT to
consult with it before making any business decisions?
Since the establishment of the Privatization Act in 1997, KT has been as much independent as
other private companies in devising business plans and making other business decisions without the
Government's intervention.
The Ministry of Information and Communication (MIC) does not request KT, a private
company, to consult with the MIC in reviewing or making a decision on its business plans.Furthermore, the Ministry neither has such a right nor has ever done so to KT.
5. Since the sale of the remainder of the ROKG's shares in KT, is KT subject to any formal or
informal regulations or other measures that are di fferent from its private sector competitors in the
telecommunications sector?
KT is subject to regulations imposed generally on a dominant operator in the fixed-line
market.  However, the regulation is equivalent to  the one SK Telecom, a dominant operator in the
wireless telecom market, is subject to.  Thus, there are no formal or informal regulations exclusively
applied to KT.
6. Are there any laws or regulations that restrict  KT from hiring former  ROKG employees?  If
so, please provide a copy.
1. After Privatization:
(i) Under Article 17 of the Public Service Ethics Act, the ROKG restricts retired public
officials from filling a position in related private enterprises.  The Act is applied to
public servants required to register their property, or officers or employees of public
service-related organizations.GPA/W/266
Page 3
(ii) With its full privatization on 21 May 2002, KT has been publicly notified as a private
company subject to the Public Service Ethics Act.
(iii) Thus, retired MIC officials of Grade IV (director level) or higher are not allowed to
work for private telecommunication companies including KT for two years after their
retirement.
(iv) The following are the relevant provisions in the Public Service Ethics Act,
Enforcement Ordinance of the Public Service Ethics Act, and the Notification of the
Ministry of Government Administration and Home Affairs.
< Public Service Ethics Act >
Article 3 (Persons Liable for Registration)
(1) Any public official who falls under any of the following subparagraphs (hereinafter referred
to as the "person liable for registration") shall register property under the provisions of this Act:
3. National and local public officials of Grade IV or higher in general service, and
public officials in special service, who receive remuneration equivalent thereto;
Article 17 (Restriction on Employment of Retired Public  Officials in Related Private Enterprises, etc.)
(1) No public official or officers or employee of a public service-related organization who was
engaged in a grade of position or field of duties as prescribed by the Presidential Decree may be
employed in a profit-making private enterprise larger than a specified size (hereinafter referred to asthe "profit-making private enterprise") connected closely with the duties which he performed at the
competent department within three years immediately before his retirement, for a period of two years
immediately after his retirement, or the organization established for the joint profits and mutual
cooperation, etc. of private enterprises (hereinafter referred to as the "association").
< Enforcement Ordinance of the Public Service Ethics Act >
Article 31 (Persons whose Employment is Restricted)
Public officials and officers and employees of public service-related organizations whose
employment is restricted under Article 17(1) of the Act shall be those liable for registration as
provided in Article 3 of the Act.
< Notification No. 2002-23 of the Ministry of Government Administration and Home Affairs >
Pursuant to the provisions of Clause 2, Article 17 of the Public Service Ethics Act and
Clause 3, Article 33 of the Enforcement Decree of the Public Service Ethics Act, the Ministry ofGovernment Administration and Home Affairs hereby notifies private enterprises subject to the
employment restriction in 2003:
No. Corporate Name Type of Industry Location
1823 KT Corporation Telecommunication206, Jeongja-dong, Bundang-gu,
Seongnam, Kyunggi ProvinceGPA/W/266
Page 4
2. Before Privatization:
Pursuant to the Privatization Act effective as of October 1997, ex officio  directorship of the
government was abolished.  Instead, KT ensured a completely independent human resources
management, including the appointment of president and directors through shareholders' general
meeting:
(i) More specifically, KT's president is appointed at the shareholders' general meeting
among president candidates recruited through public notice and recommended by the
Corporate President Recommendation Committee.  The Corporate President
Recommendation Committee is composed of outside directors and members selected
from private sectors, which makes government officials ineligible for committee
membership.
(ii) Standing directors, outside directors and auditors are also appointed at the
shareholders general meeting.  Any person who served as a government official over
the recent two (2) years is not eligible for the position of outside director.
7. Please list all former KT employees who are currently senior officials (with over 15 years
combined employment in supervisory positions) in the Ministry of Information and Communications
(MOIC), the Electronics and Telecommunications Research Institute (ETRI), the Telecommunications
Technology Association (TTA) or similar telecomm unications organizations with ties to the ROKG.
None.
8. Please list all current senior KT officials who were previously employed by MOIC, ETRI,
TTA or similar telecommunications organizations wi th ties to the ROKG and their current and past
positions in these organizations.
None.
9. Please describe the extent of financial and other support that KT provided to ETRI and
similar organizations with ties to the ROKG prior to the commencement of the ROKG's sale of itsshares in KT.  Please indicate whether, and if so indicate how, such support has changed since ROKG
completed its sale of KT shares.
No financial support has been provided to orga nizations with ties to the Government since KT
was subject to the Privatization Act in 1997.
10. Has the ROKG ever encouraged KT and other Korean entities to purchase goods and
services from foreign suppliers?  If so, please provide details and documentation.
None.
11. Please describe all financing, including direct  grants, guarantees and loans at preferential
rates that KT may have obtained prior to ROKG's sale of its KT shares.
None.
12. Please describe all financing that KT received from private sources, but that it obtained on
preferential terms due to the ownership interest of ROKG.
None.GPA/W/266
Page 5
13. Do any KT directors, named by ROKG, remain on KT's Board of Directors?
None.
14. Please describe any unusual conditions attendant to ROKG's sale of its shares (e.g., no
election of new directors until X years after sale).
None.GPA/W/266
Page 6
ATTACHMENT 1*
ACT ON RESTRUCTURING AND PRIVATIZATION OF STATE ENTERPRISES
ACT NO. 6607
Article 1 – Purpose
The purpose of this Act is to contribute to the creation of sound corporate culture and the balanced
development of national economy, by introducing a management system run by specializedexecutives and to hold the management accountable for its performance, thereby enhancing
management efficiency and facilitating privatization, while preventing the concentration of economic
power in the process.
Article 2 - Applicable Enterprises
This Act shall apply to those corporations falling into any of the following Subparagraphs (hereinafter
referred to as "Applicable Enterprises").  <Amended 26 January 1999, 14 January 2002>:
1. Korea Tobacco and Ginseng Corporation  transformed into a joint stock company
subject to the Commercial Law , pursuant to the Act on the Abolishment of Korea
Tobacco and Ginseng Corporation Act
2. Korea Telecommunication Corporation  transformed into a joint stock company
subject to the Commercial Law , pursuant to the Act on the  Abolishment of Korea
Telecommunication Corporation Act
3. Korea Gas Corporation  established pursuant to the Korea Gas Corporation Act.
4. HANJUNG (Korea Heavy Industry Incorporated)5. Incheon International Airport Corporation  established pursuant to the Incheon
International Airport Corporation Act
6. Korea Aerospace Corporation  established pursuant to the Korea Aerospace
Corporation Act
Article 3 - Relationship with Other Laws and Regulations
(1) This Act shall supersede other laws and regulations concerning the organization, shareholder
rights, and the equity sale for privatization of Applicable Enterprises.
(2) Applicable Enterprises pursuant to Article 2 Paragraph 1 through 3, Paragraph 5, and
Paragraph 6 shall not be considered as government Investment Institutions subject to the
Framework Act on the Management of Government-Invested Institutions  <Amended
26 January 1999, 14 January 2002>
(3) Matters concerning Applicable Enterprises (with the exception of Korea Gas Corporation )
other than those provided for herein shall be stipulated by the Commercial Law  provisions
concerning joint stock company.
                                                     
* English only.GPA/W/266
Page 7
(4) Matters concerning Korea Gas Corporation other than those provided for herein shall be
stipulated by the Korea Gas Corporation Act .
Article 4 - President
(1) The president shall be appointed at the shareholders' general meeting.
(2) The term of the president shall be three (3) years, and cannot be dismissed without due reason
except in the case set forth in Article 13, Paragraph 3.
(3) The president, in applying the Commercial Law , shall be deemed the chairman of Board of
Directors.
Article 5 - Directors
(1) Directors shall be classified into standing directors and non-standing directors, and shall be
appointed at the shareholders' general meeting.
(2) The quorum of standing directors including president shall account for less than 50 per cent
(%) of the total quorum of directors.
(3) The term directors shall be three (3) years.  The term of successor to a vacant non-standing
director's seat shall be the remaining term of the predecessor.
(4) One-third of the quorum of non-standing directors shall be appointed annually.
Article 6 – Board of Directors
(1) The president shall convene a board of directors meeting ex officio  or upon request by more
than one quarter (1/4) of registered directors, and shall be the chairman.
(2) In case the president cannot participate in the resolution of the board of directors pursuant to
this Act, or cannot perform the duty of the chairman of board of directors due to compellingreasons, the director as stipulated by the Articles of Incorporation shall act on the president's
behalf.
Article 7 – Remuneration of the President and Standing Directors
(1) The board of directors shall determine, upon its resolution, the criteria and payment method
of the remuneration of the president and standing directors, and report to the shareholders'
general meeting.
(2) The criteria of remuneration as set forth in Paragraph 1 shall be formulated in such a way as
to reflect the management performance of Applicable Enterprise to the determination of
remuneration.
(3) The president and standing directors cannot participate in the resolution of board of directors
pursuant to Paragraph 1.GPA/W/266
Page 8
Article 8 - Recommendation of the Director Candidate
(1) In case the president recommends the standing director candidate, the recommendation shall
be approved by the board of directors.  In this case, standing directors except the president
cannot participate in the board of directors' resolution.
(2) Non-standing director candidates shall be  recommended by either a shareholder or
shareholder association, pursuant to the Articles of Incorporation.
Article 9 - Qualifications for Non-Standing Director
(1) Candidates eligible for non-standing director shall be those with specialized knowledge or
experiences in economics, business management, law, or relevant technology.
(2) Notwithstanding Paragraph 1, those with material  interest in the Applicable Enterprise cannot
be a non-standing director.
(3) The scope of those with material interest pursuant to provision set forth in Paragraph 2 shall
be stipulated by the Articles of Incorporation.
Article 10 - Non-Standing Director's Rights to Demand Materials
A non-standing director can request the president for the provision of materials required for
performing duties.  In this case, the president shall respond to the demand unless there are special
circumstances.
Article 11 – President Recommendation Committee
(1) For the purpose of recommending candidates for president, each Applicable Enterprise shall
establish its respective President Recommendation Committee (hereinafter referred to as
"Committee").
(2) The Committee shall be composed of a few non-standing directors, one of former or
incumbent presidents pursuant to the Articles of Incorporation, and a few non-officialmembers entrusted by the Committee (with the exception of the employees of Applicable
Enterprise in question and government officials).  In this case, the quorum of Committee
members who are non-standing directors shall account for the majority of the total quorum of
members.
(3) The number of non-standing directors entrusted with the Committee membership pursuant to
Paragraph 2 shall be less than one half (1/2) of the total quorum of non-standing directors.
(4) The Committee chairman shall be appointed among non-standing directors by the board of
directors.  In this case, the president and standing directors cannot take part in the board ofdirectors' resolution.
(5) The Committee shall make decisions, with the agreement of majority of registered Committee
members, excluding the Committee chairman.  In this case, the Committee chairman does not
have voting rights.
(6) Necessary matters concerning the composition and operation of the Committee other than
those provided for herein shall be stipulated by the Presidential Decree.GPA/W/266
Page 9
Article 12 - Appointment of President
(1) The president shall be appointed among those who are qualified for a chief executive officer,
with extensive knowledge on business management and economics or with extensive
management experiences.
(2) Applicable Enterprise shall post a public notice on recruitment of president candidates on
major daily newspapers, and can separately investigate candidates for president who are
deemed appropriate for the post, or request a specialized agency for investigation.
(3) Committee shall examine those recruited pursuant to Paragraph 2, according to the
Presidential Candidate Examination Criteria as determined by the board of directors.
(4) In selecting the president candidates, th e Committee shall consult with those to be
recommended as candidates on the terms and conditions of contract on management target
determined by the board of directors, and where it is deemed necessary in the process of
consultation, can modify the contract terms and conditions determined by the board ofdirectors.
(5) In accordance with the results of examination pursuant to Paragraph 3 and consultation
pursuant to Paragraph 4, the Committee shall both recommend the presidential candidates and
submit draft contract to the shareholders' general meeting.
(6) Standing directors including the president, can not attend the board of directors' meeting held
for the purpose of determining the Presidential Candidate Examination Criteria pursuant to
Paragraph 3, and the president cannot attend the board of directors' meeting held for the
purpose of determining the terms and conditions of the contract on management targetpursuant to Paragraph 4.  In this case, the chairman of the board of directors shall be the
Committee chairman.
Article 13 - Contract with the President
(1) Upon the approval by shareholders' general meeting of the draft contract submitted pursuant
to Article 12 Paragraph 5, the Applicable Enterprise shall sign the contract with the president.In this case, the Committee chairman shall sign the contract as the representative of the
Applicable Enterprise.
(2) Pursuant to Paragraph 1, the board of directors can evaluate the performance of contract
signed with the president, or request a specialized agency for the evaluation.  In this case, thepresident and standing directors cannot participate in the resolution of board of directors.
(3) In case the evaluation results pursuant to Paragraph 2 leads to a determination that the
president's performance falls short of management target, the board of directors can propose
the president's dismissal to the shareholders' gene ral meeting.  In this case, the president and
standing directors cannot participate in the board of directors' resolution.
Article 14 - Establishment of Shareholders Association
(1) Where it is deemed necessary for the effective operation of shareholders' general meeting, as
stipulated in the Presidential Decree, the Applicable Enterprise can establish and operate a
shareholders association composed of some shareholders.
(2) Necessary matters concerning the qualifications for the shareholders association membership
and its operation shall be stipulated by the Articles of Incorporation.GPA/W/266
Page 10
Article 15 - Provisions on Special Cases Concerning Audit by the Board of Audit and Inspection
Inspection of Applicable Enterprises pursuant to Article 24 Paragraph 1 Sub-paragraph 3 of
the Board of Audit and Inspection Act shall not be carried out unless there is an accident or a
concrete evidence of the occurrence of accident.
Article 16 - Exercise of Shareholder's Right by the Government
(1) The shareholder's right of Applicable Enterprise's shares held by the government shall be
exercised by competent minister, upon consul tation with the Minister of Finance and
Economy.
(2) Necessary matters concerning the consultation pursuant to Paragraph 1 shall be stipulated by
the Presidential Decree.
Article 17 - Exercise of Minority Shareholder's Right
The provisions set forth in the Securities Transactions Act  Article 191 Paragraph 13 and
Article 191 Paragraph 14 shall be applied to the exercise of minority shareholder's right and
shareholder proposal right, even when the Applicable Enterprise's shares are not listed on the
securities market.
Article 18 - Single Person Stock Ownership Ceiling
(1) One (1) shareholder and the person in special relationship with that shareholder as stipulated
by the Presidential Decree (hereinafter referred to as "Single Person") shall neither ownstocks exceeding the ratio stipulated by the Article of Incorporation within 15 per cent (%) of
total number of issued stocks with voting rights, nor de facto  control the Applicable
Enterprise.  <Amended 29 January 1999>
(2) In case a single person owns stocks above the ceiling stipulated in Paragraph 1 or de facto
controls Applicable Enterprise, the single person shall immediately dispose of the exceeding
amount of stocks.  In this case, even before the disposal of exceeding amount, the scope ofsingle person's voting rights exercise shall be restricted to the ceiling stipulated in
Paragraph 1.
(3) Single person's ownership or de facto  control as stipulated in Paragraph 1 and Paragraph 2
means a single person exercising voting rights by owning stocks under its own or borrowed
name, or by collusion.
Article 19 - Foreign Stock Ownership Ceiling
(1) Acquisition of the Applicable Enterprise's stocks by foreigner or foreign corporation can be
separately restricted pursuant to the Article of Incorporation, in addition to the restriction
pursuant to Article 18 Paragraph 1.
(2) The provisions set forth in Article 18 Paragraph 2 shall be applied mutatis mutandis to those
foreigners or foreign corporations owning stocks above the ceiling or de facto  controlling
Applicable Enterprise, as stipulated in the Articles of Incorporation pursuant to Paragraph 1.
<Inserted 29 January 1999>GPA/W/266
Page 11
Article 20 - Equity Sale Method
(1) The stocks held by the government, government-invested institution, or Korea Development
Bank  established pursuant to the Korea Development Bank Act  (hereinafter referred to as
"Government-equivalent") can be sold on consignment or assignment to agencies stipulatedby the Presidential Decree, including but not limited to financial institution and securities
firm.
(2) In selling stocks held by government-equivalent, where it is deemed necessary for alleviating
the repercussions on stock market, widely diversifying stocks, and enhancing international
competitiveness of the Applicable Enterprise, the Minister of Finance and Economy can
restrict the qualifications for the buyer of stocks in question or the amount of stocks availablefor purchase.  <Amended 29 January 1999>
(3) Upon the request of an employee stockholders association member, government-equivalent
can sell, with priority, the stocks to the employee stockholders association of the corporation
in question within the ceiling as stipulated in Article 18 Paragraph 1.
(4) In case of selling stocks pursuant to Paragraph 3, matters including but not limited to the
allocation of stocks to the employee stockholders association members, and the disposal of
that stock shall be stipulated by the Securities Transactions Act  Article 191 Paragraph 3.
(5) Notwithstanding the Budget and Accounting Act , the cost for selling government held
stocks pursuant to Paragraph 1 can be disbursed from the proceeds from equity sale.
Article 21 - Preclusion from Application
(1) Once an Applicable Enterprise falling into any of the Article 2 Subparagraphs 1 through 3
fulfills any of the requirements set forth in the following Subparagraphs, this Act shall not
apply to that enterprise from the date of shareholders' general meeting first convened
thereafter.
1. The ratio of voting stocks held by government-equivalent is within the ceiling set
forth in Article 18 Paragraph 1.
2. The ratio of voting stocks held by single person other than government-equivalent is
larger than that held by government-equivalent.
(2) Among the stocks of Korea Heavy Industry Incorporated , Article 18 and Article 19 shall
not apply to the person who acquires the stocks held by government-equivalent through the
tendering for equity sale, and once the ratio of the stocks with voting rights held by single
person and person falling into any of the following Subparagraphs exceeds 51 per cent (%) of
the total issued stocks with voting rights, this Act shall not be applied from the date of
shareholders' general meeting first convened thereafter.
1. Person who aims at joint capital participation and management pursuant to contract.2. The person pursuant to Subparagraph 1 and person who is in special interest with the
person as stipulated by the Presidential Decree pursuant to Article 18 Paragraph 1.
(3) In case the government made investment in-kind in Korea Development Bank, The Export-
Import Bank of Korea, and Industrial Bank of Korea pursuant to the Act on the
Investment In-kind of State Properties , Article 18 shall not be applied.  <Inserted
29 January 1999>GPA/W/266
Page 12
ANNEX <NO. 5379, 28 AUGUST 1997>
Article 1 - Effective Date
This Act shall take effect as of 1 October 1997.
Article 2 - Deleted <29 January 1999>
Article 3 - Recommendation of the First Non-Standing Director
(1) For the purpose of selecting the person to recommend as the first non-standing director
(hereinafter referred to as the "Non-Standing Director Designee"), an Ad-hoc Committee on
Non-Standing Director Recommendation shall be  established under relevant department in
Applicable Enterprises.
(2) The members of the Ad-hoc Committee on N on-Standing Director Recommendation pursuant
to Paragraph 1 shall be composed of shareholder representative, non-official member with
specialized knowledge in area relevant to Applicable Enterprise, and public official from
relevant central government agency.
(3) Necessary matters concerning the composition and operation of the Ad-hoc Committee on
Non-Standing Director Recommendation shall be stipulated by the Presidential Decree.
(4) The Ad-hoc Committee on Non-Standing Di rector Recommendation shall recommend the
non-standing director designee to shareholders' general meeting as a non-standing director
candidate.
(5) In recommending non-standing director de signee as a non-standing director candidate
pursuant to Paragraph 4, the Ad-hoc Committ ee on Non-Standing Director Recommendation,
notwithstanding Article 5 Paragraph 3, shall equally divide the quorum of non-standing
directors by three (3), and separately recommend non-standing directors with respective termsof one (1) year, two (2) years, and three (3) years.  In case the quorum of non-standing
directors cannot be equally divided by three (3), the recommended candidates for the longer-
term directors shall be more than shorter-term director candidates.
Article 4 - Appointment of the First President
(1) For the purpose of recommending candidate for the first president to be appointed at the
shareholders' general meeting after the enactment of this Act, an Ad-hoc Committee on
President Recommendation shall be established.
(2) Provisions of Article 11 and Article 12 shall be applied mutatis mutandis  to the composition
and operation of the Ac-hoc Committee on President Recommendation pursuant to Paragraph
1 and the appointment of the first president.  In this case, "non-standing director" shall be
interpreted as "non-standing director designee", and "board of directors" as "non-standing
director designees' meeting".GPA/W/266
Page 13
Article 5 - Provisions on Special Cases Concerning Incumbent Executives of Applicable
Enterprises
(1) The term of incumbent chief director of Applicable Enterprise at the time of enforcement of
this Act shall be deemed terminated at the point this Act is enforced.
(2) The president, directors, and auditor of Applicable Enterprise at the time of enforcement of
this Act shall be deemed president, directors, and auditor pursuant to this Act, provided that
their term is effective until new president, directors, and auditor are appointed at the
shareholders’ general meeting pursuant to this Act.GPA/W/266
Page 14
ATTACHMENT 2**
KT’S CORPORATE REGULATION
SPECIAL REGULATIONS ON INTERNATIONAL CONTRACTS
Regulation No. 538 (30 December 2000)
Article 1 - (Purpose)
The purpose of these Regulations is to define principles, procedures, etc. related to
international tendering and contracts for Korea Tele com (hereinafter referred to as "the Company"),
pursuant to the provisions of Article 87 of the Contract Regulations.
Article 2 - (Definitions)
As used in these Regulations, the term:
1. "International tendering" shall mean a tendering procedure for contracts to be entered
into with domestic and foreign entities or foreign entities only, to supply goods,
construction, or services, and the contracts shall include a contract through limitedtendering.
2. "International contract" shall mean the signing of a contract after an international
tendering, as provided in these Regulations.
3. "List of Qualified Suppliers" shall mean a list of prospective suppliers (hereinafter
referred to as "qualified suppliers") whose proposals have been evaluated pursuant to
the provisions of Article 16 of the Company's Procurement Regulations, and found to
be advantageous to the Company, in overall consideration of the characteristics of the
project, the price, quality level of the proposed goods, convenience of the contract,
stable supply, quality attainment, conditions of maintenance and repair, etc.
4. "Telecommunications goods" shall mean telecommunication network equipment and
other telecommunication facilities, as well as incidental services and related software
(programs and plans, technical specifications, and other documents used for
programming).
Article 3 - (Scope of Application)
(1) Any of the following cases shall be subject to international contracts:
1. manufacturing or purchase of goods, the cost of which is estimated to exceed
450,000 SDR.  Provided, however, that in the case of telecommunications items, the
cost of which is estimated to exceed 130,000 SDR;
2. construction, the cost of which is estimated to exceed 15 million SDR;  or
3. if it is deemed favorable to the Company's interests to procure under an international
contract.
                                                     
** English only.GPA/W/266
Page 15
(2) Notwithstanding the provisions of Subparagraphs 1 and 2 of Paragraph (1), the following
cases may not be subject to international contracts:
1. if a contract through limited tendering is to be signed, pursuant to the provisions of
Subparagraphs 2 through 8 of Article 37 of the Contract Regulations;
2. if an emergency contract is to be execute d, pursuant to the provisions of Article 56 of
the Contract Regulations;  and
3. if it is barred from international tendering by other related laws and regulations.
(3) Calculation of estimated costs, stated in Paragraph (1), and the exchange rate of SDR to the
Korean currency shall be as provided elsewhere.
Article 4 - (Principles of International Contracts)
The official in charge of the contract shall select the other party to an international contract in
an impartial manner, not provide contract-related information in a discriminatory manner, and abide
by the following requirements:
1. the method of calculating the estimated price shall not be manipulated or a split order
shall not be placed for the purpose of avoiding an international contract;
2. any rules of origin, which are different from the provisions of the Overseas Trade Act
and the Customs Act, shall not be applied;  and
3. a fixed ratio of localized parts, technology transfer, offsets, etc. shall not be called for
in the process of evaluating the eligibility of prospective suppliers, evaluation of
proposals, and award of contracts, with a view to restricting entries or contract
conditions thereof.
Article 5 - (Method of Contract)
International contracts may be concluded through open tendering, selective tendering, or
limited tendering.
Article 6 - (Language)
(1) The language used for international contracts shall, in principle, be Korean.  Provided,
however, that if contracting parties operate primarily in a particular region and it is deemed
inevitable to use a foreign language, the language used in the region, or one language among
English, French and Spanish may be used.
(2) In the case of announcing an international tende ring, the official in charge of the contract
shall state the following matters at the bott om of the tendering announcement in English,
French or Spanish:
1. object of the contract;
2. deadline for presentation of tender and application for tendering;  and
3. name and address of the organization in charge of execution.GPA/W/266
Page 16
(3) If multiple languages are allowed to be used in preparing the tender for an international
tendering, the official in charge of contract shall include one or more languages among
English, French and Spanish.
(4) If any provision written in a foreign language, pursuant to the provisions of Paragraphs (2)
and (3), is different from what is stated in Korean, the Korean text shall prevail.
Article 7 - (Eligibility and Review of Applicants for Open Tendering)
(1) The official in charge of the contract may establish the requirements for eligibility of
applicants for open tendering, with regard to performance of a similar kinds of contracts,
performing capability, technological capability, status of management, and other necessarymatters, depending on the type and scale of the contract, in addition to the requirements stated
in Subparagraphs 1 through 3 and 5 of Article 13 of the Contract Regulations, as deemed
necessary for a successful concluding of an international contract.
(2) Upon request by a prospective applicant for open tendering, the official in charge of contract
shall review the eligibility thereof, pursuant to the provisions of the above Paragraph (1), and
notify the prospective applicant of the result.
(3) The official in charge of the contract may not conduct a review, as provided in Paragraph (2),
of those registered in the List of Qualified Suppliers.
(4) The official in charge of the contract shall pr omptly take steps to review the eligibility, if any
one who has not been through the eligibility review pursuant to the provisions of
Paragraph (1) of Article 8, requests to participate in the tendering. If it is deemed that there is
sufficient time for completing the eligibility re view by the day before the deadline for tender
submission, the official in charge shall allow him to submit the tender.
Article 8 - (List of Qualified Suppliers)
(1) The official in charge of the contract may prepare and display the List of Qualified Suppliers
in such a manner that all participants in the tendering may have ready access.
(2) In the event the List of Qualified Suppliers has expired or any party is removed from the List,
the official in charge of the contract shall notify the parties concerned to that effect.
Article 9 - (Public Notice)
(1) Tendering shall be announced 40 days prior to the day before the deadline for tender
submission.
(2) Notwithstanding the provisions of Paragraph (1), if the tendering falls under any of the
following circumstances and it is deemed impossible to procure the intended object under thecontract under the normal schedule, tendering may be announced 10 days prior to the day
before the deadline for tender submission:
1. if it is urgent;  or
2. if tendering is to be announced again, pursuant to the provisions of Article 38 of the
Contract Regulations.
(3) When public notice has been announced and the content thereof is revised or corrected, a
correction notice shall be made with the submission deadline extended by at least 10 days.GPA/W/266
Page 17
(4) Notwithstanding the provisions of Paragraph (1), public notice of tendering may be made
25 days prior to the day before the deadline for tender submission, if it falls under any of the
following cases:
1. if a separate 40-day pre-announcement has been made within the past 12 months;  or
2. if individual requests for supply are made  in a certain grouping or instalments under
the contract (hereinafter referred to as "recurring contract"), and the notice is a
follow-up to a previous one.
(5) The provision of Paragraph (1) of Article 17 of the Contract Regulations shall apply to any
public notice of tendering, pursuant to the provisions of Paragraphs (1) through (4), as
necessary.
Article 10 - (Content of Public Notice)
If a public notice, pursuant to the provisions of Article 9, is to be made, the official in charge
of the contract shall include the following matters, in addition to those set forth in the provisions of
Article 18 of the Contract Regulations, in said public notice:
1. matters concerning any additional procurement conditions in regard to the said
contract, and the scheduled date of public notice of a subsequent tendering in the case
of a recurring contract;
2. method of open tendering or selective te ndering, and whether negotiation procedures
are included;
3. type of contract to be used by the organization that placed the order—purchase, lease,
instalment purchase, etc.;
4. address, deadline for submission, and required language for the application for review
of the eligibility for tendering, the application for tendering, tender, etc.;  and
5. applicability of the GPA.
Article 11 - (Submission and Receipt of Tender)
(1) The official in charge of the contract may receive tenders and related documents submitted by
telegraph, telegram, fax, etc., as necessary.
(2) In the event tenders, etc. are submitted pursuant to the provisions of the above Paragraph (1),
the applicant shall be requested to immediately submit hard copies thereof with signature for
confirmation. In such case, if there are any discrepancies in the content between what is sentby telegraph, etc. and the signed hard copy submitted after the deadline, the copy sent earlier
by telegraph, etc. shall prevail.
Article 12 - (Determination of the Successful Applicant)
(1) The official in charge of the contract shall determine the successful applicants for open
tendering by examining the applicants' capabilit y of executing the relevant contract in the
order of the lowest tender under the ceiling.GPA/W/266
Page 18
(2) The examination, stated in the above Paragraph (1), shall be made to determine the eligibility,
considering the applicant's performance record, technological capability, financial status,
faithful execution of previous contracts, etc., pursuant to a separate set of examination
criteria.
(3) Notwithstanding the provisions of Paragraph (1), the capability of executing the relevant
contract may not be reviewed in any of the following cases:
1. if the tendering is pursuant to the provisions of Subparagraph 3 of Paragraph (2) of
Article 3;
2. if any party registered on the List of Qualif ied Suppliers, as stated in the provisions of
Article 8, submits the lowest tender;  or
3. if a party who has during the past three years supplied items equal to or higher than
the level of the contract object to the Company or public organizations, as listed in
Article 2 of the Act on Promotion of Small- and Medium-Sized Companies andPurchase of Products, submits the lowest tender.
Article 13 - (Release of Information, etc.)
(1) When the official in charge of the contract selects the successful applicant or the party to
international contract (hereinafter referred to as "successful applicant"), the following matters
shall be announced within seven (7) days of the selection of the successful applicant:
1. object, amount and price of the successful tender or the intended procurement through
limited tendering;
2. name and address of the successful applicant or party to the contract through limited
tendering;
3. address of the organization that placed the order;4. procedures that were followed in determining the successful applicant or party to the
contract through limited tendering;
5. procedures of public notice in the case of open tendering;6. in the case of limited tendering, the reason for adopting the method of limited
tendering;  and
7. other matters regarding the determination of the successful applicant.
(2) If applicants for tendering request information related to the said tendering, the official in
charge shall release the following information:
1. procurement practices and procedures of the organization that placed the order;2. reasons for rejection of an application for review of eligibility for tendering,
suspension of any existing eligibility, and not being designated as eligible;  and
3. reasons for non-selection as the successful applicant, name of the successful
applicant, characteristics and strengths of the successful tender.GPA/W/266
Page 19
(3) Notwithstanding the provisions of Paragraph (2), information about the successful tender may
not be released in any of the following circumstances:
1. if release of the information, etc. is feared to undermine public interest;
2. if release of the information, etc. is feared to undermine due commercial interests of a
particular company or adversely affect fair competition;  or
3. if release of the information, etc. is feared  to cause an inadvertent disclosure of the
Company’s commercial or corporate secrets.
Article 14 - (Selective Tendering)
In the case of a selective tendering pursuant to the provisions of Article 34 of the Contract
Regulations, the official in charge of the contract shall establish the eligibility of applicants for the
selective tendering and standards of invitation, in consideration of the matters provided in Article 8
and characteristics of the subject matter of the contract, etc.
Article 15 - (Designation and Notification  of Applicants for Selective Tendering)
(1) If the official in charge of the contract deems it desirable to execute a selective tendering, he
shall designate the eligible applicants who meet the invitation standards pursuant toArticle 14, and at the same time notify the designated applicants of matters regarding the
public notice of tendering, as set forth in Article 10.
(2) The provisions of Article 9 shall apply to the notification pursuant to the above Paragraph (1),
as necessary. In the case of a selective tendering for which the List of Qualified Suppliers isnot to be used, the deadline for submission of the application for selective tendering shall be
at least 25 days prior to the day before the date of tendering announcement.
Article 16 - (Application of Provisions on Open Tendering, as necessary)
The provisions of Articles 7 through 13 shall apply to selective tendering, as necessary.
Article 17 - (Contract through Limited Tendering)
International contracts may be concluded through limited tendering in any of the following
cases:
1. when an open tendering attracts no applicant; if tender by mutual consent is
submitted; or, no tender meets the conditions required in the public notice of
tendering, etc.;
2. if it is related to art works, patent rights, publishing rights and other proprietary rights
for which there is no proper substitute or alternative, or if procurement must be made
from a particular supplier for technical reasons;
3. if procurement cannot be made through open tendering within a given period, for
reasons of extreme urgency;
4. if procurement is for replacement of parts of already supplied objects or expansion of
facilities (this shall apply only to such case where manufacturing or supply of items
by those other than the existing manufacturer/supplier of the said items may cause
problems related to compatibility or interoperability);GPA/W/266
Page 20
5. if prototypes, etc. developed at the request of the organization that placed the order
are to be procured (This shall not apply to the case where the subsequent items, not
prototypes, are to be procured after such contract is fulfilled);
6. if additional construction services which were not included in the initial contract
become necessary, through unforeseeable circumstances, and the organization that
placed the order needs to award contracts for the additional construction services to
the contractor carrying out the construction services concerned since the separation of
the additional construction services from the initial contract would be difficult for
technical or economic reasons and cause significant inconvenience to the
organization. However, the total value of contracts awarded for the additionalconstruction services shall not exceed 50 percent of the amount of the main contract;
7. if it is new construction service consisting of the repetition of similar construction
services which conform to a basic project for which an initial contract was awarded
through international tendering and for which the organization that placed the orderindicated in the notice of intended procurement concerning the initial construction
service that limited tendering procedures might be used in awarding contracts for
such new construction services;
8. if goods are to be purchased from the raw materials market (commodity market, etc.);9. if a contract is to be signed with the winner of a design contest;  or10. if procurement of items from a particular company is significantly more advantageous
to the Company.
Article 18 - (Filing of Objections, etc.)
Matters and specific procedures related to the formation, operation, etc. of a committee in
charge of reviewing or resolution of objections to international contracts shall be based on "The Guide
to Dispute Settlement Regarding International Procurement".
Article 19 - (Relationship with the Contract Regulations)
The Contract Regulations shall apply to matters th at are not specifically provided for in these
Regulations.  Provided, however, that this shall not apply to the provisions of Articles 30 through 33
and Paragraph (2) of Article 47 of the Contract Regulations.
Article 20 - (Application of International Commercial Practices)
Notwithstanding the provisions of Article 19, the official in charge of the contract may
execute international contracts, pursuant to international commercial practices, if it is unavoidable dueto the currency, type and period of security payment, method of payment with L/C, inspection, and
execution of other contract procedures.
Article 21 - (Establishment of the Guide, etc.)
(1) The official in charge of the contract may establish and enforce a guide for the sake of the
enforcement of these Regulations.
(2) If a guide is to be established pursuant to the provisions of the above Paragraph (1), approval
of the Director of the Finance Office shall be obtained.GPA/W/266
Page 21
ADDENDA
These Regulations shall become effective on the date of promulgation.
__________