RESTRICTED  WORLD TRADE  
ORGANIZATION  GPA/W/207 
11 September 2002 
 (02-4791) 
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(b)
1 of the GPA  
   The following notification from the Perman ent Mission of the Republic of Korea was 
received on 5 September 2002 with the request that it be  circulated to the Parties to the Agreement on 
Government Procurement.  
_______________ 
  
1. Pursuant to Article XXIV:6(b) of the Ag reement on Government Pr ocurement (GPA), the 
Republic of Korea wishes to notify the Committe e on Government Procurement of the following 
modifications to Annex 3 of Appendix I of the GPA.   - Withdraw "Korea Telecom". 
 
2. The modification is based on the ongoing economic  restructuring and privatization efforts of 
the Korean Government.  3. Korea Telecom (KT, henceforth
2) has undergone a privatizati on process since 1993, and the 
Government has sold off the last of its stoc k on 21 May 2002. Furthermore, KT announced the 
completion of its privatization process at its shar eholders' meeting on 20 August 2002.  KT is no 
longer a state enterprise and, therefore, all of its  rights and obligations as a state enterprise have 
expired.  As a company that upholds maximizing co mmercial and shareholder interests as its highest 
value, KT is now run by its shareholders, comp letely free from any government influence both in 
legal and practical terms. 
 
4. Further details concerning KT's privatization are attached in Attachment A.  Also attached to 
this document are Attachment B3, which shows Korea's proposed modifications to the current 
Annex 3 of Appendix I, and Attachment C3, which shows the complete mo dified version of Korea's 
Annex 3 of Appendix I. 
                                                      
1 Article XXIV:6(b) reads as follows:  "Where a Party wishes, 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." 
2 Korea Telecom officially changed its English na me to "KT Corporation" on 10 December 2001. 
3 Attachments B and C are in English only. GPA/W/207 
Page 2  
 
 
  
ATTACHMENT A 
 
BACKGROUND MATERIAL ON KT CORPORATION  
(KOREA TELECOM)'S PRIVATIZATION 
 
 
Introduction  
 
5. As a part of its plan to privatize state en terprises, the Korean Government sought to convert 
KT from a government-invested corporation to a pr ivate company.  The Korean Government began 
selling its shares in KT in 1993, and it has completed the sale of the remaining 28.37 per cent of shares on 21 May 2002.  6. KT, as a government-invested entity, was subject  to both the "Commercial Act" and the "Act 
on Corporate Governance Improvement and Privatiza tion of State Enterprises (Privatization Act, 
henceforth)".  With the complete sale of its re maining government shares, however, KT 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 with the other private entities.  
Current Shareholder Status 
 
7. Table 1 shows the composition of KT shareholders as of May 2002.  As shown, the Korean Government or government-owned institutions no longer holds any stake in KT.  KT is owned 
completely by private sector entities.  
Table 1 
Breakdown of current shareholders (%) 
 
Government and public 
agencies Security 
firms Other domestic 
holders Foreign entities or 
persons Total 
0.0 5.7 45.3 49.0 100.0 
 
Current Legal Status 
 
8. Before privatization was completed, KT had b een subject to the Privatization Act.  However, 
after the completion of the privatization process on 20 August 2002, KT was excluded from further coverage of the Privatization Act pursuant to the pr ovisions set out in Article 21 of the said Act. 
 9. KT's status as a completely private company si gnifies that it is no longer subject to any law or 
regulation that covers government -invested entities and state enterprises.  For instance, KT is no 
longer subject to the "Board of Audit and Insp ection (BAI) Act" and the "Act on Inspection and 
Investigation of Government Administration".  Ther efore it is no longer subject to the inspections by 
BAI and National Assembly.  In other words, the le gal rights and obligations of KT are now identical 
to those of the other private companies in all aspect s.  KT is now subject only to the Commercial Act 
as with any other private firm.  Thus, the Korean Government no longer controls KT's management 
decisions.   GPA/W/207 
 Page 3 
 
 
 
 Independence of Management and Legal Restrictions 
 
10. Under the Privatization Act, enacted in Oc tober 1997, the Korean Government has ensured 
KT's independence in all aspects of management  and operation, such as in human resource 
management and financial affairs, despite the f act that the government still owned a substantial 
amount of KT stock.  Recent sale of the remaining government-owned shares in KT, and the resultant 
exclusion of KT from the Privatization Act, mean that the Government no longer has any means or 
the legal grounds to intervene in KT's affairs.  11. Thus, KT is a fully private company both from a legal and a practical viewpoint, and is 
therefore entitled to conduct its procurement sole ly under commercial considerations.  As a company 
operated purely by its private shareholders, 49 per cent of whom are foreign investors, KT can no 
longer allow the Government to intervene in its a ffairs.  Therefore, taking all these factors into 
considerations, KT should be withdrawn fro m Annex 3 of Appendix I of the GPA. 
 
 
 GPA/W/207 
Page 4  
APPENDIX I KOREA  ANNEX 3 Page 1/2
 
 
14 September 2001 (WT/Let/401)  ATTACHMENT B 
 
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 Corpora tion (except purchases of products 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 telecom
munications commodity products and 
telecommunications network equipment)  
- Korea National Tourism Organization - Daehan Printing 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 :   
 Same as "Supplies" section  GPA/W/207 
 Page 5 
 
APPENDIX I KOREA  ANNEX 3 Page 2/2
 
 
14 September 2001 (WT/Let/401 )  
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/207 
Page 6  
APPENDIX I KOREA  ANNEX 3 Page 1/2
 
 
… 2001 (WT/Let/…)  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 National Tourism Organization - Daehan Printing 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 :   
 Same as "Supplies" section  GPA/W/207 
 Page 7 
 
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. 
 
__________