Research On The Scope Of Annex 3 Other Entities Pursuant To Government Procurement Agreement

As one of the only two currently valid plurilateral agreements of World Trade Organization, Government Procurement Agreement whose principles and structure of appendix are reflected in the coming regional or bilateral treaties remains the most influential agreement on government procurement field. Pursuant to the Agreement,Parties shall list “Other Entities” which are included in the opening of government procurement market of each signatory in Annex 3 of Schedule in order to distinguish from “Central Entities” in Annex 1 and “Sub-central Entities” in Annex 2. However,the Agreement has not set out clear requirement as for the exact scope of “Other Entities”. The final offer shall be determined solely by the Parties based on negotiations and national situation. Owning to high divergence on interest of the Signatories, including national security and unpredictability of opening the government procurement market to foreign suppliers, the scope of openness in entities has been rather limited so far.Government Procurement Agreement has not posed any compulsory obligation for Parties as to which entities shall be included in the annexes, but give full right to the Parties to decide the scope of openness. Enterprises or institutions under government control shall not necessarily be deemed as “responsible” procuring entities, so as the state-owned enterprises. Government Procurement Agreement itself is the result of bargaining and balance of interests of all parties, but also due to the distribution of benefits agreements related to their government procurement markets of the signatories and may involve government, purchasing agent, suppliers and other parties of interest, the Parties and the ongoing accession negotiations the country. Annex 3list is open to other entities in line with the "Government Procurement Agreement" to promote open government procurement markets and reduce discriminatory treatment against other signatories.Pursuant to the content of Annex 3 of Parties, most institutions listed belong to the category of public utilities or non-governmental institutions which act related to government, and the thresholds are respectively offered, some even with further modification in the General Note. The crux of the scope of other entities lies on whether the institutions controlled by government and state-owned enterprises shall be governed under the Agreement or shall be considered as compulsory obligations of the potential signatory.In Korea-Government Procurement(DS163) Panel Report, the Panel has provided insights into the concept of “government control” that, despite the fact that all the institutions established for the purpose of proceeding the construction of the Incheon International Airport were controlled by the Korean Government, the institutions were not automatically covered by the Agreement.Thorough the negotiation, developed countries constantly require China to include state-owned enterprises and expand the scope of entities in Annexes. However, there are essential differences on the nature of state-owned enterprises of China and that of the west, which mainly lies in the operation and management of the enterprises. The Coverage of China in the future negotiation shall be placed more attention to the abovementioned aspects so as to determine China’s own bids list, while domestic legislation and implementation of appropriate procurement entity will be incorporated properly and promptly.It is the trend but also responsibility for China to join the Government Procurement Agreement, a condition of joining the World Trade Organization. Clarifying the scope of Other Entities shall be necessary and urgent which shall cast light on directions for follow-up negotiations for Chinese government, protecting domestic industries as premise. What’s more, that shall create better condition for domestic enterprises to enter other signatories’ competitive government procurement market.As for future action which may be taken by China, also other developing countries, it shall be taken into consideration the necessity of opening the government procurement market, the possible effect that may affect the national economy and stability. Additionally, China shall also be aware of the importance of improving the legal system of government procurement which is currently inadequate and sometimes insufficient with respect to government procurement dispute.