TAC Program - Making Trade Agreements Work for You!

I was pleased that our governments were able to conclude our three-year-long telecommunications negotiations last week with an agreement on the liberalization of the Korean telecommunications product and value-added-network services market. I am awaiting the opportunity for a formal exchange of letters pending final approval by your government of the ad referendum agreement. For purposes of section 1374 of the Trade and competitiveness Act of 1988, once this exchange of letters is finalized, the United states will no longer consider Korea a "priority foreign country."

Our negotiations addressed many issues. However, one outstanding issue is critical to my government: the liberalization of Korea's special service provider (SSP) market on terms and conditions that permit legitimate market competition and fair and equitable access for U.S. firms. The new radio-based technologies, including cellular, paging, trunked mobile radio, and trunked data services represent the very best in American ingenuity and technological advancement. There is broad-based industry and Congressional support for assuring firms are permitted to compete fairly in the Korean market to provide these technologies and services.

We have agreed to separate this issue from the section 1374 negotiations at your government's request. However, it is imperative that we continue discussions actively and immediately this issue. To this end, I suggest that our governments use the opportunity of the upcoming U.S.-Korea Trade Subgroup meeting to schedule parallel consultations between us on SSP services.

Outstanding issues which must be addressed include: the proposed structure of the market, including the need to separate common-carrier SSP services from private services; the terms and conditions of licensing of these services; use of proprietary protocols; the ability for individual firms to compete to provide multiple SSP services in multiple regions in Korea; ability to interconnect with the public switched telephone network; the need to allow for roaming capability and sufficient spectrum allocation; and assurances that the opportunity to provide each of these services will be granted in a manner which does not place some firms at a disadvantage by virtue of different liberalization dates.

If, under any circumstance, we are unable to consult effectively and make substantial progress on this issue before September 1992, my government will consider taking formal action under our unfair trade practices statute, section 301.

I sincerely hope we can avoid the necessity of taking formal action. However, I believe that this critical issue must be resolved satisfactorily between our two countries so that fair and equitable competition and market access is provided.

Sincerely,

Carla A. Hills

Dear Korean official:

I have the honor to acknowledge receipt of your letter and its attachment dated, concerning the Korean Government's plan to introduce competition into its telecommunications market. Your letter and attachment read as follows:

[insert Korean letter and attachment]

I am pleased to confirm that this exchange of letters including the Attachment thereto is the mutual understanding between our two governments concerning the implementation of the Korean Government's plan for liberalization of the telecommunications market.

Both Parties agree that the terms and conditions of this Understanding are to remain unimpaired by direct or indirect restrictions.

In light of the Korean Government's commitment to implement the Understanding set forth in the Attachment the U.S. Government will revoke its designation of Korea as a priority country under Section 1374 of the Trade and Competitiveness Act of 1988.

Sincerely,

U.S. official

Dear U.S. official:

I have the honor to refer to a series of consultations hold between representatives of the Government of the Republic of Korea and the Government of the United States of America regarding the liberalization of the Korean telecommunications market.

Taking note of dramatic changes that have occurred in the international telecommunications arena, the Korean Government undertook a major restructuring of the Korean telecommunications industry in August, 1991. In particular, the restructuring measure was designed to bring full competition into Korea's value added telecommunications services sector in order to allow into the marketplace the entrepreneurial spirit and creativity of the private sector.

As a result of the consultations between Korea and the United States, understanding was reached on implementation of the Korean Government's plan to introduce competition into key sectors of the telecommunications goods and services market in Korea.

The attached Understanding, which serves as an integral part of this exchange of letters, identifies and describes laws, regulations, policies and the general principles which govern the Korean telecommunications goods and services market, the structure and nature of the market in Korea and the terms and conditions for participation in it. National treatment will be accorded to U.S. firms (and Korean joint ventures with U.S. firms) which participate in the Korean telecommunications market pursuant to the provisions of this Attachment.

This letter reflects our mutual understanding that the Korean Government has agreed to implement its plans for liberalization of the telecommunications market as set forth in the attached Understanding. Both Parties agree that the terms and conditions of this Understanding are to remain unimpaired by direct or indirect restrictions.

I also wish to confirm that the two Parties will meet at the request of either Party concerning any matter relating to this letter and its attached Understanding.

Sincerely,

Korean Official

ATTACHMENT

UNDERSTANDING ON TELECOMMUNICATIONS

BETWEEN THE REPUBLIC OF KOREA AND THE UNITED STATES OF AMERICA

VALUE-ADDED SERVICES

I. DEFINITIONS

A. Value-Added Service Providers: Value-added service providers ("VSPs") are telecommunications service providers duly registered with the Minister of Communications (the "Minister") which provide "value-added services," as defined in I.C. using telecommunications circuits leased from Network Service Providers.

B. Network Service Providers: Network service providers ("NSPs") are telecommunications service providers duly designated or licensed by the Minister which own and operate their own circuits and transmission facilities.

C. Value-Added Services: Unless the Minister authorizes a narrower scope of value added network services between Korea and a foreign country as a result of consultations between the two countries, the value-added services authorized to be provided by VSPs are all services offered over NSPs transmission facilities, which employ one of the following computer processing applications:

1. Conversion of content, code, protocol or similar aspects of a subscriber's transmitted information (conversions performed solely for the benefit of the network are not to be included within the scope of this definition);

2. Provision of additional, different or restructured information; and

3. Computer processing involving a subscriber's interaction with stored information (a service involving the storage and automatic delivery of information to the recipient will be allowed whenever the service includes one of the processing applications described in subparagraphs 1 or 2 of this Paragraph, or whenever the storage and delivery function provides a service of value to the sender or recipient).

4. A service that combines value-added service functions and basic telecommunications services is considered to be value-added when the service provider offers the value-added functions as part of a service offering, even though such value-added functions may not be required on a particular call. However, with regard to value added voice services and value-added facsimile services, a value-added function will be required on a call-by-call basis.

5. VSPs registered with the Minister are allowed to engage in data transmission service ("DTS"). DTS is the transmission of data without change in form or content on a real-time basis. One example of DTS is packetswitched data communication. DTS does not include basic voice telephony, basic facsimile or basic telex.

6. Examples of Value-Added Services:

a. Data communications services involving the following functions:

i. Code and/or format conversion (for example, as listed on Table 1 of CCITT Recommendation X.408 or its equivalent);

ii. Protocol conversions, in addition to that between X.25 and X.75 in packet switching (with regard to packet switching, service providers which provide protocol conversions may also transmit messages without such conversions as part of their service to users); or

iii. Store and forward;

b. Facsimile communications that involve store and forward or one of the functions listed in Subparagraph a.i. or a.ii. of Paragraph I.C.6.; and

c. other examples of value-added services include: database, remote computer service ("RCS")*, Email, electronic data interchange("EDI"), message handling service ("MHS"), value-added facsimile service and voice mail.

D. VSPs are not required to offer such code and protocol processing services in conjunction with any other value-

*RCS is a data processing service which does not involve intermediation of a third party's communication. There will be no requirements on providers of international database and RCS that information be processed in Korea except for the purpose of protecting national security or public morals, where the purpose or effect is not to distort trade substantially added service. VSPs may use packet switching as a delivery method for value-added services.

II. REGISTRATION

A. Registration Requirement

1. A service provider must be registered with the Minister in order to provide a value-added service. However, provision of domestic database or domestic RCS does not require registration. By December 31, 1993, the Korean Government will review its policy requiring registration for international database and international RCS.

2. The purpose of the registration requirement is to ensure that applicants have the technical and financial qualifications to register as VSPS. The registration procedure will not be used to restrict competition or provision of a particular service and will be administered pursuant to the relevant laws and regulations.

3. A service provider which plans to provide a value-added service and DTS may submit a single application for both services.

4. For the purpose of administering the registration for VSPS, the Minister will accept applications for registration as submitted by the applicants.

5. Registration applications, interconnection agreements and international value-added services operating agreements are allowed to be reviewed concurrently to minimize the time span for completion of the overall process which is required for provision of value-added services. VSPs may file service requests with NSPs concurrently with registration applications.

6. NSPs will not make services available until the Minister has granted the VSP's registration certificate. However, the NSP will process the VSP's service order and prepare to deliver service pursuant to XII. below.

7. For purposes of the registration procedure for VSPS, "major telecommunications facilities" are defined as major nodes and major processing facilities to be determined by the applicant.

B. Registration Criteria The requirements for a VSP to be registered are as follows:

1. Financial Requirement:

a. For a corporation, minimum capital of 50,000,000 Won, or

b. For an individual, minimum assets of 100,000,000 Won in appraised value.

2. Telecommunications Facility Requirement:

a. Possession of the major telecommunications facilities determined by the applicant to be necessary for provision of services; and

b. Satisfaction of the safety and reliability standards set forth in Article 36 of the Ministerial Decree on Technical Standards for Telecommunications Facilities;

c. In order to determine satisfaction of the requirements in II.B.2.a. and b. above, the Minister may conduct a field inspection within 30 business days of the application's filing. The purpose of the inspection is to ensure that the major nodes and processing facilities described in the applicant's registration form have been installed. In cases where the applicant gives an operational demonstration of the proposed service during a field inspection, the applicant will be deemed to have satisfied the requirement in II.B.2.a.

3. Technical Capability requirement:

a. Retention of a minimum of two technicians who hold a National Technical Qualification Certificate in the telecommunications or data processing field (one of the two must qualify as a First-Class Engineer or Professional Engineer, which is defined in the National Technical Qualification Law.)

b. The technical capability requirement will be deemed satisfied if an applicant presents a provisional contract for employment of the required technicians which would become effective upon receipt of registration from the Minister.

C. Documentation for Registration

Along with an application form, the documentation required of applicants for registration is limited to the following items:

1. Applicant's business plan (information deemed proprietary by the applicant need not be included);

2. Applicant's Identification Certificate:

a. If the applicant is a Korean national, the applicant's "standard personal identification certificate;"

b. If the applicant is a Korean corporation, including a joint venture established in Korea, the "standard personal certificates" for each member of the board of directors and the auditor of the corporation (in cases where any of the officers are foreigners, those officers' "standard resident foreigner identification certificates" issued by the Korean Government or the documents certifying the nationality of those officers).

3. Copies of the corporation's articles of incorporation and corporate registration (applicable only to corporate applicants);

4. Audit report of the value of the applicant's assets as of the last day of the month immediately preceding the month of the application date (applicable only to individual applicants);

5. A general description of the services to be provided;

6. A summary description and location of the major telecommunications facilities to be used for service provision and summary network map identifying major nodes;

7. List of names of employees holding National Technical Qualification Certificates and copies of their certificates; and

8. A plan for protection of customer information from unauthorized loss or disclosure (as required by Ministerial Proclamation No. 103) to satisfy the requirements outlined in II.B.2.b above.

D. Denial of Registration

1. The Minister will approve registration and issue a Value-Added Service Business Registration Certificate (the "Registration Certificate") to an applicant within 30 business days after filing of the application, except under the following circumstances:

a. When the applicant fails to submit all the documents required in II.C. or includes fraudulent information in its application or the attached documents;

b. When the planned service(s) does not fall within the scope of the value-added services as defined in I.C;

c. When the applicant fails to demonstrate he has met the registration criteria as specified in II.B; or

d. When the applicant is determined to be disqualified under Article 24 of the Telecommunications Business Law (the "TBL"). Article 24 of the TBL provides the following causes for disqualification:

i. Persons who have been adjudged by a court to be mentally incompetent in any manner or to be bankrupt;

ii. Persons who have received a sentence within the previous two-year period from a court which involves a penalty more severe than a monetary fine in connection with a violation of the Telecommunications Basic Law, the Radio Frequency Law or the Law Pertaining to Expansion of National Computer Networks and Promotion of the Use of the Networks;

iii. Persons who have received an order of cancellation of their registration within the previous two year period; and

iv. Juridical persons, any of whose executives, have been disqualified pursuant to II.D.1.d.i., ii. or iii. above.

2. If the Minister decides to deny registration, the Minister will notify the applicant in writing of the decision and the reasons therefor within 30 business days after the filing of an application.

3. However, when an application is determined to be incomplete under the documentation requirements specified in II.C., the Minister may allow the applicant to file the missing information within a 30 business day period. When the applicant files the missing information, the Minister will make a decision on the application within 30 business days after receipt of the information.

4. In the event that an applicant receives a notification of denial of approval, the applicant may request reconsideration of its application from the Minister and demonstrate that it meets the criteria for registration. The Minister will reconsider his denial and will notify the applicant of his reconsideration decision to approve or deny registration in writing within 30 business days after filing of the request. If the Minister decides to uphold his previous denial, the Minister's notification will include a written statement setting forth the reasons for the decision.

E. Registration Amendment

1. When a registered VSP undergoes a change concerning the major telecommunications facilities or intends to provide a new service which requires a change in the existing major telecommunications facilities, the VSP must file an application for registration amendment along with a document certifying the occurrence of the change in the facilities or the services which necessitated registration amendment.

2. However, in the event of a change concerning its trademark, name, address, membership of the board of directors, or its employees holding National Technical Qualification Certificates, the VSP must file a notification* of registration amendment with the Minister.

3. In cases where provision of a new service by a registered VSP does not involve a change in the existing major telecommunications facilities, the VSP will be allowed to provide the new service after filing of a notification with the Minister. The VSP can

*The notification requirement is fully satisfied by submitting documents containing the required information and does not involve any approval process. In cases where a document contains proprietary information, the Minister will protect the confidentiality of such information.

fulfill the notification requirement by supplying the name of the new service, along with:

a. The VSP's business plan (information deemed proprietary by the VSP need not be included); or

b. A general description of the new service to be provided.

4. The Minister will notify a VSP in writing of its decision on whether the new service falls within the scope of value-added services or DTS defined in I.C. within 20 business days after the VSP files a notification or an application for registration amendment. In the event that a VSP fails to be notified within the 20 business day period, the VSP may provide the new service without receipt of a notification from the Minister.

5. Subject to the requirement in II.E.1 and the requirements in V., a registered VSP is allowed to add new features to its current service or to expand the service region to include overseas points without a notification or approval.

6. Where necessary to determine whether a new service falls within the scope of value-added services or DTS, as defined in I.C. the Minister may request additional information from the VSP regarding the new service within 20 business days after the VSP files a notification or an application for registration amendment.

7. The VSP must submit the requested information (exclusive of information deemed proprietary by the VSP) to the Minister within 30 business days after receipt of the Minister's request. The Minister will notify the VSP of its decision regarding whether the new service is allowed within 20 business days after it receives the requested information from the VSP.

8. When an application or notification for registration amendment is duly filed, the Minister will issue a revised Registration Certificate.

9. If an applicant receives a notification of denial of registration amendment, the applicant may request reconsideration of the decision from the Minister. The Minister will reconsider and will notify the applicant in writing of its decision on the reconsideration request within 10 business days after filing of the request.

F. Cancellation of Registration

The Minister is authorized to cancel the registration of a VSP or to order an interruption of a VSP's operations for a maximum of one year, if the VSP is found:

1. To have obtained registration through an unlawful method;

2. To have failed to begin operation of its business within one year after the registration date or to have been out of operation for one year or more; or

3. To have failed to implement a correction order issued by the Minister for violation of provisions of the Telecommunications Basic Law, Telecommunications Business Law, the Radio Frequency Law, or the Law Pertaining to the Expansion of National Computer Networks and Promotion of the Use of the Networks.

G. Termination/Suspension of service

In the event that a VSP intends to be out of operation temporarily or permanently, the VSP must provide notification of such intention to its service users and the Minister at least 30 business days before the business closure.

III. STANDARDIZED CONTRACTS

A. A registered VSP must notify the Minister of the standardized contract under which its services are offered before the provision of service.

B. A VSP must include information on the following items in its notification of the standardized contract:

1. Name, type and description of the services to be provided;

2. Service region;

3. Rates for the services;

4. Respective responsibilities of the VSP and user in providing and using the services; and

5. Other matters related to provision of the services, which the VSP decides at its discretion to notify.

C. VSPs are not required to provide to the Minister information on their standardized contracts that they deem is proprietary.

D. VSPs are allowed to set forth (or use a contract with) a different set of rates, terms and conditions from those in its standardized contract for users with special service requests, without filing a notification to the Minister.

IV. INTERCONNECTION BETWEEN TELECOMMUNICATIONS NETWORKS

A. In order to provide a value-added service, VSPs may interconnect their networks pursuant to a private contract. The terms and conditions of such a contract will be negotiated by the parties involved based on their own commercial considerations. Interconnection contracts between VSPs need not contain any specific item of information. An interconnection between networks of VSPs will require a notification to the Minister. The information contained in such a notification will be protected as business confidential information and will not be disclosed to any party outside the Ministry of Communications.

B. VSPs may interconnect their networks with a public-switched network of an NSP for dial-up access. Interconnection between a VSP's network and an NSP's network will be governed by a standardized contract of the NSP, where available except in the case below.

C. Where no standardized contract of an NSP is available for the type of interconnection requested by a VSP, a VSP may interconnect its network with the NSP's network pursuant to a special interconnection agreement* with the NSP. In order to protect VSPs from possible unfair practices of NSPS, such an agreement will require approval by the Minister. Any modification or repeal of the agreement will also be subject to approval by the Minister.

D. Upon approval of a special interconnection agreement, the Minister will require the NSP to publish the agreement in its special gazette immediately after its approval. In the event that any other user wishes to interconnect its network with the NSP's network on the same terms and conditions (including price) as those of the special interconnection agreement, they may notify the Minister, who will then

*A "special agreement" is equivalent to a "non-standardized contract" binding upon the parties and subject to the provisions of this Attachment.

require the NSP to convert the special agreement into a standardized contract pursuant to the procedures described in XII.C. below.

V. OPERATING AGREEMENTS FOR THE PROVISION OF INTERNATIONAL VALUE-ADDED SERVICES

For purposes of this Attachment, an operating agreement is a private contract between a VSP in Korea and its overseas business partner to establish terms and conditions for the provision of international value-added services.

VSPs may provide any services authorized by this Attachment between Korea and a point outside of Korea without a special arrangement between Korea and the country in which the foreign point is located, if the foreign country does not require such an arrangement for provision of the services.

A. operating agreements between a VSP registered under the laws of Korea and service providers in a foreign country are subject to approval by the Minister.

B. The Minister will accept applications for operating agreement approval as submitted by the applicants.

C. In order to obtain approval of an operating agreement or modification thereof, a VSP must submit the following documents to the Minister, along with an application:

1. A copy of the operating agreement, consistent with V.D. below;

2. A Korean translation of the operating agreement (if the agreement is prepared in a language other than Korean); and

3. An explanatory document (or chart) comparing the old and new operating agreements (if the application concerns modifications of the old agreement).

D. When an applicant submits its operating agreement for approval, it may indicate that specific information in the submission is proprietary. The Minister protects operating agreements submitted for approval as confidential. Applicants may also decide not to include proprietary information in their operating agreements.

E. In the event of repeal of an operating agreement, a VSP must submit to the Minister at least 30 days before the scheduled date for repeal of the agreement (i) an application for repeal approval and (ii) the following documents, which certify:

1. Repeal of the operating agreement; and

2. That the VSP has notified its users of the planned interruption of the service (if service would be interrupted due to repeal of the agreement).

F. An application seeking approval or repeal of an operating agreement will be granted without delay if the applicant satisfies the documentation requirements described above.

G. The requirements for approval of an operating agreement or modification thereof are as follows:

1. The services to be provided through the operating agreement must fall within the scope of value-added services and DTS, as defined in I.C. In addition, if a "special arrangement" between Korea and a foreign country regarding international value-added services between the two countries authorizes a narrower scope of services, the services to be provided must fall within the definition of services contained in the "special arrangement."

2. For the purposes of facilitating interconnections among networks of VSPS, an operating agreement must include a statement in which the parties commit to maintain the technical capability for exchange of the following information regarding operation of the networks

involved:

i. Volume of traffic or charging;

ii. Addressing of destination; and

iii. Calling DTE address identification.

The above requirement is not applicable to database service or RCS.

H. The grounds for denial of approval of an operating agreement are as follows:

1. When the applicant fails to submit all the documents required in V.C. or includes fraudulent information in its application or the attached documentation; or

2. When the applicant fails to demonstrate that it has met the requirements in V.G.l. and 2.

I. The Minister will notify a VSP in writing of its decision on the VSP's Application for approval of an operating agreement (or of modification or repeal thereof) within 30 days after the date of filing of the application. If the Minister denies approval, the denial notice will stipulate the reasons for denial.

J. In the event that a VSP receives a notification of denial of approval, the VSP will be allowed to request reconsideration of its application after it demonstrates that the scope of its services fall within the definition of value-added services or DTS as outlined in I.C. above. After review of a reconsideration request from an applicant, the Minister will notify the VSP of its decision on the reconsideration request in writing within 15 business days after filing of the request.

VI. FOREIGN INVESTMENT

A. In order to provide value-added services in Korea, foreign individuals and foreign corporations are allowed to establish joint ventures with Korean citizens or Korean corporations. Foreign ownership currently is limited to a 50% equity interest in joint ventures. There is no foreign investment restriction for the provision of domestic or international database service or RCS.

B. The foreign investment restrictions specified in VI.A. above will be eliminated in January of 1994. The Korean Government will review its policy on investment in DTS by December 31, 1993. Provisions of the May 19, 1989 Investment Agreement between Korea and the United States will be applied to the Korean VSP market.

USE OF CIRCUITS

VII. SELF USE OF LEASED CIRCUITS

A. For purposes of this Attachment, self-use communications is the use of private leased circuits or facilities, including international or domestic leased-line networks, for communications by the same juridical person, as defined by Korean law. Such juridical persons include, but are not limited to, corporations, proprietorships, and partnerships.

B. Examples of self-use communications include, but are not limited to, communications between or among headquarters and branch offices, corporate departments, and headquarters and factories or warehouses through circuits leased from NSPS.

C. NSP customers may engage in self-use communications for voice or data communications.

VIII. SHARED USE OF LEASED CIRCUITS

For purposes of this Attachment, shared use of leased circuits means use of a leased circuit (in the case of an international leased circuit, the terminating facility of the circuit located in Korea) jointly by two or more users.

A. Shared Use of NSPS, Domestic Leased Circuits

1. The shared use of NSPs' domestic leased circuits for data communications is permitted without any restriction on the relationship among the users.

2. The shared use of NSPs' domestic leased circuits for voice communications is permitted within the groups of entities which maintain a "close business relationship." In regard to the shared use of domestic leased circuits for voice communications, the groups of entities with a "close business relationship" are defined as:

a. Government agencies (central or local);

b. Corporations owned by the Korean Government;

c. Research institutes in which the Korean Government has invested;

d. A government agency (central or local) and a corporation (or other organization) subject to the agency's oversight under law;

e. An educational organization and an organization that supports the accomplishment of the objectives of the educational organization;

f. A public research institute and a private sector research institute that carries out or supports research activities of the public research institute;

g. A weather service agency and an organization that requires use of private circuits to report or otherwise make use of the agency's weather services;

h. A medical institution and an organization that requires use of private circuits to provide emergency care or other medical treatment services;

i. Publishing companies, duly registered under Article 7 of the Registration of Periodic Publications Law;

j. Broadcasting companies, duly licensed as radio stations under the Frequency Management Law;

k. Affiliated companies as currently defined in Article 2 of the Monopoly Regulation and Fair Trade Law, which include a group of companies maintaining a common ownership relationship in which one company owns 30% or more of each other company in the group; and

1. A group of companies maintaining a continuing business relationship in which one company accounts for 20% of the total value of transactions (including purchases and sales) of each other company in the group.

B. Shared Use of International Leased circuits

1. The shared use of international leased circuits for data communications is permitted within the groups of entities which maintain a "close business relationship." In regard to the shared use of international leased circuits for data communications, the groups of entities with a "close business relationship" are defined as:

a. A government agency (central or local) and a corporation (or other organization) subject to the agency's oversight under law;

b. An educational organization and an organization that supports the accomplishment of the objectives of the educational organization;

c. A public research institute and a private sector research institute that carries out or supports research activities of the public research institute;

d. A weather service agency and an organization that requires use of private circuits to report or otherwise make use of the agency's weather services;

e. A medical institution and an organization that requires use of private circuits to provide emergency care or other medical treatment services;

f. Affiliated companies as currently defined in Article 2 of the Monopoly Regulation and Fair Trade Law, which include a group of companies maintaining a common ownership relationship in which one company owns 30% or more of each other company in the group; and

g. A group of companies maintaining a continuing business relationship in which one company accounts for 20% of the total value of transactions (including purchases and sales) of each other company in the group.

2. The shared use of international leased circuits for voice communications is permitted within the groups of entities which maintain a "close business relationship." In regard to the shared use of international leased circuits for voice communications, the groups of entities with a "close business relationship" are defined as:

a. Government agencies (central or local);

b. Corporations owned by the Korean Government;

c. Research institutes in which the Korean Government has invested;

d. Affiliated companies as currently defined in Article 2 of the Monopoly Regulation and Fair Trade Law, which include a group of companies maintaining a common ownership relationship in which one company owns 30% or more of each other company in the group;

e. A group of companies maintaining a continuing business relationship in which one company accounts for 20% of the total value of transactions (including purchases and sales) of each other company in the group; and

f. A group of entities which falls within the definitions contained in VIII.B.2.a., b., or c. above.

C. Review of Shared Use Policies in Korea

1. The Korean Government recognizes the importance of liberalizing its shared use policy. With a view to further liberalizing its shared use system, the Korean Government will review its shared use policy by December, 1992 and will include in this review:

a. The scope of eligible entities' basis for equity and transaction percentages for shared users;

b. A definition of shared use that allows shared use between companies that have a continuous contractual relationship;

c. Interconnection between leased circuits and NSP networks both for international or domestic voice and data communications; and

d. The ability of customers to attach "exchange" equipment, including but not limited to PABXS, packet switches and multiplexers, to domestic and international circuits in Korea.

2. The Korean Government plans further to liberalize substantially the scope of eligible entities as defined in VIII.A. and B. above before the end of 1992.

3. The Korean Government will continue to consult with the U.S. Government on further measures relating to the substantial liberalization of shared use of leased circuits.

IX. APPLICATION FOR SHARED USE OF A LEASED CIRCUIT

A. In requesting service from an NSP, the requirements for a group of corporate entities planning to engage in shared use under one of the categories in VIII.A. and B. above are limited to:

1. Selection of a representative corporate entity;

2. Submission of an application form to the NSP, pursuant to IX.H. below;

3. Providing a list of company names and addresses for all the corporate entities in Korea belonging to the group; and

4. Declaring, in a simple written statement, within which specific category of shared use in VIII.A. and B. above its members fall.

B. If, after an NSP has begun to provide service to the user, the NSP has credible evidence that a member of the shared user group includes an ineligible entity, the NSP should provide the representative corporate entity with said evidence and may request that it submit a document showing that its members legitimately belong to the declared shared user group category, pursuant to IX.H. below. The request for information should be confined to documents regarding the entity's shared use communications in Korea. The representative corporate entity may then decide to:

1. Provide the document requested to the NSP; or

2. Elect to have the NSP submit its evidence to a certified public accountant ("CPA") designated by the Minister within 30 business days after receipt of the NSP's request. The CPA will review the validity of the NSP's complaint based on the evidence submitted to him by the NSP. If the CPA determines that the evidence is credible, it may then request the representative corporate entity to provide information showing that its members legitimately belong to the declared shared user group category, pursuant to IX.H. below.

C. When the representative corporate entity receives a request for documentation from the CPA, it should submit the requested information within 30 business days after receipt of the request and notify the NSP of such intent.

D. In the event the CPA determines that the information submitted by the representative corporate entity fails to demonstrate its legitimate membership in the shared user group, the representative corporate entity may appeal the decision to the Minister. Upon receipt of such an appeal from the representative corporate entity, the Minister will conduct an investigation and will notify the entity in writing of his decision within 20 business days.

E. NSPs will be required to make services, including international and domestic leased circuits, available for shared-use communications within 60 business days from the date of the filing of an application, unless the NSP and its customer negotiate a different mutually agreeable due date for furnishing service.

F. If the NSP fails to provide service within this period, the NSP will be required to provide to the customer, within 10 business days after the expiration day of the above period, both a written explanation of the delay and a written commitment specifying that it will make the service available by the end of a second, sequential 30 business day period.

G. If the NSP fails to provide service to the customer within the second 30 business day period, the Minister will accept an appeal or complaint by the customer that the NSP has failed to provide service or to negotiate in good faith, and within 10 business days will issue a written decision on such appeal or complaint.

H. Documentation requirements for shared-use communications, including investigations of valid NSP complaints, do not include information relating to lists of individual users or telephone numbers within the corporate entities. Corporate entities are not required to provide any information to NSPs that they deem proprietary, nor information regarding corporate entities outside of Korea.

X. EQUIPMENT ATTACHMENT

A. Users (including self users, shared users, and VSPS) of NSPs' services and facilities are free to purchase or lease from any supplier, and are allowed to attach to NSPs' networks, any analog or digital wireline equipment for which type approval has been obtained without additional approval by an NSP.

B. Such equipment includes multiplexers with a capacity of more than two megabits per second, high-speed packet switches, and Network Channel Terminating Equipment (NCTE), including digital service units.

C. Customers may attach "exchange" equipment, including but not limited to PABXs and packet switches, to domestic and international circuits in Korea, for self-use communications, so long as such equipment has received type approval.

D. Attachment of Equipment to a Leased Circuit for Shared Use

1. In cases where a group of entities engages in shared use under VIII.A.2. and VIII.B.2. above, any entity within the group may attach a multiplexer or switching equipment to the circuit in order to intermediate communications of other entities within the same group.

2. With regard to the shared use of domestic leased circuits for data communications, the group of entities, whose scope is identical to the group of entities eligible for the shared use of domestic leased circuits for voice communications, as defined in VIII.A.2., will be allowed to attach a multiplexer or switching equipment to the circuits, for the purpose of intermediating communications of other entities within the same group, by the end of March, 1992.

3. With regard to the shared use of international leased circuits for data communications, the eligible groups of entities under VIII.B.1. will be allowed to attach a multiplexer or switching equipment to the circuits for the purpose of intermediating communications of other entities within the same group by the end of March, 1992.

XI. INTERCONNECTION BETWEEN A LEASED CIRCUIT AND A PUBLIC NETWORK

A. Only one end of a domestic leased circuit for data communications is currently allowed to be interconnected with a public NSP network.

B. No leased circuit for voice communications is currently allowed to be interconnected with a public NSP network.

C. The Korean Government will review its policy regarding interconnection of international leased circuits for data communications with a public NSP network, with a view to allowing the interconnection by December 31, 1992.

D. The Korean Government will review its policy regarding interconnection of leased circuits for voice communications with a public NSP network, with a view to allowing the interconnection of one end of a domestic leased circuit for voice communications with a public NSP network by December 31, 1992.

XII. COMPETITION SAFEGUARDS

A. Government benefits in respect of the provision of telecommunications services will not be awarded with the purpose or effect of discriminating among providers of such services, in like circumstances.

B. NSPs will provide users and VSPs with their services pursuant to standardized contracts approved by the Minister.

C. The Minister will provide a public notice in the Official Gazette at least 20 business days before taking any measure affecting the interests of users of NSP services. NSPs with a dominant market position to be determined by the Minister will be required to provide a public notice in a special gazette or in the press at least 20 business days before establishing or amending a standardized contract. Any interested parties will be allowed to comment on the Minister's proposed measure or the NSP's proposed standardized contract before the measure or the contract is adopted.

D. In cases where an NSP competes with a VSP in the provision of a value-added service, either directly or through an affiliate, the NSP is prohibited from engaging in anticompetitive conduct such as cross-subsidization, predatory pricing, unauthorized disclosure of customer-proprietary network information without the customer's authorization, undue delay in announcing technical changes to its network or network interface, or discriminatory access to network services or functions.

E. When NSPs are found to have engaged in unfair or anticompetitive practices, the Minister can require the NSPs to implement specific measures after a review by the Telecommunications Commission, such as:

1. Structural separation of NSPs;

2. Prohibition on cross-subsidization;

3. Disclosure of information regarding the telecommunications services in dispute;

4. Changes in agreements between NSPs and between NSPs and VSPs for interconnection;

5. Changes in standardized contracts or articles of incorporation of NSPS;

6. Prohibition of practices by NSPs which unfairly restrict the business operations of new telecommunications service providers; and

7. Prohibition on the provision of telecommunications service, installation of telecommunications facilities or any other practices of NSPs which restrict competition among telecommunications service providers or harm users' interests.

F. Competition Safeguards Policy

1. Consistent with XII.E. above, the Korean Government is in the process of developing a policy on competition safeguards, including the Open Network Service Provision (ONSP), cost-accounting methodologies to prevent cross-subsidization, and measures to ensure the timely and non-discriminatory disclosure of technical changes to NSP networks and their interfaces.

2. During 1992, the Minister will establish the Telecommunications Commission, promulgate regulations for enforcement of competition safeguards and issue a directive which will provide NSPs with guidelines for their preparation of ONSP and other competition safeguards proposals.

3. Among other things, the directive on ONSP will address:

a. Measures to guarantee that NSPs provide access to their services that is equivalent in price, terms and quality to the access they grant themselves and their affiliates.

b. Requirements that NSPs unbundle, to the greatest extent possible, service elements used in their provision of competitive services, and convert them into standardized contracts.

c. Customer authorization for the disclosure of its customer-proprietary network information, including disclosure to NSP personnel involved in the marketing or provision of competitive services.

d. The timely and non-discriminatory disclosure of technical changes to NSP networks and their interfaces.

4. The directive will require NSPs to implement the Korean Government's competition safeguards policy on a gradual basis. The directive will provide a specific time table for implementation of various safeguard measures. The Minister will review and seek public comment on ONSP proposals of NSPS, and will approve them before they take effect.

5. In the course of developing and implementing its competition safeguard policy, the Ministry will provide interested parties, including foreign firms, with opportunities for public comment. Such opportunities will include attendance at, or participation in, public hearings by interested parties, as well as written comment on specific measures.

6. In January of 1994, the Korean Government and the U.S. Government will consult on the implementation and effectiveness of Korea's competition safeguard policy.

G. NSPs are required to make their services available to users (including VSPS) on a cost-oriented, reasonable and nondiscriminatory basis.

H. In the event that an NSP fails to provide a user with a service requested by the user within a reasonable time period, (normally 60 business days), the user may demand in writing an expedited action on its service request or an explanation for delay from the NSP. If the NSP's response to the user demand is not satisfactory to the user, the user may request a ruling from the Telecommunications Commission (Article 42 of the Telecommunications Basic Law). In the event that the user receives an adverse decision from the Telecommunications Commission, it may initiate an administrative proceeding to challenge the Commission's decision.

I. In the case of provision of any new service for which a standardized contract does not yet exist, NSPs must negotiate the terms of a contract and file a corresponding new standardized contract with the Minister under the normal standardized contract approval procedures, thereby establishing a new standardized contract which shall apply to any other entity which wishes to use that service provided by an NSP.

J. As of March 1992, NSPs are not allowed to bundle the provision of any NSP service with equipment.

K. Nationals and companies of foreign countries and Korean nationals and companies will have reasonable and nondiscriminatory access to and use of telecommunications circuits and services provided by NSPs offered within or across Korea's border, including national and international private leased circuits, for the provision of value-added services and simple data transmission services, as well as for self-use and shared use communications.

L. The competition safeguards adopted by the Minister will apply only to NSPS, and do not apply to VSPS.

M. No common-carrier obligations, including but not limited to universal service, approval of standardized contracts, rate regulation, interconnection or interoperability requirements, may be imposed on VSPS.

N. VSPs have the right to use proprietary communications protocols and computer systems for the provision of VSP services, and to make interconnection decisions based on their own commercial considerations, without any obligation to serve a particular customer or to interconnect with a particular VSP or NSP network. Further, VSPs will not be required to use any particular communications or interconnection standard, except that the Minister may require VSPs to use a standard technical interface to interconnect with an NSP network. VSPs will have nondiscriminatory access to and use of Data Network Identification Codes (DNICS) to achieve international interconnection of VSP networks.

STANDARDS

XIII. STANDARDS SETTING PROCEDURES

A. The Korean Government and the U.S. Government maintain transparent and open procedures, including complaint and appeals procedures, for adopting mandatory standards including equipment authorization criteria for all telecommunications equipment. The United States and Korea will ensure that standards-setting procedures for mandatory standards will permit full and timely participation by domestic firms and foreign firms (foreign firms are allowed to participate in this procedure through their local representatives) on the same terms and conditions.

B. A similarly transparent procedure has also been established for voluntary standards under the auspices of the Korean Telecommunications Technology Association. The Korean Government and the U.S. Government will attempt to ensure that the voluntary standard setting procedures in both countries will allow foreign parties' full and timely participation on a non-discriminatory basis. This transparent, open process also encompasses standards set for the interoperation of the Korean Government Computer Networks and the U.S. Government Open Systems Interconnection Profile, except where restricted by national security concerns.

XIV. KOREAN TYPE APPROVAL CRITERIA

A. Korea's criteria for type approval are limited to:

1. Prevention of any technical harm to the network;

2. Prevention of physical hazards to network operating personnel and users;

3. Prevention of the emission of electromagnetic radiation beyond prescribed levels'*

4. Prevention of billing equipment malfunction; and

5. Prevention of degradation of service to persons other than the users of the equipment to be type-approved.

*The current criteria for EMI approval, and the equipment subject to such approval, are found in Ministerial Proclamation No. 825, 1990.

B. Korea's criteria for type approval of wireless telecommunications equipment (except for safety devices for navigation and aviation*) are limited to no-harm-to-the spectrum and safety of operating personnel and users.

C. Korea's criteria for type approval of wireline and wireless telecommunications equipment does not contain performance standards (except as noted in footnote 5).

D. The wireline telecommunications equipment currently requiring type approval in Korea is listed in MOC Proclamation No. 88, 1990. The wireless telecommunications equipment currently requiring type approval in Korea is listed in Ministerial Decree No. 826, 1990. The Korean Government will update these lists as necessary.

E. The Korean Government will review the list of wireline equipment requiring approval on an ongoing basis, and will endeavor to limit such equipment to equipment that attaches directly to public NSP networks or equipment demonstrated not to have met the type approval criteria described in XIV.A. above. Equipment which is not subject to type approval may be used behind type-approved equipment or a type-approved protective device.

XV. U.S. EQUIPMENT AUTHORIZATION CRITERIA

A. The United States Government administers its telecommunications equipment authorization program through Part 68 and Part 2 of the U.S. Federal Communications Commission ("FCC" or "the Commission") Rules. The technical standards for wireline equipment are contained in Part 68 and in Part 15 of the FCC Rules. For wireless equipment, the technical standards are contained in other FCC Rule Parts, based on the radio service for which such equipment will be used.

*Navigation and aviation equipment may require special protection against radio interference. Therefore, some additional criteria, including performance requirements, may be applied for safety purposes, consistent with international practice. Navigation equipment subject to these additional criteria include: automatic alarm signal receivers; portable radio equipment for life boats; radio direction finders for ships; emergency position indicating radio beacons; F3E radio telephones for ships; radar for ships; and SSB transceivers for ships. Aviation equipment covered by such additional criteria include: SSB transceivers for aircraft; and DSB transceivers for aircraft.

B. Businesses falling under the jurisdiction of the U.S. Department of Labor, Occupational Health and Safety Administration ("OSHA") must use telephone equipment that is certified to an appropriate safety standard such as Underwriters Laboratories ("UL") standard 1459 ("Electrical Safety of Telephone Equipment") by a testing facility recognized by the Department of Labor as a "Nationally Recognized Testing Laboratory." Foreign laboratories are eligible for "Nationally Recognized Testing Laboratory" certification.

XVI. EQUIPMENT APPROVAL PROCESSES

A. Korean Type Approval Procedures

1. The Korean Government administers its wireline and wireless telecommunications equipment type approval process through the Radio Research Laboratory ("RRL"), under Ministerial Proclamations.

2. If the president of RRL, who is charged with the administration of Korea's type approval processes for both wireline and wireless telecommunications equipment, denies type approval, the president will notify an applicant in writing of the reasons for his decision within 30 business days of the filing of a type approval application. An applicant denied approval may appeal the decision to the president in writing. The president will notify the applicant in writing of his appeal decision (and reasons therefore) within 30 business days after filing of the appeal.

3. No person with an economic interest in the outcome of a type approval process will be allowed to participate in the approval process.

4. The Korean Government reserves the right to deny or revoke type approval for wireless or wireline telecommunications equipment which does not perform according to the type approval criteria, subject to a transparent appeals process which includes written notification and public comment.

5. Designation of Test Agencies

a. The Korean Government will process applications by domestic and foreign laboratories and manufacturers for certification as officially "designated" testing agencies on a reasonable and non-discriminatory basis. Korea maintains 3 separate certification procedures for wireline equipment testing, wireless equipment testing, and EMI testing.

b. The requirements for designation as a testing agency are that the applicant possess the necessary testing equipment and qualified personnel, and submit an application accompanied by proper documentation, for each designation requested, as currently described by MOC Proclamation No. 69, 1991, for wireline equipment; MOC Decree No. 826, 1990, for wireless equipment; and MOC Decree No. 825, 1990, for EMI.

c. The Korean Government will issue a decision on applications for testing agency designation within 4 months from the date of filing. A certificate of designation as a testing agency will remain current for a period of 3 years from the date of approval. Applicants for renewal of testing agency designation must file their renewal applications at least 3 months prior to the expiration of certification.

B. U.S. Acceptance of Test Data

1. The FCC currently accepts test data for both wireline and wireless telecommunications equipment from a number of Korean laboratories and testing facilities. The FCC also accepts, from Korean equipment manufacturers, test data generated through in-house laboratories.

2. The FCC will continue to accept test data from Korean laboratories, testing facilities or manufacturers that demonstrate the capability to properly conduct testing procedures. Interested parties can generally demonstrate such capability by making a written application in prescribed format to the FCC, accompanied by a sample test report and a photograph of the applicant's testing facilities. The application must demonstrate the capability to conform to FCC standards by giving an explanation of the testing procedures followed.

C. Korean Type Approval of Wireline Equipment

1. In order to obtain type approval for wireline telecommunications equipment, a manufacturer (or its local agent) is required to submit an application along with the following documents:

a. Test data or self-test data;

b. The receipt certifying payment of the type approval processing fees;

c. A summary of a quality control program for the equipment to be approved and a summary of the plan for after-sales service*;

d. A summary of information regarding the applicant's testing and inspection facility and personnel staffing of the facility;

e. A functional description of the equipment to be approved and a schematic diagram and specifications; portions of the circuitry not directly involved in demonstrating compliance with type approval criteria need not be disclosed; and

f. In cases where the applicant is importing samples of equipment to be tested for the purpose of applying for type approval, a copy of the recommendation letter issued by the president for importation of the equipment.**

2. Within 30 business days of an applicant's filing for type approval, the president may request additional information from the applicant in cases where the president decides it is needed for the purpose of demonstrating that the equipment complies with the type approval criteria described in XIV.A. above.

The president will issue a written decision approving or denying the application within 30 business days after the applicant files the additional information described above.

*An applicant for type approval may satisfy the requirement to provide a plan for after-sales service by providing its warranty information and the name, address and telephone number of its designated contact point in Korea for customer inquiries and resolution of product problems and complaints. The purpose of a quality control program is to maintain the ability to comply with the type approval criteria described in XIV.A.

** The president will issue a letter of recommendation for importation of samples to be tested in Korea within 30 business days of a written request by an entity applying for type approval.

3. The Korean Government will issue an EMI approval certificate within 30 business days after filing of an application that meets the criteria for EMI approval.

4. Any submitted information specified as proprietary by an applicant will be kept confidential and will not be disclosed to any party outside a testing entity or the Korean Government agency involved in administering type approval.

5. The president of RRL will issue a written decision within 30 business days after the filing of an application for type approval of wireline equipment.

The president may deny type approval if the applicant has not demonstrated that the equipment meets the type approval criteria or documentation requirements described above in XIV.A. and XVI.C.l.

6. The Korean Government will accept the following U.S. : test data for use in its approval process for wireline telecommunications equipment:

a. Test data generated by the U.S. laboratories and manufacturers designated as testing agencies by the Korean Government; or

b. Test data, generated by non-designated laboratories and manufacturers, if they certify that the data have resulted from a test appropriately conducted pursuant to the Ministerial Proclamation No. 839, 1992, and that the non-designated entities retain the necessary testing facilities and personnel.

D. U.S. Equipment Authorization for Wireline Equipment

1. Equipment authorization for wireline equipment is generally administered through Part 68 of the FCC's rules and regulations.

2. Part 68 requires that equipment for attachment to the network be registered with the FCC. Equipment registration is currently accomplished through the filing of FCC form 730. Form 730 must be accompanied by additional information which includes:

a. A copy of the applicant's technical data sheet describing the equipment and its purpose. Technical data must include a complete schematic diagram of the network interface circuit for each type of network port used in the system. Portions of the circuitry not directly involved in demonstrating Part 68 requirements need not be disclosed.

b. A test data package which demonstrates compliance with Part 68 test requirements and the test procedures and test circuitry used in testing.

c. Quality assurance program. The quality assurance program requires applicants to give evidence that the product complies with and will continue to comply with Part 68 requirements.

3. Part 68 has the objective of preventing degradation of the telephone network caused by certain types of defined harms. Part 68 is intended to:

a. Prevent any technical harm to the network;

b. Prevent physical hazards to network operating personnel;

c. Prevent billing equipment malfunction;

d. Prevent degradation of service to persons other than the users of the equipment to be typeapproved.

4. Part 68 prohibits the distribution or direct connection to the network of unregistered equipment. Unregistered equipment may be used behind registered equipment or a registered protective device. Part 68 also prohibits the manufacture, distribution or connection of customer premises equipment that does not conform to Part 68 requirements.

5. Digital circuitry operating at rates greater than 9KHz may require certification under Part 15 of the FCC rules. Part 15 generally requires that operation of the equipment is subject to the conditions that there is no harmful emission of electromagnetic radiation beyond prescribed levels.

6. Devices using radio links and connections to the network may require both FCC authorization of radio equipment and registration of the terminal equipment connecting to the network.

7. Devices lacking appropriate Part 15 and/or Part 68 approvals may not be imported into the United States, except that a maximum of 10 devices may be entered for testing purposes if they are "labeled "For test and evaluation. Not for sale."

E. Korean Type Approval for Wireless Equipment

1. In order to obtain type approval for wireless telecommunications equipment, a manufacturer (or its local agent) is required to submit an application along with the following documents and a sample of the equipment to be approved:

a. Manual describing operation instructions (in the case of importation, a Korean translation of the manual must be attached) for users of the equipment to be approved;

b. Test data generated by the manufacturer of the equipment or a laboratory; and

c. In cases where a Korean national applies for type approval on behalf of a foreign manufacturer, an agency document certifying that the applicant is duly authorized by the manufacturer for the matter of type approval application.

2. An applicant seeking type approval will not be required to submit a sample of the equipment specified in XVI.E.l. or the test data specified in XVI.E.l.b., if the applicant submits one of the following documents:

a. Test data generated by the laboratories designated as testing agencies by the Korean Government; or

b. A copy of the certificate issued by the foreign institutions designated as approval agencies by the Korean Government, that will satisfy the Korean Government's type approval requirements pursuant to the possible future mutual recognition of equipment authorization between the Korean Government and the U.S. Government as described in XVI.G.

3. Any submitted information specified as proprietary by an applicant will be kept confidential and will not be disclosed to any party outside a testing entity or the Korean Government agency involved in administering type approval.

4. The president of RRL will issue a written decision within 30 business days after the filing of an application for type approval of wireless equipment, except that the time frame for radar and automatic alarm receivers is 90 business days.

The president may deny type approval for wireless equipment if the applicant has not demonstrated it meets the type approval criteria and documentation requirements described above in XIV.B. and XVI.E.l.

5. Within 30 business days of an applicant's filing for type approval, the president may request additional information from the applicant in cases where the president decides it is needed for the purpose of demonstrating that the equipment complies with the type approval criteria for wireless telecommunications equipment. The president will issue a written decision approving or denying the application within 30 business days after the applicant files the additional information.

U.S. Equipment Authorization for Wireless Equipment

The technical standards for wireless equipment are contained in various FCC rule parts, based on the radio service for which the equipment will be used. In addition to the technical standards provided, the rules governing the service may require that such equipment be verified by the manufacturer or importer, or that such equipment receive an equipment authorization from the Commission by one of the following procedures: type approval, type acceptance, certification, registration or notification.

1. Verification is a procedure where the manufacturer makes measurements or takes the necessary steps to insure that the equipment complies with the appropriate technical standards. Submittal of a sample unit or representative data to the Commission demonstrating compliance is not required unless specifically requested by the Commission.

2. Type approval is an equipment authorization issued by the Commission based on examination and measurement of one or more sample units by the Commission at its laboratory.

3. Notification is an equipment authorization issued by the Commission whereby the applicant makes measurements to determine that the equipment complies with the appropriate technical standards and reports that such measurements have been made and demonstrate the necessary compliance. Submittal of a sample unit or representative data to the Commission demonstrating compliance is not required unless specifically requested by the Commission.

4. Type acceptance is an equipment authorization issued by the Commission for equipment to be used pursuant to a station authorization. Type acceptance is based on representations and test data submitted by the applicant.

5. Certification is an equipment authorization issued by the Commission for equipment designed to be operated without individual license under Parts 15 and 18 of its rules, based on representations and test data submitted by the applicant.

G. Korea-United States Consultations on Mutual Recognition

1. The Korean Government and the U.S. Government will engage in bilateral consultations during the latter half of 1992 to discuss matters relating to the future mutual recognition of equipment authorization in both countries.

2. Such mutual recognition would generally involve acceptance of Korean Government type approval by the U.S. Federal Communications Commission to meet its requirements for equipment authorization, and acceptance of FCC equipment authorization by the Korean Government to meet its type approval criteria for wireline and wireless telecommunications equipment.

GOVERNMENT PROCUREMENT

The Korean Government and the United States Government will implement their commitments regarding telecommunications procurement in the following manner.

XVII. COVERAGE AND TIMING

A. Effective January 1, 1992, U.S. products, incidental services and suppliers are accorded non-discriminatory access to the procurement contracts of the office of Supplies (OSROK )* and Korea Telecom for telecommunications commodity products. Non-discriminatory access for telecommunications network equipment will be accorded on January 1, 1993.

B. Consistent with current practice, the United States Government will neither influence nor require private U.S. telecommunications services providers to discriminate against foreign suppliers.**

XVIII. DEFINITION

A. For the purpose of this Attachment, telecommunications commodity products are products related to the provision of telecommunications services. Such products include office supplies and equipment, network installation and maintenance equipment, research and development equipment, test and measuring equipment, training equipment, and terminal equipment, except public phones.

B. For the purpose of this Attachment, telecommunications network equipment includes central office switches, transmission equipment, radio equipment and cable.

XIX. KOREA'S ACCESSION TO THE GATT GOVERNMENT PROCUREMENT CODE (THE "CODE") AND THE ROLE OF THE UNITED STATES

A. Korea submitted its offer list for Code accession in June of 1990 and has engaged in consultations with Code signatories, including the United States, concerning the offer list.

*OSROK procures all telecommunications equipment on behalf of the Ministry of Communications, which is a covered entity under the February 1990 U.S.- Korea Record of Understanding on Telecommunications.

**Consultation provisions of this Understanding will apply with respect to this paragraph until such time as the GATT Government Procurement Code negotiations on this subject are concluded and Korea has acceded to the Code.

B. Korea has participated in the Code expansion negotiations since October 1991. Korea intends to finalize its revised offer list for consideration at the Code expansion negotiations by the end of March 1992.

C. As soon as the Korean Government accedes to the Code, the U.S. Government will provide Korean products, incidental services and suppliers with non-discriminatory access to the U.S. Government telecommunications procurement market.

D. For the purpose of facilitating Korea's accession to the Code, the United States Government will continue to play a positive and cooperative role in Korea's accession process and in the Code expansion negotiations.

XX. EXCEPTIONS

A. Korea currently maintains exceptions* to open and competitive bidding, which are applied to telecommunications procurements, that are mandated by the Special Laws of the Korean Government.

B. These current exceptions taken by the Korean Government in its telecommunications procurement will remain operative until implementation of the conclusion of Korea's accession to the Code. The exceptions will be subject to modification and revision to reflect the outcome of Korea's Code accession negotiations.

C. Nothing in this provision shall be deemed to imply U.S. Government acceptance of the exceptions outlined herein, in the context of Korea's GATT Code accession negotiations.

*Korea's current exceptions to open and competitive bidding are specified in Article 76 of the Government Budget and Accounting Law and Articles 104, 105 and 106 of the Enforcement Decree of the Government Budget and Accounting Law and described in its offer list for code accession in June of 1990. Of these exceptions, the exceptions that are most relevant to telecommunications procurement include the contracts awarded to: (i) small- and medium-size firms; (ii) disabled police and military veterans; (iii) honored patriots; (iv) the veterans association; and (v) the local branch office procurement of Korea Telecom.

TELECOMMUNICATIONS EQUIPMENT TARIFFS

Tariff reductions on key telecommunications equipment i tems have been accelerated to conclude reduction to av erage OECD tariff levels by January 1, 1992. Effectiv e on that date, the tariff rate on items listed below will be 8 percent, reduced from 15 percent in 1989.

K orean

Tariff Tariff Rate

Number Product Description 1989 1992

8717.20 Teleprinters 15 8

8517.30 Telephonic or telegraphic

switching apparatus 15 8

.301 --for public exchange 15 8

. 3011 --of electronic switching system 15 8

.3019 --other 15 8

.309 -Other 15 8

.3091 --of electronic switching system 15 8

.3099 --other 15 8

8517.4050 Optical Fiber Transmission System 15 8

8517.4060 Carrier equipment for broad casting system 15 8

8517.4070 Signal Converter 15 8

8517.4080 Multiplexer 15 8

8517.4090 Other 15 8

8517.80 Other Apparatus 15 8

851 7.90 Parts 15 8

.9010 --of electronic switchi ng 15 8

system for public exchange

.909 -Other 15 8

.9091 --of telephone set 15 8

.9092 --of public exchange 15 8

.9093 --of private exchange 15 8

.9094 --of apparatus for carrier 15 8

.9095 --of facsimile 15 8

.9099 -Other 15 8

8525.1010 Transmission apparatus

Radio-broadcasting apparatus 15 8

8525.2030 Tr ansmission apparatus

Facsimile Transmission equipmen t 15 8

8525.2060 Transmission apparatus

Transceivers 15 8

8527.90 Reception apparatus for radi o-

telephony 15 8

8529.10.9290 Antennas for 8 525 and 8527 15 8

8529.9099 Parts (assemblies) of 8525 and 8527 15 8

8531.1080.00 Paging alerting devices 15 8

8531.1090 Parts (assemblies) for 8531 15 8

TANC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.


Privacy Policy \| Disclaimer \| USA.gov \| Site Map \| Download Adobe Acrobat \| USDOC \| ITA \| Export.gov