Korea's Negotiations on Government Procurement in Telecommunications Sector: Evaluation and Lessons

KT, the major telecom service provider in Korea, was transformed into a purely private company in August 2002, in accordance with the complete divestiture of government's shares. Thereafter, KT has been entitled to manage its businesses with full degree of freedom with no government intervention or influence as long as its anti-competitive conducts are not concerned. However, it is worth noting that KT's procurement in fact is still being bound by bilateral and multilateral Government Procurement Agreements (GPAs) which legally cover government or public entities only. This paper, motivated by the contradictory state of affairs, seeks to evaluate and get some lessons from the Korean government's negotiation strategies through scrutinizing its former GPAs negotiations in telecom sector and as well its recent follow-up negotiations for the exclusion of KT from them. Based upon the findings of this paper, the Korean government is generally responsible for the delay of follow-up negotiations from the perspectives as follows: first, it accepted 'Agreement' as a legal formality in the past, which is hard to modify in accordance with the change of procurement market environment; second, existing bilateral and multilateral GPAs lack the criteria for the exclusion of committed entities, while there was no such efforts made to arrange those in GPAs after taking effect; third, it lost appropriate timing to launch follow-up negotiations to exclude KT from GPAs; and finally, it lingered around in preparing negotiation leverages to turn the tables in the follow-up negotiations even after the complete privatization of KT. In this context, we could regard it as an effective and irreversible action for marking a new phase that the Korean government revised the domestic regulation affecting KT's procurement of telecom equipments around the end of 2003. What is important for the future bilateral negotiations is to target the termination of the Agreements rather than amendment, since KT currently remains a private company, de jure or de facto.