USTR Releases Title VII Report

PR0023E | Date: 2000-05-19

Taiwan, which is in the process of acceding to both the World Trade Organization (WTO) and the WTO Agreement on Government Procurement (GPA), recently enacted a law and promulgated regulations intended to bring its procurement practices into conformity with the requirements of the GPA. Although the new procurement law is an improvement over the former procurement regime, particularly in the area of transparency, it will not be fully applicable to foreign bidders until Taiwan's accession and does not cover the full range of procurement activities of interest to U.S. suppliers. Moreover, the new regulations do not appear to have effectively addressed problems that U.S. suppliers continue to experience in the Taiwan procurement market.

Last week in the "Title VII Report" to the U.S. Congress, the United States Trade Representative identified a number of practices under Taiwan's government procurement regime as discriminatory. In particular, the following practices were identified:

* The lack of timely and effective arbitration procedures, which prevent satisfactory resolution of contract disputes;
* high bid bond requirements and unacceptably high potential contract liabilities;
* frequent costly and unreasonable contract change orders;
* the use of tender specifications to exclude foreign bidders;
* qualification requirements that require experience in similar projects in Taiwan, which do not take into account relevant experience in other markets;
* qualification requirements that require foreign suppliers to establish local subsidiaries; and
* the use of offsets in certain key sectors.

The Administration continues to urge the Taiwan authorities to take concrete steps, in preparation for its WTO and GPA accession, to eliminate these and other procurement practices that appear inconsistent with WTO requirements or that constitute an unfair or unnecessary restriction on competition in Taiwan's government procurement market.

The Title VII report is available at http://www.ustr.gov/new/titlevii.html. The press release announcing the Title VII report is available at http://www.ustr.gov/releases/2000/05/00-30.html.