Free Trade Agreement Updates for 2012

by Sheppard Mullin Richter & Hampton LLP

2012 saw several updates with regard to free trade agreements (“FTAs”) between the U.S. and its international trading allies. The most notable of these was the U.S.-Korea FTA (“KORUS”), but several other changes were made to the U.S. procurement regulations implementing other free trade agreements. Regrettably, negotiations with China remain stalled with no firm promises on the horizon. Following is a summary of some of the key changes over the last year.

New Designated Countries 

During 2012, three countries were added to the list of “designated countries” under the Trade Agreements Act (“TAA”). The changes, at Federal Acquisition Regulation (“FAR”) 25.003 and Defense Federal Acquisition Regulation Supplement (“DFARS”) 225.003, are as follows:


Effective Date

Relevant FTA



March 2012

World Trade Organization Government Procurement Agreement (WTO GPA)

77 Fed. Reg. 12935
77 Fed. Reg. 4631



U.S.-Colombia Free Trade Agreement (Pub. L. No. 112-42)

77 Fed. Reg. 27549
77 Fed. Reg. 30359


November 2012

U.S.-Panama Free Trade Agreement (Pub. L. No. 112-43)

77 Fed. Reg. 69723
77 Fed. Reg. 68699

The FAR and DFARS were also updated in 2012 to reflect new changes from the United States-Korea Free Trade Agreement (Pub. L. No. 112-41), signed into law in October 2011. See 77 Fed. Reg. 13952; 77 Fed. Reg. 56739. While South Korea has long been a member of the WTO GPA, the new FTA allows for lower dollar thresholds at which South Korean products and services will qualify under U.S. procurements.


New Thresholds

Old Thresholds







South Korea







Additionally, DFARS 252.225-7017 was updated to allow exceptions to the “Buy American” restrictions on the purchase of photovoltaic devices, consistent with the new KORUS FTA. See 77 Fed. Reg. 30356. We have previously written about these “Buy American” restrictions on photovoltaic devices (click here and here), with the DOD publishing final rules (without substantive changes) in May 2012. See 77 Fed. Reg. 30368.

New Qualifying Countries

In recent months, the U.S. Department of Defense signed reciprocal defense procurement agreements with the Czech Republic and Poland, adding these countries to the list of “qualifying countries” under the DFARS. See 77 Fed. Reg. 38736; 77 Fed. Reg. 76941.

“Qualifying countries” are a distinct subset of U.S. allies that are treated the same as domestic companies for purposes of certain procurements by the DOD. See DFARS 225.003. “Qualifying countries” are different from “designated countries,” which include countries with which the U.S. either has a FTA (e.g., Canada or Mexico) or that U.S. policy chooses not to discriminate against in U.S. procurements (e.g., Afghanistan). See FAR 25.003. Each “qualifying country” has a specific Memorandum of Understanding with the DOD, which supplements any other pre-existing FTAs and/or promises that neither country will discriminate against the other in defense procurements – effectively waiving many (albeit not all) DOD “Buy American” restrictions with regard to products or services from that ally country. While there is some overlap between the list of “qualifying countries” and “designated countries” – with both Poland and the Czech Republic having already been “designated countries” since 2004 when they joined the European Union and WTO GPA – the two lists are not co-extensive.

The addition of the Czech Republic and Poland as “qualifying countries” will give companies increased flexibility for DOD procurements in using products that would normally be TAA compliant.

Updates Under the WTO GPA

Several countries remain in talks to join the WTO GPA.

  • China. Since 2007, China submitted two offers to join the WTO GPA, but each was rejected as insufficient because (among other reasons) the offers did not guarantee access to provincial procurements. In December 2012, China submitted a third offer, promising access to approximately 100 additional government agencies in three Chinese provinces. However, the U.S. and other countries criticized this latest offer as insufficient because it still did not allow access to the totality of Chinese procurements (at both the national and local levels). The offer also insisted upon dollar thresholds that were far higher than the norm under the WTO GPA – $770,000 vs. $200,000 for purchases of supplies, and $77 million vs. $7.7 million for construction projects. China claims that its offers are reasonable, given China’s status as a developing economic power, but the other members of the WTO GPA insist on greater concessions before allowing China to join. This means that while a FTA with China remains “in progress,” any definitive agreement with China remains in the far-off future. 
  • New Zealand. In September 2012, New Zealand submitted its first offer to join the WTO GPA. But this offer was rejected, with individuals from the U.S. claiming that New Zealand needed to guarantee coverage in certain industries (such as public health, education, and welfare) and with sub-central governmental entities. New Zealand countered that it does not have “sub-central entities” to be covered by the FTA, with all governmental functions handled by the central New Zealand government. While there are several issues that remain to be worked out, it appears that New Zealand is well on the way to joining the WTO GPA. 
  • Vietnam. In December 2012, Vietnam stated that it was interested in joining the WTO GPA. Vietnam is already engaging in negotiations as part of a Trans-Pacific Partnership agreement (among the U.S., Australia, Singapore, and other South Pacific and South American countries), so it seems likely that a FTA with Vietnam will eventually happen. But the timing remains unclear. 
  • India. In February 2010, India became an observer to the WTO GPA, initiating the first steps to joining the WTO GPA. While India has not made any additional formal steps to join the FTA, India remains in progress and will hopefully formalize its membership in the near future.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sheppard Mullin Richter & Hampton LLP | Attorney Advertising

Written by:

Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.