When confronted with a foreign supplier participating in a procurement tender, the procuring agency in Taiwan basically follows Article 17 of the Government Procurement Law and its ancillary laws. This article introduces step by step the handling principles followed under the Government Procurement Law of Taiwan to allow tender participation by foreign suppliers.
I. Determination of whether relevant treaties or agreements apply to a procurement project
1. Under Article 17, Paragraph 1 of the Government Procurement Law, “A foreign supplier participating in a procurement project organized by an agency shall follow treaties or agreements to which Taiwan is a signatory.” 」
The current treaties or agreements relating to government procurement projects include:
(1) World Trade Organization Agreement on Government Procurement (hereinafter, the “GPA”), which came into effect on in 2009.
(2) Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation, which came into effect in 2013.
(3) Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP), which came into effect in 2014.
2. The above agreements which have been executed by Taiwan pertain to different liberalizing agencies, threshold amounts and liberalized markets. How to determine if any treaty or agreement executed by Taiwan applies to a particular procurement project is briefly explained below:
(1) First, it is necessary to ascertain if the liberalizing agencies and the liberalizing threshold amounts under relevant agreements apply to such procurement project.
Take the GPA for example. The liberalizing agencies in Taiwan are the Presidential Office, the Executive Yuan and its affiliated ministries, commissions, bureaus or agencies, Taipei City Government, Kaohsiung City Government, some state-owned enterprises, public hospitals and national colleges and universities, to which different monetary thresholds apply. Under the ASTEP, New Taipei City Government, Taichung City Government, Tainan City Government and Taoyuan County Government are included as liberalizing agencies.
(2) In addition, it should be ascertained if the type of procurement project is covered by the liberalized markets under such specific agreement.
The markets liberalized under specific agreements basically consist of contracting of construction work, the purchase or lease of property, the retention or employment of services, which will not be elaborated in detail here since the detailed list of liberalization is quite lengthy and complex.
To safeguard Taiwan’s rights and interests, the agreements also provide for exceptions when markets are liberalized. For example, Article 23 of the GPA provides for exceptions to the agreement. Paragraph 1 of such article stipulates: “Nothing in this Agreement shall be construed to prevent any Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defense purposes.” Therefore, if a procuring agency believes a procurement project covered by the GPA meets the exceptions under such article, the application of the GPA may still be excluded.
II. If a procurement project may be exempt from treaties or agreements executed by Taiwan, such procurement project will be dealt with pursuant to the Regulations Governing the Participation of Foreign Suppliers in Procurement Not Subject to Any Treaty or Agreement.
If a procurement project is not part of the liberalizing agencies, monetary thresholds and liberalized markets under the above agreements, such treaties or agreements executed by Taiwan do not apply, and such procurement project will be dealt with in accordance with Regulations Governing the Participation of Foreign Suppliers in Procurement Not Subject to Any Treaty or Agreement (hereinafter, the “Regulations”), which was formulated pursuant to the authorization under Article 17, Paragraph 2 of the Government Procurement Law.
Article 5 of such Regulations provides that if a procurement is not subject to any treaty or agreement executed by Taiwan, the procuring agency may still allow foreign suppliers to participate in the tender documents, depending on actual needs. To wit, a procuring agency has the authority to decide if foreign suppliers are allowed to participate in a procurement project not subject to any treaty or agreement. In addition, according to Article 2 of the Regulations, a procuring agency of a procurement project subject to a treaty or agreement also has the authority to decide if suppliers from countries which are not signatories to such treaty or agreement are allowed to participate. The actual circumstances of liberalization should be governed by the tender documents released by a procuring agency.
III. Handling principles for the participation of mainland China suppliers in procurement projects of various agencies
Article 7-1 of the Regulations provides that participation of mainland China suppliers in procurement projects of various agencies shall be governed by provisions for foreign suppliers.
With respect to the interpretation and application of such article, the Public Construction Commission explained about its handling principles in its Gong-Cheng-Qi-10100346580 Circular of September 13, 2012.
According to the Circular, (1) for mainland China suppliers, since China has not joined the GPA and no treaty or agreement on mutual liberalization of government procurement markets between both sides of the Taiwan Strait has been signed, whether the GPA applies to a procurement project, it may still be stipulated in the tender documents not to allow the participation of mainland China suppliers or their products or services; (2) for suppliers in a third country with mainland China capital, if the GPA applies to the procurement project, the procuring agency may exclude the application of the GPA if the procurement projects involves national security in accordance with Article 23 of the GPA; and if the GPA does not apply to the procurement projects, the procuring agency may exclude suppliers in third countries with mainland China capital pursuant to the gist of Article 5 of the Regulations; and (3) for suppliers in Taiwan with mainland China capital, if a project is implemented by way of public announcement, suppliers in Taiwan with mainland China capital may not be excluded; if national security is a potential issue, a military agency may follow the provisions concerning military procurement under Article 104 of the Government Procurement Law; and a general agency may select appropriate suppliers without public announcement (restrictive tender) in accordance with Article 22 or 23 of the Government Procurement Law.