[MUSIC] Hello everyone, welcome back. Today we are going to talk about the Berry Amendment, a very special provision which we mentioned a little bit last session. But today we are going to talk about briefly for Berry Amendment and some other provision under Department of Defense we call RDP, Reciprocal Defense Agreement. And because this area of this regulation is very difficult area to understand, so I want to take this opportunity to recapture most of what we going through last three session. So let's talk about the BA Agreement. This is a special regulation applied to the US Department of Defense and several US federal government that are not include in free trade agreement. So when US Department of Defense, so again, the Berry Amendment is only applicable regulation for Department of Defense, not for any other agency, okay? So please note that is the case. So when US Department of Defense purchases supplies through the public procurement process, they must use, first, they apply for the Buy American Act. And then they have to use for the Berry Amendment for a specific item. So when there is any solicitation, we call it solicitation, solicitation is basically wording for tender, and most of the UK country call it tender. So when government issue a Request for Proposal, RFP, or the Expression of Interest, EOI, for procuring some product and market research. If a solicitation has a clause subject to Berry Amendment, that mean the specific solicitation is subject to the Berry Amendment. That mean before you get into anything in detail, whether you can supply this good or whether you start writing technical proposal or whether you can come up with an internal auditing system for your quality control, you need to have a look at what item under the Berry Amendment. So Berry Amendment is a very specialized area. We have about 12 different category. It is very wide range of the items. For example, the most important thing is food is included. Clothing, so the definition clothing, you have a very broad concept of clothing, clothing and the material or the component, other than sensor, or electronic, other items added. And also, you're talking about a tent, any cover, any coverage, forms of tent. And also, you included in the cotton and other natural fiber. And woolen, or the silk product, blended silk product, and yarn for the spun, you call it spinning yarn, okay, to make your fabric. So these are the all items included. And also, you have a synthetic item, a canvas item included, all types, all items included. Individual equipment, for example, like Federal Supply code number 8465, like all hand tool or individual tool, they are also included here. And also measuring tool and measuring the different type of the mechanical engineering stuff. So these 12 item are under Berry Amendment. So when your product, any of your product under these 12 category, there is a very strong chance that you may not be able to participate any of procurement contract issue and funded by Department of Defense or US government. So the Berry Amendment is basically, there is little room to get waiver. For example, like the Buy American Act, as we studied earlier, when country has a free trade agreement, you can use the free trade agreement as your waiver. So you can do free trade and participate the public procurement market in the United States. But Berry Amendment does not have that provision at all. So if your product is subject to the Berry Amendment item, you better not to pursue any further, you better stop there. Even you have a supplier in the United States or partner in the United States working together. If this item non-made in the United States largely, large component, more than 51%, you cannot sell this product to US government. So another one we want to talk about is RDP. This is Reciprocal Defense Procurement. This is very specialized area, so I don't want to go too much in detail. This is basically the special provision we call RDP MOU, where US Department of Defense enter RDP MOU, memorandum of understanding, with 27 country or ally. So they allow all these ally, under this legal framework, sell the item, the restricted item, to US government. So unfortunately, you might imagine that Korea should be as ally. We have more than 30,000 US soldiers in Korean Peninsula to protect peace and stability in Korean Peninsula. But some regions, we do not have RDP MOU executed with the US government. But Japan, all other major US ally are under this legal framework. Because RDP MOU is very specialized area of practice, I will not go in too much detail, but if you want to know more about RDP MOU, you can certainly have a look at it. So remaining part of time, I want to use it for the why we have this legal framework in place for public procurement market. I think it's very important to revisit the issue of the BAA, because I don't want to give wrong impression or the idea the US government did not promoting free trade. That is not the case at all. If you look at any country, Korea included, most of the country, whether you are under the government procurement agreement, under WTO, or not, each country has their own legal provision, written regulation to protect their businesses. So most of the country has a special provision for small business incentive act of the law, basically incentivize small business to do more work for the government. For example, in Korea, we have entity called PPS, Public Procurement Service of Korea. So PPS is like USA GSA, the General Service Administration equivalent. So PPS is agency procure most of the product and services for Korean government, like GSA. Same time, the PPS encouraged a lot of Korean small businesses to come in a specialized e-procurement system and to supply specific good and services in a protected environment. So not only Korea provides this sort of shelter, if you like, coverage for small businesses, all other developing country and developed country, they have the same thing. So don't get me wrong. The BAA is only there in America to protect American industry, but it is like a global sort of legal framework that any country would have the same thing. So let's put all this, the rules and regulation, in the prospect of understanding public procurement in a global context. So we go back with what we said first. You need to think about the pyramid. So top of pyramid, as I said, we have a World Trade Organization. Under World Trade Organization, we have a government procurement agreement in place. So that's the second legal framework that we said, very important. So under GPA, with the GPA principle of nondiscrimination and transparency. And each country under the member of the GPA promised as a protocol, as a country to country treaty, that we will take care of your company like ours. So we were not going to discriminate company from Korea for US federal government business opportunity. So that's what US government is saying under the legal framework of GPA. Now, because of GPA in the Korean government and US, they signed a free trade agreement. In the free trade agreement, there are most of the general items of product or services covered under free trade agreement. That mean Korean company can participate the public procurement business opportunity funded issue by US federal government, but there are number of restriction. Some specialized item and industry are not covered by free trade agreement. So as we looked at it earlier, the Korean and American free trade agreement, we call it KORUS. Chapter 17 is fully designated for public procurement. There are 17 section A is one provision where exclusion is included. So because of this exclusion, Korean company better not go in that particular market sector or item that cover under chapter 17-8. So with having a free trade agreement, and then we have to understand Buy American Act. Buy American Act is basically there to protect US industry from other incoming, the overseas supplier for public procurement. So all these thing that I mentioned earlier is only relevant for publicly funded procurement. So if you're talking about the commercial procurement, dealing with any commercial entity in the United States, you do not need to pay any attention to Buy American Act. Unless those purchase or those sale to those large company directly related or indirectly related to government program, they may extend the provision of the government procurement regulation, which is the Federal Acquisition Regulation. Otherwise, the Buy American Act is not relevant for commercial procurement. So please note always when we go through this lecture, this is for public procurement. Most of the things that we talk about here, rules and regulations, they are relevant to public procurement practices and businesses, not for commercial practice. So please do not confuse, otherwise this can be very complicated. So the Buy American Act is one thing, and then we had the Trade Agreement Act. So TAA, it is a special provision encourage the foreign supplier coming in to do the business with US government. This is a preference for those country under TAA agreement. So that is summary of this session. So you need to understand BAA as the discouragement for the free trade. TAA is encouragement for free trade. So you can put that way. We have to understand better so in the future, if your product happen to be one of the restricted item on the Berry Amendment, you best stop there, do not pursue anymore. But as I said earlier, even you have issue with the Buy American Act and your country does not have any legal framework in place with the US federal government, you're still free to deal with any company you wish. As long as you conduct the business in legitimate manner as a supplier or a civil contractor to the prime contractor in the United States. So you can deal with them and sell your product and services in indirect manner and through your partner in the United States. Thank you.
