Gov’t allays fears over railroad privatization

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Gov’t allays fears over railroad privatization

The Blue House scrambled yesterday to refute allegations raised by the opposition Democratic Party that the government is taking steps to privatize railroads, which are state-run.

The allegations surfaced after it was revealed that President Park Geun-hye on Nov. 15 approved the amendment of the Government Procurement Agreement (GPA), an agreement under the auspices of the World Trade Organization (WTO).

According to the organization, the agreement aims “to open up as much business as possible to the international community,” providing a framework for the progressive liberalization of markets for buying and selling goods and services.

Democrats claimed on Tuesday that Park secretly issued an approval, intentionally skipping the mandatory process of obtaining a vote from the National Assembly.

“Since the GPA will make it possible to privatize the railroads, it will impose a crucial financial burden on the public and undermine domestic industrial fundamentals,” Representative Jun Byung-hun, a DP floor leader, said Tuesday. “Even though the amendment required approval from the National Assembly, [President Park] skipped it. She apparently aimed to incapacitate the National Assembly.”

If the amendment is enforced after approval from other WTO members, it means suppliers in those 43 member countries will be subject to the same terms and conditions applied to domestic operators within Korea in government procurement markets.

Cho Won-dong, senior presidential secretary for economic affairs, however, made it clear in a briefing yesterday at the Blue House that the government “won’t make railroads run by private entities.”

“The procurement agreement is in place so that when the government places an order, local and foreign operators will be on equal terms,” he said. “That will step up competition among operators and it will drag down prices. Wouldn’t it mean local or central governments could offer better services at cheaper costs?”

Cho added that Park had consulted with the Ministry of Government Legislation, which confirmed that Assembly approval was unnecessary.

The existing version of the GPA was developed in 1994, during the Uruguay Round of multilateral trade negotiations. Forty-three countries, including Korea, among WTO members have ratified the amendment to the agreement. The protocol of amendment will go into effect upon its acceptance by two-thirds of the parties to the agreement. In response to media speculations that the Korean government was rushing to approve the amendment, Cho said that 27 out of the 43 WTO member countries are in the European Union, and that the amendment’s ratification is essentially up them.


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