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Since Taiwan has signed the Government Procurement Agreement (GPA) of World Trade Organization (WTO) on 15 July 2009, the Public Construction Commission of Executive Yuan (PCC) then notified Mainland Affairs Council of Executive Yuan (MAC) in February 2012 that there is no difficulty for government entities to handle mainland invested enterprises' participation in government procurements in accordance with GPA of WTO, Government Procurement Act, and related explanations of PCC. PCC has sent official letters to request related entities to handle procurement related affairs according to related letters and explanations of PCC. Consequently, since 30 March 2012, MAC's regulations regarding whether mainland invested enterprises in Taiwan can participate in government procurements shall cease to apply and the related affairs shall be handled in accordance with applicable regulations of PCC.
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On 18 April 2012, PCC announced the definitions of so-called "Mainland Invested Enterprises" as follows:
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Enterprise in mainland: Enterprises established and registered in accordance with the law of mainland, including their branch offices abroad.
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Mainland invested foreign enterprise: Enterprises established and registered in accordance with the law of a third area other than Taiwan and the Mainland. Such as enterprises established and registered in accordance with the law of the U.S. or Singapore, including their branch offices in areas other than the third area.
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Mainland invested domestic enterprise: Enterprises established and registered in accordance with the law of Taiwan, including their branch offices in areas outside Taiwan.
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Furthermore, according to Paragraph 1, Article 23 of GPA, for procurements to which GPA is applicable, if the government entity determines that the procurement is related to weapons, ammunition, or war materials, or is indispensable for national security or for national defense purposes, the application of GPA may be excluded. Otherwise, according to the provisions of GPA, the procurement shall open for the participation of the enterprises, products, and services of GPA members. As for procurement to which GPA is not applicable, the government entity may specify expressly on the tender documents whether the said procurement is open for the participation of foreign enterprises (including enterprises in mainland and mainland invested foreign enterprises) or their products or services. Hence, PCC declared the principles to handle the participation in government procurement of the aforementioned enterprises in mainland, mainland invested foreign enterprises, and mainland invested domestic enterprises as follows:
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Enterprise in mainland: Since mainland China has not yet signed the GPA and an open market agreement for government procurement has not yet been signed across the straight, no matter GPA is applicable to the procurement or not, the government entity may specify on the tender documents that enterprises in mainland or their products or services may not participate.
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Mainland invested foreign enterprise: For procurements to which GPA is applicable, except those have conditions stipulated in Article 23 of GPA, according to the provisions of GPA, the government entity shall open the procurement for the participation of the enterprises, products, and services of GPA members. If there is any security concern in a case, confidentiality clauses and punishments should be stipulated in related contracts as precautions. As for procurements to which GPA is not applicable, the government entity may specify on the tender documents that mainland invested foreign enterprises or their products or services may not participate.
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Mainland invested domestic enterprise: Since by nature these enterprises are domestic enterprises, no matter the percentage of equity invested by mainland funds, excluding domestic enterprises from participating in government procurements is restricting the people's right. According to Article 5 of Central Regulation Standard Act, it may only be conducted in accordance with provisions expressly stipulated in laws. If a case is processed in accordance with announcements, participation of mainland invested domestic enterprises may not be restricted. If the government entity believes that there is any security concern, confidentiality clauses and punishments should be stipulated in related contracts as precautions.
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