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Trade Regulations, Customs and Standards

Import Tariffs (Return to top)

The U.S.-Korea FTA will implement on March 15, 2012. Currently, the average basic tariff on U.S. goods at about 7.9 percent and Duty rates are high on a large number of high-value agricultural and fisheries products. Once the FTA has been implemented, however, 95% of tariffs on U.S. imports will be eliminated within five years. The U.S. Department of Commerce FTA Tariff Tool can help U.S. exporters indentify the harmonized system number for their products and the associated tariff rates over the next ten years. Exporters can also contact the U.S. Agricultural Trade Office for specific information on agricultural tariff rates.

Korea also maintains a tariff quota system designed to stabilize domestic commodity markets. Customs duties can be adjusted every six months within the limit of the basic rate plus or minus 40 percent. On December 2, 2011, the Ministry of Strategy and Finance (MOSF) released the 2011 list of products subject to tariff adjustments. 112 products were subject to adjustment tariffs.

Korea has a flat 10 percent Value Added Tax on all imports and domestically manufactured goods. A special excise tax of 10-20 percent is also levied on the import of certain luxury items and durable consumer goods. Tariffs and taxes must be paid in Korean Won within 15 days after goods have cleared customs.

Customs Valuation

Most duties are assessed on an ad valorem basis. Specific rates apply to some goods, while both ad valorem and specific rates apply to a few others. The dutiable value of imported goods is the cost, insurance, and freight (C.I.F.) price at the time of import declaration.

Import duties are not assessed on capital goods and raw materials imported in connection with foreign investment projects. Authorization to import on a duty-free basis is usually accompanied by the Ministry of Strategy and Finance’s approval of a foreign investment project.

For illustrative purposes, the following table demonstrates import duty and other taxes affecting the final import price:

Product Cost (Ex Factory)

USD 100

Insurance and Freight (C&F)

USD 15

CIF Price

USD 115

Import Tariff/Duty (Valuation CIF + VAT)

USD 5

Value Added Tax (VAT)

USD 12.3

Final Imported Price

USD 132.30

Trade Barriers (Return to top)

Korea continues a process of economic liberalization and deregulation, but the Korean government (ROKG) has yet to adopt a fully laissez-faire policy where the economy and trade are concerned. The U.S. Embassy, in cooperation with the American Chamber of Commerce (AmCham) in Korea, works actively to lift or loosen the many regulatory trade restrictions that currently exist.

Overcoming regulatory barriers to trade is also a major focus of the U.S. – Korea FTA. Transparency, due process, public comment and appeals procedures, and timely and written administrative procedures are among the topics that were addressed and agreed to and affect a number of the sector-specific elements to the agreement.

Information on specific trade barriers in Korea, including agricultural products such as restrictions on rice imports, is available in the 2010 National Trade Estimate Report on Foreign Trade Barriers for Korea. (2011 data will be released at the end of March, 2012.)

Import Requirements and Documentation (Return to top)

For companies exporting to the Republic of Korea the following shipping documents are required to clear Korean Customs:

COMMERCIAL INVOICE: An original invoice and two copies must be presented with the shipping documents and must include total value, unit value, quantity, marks product description and shipping from/to information.

CERTIFICATE OF ORIGIN: Prior to implementation of the KORUS FTA, a Certificate of Origin in duplicate was required for some products. Exporters are encouraged to discuss shipping document requirements with their respective importer.

An importer must claim preferential treatment under the KORUS FTA in order to receive the lower tariff. The importer can do this by providing written or electronic certification to Korean Customs from the manufacturer, the exporter or the importer. The importer is required to retain all documents demonstrating that the good qualifies as a U.S.-origin good for five years.

Self-certification of origin by the producer or exporter is normally the basis for deciding the good qualifies for preferential treatment. If the certification is in English, an official translation into Korean must be presented by the importer to Korean Customs. A certification may be made for a single shipment or for multiple shipments of identical goods for up to twelve months by specifying this in the certification. The importer submits the certification to Korea Customs, in writing or electronically, including at least the following information:

a. Name and contact information for the Certifying person

b. The importer

c. The exporter

d. The producer of the good

e. Harmonized System Tariff classification and description of the good

f. Information demonstrating that the good originates in the United States. This can be satisfied by either:

i. The producer’s written or electronic certification that the product meets KORUS FTA origin requirements, or

ii. The producer’s or exporter’s knowledge that the good meets KORUS FTA origin requirements.

g. Date of the Certification

h. In the case of a blanket certification, the period that the certification covers.

PACKING LISTS: Two copies are required.

BILL OF LADING: A clean bill of lading identifying the name of the shipper, the name and address of the consignee, the name of the port of destination, description of the cargo, a price list of freight and insurance charges (CIF), and attestation of carrier’s acceptance on board for the goods is sufficient. There are no regulations pertaining to the form of the bill of lading nor the number of bills of lading required to clear customs. As bills of lading are for ocean and overland cargos, the airway bill of lading replaces the bill of lading for air cargo shipments.

MARITIME INSURANCE: Under the Incoterms (shipping terms) agreed to by the parties in a transaction, if the exporter is responsible for insurance, a marine insurance policy or insurance certificate is required.

SPECIAL DOCUMENTATION

Information related to the need of special documentation for food and agricultural commodities including sanitary-phytosanitary certificates, and other agricultural documentation can be found on the USDA/Animal Plant Health Inspection Service (APHIS website at: http://www.aphis.usda.gov/import_export/index.shtml).

An overview of Korean import requirements for food is contained in the FAS Korea annual agriculture export guide at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Seoul%20ATO_Korea%20-%20Republic%20of_11-2-2011.pdf.

Additional detailed information about import requirements and documentation needs for agricultural and food products (including biotechnology products) are included in the import requirements report at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Seoul_Korea%20-%20Republic%20of_1-11-2011.pdf.

Additional information on how the new Free Trade Agreement affects duty rates can be found on the Food and Agricultural Import Regulations and Standards (FAIRS) report for Korea. The Korean Food and Drug Administration (KFDA) provides information on maximum residue levels and import procedures on the KFDA website. Additional detail on the maximum residue limits allowed by Korean food authorities and reports on import requirements for organic products are also available on the FAS website. Exporters of organic products should also review the FAS report on Korean regulatory requirements for transgenic content in organic processed food products.

Current information on which U.S. livestock and poultry products are eligible for export to the Korean market can be found on the website of the Food Safety and Inspection Service of the U.S. Department of Agriculture. This website also provides guidance on the documents Korea requires for livestock product shipments destined for Korea.

All commodities, except rice, can be freely imported, subject to special registrations and import approvals for categories like pharmaceuticals medical devices, and cosmetics. The Government of Korea has stipulated requirements and procedures for importing certain products including registration, standards and safety and efficacy testing to ensure the protection of public health and sanitation, national security, safety, and the environment. Typically, health or safety related products, such as pharmaceuticals and medicines, require additional testing or certification by recommended organizations before clearing customs. Medical device and pharmaceutical exporters must have their products registered with the Korea Food and Drug Administration and can only be imported by licensed importers that have been certified by a KFDA authorized body. In addition, special items defined by the Ministry of Knowledge Economy in its Annual Trade Plan require approval by the Minister. In most cases, the supplier’s qualified local agent completes the registration process.

US Export Controls (Return to top)

The Department of Commerce, Bureau of Industry and Security (BIS) develops, implements, and interprets U.S. export control policy for dual-use commodities, software, and technology. Dual-use items subject to BIS regulatory jurisdiction have predominantly commercial uses, but may also have military applications. For basic information on U.S. export controls, please visit the following website at http://www.bis.doc.gov/licensing/exportingbasics.htm. For information on export controls administered by other U.S. Government agencies, please visit

http://www.bis.doc.gov/About/reslinks.htm.

Temporary Entry (Return to top)

Korea has three kinds of bonded areas where goods can temporarily enter Korea for storage, manufacture, processing, sale, construction, or exhibit without going through customs clearance. The three types of bonded areas are: 1) designated bonded areas (designated storage sites and customs inspection zone); 2) patent bonded areas (bonded warehouses, bonded factories, bonded exhibition sites, bonded construction sites, and bonded sales shops); and, 3) comprehensive bonded areas (all five activities of patent bonded areas can be performed comprehensively in the same place). Duties are payable only when goods are cleared through customs.

The period for which goods may be stored in a designated bonded warehouse is six months and a patent bonded warehouse is one year. Storage fees are relatively high, and the availability of a bonded warehouse to maintain inventories is limited. The storage period does not apply to the storage of live animals or plants, perishable merchandise, or other commodities that may cause damage to other merchandise or to the warehouse. The Collector of Customs bears no responsibility for goods while they are stored in customs facilities.

Comprehensive bonded areas have no time limit for storage. Hence, storage, manufacturing, processing, building, sales and exhibition can be comprehensively carried out. U.S. exporters can store shipped goods and still maintain title until they are cleared through customs. Korea's customs laws specify that any person who wishes to establish a bonded warehouse shall obtain a license from the director of each Customs Zone. Applications must include the name of the bonded warehouse, location, structure, numbers and sizes of buildings, storage capacity and types of products to be stored. In addition, articles of incorporation and corporate registration must be submitted, when applicable.

Goods entering Korea for exhibition purposes must be stored in a bonded area. For example, the Korea Exhibition Center (COEX) is a bonded area. Exhibition goods will be held without charge at COEX during the exhibition period, after which they must be either: 1) reshipped directly out of Korea without payment of duty; 2) presented at Customs for payment of regular duty on value declared at time of entry; or, 3) transferred to the Seoul Customs house bonded storage area. Goods stored in a bonded warehouse may incur storage costs, customs brokerage charges, local transportation costs and moving equipment fees.

Korea Customs have simplified clearance procedures for goods with particular purposes (samples, goods for warranty and non-warranty repair).

The ATA Carnet is an international Customs document that a traveler may use to temporarily import certain goods into a country without having to engage in the Customs formalities usually required for the importation of goods, and without having to pay duty or value-added taxes on the goods. Korea allows for the temporary importation of commercial samples, professional equipment and certain advertising materials by a nonresident individual. For more information about carnets in Korea, please click here. By definition a temporary import is for six months or less, therefore, a Carnet is valid for a maximum of six months in Korea.

For more detailed information about guidelines for temporary entry of items into Korea, please visit the Korea Customs website.

Labeling and Marking Requirements (Return to top)

Korea has specific labeling and marking requirements for certain products, such as pharmaceuticals, as well as for organic and functional food and food produced through biotechnology. Details regarding these and other general labeling and market requirements can be found on the Foreign Agricultural Service website pertaining to food and agriculture import requirements at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Seoul_Korea%20-%20Republic%20of_1-11-2011.pdf.

Country of origin labeling is required for commercial shipments entering Korea. The Korean Customs Service (KCS) publishes a list of country of origin labeling requirements by Harmonized System Code number but the site is in Korean. The usage of “Assembled in Country” was allowed starting October of 2010. To learn more about Country of Origin labeling requirements for your product, please contact Office.Seoul@trade.gov.

The Korean Ministry of Knowledge Economy began issuing the “KC” mark for items that fall under its jurisdiction. Formerly, some 13 mandatory marks were issued, many that overlapped in testing procedures and functions. The consolidation of these marks into the “KC” mark ensures that companies, both Korean and foreign agencies, will save time and cost due to reduced redundancies introduced into this new system. To learn more about this, click “KC Mark”.

Further labeling and marking requirements for specific products, such as pharmaceutical and food products, are covered by specific regulations from the Korean Government agencies responsible for these items. Korean language labels, except for country of origin markings that must be shown at the time of customs clearance, can be attached locally on products in the bonded area either before or after clearance.

Details regarding labeling and marking regulations for food and agricultural products can be found on Foreign Agricultural Service website in the Food and Agriculture regulatory guide at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Seoul_Korea%20-%20Republic%20of_1-11-2011.pdf report for Korea.

Prohibited and Restricted Imports (Return to top)

Guns, narcotics, pornography, subversive material, treasonous material and counterfeit goods or materials are prohibited entry into Korea.

Please visit the Bureau of Industry and Security website at: http://www.bis.doc.gov/for detailed information about export controls to the Republic of Korea. The Korean Customs Service also maintains a list of prohibited imports to the Republic of Korea.

Customs Regulations and Contact Information (Return to top)

Korea maintains an import declaration system that allows for the immediate release of goods upon acceptance of an import declaration filed without defect. With the exception of high-risk items related to public health and sanitation, national security, and the environment, which often require additional documentation and technical tests, goods imported by companies with no record of trade law violations are released upon the acceptance of the import declaration without customs inspection. The Korean Customs Service’s (KCS) Electronic Data Interchange (EDI) system for paperless import clearance allows importers to make an import declaration by computer without visiting the customs house.

Import declarations may be filed at the Customs House before a vessel enters a port or before the goods are unloaded into bonded areas. In both cases, goods are released directly from the port without being stored in a bonded area if the import declaration is accepted.

Exporters can file an export notice to Korean Customs by computer based shipping documents at the time of export clearance. All commodities can be freely exported unless they are included on the negative list.

To view customs regulations, go to the website below.

Korea Customs Service
Tel. 82-42-472-2196
Fax. 82-42-481-7969
Email: kcstcd@customs.go.kr
Website: http://english.customs.go.kr/

Standards (Return to top)

Overview (Return to top)

The Korean Government adopted the ISO 9000 system (modified as the KSA 9000) as the official standard system in April 1992. The Korean Agency for Technology and Standards (KATS) continues to work to make Korean standards similar to international standards. The Korean Industrial Standardization Act requires 60 days’ notice before implementing new standards. Whenever there is a change in standards, the government is required to notify the WTO’s Committee on Technical Barriers to Trade (TBT).

Details regarding standards and import regulations for food and agricultural products can be found in on Foreign Agricultural Service website in the Food and Agricultural Import Regulations and Standards (FAIRS) report for Korea.

Standards Organizations (Return to top)

The Korean Agency for Technology and Standards (KATS) develops standards for most industrial products in Korea. The agency consults with other private organizations to develop standards and certification requirements.

The Korean Food and Drug Administration (KFDA) establishes standards for research, new product evaluation, test method development, product monitoring for food, medical devices, pharmaceuticals and radiation technology distributed within Korea.

The Telecommunications Technology Association (TTA) covers telecommunications, information technology, radio communications and broadcasting. The Association establishes industry standards and has been instrumental in creating the current Korean Information and Communication Standards. TTA also collaborates with international and national standards organizations such as the ITU and other organizations.

NIST Notify U.S. Service

Member countries of the World Trade Organization (WTO) are required under the Agreement on Technical Barriers to Trade (TBT Agreement) to report to the WTO all proposed technical regulations that could affect trade with other Member countries.

Notify U.S. is a free, web-based e-mail subscription service that offers an opportunity to review and comment on proposed foreign technical regulations that can affect your access to international markets. Register online at http://www.nist.gov/notifyus/.

Conformity Assessment (Return to top)

KATS establishes guidelines for government and private sector institutes to perform reliability assessment and certification. It also performs market surveillance on KC-marked products and penalizes products that do not meet KC requirements.

Korea is a signatory to the GATT Standards Agreement. As such, Korea must apply open procedures for the adoption of standards, announces recommended standards, provide sufficient information on proposed standards or alterations in standards, and to allow sufficient time for countries and other stakeholders to comment on proposed standards implementation.

Product Certification (Return to top)

KATS issues certification marks for new technologies and recognizes quality products manufactured by Korean companies mainly to promote exports and also imports into Korea. On July 1, 2009, KATS began issuing the KC mark for items that fall under its jurisdiction. Information related to the KC mark in English can be seen at the American National Standards Institute (ANSI) website at: http://www.standardsportal.org/usa_kr/e/conformity_assessment/ca_marks_used_in_korea.aspx. The KC mark is to reduce and minimize repetitive testing at various ministries and agencies. [The consolidation of these marks ensures that companies, both Korean and foreign agencies, will save time and cost due to reduced redundancies introduced into this new system.

Accreditation (Return to top)

Established in December 1992, the Korea Laboratory Accreditation Scheme (KOLAS) is the government accreditation body under the KATS Department of Technology and Standards Planning. Additional information and accreditation bodies can be found under the KOLAS website at http://www.kolas.go.kr/english/

Publication of Technical Regulations (Return to top)

Revised or new standards or technical regulations are published by the Korean Agency for Technology and Standards (KATS) and made available at http://www.kats.go.kr/en_kats/. The articles, more frequently than not, are published only in Korean. All proposed or newly revised/established technical regulations are consolidated at this site.

Proposed revisions or establishment of regulations in Korean are made to the Director of Technical Regulations via the website at http://www.kats.go.kr/en_kats/. A public meeting consisting of lawmakers as well as relevant private/public industry organizations is held to comment on proposed regulations. Contact the U.S. Embassy, Commercial Section for assistance with revised or new standards

Contacts (Return to top)

Korean Agency for Technology and Standards (KATS)
http://www.kats.go.kr/english/index.asp

Korean Food and Drug Administration (KFDA)
http://eng.kfda.go.kr/index.php

Korean Laboratory Accreditation Scheme (KOLAS)
www.kolas.go.kr

Trade Agreements (Return to top)

The Republic of Korea and the United States will implement the Korea-U.S. Free Trade Agreement on March 15, 2012. The trade agreement is the largest FTA negotiated by the United States since NAFTA.

The Republic of Korea is a member of the Asia-Pacific Economic Cooperation (APEC) forum. One goal of APEC, as outlined in its 1994 declaration, is to establish a Free Trade Area among its member countries by the year 2020. Substantive principles of the APEC forum include investment liberalization, tariff reduction, deregulation, government procurement, and strengthening IPR protection. Korea was the host country for APEC in 2005.

Korea has Free Trade Agreements with Chile, Singapore, European Union and the European Free Trade Association (Norway, Switzerland, Iceland and Liechtenstein). More information on EU-Korea FTA can be found on the European Union website at http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/korea/

Korea also signed a framework agreement with the Association of South East Asian Nations (ASEAN) that led to an FTA in goods by the end of 2006 and other areas by the end of 2008.

Korea also negotiated a FTA with the United States and was ratified by the national assemblies of the two countries in November 2011. The KORUS-FTA promises to remove significant trade and investment barriers and increase access to the Korean market for U.S. businesses. For additional information on the KORUS-FTA please see the following website at http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta.

The Republic of Korea is a member of the World Trade Organization (WTO) and has signed subsidiary agreements including TRIPs (Trade Related Aspects of Intellectual Property) and the Government Procurement Agreement. Korea has been a member of the Organization for Economic Cooperation and Development (OECD) since December 1996.

Web Resources (Return to top)

U.S. Department of Commerce, Commercial Service Korea
http://export.gov/southkorea/

U.S. Agricultural Trade Office in Seoul
www.atoseoul.com

U.S. Department of Agriculture
http://www.usda.gov

USDA Agriculture Exporters Guide
http://www.fas.usda.gov/agx/exporter_assistance.asp

USDA Animal Plant and Health Inspection Service (APHIS)
www.aphis.usda.gov

USDA Food Safety and Inspection Service
http://www.fsis.usda.gov/Regulations_&_Policies/Republic_of_Korea_Requirements/index.asp

Foreign Agricultural Service (FAS), U.S. Department of Agriculture (Attaché reports)
www.fas.usda.gov

American Chamber of Commerce Korea
http://www.amchamkorea.org/about/about.jsp

Department of Commerce, Bureau of Industry and Security
http://www.bis.doc.gov/

Annual National Trade Estimate Report
http://www.ustr.gov/sites/default/files/uploads/reports/2010/NTE/2010_NTE_Korea_final.pdf

Korean Agency for Technology and Standards (KATS)
http://www.kats.go.kr/english/index.asp

Korea Customs Service
http://english.customs.go.kr/

Korean Food and Drug Administration (KFDA)
http://eng.kfda.go.kr/index.php

Korean Laboratory Accreditation Scheme (KOLAS)
http://www.kolas.go.kr/english/

Telecommunications Technology Association (TTA)
http://www.tta.or.kr/English/index.jsp