Import Tariffs
Korea bound 92 percent of its tariff-line items as a result of the Uruguay Round negotiations with its average basic tariff at about 7.9 percent. Duties still remain very high on a large number of high-value agricultural and fisheries products. For example, Korea imposes tariff rates of 30-100 percent on many agricultural and horticultural products of interest to U.S. suppliers. Under WTO "Zero for Zero" initiatives, Korea is in the process of reducing tariffs to zero on most or all products in the following sectors: paper products, toys, steel, furniture, semiconductors, and farm equipment.
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 16, 2004, the Ministry of Finance and Economy (MOFE) released the 2005 list of products subject to adjustment tariffs and quota rates. A total of 46 agricultural and fishery products are subject to adjustment tariffs (18 products) and quota tariffs (28 products).
In accordance with the Information Technology Agreement (ITA), Korea is reducing tariffs on 203 types of telecommunication and information related equipment to zero. The tariff reduction was completed for most tariffs in 2000, but implementation will be phased in for 10 categories (six by 2002 and four by 2004). Korea has also participated in the ITA - 2 negotiations aimed at eliminating tariffs on 108 other items with a target year of 2002.
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.
Tariffs for agricultural products vary considerably from product to product. In general, tariff rates are higher for products that are produced domestically. Processed products generally have lower tariffs. Exporters can contact the USATO for specific information on tariff rates.
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 Finance and Economy's approval of a foreign investment project.
Trade Barriers
Korea continues a process of economic liberalization and deregulation, but the Korea government (ROKG) has yet to adopt a fully hands-off policy where the economy and trade are concerned. The U.S. Embassy, in addition to the American Chamber of Commerce (AmCham) in Korea, works actively to liberalize the many regulatory trade barriers that currently exist.
Information on specific trade barriers in Korea, including agricultural products such as the beef ban and restrictions on rice imports, is available in the 2004 National Trade Estimate Report on Foreign Trade Barriers for Korea. Since the National Trade Estimate Report was prepared, Korea has also banned imports of U.S. poultry meat.
Import Requirements and Documentation
All commodities, except rice, can be freely imported, subject to special registrations and import approvals for categories like pharmaceuticals and medical devices, unless they are included on the Negative List, which includes commodities that are either prohibited or restricted. The Negative List is officially known as the Export and Import Notice, which stipulates requirements and procedures for importing certain products (about 1,074 items, or 1 percent of all items) to ensure the protection of public health and sanitation, national security, safety, and the environment.
Applications for licenses to import items on the Negative List are approved on a case-by-case basis after screening and approval by the government agencies concerned, or by the relevant manufacturer's association. Typically, health or safety related products, such as pharmaceuticals and medicines, require additional testing or certification by recommended organizations before clearing customs. In addition, special items defined by the Ministry of Commerce, Industry and Energy (MOCIE) in its Annual Trade Plan require approval by the Minister of MOCIE. In most cases, the supplier's qualified local agent completes the registration process.
An overview of Korean import requirements for food is contained in the Exporter Guide. Additional detailed information about import requirements and documentation needs for agricultural and food products (including biotechnology products) is included in the Food and Agricultural Import Regulations and Standards (FAIRS) report for Korea. Additional detail on the maximum residue limits allowed by Korean food authorities and a report on specific import requirements for organic products are also available on the FAS website.
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.
U.S. Export Controls
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.
Most goods exported to Korea are not subject to U.S. export controls. Please visit the BIS website for more detailed information about U.S. export controls relating to Korea.
Temporary Entry
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 sites); 2) licensed bonded areas (bonded warehouses, bonded exhibition sites, bonded construction sites, and bonded sales shops); and, 3) integrated bonded areas. The period for which goods may be stored in a licensed bonded warehouse is one year and can be extended for another year. Duties are payable only when goods are cleared through customs. 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.
Integrated 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 by normal import procedures. 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).
For more detailed information about guidelines for temporary entry of items into Korea, please visit the Korea Customs website.
Labeling and Marking Requirements
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. Please visit Labeling and Marking for more detailed information about labeling requirements.
Korea has specific labeling and market requirements for organic and functional food as well as food produced through biotechnology. Details regarding these and other general labeling and market requirements can be found on the Foreign Agricultural Service website in the Food and Agricultural Import Regulations and Standards (FAIRS) report for Korea.
Prohibited and Restricted Imports
Please visit the Department of Commerce, Bureau of Industry and Security for detailed information about export controls to the Republic of Korea. The Korean Customs also maintains a list of prohibited imports to the Republic of Korea.
Customs Regulations and Contact Information
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 on their shipping documents at the time of export clearance. All commodities can be freely exported unless they are included on the negative list.
With rare exceptions, Korean Customs allows free customs entry of goods brought into Korea that are hand-carried by foreign businesspersons (such as laptop personal computers) for use during their stay in Korea. In such cases, Korean Customs makes a note on the traveler's passport and then requires the traveler to take the item(s) out of Korea when departing.
To view customs regulations, go to the website below.
Korea Customs Service
Tel. 82-42-481-7755
Fax. 82-42-481-7979
Website: http://www.customs.go.kr/eng/
Standards
Overview
The Korean Government adopted the ISO 9000 system (modified as the KSA 9000) as the official standard system in April 1992 and published related regulations in September 1993. In 1997, Korean companies also adopted the ISO 14000 environment management system. However, there are still concerns over Korea's implementation of the commitments that were made when the GATT Agreement on Technical Barriers to Trade (the "Standards Code") was signed in 1980. Korea seems to develop standards that effectively block imported goods by affecting only imported goods or which are not applied in an equal manner to domestic products. In addition, the Korean government sometimes issues new regulations without adequate public consultation procedures. The absence of a comment period and adequate time for industries to adjust can be a significant barrier to trade. Finally, implementation periods sometimes do not give foreign exporters sufficient time to comply, which often leads to unnecessary and costly interruptions in trade. In light of the fact that Korean firms consider compliance with the ISO 9000 necessary to compete in international markets, the Korean government has indicated that it will address such problems and reduce barriers.
The Korean Agency for Technology and Standards (KATS), under the Ministry of Commerce, Industry and Energy (MOCIE), is undertaking a program to make Korean standards consistent with international standards. Stronger recognition of this necessity has developed from the need to protect global consumers (i.e. electrical products safety), to facilitate trade for small and medium sized Korean companies, to increase overall efficiency of production as well as limit unnecessary barriers to legitimate trade. 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).
The Korean Food and Drug Administration (KFDA) generally accepts internationally accepted standards, or equivalents, of advanced countries or consensus standards. Included in this list of standards recognized by Korea are those of the International Standard Organizations (ISO), the American Society for Testing and Materials (ASTM), the International Electro-technical Commission (IEC), the U.S. Pharmacopoeia (USP), the British Pharmacopoeia (BP), the European Pharmacopoeia (EP), and the Japanese Pharmacopoeia (JP).
Korea has reduced some barriers in the automotive industry. The Korean government has promised not only to lower Korea's WTO tariffs on motor vehicles and actively participate in future multilateral tariff reduction negotiations, but also to change standards and certification procedures that increase costs and cause delays to market entry due to excessive documentation and testing. In October 20, 1998, the U.S. and Korea signed an MOU for improved market access for U.S. and other foreign motor vehicles into the Korean market. Although the MOU was targeted at ongoing government efforts to improve public perceptions of imports, mainly by preventing discriminatory procedures and promoting benefits of open trade and competition, the most useful outcome of the MOU was the self-certification system granted to U.S. manufacturers in 2002. This agreement made Korea the third country, after the U.S. and Canada, to introduce a self-certification system in the industry.
Despite selected improvements, however, some Korean standards are still inconsistent with international standards, and a lack of clear standards guidelines persists. KFDA has established standards for only 76 of its 950 device classifications. These few standards serve as the lower limit criteria for product approval. With many KFDA standards yet to be established, a product may meet other non-KFDA standards but not fit into KFDA's existing standards, causing delays in some cases.
U.S. companies have often faced difficulties due to rejection of equivalent standards in Korea, particularly for food, nutritional products, cosmetics, pharmaceuticals, medical devices and electronic products.
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.
For standards contact information, click here.
Standards Organizations
The Korean Agency for Technology and Standards (KATS), under the Ministry of Commerce, Industry and Energy (MOCIE), develops standards for capital goods, including construction materials and consumer products, as well as products for logistics operations. The development of standards and unification of Korean Standards (KS) with other government regulations under KATS’ jurisdiction. The agency consults with other private organizations to develop standards and certifications.
Every five years, KATS reviews KS to validate, revise or withdraw standards depending on the needs of industry. KATS may make adjustments in KS between five-year intervals to ensure conformance with international standards or to facilitate the development of new technologies. KS are then established by consensus with the Korean Industrial Standards Council (KISC). KISC members are technical experts from industry, academia, R&D organizations and consumer groups. They review and decide on KS standards as well as on Korea’s acceptance of international standards. KISC currently consists of 39 division councils of 300 members, supported by 594 technical committees with 6,808 members.
The Korean Food and Drug Administration (KFDA), similar to its counterpart in the U.S., sets standards for research, new product evaluation, test method development, product monitoring for food and drugs as well as radiation safety regulations that apply to all radiation-emitting devices 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.
As the life cycles of standards continue to shorten and competition among global standardization bodies increases, TTA is focusing on IT standardization as a strategic means to help Korea maintain a dominant position in the global market. TTA continues to use its “IT-Centric Technology Standardization Roadmap” (currently Version 2004) as a rolling plan. The roadmap presents standardization strategies with reference to the standardization procedures of major international and regional standardization bodies (i.e. ITU and ISO) as well as those of leading countries (i.e., the U.S. and Japan).
Conformity Assessment
KATS establishes guidelines for government and private sector institutes to perform reliability assessment and certification. It also performs market surveillance on KS-marked products and penalizes products that do not meet KS requirements.
KFDA operates a voluntary safety assessment program for biotechnology crops for human consumption. In accordance with the revision in the Food Sanitation Act in August 2002, safety assessments of biotechnology crops became mandatory on February 26, 2004. The U.S. Government and U.S. industry expressed concern that the requirement to have completed the mandatory safety assessment prior to February 26, 2004, would result in trade disruptions if resource constraints made it impossible for KFDA to process all applications prior to the deadline. Recognizing the potential problem, KFDA revised its safety assessment guidelines to provide an additional year for assessments of all biotech crops except soybeans, corn, and potatoes. Safety assessments for soybeans, corn, and potatoes were held to the February 26, 2004 deadline. Assessments for all other biotech crops were extended until February 26, 2005. To-date, twenty biotechnology crops and seven biotechnology additives have been tested and have received positive KFDA safety assessments.
The National Plant Quarantine Service conducts post-entry quarantine inspection of plants and plant products. It was designated as an independent agency in 2001 and is affiliated with the Ministry of Agriculture and Forestry
Ministry of Health and Welfare (MOHW) regulated products are required to have locally based (pharmacist/chemists/Korean pharmaceutical trade associations/etc.) tests on every batch of all shipments. Products tested outside Korea are frequently not accepted.
Products requiring Electro Magnetic Interference (EMI) product testing must be done by government-approved testing companies. Modems and monitors require homologation approval even if already approved in the country of origin.
The Korea Toy Industry Cooperative (KTIC) Inspection Team tests moving toys. Currently it is the only officially designated toy-testing agency. The Cooperative was incorporated in 1967 as a national nonprofit organization for toy manufacturers and traders.
The Korea Environment & Merchandise Testing Institute (KEMTI) (formerly the Korea Merchandise Testing & Research Institute – KOMTRI) has been accredited under the Korea Laboratory Accreditation Scheme (KOLAS) for tests covering hardline products, footwear, textiles, packaging and testing equipment. This qualification is granted only to laboratories that meet certain quality and technical laboratory requirements based on ISO 17025.
The Korea Testing & Research Institute for Chemical Industry (KOTRIC), Quality Assurance Department, tests batteries, tires and safety glasses. It was accredited under the Korea Laboratory Accreditation Scheme in 1994. KOTRIC is an affiliated institute under the Ministry of Commerce, Industry and Energy.
The Korea Machinery-Meter and Petrochemical Testing & Research Institute (MPI), Quality Assurance Team, tests motor brake fluids, engine coolants and washer fluids. It was designated as a KOLAS institute in 1994.
The Fabric Inspection Testing Institute (FITI) - Testing & Research Institute tests fabrics. It was designated as a reliability assessment organization by MOCIE in 2001 and is accredited by KOLAS for a range of tests.
In terms of new legislation, the Ministry of Commerce, Industry and Energy’s Living Modified Organism (LMO) Act is Korea’s legislative response to the implementation of the Cartagena Bio-Safety Protocol (BSP). Environmental risk assessments for biotechnology crops will become mandatory. Several applications have already been submitted, however, none have yet been completed. The assessments will be similar to food safety assessments for biotechnology crops for human consumption. The U.S. Government is urging Korea to adopt a sufficient grace period and minimize restrictive measures to avoid major trade interruptions. Additionally, Korea is required to notify the World Trade Organization (WTO) of any new revised requirements.
Product Certification
Generally, private industrial organizations oversee import certification procedures. KATS, however, also issues certification marks for new technologies and recognizes quality products manufactured by Korean companies mainly to promote exports. The Korea Standards Quality Certification Association offers consulting advice and preparation for ISO9000, ISO14000, KS, TS16949, HACCP, UL, and CE.
In the spring of 2001, Korea began requiring ruminant exports to be certified as BSE-free by the U.S. government. As this requirement proved highly restrictive, it was resolved for pharmaceutical products. After an extensive legal review, the Korean government decided to accept BSE-free certifications by governments, manufacturers, and relevant suppliers. After the discovery of a BSE-infected cow in the U.S. in December 2003, however, imports of ruminant products and poultry meal from countries with a history of BSE cases are highly restricted.
A number of Korea's sanitary and phytosanitary certification requirements continue to limit market access for a variety of imported products. However, progress was made in market access for cherries. In April 2003, after lengthy consultations, the Ministry of Agriculture and Forestry ruled that all varieties of cherries would be permitted to enter Korea under certain conditions. Yet market access for in-shell walnuts is still hampered by a requirement for pre-export clearance by MAF inspectors in the country of origin.
Mutual Recognition Agreements (MRAs) with U.S. Organizations
Korea is a member of the ANSI – RAB (American National Standards Institute-Registrar Accreditation Board) Multilateral Recognition Agreement.
Accreditation
Established in December 1992, the Korea Laboratory Accreditation Scheme (KOLAS) is the government accreditation body under the ATS Department of Technology and Standards Planning. KOLAS signed the Asia-Pacific Laboratory Accreditation Cooperation Multilateral Recognition Agreement (MRA) for testing in 1998 and for calibration in 2001. In 2000, KOLAS also signed the International Laboratory Accreditation Cooperation Multilateral Recognition Agreement on testing and calibration. As a result, tests that are done in laboratories of ILAC member countries are mutually recognized by 44 members economies.
There are local testing laboratories authorized to certify firms under the ISO 9000 system. As Korea has joined the International Accreditation Forum-Multilateral Recognition Arrangement (IAF-MLA), local certification for the ISO 9000 system is recognized in the 27 member countries of the IAF-MLA.
Technical Regulations
Revised or new standards or technical regulations are published by the Korean Agency for Technology and Standards (ATS) and made available on their website at http://www.ats.go.kr/fm_03/pyojun.asp. 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.ats.go.kr. A public meeting consisting of law- makers 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.
Labeling and Marking
Country of origin labeling is required for commercial shipments entering Korea. The Korean Customs Service (KCS) publishes a list of the country of origin labeling requirements by Harmonized System Code number. Click "Country of Origin" for more information on markings.
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. The Korea Food & Drug Administration (KFDA) is responsible for setting and enforcing Korean labels for food products other than livestock products. The Ministry of Agriculture and Forestry (MAF) regulates livestock products. The MAF also has its own set of standards for markings for the country of origin labeling of agricultural products. Local importers usually print Korean language labels when imported quantities are not large and consult with KCS about where they can be attached to the product.
For pharmaceuticals, all imported containers and packages must be
conspicuously marked to show:
1) country of origin and manufacturer’s and importer’s names and
addresses;
2) name of product;
3) date of production and batch number;
4) names and weights of ingredients;
5) quantity;
6) number of units;
7) storage method;
8) distribution validity date;
9) instructions for use;
10) import license number;
11) effectiveness;
12) import price and suggested retail price.
Details regarding labeling and marking 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.
Contact Information
Korean Agency for Technology and Standards (KATS)
http://www.ats.go.kr
Korean Food and Drug Administration (KFDA
http://www.kfada.go.kr
• Published technical regulations and standards
http://www.ats.go.kr/fm_03/pyojun.asp
Korean Laboratory Accreditation Scheme (KOLAS)
http://www.kolas.go.kr
Local Standards Contacts
Name: Erik Hunt
E-mail: Erik.Hunt@mail.doc.gov
Web site: http://www.buyusa.gov/korea
Name: Kim, Hae-lyong
E-mail: Haelyong.Kim@mail.doc.gov
Web site: http://www.buyusa.gov/korea
Trade Agreements
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 is the host country for APEC in 2005.
In February 2003, Korea and Chile signed a Free Trade Agreement and the Korean National Assembly ratified the FTA in February 2004 despite strong opposition from farmers. An FTA was agreed with Singapore in November 2004 and is expected to go into effect in the middle of 2005, after ratification by the Korean National Assembly. Korea is in the process of discussing FTAs with Canada, Japan and other countries, as well as with ASEAN.
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.