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.
Tariff reduction or elimination was also a key subject under discussion in the bilateral U.S.-Korea Free Trade Agreement (KORUS-FTA) negotiations. The KORUS-FTA has been signed by the parties and is awaiting parliamentary passage in the Korean National Assembly and the U.S. Congress. The KORUS-FTA offers the prospect, once ratified, of immediate elimination on hundreds of Korean tariff lines, on U.S. exports with a value of billions of dollars, with tariff elimination phased in over a three-, five-, or ten-year period for many others. Economists have forecasted that a ratified Korean-U.S. FTA could add an additional USD 10 billion in U.S. exports to Korea.
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.
In accordance with the Information Technology Agreement (ITA), Korea reduced tariffs on 203 types of telecommunication and information related equipment to zero. Korea is also a party to the Government/Authorities on the Manufacture of Semiconductors (GAMS) Agreement to Eliminate Tariffs on Multi-Chip Integrated Circuits.
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 U.S. Agricultural Trade Office 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 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 negotiated KORUS-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 the beef ban and restrictions on rice imports, is available in the 2008 National Trade Estimates Report on Foreign Trade Barriers for Korea (http://www.ustr.gov/assets/Document_Library/Reports_Publications/2008/2008_NTE_Report/asset_upload_file365_14652.pdf).
Import Requirements and Documentation
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: A Certificate of Origin in duplicate may be required. Exporters are encouraged to discuss shipping document requirements with their respective importer. Once the respective parties ratify the Korean-U.S. Free Trade Agreement, certificates of origin would be the basis for confirming and extending preferential duties (duty free) to U.S. exporters as noted in the KORUS-FTA.
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
SANITARY/PHYTOSANITARY CERTIFICATES: Sanitary and phytosanitary certificates are required for shipments of live animals, animal products, plants, and plant products. The United States Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) issues inspection certificates indicating conformity of health and sanitary standards of the destination country. The Animal and Plant Health Inspection Service is located at the U.S. Department of Agriculture, 4700 River Road, Riverdale, MD 20737. Veterinary product exporters can also call Tel: (301) 734-7885; Fax: (301) 734-6402 or E-mail vs_content_management@aphis.usda.gov . For plant products exports can contact APHIS at Tel: (301) 734-8537; Fax: (301) 734-5786 or E-mail: APHIS.Web@aphis.usda.gov .
WHOLESOMENESS CERTIFICATES: Meat and poultry products require a certificate of wholesomeness. Information can be received from the United States Food and Inspection Service, Landmark Center, Suite 300, 1299 Farnam St., Omaha, NB 68102. Exporters can call Tel: (402) 221-7400; Fax: (402) 221-7438 or E-mail TechCenter@fsis.usda.gov .
AGRICULTURE EXPORT CERTIFICATES: Meat (beef and beef products), poultry and poultry meat, pork meat, sheep and goat meat, requires certification. Exporters can receive additional information from the Agricultural Marketing Service, Audit, Review and Compliance Branch, 100 Riverside Parkway, Suite 135 Fredericksburg, VA 22406, Tel: (540) 361-7640.
The Government of Korea suspended the import of all U.S.-origin beef on 5 October 2007 awaiting negotiation and agreement of a new import health protocol between the two nations. The resumption of U.S.-origin beef imports to Korea could occur within first quarter of 2008.
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) are included in 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 at (http://kfda.go.kr/index2.html). 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.
Free Sales Certificates: Imports of pharmaceuticals, medical devices and cosmetics require a free sale certificate issued by an authority of the exporting country reflecting that the product in question are in free circulation in the country of export
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 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.
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. For basic information on U.S. export controls, please visit the following website, 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.
Most goods exported to Korea are not subject to U.S. export controls, however, please visit the above listed websites for detailed information on U.S. export controls.
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. 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 carnet 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
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.
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 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.
Prohibited and Restricted Imports
Please visit the Department of Commerce’s Bureau of Industry and Security website at (http://www.bis.doc.gov/) for additional 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 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. 82-42-472-2196
Fax. 82-42-481-7969
Email: kcstcd@customs.go.kr
Website: 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. The Korean Agency for Technology and Standards (KATS) continues to work to make Korean standards consistent with 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.
For standards contact information, go to the link below: http://www.buyusa.gov/korea/en/standardscontacts.html
Standards Organizations
The Korean Agency for Technology and Standards (KATS) develops standards 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.
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.
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
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.
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 Korea Laboratory Accreditation Scheme (KOLAS) is the government accreditation body under the KATS Department of Technology and Standards Planning. Additional information can be found under the KOLAS website at www.kolas.go.kr.
Technical Regulations
Revised or new standards or technical regulations are published by the Korean Agency for Technology and Standards (KATS) 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 www.ats.go.kr. 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.
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.
Details regarding labeling and marking regulations for food and agricultural products can be found 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.kats.go.kr/english/index.asp
Published technical regulations and standards
http://ats.go.kr/english/index.asp
Korean Food and Drug Administration (KFDA)
http://kfda.go.kr/index2.html
Korean Laboratory Accreditation Scheme (KOLAS)
www.kolas.go.kr
Local Standards Contacts
Name: Erik Hunt
E-mail: Erik.Hunt@mail.doc.gov
Name: Kim, Hae Lyong
E-mail: Haelyong.Kim@mail.doc.gov
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 was the host country for APEC in 2005.
Korea has ratified Free Trade Agreements (FTAs) with Chile and Singapore. It has signed, but not yet ratified, an FTA with the United States.
Korea has signed a framework agreement with the Association of South East Asian Nations (ASEAN) that has led to an FTA in goods by the end of 2006 and other areas by the end of 2008. Korea is in the midst of an FTA negotiations with the EU.
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.