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Doing Business in South Korea In Totality 3
Trade Regulations and Standards
Import Tariffs
Trade Barriers
Import Requirements and Documentation
U.S. Export Controls
Temporary Entry
Labeling and Marking Requirements
Prohibited and Restricted Imports
Customs Regulations and Contact Information
Standards
Trade Agreements
Web Resources
Import Tariffs
South 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, South 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, South 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.-South Korea Free Trade Agreement (KORUS-FTA) negotiations. The KORUS-FTA has been signed by the parties and is awaiting parliamentary passage in the South Korean National Assembly and the U.S. Congress. The KORUS-FTA offers the prospect, once ratified, of immediate elimination on hundreds of South 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 South Korean-U.S. FTA could add an additional USD 10 billion in U.S. exports to South Korea.
South 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 29, 2006, the Ministry of Finance and Economy (MOFE) released the 2007 list of products subject to adjustment tariffs and quota rates. Sixteen agricultural and fishery products were subject to adjustment tariffs (a decrease of two -- bananas and frozen skate -- compared to 2006) and 30 are subject to quota tariffs (a decrease of 59 compared to 2006).
In accordance with the Information Technology Agreement (ITA), South Korea reduced tariffs on 203 types of telecommunication and information related equipment to zero. South Korea is also a party to the Government/Authorities on the Manufacture of Semiconductors (GAMS) Agreement to Eliminate Tariffs on Multi-Chip Integrated Circuits, and was expected to reduce its tariffs on this type of semiconductor to zero during 2006.
South 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 South 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 Strategy and Finance’s approval of a foreign investment project.
Trade Barriers
South Korea continues a process of economic liberalization and deregulation, but the South 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 South 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 South Korea, including agricultural products such as the beef ban and restrictions on rice imports, is available in the 2009 National Trade Estimate Report on Foreign Trade Barriers for South Korea.
Import Requirements and Documentation
For companies exporting to the Republic of South Korea the following shipping documents are required to clear South 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 South 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 South 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 South Korea could occur within first quarter of 2008.
An overview of South Korean import requirements for food is contained in the Gains Report-Exporters Guide 2009. 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 South Korea. The South 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 South 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 South 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 South 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 South Korea requires for livestock product shipments destined for South 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 South 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 South 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.
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 South 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
South Korea has three kinds of bonded areas where goods can temporarily enter South 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. South 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 South Korea for exhibition purposes must be stored in a bonded area. For example, the South 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 South 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.
South 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. South 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 South 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 South Korea.
For more detailed information about guidelines for temporary entry of items into South Korea, please visit the South Korea Customs website.
Labeling and Marking Requirements
Country of origin labeling is required for commercial shipments entering South Korea. The South 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.
South 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 South 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 South Korea. The South Korean Customs also maintains a list of prohibited imports to the Republic of South Korea.
Customs Regulations and Contact Information
South 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 South 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 South 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, South Korean Customs allows free customs entry of goods brought into South Korea that are hand-carried by foreign businesspersons (such as laptop personal computers) for use during their stay in South Korea. In such cases, South Korean Customs makes a note on the traveler’s passport and then requires the traveler to take the item(s) out of South Korea when departing.
To view customs regulations, go to the website below.
South 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
• Standards Organizations
• Conformity Assessment
• Product Certification
• Accreditation
• Technical Regulations
• Labeling and Marking
• Contact Information
Overview
The South Korean Government adopted the ISO 9000 system (modified as the KSA 9000) as the official standard system in April 1992. The South Korean Agency for Technology and Standards (KATS) continues to work to make South Korean standards consistent with international standards. The South 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 South Korea.
For standards contact information, go to the link below: http://www.buyusa.gov/South Korea/en/standardscontacts.html
Standards Organizations
The South Korean Agency for Technology and Standards (KATS) develops standards most industrial products in South Korea. The agency consults with other private organizations to develop standards and certification requirements.
The South 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 South 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 South 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.
South Korea is a signatory to the GATT Standards Agreement. As such, South 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
KATS issues certification marks for new technologies and recognizes quality products manufactured by South Korean companies mainly to promote exports and also imports into South Korea. On July 1, 2009, KATS began issuing the KC mark for items that fall under its jurisdiction. To date, some 13 mandatory marks were issued, many that overlap in testing procedures and functions. The consolidation of these marks ensures that companies, both South Korean and foreign agencies, will save time and cost due to reduced redundancies introduced into this new system.
Mark Name Category Ministry Effective Date
Safety certification for electrical appliances Electrical cords, plugs, vacuum cleaners, TV, etc Ministry of Knowledge and Economy - MKE
(South Korea Agency for Technology and Standards - KATS) Jan 1, 2009
Safety Certification Press, Shear, etc Ministry of Labor - MOL Jan 1, 2009
Safety certification for industrial products Pram, Pressure cooker, Walking- Aid Devices, etc MKE (KATS) Jul 1, 2009
Self-regulatory safety confirmation Mountain climbing rope, battery, Security, etc MKE (KATS) Jul 1, 2009
Child-resistant packaging Aroma, Cleaning fluids, Polish, Stain removers, etc MKE (KATS) Jul 1, 2009
Certification for elevator parts Speed regulator, Shock buffers, Emergency stop devices, etc MKE (KATS) Jul 1, 2009
High-pressure gas vessels Safety Valve, Condensers, Evaporators, etc MKE Jul 1, 2009
Gas appliances(검 mark) Gas range, Pressure control devices, ignition devices, etc MKE Jul 1, 2009
Verification for measuring instruments Electricity meters, thermometers, scales, etc MKE (KATS) Jul 1, 2009
Energy-efficiency labeling program Refrigerator, air-conditioners, Fluorescence lamp, cars, etc MKE Jul 1, 2009
Certification for telecommunications devices Telephones, modems, PC, etc South Korea Communications Commission (KCC) Before Jan 1, 2011
Quality verification for water purifiers Water purifier Ministry of Environment - MOE Before Jan 1, 2011
Verification for firefighting equipment Fire extinguishers, fire retardants, etc National Emergency Management Agency (NEMA) Before Jan 1, 2011
Accreditation
Established in December 1992, the South Korea Laboratory Accreditation Scheme (KOLAS) is The South 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 South Korean Agency for Technology and Standards (KATS) and made available on their website at http://www.kats.go.kr/. The articles, more frequently than not, are published only in South Korean. All proposed or newly revised/established technical regulations are consolidated at this site.
Proposed revisions or establishment of regulations in South Korean are made to the Director of Technical Regulations via the website at www.kats.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 South Korea. The South 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 South Korean Government agencies responsible for these items. South 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 South Korea.
Contact Information
South 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
South Korean Food and Drug Administration (KFDA)
http://eng.kfda.go.kr/index.php
South Korean Laboratory Accreditation Scheme (KOLAS)
www.kolas.go.kr
Trade Agreements
The Republic of South 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. South Korea was the host country for APEC in 2005.
South Korea has ratified Free Trade Agreements (FTAs) with Chile and Singapore. It has signed, but not yet ratified, an FTA with the European Free Trade Association (Norway, Switzerland, Iceland and Liechtenstein). South Korea has signed an FTA with the United States that remains to be ratified by the national assemblies of the two countries. The KORUS-FTA promises to remove significant trade and investment barriers and increase access to the South Korean market for U.S. businesses. In 2010, the ratification of the European Union-South Korea Free Trade Agreement is expected later in the year.
South Korea has signed a framework agreement with the Association of South East Asian Nations (ASEAN) that will lead to an FTA in goods by the end of 2006 and other areas by the end of 2008. South Korea is in the midst of FTA negotiations with the U.S. and Canada, as well as exploratory talks with China and the EU over possible commencement of formal FTA negotiations.
The Republic of South 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. South Korea has been a member of the Organization for Economic Cooperation and Development (OECD) since December 1996.
Web Resources
U.S. Agricultural Trade Office- Seoul
www.atoseoul.com
U.S. Department of Agriculture
http://www.usda.gov
USDA Agriculture Exporters Guide
http://www.fas.usda.gov/gainfiles/200708/146291900.pdf
USDA Animal Plant and Health Inspection Service (APHIS)
www.aphis.usda.gov
USDA Food and Agricultural Import Regulations and Standards
http://www.fas.usda.gov/gainfiles/200708/146291900.pdf
USDA Food Safety and Inspection Service
http://www.fsis.usda.gov/Regulations_&_Policies/Republic_of_South Korea_Requirements/index.asp
Foreign Agricultural Service (FAS), U.S. Department of Agriculture (Attaché reports)
www.fas.usda.gov
American Chamber of Commerce South Korea
http://www.amchamSouth Korea.org/about/about.jsp
U.S. Department of Commerce, Commercial Service South Korea
http://bxa.ntis.gov
Department of Commerce, Bureau of Industry and Security
http://bxa.fedworld.gov/
South 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
South Korea Customs Service
http://www.customs.go.kr/eng/
South Korean Food and Drug Administration (KFDA)
http://eng.kfda.go.kr/index.php
South Korean Laboratory Accreditation Scheme (KOLAS)
http://www.kolas.go.kr
Ministry of Knowledge Economy (South Korean Agency for Technology and Standards – KATS)
http://ats.go.kr/english/index.asp
National Trade Estimate
http://www.ustr.gov/sites/default/files/uploads/reports/2009/NTE/asset_upload_file332_15485.pdf
Telecommunications Technology Association (TTA)
www.tta.or.kr
