If I believe after thoroughly reviewing my product, its inputs, and the applicable rule of origin, that there remains ambiguity as to the "originating" status of the product under the FTA, Korean customs prior to the arrival of my goods in Korea?
The U.S.-Korea Free Trade Agreement (FTA) is an agreement between the United States and Korea that allows both nations to strengthen and develop economic relations and to establish free trade through the reduction and elimination of barriers to trade in goods and to investment. The FTA lays the foundation for further cooperation to expand and enhance the benefits of the free trade.
No. The U.S.-Korea FTA only applies to goods that are deemed to be originating and claim eligibility for lower preferential rates of duty. No special certificate of origin is needed unless requested by your buyer.
Unlike the NAFTA, the U.S.-Korea FTA does NOT prescribe a particular form that must be used to document origin. Instead, the agreement specifies the types of information a certification must contain. Remember that this certification is required only if requested by your buyer in Korea.
Specifically, the data elements for certification must include (on company letterhead):
1. Name and address of the importer: (The legal name, address, telephone, and e-mail of the importer of record of the good.)
2. Name and address of the exporter: (If different from the producer.) (The legal name, address, telephone, and e-mail of the exporter of the good.)
3. Name and address of the producer: (If known.) (The legal name, address, telephone and e-mail of the producer of the good.)
4. Description of good: (The description of a good shall be sufficiently detailed to relate it to the invoice and the Harmonized System (HS) nomenclature.)
5. HS tariff classification number: (The HS tariff classification, to six or more digits, as specified for each good in the Rules of Origin.)
6. Preference criterion: (The rule of origin set forth in General Note 33(b) or Article 6.1 of the Agreement. In the case of a product-specific rule specified in General Note 33(o) or Annex 4-A or 6-A of the Agreement, please be specific as to which rule was applied.)
7. Single shipment: (Provide the commercial invoice number.)
8. Multiple shipments of identical goods: (Provide the blanket period in “mm/dd/yyyy to mm/dd/yyyy” format with a 12-month maximum.)
9. Authorized signature, company, title, telephone, fax, e-mail, and certification date:
10. Certification: (The importing country may require additional information such as the corporate address, a signature, and a statement regarding the truth and accuracy of the information provided.)
The language used on the certification may be in either English or Korean, although the customs authority of the importing country may require the importer to submit a translation of the certification in the language of that country.
The information can be provided by any party including producer, exporter, buyer, importer or broker. The actual certification can be provided to the customs authorities of the destination country on a company letterhead or using your broker or freight forwarder software. You can visit export.gov/fta and click on Korea to learn more about documenting origin. There is no mandated format for certification. Also, certification or notarization by a local chamber is not required. Finally, FTA certification is optional and is not required to clear customs. However, if originating is not claimed, your product may be subject to a standard (MFN) duty rate which the importer must pay.
Detailed Information on how to claim preferential tariff treatment can be found in Article 6.15, Chapter 6 of the FTA Agreement. If the good meets the required Rules of Origin, preferential tariff treatment can be obtained when the product is imported into either the U.S. or Korea.
If a claim for preferential treatment is not made at the time of importation, the importer has up to one year to apply for a refund of any excess duties paid.
In general, it is the importer that pays the duties in order to clear the goods through customs. So the importer benefits from lower tariffs and the exporter benefits because U.S. products can more readily compete in the Korean market.
To receive reduced tariff rates under the FTA, the good: 1) must be produced and shipped directly* from the U.S. or Korea; (2) must comply with the FTA Rules of Origin (ROO); and 3) must be documented as “originating,” with an appropriate certification. To learn more how to determine if the product is eligible for a preferential duty rate, visit export.gov/korea and select the Rules of Origin section. You may also consult Chapter 6 of the KORUS FTA Agreement.
The statement of eligibility for preferential duty rates is a declaration whose truthfulness may be verified by Korean customs. Declarations found after the fact to deliberately make false statements may result in significant penalties.
Yes, Chapter 6, ARTICLE 6.16 of the FTA notes that a certification or information demonstrating that a good is originating shall not be required where: the customs value of the importation does not exceed 1,000 U.S. dollars.
In general, yes. An exception is when a good is subject to the regional value content method, the packaging material or container will be taken into account as originating or non-originating in determining the regional value content of the good.
If goods are classified as a “set” as a result of the application of the General Rules of Interpretation of the Harmonized System of the U.S., the set is originating only if each good in the set is originating. In addition, a set of goods is originating if the value of all the non-originating goods in the set cannot exceed 15 percent of the adjusted value of the set.
When accessories, spare parts, or tools that form part of the good's standard accessories, spare parts, or tools, are delivered with a good, they are regarded as a material used in the production of the good as long as they 1) are classified with and not invoiced separately from the good; 2) the quantities are not considered to be unusual. When these ancillary items are sent separately from the original good, they become "the good" and must qualify as such; otherwise they will be subject to standard duty rates.
According to the FTA, a good cannot undergo subsequent production or any other operation outside of the U.S. or Korea other than loading/unloading and preserving the good. Also, if transshipped, it must remain under the control of customs authorities in the territory of a third country.
The customs authority of Korea will issue "advance rulings" at the written request of the importer, exporter, or producer on questions of tariff classification, customs valuation, duty drawback, origin, and treatment of goods entering temporarily for repair or alteration. Information regarding the facts and circumstances of the inquiry will be required by the Customs authority prior to issuing a ruling.