Local Time: Print

Trade Regulations, Customs and Standards

Import Tariffs

The U.S.-Korea FTA was implemented on March 15, 2012. Prior to that, the average basic tariff on U.S. goods at about 7.9 percent and Duty rates were high on a large number of high-value agricultural and fisheries products. Now that the FTA is being implemented, 95% of tariffs on U.S. imports will be eliminated by March 15, 2017. The U.S. Department of Commerce’s FTA Tariff Tool can help U.S. exporters identify 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.

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

Duties are assessed on a Cost-Insurance-Freight (CIF) basis. The main mode of customs evaluation is the transaction value method. Other methods under the WTO appraisement hierarchy may be used if there are doubts about Korean Customs valuation method on the stated value.

Value Added Tax rate of 10 percent is applied on imports based on customs value plus duties.

Trade Barriers

Korea continues a process of economic liberalization and deregulation, but the Republic of Korea 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/appeals procedures, and timely and written administrative procedures are among the topics that were addressed and agreed to and which 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 2012 National Trade Estimate Report on Foreign Trade Barriers for Korea.

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: 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 may 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 that the good qualifies for preferential tariff rates. 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 Korean 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 from 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.

Please note that the U.S. exporter may be required to authenticate the Certificate of Origin at some later date by Korean Customs. Penalties will be incurred if documents are not provided to Korean Customs. To learn about what is required, please refer to Chapter 6 Rules of Origin of the KORUS FTA text.

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/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Seoul_Korea%20-%20Republic%20of_12-26-2013.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-%20Certification_Seoul_Korea%20-%20Republic%20of_12-23-2013.pdf

The Ministry of Food and Drug Safety (MFDS) provides information on maximum residue levels and import procedures on the MFDS website at http://www.mfds.go.kr/eng. 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 which have been certified by a MFDS authorized body. In addition, special items defined by the Ministry of Trade, Industry and Energy (MOTIE) 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.

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 zones); 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.

Korean Customs has 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 non-resident individual. 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

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 marking 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_12-26-2013.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. Please visit Labeling and Marking.

The Korean Ministry of Trade, Industry and Energy (formerly the Ministry of Knowledge Economy) issues the KC Mark for items that fall under its jurisdiction, formerly comprised of 13 mandatory marks, many which 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 costs due to reduced redundancies introduced into this new system. To learn more about this, click “KC Mark” (this site has an English version, but the initial page is in Korean).

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.

Prohibited and Restricted Imports

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

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 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, please go to the website below:

Korea Customs Service
Telephone: 82-42-472-2196
Fax: 82-42-481-7969
E-mail: kcstcd@customs.go.kr
http://english.customs.go.kr/

Standards

Overview

Under the WTO, the Korean Government is required to alert the WTO Committee of Technical Barriers to Trade (TBT) on any changes in standards with 60 days notice for comments before implementation. To be alerted on these notifications, please visit http://www.nist.gov/notifyus.

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

Standards Organizations

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 Ministry of Food and Drug Safety (MFDS) 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 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) to report to the WTO all proposed technical regulations which could affect trade with other member countries. Notify U.S. is a free, web-based e-mail subscription service that offers the opportunity to review and comment on proposed foreign technical regulations that may affect access to international markets. Register online at internet URL: http://www.nist.gov/notifyus/.

Conformity Assessment

KATS establishes guidelines for government and private sector institutions to perform reliability assessment and certification. It also performs market surveillance on Korean Certification (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, announce recommended standards, provide sufficient information on proposed standards or alterations in standards, and 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 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 found 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 required to reduce and minimize repetitive testing at various ministries and agencies. The consolidation of these marks ensures that companies, both Korean and foreign, will save time and costs due to reduced redundancies introduced into this new system.

Accreditation

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

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. The articles are generally published only in Korean. All proposed or newly-revised/established technical regulations are consolidated on this site.

Proposed revisions or establishment of regulations in Korea are made by the Director of Technical Regulations via the website: http://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.

Contacts

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

Ministry of Food and Drug Safety(MFDS)
http://www.MFDS.go.kr/eng/index.do

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

Trade Agreements

The Republic of Korea is currently considering entry into negotiations for the Trans-Pacific Partnership (TPP) and is in ongoing talks regarding a trade agreement with China. The ROK recently signed trade agreements with Canada and Australia, but both are yet to be ratified by the legislatures of the countries involved.

The Republic of Korea and the United States implemented the Korea-U.S. Free Trade Agreement on March 15, 2012. The Agreement is the largest FTA negotiated by the United States since NAFTA. For more information about the KORUS FTA, please visit http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta.

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 the APEC summit in 2005.

Korea has Free Trade Agreements with Chile, India, Peru, Singapore, the European Union, and the European Free Trade Association (Norway, Switzerland, Iceland and Liechtenstein). More information on the 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 in 2006 and other areas by the end of 2008.

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

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.usda.gov/wps/portal/usda/usdahome?navid=EXPORTING_GOODS

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

USDA Food Safety and Inspection Service
http://www.fsis.usda.gov/wps/portal/fsis/home

Foreign Agricultural Service (FAS), U.S. Department of Agriculture (Attaché Reports)
http://www.fas.usda.gov

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

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/2014%20NTE%20Report%20on%20FTB%20Korea.pdf

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

Korea Customs Service (KCS)
http://english.customs.go.kr/

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

Ministry of Food and Drug Safety (MFDS)
http://www.mfds.go.kr/eng

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