Problems relating to Trade and Investment on Korea
9. Restrictive export/import trade, duty, and customs clearance |
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Issue |
Issue details |
Requests |
Reference |
| (1) High Import Duty | - For paucity of the domestic resources, enterprises in Republic of Korea (ROK) are compelled to rely on imports for materials and raw materials for auto parts. However, due to 8% import duty imposed on auto parts from Japan, it is difficult to shift the production site from Japan to ROK. GOK also applies 8% import duty on finished parts for cars. Car assembly business in ROK is faced with the substantial amount of expenses incurred by foreign fund enterprises (FFEs). - The import tariff rate for watches (watch/clock finished products and clock movements) is high at 8%. |
- It is requested that GOK reviews the duty rate, or GOK and GOJ ratify FTA as soon as possible. - It is requested that GOK reduces and repeals the tariff on watches. |
- Customs Act of ROK |
| (Action) - On 1 July 2011, ROK/EU FTA provisionally entered into force. This first FTA that EU has ratified with an Asian Country will remove 98.7% of tariffs within 5-years from the effective date. The text of ROK/EU FTA is available at: (http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/korea/) - On 15 March 2012, USA/Korea FTA entered into force. - On 20 December 2015, ROK/PRC FTA came into force. ROK will repeal customs tariff in 20-years, by 92% in the tariff items numbers, and 91% in the trade amount. |
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| (2) Disadvantages emanating from the Delayed Ratification of Japan-ROK FTA/EPA | - While ROK/EU, ROK/the U.S. FTA have been ratified one after another, it would appear Japanese/ROK FTA lags behind by a few years at least as agreement was reached simply to start consultation. In general, ROK levies relatively high duty on industrial products (e.g., gas turbine 8%, steam turbine 5%) so that a member firm faces severe competitive disadvantages on pricing vis-a-vis the U.S. /EU power generation equipment manufacturers. | - It is requested that GOJ: -- ratifies Japanese/ROK FTA negotiation as soon as possible, and -- urges ROK to join TPP. |
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| (Action) - In July 2011, FTA between ROK and EU took provisional effect. Since the provisional effect, ROK-EU bilateral trade increased by 4.4% in annual average. - In March 2012, FTA between ROK and the U.S. took effect. In 2012, the first year of FTA effective, the ROK trade surplus with the U.S. ballooned from USD 15.2 billion to USD 20.5 billion almost doubling that of 2011, the year immediately preceeding the FTA ratification. On cars, the U.S. export to ROK substantially increased by 26.7% from USD 11.7 billion in 2011 to USD 1.5 billion in 2013, while ROK's export to the U.S. jumped by large margin of 31.6% from USD 14.9 billion in 2011 to USD 19.6 billion in 2013. - On 20 November 2012, commencement of the 1st China/Korea FTA Conference was declared. - On 11 March 2014, The FTA negotiation reached agreement between ROK and Canada. ROK will eliminate 81.9% of the import tariffs (on the HC classification base) immediately after the FTA effective date, and within 10 years will remove 98.2% of the tariffs. - On 7 July 2014, ROK-Turkey negotiation on Service Investment FTA reached agreement in principle. Its enforcement is expected to take place within 2015. - On 10 November 2014, PRC/ROK FTA was agreed in principle, and officially signed on 1 June 2015. It took effect on 20 December 2015. |
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| (3) Overly extended Imposition of Antidumping Duty | - On 5 July 2003, GOK initiated antidumping investigation on bar and section stainless steel from Japan (also, India and Spain). On 30 July 2004, final affirmative determination, deciding imposition of antidumping duty. On 27 March 2009, initiation of sunset review. On 24 February 2010, Decision on continuation (for 3-years) of antidumping measures. On 20 September 2012, 2nd sunset review started on stainless steel bar and section stainless steel (SSB/SSS). On 25 July 2013, continuation (for 3-years, the second time) of antidumping duty levy determined on SSB/SSS. |
- It is requested that GOK repeals antidumping measures. | |
| (Action) - On 11 December 2015, ROK initiated the sunset review on stainless steel thick plate from Japan. |
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| (4) Abuse of Antidumping Measures | - On 28 April 2010, initiation of preliminary antidumping investigation on stainless steel thick plate from Japan, with thickness 8mm - 80mm, width more than 1,000mm and length less than 3,270mm, mainly used in petro-chemical, LNG ship building, construction, nuclear power generation, desalination equipment industries. On 15 September 2010, affirmative determination was made on the preliminary investigation, initiating the formal investigation of 3-5 months duration. On 23 February 2011, affirmative determination made on the final investigation, deciding antidumping duty levy. |
- It is requested that GOK repeals antidumping measures. | - Customs Act, Article 51 - Unfair Trade Act and Relief of Industrial Injuries Act. |
| (Action) - ROK decided to impose anti-dumping duties in the range 11.66% to 22.77% on valves for pneumatic transmission manufactured in Japan for five years from August 19, 2015. On 15 March 2016, GOJ filed a formal request for consultations with ROK under the WTO dispute settlement procedures to seek a solution to this issue. |
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| (5) Customs Arbitrary Application of HS Code Classification | - GOK levies import duty under the HS code different from the statistical number stated in the invoice. Lens/mirrors for semiconductor lithography equipment and lens/mirrors for FDPA semiconductor lithography equipment, by right, should attract zero duty by interpreting them as parts for semiconductor lithography equipment. In practice, Korea customs service (KCS) considers these products as glassware and levies the following import duties: --3% on lens/mirrows for semiconductor lithography equipment --8% on lens/mirrows for semiconductor lithography equipment In addition, on parts other than optical materials and optics, KCS ignores the HS code stated in invoice and completes the customs clearance under the HS code for "glassware". |
- It is requested that KCS adopts the HS Code applicable to parts for semiconductor lithography equipment (with zero customs duty). | |
| (6) Vexatiously complex Product Registration Procedures on imported Machinery and Equipment | - GOK requires product registration on prototype samples imported for evaluation purposes. - Product registration procedures are complex for import and distribution of medical equipment. |
- It is requested that GOK simplifies the procedures for customs clearance of products imported for evaluation purposes. - It is requested that GOK repeals the requirement for the renewal procedure for product registration so that once registered, no further renewal is necessary, the same as Japan. |
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| (7) Delayed Import Licence Acquisition by the Pharmaceutical Affairs Law | - It takes many hours and much cost for acquisition of import licence under pharmaceutical affairs law. | - It is requested that GOK enables mutual two-way authentication: 510K of the U.S./EU CE marking or Japanese pharmaceutical affairs law. | - Pharmaceutical Affairs Law |
| (8) Complex Export Procedures for Product Return | - In shipping back ink tank that met with the market claim to Japan, KCS (Korea Customs Service) would not issue export licence without disclosure of the principal constituent of the liquid inkjet tank (above the general MSDS (Material Safety Data Sheets) level. | - It is requested that GOK simplifies the export procedures for the liquid inkjet tank (by disclosure, only of MSDS). | |
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