The U.S.-Korea FTA was implemented on March 15, 2012. Prior to that, the average basic tariff on U.S. goods was approximately 7.9 percent and duty rates (http://english.customs.go.kr/kcshome/tariff/CustomsTariffList.do?layoutMenuNo=21025) were high on a large number of high-value agricultural and fisheries products. With the FTA, 95% of tariffs on U.S. imports will be eliminated by March 15, 2017. The U.S. Department of Commerce’s FTA Tariff Tool (http://export.gov/FTA/ftatarifftool/index.asp) 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 (http://www.atoseoul.com/) affiliated with the U.S. Embassy in Seoul 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 (VAT) on all imports and domestically-manufactured goods. A special excise tax of 10-20 percent is also levied on the importation of certain luxury items and durable consumer goods. Tariffs and taxes must be paid in Korean Won within 15 days after goods having cleared Customs.
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.
A Value Added Tax rate of 10 percent is applied on imports based on customs value plus duties.
Korea continues a process of economic liberalization and deregulation, but the Republic of Korea government (ROKG) is still in the process of fully implementing the KORUS Free Trade Agreement. Verification of goods imported from the U.S. continues to be an issue as Korean Customs officers regularly demand documentation from U.S. manufacturers to prove that goods are indeed originating. The U.S. Embassy, in cooperation with the American Chamber of Commerce (AmCham) in Korea and other industry groups, actively engage the ROKG on KORUS implementation and address technical barriers to trade (TBT).
Examples of TBT include the following: transparency, due process, public comment/appeals procedures, new standards and labeling requirements, and timely and written administrative procedures.
Information on specific trade barriers in Korea, including agricultural products (such as restrictions on rice imports) is available in the 2016 National Trade Estimate Report on Foreign Trade Barriers (https://ustr.gov/sites/default/files/2016-NTE-Report-FINAL.pdf).
For companies exporting to the Republic of Korea, the following shipping documents are required to clear Korean Customs:
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
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/Exporter%20Guide_Seoul%20ATO_Korea%20-%20Republic%20of_2015-12-10.pdf .
Additional detailed information about import requirements and documentation needs for agricultural and food products (including biotechnology products) are included in the USDA import requirements report at: FAIRS Country Report (http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Seoul_Korea%20-%20Republic%20of_12-29-2015.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.
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 (http://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/exporting-products/export-library-requirements-by-country/Korea) 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 the relevant organizations before clearing Customs. Medical device and pharmaceutical exporters must have their products registered with the Korea Food and Drug Administration (KFDA) 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.
The U.S. 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.
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 (http://coex.co.kr/eng/index.asp) 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 (http://www.customs.go.kr/kcshome/main/content/ContentView.do?contentId=CONTENT_ID_000002130&layoutMenuNo=23018).
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 FAIRS Country Report (http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Seoul_Korea%20-%20Republic%20of_12-29-2015.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 (http://portal.customs.go.kr/kcsipt/sso/login.jsp). To learn more about country of origin labeling requirements, please visit http://www.import.or.kr/viewContents.do?action=view&subid=5&fPageNum=&mnId=law04.
The Korean Ministry of Trade, Industry and Energy (MOTIE) issues the KC Mark for items that fall under its jurisdiction, formerly comprised of 13 mandatory marks, many of which overlapped in testing procedures and functions. The consolidation of these marks into the KC Mark ensures that companies, both Korean and foreign, will save time and costs due to reduced redundancies introduced into the new system. To learn more, follow this link (http://www.kats.go.kr/kcmark/).
Further labeling and marking requirements for specific products, such as pharmaceutical and food products, are covered by specific regulations from 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.
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 and the website http://export.gov/ecr/eg_main_027617.asp to view the list of export control items. The Korean Customs Service (http://english.customs.go.kr/) or http://www.koreapost.go.kr/eng/sub/subpage.jsp?contId=e1010505 also maintains a list of prohibited imports to the Republic of Korea.
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
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 of notice for comments before implementation. To be alerted on these notifications, please sign up on 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 from the Food and Agricultural Import Regulations and Standards (FAIRS) report for Korea: (http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Certification_Seoul_Korea%20-%20Republic%20of_12-24-2015.pdf).
The Korean Agency for Technology and Standards (KATS - www.kats.go.kr) 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 - http://www.mfds.go.kr/eng) 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 - http://www.tta.or.kr/English/index.jsp) 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: http://www.nist.gov/notifyus/.
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.
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.
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.
Korean Agency for Technology and Standards (KATS)
Ministry of Food and Drug Safety (MFDS)
Korean Laboratory Accreditation Scheme (KOLAS)
The Republic of Korea is currently considering entry into negotiations for the Trans-Pacific Partnership (TPP) and has recently signed a Free Trade Agreement with China.
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 Free Trade Agreement (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 Australia, Canada, Chile, China, India, Peru, Singapore, the European Union, and the European Free Trade Association (Norway, Switzerland, Iceland and Liechtenstein). For the complete list of Korea’s FTAs, please visit the Korean Ministry of Foreign Affairs site (http://www.mofa.go.kr/ENG/policy/fta/status/overview/index.jsp?menu=m_20_80_10). 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.
U.S. law firms can set up local branches in Korea to provide legal consulting services and to provide legal consultation on foreign legal issues, but are not allowed to hire locally-qualified lawyers. U.S. lawyers can practice in Korea as a “Foreign Legal Consultant” (FLC) under the Korean Foreign Legal Consultants Act of the KORUS FTA. An attorney from a country with a free trade agreement in place with South Korea is eligible to apply to be an FLC. They must have at least a three-year work experience in their respective jurisdiction. In order to hold chief status, they must have seven years of experience overall. Foreign attorneys must seek approval by the Minister of Justice (http://www.moj.go.kr/HP/ENG/index.do) and register with the Korean Bar Association (https://www.koreanbar.or.kr/eng/pages/main/main.asp).
U.S. accounting firms have to register with the Financial Services Commission (FSC - http://www.fsc.go.kr/eng/) in order to open an office in Korea. These U.S. firms are then allowed to hire foreign accountants and provide accounting consultations to Korean companies on overseas financial operations only. They are not allowed to hire Korean accountants. In 2017 (five years after the launch of the KORUS FTA), foreign accounting firms will be eligible to purchase less than a 50 percent stake in a Korean accounting firm. The FSC will approve U.S. accountants who have secured accounting licenses overseas to do business in Korea for five years.
For general consultants, opening an office in Korea requires a Foreign Direct Investment (FDI) approach. For a corporation to open an office, a minimum investment of 100 million Won (~ USD 100,000) is required for a G8 visa, and for a consultant to practice in Korea, it would require 300 million Won (~ USD 300,000) for a G9 visa. To learn more about how one can open offices in Korea, please visit the site http://www.investkorea.org/en/index.do.
U.S. Department of Commerce, Commercial Service, Korea
U.S. Agricultural Trade Office in Seoul
U.S. Department of Agriculture
USDA Agriculture Exporters Guide
USDA Animal Plant and Health Inspection Service (APHIS)
USDA Food Safety and Inspection Service
Foreign Agricultural Service (FAS), U.S. Department of Agriculture (Attaché Reports)
American Chamber of Commerce Korea
Department of Commerce, Bureau of Industry and Security
Annual National Trade Estimate Report
Korean Agency for Technology and Standards (KATS)
Korea Customs Service (KCS)
Korean Laboratory Accreditation Scheme (KOLAS)
Ministry of Food and Drug Safety (MFDS)
Telecommunications Technology Association (TTA)
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