U.S.-Korea Free Trade Agreement

Documenting Origin - What You Need to Know Before the Goods Ship

How to Declare that a Good is Originating

The U.S.-Korea Free Trade Agreement went into effect March 15, 2012, meaning from that date onwards qualifying goods cross the respective borders with zero or a reduced tariff will apply.

It is the responsibility of the importer, your customer in Korea, to claim preferential treatment for qualifying goods. Under the Agreement, the ultimate responsibility for the validity of the claim lies with the importer. It is recommended that you have a conversation with your buyer to make sure that everyone is aware of the FTA benefit, who is responsible for claiming the benefit, that the product qualifies and that you can document where the product was made.

The importer can claim origin to Korean customs by relying on information provided by the exporter. However, the producer or exporter or both may be asked to provide the importer with documented evidence that a good is “originating” under the FTA.  Providing this evidence is optional.  But without this information, the exported good will not receive preferential treatment under the FTA and non-FTA tariffs will apply.

If requested, the importer must provide to the Korean Customs a written or electronic declaration that the goods are U.S. originating. U.S. goods with some non-U.S. or Korea originating content can qualify for preferential treatment, and the rules for qualifying such goods are explained and analyzed elsewhere in the document on Rules of Origin.

Also, if requested, the importer must also be prepared to provide Korean Customs with documentation supporting the claim of preference.

Certification of Origin

The certification, if requested by the buyer of Korean Customs, has no prescribed format. Certification can take different forms including a statement on the exporter’s, importer’s or producer’s company letterhead. While no official form is required in order to demonstrate origin under the Agreement, Korean Customs has issued a list of required data elements. The certification should include: the name of certifying person; contact information; the name of the importer; exporter or producer, depending on who is providing the certification; the tariff classification number and description of the good; formation demonstrating that the good is originating; and the date of certification. There may be additional elements requested and you should check with your importer. Shipments under $1,000 in value do not require a certificate of origin or other supporting information of a preferential claim unless the customs authority suspects a claim is fraudulent.

Supporting Documentation and the Importer’s Obligations

Typically, the information supporting the declaration is provided by the producer/exporter. An importer claiming preferential treatment is required to maintain documents supporting the claim for a period of at least five years from the date of importation of the good.

Supporting Documentation and the Exporter's Obligations

A U.S. producer or exporter that generates a certification of origin should maintain a copy of the certification and the records supporting that claim for a period of at least five years after the date of importation. Such records include:

  • Purchase, cost, value of, and payment for the exported good;
  • The purchase, cost, value of, and payment for all materials, including indirect materials, used in the production of the exported good; and
  • The production of the good in the form in which it was exported.

Filing a Correction

In the event an error is detected after a certification is submitted to Korean Customs, it is the responsibility of the exporter or producer to immediately notify the importer and Korean Customs of any change that would affect the validity of the certificate. Applicable duties must be paid on goods that do not qualify as originating under the FTA. However, penalties will not be imposed on the issuer of the certification of origin if the notification of an error has been submitted.

Special Cases

In some cases a considerable amount of research into the components of the production of the goods is required in order to determine origin. Many exporters and importers believe that the only time the declaration of origin can be provided is at the time the shipment clears customs, creating a sense of urgency in determining the origin of the goods in order to obtain the zero or reduced duty rate immediately.

However, there are additional options.

Option 1. The importer may pay the non-preferential duties at the time the goods clear customs. The importer has up to one year from the date the goods were imported to apply for a refund of excess duties paid. This may happen in cases where the information required to determine that the good is originating is not available at the time of shipment.

At the time of the application for refund, the importer is required to supply a written declaration of the goods' originating status, and, if requested by the customs authority, a certification of origin or other information demonstrating that the good qualifies as originating.

Option 2. In cases where the exporter sends multiple shipments of the same product to the same importer, it is not necessary to generate supporting documentation for each individual shipment. The importer may maintain one such "blanket" certification of origin to be presented to Korean Customs at the time of each shipment. Korean Customs suggests that the "blanket period" not exceed a period of one year.

Using the Rules of Origin to Qualify Your Product

If you have shipped to other countries with which the U.S. has a free trade agreement, you will immediately recognize how to qualify your goods under the U.S.-Korea FTA. Whether you are looking to brush up on the rules, compare the U.S.-Korea FTA with other FTAs, or are shipping for the first time to Korea, you’ll appreciate this step-by-step explanation. An accurate understanding of these rules is essential to avoid costly penalties and upset buyers.

Learn more about qualifying your product.

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