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Question(Korea-US) U.S. origin verification procedures
I want to know about the U.S. origin verification procedures.
Answers○ The Korea-US FTA has introduced the direct origin verification system allowing the customs authority of the importing country to ascertain whether the origin of the relevant good is appropriate as such by conducting a written or on
-site investigation of the exporter or producer of the exporting country.
* Refer to Article 6.18 (Verification) of the Korea-US FTA.
* However, in the case of textile or apparel goods unlike in the case of general goods, the Agreement provides that the government of the exporting country shall conduct an origin verification (indirect verification) on the request of the importing country. Refer to Article 4.3 (Customs Cooperation for Textile or Apparel Goods) of the Korea-US FTA.
○ There is also a device* for securing the transparency of the investigation procedures as well as the rights and interests of the traders by notifying the persons subject to investigation of the origin investigation results and the final decision about whether to grant preferential tariff treatment to the relevant goods.
* Any objections to the investigation results or the exporter’s or the producer’s trade secret documents may be directly submitted to the investigation authorities without passing through the importer.
QuestionProcedures after the end of the origin verification procedures
What are the required procedures after the end of the origin verification procedures?
Answers○ If the importer, overseas exporter or producer fails to satisfy the requirements prescribed in the Agreement, the importing Party may limit the application of preferential tariffs for the relevant goods.
* Denial of preferential tariff treatment on a case-by-case basis: In the event of any reason such as failure to reply regarding the required data within the submission period, denial of recognition of the country of origin, etc., application of FTA preferential tariffs is limited on a case-by-case basis.
* Denial of preferential tariff treatment for the relevant item: Application of FTA preferential tariffs for the relevant item is limited with respect to any goods which repeatedly violate the requirements prescribed in the Agreement (two or more times for the last five years).
○ Besides, any person refusing to submit the required data without any justifiable reason or rejecting or interfering with any investigation undertaken rightfully is liable to a fine for negligence.
○ Any person issuing a false or fraudulent certificate of origin is liable to a fine.
* Relevant legal bases: Paragraph 6 of Article 6.18 (Verification) of the Korea-US Free Trade Agreement
- Denial of PTT: Article 35 of the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements
- Regulation related to fines for negligence: Article 46 of the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements
- Regulation related to penal fines: Article 44 of the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements
Question(Korea-US) A question about the recommended certificate of origin forms
Please let me know where I can obtain a recommended form in relation to self-certification of origin.
AnswersAs the Korea-US FTA entered into force on March 15, 2012, there is a system for self-certification of origin. Please let me know where I can obtain a recommended form?
You can download a recommended form for the Korea-US FTA from the FTA Portal of the Korea Customs Service. Please refer below:
※ Reference: FTA Portal of the KCS (http://fta.customs.go.kr/kor_portal.html) > Data Room > Collection of Forms > Issuance of Certificates of Origin
Question(Korea-US) A question about the criteria for the determination of origin on a recommended certificate of origin form provided by the Korea Customs Service
What can be used for the criteria for the determination of origin on a recommended certificate of origin form provided by the Korea Customs Service?
Answers○ The “criteria for the determination of origin” are not elements required to be stated on a certificate of origin (recommended form) under the Korea-US FTA. (Therefore, you don’t have to state them.)
- If you intend to state them, you are recommended to indicate them as mentioned below:
1) Originating goods in accordance with Article 6.1(a) of the Agreement: "WO";
2) Originating goods in accordance with Article 6.1(b) of the Agreement: "PSR"; and
3) Originating goods in accordance with Article 6.1(c) of the Agreement: "PE".
○ In other words, the provisions mentioned above are prescribed in Article 6.1 (Originating Goods), Section A (Rules of Origin), Chapter Six (Originating Goods and Origin Procedures) of the Korea-US FTA, and they recommend that the criteria for the determination of origin should be indicated in the recommended certificate of origin form in a relevant one of the manners mentioned below:
- Write down “WO” in the case of an originating good (wholly obtained or produced) in accordance with subparagraph (a);
- Write down ”PSR” in the case of an originating good (determined to qualify as originating based on the applicable criterion of a change in tariff classification, the applicable regional value content criterion, and the specific manufacturing or processing operation criterion) in accordance with subparagraph (b); and
- Write down ”PE” in the case of an originating good (produced entirely in the territory of one or both of the Parties exclusively from originating materials) in accordance with subparagraph (c).
Question(Korea-US) Whether purchased goods whose value is less than 200 dollars are exempt from customs duty
If goods whose value is less than 200 dollars have been purchased from a shopping mall in the United States, are they exempt from customs duty?
Answers○ Under the Korea-US FTA, “goods for personal use or commercial samples valued at 200 U.S. dollars or less” which are shipped into Korea from the United States are treated as being subject to list-clearance (exempt from customs duty). [Refer to Article 7.7 (Express Shipment) of the Korea-US FTA.]
In this case, the criterion of “200 U.S. dollars or less” is based on the value of goods, and thus the shipping cost is excluded from the calculation.
- Therefore, if goods valued at 200 dollars or less are purchased from a shopping mall in the United States, and then they are shipped into Korea as an express shipment, they are exempt from customs duty.
* However, under the current list-clearance system, even in case the value of goods is valued at 200 dollars or less, if such goods fall under the category of items excluded from list-clearance, they are not exempt from customs duty.
Reference: KCS Website (http://www.customs.go.kr/kcshome/) > Guide to Customs Administration > Goods for Personal Use > Express Consignments
* Also in the case of an express shipment from the United States, the duty exemption ceiling for small-sum goods excluded from list-clearance is 150 U.S. dollars as the value of goods.
Question(Korea-US) Whether certification of origin is possible with an invoice
Our company imports semiconductor-related components from a US corporation. In case the words “Country of Origin: USA” are stated on the invoice, is it okay even if we don’t prepare a separate certificate of origin form? Even in case the country of origin isn’t indicated on the invoice, if we import semiconductor components from the US corporation, is it possible to apply a changed tariff rate to them?
Answers○ The Korea-US FTA does not prescribe any particular standardized format as a certificate of origin form. Just a document containing the eight required elements as prescribed by the FTA is sufficiently acceptable:
1. The name of the certifying person (including as necessary contact or other identifying information); 2. The importer of the good (if known); 3. The exporter of the good (if different from the producer); 4. The producer of the good (if known); 5. Tariff classification under the Harmonized System and a description of the good; 6. Information demonstrating that the good is originating (words which confirm that the good is originating, the name of the country of origin, etc.); 7. Date of the certification; and 8. In the case of a blanket certification, the period that the certification covers.
- Therefore, if a commercial document such as the invoice contains the required elements mentioned above, then it can also be recognized as a certificate of origin. If a separate certificate of origin is made out, it can also be applied.
- However, Korea has established “standard forms” (recommended forms) in domestic law so that business enterprises can complete certificates of origin easily.
※ Reference: FTA Portal of the KCS (http://fta.customs.go.kr/kor_portal.html) > Data Room > Collection of Forms > Issuance of Certificates of Origin
Question(Korea-EFTA) Whether used goods are eligible for preferential tariff treatment
The products are used Swiss-made goods. An approved exporter imports such goods from Switzerland. I wonder they are eligible for the application of the Korea-EFTA FTA in this case.
Answers○ In order to be eligible for preferential tariff treatment under the FTA, the relevant goods must satisfy the applicable origin requirements by being recognized as originating in accordance with the origin criteria of the FTA, by being equipped with documentary evidence of origin including a certificate of origin, etc. as prescribed in the FTA, and by being directly transported to Korea.
○ There is not any provision that requires denial of preferential tariff treatment to used ones among the goods originating in the EFTA region. Therefore, even used goods may be granted preferential tariff treatment if they satisfy the origin requirements mentioned above.
○ Under the Korea-EFTA FTA, the exporter confirms the origin of the relevant goods, makes out the text of an origin declaration* (refer to Appendix 3 of Annex 1 of the relevant Rules below) on the invoice or any other commercial document, signs it, and then uses it as a certificate of origin (self-certification).
However, an approved exporter may omit signing it (including the signer’s name).
○ Therefore, if the relevant products are recognized as used goods originating in Switzerland in accordance with the origin criteria of the FTA, equipped with an origin declaration (certificate of origin) issued by the Swiss exporter, and directly transported to Korea, they may be granted preferential tariff treatment under the Korea-EFTA FTA.
Question(Korea-US) Goods purchased through electronic commerce
Is the omission of the submission of a certificate of origin allowed also in the case of goods purchased through electronic commerce under the Korea-US FTA?
AnswersPostal items or export goods (including “goods purchased through electronic commerce”) whose customs value does not exceed 1,000 US dollars regardless of commercial or noncommercial use may be granted preferential tariff treatment by confirming the origin of the relevant products in a simplified way through the purchase receipt and the country of origin marked on the products without requiring a certificate of origin in the FTA partner country (United States).
However, goods whose customs value exceeds 1,000 US dollars require a “certificate of origin”.
* Under the Korea-EU FTA, in the case of goods purchased through electronic commerce, even if their customs value does not exceed 1,000 US dollars, you must submit a certificate of origin in order for such goods to be eligible for preferential tariff treatment.
Question(Korea-ASEAN) Retroactive issuance of a certificate of origin
How to issue a certificate of origin (C/O) in case the date of issuance is three days later than the declared shipment date
Answers○ Regarding Rule 7 of the Operational Certification Procedures for the Rules of Origin in the Korea-ASEAN Free Trade Agreement (amended Dec. 27, 2013):
- It is required in principle that a certificate of origin should be issued “prior to or at the time of shipment or within three (3) working days after shipment” whenever the good to be exported can be considered to be originating in the territory of the exporting Party. - In exceptional cases where a certificate of origin has not been issued prior to or at the time of shipment or within three (3) working days after shipment due to involuntary errors, omissions or other valid causes, a certificate of origin may be issued retroactively but no later than one year from the date of shipment, bearing the words “ISSUED RETROACTIVELY”.
=> Therefore, in exceptional cases where a certificate of origin has not been issued prior to or at the time of shipment or within three (3) working days after shipment, eligibility for preferential tariff treatment under the Korea-ASEAN FTA requires an original certificate of origin bearing the words “ISSUED RETROACTIVELY”.
Question(Korea-EU) How to indicate the country of origin for export goods in case they originate in many countries in the EU region
How should I indicate the country of origin for export goods on an origin declaration form in case they originate in many countries in the EU region?
Answers○ In case an approved exporter exports goods originating in many countries in the EU region, if you write down ‘EU’ or ‘EC’ in the Country of Origin box of the origin declaration form, it can be used as the country of origin of such goods.
○ An origin declaration in the case of importation of both originating and non-originating products together
- If you indicate clearly to classify the non-originating products as such so that the originating and non-originating products can be distinguished from each other, the application of a preferential tariff is possible.
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