The Korean government is pushing forward with a new customs administration strategy to boost the utilization of Free Trade Agreements (FTAs), particularly for popular K-beauty and K-food products. This initiative was discussed during a meeting chaired by the Acting Prime Minister and Minister of Economy and Finance, Choi Sang-mok, on February 12th.
While Korea has FTAs in place with 59 countries, covering 77% of its total trade, the utilization rate for certain items and businesses remains low. To address this, the government aims to simplify the process of proving the origin of goods, enhance origin management, and strengthen international cooperation.
Easing Origin Certification Process
K-beauty and K-food products, despite their global popularity, have faced hurdles due to complex origin certification procedures. The government plans to drastically reduce the number of required documents for origin certification from eight to just one for key items like lipsticks, face masks, eye shadows, and certain seafood and poultry products. By requiring only a domestic manufacturing confirmation or certificate, the government hopes to alleviate the burden on small and medium-sized enterprises (SMEs) and encourage more exports.
This simplification is expected to make it easier for businesses to prove the origin of their products, reducing the administrative burden and promoting the use of FTAs for exports.
Expanding Support for Underutilized Sectors
The government is also extending support to sectors that have not fully benefited from FTAs, such as used cars and eco-friendly recycled products. For used cars, only the vehicle identification number will be required for origin certification. Products made from recycled materials will be eligible for origin certification with just the 'GR (Good Recycled) certificate'.
The government is also working with countries with high volumes of used car exports, such as those in Latin America, to simplify the origin certification process. These measures are expected to reduce the burden on exporters and increase their price competitiveness.
Tailored Support for Specific Items and Regions
The government will also provide tailored support to items, regions, and SMEs with low FTA utilization rates. Twelve items with annual exports exceeding 100 million dollars but utilization rates below 30%, and thirteen items with exports over 10 million dollars but no FTA utilization, will be targeted for support. This will include consulting and cooperation with relevant ministries.
For regions with low FTA utilization, such as the central region of Korea, support will be strengthened through the establishment of an export and import support center in Pyeongtaek Customs. The government will also expand FTA education and consulting for small businesses and novice exporters, working with relevant organizations to actively support exports.
Enhancing FTA Import Utilization and Origin Management
To reduce uncertainties in FTA import utilization, the government will activate the advance origin ruling system and extend the application period for preferential tariffs from one year to five years. This will provide businesses with more certainty and encourage the use of FTAs for imports.
The government will also strengthen origin management capabilities by providing customized consulting to SMEs with high rates of origin verification violations. Cooperation with the Korea Origin Information Center will also be strengthened to enhance the post-management of 15,000 certified exporters.
Addressing Trade Barriers and Strengthening Cooperation
To address trade barriers, the government will establish an Electronic Origin of Certificate (e-C/O) exchange system with countries like the Philippines, based on international standards. This system will enable real-time information exchange with customs authorities, reducing import clearance times and logistics costs.
The government will also strengthen cooperation channels to resolve large-scale customs disputes, including dispatching support teams to relevant countries and holding high-level talks. A origin verification cooperation meeting will also be established to address continuous export verification requests from FTA partner countries.
Acting Prime Minister Choi Sang-mok emphasized the government's commitment to simplifying the requirements for origin certificates and highlighted the importance of actively utilizing FTAs to enhance export competitiveness in the face of increasing global trade uncertainties.
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