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S. Korea: KORUS FTA Becomes Effective on March 15 |
| Source: |
korea.net |
| Source Date: |
Thursday, March 15, 2012 |
| Focus: |
ICT for MDGs
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| Country: |
Korea (Republic of) |
| Created: |
Mar 20, 2012 |
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The free trade agreement (FTA) between the United States and the Republic of Korea went into effect at midnight on March 15. Economic scholars, organizations, companies, and consumers all welcomed the FTA and the benefits it will bring.
“In the eventuality that the Korean export market struggles due to the global economic crisis, signing the FTA with the U.S., the largest market in the world, will greatly help the nation to improve its export environment,” said a declaration by the FTA Industry Alliance, an FTA countermeasure committee composed of economic organizations in Korea.
“Thanks to the KORUS FTA, the export of Korean textile and fashion products will rapidly increase,” said a declaration by the Korea Federation of Textile Industries (KOFOTI). “The Korean textile industry will have the chance to upgrade and diversify its products.”
With the KORUS FTA, an American automobile priced at 50 million won will become approximately 4 million won cheaper. It is also expected that consumers will get a discount of 2,000 won for a bottle of wine originally priced at 10,000 won in Korea and a discount of 9,000 won for a bag that was previously priced at 100,000 won.
“As the KORUS FTA goes into effect, tariffs on imported products from the U.S. will be lowered by stages and consumers will be able to buy products like foods, automobiles, and accessories at lower prices,” said the Ministry of Strategy and Finance on March 13.
Tariffs on a total of 9,061 imported items from the U.S. will be removed immediately.
The 8% tariff on automobiles will be lowered to 4% and completely removed in 2016. In addition, the individual consumption tax on automobiles larger than 2,000cc will also be dropped from 10% to 5% by 2015.
The tariffs on products like cherries (24%), grape juice (45%), raisins (21%), wine (15%), clothes (13%), and bags (8%) will also be removed immediately. The tariffs on lemons (30%), orange juice (54%), samgyeopsal or pork belly (22.5%), and beer (30%) will be lowered in two to ten years.
Moreover, when receiving a product worth up to USD 200 from the U.S. using express delivery service, the tariff on the product will also be exempted.
Most importantly, exports of Korean auto parts, textiles, and machinery products to the U.S. are expected to radically increase with lower tariffs.
Auto parts are the key export from Korea to the U.S. The tariffs on auto parts, which were as high as 4%, will immediately be removed. In addition, tariffs on certain auto parts including nuts and bolts (5.7%~12.5%), brake pads (2.5%), and airbags (2.5%) will be removed immediately.
The government is planning to support Korean auto parts companies with exports, consultations, and administrative work accordingly by building Auto-Parts Parks (APP) in the central locations of the automobile manufacturing industry in the U.S. and Europe. The APPs provide a comprehensive supportive system that handles various issues such as connecting the Korean auto parts companies with overseas automobile companies.
In addition, merchandise processing fees that were charged for exports to the U.S. will be removed. This is expected help Korea save USD 80 million a year. The fees were charged depending on the price of the import. For example, imported products priced at over USD 2,000 were charged 0.21% of the price.
However, there are certain things that both Korean and American companies have to prepare to reap the benefits from the removed tariffs. One of the things is to prepare ‘a certification of origin.’ Companies in both countries will need a certificate of origin for both imports and exports to benefit from lowered or removed tariffs.
According to regulations, export or import companies must voluntarily apply for the certification, the expiration date of which is four years.
A management program is also offered free of charge to help with this certification process. The FTA-PASS is a software program that supports management of the certification and verification of the origin of products. Anyone can download the program on the homepage of the Korea Institute of Origin Information at http://www.origin.or.kr.
For more information on the KORUS FTA, visit the following websites operated by FTA-related organizations.
Portal site for Korea Customs Service: fta.customs.go.kr
Korea Institute of Origin Information: www.origin.or.kr
FTA-PASS: www.ftapass.or.kr
Ministry of Strategy and Finance: www.ftahub.go.kr
Ministry of Foreign Affairs and Trade: www.fta.go.kr
FTA Information & Business Support Center: www.okfta.or.kr
FTA call center: 1566-5114
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