A free trade agreement between Korea and Turkey (the “Korea-Turkey FTA”) became effective on May 1, 2013, as the ninth free trade agreement entered into by Korea.
As a result, based on the number of items Korea immediately removed import duties on 80% of imports from Turkey, and Turkey immediately eliminated import duties on 65% of imports from Korea. Within 7 years, import duties will be removed on both sides for all industrial products, and within 10 years, import duties on nearly all products will be removed by both countries.
In addition to the Framework Agreement (Framework Agreement Establishing a Free Trade Area between the Republic of Turkey and the Republic of Korea) and the Agreement on Trade in Goods (Agreement on Trade in Goods between the Republic of Turkey and the Republic of Korea) which comprise the Korea-Turkey FTA, the governments of the two countries have agreed to conclude negotiations for an agreement on trade in services and investment within 1 year after the Korea-Turkey FTA has taken effect.
Although the Korea-Turkey FTA is similar to the Korea-EU FTA, there are differences in terms of the method of issuance of certificates of origin. Under the Korea-EU FTA, exporters can be issued a certificate of origin after obtaining approved exporter status from the customs office, whereas, under the Korea-Turkey FTA, exporters self-certify and issue their own certificates of origin, but post-issuance verification is strengthened. Therefore, since the Korea-Turkey FTA has become effective, importers that seek to obtain the benefits of the preferential duties on imported goods from Turkey need to thoroughly review the method of issuance of certificates of origin and the post-issuance verification process.
- Key Provisions of the Korea-Turkey FTA
- Trade Remedies
- Due to bilateral safeguards and strengthened substantive and procedural requirements for anti-dumping and countervailing measures, the Korea-Turkey FTA contains the highest level of trade remedies among the existing free trade agreements entered into by Korea.
- Country of Origin
In principle, the product specific rules (PSR) under the Korea-Turkey FTA are the same as those under the Korea-EU FTA; however, the product specific rules are relaxed for certain products or quota exceptions are secured.
- Items to which more relaxed product specific rules apply than those under the Korea-EU FTA (3): Sugar cookies, food items containing chocolate, miscellaneous biscuits
- Items to which quota exceptions to product specific rules apply (3): Cotton yarn, recycled filament fabric, recycled or semi-synthetic staple yarn fiber
- Kaesong Industrial Complex
- The Committee on Outward Processing Zones on the Korean Peninsula determines the specific matters regarding the operation of outward processing zones (OPZ) (as with the Korea-EU FTA).
- Refund of Tariffs
The Korea-Turkey FTA maintains the existing tariff refund system, but allows the Tariff Commission to review provisions relating to operation of the tariff refund system, if necessary, after a period of 5 years from its effective date.
- The procedures for exchange of statistics relating to tariff refunds and the provisions on tariff refund ceilings prescribed by the Korea-EU FTA are eliminated.
- Verification of the Country of Origin
- The Korea-Turkey FTA adopts the self-certification method whereby exporters issue their own certificates of origin.
- In contrast with the Korea-EU FTA, which allows only approved exporters to issue their own certificates of origin, the Korea-Turkey FTA does not limit the issuers of certificates of origin to approved exporters.
- As with the Korea-EU FTA, the Korea-Turkey FTA adopts the “invoice declaration” method which does not require any particular form to be used for certificates of origin.