The Korea Customs Service (the “KCS”) recently announced “5 Main Goals for 2013” regarding its customs administration.

The specific goals and the operational direction of customs administration are examined below:

<5 Main Goals of Customs Administration in 2013>

  1. To develop a system of customs and distribution in preparation for a $2 trillion trade era
  2. To strengthen preemptive risk management based on accurate information
  3. To strengthen customs management of hazardous goods and to protect the societal safety network
  4. To improve the quality of customs services and expand interagency cooperation
  5. To actively support the stabilization of prices, economic vitality, and other governmental policies

In order to achieve the above goals, the KCS has stated a policy of redesigning the system of export controls by conducting customs management by category, according to the level of risk of import-export companies, thereby expanding automatic clearance of customs for small-medium enterprises with superior legal compliance capabilities and easing requirements for submission of documents and inspection rates, while on the other hand strengthening customs management to prevent abuse of export clearance procedures.   The KCS seems to be moving toward a change in the method of reporting the product names and usage of goods requiring confirmation by the Commissioner of the KCS and 7 types of goods subject to high-priority customs management, including food, pharmaceutical products, toys, kitchen utensils, among others, and also strengthening the system of preventing errors in export and import declarations.

Further, as the necessity of strengthened customs management of goods involving public health and societal safety has become increasingly apparent, the KCS has announced plans to (i) expand the number of designated goods requiring confirmation by the Commissioner of the KCS, (ii) block illegal exports by establishing a new Notification on Export Customs Clearance of Postal Material and Express Cargo (tentative title), and (iii) select and conduct focused inspections of inbound aircraft from hotspots of illegal cargo entry, to block illegal entry of hazardous goods.

In addition, the KCS has announced plans to (i) implement a system of electronic declaration of personal belongings using smartphones, to improve the quality of customs service, (ii) establish comprehensive measures at the customs administration level for stabilization of prices, including vitalization of the clearance certification system for parallel imported goods, (iii) establish reasonable procedures for the protection of patent and other intellectual property rights of small-medium enterprises so that small-medium enterprises may operate intra-city duty free shops, and (iv) implement various policies for stabilization of prices, including strengthening support to domestic companies who move manufacturing operations back to Korea (the so-called “U-Turn companies”), and expanding scope of raw materials subject to delivery at bonded factories.

The implementation of the customs administration planned for this year by the KCS is expected to have the greatest impact on import and export companies and the manufacturing industry, especially importers of food, pharmaceutical products, kitchen utensils, and other goods subject to confirmation by the Commissioner of the KCS, and exporters.

Therefore, in the case of import-export companies, it is necessary to prepare for the inconveniences that may arise from the strengthened customs administration by the KCS by thoroughly preparing for compliance with legal and procedural requirements for the import and export of goods and improving customs clearance technologies to prevent errors in import-export declarations, and in the case of manufacturers and distribution companies, it is necessary to utilize in their business planning various statistics and indices provided to improve the quality of customs service.