Legal framework

Domestic legislation

What is the main domestic legislation as regards trade remedies?

The Customs Act and the Act on the Investigation of Unfair International Trade Practices and Remedy against Injury to Industry (the Trade Remedies Investigation Act) are the two main domestic laws as regards trade remedies in Korea.

English versions of the Customs Act and the Trade Remedies Investigation Act are available at http://elaw.klri.re.kr/eng_service/lawView.do?hseq=37150&lang=ENG and http://elaw.klri.re.kr/eng_service/lawView.do?hseq=31963&lang=ENG.

International agreements

In general terms what is your country’s attitude to international trade?

Korea is a member of the WTO, which supports free trade. Korea has entered into 15 free trade agreements (FTAs) with Chile, Singapore, EFTA, ASEAN, India, the EU, Peru, the US, Turkey, Australia, Canada, China, Colombia, New Zealand and Vietnam. Korea has also concluded an FTA negotiation with six Central American countries: Costa Rica, Guatemala, Honduras, Panama, El Salvador and Nicaragua. Korea has complied with WTO decisions in good faith. As to Korea’s track record on compliance with WTO decisions, an article 21.5 panel under the Dispute Settlement Understanding has been requested only once out of eight WTO dispute cases in which Korea was the losing party.

Trade defence investigations (outside the WTO dispute settlement system)

Government authorities

Which authority or authorities conduct trade defence investigations and impose trade remedies in your jurisdiction?

Trade remedy investigations and trade remedy measures are conducted by different government bodies. Trade remedy investigations are conducted by the Korea Trade Commission (KTC) (www.ktc.go.kr:20443/en/main.do), a government body within the Ministry of Trade, Industry and Energy (MOTIE). If affirmative decisions are made by the KTC, the Ministry of Strategy and Finance (MOSF) (english.mosf.go.kr) imposes trade remedy measures such as anti-dumping duties, countervailing duties and safeguard measures. The Korea Customs Service (KCS) is responsible for collecting any duties arising from trade remedy cases (www.customs.go.kr/kcshome/site/index.do?layoutSiteId=english).

Complaint filing procedure

What is the procedure for domestic industry to start a trade remedies case in your jurisdiction? Can the regulator start an investigation ex officio?

With respect to anti-dumping or countervailing duty investigations, persons interested in the domestic industry that suffers material injury etc, under article 51 of the Customs Act, or ‘the minister of the competent ministry in charge of such domestic industry’ may ask the Minister of Strategy and Finance to levy anti-dumping or countervailing duties as prescribed by Ordinance of the Ministry of Strategy and Finance, and such request shall be deemed a request filed with the KTC established pursuant to the provisions of article 27 of the Act on the Investigation of Unfair International Trade Practices and Remedy against Injury to Industry (the Act) for making an investigation necessary to levy anti-dumping or countervailing duties (article 51 of the Customs Act and articles 59 and 73 of the Enforcement Decree of the Customs Act). As for safeguard investigations, where the increased import of particular goods is causing, or is feared to cause, serious injury to a domestic industry that produces the same kind of goods as the particular goods or goods in direct competition with the particular goods, any interested person in such domestic industry or the heads of the central administrative agencies in charge of the domestic industry may apply to the KTC for an investigation into the injury to the domestic industry caused by the importing of such goods (article 15 of the Act).

For anti-dumping duty investigations, evidential data fully attesting to the fact of dumping goods imported and material injury etc caused thereby must be included in the filing. For safeguard investigations, evidence of serious injury caused by increased imports must be included in the filing (article 59.4 of the Enforcement Decree of the Customs Act). For countervailing duty investigations, adequate evidential data concerning the fact of importing goods for which subsidies etc are paid and the fact of material injury etc caused thereby must be provided to the KTC (article 74.2 of the Enforcement Decree of the Customs Act). As for safeguard investigations, the details, scope and duration of measures that are necessary for remedying the injury to the domestic industry concerned, where there is serious injury or a threat of serious injury to the domestic industry concerned, must be provided to the KTC (article 15 of the Enforcement Decree of the Act).

Upon receiving a request for an anti-dumping or countervailing duty investigation, the KTC shall decide whether to make an investigation into the fact of dumping or importing goods for which subsidies etc are paid, and the fact of damage etc caused thereby, within two months from the day on which such request is received. Upon receipt of any safeguard application, the KTC shall decide whether to commence an investigation in consultation with the head of a related central administrative agency within 30 days from the date of the application.

Any person who intends to request an anti-dumping duty investigation shall furnish the data including the information on the relevant goods, material injury etc caused by the import of the relevant goods to the domestic industry, the extent of support by domestic producers of the goods of the same kind for the relevant request of an investigation and evidential data fully attesting to the fact of dumping goods imported and material injury etc caused thereby (article 59.4 of Enforcement Decree of the Customs Act). Any person interested in the domestic industry that suffers material injury etc due to the import of goods for which subsidies etc are paid shall, when he or she intends to file an application for an investigation thereof, file an application stating the matters, including the information on the relevant goods, material injury etc caused by the import of the relevant goods to the domestic industry and the extent of support by domestic producers of the goods of the same kind for the relevant request of an investigation, appended by related evidential data, with the KTC (article 73.4 of Enforcement Decree of the Customs Act). A person who applies for a safeguard investigation, as to whether increased imports of particular goods cause injury to the domestic industry in accordance with article 15 of the Act, shall submit to the KTC an application indicating the information including the goods concerned, the circumstances in which imports of the goods concerned have caused or are threatening to cause serious injury to the domestic industry and the details, scope and duration of measures that are necessary for remedying the injury to the domestic industry concerned, where there is serious injury or a threat of serious injury to the domestic industry concerned etc accompanied by the materials verifying the details of the request (article 15 of the Enforcement Decree of the Act).

If the Trade Commission decides that an increase in the import of particular goods causes or is feared to cause serious injury to domestic industry, it may undertake an ex officio investigation (article 16.3 of the Act). There is no explicit provision on whether the KTC may undertake an ex officio investigation in case of an anti-dumping or countervailing duty.

Contesting trade remedies

What is the procedure for foreign exporters to defend a trade remedies case in your jurisdiction?

When the KTC determines to commence an anti-dumping or countervailing duty investigation, it shall notify the applicant for such investigation, the government of the supplying country of the relevant goods, a supplier and other interested persons of matters concerning the determination of the investigation commencement and shall publish such matters in the Official Gazette within 10 days from the day on which the decision to commence the investigation is made (articles 60.3 and 74.3 of the Enforcement Decree of the Customs Act). However, where a decision on whether to commence a safeguard investigation is made, the KTC shall publish such fact in the Official Gazette (article 16.2 of the Enforcement Decree of the Act).

Exporters who receive questionnaires from the KTC must notify the KTC as to whether or not they intend to respond to such questionnaires by no later than three weeks from the initiation of the investigation.

Exporters who are not specifically identified by the KTC may submit an application to the KTC seeking voluntary participation in the investigation within three weeks of the initiation of the investigation. The KTC has discretion in deciding whether to accept such an application, typically taking into consideration the KTC’s workload. If accepted, the KTC will send a questionnaire to such voluntary respondents, or inform them in writing that they are not included in the investigation.

The Minister of Strategy and Finance or the KTC may, when deemed necessary or there is a request from any interested person, give such interested person an opportunity to state his or her opinion at a public hearing etc or persons in conflict of their interests an opportunity to consult with each other (articles 64.8 and 78.8 of the Enforcement Decree of the Customs Act).

For anti-dumping and countervailing duty investigations, when any supplier is asked whether he or she has been involved in dumping goods or not, he or she shall be given a period of at least 40 days from the day on which a written inquiry is delivered to him or her for answering such inquiry, and if the relevant supplier asks to extend such period, citing the grounds therefor, proper consideration shall be given to his or her request (article 64.1 of the Enforcement Decree of the Customs Act). The KTC may also issue a supplemental questionnaire. A one or two-week extension may generally be granted, provided that sufficient reasons for the extension are provided.

The KTC shall conduct a preliminary investigation into whether there is adequate evidence presuming the existence of the fact of dumping or importing goods for which subsidies etc are paid, and the fact of material injury etc caused thereby, and report the results thereof to the Minister of Strategy and Finance within three months from the day on which the matters concerning the determination of the investigation commencement are published in the Official Gazette (articles 61.2 and 75.2 of the Enforcement Decree of the Customs Act). The Minister of Strategy and Finance shall determine whether to take provisional measures and the contents thereof within one month from the day on which the results of the preliminary investigation are reported. If deemed necessary, the period of one month may be extended by up to 20 days (articles 61.3 and 75.3 of the Enforcement Decree of the Customs Act). The KTC shall commence a full-scale investigation beginning from the day following the day on which the results of a preliminary investigation are reported unless special grounds prescribed by Ordinance of the MOSF exist that make it impossible to do so, and the results of such full-scale investigation shall be reported to the Minister of Strategy and Finance within three months from the day on which the full-scale investigation commences (articles 61.5 and 75.5 of the Enforcement Decree of the Customs Act). Where necessary to extend the investigation period in connection with the investigation above and any interested person requests the extension of the investigation period, citing good cause, the KTC may extend the investigation period by up to two months (articles 61.6 and 75.6 of the Enforcement Decree of the Customs Act).

For anti-dumping duty investigations, where the Minister of Strategy and Finance receives the results of a full-scale investigation, he or she shall determine whether to levy anti-dumping duties and substances thereof within 12 months from the date on which such results are published in the Official Gazette and take measures to levy anti-dumping duties. Where any special reason is deemed to exist, he or she may take measures to levy anti-dumping duties within 18 months from the date of publication in the Official Gazette (articles 61.6 and 61.7 of the Enforcement Decree of the Customs Act).

For countervailing duty investigations, the Minister of Strategy and Finance shall decide whether to levy a countervailing duty and the contents thereof, and take a measure to impose such countervailing duty within one month from the day on which the results of the full-scale investigation are received. If deemed necessary, the period of one month may be extended by up to 20 days. The Minister of Strategy and Finance shall take a measure to levy a countervailing duty within one year from the day on which the matters concerning the determination on the commencement of an investigation are published in the Official Gazette. If special reasons are deemed to exist, the Minister of Strategy and Finance may take the measure to impose such countervailing duty within 18 months from the day on which the matters concerning the determination on the commencement of such investigation are published in the Official Gazette (articles 75.7 and 75.8 of the Enforcement Decree of the Customs Act).

WTO rules

Are the WTO rules on trade remedies applied in national law?

The WTO rules on trade remedies, such as Agreement on Implementation of article VI of the General Agreement on Tariffs and Trade 1994 (the AD Agreement), the Agreement on Subsidies and Countervailing Measures (the SCM Agreement) and the Agreement on Safeguards, are reflected in Korean domestic laws and regulations because Korea is a WTO member. According to paragraph 1 of article 6 of the Constitution of Republic of Korea (the Constitution), treaties duly concluded and promulgated under the Constitution and the generally recognised rules of international law shall have the same effect as the domestic laws of Korea. If there is a conflict between the treaties and the domestic laws, the principles of lex specialis and lex posterior would be applied. The KTC generally follows the practice of the WTO. Paragraph 3 of article 58 of the Enforcement Decree of the Customs Act (the Decree) provides for a non-market economy (NME) for the purpose of anti-dumping investigations. However, there is no specific country that is currently treated as an NME. For reference, Korea recognised China and Russia in 2005 and Vietnam in 2009 as having attained market economy status.

Appeal

What is the appeal procedure for an unfavourable trade remedies decision? Is appeal available for all decisions? How likely is an appeal to succeed?

Article 13 of the AD Agreement and article 23 of the SCM Agreement provides that each member whose national legislation contains provisions on anti-dumping and countervailing duty measures shall maintain judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia, of the prompt review of administrative actions relating to final determinations and reviews of determinations within the meaning of article 11 of the AD Agreement and article 21 of the SCM Agreement.

As Korea’s domestic legislation includes provisions for trade remedies, including anti-dumping and countervailing duty measures, it maintains judicial and administrative procedures for the purpose of the prompt review of an unfavourable trade remedies decision.

Paragraph 2 of article 120 of the Customs Act provides that any administrative litigation against any illegal measure shall not be initiated unless a request for evaluation or adjudication and a decision thereon under the Customs Act is made. In other words, an interested party shall file a request for evaluation or adjudication first, and after a decision thereon is made, the party may initiate administrative litigation. According to paragraph 3 of article 120 of the Customs Act, the administrative litigation shall be initiated within 90 days from the date on which the notice of the decision is given in response to the request for evaluation or adjudication was received.

Review of duties/quotas

How and when can an affected party seek a review of the duty or quota? What is the procedure and time frame for obtaining a refund of overcharged duties? Can interest be claimed?

An affected party may file a request for a review. Any request for a review may be made after the expiration of one year from the day on which the relevant anti-dumping duties are imposed, or the countervailing duty or the pledge is put into force and such request shall be made before six months from the day on which the effect of anti-dumping duties or the pledge is lost.

The Customs Act and the Decree stipulated regarding refunds of overcharged anti-dumping or countervailing duties. Paragraph 3 of article 53 and paragraph 2 of article 59 of the Customs Act provides that if the amount of anti-dumping or countervailing duties falls short of the amount of provisional anti-dumping or countervailing duties, the difference therefrom shall be refunded. Paragraph 1 of article 67 of the Decree provides that where the amount of anti-dumping duties is lower than that of the provisional anti-dumping duties, the amount of provisional anti-dumping duties, which is equivalent to a difference, shall be refunded. The Customs Act and the Decree, however, do not explicitly provide for any procedure and time frame for those refunds.

Compliance strategies

What are the practical strategies for complying with an anti-dumping/countervailing/safeguard duty or quota?

Seeking reviews could be a way to comply with trade remedy measures. Also, it has been generally observed that importers re-source merchandise from other countries after the imposition of trade remedy measures. Proactively responding to the investigating authorities prior to the imposition of trade remedy measures would also be recommended, as it is generally understood that earnest efforts made during the investigation process would bring a fair result.

Customs duties

Normal rates and notification requirements

Where are normal customs duty rates for your jurisdiction listed? Is there an exemption for low-value shipments, if so, at what level? Is there a binding tariff information system or similar in place? Are there prior notification requirements for imports?

The applicable normal customs duty rates are shown in the Harmonised System of Korea, which is available at unipass.customs.go.kr/clip/index.do. The normal customs duty rate for industrial products imported into Korea is generally 8 per cent ad valorem, while the customs duty rates for agricultural products are generally much higher.

An exemption for low-value shipments applies to goods valued at US$150 or less if such goods are considered self-use goods.

Depending on the imported products, Korean importers may be subject to certain certification, reporting or approval requirements stipulated under various laws and regulations governing the importation of such products (ie, other than the Customs Act), such as the Pharmaceutical Affairs Act, the Medical Devices Act and the Chemicals Control Act, among others. While there are generally no prior notification requirements for imports, Korean importers seeking to import certain pharmaceutical and medical device products are required to submit a pre-importation report to the relevant industry association before obtaining customs clearance, and the relevant industry association’s acceptance of such report is a precondition for customs clearance.

Importers seeking to import any products that are subject to additional requirements under laws and regulations other than the Customs Act are strongly encouraged to ensure full compliance in view of the KCS’s aggressive enforcement actions.

Special rates and preferential treatment

Where are special tariff rates, such as under free trade agreements or preferential tariffs, and countries that are given preference listed?

The texts of the various FTAs to which Korea is a member and preferential tariff rates thereunder are available at www.customs.go.kr/kcshome/main/content/ContentView.do?contentId=CONTENT_ID_000002349&layoutMenuNo=23266. Information relating to preferential treatment provided under GSP programmes maintained by Korea is available at https://unipass.customs.go.kr/clip/index.do.

How can GSP treatment for a product be obtained or removed?

The MOSF may determine the scope of GSP treatment as applied to particular products and countries upon receiving an opinion from interested parties. If a domestic industry or interested party believes that continuing with a GSP programme may cause (or is likely to cause) material damage to the domestic industry, such industry or party may file a petition with the MOSF seeking to suspend the GSP programme.

When the MOSF determines that it is not proper to levy general preferential tariffs, such as the increase in imports of certain preferential goods, which may cause serious damage to domestic products that produce the same or similar products, the application of the general preferential tariffs to designated goods and country of origin may not be made. In addition, when the Minister of Strategy and Finance decides that it is improper to impose the general preferential tariffs considering the income level of the particular preferential tariff beneficiary country, the proportion of total amount of imports from the target country, the degree of international competitiveness of the specific preferential goods of the target country, and other circumstances, the application of general preferential tariffs can be excluded.

Is there a duty suspension regime in place? How can duty suspension be obtained?

Subject to KCS’s review and approval, a customs bonded area or free trade zone may be established where the movement of goods into such areas or zones would not give rise to customs duty implications in Korea, unless the goods actually enter into the territory of Korea, in which case the applicable customs duties and other import-related taxes will be payable. Also, certain Korean importers may be exempt from the general requirement that all applicable customs duties and other taxes should be paid at the time of customs clearance, provided that such importers qualify for and participate in the monthly aggregate programme (which would allow the importers to pay customs duties etc on a monthly basis) and collateral programme (allowing the importers to delay payment of customs duties etc for up to 15 days).

Challenge

Where can customs decisions be challenged in your jurisdiction? What are the procedures?

If the KCS issues a notice prior to the imposition of customs duties, an importer may appeal such pre-imposition to the Customs Appeal Committee (CA Committee), which is a committee composed of high-ranking customs office officials and civilian experts that hears Korean importers’ grievances regarding KCS’s expected duty impositions. A Korean importer may appeal the pre-imposition to the CA Committee within 30 days upon receiving the pre-imposition notice.

If the CA Committee decides to adopt the KCS’s pre-imposition, the KCS will then issue a final imposition notice. In such case, the Korean importer would be required to pay the additional duties and other taxes as indicated in the final imposition notice within 15 days after the receipt thereof, regardless of whether the importer decides to further appeal the KCS’s decision. Appeal against the pre-imposition notice to the CA Committee is an optional remedy to taxpayers (ie, is not a mandatory procedure). If taxpayers decide not to appeal to the CA Committee, KCS will issue the final imposition notice.

After paying the additional imposition as set forth in the final imposition notice, the next step is to appeal the final imposition to the Tax Tribunal (TT), the Board of Audit and Inspection of Korea (BAI) or the KCS. For practical reasons, however, taxpayers typically choose to appeal to the TT because the KCS is likely to uphold the decisions made by regional customs offices. Any appeal before the TT must be filed no later than 90 days after receiving the final imposition notice. Such appeal to the TT, BAI or KCS is a mandatory preliminary procedure before initiating an administrative litigation (ie, taxpayers must appeal to the TT, BAI or KCS before filing complaint to court).

The TT is a quasi-judiciary body under the jurisdiction of the Prime Minister’s Office, separate from the KCS. A final determination from the TT is made by a panel of four members, which is composed of two senior government officials associated with the MOSF (which has jurisdiction over the KCS authorities) and two civilian experts. The TT is statutorily required to make its decision within three months from the date of filing an application for appeal. In practice, however, a typical TT proceeding takes much longer than three months, and in many cases more than one year, depending on the TT’s caseload and the complexity of the issues raised in the appeal.

Finally, a Korean importer may appeal the decision made by the TT to the administrative court, the High Court and ultimately the Supreme Court of Korea.

Trade barriers

Government authorities

What government office handles complaints from domestic exporters against foreign trade barriers at the WTO or under other agreements?

The KTC and the Trade Dispute Settlement Division of MOTIE (www.motie.go.kr) are primarily responsible for receiving grievances from domestic exporters and interested parties and handling complaints against foreign trade barriers on both substantial and procedural matters, although other relevant ministries or government agencies may also be involved with regard to substantial matters of the complaints. For instance, in the case of agricultural products, the Ministry of Agriculture, Food, and Rural Affairs, and in the case of standards, the Korean Agency for Technology and Standards, is involved in the complaint procedure.

Complaint filing procedure

What is the procedure for filing a complaint against a foreign trade barrier?

Under article 25-2 of the Act on the Investigation of Unfair International Trade Practices and Remedy against Injury of Industry (the Act), the KTC may conduct an investigation on whether the domestic industry producing the specific goods or services suffers, or is feared to suffer, any injury due to the systems and practices of the trade counterparts that violate international trade norms such as WTO Agreements. According to article 25 of the Decree of the Act, the procedures are followed as below.

First, a person who intends to file an application for an investigation into injury by foreign trade barriers shall submit to the KTC an application, accompanied by the materials verifying the details.

Second, where the KTC is applied to for an investigation into injury, it shall decide whether to commence the investigation into injury within 60 days from the date of receipt of the application and the KTC has decided whether to commence the investigation into injury, it shall notify the applicant of the details, and it shall notify the government of the trading partner country of the details only if it has decided to investigate into injury and publish such fact in the Official Gazette.

Third, the KTC shall judge whether the domestic industry producing goods or services suffers any injury or threat thereof, due to the system and practices of the trading partner country within one year from the date of decision to commence the investigation into injury. When the KTC has judged as a result of investigation that the domestic industry suffers or has concerns over suffering injury, it may recommend the head of related central administrative agency to implement the measures necessary for corrections of the details of violations of the international trade norms by the trade counterparts. Necessary measures pursuant to article 25-3 of the Act means the following:

  • the execution of bilateral consultation with the trading partner country;
  • the execution of improvement procedures for the system and practices of the trading partner country through the World Trade Organization etc; and
  • the execution of measures necessary for the correction of violation of international trade norms by the trading partner country.

Since the above investigation procedure was established in 2004, no single investigation into foreign trade barriers has yet been initiated.

Meanwhile, a complaint to the WTO Dispute Settlement Body or other forum may be processed through the following procedure. First, stakeholders or associations of those who are injured or to be injured by trade barriers etc request the filing of a complaint to MOTIE. Even if there is no such action, the government can ex officio consider whether to file a complaint. Upon receipt of the request to file a complaint, the Trade Dispute Settlement Division of MOTIE will examine the need for the complaint and the chance of winning the case, together with the relevant departments, and report to a superior authority. If the opinion is made regarding the complaint through internal approval by MOTIE, the government’s official position on the complaint will be decided at the Ministerial Meeting on International Economic Affairs presided over by the Minister of Strategy and Finance and Deputy Prime Minister of Economy. If the decision is made at the Ministerial Meeting on International Economic Affairs, a request for a consultation, commencing the dispute settlement procedure, will be made to the WTO through the diplomatic missions abroad, including the Permanent Mission of the Republic of Korea in Geneva.

Grounds for investigation

What will the authority consider when deciding whether to begin an investigation?

Standards for such investigation are not expressly stipulated and are left to the discretion of the authorities. In general, the authorities first examine the need to initiate the investigation from a legal point of view and examine the implications of the investigation for diplomatic and economic relations with the country concerned.

Measures against foreign trade barriers

What measures outside the WTO may the authority unilaterally take against a foreign trade barrier? Are any such measures currently in force?

Korea does not take unilateral trade measures against foreign trade barriers that surpass the WTO framework, nor would specific statutory guidelines exist to allow unilateral actions outside of the WTO.

Private-sector support

What support does the government expect from the private sector to bring a WTO case?

Based on past cases where Korea was involved as a petitioner or defendant, the Korean government has been provided from the private sector involved in the WTO proceedings with some financial support in terms of legal fees and translation costs. It appears that the Korean government needs the support of the private sector for the time being due to restraints on the budget for WTO dispute settlement proceedings.

Notable non-tariff barriers

What notable trade barriers other than retaliatory measures does your country impose on imports?

The Korean government takes the position that it does not maintain any trade barrier that is inconsistent with its obligations under the WTO Agreements. Some foreign governments may, however, disagree with this claim. For example, Japan has challenged some of Korea’s import bans, and testing and certification requirements for radio-nuclides, which the Korean government said was necessary to protect Korean consumers from radioactive pollutant risks. In addition, several measures, including a ban on exporting the local mapping data to foreign companies and environmental measures, are being criticised by some foreign governments.

Export controls

General controls

What general controls are imposed on exports?

All goods intended for export must undergo export clearance procedures. These clearance procedures include declaring the goods intended for export to the KCS and obtaining acceptance of the export declaration by the KCS, as well as loading the goods for transportation between Korea and the importing foreign country. Any person who intends to export goods must file an export declaration with and receive acceptance from the head of the customs office having jurisdiction over the location of the relevant goods before loading the goods for transportation.

Separately, exports of ‘strategic items’ and ‘strategic technology’ (collectively ‘strategic items’) require approval from the relevant authorities for purposes of maintaining international peace and security in accordance with multinational strategic materials export control regimes.

Also, the Korean government controls exports of ‘national core technologies’ under the Act on Prevention of Divulgence and Protection of Industrial Technology.

Government authorities

Which authorities handle the controls?

MOTIE has authority over exports of strategic items under the Foreign Trade Act. Also, MOTIE has authority over exports of national core technologies under the Act on Prevention of Divulgence and Protection of Industrial Technology.

The Defence Acquisition Program Administration (www.dapa.go.kr) is responsible for controlling exports of certain defence materials and major defence industry materials designated as strategic items under the Defence Acquisition Program Act.

The Nuclear Safety and Security Commission (NSASC, www.nssc.go.kr) is responsible for controlling exports of certain atomic-related materials designated as strategic items under the Nuclear Safety Act.

The KCS (www.customs.go.kr) has authority over export clearance procedures under the Customs Act.

Special controls

Are separate controls imposed on specific products? Is a licence required to export such products? Give details.

As mentioned above, the Korean government requires a licence prior to the export of strategic items, which include dual-use equipment, military equipment and satellites. The Dual-use Control List has 10 categories of goods and is regularly updated to incorporate resolutions made by the relevant multinational treaties. These 10 categories are as follows:

  • category 1: Special materials and related equipment;
  • category 2: Materials processing;
  • category 3: Electronics;
  • category 4: Computers;
  • category 5: Telecommunications and information security;
  • category 6: Sensors and lasers;
  • category 7: Navigation and avionics;
  • category 8: Marine;
  • category 9: Aerospace and propulsion; and
  • category 0: Nuclear materials, facilities and equipment.

Categories 1 to 9 are controlled by MOTIE, while category 0 (nuclear materials, facilities and equipment) is controlled by the NSASC.

A licence may also be required under end-use controls, which apply to otherwise non-controlled goods to be supplied to an end user where there are concerns about possible end use as weapons of mass destruction.

Among the strategic items, defence materials and major defence industry materials included in the Military Goods Control List are controlled by the Defence Acquisition Program Administration. Lastly, certain products shipped to North Korea require approval from the Ministry of Unification.

Supply chain security

Has your jurisdiction implemented the WCO’s SAFE Framework of Standards? Does it have an AEO programme or similar?

Yes. Korea implemented the WCO’s SAFE Framework of Standards (which was established in June 2005) and amended provisions of the Customs Act in January 2008 to introduce the AEO programme. The KCS’s AEO programme was first implemented in April 2009. So far, Korea has executed AEO Mutual Recognition Arrangements (MRAs) with 14 countries, including, among others, the US, Japan and China, allowing participants of the KCS’s AEO programme to take advantage of the benefits accorded under the similar programmes implemented by MRA countries. In total, nine parties (exporters, importers, customs brokers, warehouse operators, transporters, freight forwarders, sea carriers, air carriers and terminal operators) have been designated under the AEO programme.

Applicable countries

Where is information on countries subject to export controls listed?

The Korean government’s export controls on strategic items apply equally to all countries.

The Foreign Trade Act merely makes a distinction between exports to Zone A and Zone B countries. Zone A countries include countries that are signatories to the major multinational regimes. Currently, 29 countries are classified as Zone A countries. All other countries are classified as Zone B countries. Since 2007, a licence is required to export strategic items from Korea to any country (including both Zone A and B countries). Approval for Zone A countries, however, is rather routinely granted, while approval for Zone B countries typically involves substantial and lengthy review by MOTIE and is not readily granted.

Named persons and institutions

Does your jurisdiction have a scheme restricting or banning exports to named persons and institutions abroad? Give details.

The Korean government publishes and updates a Denial List (www.yestrade.go.kr) to restrict or ban exports of strategic items to certain named persons and institutions designated by the UN Security Council or other multinational export control regimes. Exports to those individuals and institutes are subject to scrutinised review by the relevant authority.

Exports of non-strategic items to certain persons and institutions in countries sanctioned by the UN Security Council (the list of which can also be found at www.yestrade.go.kr) require a catch-all licence.

Penalties

What are the possible penalties for violation of export controls?

In the event that strategic items are exported without an export licence, an exporter may be subject to certain criminal sanctions, the severity of which may depend on specific purposes under which the illegal exports were made. For example, if illegal exports were made for purposes of international proliferation, the applicable criminal sanctions are imprisonment for up to seven years or a criminal fine of up to five times the transaction value or both. If the illegal exports were made for other purposes, the applicable sanctions are imprisonment for up to five years or a criminal fine of up to three times the transaction value.

In addition to the foregoing, exporters who violate export control regulations may be prohibited from exporting strategic items for a period of up to three years.

In the case of unauthorised illegal export, or false or fraudulent acquisition, an exporter must receive educational sanctions for a maximum of eight hours. If an exporter violates the duty to keep documents or fails to comply with educational sanctions, an administrative fine of 10 million won or less may be imposed.

For a violation of the Act on Prevention of Divulgence and Protection of Industrial Technology requirements relating to ‘national core technologies’, certain aggravated criminal sanctions will apply (eg, imprisonment for up to 15 years or criminal fine of up to 1.5 billion won if the violation was for purposes of using the industrial technology in a foreign country, or imprisonment for seven years or a criminal fine of up to 0.7 billion won if the illegal export was made for other purposes).

Financial and other sanctions and trade embargoes

Government authorities

What government offices impose sanctions and embargoes?

In Korea, financial sanctions are enforced by the MOSF via Foreign Exchange Transaction Act and MOSF Notification, and trade embargoes are generally imposed by MOTIE via the Foreign Trade Act and MOTIE Notification.

Applicable countries

What countries are currently the subject of sanctions or embargoes by your country?

Under MOTIE Notification No. 2017-169, exports of designated arms and related items to the following countries are prohibited: Somalia, DR Congo, Sudan, Eritrea, Lebanon, Libya, Syria, North Korea, Central African Republic and Yemen.

The Korean government imposes strong controls on trade with North Korea, and, therefore, exports of any and all items intended for trading with North Korea may be restricted (via the Inter-Korean Exchange and Cooperation Act). Accordingly, anyone who intends to contact North Korea or its people or engage in trade with North Korea, as a matter of general principle, should obtain prior approval from the Ministry of Unification (www.tongtong.go.kr).

Specific individuals and companies

Are individuals or specific companies subject to financial sanctions?

Korea imposes sanctions on certain entities and individuals as designated by the UN Security Council. Under MOSF Notification No. 2017-39, the following entities and individuals are subject to the Bank of Korea prior approval requirement:

  • those in Somalia and Eritrea as designated by the UN Security Council;
  • those connected to the Islamic State of Iraq and the Levant (ISIL) or Al-Qaeda as designated by the UN Security Council;
  • those connected to the Saddam Hussein regime as designated by the UN Security Council;
  • those in Liberia as designated by the UN Security Council;
  • those in the DR Congo as designated by the UN Security Council;
  • those in the Republic of Cote d’Ivoire as designated by the UN Security Council;
  • those in Sudan as designated by the UN Security Council;
  • those in North Korea as designated by the UN Security Council;
  • those in Iran as designated by the UN Security Council;
  • those connected to the Gaddafi regime as designated by the UN Security Council;
  • those connected to the Afghanistan Taliban as designated by the UN Security Council;
  • those in the Central African Republic as designated by the UN Security Council;
  • those in Yemen as designated by the UN Security Council;
  • those in the Republic of South Sudan as designated by the UN Security Council;
  • those designated by the US President’s Executive Order No. 13224 and separately designed by the MOSF;
  • those designated by the US President’s Executive Order No. 13382 and separately designed by the MOSF;
  • those designated by the US President’s Executive Order No. 13573, No. 13582 and separately designed by the MOSF; and
  • those designated by the Council of the European Union and separately designated by the MOSF.

Other relevant issues

Other trade remedies and controls

Describe any trade remedy measures, import or export controls not covered above that are particular to your jurisdiction.

There are none other than those discussed above.

UPDATE & TRENDS

Recent developments

Are there any emerging trends or hot topics in trade and customs law and policy in your jurisdiction?What effects are Brexit, the withdrawal of the US from TPP, the slowdown of TTIP, RCEP; and negotiations of FTAs (such as the EU–Japan Free Trade Agreement) expected to have on your jurisdiction?

No updates at this time.