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Expert: Be aware of customs requirement on FTA deal
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CHINESE exporters should be aware of specific customs requirements imposed by South Korean authorities as a free trade agreement between the two countries is poised to boost bilateral trade, an expert said.
After more than two years of negotiations, China and South Korea have initialed a free trade deal in February to eliminate tariffs on over 90 percent of goods across 17 areas over two decades.
Although some ultra-sensitive items such as agricultural and automotive products are excluded, the deal is considered as comprehensive as it will provide a high level of mutual market access to a range of areas from goods and services to government procurement.
“From China’s perspective, this will be the widest FTA that covers most of products shipped to South Korea,” Hoon Sung, head of FTA of the ONESOURCE Global Trade business segment of Thomson Reuters, told Shanghai Daily in a recent interview, “Korean companies will also benefit a lot from the deal because China is our largest trading partner.”
Hoon cautioned that although Chinese exporters already have experiences in utilizing FTAs between China and other countries, they should be prepared for some of unique non-tariff challenges in South Korea.
“Korean customs are stricter than other countries in terms of rules of origin,” Hoon said, “Only goods originated in China will benefit from preferential tariffs. Beneficiaries may be required to verify the country of origin even years after a deal is completed.”
“Companies failed to provide evidence of origin will face sever penalties,” Hoon added.
The number of requests for origin verification from Korean authorities has increased by 400 percent since Korea signed FTAs with the European Union and the US, according to Hoon.
Hoon suggested Chinese exporters to retain documents related to country of origin verification for at least three years to prepare for future inspection.
Last year, bilateral trade between the two countries was worth about $290.5 billion, rising 5.9 percent from a year earlier, data from China's General Administration of Customs showed.
Local media in South Korea reported earlier that the two countries are seeking to officially ink the deal this month and to implement it by the end of 2015.
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