EU-KOREA FREE TRADE AGREEMENT Customs Requirements

EU-KOREA FREE TRADE AGREEMENT A quick recap - Entered into Force on 1 July 2011 Provides major new market opportunities for EU and South Korean exporters

ENTITLEMENT TO PREFERENTIAL RATES OF DUTY Certain conditions must be met. These concern: Documentation Transport Origin

DOCUMENTATION Origin Declaration – inserted by the exporter declaration on invoice or other commercial document: The exporter of the products covered by this document (customs authorization No…… ) declares that, except where otherwise clearly indicated, these products are of ........... preferential origin. …………………………………………………………….............................................( Place and date) ...…………………………………………………………………….............................. (Signature of the exporter, in addition the name of the person signing the declaration has to be indicated in clear script)

DOCUMENTATION CONTINUED Any exporter in the EU or KR can issue an origin declaration where the value of the consignment is no more than €6000 (£5700) Approved exporters in the EU or KR can issue origin declarations for consignments with a value in excess of £5700

TRANSPORT Goods should normally be transported directly from between EU and KR and vice versa However: Transport through intermediate countries, say for geographical or transport reasons, acceptable if: Goods remain under customs control in country of transit storage and only undergo processes, such as unloading, reloading & operations designed to keep them in good condition (i.e. they do not undergo any operations which could make them lose their EU or KR preferential origin)

ORIGIN RULES Around 300 Product specific rules which vary according to the product concerned and are based on the first 4 digits of the commodity code the product concerned. The rules can essentially be broken down into 4 types: Wholly produced Change of Tariff Heading (CTH) Process Percentage

ORIGIN RULE EXAMPLES Wholly Obtained – i.e. Fruit & veg. grown and harvested in the EU or KR Change of Tariff Heading – wood in Tariff Chapter 4403 can be imported to produce a table in Chapter 9403 Process – T-shirt in Heading 6109 - yarn can be imported, but it must be knitted into cloth and made up into a finished garment Percentage – Watch in Chapter 91 - materials, components and parts can be imported, but their total value must not be any more than 40% of the ex-works (Factory gate) price of the watch

RESPONSIBILITIES OF IMPORTERS Ensuring compliance with the rules of origin Before claiming a preferential rate of customs duty on the import declaration check that the products concerned have met the appropriate rules of origin Advise your supplier of the rule covering the goods and ask him to confirm in writing that it has been met Check the authenticity of the Approved Exporter number included in the body of the origin declaration via the facility on the Korean Customs Website at: http://english.customs.go.kr/kcsweb/user.tdf?a=user.approvedexporter.ApprovedExporterApp&c=9001&mc=ENGLISH_INFORMATION_APPROVED Section 2 of HMRC Notice 826 – “Tariff Preference: Imports” tells you more about how you can ensure that your goods meet the rules You will be liable for the full rate of customs duty payable if post clearance checks establish that your good did not qualify for the preference claimed or that you were not in possession of a valid origin declaration

RESPONSIBILITIES OF IMPORTERS Holding the necessary proof of origin You must hold a valid origin declaration issued by your Korean Supplier, for presentation to HMRC if necessary, at the time you or your shipping agent/freight forwarder makes the claim to the preferential rate of duty on the customs import declaration If you do not hold the declaration at the time the declaration is made and the goods are released from customs control, you will have to provide security for the full rate of customs duty payable, pending receipt and presentation of the document to HMRC.

RESPONSIBILITIES OF IMPORTERS Holding evidence of compliance with the direct transport rule You must hold, for presentation to HMRC if necessary, documents to support compliance with the direct transport rule. They can take the form of : Transport documents, such as bills of lading showing that the goods were transported between South Korea and the EU – these documents must cover all legs of the journey, particularly where consignments are consolidated into larger containers en route A certificate of non-manipulation issued by the Customs authorities in the country of transit/storage Any other documentation which clearly shows that the goods which have arrived in the EU are the same as those which left South Korea

RESPONSIBILITIES OF EXPORTERS Providing Origin Declarations You will have to provide your Korean customer with an origin declaration in the prescribed format If you only exports goods in consignments with a value of less that €6000 (£5700) you do not have to become an approved exporter However, you will have to be approved by HMRC to issue origin declarations for consignments with a value of more than €6000 (£5700)

APPLYING TO BE AN APPROVED EXPORTER You must complete Form C1454 which is available for downloading and completion from the HMRC website You will need to: Establish and insert in the Form the Commodity Code for the goods you are exporting to Korea under Preference Find and insert in the Form the product specific origin rule for the product. This can be found in HMRC Notice 828 or in the Guide to the FTA which we hae published on our website Explain in Box 8 of Form how the goods met the rules – i.e. because they were wholly obtained in the EU and no imported (non-originating) materials were used; imported materials changed tariff heading during the manufacturing process; or imported materials were used, but their value was no more that X% of the ex-works price of the finished product Confirm that you hold Supplier’s declarations if you were not the actual manufacturer of the goods concerned

RESPONSIBILITIES OF EXPORTERS Holding documentary evidence to support the preferential origin of your goods You must hold, and retain for 3 years, documentary evidence to support the origin of the goods which you have exported to KR under preferential origin declarations. This can take the form of for example: Commercial documents/records providing details of the processes undertaken and the origin and value of materials used

RESPONSIBILITIES OF EXPORTERS Holding Supplier’s declarations If you are not the manufacturer of the goods you are exporting to Korea under cover of origin declarations you must obtain, and retain for 3 years, declarations from you supplier in respect of the preferential origin of your goods Section 8 of HMRC Notice 827- “EU Preferences: Export Procedures” tells you more about Supplier’s declarations and when they are required

PUBLICITY A “Guide to the EU’s new Reciprocal Preferential Trade Agreement with South Korea” Customs Information Papers (CIPs): (11)15, (11)50, (11)62, (11)67, (11)76 and (11)83 All of which can be found on the HMRC website at – http://www.hmrc.gov.uk

THANK YOU Nicholas Clappen Nicholas. clappen@hmrc. gsi. gov THANK YOU Nicholas Clappen Nicholas.clappen@hmrc.gsi.gov.uk Tel 01702 361959 Yvette Belcher Yvette.belcher@hmrc.gsi.gov.uk Tel 01702 367721