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Trading with Korea?
jlamadeleine • Nov 30, 2015
Determine if you qualify for Free Trade benefits:
More and more importers and exporters are taking advantage of free trade agreements. There are currently 14 active free trade agreements with the United States involving 20 different countries. The Korea-United States Free Trade Agreement (KORUS), provides free trade between the United States and Korea for qualifying goods. If you are importing from or exporting to Korea, are you taking advantage of KORUS? If not, why? If so, there are some guidelines that you should be sure you are aware of and to which you should be adhering.
Simply participating in trade with Korea does not qualify you for free entry. In order to qualify for the benefits offered, an importer and/or exporter needs to consider the rules of origin of the article. An article can qualify one of two ways:
- Is that item wholly obtained or produced in Korea or the U.S? Is it a natural resource of the country (i.e. an agricultural product or mineral) or 100% made up of those articles? If so, it does in fact qualify for duty free trade between the two participating countries.
- Does that item meet the rules of origin based on either a “tariff shift” or “regional value content” assessment? These are dictated by the Harmonized Tariff Schedule of the US and must be reviewed individually by item according to their tariff classification. Again, if your product adheres to the rules set forth in the origin determination, you may participate in the free trade benefit.
Once you have determined that your merchandise qualifies for free trade with Korea (or any other country for that matter), it is the responsibility of the importer/exporter to create and maintain documented proof. In order to conduct the proper analysis and create the necessary supporting data or documentation, it is imperative that the importer/exporter have not only a reasonable knowledge of the merchandise, but also of KORUS.
Creating and maintaining the necessary back up information is cumbersome and tedious, but absolutely necessary. United States Customs as well as Korean Customs can come back at any time and request your documented proof of qualification of and compliance with KORUS. Are you prepared to provide this information to Customs upon request?
Upon its inception in March of 2012, KORUS has allowed 80% of US goods going into Korea, and vice versa, to be done so without a duty burden. While that percentage has grown, the number of importers/exporters taking advantage has grown as well. Are you one of them? If you feel that you may benefit from this free trade situation and are not sure of where to get started, contact ITM today. We work with many companies setting up and maintaining various free trade programs with a number of different countries and commodities. We can help you too!
DOWNLOAD OUR GUIDE TO FREE TRADE BELOW:
In the intricate world of international trade, various mechanisms exist to facilitate smoother transactions and encourage commerce across borders. One such mechanism is duty drawback, a process that offers significant benefits to businesses engaged in importing and exporting goods. In this guide, we will delve into the concept of duty drawback, its benefits, and how businesses can leverage it to their advantage.
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We are excited to announce our first monthly newsletter! Our goal of this new endeavor is to keep our clients and the companies in our network up to date with all information regarding drawback, CBP and more!
A free trade agreement (FTA) is an agreement between two or more countries where the countries agree on certain obligations that affect trade in goods. Currently, there are 14 Free Trade Agreements in effect in the U.S. with 20 different countries.
An importer collects and maintains the information to support the FTA qualification. An exporter from the U.S. is required to complete a declaration verifying that their goods qualify for free trade with the participating country.
The rules associate with FTAs are complicated and the analysis is intricate. There are multiple steps to the process and each one must be completed in order to move onto the next.
1. Classify the product according to the HTSUS in order to determine the rule of
origin for the specific finished product
2. Choose a preference criteria from the 4 available.
3. Use the rule of origin to determine the qualification of the finished good.
How proper classification can equate to big savings for your company.
Duty Drawback is a refund from Customs, for 99% of the duties paid on imported materials that are subsequently exported, destroyed or used in the manufacture of exported goods. Today, only about 25 percent of eligible duty is being recovered. This means that $5 billion dollars goes unclaimed for drawback, and that money might be yours. So, how do you know if you are a candidate for a lucrative duty drawback program?
The new drawback regulations are written and will take effect on February 24, 2019. That’s less than a month from now!!
ITM is prepared to continue filing on behalf of all of our clients and we are excited about the possibility of new opportunities that will now exist under the new guidelines.
Customs has maintained that the ultimate goal of TFTEA is to streamline and simplifying the drawback process. At this time, there are no formal regulations in effect, but the guidelines have been released and reviewed extensively by the trade. After much conversation and deliberation, the trade was allowed and has formally submitted a response to Customs on these proposed regulations and now waits the allotted 90 days to find out how they have been received and what the final determinations will be.
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