History and regulation of customs broker in Korea

After Korea was liberated from Japanese colonialism on Aug. 15th, 1945, in Nov. 1949, the first CUSTOMS ACT was enacted.

The law defined the person entitled to perform customs clearance as 세관화물취급인 literally translated to Customs Goods Handler. The customs clearance system was the same as the one under Japanese rule.

As the Korean economy and trade grew, the CUSTOMS ACT (관세법) was amended, and the term referring to customs broker in Korean was changed to 통관업자 and to 관세사 literally translated to Customs Clearance Operator and Customs Duty Specialist respectively. Along with the term change, the scope of work that a customs broker was entitled to perform changed drastically.

In 1995, a new law named LICENSED CUSTOMS BROKER ACT (관세사법, “LCBA”) was enacted. Since then, the law regulates rights and constraints of customs brokers.

Year 1995 is crucial from the perspective of customs clearance as well. It was when EDI Customs Declaration started.

The picture above shows you what the customs broker was entitled to perform under each regime.

At the early stages, it was only the customs clearance. But now it is much more.

 

In the early years of customs broker’s history, it was impossible for a normal person to become a customs broker as below. The third grade is a high rank. Of course, there were only a few.

Since 1976, career background was not necessary to become a customs broker but, before the LCBA took effect, no one could tell when the examination would be held. Examination started to be announced by the Commissioner of the Korea Customs Service according to Article 10 of the ENFORCEMENT DECREE OF THE LICENSED CUSTOMS BROKER ACT (관세사법시행령). 

First-stage examination subject (multiple choice)	Second-stage examination subject (essay question)
Customs Act (including Act On Special Cases Of The Customs Act For The Implementation Of Free Trade Agreements) & Trade English Tax Act (Value-added Tax Act, Individual Consumption Tax Act, and Liquor Tax Act) & Accounting	Customs Act Tariff Schedule & Study of Merchandise Customs Valuation Trade Practices (including international conventions related to trade like URC 522, MIA, ICC Cargo Clauses, Hague Rules, Hague Visby Rules, Hamburg Rules, Rotterdam Rules, Warsaw Convention, Montreal Convention, UCC, SGA, URR 725, etc., Foreign Trade Act, and Foreign Exchange Transactions Act)

 

As you can guess from the pass rate below, the examination itself is not easy. 

Article 2 of the LCBA prescribes what services a customs broker is entitled to perform. The red ones are the services that only the customs brokers can perform and the violet ones are not.   

LICENSED CUSTOMS BROKER ACT Article 2 (Services of Licensed Customs Brokers) Each licensed customs broker shall perform the following services commissioned by clients: <Amended on Dec. 30, 2017> 1. Classification of Harmonized System codes and tariff rates, ascertainment of dutiable values and calculation of customs duties on imports or exports; 2.   Voluntary review and preparation of the report thereon under Article 38 (3) of the Customs Act; 3.  Declarations, etc. of exportation, importation or return of goods or transportation thereof to any foreign country or the Republic of Korea and implementation of the procedures related thereto under the Customs Act or other customs-related statutes; 4.    Applications for certification or confirmation to certify that goods to be exported or imported are permitted, approved or labeled or that other conditions are met, under Article 226 of the Customs Act; 5.    Raising objections and applying for review and trial on behalf of clients under the Customs Act; 6.    Counseling or advice on customs; 7.  Counseling or advice on declarations of exportation or importation under Articles 241 and 244 of the Customs Act; 8.   Requesting refunds on behalf of clients under the Customs Act and the Act on Special Cases concerning the Refund of Customs Duties Levied on Raw Materials for Export; 9. Providing opinions on investigations, dispositions, etc. by customs houses for and on behalf of shippers; 10. Declarations, reporting, applications, etc. and implementation of the procedures related thereto under the Customs Act, other than those prescribed in subparagraphs 3, 4 and 5 of this Article; 11. Participating in investigations of origin and presenting opinions under Articles 17 and 20 of the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements, on behalf of the Commissioner of the Korea Customs Service or the head of a customs house.   Article 3 (Restrictions on Customs Clearance Services) (1) No person, other than a licensed customs broker or customs service corporation referred to in this Act or a customs clearance handling corporation, etc. referred to in Article 19 (4) of this Act, may perform services referred to in Article 2 commissioned by clients (hereinafter referred to as "customs clearance services"): Provided, That this shall not apply to services referred to in subparagraphs 5, 6, and 9 through 11 of Article 2 as are otherwise provided for in the Customs Act or other statutes and those referred to in subparagraphs 4 and 7 of Article 2. <Amended on Dec. 30, 2017> (2)  No person shall recommend or assist a licensed customs broker or any other entity referred to in paragraph (1) of this Article to perform the services referred to in Article 2 in order to receive or request payment for such recommendation or assistance. (3)  No person, other than a licensed customs broker, shall share in any remuneration or other profit derived from rendering services which may be performed only by the licensed customs broker under this Act.

 

It is really interesting for me to solve clients’ issues like customs valuation, tariff classification, import/export requirements, duty exemption/reduction, duty refund, country of origin, FTA, foreign exchange transaction, labeling, and so on.

It was not easy to become a licensed customs broker in Korea but it’s worth my time and effort.