Priorities in application of tariff rates

There are various types of tariff rates and it can be difficult to determine what tariff rate shall apply in importing my goods. Article 50 of the CUSTOMS ACT (관세법) stipulates the priorities in application of tariff rates but it is not easily understood.

CUSTOMS ACT

Article 50 (Priorities in Application of Tariff Rates)

(1) Basic tariff rates and provisional tariff rates shall be governed by attached Schedules of Tariff Rates; and provisional tariff rates shall take priority over the basic tariff rates in the application thereof.

(2) Tariff rates referred to in subparagraph 3 of Article 49 shall take priority over tariff rates as shown in attached Schedules of Tariff Rates in the application according to the following order: <Amended on Dec. 31, 2018>

1.   Tariff rates under Articles 51, 57, 63, 65, 67-2, 68, and subparagraph 2 of Article 69;

2.   Tariff rates under Articles 73 and 74;

3.   Tariff rates under subparagraphs 1, 3 and 4 of Article 69, and Articles 71 and 72;

4.   Tariff rates under Article 76.

(3) Notwithstanding paragraph (2), tariff rates referred to in paragraph (2) 2 shall be preferentially applied only if such tariff rates are lower than basic tariff rates, provisional tariff rates and tariff rates referred to in paragraph (2) 3 and 4; and tariff rates under Article 71 among tariff rates referred to in paragraph (2) 3 shall be preferentially applied only if tariff rates under Article 71 are lower than tariff rates referred to in paragraph (2) 4: Provided, That the rates of tariff concessions made at a rate equivalent to the difference between domestic and foreign prices in tariff negotiations with an international organization under Article 73 and the rates of tariff concessions (including the rates of tariff concessions made to the market access quota) made to goods prescribed by Presidential Decree among agricultural, forest and livestock products to which a tariff concession was made at a rate higher than basic tariff rates in the process of opening the domestic market shall take priority over basic tariff rates and provisional tariff rates in the application thereof.

(4) The application of provisional tariff rates to goods subject to the application of provisional tariff rates in attached Schedules of Tariff Rates may be suspended, entirely or partially, as prescribed by Presidential Decree or provisional tariff rates may be raised or lowered to adjust the rate differential with basic tariff rates.

(5) In the application of the tariff rates referred to in subparagraph 3 of Article 49, in cases of specific customs duties in attached Schedules of Tariff Rates, an amount equivalent to the relevant tariff rate shall be applied.

 

Priorities in application of tariff rates can be summarized as below with tariff rate code.

No.

Tariff Rate Code

Priority

1

I/ K / T1/ T2

Apply first (in addition to the applicable tariff rate).

2

FTA Tariff rate (FCL, FSG, FEFCH, FEFIS, FEFNO, FAS, FIN, FEU, FGB, FPE, FUS, FTR, FAU, FCA, FCO, FCN, FVN, FNZ, FCECR, FCESV, FFCEHN, FCENI, FCEPA, FRCCN, FRCJP, FRCAS, FRCAU, FRCNZ)

Apply if tariff rate is lower than No. 3 through 7.

3

C/ D/ E/ G/ F/ N

Apply if tariff rate is lower than No. 4 through 7.

W1/ W2

Apply in priority to No. 6 and 7.

Apply if tariff rate is lower than No. 4 and 5.

4

L

Apply in priority to No. 5 through 7.

P

Apply if tariff rate is lower than No. 5.

Apply in priority to No. 6 and 7.

5

R

Apply in priority to No. 6 and 7.

6

B

Apply in priority to No. 7.

7

A

Apply if No. 1 through 6 are not applicable.

 

When filing an import declaration, a declarant shall choose the appropriate tariff rate code. Each tariff code above has following meaning:

Tariff Rate Code

Meaning

I

Anti-dumping tariffs under Article 51 of the CUSTOMS ACT

K

Emergency tariffs under Article 65 of the CUSTOMS ACT

T1

Special emergency tariffs under Article 68 of the CUSTOMS ACT (on the basis of import quantity)

T2

Special emergency tariffs under Article 68 of the CUSTOMS ACT (on the basis of import price)

FCL

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Chile, Convention: Korea-Chile FTA)

FSG

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Singapore, Convention: Korea-Singapore FTA)

FEFCH

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Switzerland or Liechtenstein, Convention: Korea- EFTA states FTA)

FEFIS

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Iceland, Convention: Korea- EFTA states FTA)

FEFNO

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Norway, Convention: Korea- EFTA states FTA)

FAS

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: ASEAN, Convention: Korea-ASEAN FTA)

FIN

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: India, Convention: Korea-India CEPA)

FEU

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: EU, Convention: Korea-EU FTA)

FGB

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: United Kingdom, Convention: Korea-United Kingdom FTA)

FPE

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Peru, Convention: Korea-Peru FTA)

FUS

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: USA, Convention: Korea-USA FTA)

FTR

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Turkey, Convention: Korea-Turkey FTA)

FAU

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Australia, Convention: Korea-Australia FTA)

FCA

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Canada, Convention: Korea-Canada FTA)

FCO

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Colombia, Convention: Korea-Colombia FTA)

FCN

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: China, Convention: Korea-China FTA)

FVN

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Viet Nam, Convention: Korea-Viet Nam FTA)

FNZ

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: New Zealand, Convention: Korea-New Zealand FTA)

FCECR

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Costa Rica, Convention: Korea-Central America FTA)

FCESV

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: El Salvador, Convention: Korea-Central America FTA)

FCEHN

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Honduras, Convention: Korea-Central America FTA)

FCENI

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Nicaragua, Convention: Korea-Central America FTA)

FCEPA

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Panama, Convention: Korea-Central America FTA)

FRCCN

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: China, Convention: Regional Comprehensive Economic Partnership Agreement)

FRCJP

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Japan, Convention: Regional Comprehensive Economic Partnership Agreement)

FRCAS

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: ASEAN, Convention: Regional Comprehensive Economic Partnership Agreement)

FRCAU

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: Australia, Convention: Regional Comprehensive Economic Partnership Agreement)

FRCNZ

Conventional tariffs under Article 4 of the FTA CUSTOMS ACT*

(County of origin: New Zealand, Convention: Regional Comprehensive Economic Partnership Agreement)

C

Concession tariffs applicable to industrial products, fishery products, and agricultural, forest and livestock products of simple concession under Article 73 of the CUSTOMS ACT pursuant to the Marrakesh Agreement Establishing the World Trade Organization

D

Concession tariffs under Article 73 of the CUSTOMS ACT pursuant to the Protocol Relating to Trade Negotiations Among Developing Countries (TNDC)

E

Concession tariffs under Article 73 of the CUSTOMS ACT pursuant to the Asia-Pacific Trade Agreement

G

Concession tariffs under Article 73 of the CUSTOMS ACT pursuant to the Global System of Trade Preference among Developing Countries (GSTP)

F

International cooperation tariffs under Article 73 of the CUSTOMS ACT

N

Beneficial tariffs under Article 74 of the CUSTOMS ACT

W1

Concession tariffs applicable to recommended agricultural, forest and livestock products to which a tariff concession was made at a rate equivalent to the difference between domestic and foreign prices or at a higher rate than the basic tariff rate with the opening of domestic market under Article 73 of the CUSTOMS ACT pursuant to the Marrakesh Agreement Establishing the World Trade Organization

W2

Concession tariffs applicable to non-recommended agricultural, forest and livestock products to which a tariff concession was made at a rate equivalent to the difference between domestic and foreign prices or at a higher rate than the basic tariff rate with the opening of domestic market under Article 73 of the CUSTOMS ACT pursuant to the Marrakesh Agreement Establishing the World Trade Organization

L

Adjusted tariffs under Article 69 of the CUSTOMS ACT

P

Quota tariffs under Article 71 of the CUSTOMS ACT

R

General preferential tariffs under Article 76 of the CUSTOMS ACT

B

Provisional tariffs under Article 49 of the CUSTOMS ACT

A

Basic tariffs under Article 49 of the CUSTOMS ACT

*Official name: ACT ON SPECIAL CASES OF THE CUSTOMS ACT FOR THE IMPLEMENTATION OF FREE TRADE AGREEMENTS (자유무역협정의 이행을 위한 관세법의 특례에 관한 법률)

 

At first, the priority table may seem overwhelming. However, as most HS Codes relate to a few types of tariff rates, it is not that difficult to determine the appropriate tariff rate code.

 

In general, to apply tariff rates lower than the basic tariff rate, relevant Certificate of Origin (CO) shall be presented. However, in applying concession tariffs pursuant to the Marrakesh Agreement Establishing the World Trade Organization [C] and international cooperation tariffs [F], CO is not required. (It suffices to confirm country of origin through commercial documents or country of origin marking)  Nonetheless, it should be kept in mind that “C”, which is usually lower than “A”, is applicable only to goods made in WTO member states.

 

Country of origin is one of data which shall be input into an import declaration. When it is found that “C” was applied to the goods not made in WTO member states during customs data analysis, Customs will request the change of tariff rate type, which may result in additional duties and interests.

Comments

  1. Seungmahn KimMarch 14, 2022 at 12:41 AM

    Nice posting to understand priority to apply correct tariff rate out of various rate types here in South Korea.

    ReplyDelete

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