Who is eligible for comprehensive export license of strategic items?

Except for some special cases, exporters shall obtain export license before filing an export declaration of strategic goods.

 

In principle, documents as below shall be attached to the application for export license of strategic items.

-        Letter of Credit, Contract, Commercial Invoice, or Proforma Invoice

-        Statement of Classification

-        Import Certificate issued by the government of the importing country, or Statement by Ultimate Consignee and Purchaser

-        Exporter’s Pledge

-        End-User Statement

-        An official document (such as a business registration or tax certificate) issued by the government of the importing country to confirm the business viability of the end-user.

-        Other documents that the export licensing authority deems necessary.

 

To manage strategic items efficiently, the Korean government classifies countries just as below – Zone Ga-1, 2 and Zone Na-1, 2:


In the case of exporting dual-use goods to the country of Zone Ga-1, only the statement of classification and the business registration or tax certificate of end-user may be attached to the application, and it doesn’t take long to receive the export license even though the official time of processing export license is 15 days.

 

However, in the case of exporting to other countries, if requested by the export licensing authority to supplement documents, it may take more than 15 days to obtain the export license of strategic goods.

 

If an export license can be valid for multiple shipments, it would be much easier to manage lead time. In Korea, there are two types of comprehensive export license – user-based and item-based, which can be valid for 2 or 3 years.

 

In the case of user comprehensive export license, purchaser, country of destination, ultimate consignee, and relevant items are fixed. But the exporter can decide whether to export and how many, considering the end user’s use.

 

In the case of item comprehensive export license, purchaser, country of final destination, ultimate consignee, end user, and end use are fixed. But the exporter can decide what to export, whether to export, and how many.

 

As the comprehensive export license gives much autonomy to the exporter, the eligibility to apply for the comprehensive export license is limited to exporters participating in Compliance Program (CP), who are called self-compliance traders.

 

There are three types of CP grade – A, AA, AAA. The biggest difference between A and AA is that AA has detailed internal manual and maintains it up to date while A doesn’t. The biggest difference between AA and AAA is that AAA has an internal organization exclusively assigned for the management of strategic items while AA doesn’t. Only the exporter who has been designated as AA self-compliance trader at least one year before is qualified to apply for AAA grade. So, AA is the highest grade that a new CP candidate may apply for.

 

As A-grade self-compliance trader can only apply for user comprehensive export license for exportation to Zone Ga-1 countries, if it is intended to reduce lead time in exporting to Zone Ga-2 or Na-1 countries, CP candidates shall aim at AA grade from the beginning.

 

A

AA

AAA

User comprehensive export license

Zone Ga-1 (Valid for 3 years)

Zone Ga-1 (Valid for 3 years)

Zone Ga-2 (Valid for 2 years)

Zone Na-1 (Valid for 2 years)

Zone Ga-1 (Valid for 3 years)

Zone Ga-2 (Valid for 3 years)

Zone Na-1 (Valid for 3 years)

Item comprehensive export license

.

Zone Ga-1 (Valid for 3 years)

 

Zone Ga-1 (Valid for 3 years)

Zone Ga-2 (Valid for 3 years)

Zone Na-1 (Valid for 3 years)

 

In order to participate in the CP, the application for designation of self-compliance trader shall be filed with the MOTIE (Ministry of Trade, Industry and Energy). MOTIE’s examination criteria are 1.  Export Management Organization and Internal Regulation, 2. CEO’s Willingness to Compliance, 3. Export Transaction Management, 4.  Shipping Management, 5. Education, 6. Audit, 7. Record Management, 8. Report on Breaches and Corrective Measures, and 10. Information Security Management. Both paper and on-site examination are performed.

 

Although the official time of processing the application for designation of self-compliance trader is 40 days, the period for supplementing the application is not counted in the 40 days. So, it usually takes several months for a CP candidate to become a self-compliance trader, receiving the Certificate of Internal Compliance Program from the MOTIE.

 

The Certificate of Internal Compliance Program is valid for 3 years. During the valid period, self-compliance traders shall submit the report on performance and operation regularly.

 

A

AA

AAA

Report on performance

Semi-annually

Semi-annually

Annually

Report on operation

Annually

Annually

Annually

 

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