Customs authority’s efforts to cope with climateflation

 


The quota tariffs stipulated in Article 71 of the CUSTOMS ACT (관세법) are flexible tariffs. They enable the application of tariff rates lower than the basic tariff rates when promoting the importation of specific goods is necessary, or higher than the basic tariff rates when suppressing importation of specific goods is required. Quota tariffs are frequently utilized to stabilize domestic prices of certain goods.

 

The items subject to quota tariffs and their applicable periods are promulgated under the Presidential Decree, ‘REGULATION ON THE APPLICATION OF QUOTA TARIFFS UNDER ARTICLE 71 OF THE CUSTOMS ACT (관세법 제71조에 따른 할당관세의 적용에 관한 규정).’ In 2024, only the quota tariffs lower than the basic tariff rates will apply. Depending on the items, quota tariffs apply to either the entire imported amount or a limited amount. When a limited amount is stipulated, a recommendation from the relevant authority is commonly required.

 

Korea is a county with a low food self-sufficiency rate (32% in 2022). Food is one of the main items subject to quota tariffs. It is expected that quota tariffs will be actively utilized in the future to cope with climateflation (climate + inflation: the increase in the prices of goods and services caused by the impacts of climate change).

 

To achieve the purpose of applying quota tariffs lower than the basic tariff rates, the relevant items should be promptly circulated in the domestic market. However, if the global prices of the items are steeply increasing, importers may choose other options instead of promptly completing customs clearance and distribution. If this happens, the government’s goal of promoting importation through the application of temporary lower tariff rates is hindered. In such cases, the government may impose an additional tax for delayed import declaration, as stipulated in Article 241 (4) of the CUSTOMS ACT.

CUSTOMS ACT

Article 241 (Declarations on Export, Import, or Return)

(4) When a person who imports or returns goods prescribed by Presidential Decree fails to file a declaration thereon within the period described in paragraph (3), the head of a customs office may collect the amount prescribed by Presidential Decree as an additional duty in an amount not in excess of 2/100 of the customs value of the goods.

 

ENFORCEMENT DECREE OF THE CUSTOMS ACT

Article 247 (Additional Duty Rate)

(1) The amount of an additional duty prescribed in Article 241 (4) of the Act shall be calculated based on the following rates:

1. 5/1,000 of the customs value of the relevant goods, when a declaration thereon is filed within 20 days from the date on which the deadline provided for in Article 241 (3) of the Act expires (hereafter referred to as "declaration deadline" in this Article);

2. 10/1,000 of the customs value of the relevant goods, when a declaration thereon is filed within 50 days from the date on which the declaration deadline expires;

3. 15/1,000 of the customs value of the relevant goods, when a declaration thereon is filed within 80 days from the date on which the declaration deadline expires;

4. 20/1,000 of the customs value of the relevant goods, except as expressly provided for in subparagraphs 1 through 3.

(2) The amount of an additional duty calculated under paragraph (1) shall not exceed five million won.  <Amended on Feb. 2, 2012>

 

Under Article 248 of the ENFORCEMENT DECREE OF THE CUSTOMS ACT (관세법 시행령), the Commissioner of the Korea Customs Service determines the goods subject to additional duty prescribed in Article 241 (4) of the CUSTOMS ACT and notifies the list via a KCS Announcement.



It is said that El Niño caused abnormal temperatures in Ghana and Côte d'Ivoire, major cocoa-producing regions in West Africa, leading to disease in cocoa trees and a sharp decline in cocoa production. Consequently, cocoa prices are soaring, and the prices of chocolate products that use cocoa as a raw material are increasing one after another. In response, the Korea Customs Service is applying quota tariffs on cocoa and imposing additional duties for delayed import declarations as follows:

  

 

HS Code

Description

Basic Tariff rate/ Quota Tariff Rate

Relevant Regulation

1801001000

Raw cocoa beans, whole or broken

2% / 0%

(May 10, 2024 ~ December 31, 2024, total import volume)

Presidential Decree No. 34616, Appendix 13

KCS Announcement No. 2024 - 65

1803100000

Cocoa paste not defatted

5% / 0%

(July 1, 2024 ~ December 31, 2024, total import volume)

Presidential Decree No. 34616, Appendix 3

KCS Announcement No. 2024 - 83

1804000000

Cocoa butter, fat and oil

5% / 0%

(July 1, 2024 ~ December 31, 2024, total import volume)

Presidential Decree No. 34616, Appendix 3

KCS Announcement No. 2024 - 83

1805000000

Cocoa powder, not containing added sugar or other sweetening matter

5% / 0%

(July 1, 2024 ~ December 31, 2024, total import volume)

Presidential Decree No. 34616, Appendix 3

KCS Announcement No. 2024 - 83

 

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