Korea’s Institutional Framework for FTA Negotiations and Administration: Tariffs and Rules of Origin

Title
Korea’s Institutional Framework for FTA Negotiations and Administration: Tariffs and Rules of Origin
Authors
Kim, Jong Bum
Keywords
FTA; Rules of Origin; Tariff; Negotiation; Customs
Issue Date
2008-08
Series/Report no.
KDI Working Paper Series;08-11
Abstract
In this chapter, I review Korea’s legislative framework of free trade agreement negotiations and administration of FTAs. In particular, focus is on the trade in goods, including the administration of rules of origin and tariff reduction chapters of enacted FTAs. The first part of this paper reviews FTA negotiations framework including the role played by the Minister’s Meeting for External Economic Affairs. Also, I examine the public hearing process prior to making the decision to launch a FTA negotiation as required under FTA Directive. Moving to the process during the negotiations, I review the laws under which the National Assembly may monitor the progress of FTA negotiations. I then examine the domestic procedures leading to the consent to the ratification by the National Assembly and the President’s ratification of the treaty. Lastly, I review the Presidential Commission on Domestic Preparation for Free Trade Agreement (Commission), which was established in order to address the grievances of the domestic industries burdened by market liberalization from FTAs. The second part of the chapter deals with the framework for FTA tariff implementation. I review the FTA Implementation laws that provide the tariff reduction and elimination schedules for goods originating in FTA partner countries. The relationship between the Customs Act and FTA implementing laws are described. As implementation of FTA tariff concession schedule is intertwined with preferential rules of origin, the Korean laws on administration of FTA rules of origin are reviewed. The procedures for origin certification and verification of rules of origin are reviewed as well. I then provide a general outline of Korea’s FTA rules of origin. As an important distinction of Korea’s FTA rules of origin, I describe the requirements of outward processing provision which permits granting of preferential origin to goods undergoing outward processing in the Gaesong Industrial Complex. The third part of this paper describes the consultation and dispute settlement procedures involving determination of preferential origin and imposition of preferential tariffs under Korea’s FTAs. In this regard, I explain the role of the Customs Cooperation Council that is established between Korea and its FTA partners for the purpose of settling customs issues. Finally, I describe a recent case involving a dispute over transshipment provision under Korea- Chile FTA rules of origin. Lastly, I conclude the chapter with discussions of possible measures to improve the public hearing process before the launch of a FTA negotiation and the need to revamp the interministry FTA policy coordination mechanism.
URI
http://archives.kdischool.ac.kr/handle/11125/17224
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KDI School Working Paper Series


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