Korea’s Institutional Framework for FTA Negotiations and Administration: Tariffs and Rules of Origin
- Korea’s Institutional Framework for FTA Negotiations and Administration: Tariffs and Rules of Origin
- Kim, Jong Bum
- FTA; Rules of Origin; Tariff; Negotiation; Customs
- Issue Date
- Series/Report no.
- KDI Working Paper Series;08-11
- 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.
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