Containers are stacked up at the Yongdang Pier in Busan Nam-gu, Busan Port. / News1
The Korea Customs Service plans to launch a large-scale crackdown on violations of country-of-origin labeling, such as falsely labeling foreign goods as domestically produced for export, until next month. This is to prevent the practice of disguising Chinese goods, which are subject to additional U.S. tariffs, as ‘Made in Korea’ in advance.
On the 6th, the Korea Customs Service announced it will set up a special task force for country-of-origin labeling violations and conduct a comprehensive inspection of such violations from today until the end of next month. The crackdown targets activities such as exporting goods labeled as domestic when they are not, or obscuring the country-of-origin labels.
The reason for the Korea Customs Service’s extensive country-of-origin inspection is that Korea could find itself in a situation where it’s adversely affected by the escalating tariff war between the U.S. and China. The U.S. imposed an additional 10% tariff on Chinese imports last month and added another 10% this month. China, in response, has decided to impose retaliatory tariffs of 10-15% on U.S. agricultural products.
As a result, Chinese products exported to the U.S. face an additional 20% tariff, whereas most Korean products can enter the U.S. tariff-free under the Korea-U.S. Free Trade Agreement (FTA). Falsely labeling Chinese products as Korean can result in significant tariff advantages. However, frequent instances of Chinese goods being passed off as Korean and exported to the U.S. could lead to disadvantages such as increased customs procedures for Korean imports. A Customs Service official stated, “We intend to respond proactively to prevent honest Korean exporters from being affected.”
The Korea Customs Service plans to focus its crackdown on products like steel and automotive parts, which are subject to U.S. anti-dumping and high tariff rates. It will analyze export-import transaction data to target businesses likely to violate the regulations. Violators of country-of-origin labeling regulations could face administrative penalties of up to 300 million won or criminal penalties of up to five years in prison.