The International Trade Blog arrow Export Compliance

Has the KORUS Been Singing In Harmony?

On: May 19, 2015    |    By: John Goodrich John Goodrich    |    3 min. read

Has the KORUS Been Singing in Harmony? | Shipping Solutions

The U.S. - Korea Free Trade Agreement, often referred to as KORUS, has been in force since mid-March of 2012. Has the KORUS been singing in harmony?

Given the limited rehearsal time and the seemingly overnight implementation, the KORUS has been putting on a pretty good show. That is not to say, however, that the choir members have not hit a few discordant notes every now and then or that the conductor's music may have been upside down.

Confusion Over Certificates

For example, there has been considerable confusion regarding the official certificate of origin required by the South Koreans.

Let's be clear: There is no official Certificate of Origin for KORUS issued by the United States or South Korea.

There is, however, a suggested format published by the Koreans at the U.S. Korea Connect website. Page two of this link includes instructions for completing the form. An English-language version of the Korea Certificate of Origin form based on this template is available for download on the Shipping Solutions website.

Even though this form is not officially a part of KORUS, U.S. exporters are advised to use this format to assist their trading partners and facilitate participation in the agreement. Likewise U.S. Customs and Border Protection has issued an implementation memo at its website. This memo outlines data elements required to support any duty exemption claim under the KORUS. (Interestingly CBP refers to KORUS as the UKFTA. The term KORUS seems to have a more melodious ring to it.)

The U.S. Export Assistance Center has posted information regarding KORUS certification at its website. It also suggests that U.S. exporters contact the Trade Compliance Center should they get any push-back from the South Korean government on legitimate free trade claims.

The issue of confusion over certification manifests itself in different ways. Attendees at seminars I have led have told me that they have had their KORUS claims challenged for the following reasons:

  • Not providing the official form.
  • Minor discrepancies regarding formatting of the suggested form.
  • Blanket periods that begin prior to the signature date of the certification statement.
  • Disagreement on harmonized system codes.
All of these are issues that should be brought to the attention of the Trade Compliance Center.

Other Sour Notes

The conductors of this chorus (i.e. South Korea and the U.S.) are not all to blame for the few sour notes heard during this startup period. The choir members themselves may be the ones out of tune. Those importers and exporters wishing to participate in KORUS are reminded that the program has its own rules. These include:

  • Participation is optional. No one is forced to sing in this KORUS.
  • Proving that a good is eligible for the agreement is an active process requiring documentary evidence that the good qualifies for the duty-free benefit of the program.
  • Simply producing, purchasing or shipping a good within the U.S. and South Korea does not automatically qualify a good for the duty free benefit.
  • The rules (the music?) for eligibility are found within note 33 of the Harmonized Tariff Schedule of the United States.

A Harmonious Future

The startup issues mentioned above were not wholly unexpected and are far from insurmountable. They should not overshadow the importance of the U.S and Korean alliance. Korea remains the United States' seventh largest trading partner. KORUS is the second largest free trade agreement signed by the U.S. exceeded only by the NAFTA. The U.S. International Trade Commission estimates that the KORUS will boost U.S. exports by $10 billion.

It seems the future of KORUS appears to be a bright and harmonious one.

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John Goodrich

About the Author: John Goodrich

John Goodrich is an International Trade Consultant and Licensed Customhouse Broker with more than 25 years of experience in international trade. He is currently the principal in the consulting firm of JD Goodrich & Associates where his varied industry experience results in practical, actionable advice for his clients.

An active member in the Twin Cities round table of the Council of Supply Chain Management Professionals (CSCMP), he takes a strategic view of the roles of international compliance and logistics in the greater supply chain.

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