[Customs Service Betrayal] "No Origin Issues" Despite Peru Government Guarantee, No Change

Peru Provides 'Peru Mung Bean Production Statistics' to Korean Customs
Includes Mung Bean Cultivation Areas and Monthly Production Status
"Agricultural Agencies Face Capacity Limits, Difficulties in Collecting New Data"
Customs Service: "Having Statistics Does Not Meet Origin Requirements"

'Peru Mung Bean Production Statistics' provided by the Peruvian government to Korean customs authorities. The 47-page report includes information on Peru's mung bean cultivation areas, production status, and origin management strategies. Source: Ministry of Agriculture and Irrigation of Peru (MIDAGRI)

The Peruvian government has confirmed that it provided its official mung bean statistics to the Korea Customs Service. The government officially guaranteed at the national level that the origin of the mung beans is Peru, but the Customs Service, while acknowledging the statistics, maintains its stance on imposing additional tariffs due to the lack of ‘documents’ to prove the origin.

According to the ‘Peru Mung Bean Production Statistics’ document from the Ministry of Agriculture and Irrigation of Peru (MIDAGRI), obtained by Asia Economy on the 5th, it contains information on Peru’s mung bean cultivation areas, monthly production status, and origin management strategies. The 47-page report was prepared by the Peruvian government and delivered to the Customs Service after Korean customs authorities began investigating due to the ‘sudden increase in Peruvian mung bean production.’

According to the statistics, Peru produced 1,717 tons in 2020, 9,696 tons in 2021, and 4,362 tons in 2022. Most of the mung beans are exported to Korea, with recorded exports of 1,405 tons, 8,643 tons, and 2,500 tons respectively. Since the amount produced in Peru exceeds the amount exported to Korea, the Peruvian government’s official position is that there is no possibility of smuggling or similar activities.

The delay in compiling mung bean statistics was explained as due to system deficiencies and the impact of COVID-19. The Peruvian government stated, “With the outbreak of COVID-19 starting in 2020, statistical data collection activities were paralyzed.” At that time, Peru implemented strict social distancing measures, including border closures and allowing only people with permits to travel, which caused delays in related statistical compilation.

Infrastructure Shortcomings Acknowledged by Peru... Is the Responsibility on Our Import Companies?

The Customs Service rebutted that securing production statistics does not confirm origin requirements. The Customs Service said, “Origin investigations verify the origin for each individual import case,” adding, “It is difficult to confirm compliance with origin requirements stipulated in Free Trade Agreements (FTA) and domestic laws solely based on macro statistics.”

However, they explained, “The recently updated statistics announced by Peru are referenced during verification investigations.” In fact, the Customs Service used these statistics as grounds for applying duty-free measures on the domestic import of Peruvian mung beans. The Incheon Customs, having received Peru’s statistics, sent a notice to domestic import companies in January this year stating that “considering the reissued mung bean production statistics and the results of prior investigations comprehensively, the suspension of preferential tariff (duty-free) application is lifted.” This means that from January this year, the tariff on Peruvian mung beans is 0%.

However, if companies under origin investigation import additional mung beans, the pre-reduction tariff rate (607.5%) is applied. Mung beans newly imported by companies from the time of the origin investigation until January this year were subject to a 607.5% tariff, and importers were unable to sell mung beans domestically due to unpaid tariffs. While the Customs Service claimed during the origin investigation that the Peruvian government’s data alone could not prove the mung beans originated from Peru, the January notice paradoxically confirmed Peru as the origin based on the same data.

The document also included explanations about Peru’s insufficient agricultural product management system. The Peruvian government stated, “Since mung beans are a relatively new crop, registration of regional statistics is at an initial stage,” and “The capacity of agricultural institutions is limited in terms of resources, making it difficult to collect data on new crops.”

Although the Peruvian government acknowledges the lack of infrastructure to prove origin, domestic import companies still have to obtain supporting documents locally due to the Customs Service’s additional tariff imposition. A representative of an importing company lamented, “This (document) is evidence that the Peruvian agricultural companies’ origin management methods are inadequate,” adding, “Nevertheless, the Customs Service interprets the agreement on the assumption that they have properly maintained various documents.”