[Customs Service Betrayal] "Peru Origin System Inadequate"... Is the Responsibility on Import Companies?

Ministry of Economy and Finance on Last Year's Latin America 'Knowledge Sharing Conference'
South Korea Also Says "Peru Exporters Unfamiliar with Origin Rules"
South Korea Directly Works on Improving Peru Origin System
Origin System Deficiencies, Data Submission Not "Excessive"

The South Korean government was confirmed to have been aware that Peru's origin certification system was inadequate. Although it was an environment where private companies could not prove the origin, the Korea Customs Service maintained the position that it was the responsibility of import companies to handle it. According to the Free Trade Agreement (FTA) regulations, the obligation to prove origin lies with the ‘importer,’ meaning that the import companies must be able to provide proof for the controversial Peruvian mung beans as well.

On September 6 last year, attendees are taking a commemorative photo at the Korea-Latin America Diplomatic Relations 60th Anniversary Knowledge Sharing Event held at the Global Knowledge Exchange and Development Center (GKEDC) in Dongdaemun-gu, Seoul.
[Image source=Yonhap News]

According to Asia Economy's coverage on the 5th, the Ministry of Economy and Finance held the ‘Korea-Latin America Diplomatic Relations 60th Anniversary Knowledge Sharing Conference’ on September 6 last year. The event was attended by officials from the Ministry of Economy and Finance, the supervising ministry of the Korea Customs Service, as well as economic counselors from the Embassy of Peru in Korea. The presentation topic was about the ‘Establishment of Peru’s Origin Certification and Customs System’ through the construction of a Korea-Latin America digital system and expansion of infrastructure accessibility.

The materials prepared by Song Kyung-eun, then Director of the International Origin Information Center and the presenter, included statements such as “Peruvian exporters are not familiar with origin rules” and “Although they have access rights to issue certificates of origin when ready to export, they do not know what to comply with.” Additionally, government officials exchanged remarks like “Upon visiting Peru, we found the origin management system to be lacking.”

Accordingly, the government decided to support the improvement of Peru’s origin system. At that time, the South Korean government expressed to Peruvian officials its intention to provide ‘specific and systematic technology and education,’ and the Peruvian government responded that a smooth relationship was anticipated. On the 16th of last month, the ‘Knowledge Sharing Program (KSP) Promotion Council’ chaired by First Vice Minister Bang Gi-seon selected the project to establish Peru’s origin certification customs system as an exemplary project.

Although Peru’s origin system is so inadequate that it requires support from Korea, the Korea Customs Service insists that import companies must still be able to prove the origin. Their basis is that the FTA regulations specify this as the obligation of import companies. Despite criticisms that it is virtually impossible to obtain bank account details, accounting books, tax reports, and cultivation specifications demanded from Peruvian companies and farmers, the Customs Service maintains that these are not unreasonable demands and must be submitted. Failure to meet these requirements results in a retroactive tariff of 607.5%, which would force most import companies to shut down.

Import companies complain that the Korea Customs Service makes decisions obsessed with the interpretation of wording despite being aware of Peru’s reality. An official from an import company criticized, “Even in Europe, where tariff barriers are much higher than in Korea, grains from Latin America such as Peru are imported smoothly,” calling it “a typical desk-bound administration and administrative convenience.”