• Journal of Korea Trade
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• v.25 no.8
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• pp.1-24
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• 2021

Purpose - This study categorizes factors that influence the utilization of preferential tariffs based on the characteristics of rules of origin (RoO) and identifies and analyzes the influence of these characteristics on the utilization of preferential tariffs and the trade performance of companies. Design/methodology - In this study, we categorized factors that have an influence on the utilization of preferential tariffs based on the characteristics of RoO and investigated and tested the influence of these characteristics on the utilization of preferential tariffs and the trade performance of companies. For empirical analysis, we categorized the characteristics of RoO into restrictiveness, complexity, and uncertainty. We then developed a research model and formulated hypotheses based on previous studies, and tested the hypotheses using statistical software-(SPSS 25.0 and AMOS 18.0.) Findings - Previous studies suggested that each characteristic of RoO is determined by unique features of a Regional Trade Agreement (RTA). This study conducted an empirical analysis on the influence of the characteristics of RoO on the utilization of preferential tariffs and trade performance. The results confirmed that, overall, the characteristics of preferential rules of origin (PRoO) are related to and influence Korean companies' utilization of preferential tariffs and trade performance. As for the degree of the influence, the characteristics were in the order of uncertainty> restrictiveness> complexity. Nevertheless, complexity turned out not to have an influence large enough to change a company's decision on the utilization of preferential tariffs. Based on these results, this study identified unique features of PRoO and related problems for Korean companies that want to utilize preferential tariffs and suggested countermeasures for their effective utilization of preferential tariffs in the future. Originality/value - Companies that want to use preferential tariffs in international trade have to satisfy PRoO. The issue of origin can be regarded as an essential part of an RTA and RoO, are a crucial criterion in using preferential tariffs. The rules are requirements to claim benefits of preferential trade agreements and are the primary reasons companies have trouble in utilizing preferential tariffs. In this sense, this study categorized the characteristics of RoO, which are a key part of an RTA, and surveyed working-level professionals in charge of international trade at Korean companies to investigate the relationship between these characteristics and the utilizations of preferential tariffs and trade performance of the companies.

• Korea Trade Review
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• v.43 no.3
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• pp.199-218
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• 2018

The force majeure in the international sale of goods has been widely used regarding liability and settlement of disputes in the event of breach of contract due to circumstances beyond the control of the parties. The purpose of this study is to examine the judgment criteria and cases concerning on force majeure in the application of FTA preferential tariffs. In order to achieve this purpose, this paper uses a literature review and case analysis on exceptional circumstances under the Korea·ASEAN FTA and the Korea·EU FTA. This study, this paper provides several implications for companies seeking preferential tariffs regarding the Korea·ASEAN FTA and the Korea·EU FTA. Korean companies are subject to the following: confirm the denial article of FTA preferential tariffs stipulated in the Korea·ASEAN FTA and the Korea·EU FTA, consider the judgment criteria on exceptional circumstances of customs authorities, confirm the extension criteria on the validity period of certificate of origin, confirm the reply criteria of verification result of the customs authorities of the exporting country, and confirm the violation of the principle of good faith for unrequested action on reply of verification result of customs authorities.

• Journal of Korea Trade
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• v.26 no.8
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• pp.58-76
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• 2022

Purpose - This study examined the Rules of Origin (RoO) as a factor affecting free trade agreements' (FTA) utilization and analyzed the causal relationship and the effects of these factors on the export performance of automobile parts companies. Design/methodology - We analyzed and verified the impact of FTA utilization and the export performance of automobile parts companies by dividing the characteristics of the RoO into complexity and uncertainty. Following which, various statistical analyses were conducted on the interrelationships among these variables. Findings - This research analyzed the effect of the RoO factors of complexity and uncertainty on the use of FTA and the export performance of automobile parts companies. We found that these characteristics of RoO were generally related to and affected the FTA use and export performance of these companies. Based on this, this study's investigation into the characteristics of the RoO would then help companies in better utilizing the FTA, as well as providing suggestions on how to effectively respond to the application of the FTA in the future. Originality/value - Companies that want to utilize FTAs in international trade must follow the RoO. In the Regional Trade Agreement (RTA), the country-of-origin is a key factor, with the RoO being an important requirement for the application of preferential tariffs. These regulations are a requirement for receiving FTA preferential treatment; however, they also cause difficulties to companies in using the FTA.

• Journal of Korea Trade
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• v.23 no.6
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• pp.1-13
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• 2019

Purpose - This study deals with a strategic plan for meeting the value added criteria effectively, which is one of the methods of determining origin used in preferential trade such as FTA. Automobile products, one of the major Korean export items, were selected to give a practical use against the FTA requirements. Design/methodology - This study is based on the value-added criteria of the Korea-US and Korea-EU FTAs that apply various value-added criteria. The Korea-US FTA adopts the RVC method based on the integration, deduction and net cost methods, while the MC method is employed in the Korea-EU FTA. The methodology used in this work is an extended literature review, analysis of the value-added criteria applied to automobile products under Korea-US and Korea-EU FTA with some secondary statistics. Findings - Based on in - depth analysis of the value - added criteria requirements for automobile products stipulated in the Korea - US FTA and the Korea - EU FTA, two strategic considerations are suggested. First is 'appropriate value-added strategy' and the second is 'strategy of changing production and trade structure'. The second strategy is a bit used in Korea but this is not considered best if the first strategy is ignored or forgotten. The second one is meaningful when this becomes inevitable. Research limitations/implications - This study is primarily designed to assist Korean auto mobile industry players exporting to EU and USA but this may help to auto part or material producers in FTA counter party territories being EU or USA as the preferential tariffs are applied on a inter region basis. A further research other than auto mobiles using other major FTAs might be followed later. Originality/value - There has been so far little research on strategic factors to meet the value-added origin requirements. This study, therefore, is expected to contribute facilitating the decision of FTA origin and to improve the utilization of FTA by allowing exporting companies using value added criterion to more smoothly meet origin requirements. This will also enable the tax authorities to utilize the value-added criterion to validate effectively the origin of imports where preferential tariffs are applied.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.67
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• pp.187-208
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• 2015

The Korea China FTA was signed on June 1 2015. It includes some concessions regarding major export items in the manufacturing sector for the protection of primary industries and preferential tariffs for a number of products produced in the Kaesong Industrial Complex. Primary industries are what the Korean government paid the greatest attention to. Rice was excluded from the negotiations from the get go, and was joined by 548 other food items including pork, apples, pears, beef, chili, garlic etc. These foodstuffs account for about one-third of the agricultural and livestock products that Korea produces, and are not going to be subject to tariff elimination. The results of the study are as follows: Korean government policy is to maintain of agri-food export support system, eliminate of agri-food non-tariff barriers, foster of agri-food export SMEs and expand of investment of foreign agri-food company. Korean firms strategy is to establish of regional marketing strategy, ensure of high quality agri-food and develop of food packaging technologies, establish of agri-food export logistics center and take advantage of the FTA preferential tariff.

• KDI Journal of Economic Policy
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• v.45 no.1
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• pp.33-68
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• 2023

The present article investigates empirically whether non-reciprocal trade preferences (NRTPs) offered by QUAD countries (Canada, the European Union, Japan, and the United States) to developing countries have helped to promote economic growth in the beneficiary countries. Two main blocks of NRTPs are considered here: Generalized System of Preferences (GSP) programs and other trade preferences programs. The analysis used a set of 90 beneficiary countries of NRTPs that are concurrently recipients of development aid over the period of 2002-2018. Using the two-step system generalized method of moments, the analysis indicated that while a higher degree of utilization of each of these two blocks of NRTPs has been associated with a high economic growth rate, development aid enhances this positive effect. This highlights the need for donors to support a development strategy based on the provision of both development aid and NRTPs if they are to help beneficiary countries to promote economic growth. Finally, when the positive economic growth effect of the utilization of NRTPs is higher, the result is a greater country's share of exports (under preferential tariffs) to QUAD countries out of their total merchandise exports.

• East Asian Economic Review
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• v.26 no.3
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• pp.227-253
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• 2022

Despite the proliferation of free trade agreements (FTAs), many exporting firms are still confronted with several challenges in utilizing the FTA preferential tariffs. Based on the Technology-Organization-Environment (TOE) framework, this study empirically examines the factors affecting the utilization of FTA schemes by exporting firms. To clarify the key factors influencing FTA utilization, this study develops a conceptual model from the perspective of the adoption of information technology innovations. Eight factors derived from the TOE framework are proposed to explore the determinants of FTA utilization in export. Partial least squares structural equation modeling is employed to analyze the data collected from 162 exporting small- and medium-sized enterprises in the South Korean textile industry. The findings reveal that compatibility and trading partner influence are positively associated with FTA utilization, while complexity is negatively related. Factors of organizational context do not show any relationship with FTA utilization. This study is the first to theoretically analyze and empirically test the determinants of FTA utilization from the perspective of technological innovation adoptions. By examining the relative importance of TOE factors in the utilization of FTA schemes, this study expects to advance a holistic understanding on the perceived factors that could potentially affect the utilization of FTA schemes.

• International Commerce and Information Review
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• v.14 no.4
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• pp.387-408
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• 2012

This paper have examined the descriptive and legal approaches to the comparison and analysis of major content of direct transport in FTA rules of origin and the primary judicial precedents that arose during the executing process of FTAs. Preferential tariff treatment shall be applied to a good satisfying the requirement of this agreement(annex, article etc.,) and which is transported directly between the territories of the exporting party and importing party. However, products may be transported through territories of non-parties, provided that they do not undergo operations other than unloading, reloading, splitting-up of consignments or any operation designed to preserve them in good condition. During this period the products shall remain under customs control in the country of transit. The low perception of firms on the rules of origin was found to lead to breaking the rule and thus taking up losses. The FTA major countries enacted penalty rules against the violation of the rules of origin and bring civil and criminal suits and administrative sanctions. The types and level of penalties are subject to their domestic laws of each of those nations. With better recognition of major content of direct transport in FTA rules of origin and well-prepared countermeasures, firms will be able to enhance competitive advantage while benefiting from preferential tariffs.

• International Commerce and Information Review
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• v.17 no.2
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• pp.201-223
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• 2015

Concerning post-verification which is after the application of FTA preferential tariffs, in cases such as Korea-EFTA and Korea-ASEAN, the growing trend of post-verifications was restricted and there was no active research concerning this; whereas with Korea-EU FTA which adopted indirect verification for post-verification, the demand for post-verification has been rising constantly each year; and for Korea-US FTA which has adopted direct verification, a new approach to post-verification research is needed as it began genuine post-verification regarding many national enterprises only after a year and a half since the agreement. This study will consider the counter measures that can be taken for post-verification, through case of studies on the factors influencing violation of determining the country of origin for export company regarding verification of FTA. Result of this case study regarding the determining a violation of origin, The main cause of the violation factors on the essential & general principles(goods wholly obtained, value added criteria) are lack of understanding agreement & manpower. but Violation of the parties to a transaction & the origin certification are lack of advanced preparation and effected violation of principle of good faith. Finally, In this study help countermeasures of export company through the Detailed analysis of the type & implications deriving from verification of origin.

• Korea Trade Review
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• v.42 no.1
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• pp.69-97
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• 2017

This study purpose to examine the importer's risks that may arise from origin investigation by Customs authorities. We have drawn the important factors affecting the application of FTA preferential tariffs and divided the stages from the conclusion of the contract for the importer to the undergoing origin investigation. In addition, we demonstrate empirically that the risks that arise in areas where importers are difficult to control exist. As a management method of the uncontrollable risk from the importer, we have provided the methods that the seller stipulated the seller's responsibility in the trade contract, prepared for situations in which no one was responsible, and formulated a friendly and cooperative supply chain. Even if the seller's liability is clarified in the contract for sale, the risk of the investigation into the origin of the imported goods is not completely eliminated. This is because, under the current agreement and system, there is no way for the customs authority of the contracting party of the FTA to claim compensation for damages incurred by importers due to breach of agreement such as not returning the result of the origin verification. Importers are subject to customs duties, but there may actually be situations in which no one is responsible for them.