Importer’s Management of Risks Arising from the Investigation of Country of Origin
Kim Duk-jong
Department of International Trade on FTA
Graduate School, Kyungpook National University
Daegu, Korea
(Supervised by Professor Kim Heeho)
Abstract
This study...
Importer’s Management of Risks Arising from the Investigation of Country of Origin
Kim Duk-jong
Department of International Trade on FTA
Graduate School, Kyungpook National University
Daegu, Korea
(Supervised by Professor Kim Heeho)
Abstract
This study is about the risks that may arise to importers from origin verification by Customs. The origin verification is conducted on the exported goods and the imported goods with the preferential tariff rates of the FTA, but this study targets the origin verification conducted on the imported goods.
We have drawn the factors affecting the application of FTA preferential tariffs and divided the stages from the conclusion of the contract of the importer to the undergoing origin verification. The general importing stages is divided into an international commodity sales contract, the producer to produce the goods and keep the documents, the exporter to prepare the certification of origin(C/O) and keep the documents, the carrier to carry out the international transportation, the stage of importer's declaration of imports and documents, the stage of importers responding to the origin verification, and the stage of exporters or producers responding to the origin verification. The risks that may arise from each stage from origin verification are divided into the controllable risks and the uncontrollable risks by importer.
* A thesis submitted to the Council of the Graduate School of Kyungpook National University in partial fulfillment of the requirements for the degree of Master of economics in December 2016
And we demonstrate empirically that the risks that arise in areas where importers are difficult to control exist. For this purpose, this study analyzed the statistical analysis through the field survey of the origin verification and the legal precedent of the origin verification by the type of the risk and verified the risk by the origin verification.
As a control method of the risk that can be controlled by the importer, knowledge of the FTA agreement, knowledge of the trade practice, company-level origin management system should be had and the protection system for taxpayer's rights should be taken advantage of.
As a management method of the uncontrollable risk of the importer, we have drawn 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 of sale, the risk from the investigation of 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. Importers need to take measures such as reserving some of the profits from the import in order to prepare for such a situation.
Regardless of the importer's best efforts, the government's support policy is also needed because the risk is not completely eliminated. A system to support the importer's compensation method should be established and the agreement to minimize the occurrence of risk should be operated. There is a need to study and improve the review process and to support the FTAs necessary for importers.
Key Words : investigation, verification, origin, risk, FTA
Importer’s Management of Risks Arising from the Investigation of Country of Origin
Kim Duk-jong
Department of International Trade on FTA
Graduate School, Kyungpook National University
Daegu, Korea
(Supervised by Professor Kim Heeho)
Abstract
This study is about the risks that may arise to importers from origin verification by Customs. The origin verification is conducted on the exported goods and the imported goods with the preferential tariff rates of the FTA, but this study targets the origin verification conducted on the imported goods.
We have drawn the factors affecting the application of FTA preferential tariffs and divided the stages from the conclusion of the contract of the importer to the undergoing origin verification. The general importing stages is divided into an international commodity sales contract, the producer to produce the goods and keep the documents, the exporter to prepare the certification of origin(C/O) and keep the documents, the carrier to carry out the international transportation, the stage of importer's declaration of imports and documents, the stage of importers responding to the origin verification, and the stage of exporters or producers responding to the origin verification. The risks that may arise from each stage from origin verification are divided into the controllable risks and the uncontrollable risks by importer.
* A thesis submitted to the Council of the Graduate School of Kyungpook National University in partial fulfillment of the requirements for the degree of Master of economics in December 2016
And we demonstrate empirically that the risks that arise in areas where importers are difficult to control exist. For this purpose, this study analyzed the statistical analysis through the field survey of the origin verification and the legal precedent of the origin verification by the type of the risk and verified the risk by the origin verification.
As a control method of the risk that can be controlled by the importer, knowledge of the FTA agreement, knowledge of the trade practice, company-level origin management system should be had and the protection system for taxpayer's rights should be taken advantage of.
As a management method of the uncontrollable risk of the importer, we have drawn 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 of sale, the risk from the investigation of 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. Importers need to take measures such as reserving some of the profits from the import in order to prepare for such a situation.
Regardless of the importer's best efforts, the government's support policy is also needed because the risk is not completely eliminated. A system to support the importer's compensation method should be established and the agreement to minimize the occurrence of risk should be operated. There is a need to study and improve the review process and to support the FTAs necessary for importers.
Key Words : investigation, verification, origin, risk, FTA
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