51 Million (2017)*
South Korean Won (₩)
*Source: The CIA World Factbook
Ranked 5th for ease of doing business
7th largest U.S. goods export market
11th largest economy in the world
Retail sector attracts millions of Chinese visitors each year
97% of population with internet access, with the fastest average internet in the world (as of 2017)
Top Industry Export Opportunities
South Korea was the 8th largest market for U.S. aerospace exports in 2016. In 2016, total U.S. aerospace exports to Korea exceeded 5.2 billion USD (including aerospace products in the defense sector). In total value, U.S. aerospace sales constituted about 70 percent of Korea’s total aerospace imports in 2016. Over 99 percent of total aerospace imports into Korea are for commercial & defense aircraft and their parts and components. Of this, 70 percent of Korea’s aircraft, parts and component imports were from the U.S. in 2016. The aerospace sector is one of the rising sectors for the Korean government as it tries to develop a next generation growth engine.
South Korea is a prime target for cyber-attacks, due to the country’s high network connectedness, advanced use of mobile devices, and significant intellectual property. South Korea recognizes that cyber-security is a matter of national security. The country has a fast but insecure infrastructure, which is vulnerable to cyber-attacks. It has heightened its security protocols over recent years, following several high-profile hacking cases. A myriad of opportunities exist for U.S. firms to provide cutting-edge cyber security solutions for critical infrastructure in South Korea. Due to its advanced ICT infrastructure, South Korea is an ideal market for U.S. firms seeking to test cyber security solutions before deployment in other markets. Opportunities in this sector include: encryption for network access, end-to-end point detection, intrusion prevention systems (IPS), advanced persistent threat (APT), and cloud security.
Demand for high quality, sophisticated chemical products and associated substances for use in product development and production presents a lucrative opportunity for U.S. chemical manufacturers. In 2016, the estimated total value of Korea’s specialty chemicals market was USD 52.5 billion, representing a 3 percent increase over 2015. During the same period, foreign suppliers satisfied approximately 31 percent of Korea’s total demand for raw and intermediate materials and new substances. Imports from the U.S. totaled USD 3.5 billion. The U.S. holds a 21 percent share of the specialty chemical import market. U.S. chemical exports receive duty-free treatment under the KORUS FTA. Opportunities in this sector include: specialty chemicals for the medical and pharmaceutical industries, cosmetics industry, and electronics & IT industries.
Trade Regulations & Customs Information
Import Tariffs: With the U.S.-Korea FTA, 95% of tariffs on U.S. imports were eliminated by March 15, 2017. Korea maintains a tariff quota system designed to stabilize domestic commodity markets. The U.S. Department of Commerce can help U.S. exporters identify the harmonized system number for their products and the associated tariff rates over the next ten years. Exporters can also contact the U.S. Agricultural Trade Office, affiliated with the U.S. Embassy in Seoul, for specific information on agricultural tariff rates. Tariffs and taxes must be paid in Korean Won within 15 days after goods have cleared Customs.
Import Duty: Duties are assessed on a Cost-Insurance-Freight (CIF) basis. The main mode of customs evaluation is the transaction value method. Other methods under the WTO appraisement hierarchy may be used if there are doubts about Korean Customs valuation methods on the stated value. Customs duties can be adjusted every six months, within the limit of the basic rate, plus or minus 40 percent. Korea has a flat 10 percent Value Added Tax (VAT) on all imports and domestically manufactured goods. A special excise tax of 10-20 percent is also levied on the importation of certain luxury items and durable consumer goods.
Import Requirements and Documentation: Companies exporting to the Republic of Korea must provide a commercial invoice and a certificate of origin to clear customs. The commercial invoice is an original invoice, and two copies must be presented with the shipping documents and must include total value, unit value, quantity, marks, product description and shipping from/to information. The certificate of origin was required for some products prior to implementation of the KORUS FTA. Exporters are encouraged to discuss shipping document requirements with their respective importer. An importer may claim preferential treatment under the KORUS FTA in order to receive the lower tariff. The importer can do this by providing written or electronic certification to Korean Customs from the manufacturer, the exporter, or the importer. The manufacturer, exporter or importer is required to retain all documents (i.e., bill of materials, manufacturing process documentation, etc.) demonstrating that the good qualifies as a U.S.-origin good, for five years.
Customs Regulations: Korea maintains an import declaration system that allows for the immediate release of goods upon acceptance of an import declaration filed without defect. With the exception of high-risk items related to public health and sanitation, national security, and the environment, which often require additional documentation and technical tests, goods imported by companies with no record of trade law violations are released upon the acceptance of the import declaration without Customs inspection. The Korean Customs Service’s Electronic Data Interchange (EDI) system for paperless import clearance allows importers to make an import declaration by computer without visiting the Customs House. Import declarations may be filed at the Customs House before a vessel enters a port or before the goods are unloaded into bonded areas. In both cases, goods are released directly from the port without being stored in a bonded area, if the import declaration is accepted.
U.S. Export Controls: The U.S. Department of Commerce, Bureau of Industry and Security (BIS), develops, implements, and interprets U.S. export control policy for dual-use commodities, software, and technology. Dual-use items subject to BIS regulatory jurisdiction have predominantly commercial uses, but may also have military applications.
Source: The International Trade Administration (ITA), U.S. Department of Commerce www.export.gov