The EU-Korea Free Trade Agreement (FTA) was signed in 2010 and came into effect in 2011. This agreement is significant as it is one of the first FTAs that the European Union (EU) signed with an Asian country. It covers a wide range of areas such as trade in goods, services, investment, and intellectual property rights.
One of the essential aspects of the EU-Korea FTA is the rules of origin. These rules determine the products’ country of origin and the conditions under which they can benefit from preferential treatment under the agreement. The rules of origin are crucial because they help prevent non-Korean goods from entering the Korean market through EU preferential tariffs.
The EU-Korea FTA rules of origin contain three main criteria that must be met for a product to be considered of Korean origin. Firstly, the product must be wholly obtained or substantially transformed in Korea. Secondly, at least 35% of the product’s ex-factory price must be produced in Korea. Finally, the product must meet specific product-specific rules of origin.
Wholly obtained products refer to natural resources such as agriculture, forestry, and mining products. For example, a product made from Korean-grown cotton or leather would be considered wholly obtained. Substantial transformation refers to a product that undergoes a significant process in Korea, resulting in a change in its character or name. For example, if raw materials are imported into Korea and made into a final product, such as a car, in Korea, the car would be considered substantially transformed.
The third criterion – product-specific rules of origin – determine if a specific product meets the FTA criteria. The criteria vary depending on the product and can range from the percentage of material originating in Korea and the type of processing required.
To benefit from the EU-Korea FTA preferential tariff rates, each exporter must provide proof of the product’s origin through documentation such as a certificate of origin. The certificate of origin is issued by an authorized body and certifies that the product meets the requirements under the FTA.
In summary, the EU-Korea FTA rules of origin play a vital role in determining the products eligible for preferential treatment under the agreement. Exporters must be aware of the criteria and documentation required to ensure their products are compliant with the regulations. As a result, businesses can take advantage of the benefits under the FTA, such as lower tariffs, and greater access to markets.