[Loading export cargo on container ship in Pusan]
This year is the 2nd year ever since the Korea-China FTA agreement. There has been an implementation of provisional tariff reduction on 787 items. From the second half of the year, there will be expansion of applicable tariff elimination on a range of information and communication products. Korean International Trade Association (KITA) has pointed out that Korean exporting companies should make best use out of this opportunity while China’s import tariff policy is friendly for them.
According to the report, “Consideration for Changes in China’s Tariff Rate in 2016 and Export Marketing Strategy” from KITA’s branch in Beijing, Korean products have gained a foothold of price competitiveness in China thanks to the application of immediate tariff elimination on 958 items since 20/Dec/2015 as well as 1st tariff elimination on 1,679 items for 5 years and 2nd tariff elimination on 2,518 items for 10 years since the New Year.
Due to the provisional tariff, Korean export environment has improved. The provisional gets updated every year and as a result, when compared to the previous year, there are 62 additional item inclusions in 2016. Particularly in this year, approximately half the rate of general tariff has been reduced on wide range of consumer goods such as bags, apparels, scarves, blankets, sunglasses, vacuum thermal bottles, and etc.
With their provisional tariff policy, Chinese government already has been applying their tariff rate lower than their general tariff on consumer goods but the applicable product ranges and tariff reduction rate has become more favorable. Most of products under China’s provisional tariff are set to be half the rate of general tariff and some products such as cosmetics are set to be one-third of the general tariff.
As per the Information Technology Agreement (ITA) since last month, China’s tariff on electronics, medical devices, measurement devices, audio equipment, and etc. will be declined from 2016 July and then eliminated after 3~5 years.
In addition, Asia-Pacific Trade Agreement (APTA) became effective since the New Year. As per the agreement, approximately 33.1% of tariff rate has been declined on 2,191 products when exporting to China. Number of APTA covering products overlap with the products covered through Korea-China FTA and the tariff rate on APTA covered products are found to be lower.
Moreover, China’s provisional tariff and ITA tariff rate does not require any certificates of origins and automatically being applied upon exportation whereas Korea-China FTA and APTA requires certificates of origins and apply preferential tariff upon exportation application.
APTA tariff reduction applies on televisions, cameras, optical lens, semi-conductor manufacturing equipment, construction heavy equipment parts, plastic products, wireless communication equipment parts, pesticide raw material, aluminum foils, flame ignition internal combustion engines, and etc.
Young-Min Choi, the manager of KITA’s Beijing branch stresses that in order to gain the most benefit out from the exportation to China, Korea-China FTA applied tariff, China’s provisional tariff, ITA tariff rate, and APTA tariff must be compared prior to exportation.