Administrative Sanctions, Criminal Penalties, and Fine Criteria for Country of Origin Labeling Violations Released

In international trade, Country of Origin Labeling (COOL) for imported goods is a fundamental and critical obligation designed to guarantee the consumer's right to know and establish a fair trade order. If an importer neglects this duty or intentionally violates it, they may face strong administrative and criminal sanctions under the "Foreign Trade Act," even if the violation was a simple mistake. Below, we provide a detailed explanation of the specific penalty regulations and the severity of sanctions regarding country of origin labeling violations.

1. Obligation of Origin Labeling and Types of Violations under the Foreign Trade Act

According to Article 33, Paragraph 1 of the "Foreign Trade Act," importers are obligated to indicate the country of origin on imported goods in a legal and clear manner. Violations of this obligation are generally classified into three types, all of which are subject to punishment.

• False Indication of Origin (Falsification): The act of deceptively marking a country other than the actual country of production as the origin. This is considered the most serious violation as it deceives consumers.
• Damaging or Modifying Origin Labels: The act of removing an attached origin label, damaging it to make it illegible, or changing it to different content.
• Non-Indication of Origin: The act of importing or distributing goods without marking the origin, despite the goods being subject to mandatory labeling under the law.

These acts are strictly prohibited under Article 33, Paragraph 4 of the "Foreign Trade Act." Upon detection, the level of sanctions is determined based on the gravity of the case, the frequency of violations, and whether the act was intentional.

2. Administrative Sanctions: Imposition of Penalty Surcharges

The first consequence of violating origin labeling regulations is a financial sanction known as a penalty surcharge (administrative fine). Based on Article 33-2, Paragraph 2 of the "Foreign Trade Act" and Article 60, Paragraph 1 of the Enforcement Decree of the same Act, customs authorities or relevant administrative agencies may impose a penalty surcharge of up to 300 million KRW on the violating party.

The specific amount of the surcharge is generally calculated in proportion to the transaction value (e.g., import declaration amount) of the violating goods. If the violation is repeated or deemed intentional, the amount may be aggravated. The purpose of this measure is to recoup any unfair profits gained through the violation and to prevent similar occurrences. It is important to note that this penalty surcharge is an administrative disposition separate from the "criminal fines" imposed by a court.

3. Criminal Penalties: Imprisonment and Fines

Beyond administrative measures, serious cases may be referred to judicial authorities, leading to criminal punishment. Article 53-2 (Penal Provisions) of the "Foreign Trade Act" stipulates strong penalties for those who falsely indicate the country of origin or damage/modify such indications:

• Imprisonment for up to 5 years, or
• A criminal fine not exceeding 100 million KRW.

Particular attention should be paid to the fact that imprisonment and fines are not merely selective options; in certain cases, both imprisonment and fines may be imposed concurrently. This signifies that violations of country of origin regulations are treated strictly as criminal acts that disrupt sound trade order, rather than simple procedural errors.

4. Additional Disadvantages: Correction Orders and Customs Clearance Withholding

In addition to financial and criminal penalties, there are measures that can cause significant practical damage to business operations. If a violation of origin labeling is detected, the head of the customs office will issue an order to correct the origin labeling. Until this correction order is fulfilled, the customs clearance of the goods in question is completely withheld, or their distribution in the market is prohibited.

Even if customs clearance has been completed and the goods are circulating domestically, if a violation is confirmed, a recall order may be issued. This can lead to massive secondary damages, including logistics costs, disposal costs, and a decline in corporate reliability. Therefore, it is crucial to thoroughly review whether the method of origin labeling (marking on the product, packaging, etc.) complies with relevant laws and notifications through a professional consultant before proceeding with imports.