Applying KORUS FTA Preferential Tariffs for US Liquor under $1,000: Requirements for Valid Country of Origin Markings Released

Regarding your inquiry about applying the KORUS FTA (Korea-US Free Trade Agreement) preferential tariff to four bottles of liquor purchased in the U.S. (total value under $1,000 USD), you expressed concern that one bottle lacks a state name and the other three are marked only with 'CA' instead of 'USA.' Below is a detailed explanation of the customs requirements for origin verification.

Under the KORUS FTA, there is a simplified provision for small-value goods (under $1,000 USD). This is intended to facilitate customs clearance by waiving the formal Certificate of Origin (CO) requirement. For 'originating goods' produced in the U.S. and shipped directly to Korea, the preferential rate can be applied based on the country of origin marking on the physical product and the purchase receipt.

However, the markings you described—one bottle with no origin information and three bottles marked only as 'CA'—are generally not recognized as 'proper origin markings' by the Korea Customs Service. Customs authorities prioritize clarity and objectivity when determining origin to ensure the integrity of the FTA agreement.

Importance of Proper Origin Marking and Standards

Origin marking is crucial because it determines the applicable duty rate, protects consumer rights, and prevents unfair trade practices. To qualify for FTA benefits, the origin must be clearly and accurately indicated. The criteria for 'proper marking' include:

• Clarity: The country name must be explicitly stated, such as 'Made in USA', 'Product of USA', or 'USA'.
• Legibility: The marking must be easily identifiable to the naked eye and durable enough not to be easily removed or altered. For liquor, this is typically printed on the label.
• Standard Country Names: State names or abbreviations (e.g., 'CA' for California) alone are insufficient. While 'CA' represents California, it does not legally confirm the 'USA' as the country of origin, as it could potentially refer to other entities or product codes. Therefore, it must be paired with the country name, such as 'California, USA' or 'CA, USA'.

Supplementary Evidence and Professional Guidance

While the current markings make it difficult to qualify for the FTA rate, you may attempt to substantiate the origin by submitting supplementary documents to Customs. These documents serve as secondary evidence:

• Purchase Receipts/Invoices: Check if the commercial invoice or receipt explicitly states 'Country of Origin: USA'.
• Manufacturer's Website/Catalog: Screenshots from the official manufacturer’s website or product catalogs confirming the item is produced in the U.S. can be helpful.
• Correspondence with the Seller: Emails or messages from the seller confirming the U.S. origin of the products.
• Shipping Documents: While a Bill of Lading (B/L) or Air Waybill (AWB) showing a U.S. departure point does not prove origin, it can be used as supporting circumstantial evidence.

Please be advised that even with supplementary data, if the physical marking on the product is missing or ambiguous, Customs may still reject the FTA application and apply the MFN (Most Favored Nation) base duty rate. The burden of proof regarding origin lies with the importer.

Future Recommendations for Importers

To ensure a smooth customs process and secure FTA benefits for future purchases, please consider the following:

• Verify Markings Pre-Purchase: Check product photos or descriptions to ensure 'Made in USA' is clearly marked.
• Retain All Documentation: Keep all receipts, invoices, and shipping documents that contain origin information.
• Identify Manufacturer Information: Familiarize yourself with the producer’s location and manufacturing details beforehand.

In conclusion, the current 'CA' or missing markings are likely insufficient for KORUS FTA application. Clear 'Made in USA' labeling is the primary requirement. While you can attempt to provide supplementary evidence, the most reliable way to receive tariff benefits is to ensure the physical products are marked correctly before they are shipped.