Can preferential tariffs under the Korea-EU FTA be applied when non-certified exporter B exports the goods to Korea, based on the origin declaration made by certified exporter C from France on the invoice? Released

Origin Declaration for Korea-EU FTA Preferential Tariff Application, Validity Assessment in Complex Supply Chains

The issue you inquired about is a very important matter in determining the validity of the origin declaration in a multi-stage supply chain when applying the Korea-EU FTA. It is understood as an inquiry about whether the origin declaration on the commercial invoice is valid for applying the Korea-EU FTA preferential tariff when goods sold by certified exporter C in France to non-certified exporter B are exported to Korea through B.

To conclude, in principle, it is difficult to apply the Korea-EU FTA preferential tariff to goods exported to Korea by non-certified exporter B in France based solely on the origin declaration on the commercial invoice issued by certified exporter C to B. This is because a clear understanding of the origin rules of the Korea-EU FTA, particularly the issuer and requirements of the origin declaration, is necessary.

1. Key Requirements of the Korea-EU FTA Origin Declaration

The Korea-EU FTA agreement adopts the 'origin declaration' as the method of proving origin. This origin declaration is made by the exporter directly writing the wording on the invoice or other commercial documents or export documents.

• The issuer of the origin declaration must be the exporter. In other words, the party that ultimately exports the goods to Korea (here, B) must issue it.
• When issuing the origin declaration, it must include exporter information, importer information, product name, wording proving the origin of the goods, date of issuance and signature (handwritten or digital), and the Approved Exporter Number.

2. Role and Limitations of Certified Exporter C

The origin declaration on the invoice issued by certified exporter C to B serves as a 'Supplier's Declaration' or 'Intra-Community Origin Declaration' from C's perspective, proving to B that the goods are of EU origin. This can be used as internal evidence for B to determine the origin of their export goods if B processes the goods within the EU or includes them in other goods for export. In other words, the origin declaration issued by C to B is essential evidence for B to verify the origin of the goods, but it does not function as an origin certificate for FTA preferential tariff application to the final export country, Korea.

3. Issues with Non-Certified Exporter B's Export

Since B is not a certified exporter, in principle, they cannot issue an origin declaration for the application of the Korea-EU FTA. However, the Korea-EU FTA provides an exception allowing non-certified exporters to issue an origin declaration for small exports not exceeding 6,000 euros in total price.

• If the total price of goods exported by B to Korea is 6,000 euros or less, B can apply for preferential tariffs by directly writing the origin declaration on the invoice (or other commercial documents) issued to Korea, based on the origin evidence received from C (such as the origin declaration on the invoice issued by C to B). In this case, B writes the name and signature of the issuer instead of the Approved Exporter Number.
• However, if the total price of goods exported by B to Korea exceeds 6,000 euros, B is not qualified to issue an origin declaration as they are not a certified exporter. In this case, the origin declaration on the invoice issued by C to B cannot be recognized as a valid FTA origin certificate. The origin declaration must be written on the final commercial invoice or export document exported to Korea, and the issuer must be a certified exporter.

4. Solutions and Considerations

In this situation, there are several solutions to consider for B to provide Korea-EU FTA preferential tariff benefits to the Korean importer.

• Solution 1: C exports directly to Korea
  The most certain method is for certified exporter C to export the goods directly to Korea and include the origin declaration with C's Approved Exporter Number on C's commercial invoice. This can be in the form of B simply transiting C's goods, or C exporting on behalf of B.
• Solution 2: B obtains certified exporter qualification
  If B plans to continuously export EU origin goods to Korea, they can consider applying for and obtaining certified exporter qualification from the French customs authorities. However, becoming a certified exporter for a single transaction is practically difficult.
• Solution 3: Split shipment (not recommended)
  In cases where the total price exceeds 6,000 euros, one might consider arbitrarily splitting the goods to match 6,000 euros or less for multiple shipments, but this may be subject to customs authorities' scrutiny and considered a circumvention, posing a risk. It is also inefficient in terms of the nature of the goods and transportation efficiency.

5. Important Emphasis

The origin declaration must be written on the export document issued by the final exporter to the final importer, and the origin proof generated in the intermediate transaction is not recognized as a valid certificate for FTA preferential tariff application in the final export country. Therefore, the origin declaration issued by C to B is only internal data for B to verify the origin of their export goods, and it is not an FTA origin certificate that B can directly use when exporting to Korea. The Korean importer can only recognize the origin declaration written on the invoice exported to Korea, and this origin declaration must be directly issued by exporter B (in the case of small exports of 6,000 euros or less) or B must have certified exporter qualification. If the amount exceeds 6,000 euros and B is not a certified exporter, it is difficult to apply the preferential tariff.

In conclusion, if goods are exported to Korea through B, it is difficult to apply the Korea-EU FTA preferential tariff based solely on the origin declaration issued by C to B. If the export amount exceeds 6,000 euros, solutions such as C exporting directly to Korea as a certified exporter or B obtaining certified exporter qualification must be considered.