Is it possible to apply the preferential tariff even if the legal name and country information of the third-country invoice issuer are missing on the Korea-China FTA certificate of origin, or does the certificate need to be corrected? Released

You inquired about the possibility of applying preferential tariffs if the legal name and country information of the third-party invoice issuer are missing on the Korea-China FTA certificate of origin. To conclude, the omission of this information is considered a significant error on the certificate of origin, and preferential tariffs cannot be applied, and a corrected certificate of origin must be submitted.

This is based on the provisions specified in the Korea-China FTA agreement Article 3.25 (Exclusion of Preferential Tariff Application). This clause stipulates that the application of preferential tariffs can be excluded if the certificate of origin does not meet the requirements of Chapter 3 (Rules of Origin and Origin Implementation Procedures). Providing information related to third-party invoicing is one of the key requirements to ensure transparency and accuracy in origin implementation procedures.

What is third-party invoicing, and why is this information important?

Third-Party Invoicing refers to a transaction form where the exporter (producer or supplier) and the importer do not directly trade, but a business in a third country issues the invoice and mediates the payment. For example, when goods produced in China are imported into Korea, a specific company in Japan issues the invoice and manages the payment. Such transactions can occur frequently due to the complexity of global supply chains.

In such third-party invoicing, the certificate of origin must clearly state the legal name and country of the third-party operator issuing the invoice, in addition to the actual origin exporter and importer. The reasons why this information is important are as follows:

• Ensuring transaction transparency: In transactions involving a third party, there is a possibility that information related to origin may become opaque. By clarifying the information of the invoice issuer, it becomes essential data to clearly identify the movement path of goods and the transaction parties and to examine whether there is a violation of origin regulations.
• Preventing origin laundering: It prevents attempts to deceive the origin through third-country transit or invoicing and ensures that the benefits of preferential tariffs are only applied to legitimate origin goods.
• Maintaining trust between FTA parties: FTAs operate based on mutual trust between the parties. The omission of such detailed information can affect the trust relationship and may cause unnecessary friction in future origin verification processes.

Response measures if information is missing

In cases like yours, where the legal name and country of the third-party invoice issuer are not stated on the certificate of origin, it is difficult for the certificate of origin to be recognized as valid. Customs authorities consider such errors as 'errors on the certificate of origin,' and without resolving this, the application of preferential tariffs is not allowed. Therefore, the most certain and prompt solution is to contact the exporter to issue and submit a corrected certificate of origin (Amended COO or Corrected COO).

• Correction procedure: The exporter must request an error correction from the certificate of origin issuing authority (such as Chinese customs or the chamber of commerce) and obtain a new certificate. In this process, the number of the existing certificate is often stated, and what content has been corrected is specified.
• Period and precautions: The corrected certificate of origin should be obtained as quickly as possible to prepare for import declaration correction or post-audit. If the corrected certificate is not submitted within a certain period after the import declaration is accepted, the application of preferential tariffs may be denied, and the general tariff rate (MFN Rate) may be applied, and additional taxes may be imposed.

Advice to prevent similar issues in the future

To prevent the recurrence of such issues, it is advisable to take the following measures.

• Prior consultation and guidance provision: When contracting with the exporter, clearly consult on the requirements for issuing the certificate of origin and provide guidance requesting that necessary information (legal name, country, etc.) be stated if there is third-party invoicing.
• Thorough document review: As soon as the certificate of origin is received, develop a habit of meticulously checking all entries, especially information related to third-party invoicing.
• The role of customs brokers: It is difficult for individual companies to fully understand the complex FTA regulations and certificate of origin review criteria. It is important to review the certificate of origin requirements in advance with the help of professional customs brokers and respond quickly in case of problems.

FTA preferential tariffs provide significant cost-saving effects for companies, but to receive these benefits, origin regulations and procedures must be thoroughly followed. Even a small omission of information can lead to substantial financial losses, so we urge you to always ensure accurate and complete document preparation.