1.

Social Safety - Prevention of Illegal Drug Trafficking and Establishing Economic Security and Fair Trade Order

The KCS recently highlighted the escalating risks to social safety, including narcotics and supply chain disruption. In response, they outlined the following measures: (i) restructuring operational systems and strengthening information analysis to establish a robust surveillance network aimed at preventing the trafficking of narcotics and other harmful substances, and (ii) forcefully combating threats to economic security and instances of tax evasion, as well as cracking down on economic crimes utilizing foreign exchange and virtual assets and country of origin frauds that damage K-brands. The KCS has proposed the following tasks that have significant implications for export-import companies:
 

(1)

Prevention of Illegal Activities Exploiting E-commerce

• Strengthening punishment for code verification and name lending practices to eradicate identity theft using individual customs clearance codes, and introducing simplified personal authentication procedures for overseas direct purchases.

• Establishing a system to screen for illicit transactions by comparing transaction information obtained from major e-commerce platforms with import declaration information.
   

(2)

Enhancement of Responses to Economic Security Threats

• Expansion of export-import controls on items involving technology infringement, trade secrets, and strategic goods, along with enhancing information exchange and economic surveillance activities among relevant agencies (inter-agency consultations on combating technology leaks).

• Advancement of the early warning system (“C-EWS”) based on trade data to identify supply chain disruptions, providing detailed information to relevant ministries for identifying alternative import sources in case of a shock to the system.
   

(3)

Strengthened Enforcement Against Economic Crimes in Trade

• Strengthening the customs investigation scope and enhancing information analysis to sternly address tax evasion, and uncovering areas such as high-value declaration and asset flight.

• Enhancing crackdowns on unregistered currency exchanges exploited for crimes such as voice phishing and money laundering, and revising the foreign exchange inspection system to improve the soundness of corporate foreign exchange transactions.

• (i) Establishing an information-sharing framework, (ii) introducing virtual asset tracking and analysis programs, and (iii) training analysis experts in order to combat the exploitation of virtual assets for money laundering.
   

2.

Support for National Prosperity - Assisting Growth of Export-Import Companies and Enhancing Convenience for Citizens and Taxpayers

As the global trend of low growth continues and competition among nations intensifies, especially in advanced industries such as semiconductors, the KCS recognizes the need for sustained growth momentum to support national prosperity. To achieve this goal, it announced plans to (i) introduce regulatory innovation and non-tariff barrier reduction through convergence of economic activities and addressing corporate challenges, along with providing support to alleviate financial burdens on companies, and (ii) enhance convenience for citizens and taxpayers as the main clients of customs administration expand from export-import companies to include travelers and overseas direct purchase users. To achieve the foregoing objectives, the KCS has proposed the following tasks:
 

(1)

Support for Industrial Growth Through Regulatory Innovation in the Bonded System

• Petroleum Blending: Introducing a new procedure to blend domestically produced petroleum products sold to overseas companies in comprehensive bonded zones before exporting them, aimed at attracting global blending volumes domestically.
   

(2)

Support for Non-Tariff Barrier Reduction

• Mutual Recognition Agreement: Completion of the Authorized Economic Operator (“AEO”) supply chain with Korea’s top ten trading partners through the signing of an AEO Mutual Recognition Agreement (“MRA”) with Vietnam (the tenth largest trading partner and the last one to sign an AEO MRA).

• Customer Disputes: Strengthening customs cooperation with major countries involved in customs disputes and actively utilizing dispute resolution procedures of international organizations such as the World Customs Organization (“WCO”).
   

(3)

Support for Reduction of Corporate Financial Costs

• Customs Declaration: Improving the customs declaration and payment process by allowing diligent companies to declare and pay import duties on a monthly basis for one month’s worth of imports, extending the payment deadline from up to 15 days after the importation date to up to 60 days.

• Export Refunds: Expanding the calculation basis for export refunds to include not only the “export amount” but also the “amount delivered by the manufacturer to the exporter,” thereby enhancing the convenience of refund applications for small and medium subcontractors.
   

(4)

Improving Convenience for Travelers’ Entry and Exit

• Duty-Free Limit Adjustments: (i) Expanding the duty-free limit for perfumes (from 60 ml to 100 ml), and (ii) implementing rational adjustments (expansion) to the duty-free limit for alcoholic beverages (currently two bottles + 2L + under USD 400).
   

3.

Leading Global Trade Standards - Fulfillment of Responsibilities as Global Pivotal State

The KCS announced its commitment to leading international customs administration standards as a customs agency of a global pivotal state and expanding assistance for developing countries based on international solidarity. The KCS has proposed the following tasks:
 

(1)

Analyzing export companies and products subject to the European Union’s Carbon Border Adjustment Mechanism (“CBAM”) regulations and providing assistance for regulatory compliance on a company and product basis.

(2)

Supporting the utilization of free trade agreements (“FTAs”) for recycling products where proving origin is difficult as a result of the use of waste and recycled materials.