Popcorn grown in Australia qualifies for preferential treatment under the KAFTA. It must be supported by a Certificate of Origin (COO) to qualify for preferential treatment (See What documents do I need to export?). Claims for treatment must be made at the time of importation.
Prior to the KAFTA, exports of popcorn faced a tariff of 630%. Under KAFTA the tariff on popcorn is reduced and will eventually be eliminated. It will be reduced in eighteen equal annual stages, reaching zero by 2031. The tariff rates are as follows:
- 12 December (2014):595%
- 1 January (2015): 560%
- 1 January (2016): 525%
- 1 January (2017): 490%
- 1 January (2018): 455%
- 1 January (2019): 420%
- 1 January (2031): 0%
Tariff rates agreed under KAFTA may not be increased. Any subsequent (better) tariff reductions which Korea grants to all other WTO members will automatically apply under the KAFTA.
The current tariff rate (as of June 2015) for popcorn under the KAFTA is 560%.
This is lower than the 630% which applies to exports from other countries.*
These rates apply when a quota (of 6,102.1 tonnes) of global exports has been filled. A tariff of 1.8% applies to popcorn exports within the quota amount.
Korea also retains a right to allow additional duties to be applied to imports of popcorn in the event of a surge of imports (termed a ‘special safeguard’ measure under WTO rules).
A Certificate of Origin (COO) is required to qualify for preferential treatment under KAFTA. The COO should be prepared by the exporter or the producer (self-certification). Australian exporters also have the option of obtaining a COO from an authorised body; the Australian Chamber of Commerce and Industry (ACCI) or the Australian Industry Group (Ai Group).
The COO requires the exporter to provide the following information:
- Issuing number;
- Exporter, including contact details;
- Blanket period for multiple shipments;
- Producer, including contact details (optional);
- Importer, including contact details (optional);
- Description of good(s);
- Harmonized System code (six digits);
- Preference criterion;
- Observations (optional);
- Declaration; and
- Name, signature, company or authorised body and contact details of person completing the Certificate of Origin (COO); and date of issue.
The following is required prior to exporting of popcorn to Korea:
- A Notice of Intention to Export Prescribed Goods or Request For Permit. The Notice must be submitted to the Australian Government Department of Agriculture.
- A Certificate of Registration that the Popcorn have been prepared and inspected in a registered Australian establishment. To be registered the premises must be constructed, equipped and operate in an effective and hygienic manner. The exporter must submit an Export Registration form to the local Australian Government Department of Agriculture office. Once the application is approved and the establishment has passed inspection, the premises will be registered.
- An Export Permit that has been signed and stamped by an Australian Government Department of Agriculture Authorized Officer. This will occur after the officer has inspected the goods and is satisfied that they meet the requirements of Australian export legislation and Korean requirements. All prescribed goods shipments over 10 kilograms require an export permit. An export permit is valid for 28 days once it is issued.
- Pro-forma invoices may be required in order for importers to conveniently open a letter of credit.
- A Commercial invoice issued and signed by the seller which shows the unit cost of each article and if necessary other costs. These invoices should also be sent under separate cover to the consignee. No special forms of invoices are prescribed in Korea.
- A Bill of Lading/Airway bill made out to the Order of Letter of Credit (L/C) Opening Bank. The bills could be required to bear the name and address of the consignee.
- A minimum of four copies of the packing list; one copy to be included in the relative package, one copy to be sent to the negotiating bank, and one copy each for the exporter and importer. It must also contain a full description of the contents of the shipment.
- An Organic Certificate for foods labelled as organic. See labelling and marking requirements below.
- The Insurance Contract. In the case of a Cost, Insurance and Freight (CIF) contract (Incoterms 1990), the policy must cover 110% of the invoice value, be endorsed by the exporters and expressly state that claims are payable in the currency of the draft. The policy should name an insurance agent as the correspondent in Korea for the settlement of any claims.
Under KAFTA an Australian exporter, or its Korean importer, can request an advance ruling from Korean Customs Service prior to the export of the good concerning its tariff classification, the applicable customs valuation criteria, whether the good is originating or not, and other matters.
Exports of popcorn must satisfy procedures according to Korea’s Plant Quarantine Act and the Food Sanitation Act, including collecting information as to whether goods to be exported comply with the relevant standards.
Prior to exporting popcorn from Australia, the exporter must:
- Obtain a Phytosanitary Certificate issued by the Australian Government Department of Agriculture certifying that the popcorn have been inspected according to appropriate procedures, and they are considered to be free from pests, soil, weed seeds, and extraneous material and conform with Korea’s phytosanitary regulations. For sea freight shipments, both the container and the seal numbers must be recorded on the phytosanitary certificate.
- Meet the required health and safety inspection requirements. The popcorn must be prepared and inspected in a (Australian Government Department of Agriculture) registered establishment to ensure it is free of pests and diseases.
All imported food products are required to carry legible Korean language labels. Stickers may be used, but should not be easily removable nor should they cover the original label. Labels must include the product name, producer name, manufacture date (packing date or package year), net quantity of contents, and storage and handling instructions on the South Korean language label.
Popcorn packed in a container, a bag, or a box must have a country of origin label on the smallest retail packaging unit. Each pallet must have the words ‘FOR KOREA’ In English printed/stencilled on all four sides of the pallet.
Korean language labels, except for country of origin markings that must be shown at the time of customs clearance, can be attached locally on products in the bonded area, either before or after customs clearance.
Korea requires an Organic Certificate issued by Korea’s certifying agents for all imported foods (including unprocessed) labelled as organic. The certification for organic produce is classified into two categories: organic and no-pesticide. Australian Certified Organic (ACO) is currently the only certification body that has been accredited by the Korean government bodies for the inspection and certification according to Korean organic standards. The exporter must apply for organic certification from the ACO. The exporter should also keep the Korean importer informed on their ACO application so that the importer can seek Korean certification co-currently.
Exporters must obtain an Organic Certificate prior to the consignment departing Australia. Australia prohibits the export of organic produce unless an Organic Produce Certificate has been issued by the recognised authority in Australia.
Genetically modified corn (and other cereals) are subject to mandatory Genetically Modified Organism (GMO) labelling requirements in Korea. A notarised self declaration that products are exempt from GMO labelling is accepted by Korean authorities. Manufacturers/importers must keep records to prove unlabelled foods are GMO free for up to 2 years.
The KAFTA creates an institutional framework for both countries to accelerate tariff reductions, address non-tariff barriers affecting trade and cooperate on agricultural trade.
Accelerate tariff reductions
- KAFTA creates a mechanism for Australia and Korea to consider accelerating tariff reductions which have been agreed under the agreement. A Committee on Trade in Goods is established under the agreement and part of its mandate is to conduct consultations on accelerating tariff elimination.
Review barriers of concern
- Non-tariff barriers of concern to Australia can also be reviewed under the KAFTA to improve trade. The Committee on Trade in Goods can review specific non-tariff barriers which are identified by Australia. The Committee will consider approaches to facilitate trade and make recommendations to the parties to address the barriers. The recommendations can then be considered by high level officials from Korea under the Joint Committee of the Agreement, which oversees its general implementation.
Cooperate with Korean farmers and regulators
- KAFTA encourages cooperation on agriculture by both public and private entities in Korea and Australia. Cooperative activities on any agricultural matter can be undertaken to promote cooperative relationships between Korean and Australian farmers.
Recommendations for cooperative activities are made by a Committee on Agricultural Cooperation under the agreement. It is comprised of officials from both Australian and Korean Agricultural, Fisheries and Forestry Ministries and meets annually. The Australian Government Department of Agriculture is the designated contact point for overseeing and coordinating agricultural cooperation activities.
- The KAFTA supports cooperation between Australia and Korea to promote trade on technical standards, including through the development of bilateral initiatives on standards, testing procedures and technical regulation. Sector specific proposals for cooperation can be raised by either country and must be considered by the other.
The Technical Barriers to Trade (TBT) Coordinator under the Agreement (for Australia the Department of Industry and for Korea the Korean Agency for Technology and Standards) will consider specific proposals for cooperation as well as facilitate mutual recognition agreements. Further issues can be considered under an Ad Hoc Working Group.Similarly, there is agreement to cooperation on quarantine issues including detection of pathogens and plant pest control, among other issues.
- Australian Trade Commission (Austrade): www.austrade.gov.au See Republic of Korea- Doing Business.
- Australian Department of Agriculture MICOR- Manual of Importing Country Requirements, and Exporting plants and plant products: A step-by-step guide for Australian exporters micor.agriculture.gov.au and www.agriculture.gov.au
- Australian Embassy in South Korea: www.southkorea.embassy.gov.au
- Australian Trade Commission in Seoul (Austrade): email (firstname.lastname@example.org)
- Department of Foreign Affairs and Trade (DFAT): www.dfat.gov.au
- Ministry of Foreign Affairs and Trade (MOFAT): www.mofat.go.kr
- Ministry of Food and Drug Safety: mfds.go.kr/index.jsp
- Animal and Plant Quarantine Agency (QIA): www.qia.go.kr
- Australian Certified Organic (ACO), Korea Organic Certification www.aco.net.au
- Department of Foreign Affairs and Trade (DFAT), dfat.gov.au See Guide to using KAFTA to export and import goods and Explanatory Schedule of Korean Tariff Commitments
- Horticulture Industry Network (HIN): www.hin.com.au
- Australian Horticulture Exporters Association (AHEA): www.ahea.com.au
- Korea Importers Association (KOIMA): www.import.or.kr
KAFTA sets out disciplines to ensure that technical standards, such as marking and labelling, do not create barriers to trade. It affirms and builds on WTO commitments. KAFTA:
- Encourages the use labelling and marking only for the purpose of providing information which is relevant to consumers;
- Requires that identification numbers for Australian economic operators are issued without delay and on the same basis as for Korean operators;
- Makes provision for the use of both English and Korean language labels on products;
- Encourages the acceptance of detachable labels, and the use of marking and labelling in documentation accompanying the product rather than being attached to it.
KAFTA supports recognition and acceptance of product testing results conducted by Australia in Korea. Korean authorities must explain reasons in the event the testing results of Australia are not accepted, and must consider requests by Australia to negotiate agreements for recognition of product testing.
KAFTA also encourages greater transparency in the development of standards in Korea and their accessibility. For example, there is a requirement that proposed standards are notified to Australia and that standards are made publicly available.