DO PRAWNS BENEFIT FROM KAFTA?

Prawns grown and harvested in Australia qualifies for preferential treatment under the KAFTA.

They 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.

HAVE TARIFFS BEEN REDUCED?

Prior to KAFTA, exports of shrimps and prawns faced a tariff of 20%. Under KAFTA, tariffs of 20% (on most prawns) and 42% (on salted/in brine prawns) will be reduced gradually within 2 – 8 years, reaching zero by 2023 or earlier.

The reduction will be staged annually. Each category of shrimps and prawns will follow a different tariff schedule. The rates are as follows:

Frozen prawns

  • Peeled
    • 12 December 2014: 16%
    • 1 January 2015: 12%
    • 1 January 2016: 8%
    • 1 January 2017: 4%
    • 1 January 2018: 0%
  • Other
    • 12 December 2014: 18%
    • 1 January 2015: 16%
    • 1 January 2016: 14%
    • 1 January 2017: 12%
    • 1 January 2018: 10%
    • 1 January 2019: 8%
    • 1 January 2020: 6%
    • 1 January 2021: 4%
    • 1 January 2022: 2%
    • 1 January 2023: 0%

Fresh or chilled prawns

  • 12 December 2014: 17.1%
  • 1 January 2015: 14.2%
  • 1 January 2016: 11.4%
  • 1 January 2017: 8.5%
  • 1 January 2018: 5.7%
  • 1 January 2019: 2.8%
  • 1 January 2020: 0%

Dried prawns

  • 12 December 2014: 17.1%
  • 1 January 2015: 14.2%
  • 1 January 2016: 11.4%
  • 1 January 2017: 8.5%
  • 1 January 2018: 5.7%
  • 1 January 2019: 2.8%
  • 1 January 2020: 0%

Prawns salted or in-brine

  • 12 December 2014: 36% or 242Won/kg, whichever is greater
  • 1 January 2015: 30% or 202Won/kg, whichever is greater
  • 1 January 2016: 24% or 161Won/kg, whichever is greater
  • 1 January 2017: 18% or 121Won/kg, whichever is greater
  • 1 January 2018: 12% or 80Won/kg, whichever is greater
  • 1 January 2019: 6% or 40Won/kg, whichever is greater
  • 1 January 2020: 0%

Smoked prawns (frozen and unfrozen)

  • In airtight containers
    • 12 December 2014: 16%
    • 1 January 2015: 12%
    • 1 January 2016: 8%
    • 1 January 2017: 4%
    • 1 January 2018: 0%
  • In non airtight containers
    • 12 December 2014: 13.3%
    • 1 January 2015: 6.6%
    • 1 January 2016: 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.

WHAT TARIFFS ARE PAYABLE?

Current tariff rates for prawns under KAFTA (as of June 2015) are as follows:

  • Frozen prawns (peeled) – 12%
  • Frozen prawns (unpeeled) – 16%
  • Fresh prawns – 14.2%
  • Dried prawns – 14.2%
  • Prawns salted or in brine – 30% or 202Won/kg, whichever is greater
  • Smoked prawns – 6.6%-12%

This is lower than the tariffs which apply to exports of other countries.* Most prawns from non-FTA partners of Korea face a tariff of 20%. An adjustment tariff of 42% (or 283 Won/kg, whichever is higher) applies to salted/in brine prawns.

ARE THERE OTHER CHARGES?

A domestic export charge is payable on farmed prawns produced in and exported from Australia. The farmed prawns levy and export charge funds the Fisheries Research and Development Corporation (FRDC) farmed prawns research and development (R&D). The producer, (the person who owns the product at the time of export from Australia) or the producer’s agent must pay the charge, to the Levies Revenue Service (LRS).

As of 1 October 2013, the rate of domestic levy and export charge rate on farmed prawns is 3.64 cents per kilogram of whole farmed prawns.

WHAT DOCUMENTATION DO I NEED?

A Certificate of Origin (COO) is required to qualify for preferential treatment under the Korea-Australia Free Trade Agreement (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:

  1. Issuing number;
  2. Exporter, including contact details;
  3. Blanket period for multiple shipments;
  4. Producer, including contact details (optional);
  5. Importer, including contact details (optional);
  6. Description of good(s);
  7. Harmonized System code (six digits);
  8. Preference criterion;
  9. Observations (optional);
  10. Declaration; and
  11. 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 export of fish and fish products to Korea, including prawns:

  1. A Certificate of Export Registration for establishments which prepare (preparation includes processing, packing, storage, treatment, handling and loading activities) fish and fish products for the purpose of export as food for human consumption must be issued by the Australian Government Department of Agriculture. If the product is transported from one establishment to another, each establishment must be export registered with the Department.
  2. An Approved Arrangement(AA) which details how establishments involved in preparing, handling and storing fish and fish products plan to comply with Australia’s export control legislation and importing country requirements. Establishments including vessels involved in preparing, handling and storing fish products destined for human consumption must submit their AA to the Australian Government Department of Agriculture for assessment and approval. There is a fee for this service. An establishment must have in place an AA in order to obtain the Certificate of Export Registration.
  3. An Audit by the Australian Government Department of Agriculture is conducted to verify that the establishment is meeting all requirements set out in food export legislation and the establishment’s approved arrangement. As of July 2015, export registered vessels and fish establishments will be audited either annually, 9 monthly or 6 monthly depending on the risk category of each establishment.
  4. A Request for Permit must be lodged electronically using the Australian Government Department of Agriculture EXport DOCumentation system (EXDOC) prior to obtaining an export permit and an export health certificate (where required).
  5. An Export Permit issued by the Australian Government Department of Agriculture for the export of fish and fish products. An export permit must be generated electronically, using the Australian Government Department of Agriculture EXport DOCumentation system (EXDOC). An export permit will be issued by a Australian Government Department of Agriculture authorised officer after the goods have been inspected and are seen to have satisfactorily met the requirements of Australian export legislation and Korean requirements.
  6. A Transfer Certificate for each consignment moving between export registered establishments for the product to remain export eligible.
  7. Manufacturer’s Declaration of Compliance provided by registered establishments that manufacture fish and fish products (rather than just store them) verifying that, to the point of despatch from the export registered premises that manufactured the goods, the registered establishment has complied with all necessary domestic and importing country requirements.
  8. For export eligible live seafood, exporters must submit FX46KR Certificate, certifying that the goods are: (i) In sound condition; (ii) Fit for human consumption; (iii) Australia maintains a system that meets OIE (The World Organization for Animal Health) requirements for the notification of diseases and epidemiological information in aquatic animals. In respect of farmed aquatic animals, these must be examined prior to harvesting for processing or transport and found to be healthy; and (iv) Of Australian Origin.
  9. Pro-forma invoices may be required in order for importers to conveniently open a letter of credit.
  10. 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.
  11. 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.
  12. 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.
  13. An Organic Certificate, for foods labelled as organic. See labelling and marketing requirements below.
  14. 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 the 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.

WHAT OTHER REQUIREMENTS ARE THERE?

Exports of fish, including shrimps and prawns 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. When necessary, exporters and importers must submit reports of self-assessment.

Documents required from exporters include:

  • List of materials: All ingredients and food additives should be listed in scientific terms and on a document with the trademark of exporter and issued and signed by the manufacturer.
  • Manufacturing and processing details: Documents showing the process from input of raw materials to production of finished goods. Manufacture and process details must include sterilization methods, temperature, and length. Documents should bear the name of the manufacturer, place of manufacture, and the product name. All documents must be issued and signed by the manufacturer.
  • Other documents necessary for marine products.
  • Testing and inspections must be undertaken to determine maximum values of chemical residues for treatment of fish and crustaceans imported to Korea based on common standards and specifications for general food.

For frozen fish hygienically processed and contained in packages for consumption, Korea requires the number of germs per 1 gram must be under 100,000 units. The number of colon bacillus per 1 gram must be under 10 units.

Establishments that produce frozen fish visceral by-products (covered by HS Codes 0303, 0306 and 0307), and wish to send these products to Korea must undergo an audit by Korean authorities.

ARE THERE TECHNICAL STANDARDS?

All imported food products are required to carry legible Korean language labels (containing the product name and type, producer name, manufacture date, shelf life, net quantity of contents, ingredients, and storage and handling instructions). Imported fish/fish product that is not contained in containers or packages is exempt from this requirement.

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.

HOW ELSE IS KAFTA IMPROVING ACCESS?

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 (DA) 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.
WHERE CAN I GET MORE ADVICE?
DOES KAFTA MAKE EXPORTING EASIER?

The 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.

The 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.

The 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.

Fresh prawns