DO WHEAT NOODLES BENEFIT FROM KAFTA?

Wheat which is wholly grown in Australia, or wheat products produced from goods which are wholly grown in Australia (such as flour or noodles made from Australian wheat), qualify 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?

Wheat for milling including durum

The tariff on wheat (including durum and for milling) was eliminated on entry into force of the KAFTA (December 2014).

Wheat flour

Prior to the KAFTA, exports of wheat (flour) faced a tariff of 4.2%. Under KAFTA the tariff on wheat (flour) will be reduced in 5 equal annual stages until it is eliminated on 1 January 2018. The rates are as follows:

  • 12 December (2014): 3.3%
  • 1 January (2015): 2.5%
  • 1 January (2016): 1.6%
  • 1 January (2017): 0.8%
  • 1 January (2018): 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.

Wheat noodles

Prior to the KAFTA, exports of wheat (noodles) faced a tariff of 8%. Under KAFTA the tariff on wheat (noodles) will be reduced in in 15 equal annual stages until it is eliminated on 1 January 2028. The rates are as follows:

  • 12 December (2014): 7.4%
  • 1 January (2015): 6.9%
  • 1 January (2016): 6.4%
  • 1 January (2017): 5.8%
  • 1 January (2018): 5.3%
  • 1 January (2019): 4.8%
  • 1 January (2028): 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?

Wheat including durum and for milling

The current rate of tariff (as of June 2015) on wheat (including durum and for milling) under KAFTA is 0%. Other countries* face a tariff of 3%.

Other countries face a tariff of 1.8% on wheat for milling after a quota of 2.4 million tonnes is filled. Tariffs are 0% within the quota amount.

Wheat flour

The current tariff rate (as of June 2015) for wheat flour under KAFTA is 2.5%.

This is lower than the 4.2% which applies to exports from other countries.*

Wheat Noodles

The current tariff rate (as of June 2015) for wheat (noodles) is 6.9%.

This is lower than the 8% which applies to exports from other countries.*

These rates apply to WTO members. Rates may differ under Korea’s free trade agreements with other countries.

WHAT DOCUMENTATION DO I NEED?

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:

  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 wheat noodles:

  1. A Notice of Intention to Export Prescribed Goods or Request For Permit. The Notice must be submitted to the Australian Government Department of Agriculture.
  2. A Certificate of Registration that the Wheat noodles 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.
  3. 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.
  4. Pro-forma invoices may be required in order for importers to conveniently open a letter of credit.
  5. 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.
  6. 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.
  7. 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.
  8. An Organic Certificate for foods labelled as organic. See labelling and marking requirements below.
  9. 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.

WHAT OTHER REQUIREMENTS ARE THERE?

Exports of wheat and wheat-products must satisfy the requirements of 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.

Exports of wheat seed to Korea require a Phytosanitary Certificate prior to export from Australia, issued by the Australian Government Department of Agriculture to certify that the wheat has been inspected according to appropriate procedures, and is considered to be free from pests, soil, weeds, seeds, and extraneous material and conforms with Korea’s phytosanitary regulations.

To obtain a phytosanitary certificate, the wheat seed must be prepared and inspected in a (Australian Government Department of Agriculture) registered establishment.

For sea freight shipments, both the container and the seal numbers must be recorded on the phytosanitary certificate. The registered grainhouse number must be entered in the phytosanitary certificate. No pre-shipment screening is required by Korean officials.

Multiple standards apply for the grade and quality of Australian wheat seed that is traded from Australia to Korea. See Grain Trade Australia, Wheat Trading Standards and the Australian Export Grains Innovation Centre for further information (See Where can I get further advice?).

Phytosanitary certificates are not required for wheat products (wheat noodles and wheat flour) that have been processed in such a way that they have no potential for introducing regulated pests.

Under Australian law, wheat noodles may be pre-packed before inspection in Australia if the packaging can be removed in a way that allows an Authorised Officer to inspect the goods using a method approved under the Export Control (Plants and Plant Products) Order 2011.

Korean officials require wheat and wheat-related products (including noodles and flour) to be packaged in containers which safeguard the hygienic, nutritional, technological, and organoleptic qualities of the product. When wheat seed is packaged in sacks, these must be clean, sturdy and strongly sewn or sealed.

Korean authorities also require manufacture and process details documents for exports of wheat noodles and wheat flour, showing the process from input of raw materials to production of finished goods. The details must include sterilization methods, temperature, and length, as well as documents issued and signed by the manufacturer.

For wheat noodles, a list of raw materials used in the finished product must also be provided to Korean officials that includes the quantities of food additives along with exact scientific names, those issued or prepared by the manufacturer (if in English or other languages, they must be translated into Korean); including the manufacturer’s preparations and signature.

ARE THERE TECHNICAL STANDARDS?

Wheat noodles and wheat flour 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.

Wheat noodles and wheat flour labels must include the product name, producer name, manufacture date (packing date or package year), net quantity of contents, and storage and handling instructions.

For wheat noodles and wheat flour, the names of all ingredients are required on the Korean language label. However, for those products with a principal display panel smaller than 30 cm2, only the top five ingredients are required. 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.

Required on the label are declarations of the following:

  • Composite Ingredients.
  • Allergens
  • Nutrients
  • Additives
  • Other items designated by the detailed labelling standards for food. This includes cautions and standards for use or preservation
  • Gluten free claim.
  • Inner package labelling is voluntary.
  • Either a best before date or a shelf life date on the product label.

Agricultural products such as wheat grains exported in bulk are exempted from the abovementioned labelling requirements. However, for exports of wheat grain for non-retail containers, the product information must be either given on the container or in accompanying documents. An identification mark and the name and address of the manufacturer or packer may be used.

Labelling of genetically modified organisms (GMOs) is not required for genetically modified agricultural products and processed foods which contain wheat.

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 the 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.

ARE THERE OTHER CHARGES?

An export charge is payable on wheat seed exported from Australia. It funds the Grains Research and Development Corporation (GRDC) grain legumes research and development (R&D), Plant Health Australia (PHA) plant health and emergency plant pest response (EPPR) programs and National Residue Survey (NRS) testing. The charge is payable on wheat produced in Australia where the producer delivers the wheat to another person (other than for storage) or where the wheat is processed by or for the producer.

As of 1 November 2010, the levy rate on wheat is: 1.02% of the farm gate value of the grain.

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 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?

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.

Bundles of dried wheat noodles