"Continued Until the End of the Middle East War"... Expedited Customs Clearance and Diversified Supply for Economic Security Items

The government will continue to expedite customs clearance and diversify supply sources for economic security items, including raw materials, until the end of the Middle East war, in order to resolve supply-demand imbalances.

On May 7, the Korea Customs Service announced its “Inspection and Improvement Measures for Import Customs Clearance of Items Affected by the Middle East War” at a task force meeting of ministers responsible for special management of the cost of living.

Previously, the Korea Customs Service operated an “Emergency Response Task Force for the Middle East War” to stabilize the supply of urgently needed items and provide emergency customs and logistics support to import and export businesses in the Middle East region.

The support focused on enabling urgent demand items to be immediately introduced into the domestic market and supplied to industrial sites through expedited customs clearance before arrival and unloading, as well as alleviating supply chain bottlenecks at the import stage by prohibiting hoarding and designating penalties for delays in import declarations of emergency supply adjustment items.

Through these measures, at the end of March, 27,900 tons of Russian naphtha, secured through public-private cooperation, and between March and April, 1,097,000 tons of government stockpile oil loaned to refiners (via the SWAP system) were promptly imported into Korea through expedited customs clearance.

In particular, on April 20, as part of supply chain diversification, the Korea Customs Service and the Alberta provincial government of Canada jointly announced a “Joint Statement on Simplifying Documentation for Proof of Origin” for Alberta crude oil from Canada.

This joint statement resolved the issue of proving the origin of Alberta crude oil—a barrier to applying the preferential FTA tariff rate (from 3% to 0%) when Korea imports Alberta crude oil—thus providing a breakthrough in addressing the international crude oil supply crisis.

Canada is the third largest energy powerhouse in the world in terms of crude oil reserves, and Alberta accounts for 80% of Canada’s total crude oil production as of last year. However, despite the FTA between Korea and Canada, Korea faced limitations in applying preferential FTA tariff rates to crude oil imports due to structural difficulties in verifying origin.

This is because, in the process of transporting crude oil from the extraction site to the loading port, oils from multiple producers are mixed and transported, making it practically difficult to separate and certify the origin of each individual producer.

The joint statement is centered on a special measure whereby the Alberta provincial government takes overall responsibility for verification. If the provincial government directly aggregates and verifies the total amount of crude oil produced and the amount of offshore crude oil used, the Korea Customs Service will accept an official verification document confirming origin as proof of origin. This effectively resolves the previous barriers to applying FTA preferential tariff rates.

As a result, individual Canadian exporters can now benefit from FTA preferential tariffs without the burden of proving origin, which is expected to lower the domestic supply price of Canadian crude oil.

The Korea Customs Service plans to continue expedited customs clearance and supply chain diversification until the end of the Middle East war, based on the achievements of the “Emergency Response Task Force for the Middle East War.”

First, to facilitate expedited customs clearance, raw materials sourced overseas can now submit the required import documents after customs clearance, in consultation with the relevant ministries. In addition, to prevent supply delays caused by berthing and unloading delays of crude oil and LNG carriers, certain vessels will be exempt from designated inspections and from mandatory reporting of in-port movement. Furthermore, no fines will be imposed even if additional quantities of crude oil, not originally planned, are unloaded to ease domestic importation.

For supply chain diversification, similar to the special FTA support case for Canadian crude oil, the Korea Customs Service will focus on identifying additional items and systems eligible for special FTA support to resolve procedural difficulties in imports.

Representative examples include efforts to shorten the 184-day issuance period for certificates of origin for Malaysian crude oil (currently 57 days for Australia and 3 days for the Philippines), as well as seeking ways to support imports of Australian condensate as an alternative raw material to naphtha.

Commissioner Lee Myunggu of the Korea Customs Service stated, “The Korea Customs Service will continue to strive to identify core items essential to national resource security and to build a stable supply chain.”

This content was produced with the assistance of AI translation services.