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The concept criteria of the raw materials for foreign exchange earnings that are exempted from, and the imported raw materials that are subject to, the requirement to mark the origin of the materials

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2020, (30), pp.47-73
  • DOI : 10.31839/ibt.2020.07.30.47
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law
  • Received : June 17, 2020
  • Accepted : July 27, 2020
  • Published : July 31, 2020

SONG KWANHO 1

1동아대학교

Accredited

ABSTRACT

Although importation of raw materials for foreign exchange earnings doesn’t require compliance with the requirement to mark origin of such materials, exemption from the regulation requires such materials to be first on the list of raw materials approved for importation. An importer seeking exemption also needs to obtain approval for importation from the head of a relevant agency authorized by the Minister of Trade, Industry and Energy and fulfill certain obligations such as making actual foreign exchange earnings within the required time period. Without complying with the requirements, an importer of raw materials who intends to use such materials for domestic market cannot be entitled to exemption from the duty to mark the origin of raw materials. The central issue is not whether an importer ultimately exported goods after using imported raw materials. If the importer did not obtain approval for importation of raw materials for foreign exchange earnings, but imported the materials by following general import procedures, he/she cannot benefit from the exemption because such materials could not be considered as the materials for foreign exchange earnings. Otherwise, the importer’s activity would determine whether the trader is subject to the requirement to mark the origin of the materials, which would defeat the purpose of the regulation. If an imported material is used as a component and raw material for manufacturing that results in substantial transformation, it would be exempted from the requirement to mark the origin of the materials. Such application is consistent with the purpose of the decree because if the semi-manufactured goods undergo further production, manufacturing and processing which lead to substantial transformation, such goods would be labelled as domestically produced goods and therefore marking of the origin of the equipment and raw materials used in such goods wouldn’t be required. However, in the judgment case being reviewed in this paper, the duty to mark origin had to still apply because the imported materials were subject to only simple processing works instead of manufacturing activities that substantially transform the goods and give essential characteristics to the goods. If an importer fails to fulfill the duty to mark origin when only simple processing works need to be carried out in the Republic of Korea, he/she should be subject to criminal punishment and penalties for the violation of the Foreign Trade Act. The traders and distributors of imported goods in the judgment case examined in this paper therefore had to be criminally punished for their breach of the duty to mark origin under the Foreign Trade Act. In addition to addressing the issues in the aforementioned court decision, this paper also explores other court decisions where the duty to mark origin was more accurately interpreted and enforced.

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