Companies that disguised gold products from China, Vietnam, and Indonesia as "made in Korea" and secretly sold them to the United States were caught in large numbers. The Korea Customs Service revealed that seven companies forged certificates of origin and illegally bypass-exported a total of 283.9 billion won worth of processed gold products. They targeted the fact that Chinese gold products face tariffs as high as 158%, while only 10% is imposed on Korean products.
A similar method also appeared in steel. One company imported Chinese flanges (pipe connection parts), erased the "Made in China" marks, stamped them as Korean, and sent them to the United States. They were caught while exporting more than 60,000 units (worth 4.3 billion won) to the United States to evade the 257.11% anti-dumping tariff the U.S. imposes on Chinese flanges.
The Korea Customs Service said on the 12th that bypass-exports to avoid recent U.S. tariff policy are increasing. From January to August this year, the agency uncovered 20 cases of bypass-exports totaling 356.9 billion won, with the number of cases up 150% and the amount up 1,313% from the same period a year earlier.
The Korea Customs Service analyzed that bypass-export activities mainly aim to evade the U.S. ▲ high tariff rates ▲ import restrictions ▲ anti-dumping and countervailing tariffs. It also warned, "If such trade distortions continue, there could be direct and indirect damage, including a decline in international credibility for our export products and stronger trade barriers."
To prevent this, the Korea Customs Service is strengthening monitoring and crackdowns on bypass-exports aimed at evading high U.S. tariff rates and import restrictions and seeking arbitrage from a domestic-made premium. In Apr., under the special response headquarters for U.S. tariff policy, it established a special trade security investigation team and is making an all-out effort to block bypass-exports.
In addition, the Korea Customs Service plans to actively use an AI and big data-based export-import and cargo information monitoring system, and to strengthen information exchange and investigative cooperation with domestic and overseas intelligence agencies such as the National Intelligence Service, the Ministry of Trade, Industry and Energy (MOTIE), and the Ministry of Foreign Affairs (MOFA), as well as with U.S. Customs and Border Protection (CBP) and Homeland Security Investigations (HSI).
In particular, a method has recently been abused in which goods are stored in a bonded area without going through import clearance and then returned abroad, or exported via a third party's name after import clearance. The Korea Customs Service plans to build a tight monitoring and enforcement network against these practices as well.
Lee Myung-gu, commissioner of the Korea Customs Service, said, "Bypass-exports disguised as domestic products inflict serious damage on good-faith Korean exporters and domestic industry," adding, "As the U.S. government has recently signaled strong sanctions, we will root out bypass-export activities." He added, "If bypass-exports are suspected, we will track them to the end so that those responsible face judgment under the law."