"We should greatly expand special judicial police officers and establish a new tariff law system centered on support for corporations."
Administrator Lee Myung-gu of the Korea Customs Service said in an interview held at Gimhae International Airport in Gangseo-gu, Busan, on Sept. 30, "While I serve as the head of the Korea Customs Service, I will focus on strengthening trade security."
He took office as the new head of the Korea Customs Service on Jul. 14 and faces the task of protecting Korea's export economy in response to the heightened trade uncertainty since the launch of the Donald Trump U.S. administration. On top of that, there is the heavy responsibility of detecting the domestic inflow of dangerous cargo such as drugs and illegal firearms with limited manpower. This is why Lee described the Korea Customs Service as "an agency that works at the tariff border with the mindset of sleeping on the blade of a knife."
He expressed a determination to deliver results in three broad areas to strengthen trade security: securing human and material capacity and overhauling laws and systems. Lee said, "For proper security, we need to add more to the current 500 special judicial police officers, and we also need to further advance equipment related to drug detection," adding, "We have begun a two-year plan, including launching the research and development execution unit 'Customs Lab 2.0' in collaboration with the Ministry of Science and ICT."
Regarding laws and systems, he lamented that the current tariff law framework is oriented toward "taxes." Lee said, "As issues at the tariff border are becoming increasingly complex, I believe we need to create separate tariff laws related to support for corporations," adding, "We will soon draw up an internal roadmap for this plan and begin consultations with related ministries, including the Ministry of Economy and Finance." The following is a Q&A.
─You took office as trade uncertainty sparked by Trump's tariffs intensified. What policies are you focusing on most?
"The first step regarding U.S. tariff policy is to pursue customized support policies for corporations. What corporations want most is information on whether the products they export are subject to tariffs, among other things. Providing the "Korea-U.S. item classification linkage table" is a representative example.
Also, since the Korea-U.S. Free Trade Agreement (FTA), which took effect in Mar. 2012, remains in force, we provide guidance on "U.S. non-preferential origin determination." In a Korea Customs Service survey of 667 exporters to the United States conducted Aug. 14–27, 77.4% of corporations responded that these two issues were "difficulties in U.S. customs procedures." Since Mar. 28, we have established the "Special Response Headquarters for U.S. Tariff Policy Response and Domestic Industry Protection (SRH)" to provide customized support."
─If there is something you are preparing to help corporations export.
"As Korea depends on imports for most raw materials, the swift flow of tariffs and logistics is crucial. To that end, we are using the bonded processing system (a system that allows finished goods to be produced by manufacturing and processing imported materials and supplies without paying tariffs), and the Korea Customs Service has contributed to enhancing the growth potential of the overall industry by innovating this system.
The bonded system is also essential for advancing the Korea-U.S. shipbuilding cooperation project "MASGA." We plan to improve the system by reflecting on-the-ground feedback, such as simplifying the storage of massive raw materials and expanding autonomous management. Through this, we expect to help ensure the smooth supply of raw materials for warships and repairs.
In step with Incheon Airport's full-fledged push to attract the P2F (passenger-to-freighter conversion) MRO (maintenance, repair and overhaul) business, we also plan to support the aviation industry. Under current law, aircraft parts are restricted as items related to national defense strategy. We are closely consulting with related agencies to simplify the approval process for the import of aircraft parts subject to MRO and are also pushing to revise related laws."
─Illegal trade that circumvents U.S. tariffs by routing through Korea has become a problem.
"The Korea Customs Service's response to U.S. tariffs rests on two pillars: "support" and "crackdowns." As the United States pursues tariff policies by item and by country, the trade environment has grown more complex and the global supply chain has been reorganized. In that context, attempts at roundabout exports transiting Korea have been detected. There is concern that products such as those from China, where tariff rates are higher than in Korea, could be relabeled as Korean to avoid their home country's high tariffs and then exported to the United States."
The U.S. customs authority, through executive order, imposes an additional 40% tariff on goods exported through roundabout routes. The problem is that countries and facilities involved in the roundabout exports are also disadvantaged in areas such as public procurement and national security screening. This undermines the value of K-brands in the U.S. market and could lead to a higher level of U.S. customs inspections on cargo originating from Korea, causing secondary damage to domestic corporations. To prevent this, it is important to block illegal roundabout exports."
─Have there been cases of detecting roundabout exports?
"On 14th, we uncovered a case in which parts such as intelligent closed-circuit (CC) TVs were imported from China into Korea, assembled, and then illegally exported to the United States. The intent was to disguise them as domestic products to circumvent U.S. import restrictions on Chinese telecommunications and video security equipment.
The Korea Customs Service established the "Special Investigation Team for Trade Security" to strictly crack down on such intentional roundabout exports. As a result, through September, we detected "roundabout exports disguised as domestic products" totaling 357.8 billion won, up 1,317% from the same period a year earlier."
─If there are areas the Korea Customs Service should improve.
"Among the 123 national agendas of the Lee Jae-myung administration, No. 37 includes "economic security," and the Korea Customs Service's implementation task is precisely to "establish a trade security enforcement system." To do so, we must expand material capacity along with human capacity and overhaul laws and systems.
The current 500 special judicial police officers are not enough to properly safeguard trade security. Expanding personnel is urgent. In terms of equipment, in addition to the recently introduced millimeter-wave personal screening devices, we need to introduce more advanced devices for drug detection. Representative examples include Raman spectrometers and ion scanners, and we have drawn up a two-year plan to advance equipment in collaboration with the Ministry of Science and ICT.
Lastly, the current tariff law does not reflect the increasingly complex trade environment. There is a need to create separate laws on the "tariff border" or "support for corporations," rather than the existing tax-oriented framework."
─At the time of your inauguration, you also set goals such as stabilizing revenue and an AI-driven transformation.
"As of Aug., there were 2,518 delinquent taxpayers, with arrears totaling 2.1155 trillion won. Through Dec., the Korea Customs Service will run a "special period for clearing arrears" to focus on long-term, large-amount, and new delinquencies, and will mobilize all administrative means, including interviews, seizures, and sales, to strengthen effective collection. In Mar. next year, we plan to establish a "tariff arrears management unit" to conduct a full review, and by building a profile database (DB) of delinquent taxpayers, we will lay the foundation for systematic arrears management. To strengthen the tracking of virtual assets and assets hidden overseas, we will identify patterns of asset concealment using big data and artificial intelligence (AI), and will continue home searches and investigations into financial assets.
Regarding AI, in Jul. we successfully test-developed a "taxable value Q&A chatbot." Because it was developed in-house, it overcomes the security issues of external AI as a service. I believe this will serve as a stepping stone for the full-scale introduction of AI. The Korea Customs Service will not stop experimenting and taking on challenges, and will gradually expand AI-driven tariff administration."