  
  
WT/TPR/S/414/Rev.1  
21 December  2021 
(21-9524) Page: 1/229 
Trade Policy Review Body   
 
TRADE POLICY REVIEW  
REPORT BY THE SECRETARIAT  
REPUBLIC OF KOREA 
Revision  
This report, prepared for the eighth Trade Policy Review of the Republic of Korea, has been drawn 
up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the 
Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from the Republic of Korea on its 
trade policies and practices . 
 
Any technical questions arising from this report may be addressed to Sergios Stamnas  
(tel. 022 739 5382) and Zheng Wang ( tel. 022 739 5288).   
 
Document WT/TPR/G/414 /Rev.1  contains the policy statement submitted by the Republic of Korea.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report was drafted in English.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  CONTENTS  
SUMMARY  ................................ ................................ ................................ ........................  9 
1   ECONOMIC ENVIRONMENT  ................................ ................................ ........................  15 
1.1   Main Features of the Economy  ................................ ................................ ..................... 15 
1.2   Recent Economic Developments  ................................ ................................ ................... 19 
1.2.1    Growth, income, and employment  ................................ ................................ ............. 19 
1.2.2    Prices  ................................ ................................ ................................ ..................... 22 
1.2.3    Main macroeconomic policy developments  ................................ ................................ ..22 
1.2.3.1    Monetary and exchange rate policy  ................................ ................................ ......... 22 
1.2.3.2    Fiscal policy  ................................ ................................ ................................ .......... 23 
1.2.4    Structural policies  ................................ ................................ ................................ ....23 
1.2.4.1    Tax reform  ................................ ................................ ................................ ........... 24 
1.2.4.2    Privatization  ................................ ................................ ................................ ......... 25 
1.2.4.3    Competition policy  ................................ ................................ ................................ 25 
1.2.4.4    Corporate governan ce and the cost of capital  ................................ ........................... 25 
1.2.4.5    Labour market policies  ................................ ................................ ........................... 26 
1.2.5    Balance of payments  ................................ ................................ ................................ 27 
1.3   Developments in Trade and Investment  ................................ ................................ ........ 29 
1.3.1    Trends and patterns in merchandise and services trade  ................................ ................ 29 
1.3.2    Trends and patterns in FDI  ................................ ................................ ....................... 32 
2   TRADE AND INVESTMENT REGIMES ................................ ................................ ...........  36 
2.1   General Framework  ................................ ................................ ................................ ....36 
2.2   Structure of Trade Policy Formulation  ................................ ................................ ............ 37 
2.3   Trade Policy Objectives  ................................ ................................ ............................... 37 
2.4   Trade Laws and Regulations  ................................ ................................ ......................... 38 
2.4.1    Regulatory reform  ................................ ................................ ................................ ....38 
2.4.2    Trade -related legislation  ................................ ................................ ........................... 39 
2.4.3    Transparency  ................................ ................................ ................................ .......... 39 
2.5   Trade Agreements and Arrangements  ................................ ................................ ........... 42 
2.5.1    WTO ................................ ................................ ................................ ...................... 42 
2.5.2    Regional and preferential agreements  ................................ ................................ ........ 43 
2.5.2.1    RCEP  ................................ ................................ ................................ ................... 44 
2.5.2.2    RTA with  five Central American countries  ................................ ................................ .45 
2.5.2.3    RTA with the United Kingdom  ................................ ................................ ................. 45 
2.5.3    Preferential trade arrangements  ................................ ................................ ................ 45 
2.5.4    Other agreements and arrangements  ................................ ................................ ......... 45 
2.5.4.1    Asia-Pacific Economic Cooperation (APEC)  ................................ ................................ 45 
2.5.4.2    Asia-Europe Meeting (ASEM)  ................................ ................................ .................. 46 
2.5.4.3    Trade with the Democratic People's Republic of Korea  ................................ ............... 46 
2.6   Foreign Direct Investment  ................................ ................................ ........................... 47 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.6.1    Overview  ................................ ................................ ................................ ................ 47 
2.6.2    FDI restrictions  ................................ ................................ ................................ ........ 48 
2.6.3    FDI incentives  ................................ ................................ ................................ ......... 50 
2.6.3.1    Tax incentives  ................................ ................................ ................................ ......50 
2.6.3.2    Cash grants  ................................ ................................ ................................ .......... 51 
2.6.3.3    Industrial site support  ................................ ................................ ........................... 51 
2.6.4    Other  ................................ ................................ ................................ ..................... 53 
3   TRADE POLICIES AND PRACTICES BY MEASURE  ................................ ........................  54 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 54 
3.1.1    Customs procedures, valuation, and requirements  ................................ ....................... 54 
3.1.1.1    Procedures  ................................ ................................ ................................ ........... 54 
3.1.1.2    Customs valuation  ................................ ................................ ................................ 58 
3.1.2    Rules of origin  ................................ ................................ ................................ ......... 60 
3.1.3    Tariffs  ................................ ................................ ................................ .................... 61 
3.1.3.1    Applied MFN rate ................................ ................................ ................................ ..61 
3.1.3.2    MFN tariff dispersion and escalation  ................................ ................................ ........ 64 
3.1.3.3    "Flexible" tariffs  ................................ ................................ ................................ ....65 
3.1.3.4    Bound tariff  ................................ ................................ ................................ .......... 66 
3.1.3.5    Duty concessions/exemptions  ................................ ................................ ................. 67 
3.1.3.6    "Usage" tariff rates ................................ ................................ ................................ 68 
3.1.3.7   Tariff preferences  ................................ ................................ ................................ ..68 
3.1.3.8    Tariff quotas  ................................ ................................ ................................ ......... 69 
3.1.3.8.1    Agricultural tariff quotas  ................................ ................................ ..................... 69 
3.1.3.8.2    Autonomous tariff quotas  ................................ ................................ .................... 70 
3.1.4    Other charges affecting imports  ................................ ................................ ................. 71 
3.1.5    Import prohibitions, restrictions, and licensing  ................................ ............................ 71 
3.1.5.1    Prohibitions  ................................ ................................ ................................ .......... 71 
3.1.5.2    Quotas  ................................ ................................ ................................ ................ 71 
3.1.5.3    Licensing  ................................ ................................ ................................ ............. 72 
3.1.6    Anti-dumping, countervailing, and safeguard measures  ................................ ................ 73 
3.1.6.1    Anti-dumping and countervailing measures  ................................ .............................. 74 
3.1.6.2    Safeguards  ................................ ................................ ................................ ........... 75 
3.2   Measures Directly Affecting Exports  ................................ ................................ .............. 76 
3.2.1    Customs procedures and requirements  ................................ ................................ .......76 
3.2.2    Taxes, charges, and levies  ................................ ................................ ........................ 76 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ............................. 76 
3.2.3.1    Prohibitions  ................................ ................................ ................................ .......... 76 
3.2.3.2    Restrictions and licensing  ................................ ................................ ....................... 77 
3.2.4    Export support and promotion  ................................ ................................ ................... 79 
3.2.4.1    Subsidies  ................................ ................................ ................................ ............. 79 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.2.4.2    Duty and tax concessions  ................................ ................................ ....................... 79 
3.2.4.3    Promotion and marketing  ................................ ................................ ....................... 79 
3.2.5    Export  finance, insurance, and guarantees  ................................ ................................ ..80 
3.3   Measures Affecting Production and Trade  ................................ ................................ .......81 
3.3.1    Incentives  ................................ ................................ ................................ ............... 81 
3.3.1.1    Taxation  ................................ ................................ ................................ .............. 81 
3.3.1.1.1    Indirect taxation  ................................ ................................ ................................ 81 
3.3.1.1.2   Direct taxation  ................................ ................................ ................................ ...84 
3.3.1.2    Tax and non -tax incentives  ................................ ................................ .................... 85 
3.3.1.2.1    Tax incentives ................................ ................................ ................................ ....85 
3.3.1.2.2    Non-tax incentives  ................................ ................................ ............................. 87 
3.3.1.2.2.1    Access to finance  ................................ ................................ ............................. 87 
3.3.1.2.2.2    Other support  ................................ ................................ ................................ .90 
3.3.2    Standards and other technical requirements  ................................ ............................... 93 
3.3.2.1    Standards, testing, and certification  ................................ ................................ ........ 93 
3.3.2.2    Voluntary, compulsory, national, and align ed standards  ................................ ............. 94 
3.3.2.3    Food, health -related, and other measures  ................................ ................................ 95 
3.3.2.4    Conformity assessment ................................ ................................ .......................... 98 
3.3.2.5    Transparency  ................................ ................................ ................................ .......99 
3.3.2.6    Labelling and packaging  ................................ ................................ .......................  100 
3.3.3    Sanitary and phytosanitary requirements  ................................ ................................ .. 101 
3.3.3.1    Food standards -setting framework  ................................ ................................ ........  101 
3.3.3.2    Quarantine regulations  ................................ ................................ ........................  105 
3.3.3.3    Transparency  ................................ ................................ ................................ ..... 106 
3.3.4    Competition policy and price controls  ................................ ................................ ....... 106 
3.3.4.1    Competition policy  ................................ ................................ ..............................  106 
3.3.4.1.1    Policy, institutional, and regulatory framework  ................................ .....................  106 
3.3.4.1.2    Operational developments  ................................ ................................ .................  109 
3.3.4.1.3    Enforcement  ................................ ................................ ................................ .... 110 
3.3.4.2    Price controls and monitoring  ................................ ................................ ...............  112 
3.3.4.3    Consumer protection  ................................ ................................ ...........................  114 
3.3.5    State trading, state -owned enterprises, and privat ization  ................................ ...........  115 
3.3.5.1    State trading  ................................ ................................ ................................ ...... 115 
3.3.5.2    State involvement in the economy and privatization  ................................ ................  116 
3.3.6    Government procurement  ................................ ................................ .......................  118 
3.3.6.1   Legislation  ................................ ................................ ................................ .........  119 
3.3.6.2    Procurement methods  ................................ ................................ .........................  121 
3.3.6.3    Public Procurement Service (PPS)  ................................ ................................ .........  121 
3.3.7    Intellectual property rights  ................................ ................................ ......................  125 
3.3.7.1    Industrial property  ................................ ................................ ..............................  126 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.3.7.1.1    Patent and utility models  ................................ ................................ ...................  127 
3.3.7.1.2    Trademarks  ................................ ................................ ................................ ..... 129 
3.3.7.1.3    Plant variety protection  ................................ ................................ .....................  130 
3.3.7.1.4    Industrial designs and layout designs of integrated circuits (topographies)  ..............  131 
3.3.7.1.5    Trade secrets  ................................ ................................ ................................ ... 131 
3.3.7.2    Copyright and related rights  ................................ ................................ .................  132 
3.3.7.3    Enforcement  ................................ ................................ ................................ ....... 134 
4   TRADE PO LICIES BY SECTOR  ................................ ................................ ...................  138  
4.1   Agriculture and Livestock ................................ ................................ ...........................  139 
4.1.1    Main features and recent developments  ................................ ................................ .... 139 
4.1.2    Policy, institutional, and regulatory developments  ................................ ......................  140 
4.1.2.1    Border measures  ................................ ................................ ................................  140 
4.1.2.1.1    Tariffs and tariff quotas  ................................ ................................ .....................  141 
4.1.2.1.2    State trading, import licensing, and special safeguards  ................................ .........  141 
4.1.2.1.3    Export restriction s and export subsidy programmes  ................................ ..............  142 
4.1.2.2    Domestic support  ................................ ................................ ................................  142 
4.1.2.2.1    OECD indicators  ................................ ................................ ...............................  142 
4.1.2.3    WTO notifications  ................................ ................................ ................................  144 
4.1.2.3.1    Other support measures ................................ ................................ ....................  145 
4.1.3    Key subsectors  ................................ ................................ ................................ ...... 147 
4.1.3.1    Rice ................................ ................................ ................................ ..................  147 
4.1.3.2    Livestock – meat................................ ................................ ................................ . 148 
4.2   Fisheries  ................................ ................................ ................................ ..................  149 
4.2.1    Overview  ................................ ................................ ................................ ..............  149 
4.2.2    Border policy  ................................ ................................ ................................ .........  152 
4.2.3    Domestic support ................................ ................................ ................................ ... 152 
4.3   Mining and Energy  ................................ ................................ ................................ .... 154 
4.3.1    Mining and quarrying  ................................ ................................ .............................  154 
4.3.2    Energy  ................................ ................................ ................................ .................  154 
4.3.2.1    Main features  ................................ ................................ ................................ ..... 154 
4.3.2.2    Regulatory and institutional framework  ................................ ................................ .. 155 
4.3.2.3    Policies ................................ ................................ ................................ ..............  157 
4.3.2.3.1    Border policies  ................................ ................................ ................................ . 157 
4.3.2.3.2    Domestic support  ................................ ................................ .............................  157 
4.3.2.4    Hydrocarbons  ................................ ................................ ................................ ..... 157 
4.3.2.4.1    Oil ................................ ................................ ................................ ..................  157 
4.3.2.4.2    Natural gas  ................................ ................................ ................................ ..... 158 
4.3.2.5    Electricity  ................................ ................................ ................................ ...........  158 
4.3.2.6    New and renewable energy  ................................ ................................ ..................  160 
4.4   Manufacturing  ................................ ................................ ................................ ..........  161 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.4.1    ICT industry  ................................ ................................ ................................ ..........  162 
4.4.2    Automotive  ................................ ................................ ................................ ...........  163 
4.4.3    Shipbuilding  ................................ ................................ ................................ ..........  164 
4.5   Services  ................................ ................................ ................................ ..................  166 
4.5.1    Features  ................................ ................................ ................................ ...............  166 
4.5.2    GATS and RTA commitments  ................................ ................................ ...................  167 
4.5.3    Financial services  ................................ ................................ ................................ ... 168 
4.5.3.1    Banking  ................................ ................................ ................................ .............  171 
4.5.3.1.1    Structure and ownership  ................................ ................................ ...................  171 
4.5.3.1.2    Prudential requirements, profitability, and non -performing loans  ............................  171 
4.5.3.1.3    Non-banking  ................................ ................................ ................................ .... 173 
4.5.3.2    Insurance  ................................ ................................ ................................ ..........  174 
4.5.3.2.1    Recent developments  ................................ ................................ .......................  174 
4.5.3.2.2    Regulatory framework  ................................ ................................ ......................  174 
4.5.4    Communications and postal services  ................................ ................................ ........  175 
4.5.4.1    Communications  ................................ ................................ ................................ . 175 
4.5.4.2    Postal services  ................................ ................................ ................................ .... 179 
4.5.5    Transport services  ................................ ................................ ................................ . 180 
4.5.5.1    Maritime transport  ................................ ................................ ..............................  180 
4.5.5.2    Air transport  ................................ ................................ ................................ ....... 183 
4.5.5.3    Land transport  ................................ ................................ ................................ .... 185 
4.5.6    Distribution services with a specific focus on e -commerce  ................................ ...........  186 
4.5.7    Tourism  ................................ ................................ ................................ ................  188 
4.5.7.1    Recent developments  ................................ ................................ ..........................  188 
4.5.7.2    Regulatory framework  ................................ ................................ .........................  189 
5   APPENDIX TABLES  ................................ ................................ ................................ .. 190  
 
CHARTS  
 
Chart 1.1 Product composition of merchandise trade by main HS section, 2015 and 2020  ........... 30 
Chart 1.2 Direction of merchandise trade, 2015 and 2020  ................................ ....................... 31 
Chart 3.1 Average applied MFN and bound tariff rates, by HS sect ion, 2016 and 2021  ................ 63 
Chart 3.2 Distribution of MFN tariff rates, 2016 and 2021  ................................ ....................... 64 
Chart 3.3 Tariff escalation by 2 -digit ISIC industry, 2016 and 2021  ................................ .......... 65 
Chart 4.1 Korean major agricultural products: production, consumption, and trade, 2020  .........  139 
Chart 4.2 Rice production, 2016 -20 ................................ ................................ ....................  147 
Chart 4.3 Livestock production, importat ion, consumption, stocks, exportation,  
and per  capita human consumption, 2016 -20 ................................ ................................ ...... 149 
Chart 4.4 Domestic production, 2016 -20 ................................ ................................ .............  150 
Chart 4.5 Energy supply sources, 2019  ................................ ................................ ...............  155 
Chart 4.6 Deliveries of newly built vessels, 2019  ................................ ................................ .. 165 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Chart 4.7 Interest rate spread, 2016 -Q1 2021 ................................ ................................ ..... 173 
Chart 4.8 Postal services, 2020  ................................ ................................ ..........................  179 
Chart 4.9 Cargo -handling capacity, 2020  ................................ ................................ ............  183 
Chart 4.10 International and domestic passenger flights, January to December,  
2019 and 2020  ................................ ................................ ................................ ................  184 
 
TABLES  
 
Table 1.1 Selected macroeconomic indicators, 2016 -20 ................................ .......................... 16 
Table 1.2 Basic economic and social indicators, 2016 -20 ................................ ......................... 20 
Table 1.3 Balance of payments, 2016 -20 ................................ ................................ .............. 28 
Table 1.4 Trade in services, 2016 -20 ................................ ................................ .................... 31 
Table 1.5 Stock of outward foreign direct investment, 2016 -18 ................................ ............... 33 
Table 1.6 Stock of inward foreign direct investment, 2016 -18 ................................ .................. 34 
Table 2.1 FDI restricted sectors, 2021  ................................ ................................ .................. 49 
Table 2.2 Summary of FDI tax incentives, 2021  ................................ ................................ .....50 
Table 2.3 Industrial sites for foreign investors, 4th Quarter 2020  ................................ ............. 51 
Table 2.4 Foreign investment location tax incentiv es, 2021  ................................ ..................... 52 
Table 3.1 Tariff structure, 2016 and 2021  ................................ ................................ ............. 62 
Table 3.2 Summary analysis of the preferential tariff, 2021  ................................ ..................... 68 
Table 3.3 Structure of direct and indirect tax revenue , 2012 -20 ................................ ............... 81 
Table 3.4 State involvement in the economy, 2021  ................................ ..............................  117 
Table 4.1 Agricultural support by commodity, 201 6-19 ................................ .........................  143 
Table 4.2 Subsidies notified, 2017 and 2018  ................................ ................................ ....... 145 
Table 4.3 Rice production, supply, and demand, 2016 -20 ................................ .....................  148 
Table 4.4 Composition of beef import tariffs, 2021  ................................ ...............................  149 
Table 4.5 Fisheries trade data, 2016 -20 ................................ ................................ ..............  150 
Table 4.6 Seafood under tariff quotas, 2021  ................................ ................................ ........  152 
Table 4.7 Fisheries subsidies, 2016 -19 ................................ ................................ ...............  152 
Table 4.8 Subsidies to the energy sector, 2016 -19 ................................ ...............................  154 
Table 4.9 Production and trade in the ICT industry, 2018 -20 ................................ .................  162 
Table 4.10 Automobile supply and demand, 2016 -20................................ ............................  163 
Table 4.11 Vehicle taxes and t ax reduction for eco -friendly vehicles, 2020  ..............................  164 
Table 4.12 Structure of the financial system, 2015 and 2020  ................................ .................  168 
Table 4.13 Banking indicatorsa, 2015 -20 ................................ ................................ ............  172 
Table 4.14 Selected telecommunications indicators, 2016 -19 ................................ ................  175 
Table 4.15 Ownership structure  of major telecom operators, December 2020  ..........................  176 
Table 4.16 Annual growth rates of postal and courier services, 2016 -20 ................................ . 180 
Table 4.17 Annual international and domestic passenger transport by mode, 2016 -20 ..............  180 
Table 4.18 Air transport, 2016 -20 ................................ ................................ ......................  183 
Table 4.19 Tourism enterprises (2018) and em ployment, 2014 -18 ................................ .........  188 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  BOXES  
 
Box 1.1 Korea's response to the COVID -19 challenge  ................................ ............................. 18 
 
APPENDIX TABLES  
 
Table A1.1 COVID -19 policies to support the economy, as at June 2021  ................................ . 190 
Table A1.2 Merchandise exports by HS section and major HS chapter/subheading, 2015 -20 ..... 192 
Table A1.3 Merchandise imports by HS section and major HS chapter/subheading, 2015 -20 ..... 194 
Table A1.4 Merchandise exports by destination, 2015 -20 ................................ ......................  195 
Table A1.5 Merchandise imports by origin, 2015 -20 ................................ .............................  196 
Table A2.1 Notifications to the WTO, 1 July 2016 -1 July 2021  ................................ ................  197 
Table A2.2 Main feat ures of Korea's RTAs, 2021  ................................ ................................ .. 199 
Table A3.1 Tariff summary, 2021  ................................ ................................ .......................  203 
Table A3.2 Non -ad valorem  MFN applied tariffs and ad valorem equivalents of their  
specific duty component, 2021  ................................ ................................ ..........................  205 
Table A3.3 Adjustment tariff, 2020 and 2021  ................................ ................................ ...... 207 
Table A3.4 Tariff quotas on agricultural products, 2019 and 2021  ................................ ..........  208 
Table A3.5 Fill ratios for main agricultural tariff -rate quotas, 2019  ................................ .........  216 
Table A3.6 Autonomous tariff quotas, 2021  ................................ ................................ .........  218 
Table A3.7 Domestic agricultural support notifie d to the WTO, 2018  ................................ ....... 225 
Table A4.1 Air Transport Agreements, 2021  ................................ ................................ ........  226 
 
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  SUMMARY  
1. Since the Republic of Korea's previous Trade Policy Review in 2016, relatively strong economic 
fundamentals and solid buffers to external shocks h ave helped the country maintain macroeconomic 
stability and ensure the resilience of its export -led economy. Korea was able to weather the 
COVID -19 pandemic comparatively well, supported by a comprehensive set of fiscal, monetary, 
financial, and other meas ures. During the review period, Korea's annual GDP growth peaked at 3.2% 
(2017) and progressively declined to -0.9% (2020) due to the COVID -19 outbreak, a considerably 
milder contraction than in most other advanced economies. Annual average GDP growth rate  for 
2016-20 stood at 2.1%, a further decline compared to previous performances (averaging 2. 9% in 
2012-15 and 4. 6% over 2001 -11). Developments in Korea's position among the most competitive 
economies in the world involved variable labour and total factor productivity (TFP) growth, but also 
weaknesses in areas where some reforms have been under way. Whereas headline inflation 
remained below target and dropped progressively to 0.5% (about a fourth of its 2017 peak level) in 
2020, the unemployment rate rose s lightly (4%) in 2020, reflecting weak private job creation and 
the impact of the pandemic.  
2. During the review period, trade and trade -related structural reforms (e.g. in taxation, 
competition policy, corporate governance, and the labour market) were underta ken. Reforms were, 
inter alia, focused on supporting income, creating jobs, assisting small and medium -sized 
enterprises (SMEs) and start -ups, and promoting productivity -boosting innovation, as well as 
strengthening social safety nets and substantially rai sing the minimum wage. Since June 2016, the 
Bank of Korea has progressively cut its policy rate five times from 1.25% to a record -low 0.5% 
(May 2020). The responsiveness of the floating exchange rate system to economic developments 
continued reducing exter nal imbalances to levels consistent with Korea's fundamentals. The nominal 
exchange rate depreciated (2019 and 2020) after a slight appreciation (2016 -18) whereas, overall, 
the effective exchange rate appreciated (except for 2018 and 2019), thus affecting Korea's 
international competitiveness. Imbalances in the economy – particularly weak domestic demand – 
led to irregular large current account surpluses below their 2016 level, averaging 4.8% of GDP during 
2016-20 compared to 6% over 2012 -15. Foreign exchan ge reserves increased steadily due to 
continuously increasing returns from the management of reserve assets. Gross external debt 
increased considerably, by 42.6%, during the period 2016 -20 amid, inter alia,  financial market 
volatility due to the COVID -19 pandemic and a rise in foreign investment in Korean treasury bonds, 
compared to a 3.6% rise in 2012 -14, followed by a 6.4% drop in 2015.  
3. Korea's openness to international trade and its integration into the world economy continued 
to be reflected by the high  ratio of its trade (exports plus imports) in goods and services to GDP, 
which stood at 69.2% in 2020, though lower than in 2016. International trade and foreign direct 
investment (FDI) trends reflect the continued importance of Asia -Pacific as Korea's mai n regional 
market and FDI supplier. China, the United  States, the European  Union, and Japan remain its major 
individual trading partners; furthermore, trade under free trade agreements (FTAs) and regional 
trade agreements (RTAs) continued to steadily rise during the review period. The FDI regime went 
through significant changes during the review period with: (i)  tax incentives in the form of local tax 
and import tariff reductions/exemptions and discontinuation of the granting of new corporation tax 
relief t o foreign -invested enterprises as from 2019; (ii)  the elimination of foreign investment 
restrictions on fishing and support air transport activities; and (iii)  the main legislation, the Foreign 
Investment Promotion Act, amended in 2020, now allowing for in centives to be granted for the 
reinvestment of unused retained earnings. Nonetheless, FDI stock levels remain low compared with 
those in other OECD countries.  
4. Since its previous TPR, Korea has continued to promote a free and open economy based on 
market pr inciples. As an important step in supporting the development of SMEs, in 2017 the Small 
and Medium Business Administration was reorganized and expanded into the Ministry of SMEs and 
Startups. Korea continued its efforts to improve transparency in public ad ministration  by 
implementing participatory budgeting at the national level. Under the Five -year Plan for the 
Administration of State Affairs, launched in 2017, job creation is considered as the top economic 
policy priority. In 2019, a vision for an innovat ive and inclusive nation was announced. Regulatory 
reforms were conducted to reduce trade and investment barriers by applying regulatory sandboxes, 
designating regulatory -free special zones, and following the "cost -in, cost -out" approach when 
introducing n ew regulations.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  5. Korea continued to participate actively in the WTO. In October 2019, Korea committed to not 
seek special and differential treatment for developing countries in ongoing and future negotiations. 
During the review period, Korea was involved in  seven WTO disputes – four as a complainant and 
three as a respondent. Korea continued to pursue market opening opportunities through RTAs. Also 
during the review period, it signed the Regional Comprehensive Economic Partnership (RCEP) 
Agreement, as well a s RTAs with five Central American countries (in force as from 1 March 2021), 
the United Kingdom (in force as from 1  January  2021), Israel, and Indonesia. These added to the 
extensive list of its existing RTAs with both large economic blocs and newly emergi ng markets 
(Association of South East Asian Nations (ASEAN) , Asia -Pacific Trade Agreement (APTA), Australia, 
Canada, Chile, China, Colombia, the European Free Trade Association (EFTA), the European  Union, 
India, New  Zealand, Peru, Singapore, Turkey, the Un ited States, and Viet  Nam). Agriculture remains 
partially covered, and rice excluded, from all RTAs.  
6. Since its previous TPR, Korea has maintained its general trade policy thrust, which has 
remained relatively unchanged though particular emphasis was placed  on SMEs and innovation. 
While no unilateral liberalization has been undertaken, there have been regulatory or institutional 
developments in certain areas, including trade facilitation, anti -dumping, export control of strategic 
goods, enterprises in repatr iation/re -shoring, standards, sanitary and phytosanitary (SPS) 
requirements, government procurement, competition policy, and intellectual property rights. 
COVID -19 circumstances led to the implementation of temporary trade -related measures in certain 
areas . Some measures continue to protect domestic producers, especially farmers, from foreign 
competition.  
7. The tariff remains one of Korea's main trade policy instruments, and a relatively significant, 
albeit declining, source of tax revenue. The 2021 customs t ariff remains transparent but is relatively 
complex, involving a multiplicity of rates (88 ad valorem duties, and 41 alternate duties) often with 
small rate differences and some involving decimal points. As a result of changes relating to the 
implementatio n of the expansion of the Information Technology Agreement and changes in the tariff 
nomenclature (from HS12 to HS17), the average applied MFN tariff rate dropped slightly from 14.1% 
in 2016 to 13.9% in 2021. This remains high by OECD country standards, th ereby requiring tariff 
concessions or drawbacks to ensure that tariffs on intermediate inputs do not become taxes on 
exports, adding to the complexity of border taxation. Peak ad valorem  rates also remained 
unchanged and concentrated in agricultural items (WTO definition); applied MFN tariff rates ranged 
from zero to 887.4% (for manioc). As in 2016, 84.9% of rates remain at 10% or below in 2021 
(85.2% in 2016). Tariff rate quotas (TRQs) remain in place under Korea's multilateral agricultural 
market access c ommitments, with in -quota rates ranging from zero to 50% (2021), compared with 
out-of-quota rates of up to 887.4%, and with a decreasing average fill rate of 58% (2020). Other 
measures (e.g. "autonomous" tariff quotas, usage tariffs, and duty concessions) selectively reduce 
tariffs on inputs. Bound rates cover 90.7% of Korea's tariff lines, a slight increase due to the 
nomenclature change; 99.7% of agricultural lines (excluding seaweeds and bait for fishing) and 
89.2% of non -agricultural lines (WTO definiti ons) are covered by tariff bindings. The gap of 
4.2 percentage points between the average bound and applied MFN tariff rates imparts a degree of 
unpredictability to the tariff regime and provides scope for the authorities to raise applied rates 
within the bindings. Korea has continued to use this gap to apply higher MFN duties (e.g.  adjustment 
duties) termed "flexible tariffs", which the authorities maintain are within WTO bindings; product 
coverage under flexible tariffs (including seasonal and adjustment duties) increased from 145 (at 
the 6-digit HS level) in 2016 to 184 in 2021.  
8. Korea's customs clearance performance remains appreciated at the international level and is 
considered as the cutting edge of best practice. During the review period, its trade facilitation 
developments included the full implementation of WTO Trade Facilitation Agreement (TFA) 
commitments and transparency notifications, the extension of e -clearance examination to all goods 
imported by authorized economic operators, and the exploration of blockchain technologies. 
Wide-ranging trade -facilitating initiatives were undertaken to stop the spread of the COVID -19 
pandemic and mitigate its damage, including the speeding up of customs clearance, tax relief 
measures, and the operation of Customs Clearance Support Centers. Regarding customs valuation, 
Customs introduced services to protect taxpayers' rights to assist them on matters not resolved by 
tax appeals, and reinforced cooperative schemes on action against tax evasion, encouraging  
enterprises to be voluntarily tax compliant. RTA/FTA action to help companies, including SMEs, utilize 
trade preferences subject to diverse and complicated rules of origin was continued.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  9. During the review period, rice imports remained tariffied, and the p rocess of modification and 
rectification of its Schedule of Concessions, now incorporating the relevant TRQ rates (5% in -quota, 
513% out -of-quota), was completed. Import licensing requirements cover numerous tariff items, 
and prohibitions are maintained mostly for the protection of public morals, human health, hygiene 
and sanitation, animal and plant life, environmental conservation, or essential security interests in 
compliance with domestic legislation requirements or international commitment s. During the review 
period, recourse to anti -dumping initiation action remained relatively stable, but there has been an 
increase in the number of definitive measures in place. Korea continued to use anti -dumping 
provisions, mainly against imports of chem icals, plastics, paper, plywood, and stainless steel 
originating mostly in Asia. Price -based special safeguard provisions (SSGs) under the 
WTO Agreement on Agriculture were used on ginseng root and powder, as well as products of red 
ginseng and wild cultiv ated ginseng.  
10. Korea continued to maintain the option to restrict or monitor certain exports to ensure 
adequate domestic supplies, thereby possibly assisting downstream processing of these products. 
In response to domestic needs related to the COVID -19 pand emic, Korea introduced a temporary 
export ban (entirely lifted on 23 October 2020) on surgical and sanitary masks, filtering respirators, 
and melt blown filters involving domestic supply -linked quantitative restrictions depending on the 
item. During the re view period, no quantitative export restrictions for rice or any other agricultural 
products were in place. Direct export subsidies were kept in order to reduce marketing costs for 
certain agricultural products and are to be eliminated by 2023. A drawback scheme continues to 
provide refunds of border taxes on raw materials used in exports. Internal indirect taxes are 
reimbursed on exports; no new corporation tax relief to foreign enterprises located in free trade 
zones has been granted since 2019. Exports c ontinue to benefit from government finance, insurance, 
and guarantees, as well as the promotional activities provided by state -owned institutions.  
11. Measures involving grants, tax concessions, and low -interest loans continued to support 
production and trade of various agricultural, forestry, fishing, coal mining, renewable energy, the 
Fourth Industrial Revolution, and manufacturing industries, and to encourage SMEs, innovation, 
research and development, and environmental protection activities. Although tax in centives were to 
terminate automatically in accordance with sunset clauses, many were extended. SMEs remain 
among the major beneficiaries of these measures; there has been persisting emphasis on them, 
including through more favourable incentives in virtual ly all policy areas (e.g. customs clearance, 
rules of origin, export promotion, export finance/insurance, taxation, financing, SPS, and public 
procurement), as well as the COVID -19 response involving direct and indirect tax reductions for 
certain taxpayer categories. Furthermore, the 2020 Korean New Deal initiative is to pursue job 
creation and enhancement of competitiveness of the manufacturing sector by increasing public 
investment in digital and green energy infrastructure. Agriculture continued to recei ve substantial 
financial support. Government support of FDI through the operation of foreign investment zones, 
export -oriented free trade zones, and free economic zones remains. Tax and non -tax benefits for 
repatriating Korean companies expanded to cover i nformation technology services and information 
and communications firms; compensation or adjustment support for farmers and manufacturers 
adversely affected by a bilateral free trade agreement remains in place.  
12. During the review period, regulatory and othe r initiatives were undertaken to, inter alia , 
improve food and drug safety and align domestic standards to international standards. The number 
of Korean industrial standards slightly increased over the review period, but the actual share of those 
adopted i n mandatory technical regulations is unknown; the share of those harmonized with 
international standards remains virtually unchanged. Safety c ontrol over imported food hazards was 
reinforced by making Hazard Analysis of Critical Control Point (HACCP) certi fication mandatory, as 
well as expanding its coverage and unifying the certification process. As at 2019, Korea fully 
implemented its "positive list" system (PLS) to all pesticides in agricultural products except for those 
with domestically set maximum res idue limits. A Rapid Clearance System for Planned Import for 
reliable business operators with a long -time record of safe food imports was introduced in 2019.  
13. State involvement in, inter alia , agriculture, mining, energy, finance, and transport persists. 
No major privatization efforts were pursued during the review period, and at the same time, the 
level of government shareholding at several entities rose for different reasons. The Ministry of 
Agriculture, Food and Rural Affairs (MAFRA) remains the sole enti ty responsible for imports of all 
rice within the tariff quota, and the state -owned Korea Agro -Fisheries and Food Trade Corporation 
is responsible for some other agricultural items; their operations allowed for important price 
mark-ups or mark -downs depend ing on the product. Changes were made to the main government WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  procurement legislation in areas including contracting, qualification, and conciliation; the small share 
of foreign supplies remained relatively stable during the review period. Despite the non -utilization 
of price preference schemes, government procurement is still seemingly used as a policy tool for 
promoting SMEs, companies in a disadvantageous position (firms owned by women or people with 
disabilities), regional development, and green purchasi ng. Most procurement remains decentralized.  
14. During the review period, several legislative amendments were undertaken in competition 
policy necessary for the realization of a fair economy and the promotion of innovation and 
competition in the age of the Fou rth Industrial Revolution, including the complete revision of the 
Monopoly Regulation and Fair Trade Act. A prohibition on new cross -shareholdings 
(i.e. circular -shareholding after 2014) between subsidiaries under large business groups, many of 
which are f amily controlled (chaebols), led to their reduction, but its impact on preventing market 
concentration remains unknown. Large corporations and SMEs continued to be encouraged to 
voluntarily sign agreements on fair trade and shared growth. Price controls re main in place in specific 
areas. Consumer protection was reinforced by strengthening transparency and law enforcement with 
respect to products and areas that closely affect consumers, such as daily necessities and 
e-commerce.  
15. Korea's intellectual property rights regime continued to evolve rapidly in response to 
technology developments and to pursue public policy objectives. Legislation was strengthened, 
including in the area of penalties, to better protect right holders in several areas; in response to 
COVID-19 challenges, the deadlines applicable under certain industrial property legislation were 
extended, and measures were announced to combat a rapidly increasing online distribution of 
counterfeit products.  
16. Agriculture accounts for a small share in GDP (2%  in 2020), and 5.4% of total employment. 
Korea is a land -scarce country with a high population density, and it is a net food importer. The 
Government uses a wide range of policy tools, both at the border and domestically, to facilitate the 
country's develo pment and to improve the welfare of rural residents. Policy objectives also include 
self-sufficiency in food and staples, and targets for rice, barley, grains, livestock products, and forage 
were maintained. At the border, peak tariffs and the much higher average applied MFN tariff 
protection for agricultural goods than for non -agricultural goods persist. SSGs affected certain 
imports of ginseng products. Export approval is required for ginseng seeds and animals. Export 
subsidies continued to be provided. D omestic support to agricultural production and trade measures 
continued to make Korean consumers pay much higher prices than the world levels. Tax and 
non-policy tools including in the form of low or no irrigation water fees, as well as cross -subsidized 
electricity tariffs, remain in place. Foreign investment in rice growing is prohibited. Eco -friendly 
agriculture and aquaculture production is encouraged by providing direct payments to certified 
farms, and by increasing the share of smart fish farm supplies . 
17. Korea's fisheries output is increasingly led by aquaculture production in shallow sea areas, 
whereas fisheries resources in distant and adjacent waters continue to deplete. FDI  restrictions on 
fisheries were removed in 2016, while border protection mainl y takes the form of tariffs and 
adjustment tariffs. The Government continues to fight against illegal, unreported, and unregulated 
(IUU) fishing, and provides domestic support for vessel decommissioning and fisheries resources 
management. It also continues  to promote the development of sustainable fisheries and aquaculture 
production.  
18. Mining accounts for a tiny share of GDP, and Korea, an energy -intensive country, relies heavily 
on imported energy, particularly fossil fuels. This high reliance has focused K orea's energy policy on 
the security of supply. Recently, the Government committed to advance energy transition by 
increasing the share of renewable electricity to 20% by 2030, and to 30% -35% by 2040, and to 
gradually phase out coal and nuclear from the en ergy mix. To reach these targets, the Government 
lowered the consumption tax and import surcharge on liquified natural gas while raising the tax on 
coal, and enhanced decarbonization across all energy sectors in line with its Green New Deal. Various 
measur es including financial and technical support and tax credits continue to be applied in support 
of the sector. Foreign investment in electricity transmission and distribution faces an equity limit of 
50%, and the largest shareholder must be Korean. State -owned companies continue to play a major 
role in the energy sector, and prices are often regulated (coal and electricity).  
19. Manufacturing is an important and export -oriented activity (27.2% of GDP in 2020, 91.4% of 
total merchandise exports in 2020). Korea is  one of the main hubs in international manufacturing WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  production network. The sector remains dominated by large conglomerates, while the labour 
productivity gap between large firms and SMEs is large. Border measures are confined to tariffs, 
adjustment dutie s, and autonomous TRQs, whereas several tax and non -tax incentives continue to 
be used to pursue policy objectives. Foreign investment in manufacturing in general is allowed. 
Sector -specific measures include those to promote the purchase of eco -friendly ve hicles and the use 
of information and communication technology (ICT), and to meet environmental requirements set 
by international organizations in the shipbuilding industry. In line with the Korean New Deal, ICT's 
role as an important policy tool to facili tate the development of various sectors, and to meet 
environmental protection targets has been emphasized. Consequently, public investment in, 
inter alia, smart agriculture, smart fish farms, digital and green energy infrastructure, and intelligent 
transpo rt systems increased.  
20. The contribution of services to GDP rose slightly during the review period, from 60.5% in 2016 
to 62.3% in 2020. Labour productivity, particularly of traditional services (such as wholesale and 
retail, and transport and accommodation) , is lower than that of manufacturing. Korea has made 
commitments beyond G eneral Agreement on Trade in Services (GATS)  in the context of some of its 
RTAs. The Government plans to increase subsidies to some services activities (such as transport and 
tourism ). Subsidies have also been allocated to various services sectors to mitigate the impact of 
the COVID -19 pandemic.  
21. The financial services sector maintained its robust growth during the review period, and with 
government support it managed to weather the ch allenges posed by the COVID -19 pandemic. 
Several pieces of legislation were revised to deregulate certain financial services, including those on 
online investment -linked financing, supervision of electronic financial transactions, data privacy for 
financia l institutions and financial technology (fintech) operators, financial consumer protection, and 
cybersecurity. Foreign banks operate through locally incorporated subsidiaries, branches, and 
representative offices, while no foreign equity restrictions exist  for insurance companies.  
22. Korea ranks high internationally in information and communications services. In 2020, fixed 
broadband was designated as a universal service. The telecommunications sector remains relatively 
concentrated with three companies domina ting the fixed -line sector, and three dominating the 
mobile phone services sector; none of them is state owned. Foreign investment remains subject to 
a ceiling of 49% in facilities -based services, while value -added services are fully open to foreign 
invest ment. Several postal services (including letters weighing less than 350 grams and parcels 
weighing less than 2 kg) are reserved for the state -owned Korea Post. While postal services 
stagnated, courier services grew quickly.  
23. International transport for frei ght is mainly by sea, whereas for passengers is mainly by air. 
In 2017, a five -year plan was launched to restructure the maritime transport sector by, inter alia , 
building more ultra large container and eco -friendly ships, and supporting vessels going gree n. 
Measures to reduce marine pollution and enhance marine safety and cybersecurity were also 
adopted. Tax incentives remain available to the maritime sector, and a rescue fund to help shippers 
manage the difficulties caused by the pandemic was introduced. Foreign ownership of Korean airline 
operators is limited to less than 50%, and foreign owners must register their aircraft in Korea. 
Cabotage for air and land transport is not permitted, although for maritime transport some 
exceptions exist.  
24. The distributi on and the tourism sectors contracted significantly in 2020 due to the COVID -19 
pandemic. The regulatory framework and FDI restrictions for distribution services remain 
unchanged. As a result of the country's very high Internet penetration rate, e -commerce  develops 
quickly, and, due to COVID -19, it recorded its strongest growth in 2020, reflecting changes in 
consumption styles. In 2017, the Government relaxed visa rules and included more cultural content 
into tour programmes, to help the tourism sector cope  with its trade deficit challenges. A Tourism 
2020 Strategy identified policy tools to address challenges facing the sector. The level of financial 
support to the tourism sector was raised, and the use of online platforms to improve digital 
marketing of to urism services was promoted.  
25. Korea's economic growth is expected to gradually gain momentum in 2021, although 
uncertainty surrounding the outlook reflecting external and domestic COVID -19-related risks 
remains elevated. Notwithstanding the considerable suc cess of its existing buffers and weathering 
of the pandemic, the economy remains vulnerable to exogenous shocks, such as a persistent slump 
in world trade, rising protectionism, retreat from multilateralism, geopolitical tensions, and/or WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  weaker -than-expect ed global growth, particularly due to Korea's heavy reliance on exports of 
manufactures produced mostly by a few large business conglomerates. Future prosperity and 
sustainable growth would depend on the Government implementing TFP -enhancing structural 
reforms; promoting balanced, private sector -led growth; promoting fair competition between large 
corporations and smaller firms; fostering innovation, especially in SMEs; and reducing the regulatory 
burden on firms, especially in the services sector. These an d related reforms, including tax, 
privatization, and continued regulatory reforms, would increase the flexibility of the Korean economy 
and its ability to respond to growing external competition, thus enabling Korea to continue meeting 
its broad -based econ omic and welfare objectives, including inclusive growth and a narrower wealth 
divide.  
 
 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  The export -oriented economy of the Republic of Korea, a WTO developing country Member 
(Section 2.5.1) with a population of 51.3 million (as at March 2021), remains a high -income, highly 
developed mixed economy dominated by large conglomerates and a global leader in innovation and 
technology ; in 2020, according to IMF and OECD estimates, it was the 4th largest in Asia and the 
10th (11th in 2017) largest economy in the world in gross domestic product (GDP) terms, a rise in its 
global ranking as it fared better than other major economies despit e the coronavirus outbreak.1 
According to the Harvard Growth Lab's economic complexity index, in 201 9 Korea remained  the 
world's 4th most diverse economy, after Japan, Switzerland, and Germany, the same as in 2016.2 
Small and medium -sized enterprises (SM Es) continue to play a considerable role in the economy but 
are affected by higher labour costs, despite government aid and continuous widespread support to 
help them adjust, raise their competitiveness, and strengthen partnerships with large conglomerates  
(Sections 2.2, 2.4.1, 2.5.2, 3.1.1.1, 3.1.2, 3.1.3.5, 3.2.4.3, 3.2.5, 3.3.1.1.2, 3.3.1.2.1, 3.3.1.2.2, 
3.3.3.1, 3.3.4.1, 3.3.6, and 3.3.7.3).3 Developments in Korea's position among the most competitive 
economies in the world reflect those of labour prod uctivity growth and, in particular, total factor 
productivity growth (Table  1.1 and Section  1.2.1) – a key long -term determinant of international 
competitiveness and domestic living standards, but also weaknesses in several areas where reforms 
have been un der way (Section 1.2.4).4 During the review period, growth slowed down and its 
prospects were hampered by deterioration in external demand, unfavourable demographics, and 
slowing productivity growth, driven by structural weaknesses as well as the COVID -19 outbreak 
although contraction in GDP in 2020 was considerably milder than in most other advanced 
economies, including OECD countries (Table 1.1 and Section 1.2.1).5 According to the latest available 
 
1 Worldometer, South Korea . Viewed at: https://www.worldometers.info/world -population/south -korea -
population/ ; IMF, World Economic Outlook Database. Viewed at:  
https://www.imf.org/en/Publications/WEO/weo -database/2020/October/weo -
report?c=512,914,612,614,311,213,911,314,19 3,122,912,313,419,513,316,913,124,339,638,514,218,963,61
6,223,516,918,748,618,624,522,622,156,626,628,228,924,233,632,636,634,238,662,960,423,935,128,611,3
21,243,248,469,253,642,643,939,734,644,819,172,132,646,648,915,134,652,174,328,258,656,654,336,263,
268,532,944,176,534,536,429,433,178,436,136,343,158,439,916,664,826,542,967,443,917,544,941,446,666
,668,672,946,137,546,674,676,548,556,678,181,867,682,684,273,868,921,948,943,686,688,518,728,836,55
8,138,196,278,692,694,962,142,449,564,565,283,853,288,293,56 6,964,182,359,453,968,922,714,862,135,7
16,456,722,942,718,724,576,936,961,813,726,199,733,184,524,361,362,364,732,366,144,146,463,528,923,
738,578,537,742,866,369,744,186,925,869,746,926,466,112,111,298,927,846,299,582,487,474,754,698,&s
=NGDPD,&sy=2018&ey=2 025&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 ; World 
Bank, Atlas of Sustainable Development Goals 2018: The World by Income . Viewed at: 
https://datatopics.worldbank.org/world -development -indicators/images/figures -png/world -by-income -sdg-
atlas-2018.pdf ; World Bank, The World Bank in Republic of Korea . Viewed at: 
https://www.worldbank.org/en/country/korea ; Worldometer, GDP by Country . Viewed at: 
https://www.worldometers.info/gdp/gdp -by-country/ ; and Yonhap News Agency, "S. Korea Estimated to Have 
Ranked 10th in 2020 Global GDP rankings", 15 March 2021. Viewed at: 
https://en.yna.co.kr/view/AEN20210315001000320 . 
2 World Atlas, Countrie s with the Most Diverse Economies . Viewed at: 
https://www.worldatlas.com/articles/countries -with-the-most-diverse -economies.html ; and Atlas of Economic 
Compl exity, Country & Product Complexity Rankings . Viewed at: https://atlas.cid.harvard.edu/rankings . 
3 In 2018, SMEs accounted for 99.9% (same as in 2016) of the number of enterprises, 83.1% (87.9% in 
2016) of total employment, 17.4% (37.5% in 2016) of total exports, and 37.8% (51.2% in 2016) of value 
added in the economy. Ministry of SMEs and Startups. Viewed at: 
https://www.mss.go.kr/site/eng/02/10202000000002016111504.jsp#:~:text=SMEs%20play%20an%20impor
tant%20role,one%20percent%20of%20added%20value ; 
https://www.kbiz.or.kr/ko/contents/contents/co ntents.do?mnSeq=32 ; and OECD (2020), OECD Economic 
Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -en. 
4 In 2018, Korea ranked 13th among 140 economies (26th in 2016) in the WEF Global Co mpetitiveness 
Index. In 2018, it boasted the most optical fibre connections per capita in the world and 96% of the population 
used the Internet on a regular basis. Korea obtained the Index's best mark on macroeconomic stability and 
was the world's 6th innovation hub. However, according to the WEF, entrepreneurship is undermined by cultural 
and sociological factors. Other weak aspects of involved market inefficiencies related to domestic competition 
and trade barriers, as well as labour market rigidities and  conflictual industrial relations. WTO document 
WT/TPR/S/346/Rev.1, 6 January 2017; and World Economic Forum, The Global Competitiveness Report 2019 . 
Viewed at: http:// www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf . 
5 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890; IMF, "IMF Staff Completes 2021 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  data, between 2016 and 2018, income inequality and the poverty gap dropped slightly due to, 
inter alia, several measures in recent years (e.g. minimum wage rise in 2018, 2019, and 2020 
(Section  1.2.4.5)); while inequality, as measured by the Gini coefficient, is above the OECD average, 
the relative poverty rat e of the elderly is more than three times the OECD average.6 According to 
the OECD, the COVID -19 crisis would increase inequality, despite income support, job retention 
measures, and the creation of public jobs for the elderly and other low -income groups.7 
Table 1.1 Selected macroeconomic indicators, 2016 -20 
 
2016  2017  2018  2019  2020  
National accounts (% change, unless otherwise indicated)  
Real GDP (at 2015 prices)  2.9 3.2 2.9 2.2 -0.9 
Consumption  3.0 3.1 3.7 3.2 -2.4 
Private consumption  2.6 2.8 3.2 2.1 -5.0 
Government consumption  4.4 3.9 5.3 6.4 5.0 
Gross fixed capital formation  6.6 9.8 -2.2 -2.1 2.6 
Exports of goods and non -factor services  2.4 2.5 4.0 0.2 -1.8 
Imports of goods and non -factor services  5.2 8.9 1.7 -1.9 -3.3 
XGS/GDP (%) (at current market price)  40.1 40.9 41.7 39.3 36.4 
MGS/GDP (%) (at current market price)  33.5 36.2 37.3 36.5 32.8 
Unemployment rate (%)  3.7 3.7 3.8 3.8 4.0 
Productivity (% change)   
Labour productivity  1.6 3.0 1.8 1.0 2.0 
Total factor productivity  1.1 0.3 4.2 1.1  .. 
Prices and interest rates   
Inflation (CPI, % change)  1.0 1.9 1.5 0.4 0.5 
Core inflation (excluding food and energy sector)  1.9 1.5 1.2 0.7 0.4 
Loans and discounts rate (%)  3.37 3.48 3.66 3.45 2.80 
Savings deposit rate (%)  1.48 1.56 1.87 1.75 1.05 
Exchange rate       
KRW/USD (annual average)  1,160.5  1,130.8  1,100.3  1,165.7  1,180.1  
Real effective exchange rate (% change)  1.5 3.5 -0.5 -5.8 2.7 
Nominal effective exchange rate (% change  2.0 4.1 0.0 -3.9 2.9 
Consolidated fiscal balance (% of GDP)  1.0 1.3 1.6 -0.6  -3.7 
Consolidated revenue  21.3 22.0 23.1 23.1  23.1 
National t ax revenue  13.9 14.5 15.5 15.2  14.8 
Consolidated expenditure and net lending  20.4 20.7 21.4 23.7  26.8 
Central government total debt  34.0 34.2 34.3 36.3 42.4 
Saving and investment (% of GDP)       
Gross national savings  36.9 37.1 35.9 34.8 36.2 
 
Article  IV Mission to Republic of Korea", 27 January 2021. Viewed at: 
https://www.imf.org/en/News/Articles/2021/01/27/pr2125 -korea -imf-staff-completes -2021-article -iv-mission -
to-republic -of-korea . 
6 As at 2018, Korea's income inequality indicator stood at 0.345 compared to 0.355 in 2016. The Gini 
coefficient is based on the comparison of cumulative proportions of the population against cumulative 
proportions of income they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of 
perfect inequality. Income inequality is relatively high, due to wage  dispersion and limited redistribution; a dual 
labour market (i.e. regular and non -regular workers) and partly related large differences in productivity 
(Section 1.2.1)) between large firms and SMEs, and between industry and services, generate strong wage 
inequality. Redistribution through taxes and benefits is weaker than in most other OECD countries. As at 2018, 
its poverty gap stood at 0.342 compared to 0.351 in 2016. The poverty gap is the ratio by which the mean 
income of the poor falls below the pover ty line. The poverty line is defined as half the median household 
income of the total population. In 2018, the relative poverty rate of the elderly in Korea was 16.7% (17.6% in 
2016), well above the OECD average. Korea's relative poverty rate is the third highest OECD -wide, driven by 
the worst old -age relative poverty rate in the OECD due to limited pension income and low earnings for many 
of those still working. OECD, Income Inequality . Viewed at: https://data.oecd.org/inequality/income -
inequality.htm ; OECD (2019), Economic Policy Reforms 2019: Going for Growth . Viewed at: 
https://doi.org/10.1787/aec5b059 -en; and OECD (2020), OECD Econo mic Surveys: Korea 2020 . Viewed at: 
https://doi.org/10.1787/2dde9480 -en. 
7 OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10 .1787/2dde9480 -
en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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2016  2017  2018  2019  2020  
Gross domestic investment  30.1 32.3 31.5 31.5 31.9 
Savings -investment gap  6.7 4.8 4.5 3.4 4.3 
External sector (% of GDP, unless otherwise 
indicated)       
Current account balance  6.5 4.6 4.5 3.6 4.6 
Net merchandise trade  7.8 7.0 6.4 4.8 5.0 
Merchandise exports  34.1 35.7 36.3 33.7 31.5 
Merchandise imports  26.4 28.7 29.9 28.9 26.5 
Services balance  -1.2 -2.3 -1.7 -1.6 -1.0 
Capital account  -0.0 -0.0 0.0 -0.0 -0.0 
Financial account  6.7 5.2 4.4 3.6 4.7 
Direct investment  1.2 1.0 1.5 1.6 1.4 
Balance -of-payments  0.5 0.3 1.0 0.1 1.1 
Terms of trade (2015=100)  101.0  100.6  95.4 91.4 94.9 
Merchandise exportsa (% change)  -5.7 13.4 7.9 -11.1 -7.2 
Merchandise importsa (% change)  -6.5 18.0 10.6 -7.6 -8.8 
Service exportsa (% change)  -2.8 -5.4 15.6 0.2 -13.2 
Service importsa (% change)  0.0 12.7 5.2 -1.8 -18.7 
International reservesb (USD billion, end -period)  371.1  389.3  403.7  408.8  443.1  
Foreign exchange reserves (USD billion, 
end-period)  361.7  379.5  393.3  397.9  430.1  
in months of imports of goods and services  8.1 8.7 7.8 7.5 8.2 
Total external debt (USD billion; end -period)  382.1  412.0  441.2  470.7  544.9  
of which short term  104.8  116.0  125.6  135.5  159.3  
Debt-service ratioc 9.3 8.2 8.8 9.8 10.9 
a Growth rates are based on USD.  
b Including foreign exchange reserves, gold, special drawing rights, and IMF Reserve Position.  
c Debt service on medium - and long -term debt in percentage of exports of goods and services. 2019 
and 2020 figures are estimates.  
Note:  Based on IMF figures: real effective exchange rate (RE ER) % change equals -2.1, 3.1, 7.1, -3.8, and 
-10.2, and nominal effective exchange rate (NEER) % change equals -4.0, 2.3, 1.0, -3.8, and -2.4, 
respectively, for 2016, 2017, 2018, 2019, and 2020. Both REER and NEER are based on Unit Labour 
Costs.  
Source:  Bank of Korea Economic Statistics System. Viewed at: http://ecos.bok.or.kr/ ; IMF data; and data 
provided by the authorities.  
1.2.  Despite Korea's solid fundamentals, supported by robust policy frameworks and a resilient 
financial system, downside risks to the economic outlook remain relatively unchanged and subject 
to COVID -19 pandemic developments.8 Domestic/endogenous risks to the economy may stem from, 
inter alia, Korea's high reliance on manufacturing export -led growth,  the rapidly ageing population, 
reduction in household incomes, downward pressures on demand and inflation, excessive reliance 
on monetary easing, and hindered employment creation.9 Specialization in a few key industries (e.g. 
electrical and electronic eq uipment industry, cars, petrochemicals, and other heavy industrial 
products) dependent on a few large firms increasingly exposes the economy to domestic and external 
shocks, as they are highly interconnected with other domestic industries via upstream/down stream 
linkages and with foreign markets via export/import linkages, thus making Korea vulnerable to 
lasting disruptions in global value chains (GVCs). A permanent slump in world trade, rising 
protectionism, retreat from multilateralism, geopolitical tensi ons, and/or weaker -than-expected 
global growth could adversely impact exports, further dampen investment, and push up 
unemployment.10 According to the IMF, as at 2019, future prosperity depended on policies aimed at 
 
8 IMF (2019), Republic of Korea:  Selected Issues , IMF Country Report No.  19/133. Viewed at: 
https://www.imf.org/en/Publicati ons/CR/Issues/2019/05/13/Republic -of-Korea -Selected -Issues -46891 . 
9 Korea's population is ageing rapidly, but digitalization could raise productivity; the old -age dependency 
ratio will be the highest of OECD Member States by 2060. OECD (2020), OECD Economi c Surveys: Korea 2020 . 
Viewed at: https://doi.org/10.1787/2dde9480 -en. 
10 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 ; and OECD (2020), OECD 
Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  promoting balanced, private sector -led g rowth; fostering inclusion; enhancing productivity; 
promoting fair competition between large corporations and smaller firms; fostering innovation 
especially in SMEs; and reducing the regulatory burden on firms, especially in the services sector.11 
Furtherm ore, outlook uncertainty reflecting external and domestic COVID -related risks remains 
elevated; reportedly, in addition, a strong currency and political factors could pose downside risks 
for growth.12 According to the IMF, as at 2021, building on the succe ssful response to the COVID -19 
shock (Box 1.1), the priorities for the period ahead would be to nurture the ongoing recovery with 
additional fiscal and monetary policy accommodation, and solidify the foundations for resilient, 
greener, and more inclusive m edium -term growth.  
Box 1.1 Korea's response to the COVID -19 challenge  
Korea was among the first countries hit by COVID -19. Due to an effective strategy to contain the 
spread of the virus, as at August 2020 the damage to the economy has been limited and output 
was shrinking less than in any other OECD country. Prompt and unprecedented wide -ranging 
action ( Table A1. 1) was taken to mitigate the pandemic's impact on employment, output, and 
investment as well as to shore up growth.  
 
Between February and September  2020, fiscal and non -fiscal measures worth KRW  277 trillion 
(14.4% of GDP) were introduced and raised to attain KRW  310 trillion (16.5% of GDP) as at 
June 2021 ( Table A1. 1). They included: (i)  four supple mentary fiscal stimulus budgets totalling 
KRW 66.9 trillion (USD  55 billion or about 3.5% of GDP), the third being the largest in the 
country's history (Section 3.3.1.2); (ii)  loans and guarantees of over KRW  200 trillion to 
households, SMEs, and severely affected industries (Section  3.3.1.2.2); (iii)  employment support 
(e.g. subsidized wages and reduced contributions to the National Health Insurance and Workers 
Accident Compensation Insurance); (iv)  relief checks in form of spending coupons of up to 
KRW 1 million (USD  814) to all households; (v)  a government -sponsored fund of about 2% of 
GDP to support key industries (e.g. aviation, shipping, shipbuilding, and automobile); and 
(vi) Bank of Korea policy rate cut and swap agreement with the US Federal Reserve  
(Section  1.2.3.1). Temporary tax measures included: (i)  tax deductions for spending via credit 
cards, cash, or debit cards, and for expenses paid in traditional markets and public transportation; 
(ii) consumption tax cut on motor vehicles; (iii)  higher in come tax credits for SMEs operating in 
hard-hit regions; (iv)  VAT reduction for small proprietors; and (v)  VAT exemption for small -
revenue taxpayers. Furthermore, other trade -related measures were introduced in areas such as 
trade facilitation, customs dut y concessions, temporary export ban of medical equipment, export 
credit insurance, price control on healthcare products, and industrial property rights 
(Sections  3.1.1.1, 3.1.3.5, 3.2.5, 3.3.4.2, and 3.3.7.1).  
 
According to the OECD, as at August 2020 soun d public finances provided fiscal space for further 
measures to prop up the economy if the crisis lingers. On 25 March 2021, a total budget of 
KRW 19.4 trillion, consisting of a proposed KRW  14.9 trillion supplementary budget and 
KRW 4.5 trillion of the 20 21 original budget, which were to be spent on the COVID -19 support to 
help small businesses with carrying out operations and retaining employment, was passed.  
Source:  OECD (2020), OECD Economic Outlook , Vol. 2020, Issue 1, No.  107. Viewed at: 
https://doi.org/10.1787/0d1d1e2e -en; OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed 
at: https://doi.org/10.1787/2dde9480 -en; EIU (2020), Country Commerce: South Korea . Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf ; Ministry  of Economy 
and Finance, 2021 Supplementary Budget Proposal . Viewed at: 
https://english.moef.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=5080 . 
 
11 IMF (2019), Republic of Korea: Staff Rep ort for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 ; and IMF (2019), Republic of 
Korea:  Selected Issues , IMF Country Report No.  19/133. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -Selected -Issues -46891 . 
12 IMF, "IMF Staff Completes 2021 Article  IV Mis sion to Republic of Korea", 27  January  2021. Viewed at: 
https://www.imf.org/en/News/Articles/2021/01/27/pr2125 -korea-imf-staff-completes -2021-article -iv-mission -
to-republic -of-korea ; and Pulse News, "2021 Outlook: Korea's Growth to Fall Under 3% on Pandemic, Political 
Risks", 17 December 2020. Viewed at: https://pulsenews.co.kr/view.php?year=2020&no=1295124 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  1.2  Recent Ec onomic Developments  
1.2.1   Growth, income, and employment  
1.3.  During the review period, Korea's annual GDP growth peaked at 3.2% (2017) to progressively 
decline to -0.9% (2020) due to the COVID -19 outbreak, while its annual average rate for the period 
2016-20 stood a t 2.1%, a further slowdown compared to the averages of 2. 9% in 2012 -15 and 
4.6% in 2001 -11 (Table 1.1).13 According to the OECD, the 2017 upturn was led by business 
investment, a continuing boom in construction, an uptick in world trade, and surging demand  for 
semiconductors, and it was supported by a supplementary budget in mid -2017.14 According to the 
IMF, the reasons for the subsequent decline included a deterioration in external demand, a global 
slowdown in the demand and prices for semiconductors, trad e tensions, China's growth slowdown, 
unfavourable demographics, and slowing productivity (see below).15 Recognizing the challenging 
growth environment, a supplementary budget of 0.3% of GDP was approved by vote in August 2019 
and fiscal stimulus of about 1 .2% of GDP was already planned for 2020.16 Despite negative growth 
amid the prolonged COVID -19 pandemic in 2020, according to OECD data, Korea ranked third among 
major economies after China and Turkey, in terms of economic growth, as a result of rising glo bal 
demand for semiconductors, high -tech products, and automobiles; resilient investment in machinery 
and equipment; and expansionary fiscal and accommodative monetary measures (Box 1.1 and 
Section 1.2.3).17 Furthermore, the July 2020 Korean New Deal initi ative (Sections 1.2.4 and 
3.3.1.2.2.2) offers an opportune strategy to develop new growth drivers and achieve greater 
inclusiveness by increasing public investment in digital and green energy infrastructure.18 According 
to the IMF, growth is projected to g radually gain momentum, reaching on a preliminary basis 3% 
(Bank of Korea) or 3.6% (IMF) in 2021.19 According to the Bank of Korea (BOK), GDP is expected 
to record growth of over 3% in 2021, as it is expanding more than expected; the global economy is 
picking up, exports have constantly been good on the back of IT industry bouncing back, facility 
investment is improving, and lingering weakness in private consumption is getting better as the 
social distancing policy is eased.20 
1.4.  Since 2016, changes in the ove rall sectoral pattern of Korea's GDP and employment have 
mainly consisted of the increasing contribution of services – accounting for 62.3% (2020) of 
economic activity – still well below the OECD average, and a decline in manufacturing (Table 1.2).21 
Labou r productivity in Korea's dualistic economy peaked in 2017 but then dropped only rise again 
in 2020, whereas the weak total factor productivity (TFP) peaked in 2018 and then slowed, thus 
 
13 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
14 OECD (2018), OECD Economic Surveys: Korea 2018 . Viewed at: 
http://dx.doi.org /10.1787/eco_surveys -kor-2018-en. 
15 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 . 
16 OECD (2019), OECD Economi c Outlook , Vol. 2019, Issue 2, No.  106. Viewed at: 
https://doi.org/10.1787/9b89401b -en. 
17 According to the OECD, the COVID -2019 hit to the economy was particularly severe for tourism, 
travel, hotels, restaurants, culture, petrochemicals, cars, shipping, and shipbuilding. Both disruptions to supply 
chains and shrinking demand have led to stoppa ges in some industries and the manufacturing purchasing 
managers' index in April 2020 fell to its lowest level since 2009. Exports tumbled. OECD (2020), OECD 
Economic Outlook , Vol. 2020, Issue 1, No.  107. Viewed at: https://doi.org/10.1787/0d1d1e2e -en; OECD 
(2019), OECD Economic Outlook , Vol. 2019, Issue 2, No.  106. Viewed at: https://doi.org/10.1787/9b89401b -
en; IMF, "IMF Staff Completes 2021 Article  IV Mission to Republic of Korea", 27 January 2021. Viewed at: 
https://www.imf.org/en/News/Articles/2021/01/27/pr2125 -korea -imf-staff-completes -2021-article -iv-mission -
to-republic -of-korea ; and Korea Herald , "S. Korea Ranks 3rd in 2020 Economic Growth After China, Norway: 
OECD", 23 February 2021. Viewed at: http://www.koreaherald.com/view.php?ud=20210223000773 . 
18 IMF, "IMF Staff Completes 2021 Article  IV Mission to Republic of Korea", 27  January  2021. Viewed at: 
https://www.imf.org/en/News/Articles/2021/01/27/pr2125 -korea -imf-staff-completes -2021-article -iv-mission -
to-republic -of-korea ; and IMF (2021), World Economic Outlook April 2021: Managing Divergent Recoveries . 
Viewed at: https://www.imf.org/en/Publications/WEO/Issues/2021/03/23/world -economic -outlook -april-2021. 
19 IMF, "IMF Staff Completes 2021  Article  IV Mission to Republic of Korea", 27  January  2021. Viewed at: 
https://www.imf.org/en/News/Articles/2021/0 1/27/pr2125 -korea -imf-staff-completes -2021-article -iv-mission -
to-republic -of-korea ; and Pulse News, "2021 Outlook: Korea's Growth to Fall Under 3% on Pandemic, Political 
Risks", 17 December 2020. Viewed at: https://pulsenews.co.kr/view.php?year=2020&no=1295124 . 
20 Bank of Korea (2021), Executive Summary for Monetary Policy Report (March 2021) . Viewed at: 
https://www.bok.or.kr/eng/bbs/E0000628/view.do?nttId=10063407&menuNo=400204 . 
21 World Bank, Services, Value Added (% of GDP) . Viewed at: 
https://data.worldbank.org/indicator/NV.SRV.TO TL.ZS . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  slowing the rise of income, well -being, and female employment (Table 1.1); according to the OECD, 
narrowing the productivity gap requires regulatory reform, particularly in the lagging services sector 
(e.g. trade, transportation, accommodation, and catering).22 Korea remains deeply integrated in 
GVCs, particularly for elect ronic goods; as an export -oriented economy, it is, inter alia,  vulnerable 
to lasting COVID -19-related GVC disruptions.23 According to United Nations Conference on Trade 
and Development (UNCTAD) estimates, in 2017, Korea ranked 6th (4th in 2010) among the world's 
25 top exporting developing economies by GVC participation rate; its GVC participation in exports 
(58%, mostly up stream) stood below the average of the developed exporting economies (60%) but 
above the average of developing exporting economies (56%).24 
Table 1.2 Basic economic and social indicators, 2016 -20 
 
2016  2017  2018  2019  2020  
Real GDP at market prices  
(KRW trillion, 2015 prices)  1,706.9  1,760.8  1,812.0  1,852.7  1,836.9  
Real GDP at market price (USD billion, 
2015 prices)  1,470.8  1,557.1  1,646.8  1,589.3  1,556.6  
Current GDP at market price (KRW trillion)  1,740.8  1,835.7  1,898.2  1,924.5  1,933.2  
Current GDP at market price (USD billion)  1,500.0  1,623.3  1,725.2  1,651.0  1,638.2  
GDP per capita at current market price 
(USD)  29,287.2  31,605.2  33,429.0  31,928.8  31,637.3  
GDP by economic activity at constant 2015 prices (% change)  
Agriculture, forestry and fishing  -5.6 2.3 0.2 3.9 -4.0 
Mining and quarrying  7.0 -4.0 -7.4 -6.2 -0.2 
Manufacturing  2.3 3.7 3.3 1.1 -0.9 
Chemicals and chemical products  0.5 3.4 2.5 -0.9 0.7 
Computer, electronic and optical products  10.3 4.8 11.4 6.4 3.9 
Machinery and equipment  -4.4 22.5 0.7 -0.9 2.2 
Transportation equipment  1.6 -8.1 -2.3 1.9 -9.1 
Electricity, gas and water supply  -1.2 6.2 -1.7 4.3 4.2 
Construction  9.8 5.9 -2.8 -2.6 -1.4 
Services  2.9 2.6 3.8 3.4 -1.0 
Wholesale and retail trade  2.2 2.6 2.5 3.5 -1.9 
Accommodation and food services  4.5 -0.5 4.0 3.6 -16.7 
Transport and storage  0.4 2.7 3.7 1.7 -15.1 
Finance and insurance  1.9 4.2 5.6 3.4 9.1 
Real estate  3.5 2.3 3.2 1.4 1.7 
Information and communication  5.3 3.1 4.5 4.6 3.2 
Professional, scientific and technical 
services  1.3 0.5 3.4 2.0 2.3 
Business support services  4.1 4.7 4.7 3.7 -5.4 
 
22 Korea's dualistic economy remains characterized by large productivity gaps between manufacturing 
and services, large and small firms, and regular and non -regular workers contributing to sluggish productivity 
growth (Sections 1.1 and 1.2.4.5). Prod uctivity is only about half as high as that of OECD countries, while 
labour inputs are the largest in the OECD, reflecting long working hours. The TFP growth level remained about 
65% of that in the United  States in 2017. Despite dynamism in digital technol ogies, Korea's economy -wide 
productivity is far below the OECD average, thus reflecting several structural features. As in many OECD 
countries, most jobs created in new SMEs are in low productivity activities (e.g. trade, transportation, 
accommodation, and  food services); in high productivity sectors (e.g. manufacturing), SMEs account for a high 
share of enterprises and of employment, but are less productive than large firms, and this productivity gap 
observed across OECD countries is substantially larger i n Korea. IMF (2019), Republic of Korea: Staff Report 
for the 2019 Article  IV Consultation , IMF Country Report No.  19/132. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-Article -IV-Consultation -
Press -Release -Staff-Report -and-Statement -by-46890 ; OECD (2019), Economic Policy Reforms 2019: Going for 
Growth . Viewed at: https://doi.org/10.1787/aec5b059 -en; and OECD (2020), OECD Economic Surveys: Korea 
2020. Viewed at: https://doi.org/10.1787/2dde9480 -en. 
23 OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -
en. 
24 The GVC participation rate indicates the share of a country's exports that is part of a multi -stage 
trade process. WTO, Trade in Value -Added and Global Value Chains: Statistical Profiles . Viewed at: 
https://www.wto.org/english/res_e/statis_e/miwi_e/countryprofiles_e.ht m; and UNCTAD (2018), World 
Investment Report 2018 – Investment and New Industrial Policies . Viewed at: 
https://unctad.org/en/PublicationsLibrary/wir2018_en.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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2016  2017  2018  2019  2020  
Public administration and defence  2.7 2.8 3.4 3.9 4.0 
Education  1.3 2.0 1.7 1.6 -2.4 
Health and social work  7.3 6.4 8.2 9.8 1.3 
Culture and other services  3.4 -0.8 2.7 2.9 -18.7 
Share of gross value added, current prices (%)  
Agriculture, forestry and fishing  2.0 2.0 1.9 1.8 2.0 
Mining and quarrying  0.1 0.1 0.1 0.1 0.1 
Manufacturing  28.8 29.5 29.1 27.6 27.2 
Chemicals and chemical products  4.6 4.4 4.3 4.3 4.4 
Computer, electronic and optical products  6.8 8.2 8.5 7.1 7.0 
Machinery and equipment  2.4 2.6 2.5 2.6 2.7 
Transportation equipment  3.6 3.0 2.8 3.0 2.8 
Electricity, gas and water supply  2.8 2.4 2.0 2.1 2.4 
Construction  5.7 6.0 5.9 6.0 6.0 
Services  60.5 60.0 60.9 62.4 62.3 
Wholesale and retail trade  8.1 8.0 7.9 7.8 7.6 
Accommodation and food services  2.5 2.5 2.5 2.7 2.2 
Transport and storage  3.7 3.5 3.3 3.5 3.2 
Finance and insurance  5.6 5.8 6.0 5.9 6.3 
Real estate  8.1 7.9 8.0 8.1 8.3 
Information and communication  4.7 4.6 4.6 4.7 5.0 
Professional, scientific and technical 
services  6.0 6.0 6.2 6.5 6.8 
Business support services  3.2 3.2 3.4 3.5 3.4 
Public administration and defence  6.3 6.4 6.6 6.9 7.3 
Education  5.3 5.2 5.2 5.4 5.3 
Health and social work  4.3 4.4 4.7 5.1 5.3 
Culture and other services  2.6 2.5 2.6 2.6 2.2 
Share of sector in total employment  
Agriculture, forestry and fishing  4.8 4.8 5.0 5.2 5.4 
Mining and quarrying  0.1 0.1 0.1 0.1 0.0 
Manufacturing  17.4 17.1 16.8 16.5 16.3 
Electricity, gas, and water supply  0.7 0.7 0.7 0.8 0.8 
Construction  7.1 7.4 7.6 7.5 7.5 
Services  70.0 69.9 69.8 71.1 70.2 
Wholesale and retail trade  14.2 14.2 13.9 13.7 13.1 
Accommodation and food service 
activities  8.7 8.6 8.4 8.6 8.0 
Transport and storage  5.4 5.3 5.2 5.3 5.5 
Finance and insurance  3.0 3.0 3.1 3.0 2.9 
Real estate  1.8 2.0 2.0 2.1 1.9 
Information and communication  3.0 2.9 3.1 3.2 3.2 
Professional, scientific and technical 
activities  4.2 4.1 4.1 4.3 4.3 
Business support services  5.3 5.1 4.9 4.9 5.0 
Public administration and defence; 
compulsory social security  3.8 4.0 4.1 4.0 4.1 
Education  7.1 7.1 6.9 7.0 6.7 
Health and social work  7.0 7.2 7.6 8.2 8.7 
Culture and other services  6.5 6.5 6.5 6.8 6.7 
Source:  Bank of Korea Economic Statistics System. Viewed at: http://ecos.bok.or.kr/ ; and data provided by 
the authorities.  
1.5.  During the review period, Korea's unemployment rate rose slightly to 4% in 2020 (Table 1.1) 
as a result, inter alia,  of weak private job creation particularly in low -productivity sectors and among 
low-skilled workers, reflecting both the slowing economic m omentum and the sharp rise in the WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 22 - 
 
  minimum wage in 2018 -19 (Section 1.2.4.5), as well as the COVID -19 outbreak.25 The 
pandemic -related fall in employment affected mostly wholesale and retail trade, accommodation, 
and food, particularly temporary and daily w orkers, as well as small business owners.26 According 
to the authorities, as at February 2021 on a year -on-year basis, 473,000 jobs were lost but losses 
were slowing due to recovering services.27 As at March 2021 on a year -on-year basis, 314,000 jobs 
were added as employment in the private sector revitalized while exports and domestic consumption 
improve.  
1.2.2   Prices  
1.6.  During the review period, headline inflation peaked to 1.9% in 2017, mainly due to an increase 
in oil and food prices, and then dropped to 0.5% in 2020 led by their fall; it remained below the 
BOK's 2% target (Section 1.2.3.1).28 Core inflation, which excludes energy and food, dropped 
steadily and considerably to 0.4%, about one fifth of its 2016 level (Table 1.1). According to the 
authorities, as at  March 2021 on a year -on-year basis, headline and core inflation rose to 1.5% and 
0.6%, respectively.29 According to the BOK, consumer price inflation is forecast to rise to 1.3% in 
2021, as international oil prices are expected to considerably exceed the 2020 level, whereas core 
inflation is forecast to increase to 1%.30 
1.2.3   Main macroeconomic policy developments  
1.2.3.1   Monetary and exchange rate policy  
1.7.  An accommodative monetary policy has been conducted by the independent Bank of Korea, 
mainly on the basis of an inf lation target set at 2% since 2016 -18.31 With inflation continuing to 
undershoot its target since 2016, the BOK cut its policy rate progressively five times from 1.25% 
(June 2016) to a record -low 0.5% (May 2020); it was raised only twice – to 1.5% (Novembe r 2017) 
and 1.75% (November 2018).32 According to the IMF, monetary policy was appropriately eased in 
2020 and has scope for additional support to underpin the recovery and bring inflation closer to the 
BOK target through a modest further easing.33 
1.8.  Korea h as maintained its floating exchange rate system, which provides an important buffer 
against external shocks and facilitates adjustment towards domestic sources of growth, thereby 
reducing external imbalances to levels consistent with Korea's fundamentals. The authorities adhere 
to the principle that the exchange rate is determined by the market; the intervention policy in foreign 
exchange markets remains limited to episodes of disorderly market conditions, and exchange rate 
flexibility would continue.34 As from the second half of 2018, Korea began to disclose foreign 
 
25 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 . 
26 OECD (2020), OECD Economic Outlook , Vol. 2020, Issue 1, No.  107. Viewed at: 
https://doi.org/10.1787/0d1d1e2e -en. 
27 Ministry of Economy and Finance, "Current Economic Situation, March 2021", 19 March 2021. Viewed 
at: https://english.moef.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=5092 . 
28 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publica tions/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 . 
29 Ministry of Economy and Finance, "Current Economic Situation, March 2021", 19 March 2021. Viewed 
at: https://english.moef.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=5092 . 
30 Bank of Korea (2021), Executive Summary for Monetary Policy Report  (March 2021) . Viewed at: 
https://www.bok.or.kr/eng/bbs/E0000628/view.do?nttId=10063407&menuNo=400204 . 
31 In addition to monetary policy, in order t o mitigate the rise in inflation, the Government continued  
implementing, inter alia,  administrative price stabilization measures,  including flexible customs tariffs, 
autonomous tariff quotas, flexible individual consumption (special excise) tax rates, and price controls 
(Sections 3.1.3.3, 3.1.3.8, 3.3.1.1.1, and 3.3.4.2).  
32 Trading Economics, South Korea Interest Rate . Viewed at: https://tradingeconomics.com/south -
korea/interest -rate. 
33 IMF, "IMF Staff Completes 2021 Article  IV Mission to Repub lic of Korea", 27  January  2021. Viewed at: 
https://www.imf.org/en/News/Articles/2021/01/27/pr2125 -korea -imf-staff-completes -2021-article -iv-mission -
to-republic -of-korea . 
34 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  exchange market intervention data to enhance its foreign exchange policy transparency. Between  
the second half of  2018 and 2020, Korea sold USD  211.4 billion (on a net basis), including both the  
spot and forward markets ; the net purchase of US dollars by the FX authorities for market stability 
was USD -1.51 billion.  
1.9.  During the review period, the nominal KRW/USD exchange rate depreciated (2019 and 2020) 
after slightly appreciating (2016 -18) (Table  1.1); in trade -weighted terms, overall, the effective 
exchange rate appreciated (except for 2018 and 2019), thus reducing Korea's price competitiveness 
in international  trade . Exchange rate movements were driven by both external and internal factors. 
External factors included global risk -on, risk -off investment behaviour and policy responses of major 
countries to address COVID -19. Internal factors included trends in the current account balance 
following export and import, foreign capital flows, the policy response for tackling COVID -19, and 
geopolitical risks. According to the IMF, the Korean won has been on a gradual appreciating trend 
since 2013, and in real effective exchange rate (REER) terms it appreciated by nearly 1% (2018 
average compared to 2017 av erage); in its REER terms during the review period it appreciated 
(except for 2019 and 2020).35 
1.2.3.2   Fiscal policy  
1.10.   Korea's prudent fiscal policy shifted to an increasingly expansionary, more pro -growth stance 
to support consumption and investment and cope with the impact of COVID -19 on the economy, a 
move consistent with utilizing fiscal space when needed while preserving longer -term fiscal 
sustainability. Consequently, its rising fiscal surplus shifted from a peak of 1.6% of GDP (including 
social security surpl us) in 2018 to deficits of 0.6% in 2019 and 3.7% in 2020 (Table 1.1). According 
to the OECD, Korea is appropriately using the fiscal space offered by strong public finances, with 
central government gross debt at 36. 3% of GDP in 2019 and 42. 4% in 2020, to d ampen the impact 
of the crisis (Box 1.1 and Table 1.1); the budget balance is projected to move from a surplus in 
2019 to a deficit of up to more than 3% of GDP in 2020.36 According to the IMF, the 2021 budget 
has scope for raising targeted transfers to ad versely affected workers and firms and accelerating 
public investment plans to support the recovery; as done in the past, Korea's somewhat higher 
budgeted deficit could be offset by gradual consolidation in subsequent years.37 
1.2.4   Structural policies  
1.11.   Trade and  domestic reform are considered as intrinsically linked. During the review period, 
policy was, inter alia,  focused on supporting income, creating jobs, supporting SMEs and start -ups, 
and promoting productivity -boosting innovation, as well as strengthening social safety nets and 
substantially raising the minimum wage (Sections 3.2.4.3, 3.3.1.2.2, 3.3.4.1, 3.3.6 , and 3.3.7).38 A 
July 2020 Korean New Deal strategy is to develop new growth drivers in the post -pandemic world 
and increase inclusiveness (Sections 1.2.1 and 3.3.1.2.2.2).39 According to the IMF and the OECD, 
reforms that reduce entry barriers and stimulate competition, especially in the services sector, and 
tackle remaining rigidities in the labour market (Section 1.2.4.5) could provide a further boost to 
potential growth; f urthermore, policies and structural reforms to promote domestic demand and 
 
35 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890. 
36 OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -
en. 
37 IMF, "IMF Staff Completes 2021 Article  IV Mission to Republic of Korea", 27  January  2021. Viewed at : 
https://www.imf.org/en/News/Articles/2021/01/27/pr2125 -korea -imf-staff-completes -2021-article -iv-mission -
to-republic-of-korea . 
38 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 . 
39 Government of the Republic of Korea (2020), The Korean New Deal – National Strategy for a Great 
Transformation . Viewed at: 
https://english.moef.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=4948#:~:text=The%20Korean
%20New%20Deal%2C%20announced,employment%20and%20social%20safety%20net ; IMF, "IMF Staff 
Completes 2021 Article  IV Mission to Republic of Korea", 27 January 2021. Viewed at: 
https://www.imf.org/en/News/Articles/2021/01/27/pr2125 -korea -imf-staff-completes -2021-article -iv-mission -
to-republic -of-korea . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  private investment would contribute to a further reduction of the current account surplus 
(Section  2.2.5).40 
1.2.4.1   Tax reform  
1.12.   During the review period, tax reform in line with policy obje ctives, including to cope with 
COVID -19 impact to the economy, was undertaken (Box 1.1, Section 3.3.1, and below).41 In 2016, 
it included tax incentives to inject more vitality into the economy (e.g. research and development 
(R&D), new growth -engine indust ries, core technology, cultural content such as films and TV dramas, 
and venture investment); tax system improvements on tax benefits for low - and middle -income 
households, SMEs, the self -employed and fishers/farmers.; taxation equity enhancement and 
non-taxation/exemption schemes overhauling in certain areas (e.g. capital gains tax, offshore tax 
base, and tax package for increasing household incomes); and tax system rationalization under the 
2016 tax code revision. In 2017, specific measures were taken as follows: tax support programmes 
overhauling for creating quality jobs (e.g. Tax Credit for Enterprises Increasing Job Creation tax 
reduction); rise of tax burdens on high -income earners versus relief for middle -income and 
working -class people and small -scale business owners; corporate tax rate for large corporations with 
sufficient funding rise to previous levels; and further rationalization of the tax regime. The 2018 tax 
reform included: earned income tax credit (EITC) redesign and expansion; tax burdens on real estate 
ownership rationalization; bigger tax incentives to businesses increasing jobs in designated special 
areas and reinforcement of tax support for companies starting operations in regions at risk 
(corporate and individual income tax exemption);  and further rationalization of the overall tax 
regime (e.g. taxes levied on bituminous coals and natural liquefied gas (LNG) adjusted to their 
environmental costs). The 2019 tax revision highlights were the introduction of tax support 
programmes to help e conomic vitality (e.g. production enhancement facilities, public safety facilities, 
individual consumption tax relief for passenger vehicles, and R&D for new growth and source 
technologies); upgrading of tax schemes to support the working and middle -income  classes, SMEs, 
and employment (companies hiring local); elevation of tax equity and transparency in tax revenue 
sources; and further rationalization of the tax regime (e.g. penalties and administrative fines for 
breaching reporting duties on overseas fina ncial accounts and the tax surcharge verification for 
stocks of largest shareholders).  
1.13.   In addition to tax measures during the first half of 2020 (Box 1.1, Table 1.1, and 
Section  3.3.1.1.2), as at July 2020 several tax reforms aimed at reducing inequality a nd facilitating 
economic recovery from the COVID -19 pandemic, including the introduction of a new top tax bracket 
for personal income and tax relief for smaller companies, were passed.42 These reforms were 
implemented through the passing of amendments to t he tax law on 30 November 2020 and 
enforcement decrees and regulations were promulgated and entered into force in February and 
March 2021. Regarding the personal tax regime, they introduced a new top tax bracket for annual 
earnings exceeding KRW  1 billon s ubject to a new 45% tax rate, compared with the previous 42% 
rate applied on annual income over KRW  500 million. The introduction of new top bracket for 
personal income tax was implemented as of 29 December 2020 (revision of Article  55(1) of the 
Income Tax  Act). Regarding companies, there was a broadening of the application of a simplified 
tax-filing process and introduction of VAT exemptions for businesses with annual sales below 
KRW 48 million. The VAT -related amendments came into effect on 22 December 20 20 (amendment 
to Article  69(1)). The capital gains tax of 20% on profits of over KRW  50 million from transactions 
of listed shares, starting from 1 January 2023, was amended on 29 December 2020.  
1.14.   According to the IMF, in the longer term, tax reforms aimed a t promoting innovation and 
efficiency in resource allocation could further support growth.43 As indicated at the time of the 
previous review by the IMF, Korea's tax revenue (27. 2% of GDP in 2019) remains relatively low 
compared to that of most OECD countri es at similar levels of development, in part reflecting high 
 
40 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 ; and OECD (2019), OECD 
Economic Outlook , Vol. 2019, Issue 2, No.  106. Viewed at: https://doi.org/10.1787/9b89401b -en. 
41 Ministry of Economy and Finance (2020), Korean Taxation 2020 . 
42 EIU (2020), Country Commerce: South Korea . Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
43 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultatio n, IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Is sues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  levels of exemptions (Section 3.3.1.1); tax reform focused on broadening the base would reduce 
policy distortions and improve productivity.44 To enhance tax compliance, the authorities expanded 
the disclosure list of large and habitually delinquent payers (2021), established an exclusive 
organization for tax delinquency in local tax offices (2020), and encouraged compliance of delinquent 
payers by reducing the "additional tax to payment defer" rat e from 0.03%/day to 0.025%/day 
(2019).  
1.2.4.2   Privatization  
1.15.   As at the previous Review and despite a commitment to privatization, there has been no 
progress in this area (Section 3.3.5).  
1.2.4.3   Competition policy  
1.16.   During the review period, Korea set out a vision of "Raisi ng the Living Quality of the People 
through Establishment of a Fair Market Economy" to promote innovation and competition, and 
undertook several legislative changes to respond to developments in the economic landscape 
(Section 3.3.4.1.1). Market and indust ry concentration remains relatively high, and large business 
and state conglomerates continue to be monitored. A prohibition on new cross -shareholding 
(i.e. circular shareholding) between subsidiaries under a large business group remains in place to 
enhanc e transparency and soundness of corporate ownership and governance (Section 1.2.4.4); 
however, as indicated by the IMF in 2019, the manufacturing sector continues to be highly 
concentrated, particularly compared to peers, and tighter vertical and trade lin kages have increased 
the vulnerability of the economy to domestic and external shocks (Section 1.1).45 Consequently, 
promoting competition in certain industries and preventing transfer of dominance between industries 
through unfair support for affiliates a nd abuse of superior bargaining position in forward and 
backward transactions have been priority concerns of competition policy in Korea.  
1.2.4.4   Corporate governance and the cost of capital  
1.17.   Good corporate governance contributes to sustainable economic development  by enhancing 
the performance of companies and increasing their access to outside capital.46 During the review 
period, changes in this area included elimination of the "shadow voting system" (2018), introduction 
of an electronic registration securities sys tem (2019), revision of the Financial Services Commission 
(FSC) posting regulations for the consolidated balance sheets of Korea Exchange (KRX) -listed 
companies (2018), and publication of the KRX Guidelines on Disclosure of Corporate Governance 
(2019).47 As many companies (especially companies with subsidiaries in China or located in areas 
under special infectious disease control) would not be able to meet these financial reporting 
submission deadlines due to the COVID -19 outbreak, the authorities announced  to exempt those 
companies from administrative sanctions for failing to meet the deadline to submit the financial 
statements and business reports due to COVID -19-related issues; the deadline was extended until 
31 August 2020. Despite the drive to reform bu siness practices regarding large business 
conglomerates, their dominance continues to be reflected in corporate governance and contributes 
to the so -called "Korea discount" (10% -40% less in 2010), i.e. the amount by which investors 
undervalue Korean stocks  owing to the perceived higher investment risk in Korea compared with 
that of other countries.48 At the time of the previous Review, the authorities considered that this 
 
44 OECD, Revenue Statistics 2020 . Viewed at: https://www.oecd.org/ctp/revenue -statistics -
2522770x.htm#:~:text=Metadata&text=Tax%20to%20GDP%20ratio%3A%20New,of%20GDP%20relative%20
to%202018 ; and WTO document WT/TPR/S/346/Rev.1, 6 January  2017.  
45 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 . 
46 World Bank Group, World Bank Group A to Z 2016: Corporate Governance . Viewed at: 
http://elibrary.worldbank.org/doi/full/10.1596/978 -1-4648-0484-7_corporate_governance . 
47 Viewed at: https://practiceguides.chambers.com/practice -guides/corporate -governance -2020/south -
korea . 
48 As indicated at the previous R eview, the prime cause of the discount is more likely to be due to poor 
corporate governance at the family -run business conglomerates, but also to, inter alia , geopolitical risks on the 
Korean peninsula, investors' concern over the high level of household debt, Korea's reputation for labour 
militancy, and Korea's low (albeit improved) ranking on Transparency International's Corruption Perceptions 
Index  (CPI) (33rd of 180 economies in 2020, and 37th of 167 economies in 2015). According to the Korea Fair 
Trade Commission (KFTC), as at 2020 the share of owners or immediate family who are listed as members of WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  causal link is ambiguous. According to a 2019 study, Korean stocks exhibit, on average , a 
price-earnings (PE) ratio significantly lower (30%) than their global peers from developed and 
emerging markets as well stocks from the Asia -Pacific region, and this pervasive phenomenon affects 
most Korean stocks.49 The discount seemingly affects both  large conglomerates and non -large 
conglomerate firms; reportedly, the discount of large conglomerate firms is significantly lower than 
the discount of other Korean firms, and this may be due to the fact that the former gained an 
international reputation a nd visibility that could also lead investors to consider them differently than 
less-known Korean firms.  
1.2.4.5   Labour market policies  
1.18.   Labour market duality (i.e. regular and non -regular workers) persists but has somewhat 
mitigated.50 Employment protection, involv ing lay -off costs, remains a key reason for the rise in the 
share of non -regular workers (i.e. fixed -term, dispatched, and part -time workers) to more than a 
third of employment.51 Labour market duality implies that non -regular workers are most vulnerable 
to shocks like the COVID -19 pandemic.52 According to the IMF and the OECD, dualism drives wage 
inequality, reduces productivity growth by discouraging firm -based training, and has a negative 
impact on female employment; action to reduce dualism was taken.53 During the review period, 
Korea used or is considering using a number of policies to support employment, including transfers 
to SMEs to create or preserve jobs, Active Labor Market Policies (ALMPs), and boosting public 
employment (Sections 3.2.4.3 and 3.3 .1.2).54 According to the IMF, measures to enhance flexibility 
and security (flexicurity) in the labour market to mitigate duality and create jobs in the private 
sector, as well as linking minimum wage increases to labour productivity growth and phasing out 
compen satory subsidies to SMEs, are key to boosting potential growth.  
1.19.   Under the 2003 amendment of the 1997 Labor Standards Act, which is to progressively reduce 
the statutory weekly working hours from 44 to 40 to better protect workers' right to health and to 
improve work -life balance, the maximum number of total weekly working hours was reduced from 
 
the board at affiliates of large family -run conglomerates stood at 16.4% (21.7% end -2015), whereas the share 
of outside directors of large conglomerates st ood at 50.9% (49.5% end -2015). WTO document 
WT/TPR/S/346/Rev.1, 6 January 2017; and Transparency International, South Korea . Viewed at: 
https://www.transparency.org/en/countries/south -korea. 
49 Romain Ducret and Dušan Isakov (2019), The Korea Discount and Chaebols , Université de Fribourg 
Working Papers SES N. 511 XI.2019. Viewed at: https://doc.rero.ch/record/327559/files/WP_SES_511.pdf . 
50 The authorities indicate that major indicators including the wage level of non -regular workers in small 
businesses, the share of low-wage workers (the share of workers earning less than two thirds of the median 
income), and wage quintiles (the average income of the top 20%/bottom 20%) showed signs of improvement.  
51 Regular workers receive high employment protection (e.g. particularl y tight restrictions on dismissal) 
as a result of government policies, business practices, social customs, and labour unions. Consequently, share 
of non -regular workers increased from 32.8% in August 2016 to 36.3% in August 2020. The authorities 
indicate t hat this increase is due to changes in the ILO statistical standards/methodology as of 2019. Statistics 
Korea, Supplementary Results of the EAPS , 29 October 2019. Viewed at: 
http://kostat.go.kr/portal/eng/pressReleases/5/5/index.board?bmode=read&aSeq=379554&pageNo=&rowNu
m=10&amSeq=&sTarget=&sTxt= . 
52 OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -
en. 
53 As at 2019, the authorities aimed to transform the contracts of 205,000 non -regular workers in the 
public sector to regular status by 2020, as well as expand public sector jobs by 810,000 by 2022, partly by 
converting non -regular public -sector workers into regular employment. Korea's public employment is only 9% 
of total employment, far behind the OECD average of 21.3% and, as the population ages, more public service 
would be nee ded to improve citizens' welfare. As at the end of December 2020, 199,538 non -regular workers 
in the public sector were converted to regular workers (i.e. 97.3% of the target figure). The Ministry of 
Employment and Labour (MOEL) provides a variety of suppo rt to the public sector institutions that have yet to 
complete the regular worker conversion process, including expert consulting service and sharing of best 
practices. In 2018, the subsidy to firms that convert non -regular workers to regular status was ra ised from 
KRW 600,000 per month to KRW  800,000 (USD  741). OECD (2019), Economic Policy Reforms 2019: Going for 
Growth . Viewed at: https://doi.org/10.1787/aec5b059 -en; and IMF (2019), Republic of Korea: St aff Report for 
the 2019 Article  IV Consultation , IMF Country Report No.  19/132. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -2019-Article -IV-Consultation -
Press -Release -Staff-Report -and-Statement -by-46890 . 
54 ALMPs are government programmes focused on direct job creation and represent spending equivale nt 
to 0.4% of GDP, close to the OECD average, or more than half of government expenditure on employment 
support in 2016, a much larger share than the OECD average (13%). IMF (2019), Republic of Korea:  Selected 
Issues , IMF Country Report No.  19/133. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -Selected -Issues -46891 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  68 to 52 by lowering the statutory cap on overtime from 28 hours to 12 in 2018, as Korea's average 
hours worked per employee is the second highest in the OECD and ab out 19% above the OECD 
average. This working -hour system is under implementation in a gradual manner; exemptions 
remain for certain types of transportation services and healthcare.55 Under regulations effective as 
at January  2020, the 52 -hour workweek rest riction would not apply in cases of safety emergencies, 
unusual increase in workload, and R&D projects deemed crucial to national competitiveness.56 
Several measures were taken to tackle income inequality (Section 1.1).57 
1.20.   The minimum wage was raised by 16. 4% in 2018, by 10.9% in 2019 (third -highest increase 
of OECD countries and significantly larger than the expected labour productivity increase), by 2.9% 
in 2020 and, in the context of the COVID -19 crisis, by 1.5% in 2021; SMEs are affected by higher 
labour  costs, despite subsidies to help them adjust through a Job Stabilization Fund to dampen the 
impact of the minimum wage increase and preserve some jobs, with a fiscal cost of about 
KRW 2.5 trillion (0.1% of GDP) in 2018, and KRW  2.9 trillion (0.1% of GDP) expected for 2019. 
Furthermore, the authorities more than tripled the amount spent on the EITC in 2019 
(Section  1.2.4.1). Minimum pensions were increased, while training programmes aimed at older 
workers in combination with subsidies for those who particip ate were expanded.58 Measures to 
enhance childcare quality, improve work -life balance, and facilitate return to work after career 
breaks were taken and are expected to encourage the participation and leadership of women in the 
labour market.59 
1.2.5   Balance of p ayments  
1.21.   In line with its traditional strategy of encouraging export -led growth based on manufactures, 
Korea continues to run a surplus in merchandise trade and a deficit in services (Table 1.3). However, 
since 2016 the merchandise trade surplus has decline d progressively to bottom in 2019 before rising 
slightly, albeit below its previous levels, partly due to sharper decline in exports than imports caused 
by the COVID -19 pandemic; the deficit in services peaked in 2017, due to a rise in freight charges, 
and then dropped steadily to below its 2016 level, partly due to the narrowing of the tourism account 
deficit.  Imbalances in the economy – particularly weak domestic demand – led to irregular large 
current account surpluses below their 2016 level; consequently, the surplus averaged 4.8% of GDP 
during 2016 -20 compared to 6% over 2012 -15 (Table 1.1). The overall current account surplus 
reflects the changes and extent to which gross national saving (36.2% of GDP in 2020) continues to 
exceed the weakene d gross domestic investment (31.9% of GDP), although the gap was reduced 
over the review period before increasing in 2020 (Table 1.1). According to the BOK, the current 
account surplus slightly narrowed to USD  7.82 billion in March 2021 as higher oil price s increased 
the import bill, compared to USD  7.94 billion the previous month.60 
 
55 To give smaller firms more time to adju st, implementation has been as follows: as from July 2018, to 
businesses with 300 or more employees and public institutions; as from January 2020, to businesses with 
50 to 299 employees; and, as from July 2021, to businesses with 7 to 49 employees. In Janu ary 2020, the 
system was updated to allow overtime work exceeding 12 hours a week after obtaining consent from the 
workers and an approval from the Minister of Employment and Labour, under special circumstances such as 
disasters, protection of human life a nd ensuring safety, unexpected circumstances such as sudden 
malfunctioning of equipment or facilities, exceptional increase in the workload, and R&D projects deemed 
crucial to national competitiveness. OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed  at: 
https://doi.org/10.1787/2dde9480 -en; and IMF (2019), Republic of Korea:  Selected Issues , IMF Country 
Report No.  19/133. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -of-Korea -
Selected -Issues -46891 . 
56 EIU (2020), Country Commerce: South Korea . Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
57 IMF (2019), Republic of Korea: Staff Report for the 2019 Article  IV Consultation , IMF Country Report 
No. 19/132. Viewed at: https://www.imf.org/en/Publications/CR/Iss ues/2019/05/13/Republic -of-Korea -2019-
Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-46890 ; and OECD (2020), OECD 
Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde 9480-en. 
58 OECD (2019), Economic Policy Reforms 2019: Going for Growth . Viewed at: 
https://doi.org/10.1787/aec5b059 -en. 
59 Korea's female labour force participation is one of the lowest in advanced economi es – 20 percentage 
points below the best performers. The gender employment gap for people aged 15 -64 is nearly 18 percentage 
points, the fourth largest in the OECD, whereas the gender wage gap at about 34% in 2018 was the widest in 
the OECD (average of abo ut 13%). OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed at: 
https://doi.org/10.1787/2dde9480 -en. 
60 Korea Herald , "Current Accounts Surplus Slightly Narrows in March", 7 May 2021. Viewed at: 
http://www.koreaherald.com/view.php?ud=20210507000426 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Table 1.3 Balance of payments, 2016 -20 
(USD million)   
2016  2017  2018  2019  2020  
Current account  97,923.7  75,230.9  77,466.5  59,676.1  75,275.7  
Goods and services balance  99,123.3  76,858.8  80,717.4  52,966.8  65,755.1  
Trade balance  116,461.7  113,592.9  110,086.8  79,812.1  81,945.2  
Exports  511,926.1  580,310.2  626,266.5  556,667.9  516,604.1  
Imports  395,464.4  466,717.3  516,179.7  476,855.8  434,658.9  
Services balance  -17,338.4  -36,734.1  -29,369.4  -26,845.3  -16,190.1  
Receipts  94,809.1  89,701.3  103,677.5  103,838.9  90,106.0  
Payments  112,147.5  126,435.4  133,046.9  130,684.2  106,296.1  
Primary income balance  4,567.1  5,336.9  4,901.9  12,856.0  12,050.3  
Credit  26,472.8  29,472.2  34,822.2  41,371.8  35,399.5  
Compensation of employees  823.8  682.8  819.6  764.9  779.6  
Investment income  25,649.0  28,789.4  34,002.6  40,606.9  34,619.9  
Debit  21,905.7  24,135.3  29,920.3  28,515.8  23,349.2  
Compensation of employees  1,700.4  1,890.4  1,994.3  1,616.9  1,435.6  
Investment income  20,205.3  22,244.9  27,926.0  26,898.9  21,913.6  
Secondary income balance  -5,766.7  -6,964.8  -8,152.8  -6,146.7  -2,529.7  
Credit  8,742.7  9,706.7  9,476.8  10,428.3  10,593.2  
Debit  14,509.4  16,671.5  17,629.6  16,575.0  13,122.9  
Capital account  -46.2 -26.8 316.7  -169.3  -339.4  
Financial account (including reserves)  99,925.3  84,516.4  76,473.4  59,026.9  77,115.9  
Financial account (excluding reserves)  92,310.1  80,159.3  58,977.7  57,560.7  59,724.4  
Direct investment  17,785.2  16,156.5  26,037.8  25,604.7  23,256.1  
Assets  29,889.5  34,069.4  38,220.4  35,239.0  32,479.7  
Liabilities  12,104.3  17,912.9  12,182.6  9,634.3  9,223.6  
Portfolio investment  66,970.2  57,853.0  47,420.7  42,377.0  41,494.4  
Assets  63,200.3  75,325.7  69,031.4  59,639.4  58,550.4  
Equity securities  20,900.3  33,918.5  35,870.0  42,618.9  56,325.5  
Debt securities  42,300.0  41,407.2  33,161.4  17,020.5  2,224.9  
Liabilities  -3,769.9  17,472.7  21,610.7  17,262.4  17,056.0  
Equity securities  13,272.3  8,676.8  -6,302.2  773.3  -15,798.4  
Debt securities  -17,042.2  8,795.9  27,912.9  16,489.1  32,854.4  
Financial derivatives  -3,440.1  -8,253.3  -1,502.4  6,233.2  4,215.1  
Other investment  10,994.8  14,403.1  -12,978.4  -16,654.2  -9,241.2  
Assets  11,137.5  14,706.8  -5,367.6  -4,705.6  13,253.4  
Trade credits  871.2  3,182.2  1,507.3  -2,717.6  1,187.0  
Loans  3,141.2  8,497.9  -2,922.6  3,762.7  3,054.7  
Currency and deposits  7,558.2  -545.8  -1,507.9  -4,205.8  5,193.7  
Other assets  -433.1  3,572.5  -2,444.4  -1,544.9  3,818.0  
Liabilities  142.7  303.7  7,610.8  11,948.6  22,494.6  
Trade credits  638.3  1,473.5  769.8  -1,510.3  303.4  
Loans  -2,823.1  -4,387.5  8,304.2  7,005.4  16,842.5  
Currency and deposits  2,617.5  3,254.7  1,366.6  3,644.4  688.1  
Other liabilities  -290.0  -37.0 -2,829.8  2,809.1  4,660.6  
Reserve assets  7,615.2  4,357.1  17,495.7  1,466.2  17,391.5  
Net errors and omission  2,047.8  9,312.3  -1,309.8  -479.9  2,179.6  
Note:  Positive figures in financial account represent increases in assets/liabilities, and negative figures 
represent decreases.  
Source:  Bank of Korea Economic Statistics System. Viewed at: http://ecos.bok.or.kr/ . 
1.22.   Korea's gross external debt grew considerably, by 42.6%, during the period 2016 -20 to 
USD 544.9 billion (29.2% short -term in 2020, Table 1.1) due to, inter alia,  the increase of banks' 
short-term external borrowing resulting from the rise in demand for foreign currency liquidity amid 
the COVID -19 pandemic and the growing foreign investment in Korea's treasury bonds, compared WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  to a 3.6% rise in 2012 -14 followed by a 6.4% drop in 2015. As a result, according to IMF data, the 
debt-service ratio rose from 9.3% to 10.9% over t he same period. As a percentage of GDP, gross 
external debt r ose by 30.6%, i.e. from 25.5% in 2016 to 33.3% in 2020 (Tables 1.1 and 1.2). 
According to the authorities, as at the end of 2020, external debt soundness indicators remained 
stable in the 30% ran ge, as the ratio of short -term external debt to total external debt rose by 
1.8 percentage points  to 29.2%  and the ratio of short -term external debt to foreign exchange 
reserves increased by 8.1 percentage points to 3 7%, compared to 2016. As at end of the first quarter 
of 2021, long -term external debt was on a steady rise, largely driven by Korea's robust economic 
fundamentals and demand on government bonds, while the overall rate of increase slowed, driven 
by short -term external debt.  
1.23.   Since 2016, Korea's f oreign exchange reserves have increased steadily by an overall 18.9%, 
largely due to continuously increasing returns from the management of reserve assets (Table 1.1); 
in 2020 they were equivalent to 26.4% of GDP, 8.2 months of imports of goods and service s, and 
about three times Korea's short -term external debt. As at end -March 2021, foreign exchange 
reserves stood at USD  433.2 billion, equivalent to nearly nine months of imports of goods and 
services. According to the IMF, based on measures of adequacy, K orea's reserves should be enough 
to buffer against a wide range of possible external shocks.  
1.3  Developments in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.24.   The openness of the Korean economy to international trade and its integr ation into the world 
economy continued to be reflected by the high ratio of the country's trade (exports plus imports) in 
goods and services to GDP; nevertheless, this ratio continued to drop progressively and significantly 
from 73.6% in 2016 to 69.2% in 2 020 (Table 1.1) partly due to global economic conditions and 
affecting the volume of trade, compared to the decrease from 109.8% in 2012 to 84.8% in 2015.  
1.25.   Since the previous Review, Korea's merchandise trade has remained largely dependent on 
manufactures ( Chart 1.1, and Tables A1.2 and A1.3). As at 2020, the share of machinery and 
electrical equipment, chemicals, and plastics and rubber in total exports had risen, whereas the 
share of precision instruments and transport equipment had dropped. Fuels now acco unt for less 
than one fifth of total imports, whereas agriculture accounts for 7%.  
1.26.   At the same time, while Korea's merchandise trade with countries in the region remained 
virtually unchanged for imports, the pattern of exports strengthened the share of Asi a-Pacific as a 
result of increased export values towards Viet  Nam (Chart 1.2, Section 2.5.2, and Tables A1.4 and 
A1.5). Notwithstanding some fluctuation in trade shares, as at 2020 77.4% (69.4% in 2015) of total 
merchandise trade continued to be conducted with trading partners from the Asia -Pacific Economic 
Cooperation (APEC) and 17.4% (12.4% in 2015) with ASEAN Members. Reportedly, trade under 
RTAs rose from 43% (2015) to 72% (2020) of total trade.61 According to the OECD, the signature 
and entry in force of several RTAs would increase Korea's market diversification and resilience over 
time (Section 2.5.2).62 Korea's main individual trading partners remain China, the United  States, the 
European  Union (EU -27), and Japan.  
 
61 Between 2016 and 2020, the average RTA utilization rate increased by 17.2% to 74.8%. As at 2020, 
the individual rates stood as follows:  Chile (68.6%), EFTA (80.1), ASEAN (49.2%), India (74.6%), 
European  Union (87.2%), Peru (68.7%), United  States (84.4%), Turkey (76%), Australia (80.9%), Canada 
(95.4%), China (65%), New  Zealand (42.8%), Viet  Nam (44.6%), and Colombia (47.9%). At the time o f the 
previous Review, RTA utilization rates stood at 78.4% for Chile, 80.5% for EFTA, 38.5% for ASEAN, 43% for 
India, 80.9% for the European  Union, 92% for Peru, 76.4% for the United  States, and 70.2% for Turkey; the 
main reason for non -utilization was la ck of knowledge. Korea Customs Service, FTA Portal. Viewed at: 
https://www.customs.go.kr/ftaportalkor/cm/cntnts/cntntsView.do?mi=3532&cntntsId=1167 . 
62 OECD  (2020), OECD Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -
en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Chart 1.1 Product composition of merchandise trade by main HS section, 2015 and 2020  
 
Source:  WTO Secretariat calculations, based on UN Comtrade database.  
1.27.   During the review period, Korea remained a net importer of services, running a deficit in the 
services account that peaked at 2.3% of GDP in 2017 and gradually dropped to 1% in 2020 
(Section  1.2.5, and Tables 1.1, 1.3, and 1.4). Transportation, travel, and other business services 
remain the major traded services.  
Chart 1.[KOR]  Product composition of merchandise trade by main HS section, 2015 and 2020
2015 2020
Total:   USD 526.8 billion Total:  USD 512.7 billion  
Base metals & 
articles thereof
8.9%Machinery;
electrical equipment
44.4%
Base metals &
articles thereof
6.9% 
Total:   USD 436.5 billion Total:   USD 467.5 billion Transport 
equipment
14.7%
Other
4.8%
Source:  WTO Secretariat calculations, based on UN Comtrade database.Other 
12.4%Base metals &
articles thereof
8.4%
Other
13.7%Transport
equipment
5.0%Transport
equipment
20.9%  
Other
4.2%
Chemicals 
9.2%Transport
equipment
4.9%Base metals & 
articles thereof
8.2%Machinery; 
electrical equipment
38.1%
Plastics & rubber
7.4%
Machinery;
electrical equipment
28.5% Machinery; 
electrical equipment
32.4% 
Plastics & rubber 
3.0% Plastics & rubber
2.8% Plastics & rubber
6.7%
Petroleum & 
mineral products
26.6%Petroleum & 
mineral products
22.1%Textiles & textile 
articles 3.2%Chemicals 
9.3%Chemicals 
6.5%Precision
instruments
4.0%Exports (f.o.b.)
Imports (c.i.f.)
Precision 
instruments
4.4%Precision
instruments
4.4%Precision 
instruments
6.2%
Petroleum & 
mineral products
5.1%Petroleum & 
mineral products
6.4%
Textiles & textile 
articles 3.2%Textiles & 
textile articles 
2.7%Textiles &
textile articles
2.1%
Chemicals 
8.3%WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Chart 1.2 Direction of merchandise trade, 2015 and 2020  
 
Source:  WTO Secretariat calculations, based on UN Comtrade database.  
Table 1.4 Trade in services, 2016 -20 
 
2016  2017  2018  2019  2020  
Total credit (USD billion)  94.8 89.7 103.7  103.8  90.1  
(% of total credit)  
Manufacturing services on physical inputs owned by others  2.6 2.5 2.4 1.8 2.3 
Maintenance and repair  0.4 0.4 0.5 0.6 0.5 
Transportation  28.9 27.6 27.0 26.1 27.9 
Passenger  4.3 4.2 4.4 4.4 1.4 
Freight  20.8 19.1 18.3 17.1 21.9 
Other  3.9 4.3 4.4 4.6 4.6 
Chart 1.[KOR]  Direction of merchandise trade, 2015 and 2020
2015 2020
Exports (f.o.b.)
Asia/Oceania
59.8%
Total:  USD 526.8 billion Total:  USD 512.7 billion
EU-27
11.7%Other
1.8%
Other 
Middle East
7.1%United States
10.1%Imports (c.i.f.)
EU-27
11.8%United States
12.4%
Total:  USD 436.5 billion Total:  USD 467.5 billionJapan
4.9%
Other Europe
2.3%Viet Nam
4.4%Viet Nam 
2.2%United States
13.3%Other Asia/
Oceania
13.3%United States
14.5%
Other Europe
2.9%
Source :  WTO Secretariat calculations, based on UN Comtrade database.Japan
9.8%
China
20.7%China
25.9%EU-27
9.3%
China
26.0%
Other America
5.2%
Japan
10.5%Other Asia/
Oceania
9.3%Hong Kong, 
China 6.0%EU-27
7.7%Chinese Taipei
2.3%
Middle East
5.0%Hong Kong, 
China 5.8%
Japan
4.9%
Chinese Taipei
3.8%Other Asia/
Oceania
11.0%
Other Asia/
Oceania
10.0%Other Europe
3.9Chinese Taipei
3.2%
Australia 
4.0%Chinese Taipei
3.8%
Asia/Oceania
54.7%Asia/Oceania
51.0%Asia/Oceania
62.7%
Other
2.1%
Russian Federation
2.6%Other America
4.5%
Other
Middle East
5.8%China
23.3%Russian Fed.
2.3%
Qatar
3.8%Viet Nam
5.3%
Saudi Arabia
4.5%Saudi Arabia
3.4%Viet Nam
9.5%India 2.3 %India 2.3 %
Middle East
2.4%Other 
3.5%Other 
3.7%
Other Europe
2.5%Other America
6.6% Other America
4.8%
Australia
3.8%WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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2016  2017  2018  2019  2020  
Travel  17.8 14.9 17.9 20.1 11.7 
Construction  12.4 11.8 13.1 9.3 7.6 
Insurance  0.7 1.2 0.8 0.6 0.8 
Financial services  1.9 2.5 2.8 3.1 4.4 
Charges for the intellectual property  7.3 8.1 7.5 7.5 7.6 
Telecommunication, computer and information  3.9 5.1 6.4 7.4 9.3 
Telecommunication  0.6 0.6 0.6 0.5 0.6 
Computer  2.5 3.3 4.1 4.2 5.6 
Information  0.8 1.3 1.6 2.6 3.1 
Other business services  21.9 23.7 19.9 21.5 25.9 
Research and development  0.9 0.8 0.9 1.1 1.2 
Professional and management consulting  2.4 2.7 2.4 2.4 3.1 
Other  18.7 20.1 16.7 18.0 21.6 
Personal, cultural and recreational services  1.2 1.0 1.1 1.2 1.3 
Government goods and services, n.i.e.  1.0 1.1 0.7 0.8 0.8 
Total debit (USD billion)  112.1  126.4  133.0  130.7  106.3   
(% of total debit)  
Manufacturing services on physical inputs owned by others  7.3 7.3 7.4 7.3 7.3 
Maintenance and repair  0.3 0.4 0.6 0.8 1.2 
Transportation  25.6 23.9 22.9 22.0 21.6 
Passenger  2.3 2.2 2.2 2.0 0.5 
Freight  11.5 12.3 11.6 10.6 11.3 
Other  11.8 9.4 9.1 9.5 9.8 
Travel  24.3 25.1 26.4 25.1 15.2 
Construction  2.0 2.1 2.9 2.2 1.9 
Insurance  0.9 1.0 0.5 0.7 1.0 
Financial services  1.5 1.5 1.5 1.7 2.1 
Charges for the intellectual property  8.4 7.7 7.4 7.6 9.3 
Telecommunication, computer and information  2.4 2.7 3.8 4.0 6.3 
Telecommunication  0.6 0.6 0.6 0.6 0.7 
Computer  1.4 1.8 2.9 2.9 4.8 
Information  0.3 0.3 0.3 0.4 0.8 
Other business services  25.4 26.5 24.7 26.5 31.8 
Research and development  2.7 3.1 3.2 3.8 5.0 
Professional and management consulting  4.9 5.4 5.0 4.7 5.1 
Other  17.8 18.0 16.5 18.0 21.7 
Personal, cultural and recreational services  0.6 0.6 0.6 0.8 0.9 
Government goods and services, n.i.e.  1.2 1.3 1.1 1.4 1.3 
Source:  Bank of Korea Economic Statistics System. Viewed at: http://ecos.bok.or.kr/ . 
1.3.2   Trends and patterns in FDI  
1.28.   Korea remains not only a major exporter of goods, but also of capital. FDI outflows (on a 
balance -of-payments basis) peaked in 2018 and dropped gradually by 15% in 2020 while remaining 
almost 9% above their 2016 level (Table 1.3). In 2018 and 2019, Korea's multinational enterprise s' 
FDI outflows ranked 9th of those of the top 20 economies, reflecting the continuing global expansion 
of major Korean multinational enterprises.63 According to OECD data, in 2018 outflows remained 
largely concentrated in services (mainly finance, insuran ce, and wholesale and retail trade) and 
manufacturing activities. At the same time, the main individual destinations were the 
European  Union, the United  States, and China, while 15.7% (2018) of total outflows was directed to 
 
63 LG Electronics tripled its non -current assets in North America and Europe through various deals and 
projects, whereas the IT group SK Holding also increased its foreign assets significantly following efforts to 
vertically integrate the chipmaking business of its subsidiary SK Hynix and gain market share. UNCTAD (2020), 
World Investment Report 2020 – International Production Beyond the Pandemic . Viewed at: 
https://unctad.org/webflyer/world -investment -report -2020. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  ASEAN countries.64 Between 2016  and 2018, the FDI outward stock increased steadily by 29.4% 
(Table 1.5); in 2018, it was estimated at USD  384 billion and allocated to services (mainly finance 
and insurance, and wholesale and retail trade), manufacturing, and mining and quarrying; its ma in 
locations were the United  States, China, ASEAN countries, and the European  Union.  
Table 1.5 Stock of outward foreign direct investment, 2016 -18 
 2016  2017  2018  
Total outward stock (USD million)  296,690.3  343,128.9  384,024.3  
 (% of total)  
By sector     
Agriculture, forestry and fishing  0.3 0.3 0.3 
Mining and quarrying  11.9 9.9 8.8 
Manufacturing  37.4 39.4 35.3 
Electricity, gas, steam and air conditioning supply  1.7 1.9 1.9 
Water supply  0.0 0.0 0.2 
Construction  0.6 0.9 0.9 
Services  48.1 47.6 52.7 
Wholesale and retail trade, and repairs  16.1 15.8 18.8 
Accommodation and food service activities  0.8 0.9 0.7 
Transport and storage  1.5 1.2 1.3 
Information and communication  1.9 1.9 1.7 
Financial and insurance activities  18.3 20.1 22.0 
Real estate activities  5.2 5.0 5.5 
Other services  4.3 2.7 2.6 
By destination     
Netherlands  3.9 2.5 2.2 
United Kingdom  1.6 2.2 2.7 
Germany  1.1 1.2 1.1 
Czech  Republic  0.7 0.9 0.8 
Ireland  0.4 0.9 0.8 
Russian  Federation  0.8 0.8 0.8 
United  States  22.7 23.6 23.6 
Cayman Islands  4.2 4.4 4.9 
Canada  1.3 1.1 1.1 
Brazil  1.9 1.8 1.6 
Mexico  0.8 0.9 0.8 
Bermuda  - - 0.2 
Australia  3.8 3.2 3.1 
China  23.4 22.6 20.2 
Hong Kong, China  4.2 3.9 4.0 
Viet Nam 4.2 4.6 5.3 
Singapore  3.7 4.1 4.2 
Japan  1.7 1.6 1.8 
Indonesia  2.3 2.1 2.0 
India 1.7 1.6 3.2 
Malaysia  1.4 1.5 1.4 
Philippines  0.8 0.8 0.4 
Thailand  1.0 0.9 0.9 
Myanmar  0.9 0.9 0.8 
Kazakhstan  0.4 0.2 0.3 
Other  10.9 11.9 11.5 
Source:  Data provided by the authorities.  
 
64 OECD (2020), OECD International Direct Investment Statistics 2019 . Viewed at: 
https://doi.org/10.1787/g2g9fb42 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  1.29.   Inward FDI is not only an additional source of capital, but it also brings with 
it entrepreneurship, management skills, and especially new technology, which contribute to 
improved TFP. Korea remains relatively open to FDI and its extensive RTAs (Section 2.5.2) provide 
a regulatory environment conducive to attracting foreign capital; however, according to the Korea 
Trade -Investment Promotion Agency's Foreign -invested Company Management Status Survey 2019, 
rising wages (Secti on 1.2.4.5) and rigid labour -management relations, as well as difficulties in 
reflecting opinions on regulatory amendments, obtaining regulatory information, and negative 
investors' evaluation on Korea's regulatory environment, have seemingly remained as s ome of the 
obstacles for investors. The influence of FDI on the local economy has been declining in recent years, 
largely because flows into less sensitive sectors have already taken place and because domestic 
companies have been moving production abroad. During the review period, FDI inflows (on a 
balance -of-payments basis) remained much lower than outflows; between 2012 and 2015 they 
ranged from 27.3% (2019) to 52.6% (2017) of the outflow amount (Table 1.3). The reasons for 
these relatively low FDI inflow s remain unclear, although they may be partly related to the "Korea 
discount" factors (Section 1.2.4.4) and Korea's manufacturing -based industrial structure.65 FDI 
inflows (on a balance -of-payments basis) peaked in 2017 (USD  17.9 billion) and bottomed in 2020 
(USD  9.2 billion) (Table 1.3), possibly due to the COVID -19 pandemic uncertainty. Between 2016 
and 2018, the FDI inward stock rose progressively by 22.4% t o USD  214.7 billion (Table 1.6). As at 
2018, it was largely allocated to services (mainly finance and insurance) and manufacturing; it 
mainly originated in the European  Union (26.7%), Japan, and the United  States.  
Table 1.6 Stock of inward foreign direct investment, 2016 -18 
 2016  2017  2018  
Total inward stock (USD million)  175,349.6  211,961.9  214,698.1  
 (% of total)  
By sector     
Agriculture, forestry and fishing  0.1 0.1 0.1 
Mining and quarrying  0.0 0.0 0.0 
Manufacturing  38.1 37.8 38.2 
Electricity, gas, steam and air conditioning supply  0.6 0.5 0.5 
Water supply  0.1 0.1 0.1 
Construction  0.7 0.8 0.8 
Services  60.4 60.7 60.3 
Trade and repairs  8.8 9.9 11.3 
Accommodation and food service activities  8.3 8.5 7.4 
Transport and storage  1.8 1.9 1.4 
Information and communication  2.7 3.5 3.6 
Financial and insurance activities  30.9 29.1 28.5 
Real estate activities  3.9 4.3 5.0 
Other services activities  4.0 3.4 3.0 
By origin     
EU-27 24.6 28.5 26.7 
Netherlands  10.0 13.4 10.1 
Germany  4.0 3.9 4.4 
Malta  3.4 4.6 4.3 
France  2.4 2.5 2.9 
Hungary  2.0 1.7 1.8 
Ireland  0.5 0.0 0.9 
Sweden  1.3 1.1 0.9 
Austria  0.3 0.4 0.8 
Luxembourg  0.7 0.9 0.6 
Japan  24.8 22.4 25.5 
United  States  18.1 16.0 15.1 
United Kingdom  8.0 7.0 7.6 
Singapore  6.6 7.1 7.2 
China  3.2 2.7 3.8 
 
65 The authorities consider ambiguous the reference to the impact of the "Korea discount" factors.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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   2016  2017  2018  
Hong Kong, China  3.5 3.2 3.3 
Switzerland  1.9 2.4 1.8 
Cayman Islands  1.0 2.5 1.5 
Canada  1.3 1.1 1.1 
Malaysia  0.8 0.8 1.1 
Saudi Arabia, Kingdom of  1.0 1.2 0.9 
Australia  0.3 0.4 0.8 
British Virgin Islands  0.9 0.8 0.8 
Norway  0.4 0.4 0.3 
New Zealand  0.0 0.0 0.2 
Other  3.5 3.6 3.2 
Source:  Data provided by the authorities.  
 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2  TRADE AND INVESTMENT REGIMES  
2.1.  Since its previous TPR in 2016, the Republic of Korea has continued to target its trade policy 
at building a free and open economy based on market principles. In 2017, the Small and Medium 
Business Administration was reorganized and expanded into the Ministry of SMEs and Startups 
(MSS). Kore a continued its efforts to improve transparency in public administration. Under the 
Five-year Plan for the Administration of State Affairs, launched in 2017, job creation is considered 
as the top economic policy priority. In 2019, a vision for an innovativ e and inclusive nation was 
announced. Regulatory reforms were conducted to reduce trade and investment barriers.  
2.2.  Korea continued to participate actively in the WTO. In 2019, it committed to not seek special 
and differential treatment for developing countri es in ongoing and future negotiations at the WTO. 
During the review period, it was involved in seven WTO disputes and made a number of notifications. 
It continued to pursue market opening opportunities through RTAs. Agriculture remains partially 
covered, a nd rice excluded, from all RTAs.  
2.3.  The foreign direct investment (FDI) regime went through significant changes during the review 
period. Corporation tax incentives were abolished in 2019; fishing and supporting air transport 
activities are now allowed with n o foreign investment restrictions; and the main legislation, the 
Foreign Investment Promotion Act, was amended in 2020. Nonetheless, FDI stock remains low 
compared with that in other OECD countries.  
2.1  General Framework  
2.4.  Since the previous Review, there has be en no change to Korea's general constitutional and 
institutional framework. It is a democratic unitary republic, with a presidential parliamentary system. 
Under the Constitution1, the National Assembly exercises legislative power by enacting laws and 
monitoring state administration, including the control of the Budget. The current 21st National 
Assembly was formed through elections in April 2020, with 300 members (253 members elected in 
local constituencies and 47 elected through proportional represent ation).2 
2.5.  The executive authority rests with the President and the State Council (Cabinet), which is 
chaired by the President and comprises the Prime Minister and other members including ministers. 
The President is directly elected for a five -year term, an d cannot be re -elected for a second term. 
The current President was elected in May 2017. The President appoints the Prime Minister (subject 
to approval by the National Assembly), and ministers from among members of the State Council on 
the recommendation o f the Prime Minister. In the absence of the President, the Prime Minister 
controls the ministries of the Government on his or her behalf. At present, the executive branch of 
the Government operates 1 boards, 1 agency, 6  offices, 2 2 ministries, 18 administr ations, and 
7 committees.3 
2.6.  Since the previous Review, there has been no change to legislative procedures. Bills may be 
introduced in the National Assembly by its members, or by the executive branch through relevant 
ministers. The President must promulgate  bills passed by the National Assembly within 15 days, 
unless he or she vetoes them. Laws and subordinate statutes generally enter into force 20  days after 
promulgation.  
2.7.  In descending order of importance, the Constitution is followed by acts and administra tive 
legislation including presidential decrees, ordinances, and administrative rules (such as directives, 
regulations, and public notices). Treaties concluded and promulgated under the Constitution and 
generally recognized rules of international law have the same effect as domestic laws. Proposed 
treaties must be deliberated by the State Council. The National Assembly has the right to consent 
to the conclusion and ratification of treaties, including on trade, and the President must ratify them.  
2.8.  The judicia l branch is composed of, inter alia , the Supreme Court, appellate courts, district 
courts, family courts, administrative courts, and the patent court. The Supreme Court Chief Justice 
 
1 The Constitution was most recently amended in 1987.  
2 Korea.net, Executive, Legislature and the Judiciary . Viewed at: 
http://www.korea.net/Government/Constitution -and-Government/Executive -Legislature -Judiciary . 
3 Korea.net, Executive, Legislature and the Judiciary . Viewed at: 
https://www.korea.net/Government/Constitution -and-Government/Executive -Legislature -Judiciary . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  is appointed by the President with the consent of the National Assembly, and other Supreme Court 
justices are appointed by the President upon the recommendation of the Chief Justice. The term for 
the Chief Justice and other justices is six years.4 
2.9.  In Korea, around 82% of civil cases are e -filed. The World Bank's Doing Business  Report stated 
that (as at 1 May 2019) it took around 290 days and cost 12.7% of the claim to resolve a standard 
commercial dispute through a local first -instance court. The time is shorter and the cost lower than 
the OECD averages (589.6 days and 21.5%, r espectively).5 
2.2  Structure of Trade Policy Formulation  
2.10.   The Ministry of Trade, Industry and Energy (MOTIE) is in charge of formulating and 
implementing trade and industrial policies. When MOTIE formulates trade policies and makes policy 
decisions, it consults with relevant stakeholders, including:  
• representatives from other government ministries (such as the Ministries of Economy and 
Finance; Agriculture, Food and Rural Affairs; Justice; and Land, Infrastructure and 
Transport);  
• stakeholders from the pr ivate sector (such as the Korea Chamber of Commerce and 
Industry (KCCI), and the Korea International Trade Association (KITA)); and  
• public research institutes including government -funded think -tanks (such as the Korea 
Institute for International Economic P olicy, the Korea Institute for Industrial Economics 
and Trade, the Korea Development Institute, the Korea Economic Research Institute, and 
the Korea Rural Economic Institute).  
2.11.   MOTIE holds Foreign Investment Advisory Council meetings jointly with the Korea 
Trade -Investment Promotion Agency (KOTRA), and foreign firms may advise the Government on 
foreign investment policy (Section 2. 6). 
2.12.   In 2017, the Small and Medium Business Administration was reorganized and expanded into 
the MSS, whose objective is to streng then the competitiveness and support innovation of SMEs  and 
micro enterprises (Section  3.3.1.2).6 
2.3  Trade Policy Objectives  
2.13.   The current Government, inaugurated in May 2017, launched its Five -year Plan for the 
Administration of State Affairs. It shifted the focus of economic policies from the nation and 
businesses to individual citizens and households. Job creation is the top priority of economic and 
social policies. In 2019, the Government declared its vision for an innovative and inclusive nation. 
The Gover nment is working hard to, inter alia , boost corporate vitality through encouraging 
innovative growth, help increase the number of jobs by channelling more investment into the private 
sector, and encourage competition to create a fair economy by rectifying unfair trade practices in 
business sectors.7 
2.14.   Korea's general trade policy objective remains to build a free and open economy. Its policy 
priorities are: (i)  facilitating free and open trade while reinforcing the values of inclusiveness and 
sustainability;  (ii) upholding the rules -based multilateral trading system; and (iii)  enhancing 
transparency and predictability to make Korea more business -friendly.  
 
4 Korea.net, Executive, Legislature and the Judiciary . Viewed at: 
http://www.korea.net/Government/Constitution -and-Government/Executive -Legislature -Judiciary . 
5 World Bank (2020), Doing Business 2020: Comparing Business Regulation in 190 
Economies  – Economy Profile Korea, Rep. Viewed at: 
https://www.doingbusiness.org/content/dam/doingBusiness/country/k/korea/KOR.pdf . 
6 MSS. Viewed at: https://www.mss .go.kr/site/eng/main.do . 
7 Korea.net, An Economy Pursuing Mutual Prosperity , 28 June 2019.  Viewed at: 
http://www.korea.net/Governme nt/Current -Affairs/National -
Affairs/view?affairId=882&subId=742&articleId=47691 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.4  Trade Laws and Regulations  
2.4.1   Regulatory reform  
2.15.   Product market regulations in Korea are among the most strin gent in the OECD. The State's 
involvement in business operations, barriers in services and network sectors, and barriers to trade 
and investment is among the highest in OECD countries.8 Against this background, Korea has a 
high-level commitment to regulat ory reform. Its ministerial meetings focus on reducing regulatory 
burdens and creating a more business -friendly environment. The Regulatory Reform Office (RRO) 
under the Office  for Government Policy Coordination  plays an oversight and steering role. The 
Regulatory Reform Committee (RRC), co -chaired by the Prime Minister, reviews all regulatory 
proposals from central administrative agencies.  
2.16.   The Government conducted various reforms to reduce regulatory burdens on businesses. 
Regulatory sandboxes were introduced at the beginning of 2019 in areas such as electronics, energy, 
fintech, manufacturing, medical, mobility, and telecommunications. Regulatory sandboxes usually 
refer to live testing of new products or services in a controlled regulatory environme nt, so that 
regulators may relax certain regulatory requirements to conduct the test. According to the OECD, 
applying these sandboxes allows firms to experiment with innovative products and business models 
without being subject to existing legal requiremen ts.9 By the end of August 2021, 509  projects were 
approved by regulatory sandboxes, and revisions of laws and regulations for 121 of these projects 
were completed.  
2.17.   The Government also announced the designation of regulation -free special zones, which allow  
firms to experiment with innovative technologies in designated areas without restrictions from 
regulations (for example, digital healthcare in Gangwon, blockchain technology in Busan, and 
autonomous driving in Sejong).  The authorities stated that 2 8 regulation-free special zones were 
designated across the country, where 13 9 special regulatory exceptions were permitted, relating to 
new businesses or to ensure new technology verification or commercialization.  
2.18.   The Government continues to adopt a "cost -in, cos t-out" (CICO) approach to reduce 
regulatory burdens. First introduced in 2014, the CICO approach imposes disciplines on regulatory 
reforms so that any new regulation that is expected to impose a direct incremental net cost on 
business must be offset by mea sures that provide savings of at least the same amount. Costs and 
savings are estimated through regulatory impact assessments (RIAs), and e -RIAs were introduced 
in 2015. Regulations for the protection of people's lives and safety and regulations required t o 
implement international treaties are exempt from this requirement. As at March 2021, the CICO 
approach is applied to 30 central administrative agencies.  
2.19.   In addition, specific initiatives were taken to reduce regulatory burdens and compliance costs 
for SM Es, which make up around 99% of the total number of enterprises and account for 88% of 
employment across all industries. Currently 60% of all regulations pertain to SMEs. Regulatory 
reform priorities for SMEs are set annually by the SMEs Ombudsman, the MSS , and the RRC.  
2.20.   According to an OECD report, limited regulatory reforms were made regarding National 
Assembly practices, where approximately 90% of laws are approved.10 The OECD recommended a 
more inclusive regulatory system by, inter alia , subjecting the N ational Assembly to public scrutiny, 
creating a legislative regulatory quality check mechanism for the National Assembly, and asking the 
Government to submit RIA statements and CICO analyses to the National Assembly so that all 
relevant information is take n into consideration when reviewing or drafting bills. The authorities  
stated that the National Assembly is subject to public scrutiny and is contributing to a more inclusive 
regulatory system through various mechanisms including www.better.go.kr  where people can check 
all drafting bills related to new or strengthened regulations and present their opinions, as well as 
 
8 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://www.oecd -
ilibrary. org/economics/oecd -economic -surveys -korea_19990707 . 
9 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://www.oecd -
ilibrary.org/economics/oecd -economic -surveys -korea_19990707 .  
10 This report considers that the lack of legislative quality processes in the National Assembly counters 
the regulatory practice initiatives established under the executive branch. OECD (2017), Regulatory Policy in 
Korea: Towards Better Regulation , OECD Rev iews of Regulatory Reform. Viewed at: 
http://dx.doi.org/10.1787/9789264274600 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  likms.assembly.go.kr  and petitions.assembly.go.kr . Currently the CICO approach does not apply to 
laws drafted by the National Assembly; it applies only to enforcement decrees drafted by the 
Government.  
2.4.2   Trade -related legislation  
2.21.   The Foreign Trade Act and the Customs Act remain the main legislation on international trade. 
The latter was most recently amende d in 2020. Its implementing regulations were recently amended 
as well:  
• the Enforcement Decree of the Customs Act (Presidential Decree No.  31454), partially 
amended on 17 February 2021;  
• the Enforcement Regulations of the Customs Act (Ministerial Ordinance N o. 842), partially 
amended on 16 March 2021; and  
• the Regulations on Providing Preferential Tariff Treatment to Least Developed Countries 
(Presidential Decree No.  31662), partially amended on 4 May 2021.  
2.22.   The main legislation on investment, the Foreign Investment Promotion Act, was most recently 
amended in 2020 (Section 2.6). The Act on Consumer Protection in Electronic Commerce 
(Act No. 15141) was partially amended in November 2017. Currently this Act is b eing reviewed, with 
its pre -announcement made in March 2021.11 
2.4.3   Transparency  
2.23.   The Government continues to promulgate laws to improve transparency in public 
administration, such as:  
• the Administrative Procedures Act (2017), to ensure fairness, transparency, a nd credibility 
in administrative operations to protect citizens' interests;  
• the Official Information Disclosure Act (2017), to ensure people's rights to know and 
secure their participation in state affairs and transparency of the operation of state affairs ; 
and 
• the Framework Act on Administrative Regulations (2018), to eliminate unnecessary 
administrative regulations and to prevent inefficient administrative regulations.12 
2.24.   Korea's national e -government strategies are adopted every five years. The Digital 
Government Master Plan (2021–2025)  aims at building an intelligent data -driven government for 
Korean citizens.13 In addition, the Intelligent Government Master Plan aims to set up a framework 
for developing and utilizing artificial intelligence (AI) and data  for innovation in public administration. 
Its implementation strategy is reflected in the Data and AI Economy Facilitation Plan14, which focuses 
on strengthening data and AI capacities to build a strong foundation to develop a sustainable digital 
economy.  
2.25.   The Government provides platforms for e -participation (e -People, also called Sinmungo )15, 
open data ( data.go.kr ), i-Ombudsman, and e -procurement (KONEPS).16 Korea's legal framework for 
 
11 The legislation pre -announcement system is where the Government announces to the public the 
purpose and main elem ents of bills that are closely related to the rights or daily lives of people, so as to collect 
and reflect public opinions.  
12 APEC, The Final Review of APEC's Progress towards the Bogor Goals . Viewed at: 
https://www.apec.org/About -Us/About -APEC/Achievements -and-Benefits/2020 -Bogor -Goals . 
13 All documents related to digital government strategy are online, in Korean. Viewed at: 
https://mois.go.kr/frt/sub/a06/b04/egovVision/screen.do . The Ministry of Interior and Safety (MO IS) is 
working on the new five -year plan from 2021 to 2025.  
14 Ministry of Science and ICT. Viewed at: https://english.msit.go.kr/eng/index.do . 
15 E-People. Viewed at: https://www.epeople.go.kr/  . 
16 Korean Public Procurement Service, e-Procurement (KONEPS) . Viewed at: 
https://www.pps.go.kr/eng/index.do . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  e-government focuses on the protection of personal data and information  and on digital security and 
digital identity.17 National mechanisms such as the Blockchain Technology Diffusion Strategy18, the 
Smart City Implementation Strategy19, and the New Industry and Technology Roadmap20 facilitate 
the acceleration of new technology development for the benefit of society and public administration.  
2.26.   Transparency was also enhanced through participatory budgeting, which has existed for more 
than 20 years at the municipal level. It started to be implemented from 2018 at the national level, 
where it aims to enhance the transparency of fiscal operations and increase the public's interest in 
the budget, by allowing people to make budget proposals and participate in the screening and 
prioritization  of proposals.  
2.27.   In 2005, the National Information Resources Service (NIRS), the world's first 
pan-governmental data centre, was established to integrate the information of central government 
institutions. By centralizing information resources once separatel y managed by individual 
government departments, the NIRS aims to address challenges associated with the operation of 
isolated information systems, including the inefficient use of information, duplication in information 
and communication technologies (ICT)  investments, lack of IT expertise, and wide exposure to 
security risks. Its main functions are:  
• integrating, operating, and managing 1,25 2 digital government services linked to 
45 central government institutions; and controlling about 43, 664 government in formation 
resources including hardware and software. Furthermore, management of the system is 
automated;  
• based on the cloud -first policy, facilitating interdepartmental information sharing and 
optimizing resource utilization by building a Government -exclus ive cloud centre; and  
• protecting national information against cyberthreats through an integrated security 
management system using AI technologies.21 
2.28.   In the past few years, Korea has been increasingly using data -driven policies to complement 
traditional reg ulatory tools. For example, its AI service – The Work – helped 2,666 job seekers find 
relevant job offers that led to employment in the second quarter of 2019.22 Facing the COVID -19 
pandemic, the Government has been using digital technologies to contain th e spread of the virus 
and to mitigate the effect of the crisis. Consequently, between May and October 2020 only 10% of 
businesses in Korea were closed.23 Korea's AI Open Innovation Hub provides SMEs and start -ups 
with data, algorithms, and high -performance computing resources to allow them to innovate with 
AI. 
2.29.   In addition, all laws and regulations are published online in Korean, mostly translated into 
English, on the website ( www.law.go.kr ) of the Ministry of Government Legislation. Legislation 
affecting foreign trade is published in the Consolidated Public Notice on Guidelines of Exports and 
Imports.  
 
17 UN (2020), 2020 United Nations e -Government Survey . Viewed at: 
https://publicadministration.un.org/en/Research/UN -e-Government -Surveys . 
18 MSIT, in Korean. Viewed at: 
https://www.msit.go.kr/bbs/view.do?sCode=user&mId=113&mPid=112&bbsSeqNo=94&nttSeqNo=2940228 . 
19 Smart City Korea, in Korean. Viewed at: https://smartcity.go.kr/ . 
20 ITECH, in Korean. Viewed at: https://itech.keit.re.kr/index.do .  
21 UN (2020), 2020 United Nations e -Government Survey . Viewed at: 
https://publicadministration.un.org/en/Research/UN -e-Government -Surveys . 
22 OECD (2020), Digital Economy Outlook 2020.  Viewed at: https://www.oecd.org/publications/oecd -
digital -economy -outlook -2020-bb167041 -en.htm . 
23 ITU (2021), Digital Trends in Asia and the Pacific 2021. Viewed at: https://www.itu.int/dms_pub/itu -
d/opb/ind/D -IND-DIG_TRENDS_ASP.01 -2021-PDF-E.pdf. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.30.   As a consequence, Korea topped the OECD Digital Government Index 201924, and in 2020 it 
was ranked second by th e United Nations in its E-Government Survey.25 
2.31.   Korea ranked 33rd (of 180 economies) in Transparency International's Corruption Perception 
Index in 2020, improved from 43th in 2015.26 It has been a party to the United Nations Convention 
against Corruption s ince 2008.27 
2.32.   As in all countries, a lack of transparency, and thus a lack of public accountability, creates 
scope for administrative discretion and therefore corruption. During the review period, the 
Government took significant steps to fight corruption by  issuing new and amending existing relevant 
legislation. The Act on Prohibition of False Claims for Public Funds and Recovery of Illicit Profits 
(Public Funds Recovery Act)28 came into force on 1 January 2020, aimed at recovering illegitimate 
profits deriv ed from abusive claims for public funds (e.g. subsidies, compensation, and 
contributions), which amounted to an estimated KRW  252 trillion in 2020. The Act on the Prevention 
of Corruption and the Establishment and Management of the Anti -Corruption & Civil Rights 
Commission (ACRC) was most recently amended in December 2019, aimed at reinforcing the 
protection of whistle -blowers by severely punishing revealing reporter's identity . Before that, the 
Public Interest Whistle -blower Protection Act, which aims to p rotect those who report public interest 
violations in the private sector, was amended in April 2018 to introduce proxy reporting by lawyers, 
with a view to strengthening confidentiality of whistle -blowers. The Code of Conduct for Public 
Officials was also comprehensively amended in January 2018, to prevent conflicts of interest.  In 
addition, the Act on Prevention of Conflict of Interest of Public Officials was enacted in May 2021 
and is to take into force in May 2022.  
2.33.   To address potential high -level corrupt ion involving politicians and top private company 
executives, a Corruption Investigation Office for High -ranking Officials (CIO), an independent anti -
corruption investigation agency, was officially set up in January 2021.29 It is authorized to investigate 
corruption cases involving former and current high -ranking government officials including the 
President, the Prime Minister, and members of the National Assembly.  
2.34.   Key domestic institutions to combat corruption and enhance accountability include the ACRC, 
which is pushing forward anti -corruption reforms with, inter alia : 
• The Anti -Corruption Policy Consultative Council, which meets to discuss government -wide 
anti-corruption measures, particularly those urgent and serious corruption issues, and 
develops its co untermeasures to tackle cheating and unfair privileges. The Council is 
chaired by the President and participated by 15 anti -corruption relevant agencies including 
the ACRC, Ministry of Justice, Fair Trade Commission, and National Tax Service. It 
establishe d a Five -Year Comprehensive Anti -Corruption Plan in 2017.  
• The Public -Private Consultative Council for Transparent Society, comprising not more than 
40 persons from 7 sectors including public, private, and civil societies. It functions as a 
platform to deve lop and monitor the anti -corruption agenda, and gather opinions.  
2.35.   Korea is a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials 
in International Business Transactions. According to the OECD, Korea's OECD Anti -Bribery 
Conventio n enforcement record declined between the 2011 and 2018 assessments. The OECD 
suggested that coordination mechanisms between Korea's police and prosecutors' offices and 
reporting requirements of suspected bribery to relevant law enforcement agencies need t o be 
 
24 OECD, Digital Government Index, 2019 Results. Viewed at: http://www.oecd.org/gov/digital -
government -index -4de9f5bb -en.htm .  
25 UN (2020), 2020 United Nations e -Government Survey . Viewed at: 
https://publica dministration.un.org/en/Research/UN -e-Government -Surveys . 
26 Transparency International, Corruption Perceptions Index. Viewed at: 
https://www.transparency.org/en/cpi/2020/index/kor . 
27 UNODC,  Signature and Ratification Status . Viewed at: 
https://www.unodc.org/unodc/en/corruption/ratification -status.html . 
28 ACRC, The Public Funds Recovery Act . Viewed at: 
https://www.acrc.go.kr/en/data/5.Act%20on%20Prohibition%20of%20False%20Claims%20for%20Public%20F
unds% 20and%20Recovery%20of%20Illicit%20Profits.pdf . 
29 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://www.oecd -
ilibrary.org/economics/oecd -economic -survey s-korea_19990707 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  clarified. On the other hand, the OECD Economic Survey on Korea indicated that high tax 
transparency helps fight corruption.  
2.5  Trade Agreements and Arrangements  
2.5.1   WTO  
2.36.   Korea's trade policies have been reviewed seven times, and the last Review took place in 
2016. Korea accords at least MFN tariff treatment to all WTO Members. It is a party to the 
Information Technology Agreement (ITA), and tariffs on the items covered by ITA II are to be 
eliminated on 1 January 2023 for Korea.30 Korea ratified the WT O Trade Facilitation Agreement (TFA) 
on 30  July 2015, and implemented 100% of its Category A commitments.31 It is a member of the 
WTO Committee on Government Procurement, and has been implementing the revised Agreement 
on Government Procurement (GPA) since  14 January 2016. Korea is also an observer to the 
WTO Committee on Trade in Civil Aircraft. In October 2019, Korea committed not to seek special 
and differential treatment for developing countries in ongoing and future negotiations at the WTO.  
2.37.   The authori ties state that, as a strong advocate of the WTO's rules -based multilateral trading 
system, Korea participates actively in WTO negotiations (in both multilateral and plurilateral formats) 
and in the WTO's regular work in councils and committees. Korea is a lso committed to the successful 
reform of the WTO, and as a member of the Ottawa Group has been actively engaging with other 
WTO Members to realize this goal.  
2.38.   Korea is also part of a number of negotiation groups: the Asian Group of Developing Members, 
the Asia-Pacific Economic Cooperation (APEC)  group, the G -10 group, the G -33 group, the Friends 
of Anti -Dumping Negotiations (FANs) group, and the Joint Proposal (in intellectual property) group.32 
2.39.   Korea stated that it strongly supports the WTO's efforts to enhance the trading capacities of 
developing countries and LDCs, and makes donations to the Doha Development Agenda Global Trust 
Fund: by the end of 2020, Korea had donated about CHF 6 million over the past 20  years.33 
2.40.   On 5 April 2018, Korea not ified the WTO, under Article  12.5 of the Agreement on Safeguards, 
that it proposed to suspend concessions and other obligations on certain imports from the 
United  States, following the imposition of safeguard duties by the United  States on imports of certa in 
large residential washers and parts thereof.34 On 2 April 2019, Korea notified the WTO, under the 
same Agreement, of proposed suspension of concessions and other obligations on some imports 
from the European  Union, following the imposition by the Europe an Union of definitive safeguard 
duties on imports of certain steel products.35 
 
30 WTO documents WT/L/956, 28 July 2015; and WT/MIN(15)/26, 16 December 2015; and APEC, The 
Final Review of APEC's Progress towards the Bogor Goals . Viewed at: https://www.apec.org/About -Us/About -
APEC/Achievements -and-Benefits/2020 -Bogor -Goals . 
31 WTO Trade Facilitation Agreement Database, Korea, Republic of.  Viewed at: 
https://tfadatabase.org/members/korea -republic -of. 
32 WTO, Groups in the Negotiations . Viewed at: 
https://www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm#grp023 . 
33 WTO, "Korea Donates CHF 350,000 to Enhance Developing Countries' Trading Skills", 3 March 2020. 
Viewed at: https://www.wto.org/english/news_e/pres20_e/pr852_e.htm . 
34 The suspension was to come into effect on 7 February 2021, if the United  States decided to extend 
the period of application of its safeguard measures, or following the date of a decision from the  WTO Dispute 
Settlement Body that the safeguard measure imposed by the United  States is incompatible with the 
WTO Agreement on Safeguards, whichever is earlier. The suspension is to continue until the safeguard 
measure maintained by the United  States is li fted. Global Trade Alert, Republic of Korea: Second Immediate 
Notification of Suspension of Concessions towards the United  States , 6 April 2018.  Viewed at: 
https://www.globaltradealert.org/state -act/30786/republic -of-korea -second -immediate -notification -of-
suspension -of-concessions -towards -the-united -states . WTO documents G/L/1223 -G/SG/N/12/KO R/2, 
6 April 2018; and G/L/1224, G/SG/N/12/KOR/3, 6 April 2018.  
35 Korea reserves the right to impose additional  duties within 30 days of this notification. The duty is to 
be in place for a period equal to the duty imposed by the European  Union. Global Trad e Alert, Republic of 
Korea: Immediate Notification of Proposed Suspension of WTO Concessions towards the EU . Viewed at:  
https://www.globaltradealert.org/state -act/36807/republic -of-korea -immediate -notification -of-proposed -
suspension -of-wto-concessions -towards -the-eu. WTO document G/L/1306 -G/SG/N/12/KOR/4, 2  April 2019.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.41.   Korea submitted a number of notifications to the WTO during the review period ( Table A2. 1). 
2.42.   Between June 2016 and June 2021, Korea was involved in seven disputes at the WTO: fo ur as 
a complainant36, and three as a respondent.37 It also participated as a third party in 30  cases.38 
2.5.2   Regional and preferential agreements  
2.43.   Korea actively pursues RTAs with its key trading partners. At the regional level, it signed the 
Regional Comprehen sive Economic Partnership (RCEP) Agreement in November 2020, which is not 
yet ratified. In 2018, it signed an RTA with five Central American countries: Costa  Rica, El Salvador, 
Honduras, Nicaragua, and Panama.39 At the bilateral level, the RTA between Kore a and the 
United  Kingdom was signed in August 2019 and entered into force on 1  January 2021.40 Korea also 
concluded negotiations for an RTA with Israel in August 2019, which has not been signed. The RTA 
between Korea and Indonesia was signed on 18 December  2020, but has not been ratified. The RTA 
with the United  States was amended in 2018.41 In 2018 and 2019, Korea notified the WTO of 
proposed suspension of concessions and other obligations on some imports from the United  States 
and the European  Union in re sponse to safeguard measures taken by these Members on certain 
export items (Section 3.1.6.2).  
2.44.   The authorities confirmed that in all of Korea's RTAs, agriculture remains partly covered, and 
rice excluded.  
2.45.   Korea also provides preferential tariff treatment t o a limited number of imports from some 
other developing countries, including those under the Global System of Trade Preferences (GSTP), 
and those  under the GATT Protocol Relating to Trade Negotiations Among Developing Countries 
(TNDC).42 In 2019, annual imports subject to actual preferential rates under these schemes were 
USD 11.5 million, or 0.23% of total imports under the GSTP, and no imports under the TNDC.  
 
36 On 14 February 2018, Kore a requested consultations with the United  States concerning certain 
anti-dumping and countervailing duty measures imposed on products from Korea, and certain laws, 
regulations, and other measures maintained by the United  States with respect to the use of f acts available in 
anti-dumping and countervailing duty proceedings – panel report circulated (DS539). On 14 May 2018, Korea 
requested consultations with the United  States concerning definitive safeguard measures imposed by the 
United  States on imports of c ertain crystalline silicon photovoltaic products – a panel was established, but has 
not yet been composed (DS545). On 14 May 2018, Korea requested consultations with the United  States 
concerning definitive safeguard measures imposed by the United  States on  imports of large residential washers 
– a panel was composed (DS546). On 11 September 2019, Korea requested consultations with Japan regarding 
certain measures, including licensing policies and procedures, adopted by Japan allegedly restricting exports of 
fluorinated polyimide, resist polymers and hydrogen fluoride, and their related technologies destined for Korea. 
Those products are used primarily in the production of smartphones, TV displays, and semiconductors – a 
panel was established, but has not yet been composed (DS590).  For details on these cases, see WTO, Republic 
of Korea and the WTO . Viewed at: https://www.wto.org/english/thewto_e/countries_e/korea_republic_e.htm . 
37 On 18 June 2018, Japan requested consultations with Korea concerning Korea's determination to 
continue the imposition of anti -dumping duties on stainless steel bars from Japan – Korea notified its decision 
to appeal the panel report circulated (DS553). On 6 November 2018, Japan requested consultations with Korea 
concerning the following measures alleged ly affecting trade in commercial vessels: (i)  corporate restructuring 
measures to allegedly support Korean shipbuilders; (ii)  guarantees and other insurance for financing related to 
commercial vessel orders placed with Korean shipbuilders; (iii)  pre-shipme nt loans, measures for part of the 
new shipbuilding programme, and other financing for commercial vessel orders placed with Korean 
shipbuilders; (iv)  alleged eco -ship replacement subsidies; (v)  other measures imposed by Korea to allegedly 
support commercia l vessel purchases; and (vi) amendments and other measures – in consultation (DS571). On 
31 January 2020, Japan requested, for the second time, consultations with Korea concerning measures 
allegedly affecting trade in commercial vessels – in consultation ( DS594).  
38 WTO, Republic of Korea and the WTO . Viewed at:  
https://www.wto.org/english/thewto_e/countries_e/korea_republic_e.htm . These are cases with dates of 
request for consultation between July 2016 and January 2021 (DS508 -DS560).  
39 WTO document WT/REG452/N/1 -S/C/N/1054, 16 April 2021.  
40 WTO document WT/REG 431/N/1 -S/C/N/1029, 7 January 2021.  
41 WTO document WT/REG311/N/1/Add.1 -S/C/N/621/Add.1, 7 March 2019.  
42 WTO RTA database: http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.5.2.1   RCEP  
2.46.   On 15 November 2020, the RCEP Agreement was signed by 15 parties (10 ASEAN Member 
States and Australia, China, Japan, the Republic of Korea, and New  Zealand). The Agreement covers, 
inter alia , trade in goods, trade in services, investment, and e -commerce.  
2.47.   Korea already has RTAs in force with all RCEP parties except Japan. In most of thes e existing 
RTAs, Korea liberalizes more than under the RCEP Agreement. The authorities indicate that Korean 
economic efficiency is expected to increase, as well as bilateral investment, as a consequence of 
market liberalization to Japan under the RCEP Agre ement.  
2.48.   Regarding trade in goods, Korea committed to reduce or eliminate tariffs with a 20 -year 
transition period (35 years for imports from China). It has one tariff reduction/elimination schedule 
for ASEAN, and separate schedules for non -ASEAN Member States. Products that are excluded from 
liberalization for Korea include eggs, honey, products of the milling industry, and vegetables.43 Rice 
is not covered in Korea's tariff reduction/elimination schedule.  
2.49.   Regarding trade in services, Korea follows a negative list approach to schedule its specific 
commitments. Unbound sectors include postal and courier services, primary and secondary 
education, broadcasting, health -related and social services, recreational and cultural and sporting 
services, internal waterways and s pace transport services, and sanitation and similar services. Air 
services and financial services remain largely unbound, with broad reservations. Compared with its 
commitments under the G ATS, Korea's commitments under the RCEP Agreement are broader, as 
they also include full commitments in almost all construction and related services, and more 
commitments in eight new subsectors including rail and pipeline transport, higher and adult 
education, and real estate services.  
2.50.   In addition, a ratchet mechanism con tained in the RCEP Agreement locks any unilateral 
liberalization in trade in services in the future.44 For Korea, which follows a negative list approach, 
any amendments that decrease the restrictiveness of a non -conforming measure (in the case of a 
negativ e list) are automatically incorporated into the RCEP Agreement.  
2.51.   Regarding investment, all parties to the RECP Agreement, including Korea, use a negative list 
to schedule their sector -specific commitments in this area.  
2.52.   The provisions on electronic commerce mainly cover:  
• promoting wider use of e -commerce by assisting SMEs to overcome obstacles in the use 
of e-commerce, identifying areas of cooperation to help the parties implement or enhance 
their e -commerce legal framework, and sharing information, experienc es, and best 
practices in the development of e -commerce;  
• facilitating trade by promoting paperless trading and the e -submission of trade documents, 
and making trade administration documents available online; and  
• protecting consumers and their online person al information.  
2.53.   The parties also agreed that they will maintain the current practice of not imposing customs 
duties on electronic transactions among themselves, which shall not preclude them from maintaining 
any internal duties.  
2.54.   The RCEP Agreement is to en ter into force for those signatory States that have deposited their 
instrument of ratification, acceptance, or approval 60 days after the date on which at least six  ASEAN 
signatories and three non -ASEAN signatories have deposited their instrument of ratifi cation, 
acceptance, or approval with the Depository. Currently, Korea is examining the Agreement and its 
impact assessment. After that, the Agreement is to be submitted for presidential approval, and then 
for ratification at the National Assembly.  
 
43 Korea's tariff schedule is available online at:  https://www.fta.go.kr/rcep/doc/2/ . 
44 RCEP Agreement, Articles 8.7 and 8.8.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.5.2.2   RTA with  five Central American countries  
2.55.   The RTA between Korea and the five Central American countries was signed on 
21 February  2018. The RTA with Honduras and Nicaragua went into force on 1 October 2019, with 
Costa Rica on 1 November 2019, with El Salvador on 1 January 2020, and with Panama on 
1 March  2021.  
2.56.   The Agreement contains, inter alia , provisions on national treatment and market access for 
goods, rules of origin and origin procedures, customs administration and trade facilitation, sanitary 
and phytosanitar y measures, technical barriers to trade, trade remedies, investment, trade in 
services, temporary entry for businesspeople, electronic commerce, intellectual property rights, 
labour, environment, transparency, cooperation, competition policy, institutional  provisions, dispute 
settlement, and exceptions. The end of implementation period is 2039. The parties are currently 
preparing to notify to the WTO.  
2.5.2.3   RTA with the United Kingdom  
2.57.   In January 2021, Korea notified, together with the United Kingdom, the WTO that  the two 
parties signed an RTA, which entered into force on 1 January 2021.45 It was signed in August 2019 
when the United Kingdom was preparing to leave the European  Union. This RTA is based on the one 
between Korea and the European  Union, to provide cont inuity and "remove Brexit uncertainty".46 
2.58.   The United Kingdom's previous preferential trading relationship with Korea was governed by 
the RTA between Korea and the European  Union. The bilateral Korea –United Kingdom RTA 
establishes a free trade area for trad e in goods and for trade in services, as well as commitments 
on, inter alia , technical barriers to trade, sanitary and phytosanitary measures, customs and trade 
facilitation, protection of intellectual property rights, government procurement, competition a nd 
transparency provisions, trade and sustainable development provisions, and dispute settlement and 
mediation mechanisms.  
2.5.3   Preferential trade arrangements  
2.59.   Korea has been providing duty -free market access for imports from 46 UN -defined least 
developed count ries (LDCs). According to UN Comtrade data, in 2020, 0.55% of Korea's total 
merchandise imports came from these LDCs.  
2.60.   Korea is eligible for trade preferences under the GSP scheme of Australia because of its 
developing country status.47 
2.61.   It used to be eligible for trade preferences under the GSP schemes of Armenia, Kazakhstan, 
and the Russian  Federation. However, on 5 March 2021, EAEU Members (Armenia, Belarus, 
Kazakhstan, the Kyrgyz  Republic, and the Russian  Federation) decided to revise their list of 
developing and LDC countries. Six months after the official publication of this revised list, Korea will 
no longer be eligible for EAEU tariff preferences.  
2.5.4   Other agreements and arrangements  
2.5.4.1   Asia-Pacific Economic Cooperation (APEC)  
2.62.   APEC's trad e efforts focus on its 21 member economies meeting unilateral targets for 
liberalization and for better quality measures in a broad range of areas, covering customs procedures 
and standards to subsidies and contingency measures.48 Korea's latest IAP (Indiv idual Action Plan) 
on the assessment of achievements of the Bogor Goals, which is a roadmap (updated every 
 
45 WTO document, WT/REG431/N/1, S/C/N/1029, 7 January 2021.  
46 BBC, UK and South Korea Sign " Continuity" Trade Agreement,  22 August 2019. Viewed at: 
https://www.bbc.com/news/business -49430207 . 
47 WTO PTA database. Viewed at: http:// ptadb.wto.org/Country.aspx?code=410 . 
48 APEC's 21 member economies are: Australia; Brunei  Darussalam; Canada; Chile; China; 
Hong Kong,  China; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New  Zealand; 
Papua  New Guinea; Peru; the Philippines; th e Russian  Federation; Singapore; the Separate Customs Territory 
of Taiwan, Penghu, Kinmen and Matsu (Chinese  Taipei); Thailand; the United  States; and Viet  Nam.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  two years) containing APEC Members' intended actions in 15  policy areas to achieve APEC's 
liberalization goals, was done in 2020.49 It recorded progr ess made by Korea in the following areas:  
• As at 1 July 2019, 90% of Korea's tariff lines under the ITA II were eliminated, and Korea 
plans to eliminate all tariffs covered by the ITA II by 1 January 2023.  
• Korea has been negotiating with China in the areas of trade in services and investment 
since 2017, and launched negotiations in same areas with the Russian  Federation in 2019.  
• The Foreign Investment Promotion Act was amended in January 2020 so that 
foreign -invested companies are eligible for tax reductions  if they reinvest domestic 
reserves (Section 2.6).  
2.63.   Korea also plans to make further improvements in standards and conformance, customs 
procedures, government procurement, deregulation and regulatory review, implementation of 
WTO obligations, and mobility o f businesspeople.  
2.5.4.2   Asia-Europe Meeting (ASEM)  
2.64.   The ASEM is an intergovernmental process established in 1996 to foster dialogue and 
cooperation between Asia and Europe. The ASEM Summit is a biennial meeting addressing political, 
economic, financial, social, c ultural, and educational issues of common interest, among the 
53 partners: 30 European and 21 Asian countries, the European  Union, and the ASEAN Secretariat.50 
2.65.   In 2016, ASEM leaders reiterated their commitment to enhance inter -regional trade and 
investment  flows, so as to deepen economic integration between Asia and Europe. In 2018, leaders 
reaffirmed their strong support for preserving and strengthening the rules -based multilateral trading 
system centred on the WTO. They reconfirmed the conclusions of the 7th ASEM Economic Ministers' 
Meeting (ASEM EMM7), which was held in Seoul, Korea, in 2017.51 Leaders underlined their joint 
commitment to open, free, and non -discriminatory trade as a prerequisite for long -term growth and 
prosperity. They reiterated the need to further strengthen and reform the WTO to help it meet new 
challenges and to improve it s transparency, monitoring, dispute settlement mechanisms, and 
rulemaking functions. They committed to ensure free and open trade on a level -playing field and 
fight all forms of protectionism, including unilateral protectionist measures and unfair trade 
practices. Leaders underlined the importance of implementing and enforcing obligations under the 
WTO by its Members, including the ongoing work to implement its TFA.  
2.5.4.3   Trade with the Democratic People's Republic of Korea  
2.66.   According to the 1992 Agreement on Reco nciliation, Non -Aggression and Exchange and 
Cooperation52, Korea always regards trade with the Democratic People's Republic of Korea as 
intra-Korean commerce, thus such trade is exempt from tariffs, although approval (indicating the 
kind of product, the ty pe of transaction, and the settlement method) must be obtained from the 
Minister of Unification.  
2.67.   Nonetheless, trade with the Democratic People's Republic of Korea has been prohibited since 
2010, and the Gaeseong Industrial Complex (located in the Democrati c People's Republic of Korea) 
has been closed since 10  February  2016.  
 
49 APEC, The Final Review of APEC's Progress towards the Bogor Goals . Viewed at: 
https://www.apec.org/About -Us/About -APEC/Achievements -and-Benefits/2020 -Bogor -Goals . 
50 ASEM, Fostering Dialogue & Cooperation Between Asia and Europe . Viewed at: 
https://www.aseminfoboard.org/about/overview . 
51 ASEM, 7th ASEM Economic Ministers' Meeting (ASEM EMM7) . Viewed at: 
https://www.aseminfoboard.org/events/7th -asem -economic -ministers -meeting -asem -
emm7#:~:text=The%207th%20ASEM%20Economic%20Ministers,September%202017%20in%20Seoul%2C%
20Korea . 
52 Korea.net, Inter-Korean Exchange and Cooperation . Viewed at: 
https://www.korea.net/AboutKorea/Inter -Korean -Relations/Inter -Korean -Exchanges -Cooperation . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.6  Foreign Direct Investment  
2.6.1   Overview  
2.68.   During the review period, Korea's FDI system went through significant reforms in the areas 
of incentives and restricted sectors. In particular, corpora tion tax reductions and exemptions were 
abolished in 2019; foreign -invested companies may still benefit if they applied for these tax 
incentives on or before 31 December 2018.53 Korea's main legislation governing foreign 
investment  – the Foreign Investment  Promotion Act – was most recently amended in 
December  2020 (by Act No.  17653, which entered into force on 1 January 2021), so that the 
Government may grant FDI incentives for reinvestment of unused retained earnings, which were 
previously not recognized a s FDI.54 In addition, when foreign -invested companies fail to comply with 
contractual terms, the amendment contains provisions to terminate their contracts, and to 
strengthen follow -up management of private contracts on national and public -owned property. In 
2020, Korea also tightened its FDI review mechanism for foreign investment where there is high 
possibility of leakage of core national technologies.55 
2.69.   Other legislation on FDI includes:  
• Act on the Designation and Management of Free Trade Zones;  
• Financial Investment Services and Capital Markets Act;  
• Foreign Exchange Transactions Act;  
• Foreigner's Land Acquisition Act;  
• Restriction of Special Taxation Act, and its Enforcement Decree and Enforcement Rules; 
and 
• Special Act on the Designation and Manage ment of Free Economic Zones.  
2.70.   A number of regulations also govern foreign investment: Regulations on Foreign Investment, 
promulgated by MOTIE on 6 July 2018; Consolidated Public Notice for Foreign Investment, 
promulgated by MOTIE on 7 February 2021; and Reg ulations on Tax Abatement or Exemption for 
Foreign Investment, promulgated by the Ministry of Economy and Finance on 4 April 2017.  
2.71.   The institutional framework for FDI promotion consists mainly of:  
• MOTIE, which is in charge of policy -making;  
• the Foreign Inv estment Committee, which is in charge of policy coordination;  
• KOTRA and its main arm, InvestKorea, which implements FDI -related policies; and  
• local governments, as well as relevant agencies and various zones, which designate foreign 
investment promotion of fices to provide support for foreign investment.56 
2.72.   Under KOTRA, the Office of the Foreign Investment Ombudsman (OFIO) (and its grievance 
resolution body) handles specific grievances encountered by foreign investors in Korea. The number 
of cases handled by the OFIO reached 357 in 2020 (462 in 2015).  
 
53 KOTRA (2020), Doing Business in Korea 2019. Viewed at: 
https://news.kotra.or.kr/user/reports/kotranews/20/usrReportsView.do?reportsIdx=10424 . 
54 APEC, The Final Review of APEC's Progress towards the Bogor Goals. Viewed at: 
https://www.apec.org/About -Us/About -APEC/Achievements -and-Benefits/2020 -Bogor -Goals . 
55 UNCTAD, Investment Policy Monitor , February 2021. Viewed at: 
https://unctad.org/system/files/official -document/diaepcbinf2021d2_en.pdf . 
56 InvestKorea, Intro to InvestKorea. Viewed at: https://www.investkorea.org/ik -en/index.do# . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.73.   The authorities indicate that Korea seeks to improve its domestic industry structure by 
attracting FDI in new growth engines and high -tech industries, while focusing on boosting technology 
transfer. The Governmen t aims to promote Korea as a global hub, where foreign -invested companies 
build their regional headquarters and R&D centres, and where domestic production infrastructure is 
being expanded to core materials and components in key industries.  
2.74.   Foreign investor s must inform KOTRA, or foreign exchange banks, of their investment 
decisions. Approval from the Government is required only for investment in financial services or the 
defence industry.57 In accordance with the Banking Act, the Insurance Business Act, and  the 
Financial Investment Services and Capital Markets Act, foreign financial institutions must be 
approved by the Financial Services Commission (FSC).  Land acquisition by foreigners is governed 
by the Foreign Investment Promotion Act, the Act on Report on  Real Estate Transactions, Etc., and 
the Foreign Exchange Transactions Act. The authorities state that regulations and limitations on the 
acquisition, usage, and development of land are applied uniformly to both Koreans and foreign 
nationals.  
2.75.   On 5 August 2 020, amendments to the Enforcement Decree of the Foreign Investment 
Promotion Act entered into force. The amendments allow the competent Minister or the heads of the 
relevant agencies to require the Foreign Investment Committee to review a foreign investme nt 
project where there is a "high" possibility of leakage of core national technologies58, and where a 
foreigner's acquisition of de facto  control over the management of an existing domestic company 
may threaten national security.59 
2.76.   According to the World Bank's Doing Business  2020 report, Korea ranked 5th of 190  countries 
(4th of 189 countries in 2016) in overall terms of the ease of doing business.60 It was 2nd in the areas 
of getting electricity and enforcing contracts, and performed well in resolving in solvency (11th) and 
dealing with construction permits (12th). It was ranked 33rd in starting a business, 36th in terms of 
trading across borders, 40th in terms of registering property, and 67th in terms of getting credit.  
2.6.2   FDI restrictions  
2.77.   Restrictions appl y on foreign investment where it: (i)  threatens the maintenance of national 
security and public order; (ii)  has harmful effects on public hygiene or environmental preservation 
or is against Korean morals and customs; and (iii)  violates the Acts and subordi nate statutes of the 
Republic of Korea. As prescribed by the Regulations on Foreign Investment and the Integrated Public 
Notice of Foreign Investment, of 1,196 categories of businesses under the Korean Standard 
Industrial Classification (KSIC), foreign inv estment is not permitted in 61 categories, including public 
administration, diplomacy, and national defence (unpermitted category of business). This is 
1 category more than the 2016 level (60 categories); the authorities indicate that this is due to 
reclas sification of the categories in 2016.  
2.78.   Foreign investment is partially permitted in 29 categories (restricted category of business) 
(Table 2.1). Compared with the previous Review, the two significant changes to the list are:  
• Fishing has been allowed with no foreign investment restrictions since 2016; and  
• Supporting air transport activities, including aircraft maintenance, repair, and overhaul, 
are now allowed with no foreign investment restrictions, and the previous foreign equity 
cap at 50% was remov ed from 30 March 2017.  
 
57 Where a for eign investor intends to make foreign investment in a defence industry company, the 
foreign investor must obtain permission in advance from MOTIE, which then must consult with the Ministry of 
National Defence before determining on the permission.  
58 Core na tional technologies are defined by the Act on the Prevention of Divulgence and Protection of 
Industrial Technology.  
59 UNCTAD, Investment Policy Monitor , February 2021. Viewed at: 
https://unctad.org/system/files/official -document/diaepcbinf2021d2_en.pdf . 
60 World Bank (2020), Doing Business 2020: Comparing Business Regulation in 190 Economies – 
Economy Profile: Korea, Rep.  Viewed at: 
https://www.doingbusiness.org/content/dam/doingBusiness/country/k/korea/KOR.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Table 2.1 FDI restricted sectors, 2021  
Sector/business  FDI limitation  
A. Closed   
Nuclear power generation  Wholly closed  
Broadcasting   
 Radio broadcasting  Wholly closed  
 Over-the-air broadcasting  Wholly closed  
B. Partially closed   
Growing of crops  Allowed, except for rice and barley growing  
Farming of animals  Allowed, except for beef cattle (less than 50% foreign equity)  
Manufacture of inorganic chemicals 
and inorganic chemical products, and 
manufacture of base metal products  Allowed, excluding the manufacture and supply of fuel for nuclear 
power generation  
Electricity   
 Hydroelectric, thermoelectric, solar, 
and other power generation (except 
for nuclear power generation)  Foreign nationals may pu rchase from the Korea Electric Power 
Corporation (KEPCO) no more than 30% of all domestic power 
generation facilities  
Only applicable when foreigners purchase power generation 
facilities from KEPCO (includi ng its subsidiaries)  
 Transmission, distribution, and 
selling of electricity  Less than 50% foreign equity, and the largest shareholder is 
Korean (limited to voting stocks and including voting stock 
equivalents)  
Selling of electricity is defined under the Electric Utility Act  
Waste collection, disposal, and 
material recovery  Allowed, except for disposal of radioactive waste as stipulated in 
Article  9 of the Radioactive Waste Management Act  
Wholesale trade and commission 
trade Allowed, except for wholesale of meat (less than 50% foreign 
equity)  
Water transport  Sea water transport: allowed  
Costal water passenger/freight transport: allowed between the 
Republic of Korea and the Democratic People's Republic of Korea; 
less than 50% foreign equity; fore ign investors must enter into 
joint ventures with domestic shipping companies  
Air transport  Less than 50% foreign equity  
Publishing activities   
 Publishing of newspapers  Less than 50% foreign equity (less than 30% foreign equity for 
daily newspapers)  
 Publishing of magazines and 
periodicals  Less than 50% foreign equity  
Broadcasting   
 Programme distribution (programme 
providing businesses defined under 
the Broadcasting Act)  No more than 49% foreign equity (no more than 20% foreign 
equity for general s ervice programming; and no more than 10% 
foreign equity for specialized programming of news reports)  
No foreign equity restriction:  
(1) for programme providers, except for general service 
programming or specialized programming of news reports or 
product pr esentation and marketing;  
(2) according to the free trade agreement (FTA) between Korea 
and the United  States, Canada, the European  Union, and Australia  
 Cable networks  No more than 49% foreign equity for System Operator (SO); no 
more than 20% foreign equity for cable Relay Operator (RO)  
 Broadcasting via satellite and other 
broadcasting  No more than 49% foreign equity (no more than 20% foreign 
equity for Internet multimedia broadcasting content providers for 
general programming or specialized programming of news reports)  
No foreign equity restriction:  
(1) for Internet mul timedia broadcast services, except for general 
service programming, specialized programming of news reports, or 
product presentation and marketing;  
(2) according to  the FTA between Korea and the United  States, 
Canada, the European  Union, and Australia  
Wire communications/wireless and 
satellite communications  Allowed provided that the sum of stocks (limited to voting stocks 
and including voting stock equivalents, suc h as depository receipts 
and investment shares) owned by foreign investors (including 
deemed foreign corporationsa) is no more than 49% of the total 
number of outstanding stocks (In the case of KT, a foreign investor 
cannot be the largest shareholder unles s their shares are less than 
5%) 
No foreign equity restriction on companies not operating against 
public interest, and under the FTA between Korea and the 
United  States , Canada, the European  Union, and Australia  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Sector/business  FDI limitation  
Other electronic communications  Same as the limitations for wire communications, but no limits for 
value -added telecommunication business  
News -providing services  Less than 25% foreign equity  
Financial institutions  Allowed, except for the National Agricultural Cooperative  
Federation (Finance) under the National Agricultural Cooperative 
Act, and the National Federation of Fisheries Cooperatives 
(Finance) under the Fisheries Cooperatives Act  
a A "deemed foreign corporation" is a corporation whose largest shareholder is a foreign investor 
(including affiliated persons in accordance with Article  9.1.1 of the Financial Investment Services and 
Capital Markets Act) holding at least 15% of the total number of outstanding stocks in the 
corporation.  
Source:  Inform ation provided by the authorities.  
2.6.3   FDI incentives  
2.79.   The Government continues to use various incentives, in the form of tax incentives, cash 
grants, and industrial site support, to attract foreign investment. Since the previous Review, 
significant changes hav e been introduced to the incentives, in particular, corporation tax reductions 
and exemptions for foreign investment were abolished from 2019. Other changes include the revision 
to the cash grant schemes, and cancellation of the designation of Saemangeum A rea as a free 
economic zone.61 
2.6.3.1   Tax incentives  
2.80.   Since 2019, tax incentives have taken the form of local tax and import tariff 
reductions/exemptions, which are provided for limited periods and on an MFN basis (Table 2.2). 
Corporation tax incentives apply only  to those foreign -invested enterprises that applied for them on 
or before 31 December 2018.62 
Table 2.2 Summary of FDI tax incentives, 2021  
Tax incentives  Business  Reduction period and 
details  
Local tax (acquisition tax 
and property tax 
(property tax on land 
and buildings))  Deliberated and voted upon by each committee 
for companies in the new growth driver 
industrya, and businesses in individual -type 
foreign investment zones (FIZs)  Full exemption for five  years 
from the date the business 
commenced, and 50% for 
two years thereafter  
Companies and project entities in FIZs 
(complex -type), free economic zones (FEZs), 
Jeju Investment Promotion Zone, enterprise 
city development zone, Saemangeum Area, etc.  Full exemption for three 
years from the date the 
business commenced, and 
50% for two years thereafter  
Exemption of tariffs, 
individual consumption 
tax, VAT, etc.  Capital goods imported by a foreign -invested 
company with a foreign or domestic means of 
paym ent it obtained as equity investment from 
a foreign investor  
Capital goods that are imported by a foreign 
investor as an object of investment  Tariff;  individual consumption 
tax; VAT 
a "New growth driver industry" refers to the following categories: future vehicles, intelligent 
information, next -generation software and security, content, next -generation electronic information 
device, next -generation broadcasting and telecommunication, bio and health, new energy business 
and environment, co mposite and integrated materials, robotics, and aerospace.  
Source:  Restriction of Special Taxation Act, Article  121; and information provided by the authorities.  
 
61 KOTRA (2020), Doing Business in Korea 2019. Viewed at: 
https://news.kotra.or.kr/user/reports/kotranews/20/usrReportsView.do?reportsIdx=10424 . 
62 For details of these corporation tax incentives, see WTO document WT/TPR/S/346/Rev.1, 
6 January  2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2.81.   In accordance with local governments' ordinances, t he period of local tax reduction may be 
extended up to 15 years, and the reduction ratio may be increased.  
2.6.3.2   Cash grants  
2.82.   According to KOTRA, cash grants to foreign -invested enterprises were revised in 2019.63 The 
Government expanded eligibility for cash grants to high -tech industries, in accordance w ith the 
Industrial Development Act (Article  5) and the Public Notice No.  2019-121 by MOTIE, released on 
26 July 2019 (enforced in 2020).  
2.83.   Before the revision, the central and local governments provided cash grants for companies 
that operate in certain indus tries and that promote FDI and contribute significantly to the national 
economy. These industries include those using new growth -engine technologies, manufacturing 
materials and components, creating large -scale employment, and establishing R&D centres or 
regional headquarters. To be eligible for cash grants, a foreign investor must own at least 30% of 
the equity.64 
2.6.3.3   Industrial site support  
2.84.   Under the industrial site support system, foreign investment zones (FIZs) designated by the 
Foreign Investment Promotion Act, free trade zones (FTZs) under the Act on Designation and 
Management of Free Trade Zones, and free economic zones (FEZs) prescribed  by the Special Act on 
Designation and Management of Free Economic Zones are operated to attract foreign investment 
(Table 2.3).  
Table 2.3 Industrial sites for foreign investors, 4th Quarter 2020  
Industrial si te system  Designated region  No. of 
locations  
Foreign 
investment zone  
(FIZ) Complex -type Cheonan Industrial Complex  
Cheonan Industrial Complex No.  5 
Chungju Industrial Complex  
Daebul Industrial Complex  
Dalseong Industrial Complex  
Dang-dong Industrial Complex  
Gumi Industrial Complexa 
Gwangyang -Sepoong Industrial Complex  
Iksan Food Cluster  
Inju Industrial Complex  
Jangan High -Tech Industrial Complex No.  1 & No.  2 
Jincheon -Sansu Industrial Complex  
Jisa Industrial Complex  
Munmak Industrial Complex  
Ochang Industrial Complex  
Oseong Industrial Complex  
Sacheon Industrial Complex  
Songsan 2 Industrial Complexb 
Songsan 2 -1 Industrial Complexb 
Songsan 2 -2 Industrial Complexb 
Woljeon Industrial Complex  
Changwon Industrial Complex (parts)  
Gumi Industrial Complex (parts)a 
Iksan Industrial Complex (parts)  
Mieum Industrial Complex in Busan (parts)  
Pohang Industrial Complex (parts)  
Daejeon International Science Business Belt  28 
Individual -type Manufacturing industry (68 companies), service 
industry (10 companies)  78 
 Service -type Intuitive Surgical Korea, ABiotech, Boeing Korea 
Engineering & Technology Center (Seoul)  3 
 
63 KOTRA (2020), Doing Business in Korea 2019. Viewed at: 
https://news.kotra.or.kr/user/reports/kotranews/20/usrReportsView.do?reportsIdx=10424 . 
64 KOTRA (2020), Doing Busi ness in Korea 2019. Viewed at: 
https://news.kotra.or.kr/user/reports/kotranews/20/usrReportsView.do?reportsIdx=10424 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Industrial si te system  Designated region  No. of 
locations  
Rental complex 
for foreign -
invested 
companies in 
Gyeonggi 
Province  Chupal Industrial Complex  
Eohyeon -Hansan Industrial Complex  
Hyeongok Industrial Complex  
Poseung Industrial Complex  4 
Free trade zone 
(FTZ)  Industrial 
complex -type Daebul FTZ, East Sea FTZ, Gimje FTZ, Gunsan FTZ, 
Masan FTZ, Ulsan FTZ, Yulchon FTZ  7 
Ports and airports -
type Busan Port  
Dangjin -Pyeongtaek Port  
Gwangyang Port  
Incheon Port  
Pohang Port  
Incheon International Airport  6 
Free economic 
zone (FEZ)c Busan -Jinhae FEZ, Chungbuk FEZ, Daegu -Gyeongbuk FEZ,  
East Coast FEZ, Gwangyang Bay Area FEZ, Incheon FEZ, 
Gyeonggi FEZ, Gwangju FEZ, Ulsan FEZ newly designated in 2020  9 
a Gumi Industrial Complex and Gumi Industrial Complex (parts) are different regions.  
b Songsan 2 Industrial Complex, Songsan 2 -1 Industrial Complex, and Songsan 2 -2 Industrial 
Complex are different regions.  
c From April 2018, the Saemangeum -Gunsan FEZ is no longer a FEZ. It was merged into the 
Saemangeum Project Area.  
Sourc e: Information provided by the authorities.  
2.85.   Tax incentives granted by these zones to foreign -invested enter prises vary (Table 2.4). 
Foreign -invested businesses may benefit from non -tax incentives, including, inter alia , cash grants, 
provision of infrastructure facilities, foreign education facilities and research facilities, rent reduction 
or exemptions, eased labour regulations, and free foreign exchange transactions.  
Table 2.4 Foreign investment location tax incentives, 2021  
Classification  Foreign investment zone (FIZ)  Free trade zone (FTZ)  Free economic zone 
(FEZ)  
Governing law  Foreign Investment Promotion Act  Act on the Designation & 
Management of Free Trade 
Zones  Special Act on the 
Designation & 
Management of Free 
Economic Zones  
Designating 
authority  Mayor or provincial governor  
 Minister of MOTIE  Minister of MOTIE  
 
Managing 
authority  State industrial complexes: 
Industrial complex management 
authorities  
Others: Mayor or provincial governor  Minister of Trade, Industry 
& Energy  Free Economic Zone 
management authority  
Types of 
companies  Foreign -invested 
company  Foreign -invested 
company  Domestic company, and 
foreign -invested company  Domestic company, and 
foreign -invested company  
Occupancy 
requirement  Foreign 
investment ratio 
of 30% or 
higher, 
investment of 
KRW 100 million 
or more  
 
Busines ses 
accompanying 
new growth -
engine industry 
technology, 
high-tech 
manufacturing, 
R&D industry, 
logistics industry  
 FDI 
requirements:  
• Manufacturing: 
USD 30 million 
or more  
• Tourism: 
USD 20 million 
or more  
• Logistics: 
USD 10 million 
or more  
• R&D: 
USD 2 million or 
more (employing 
10 or more 
researchers)  • Manufacturing: export 
50% or more  
• Wholesale: export and 
import 50% or more  
• Integrated logistics 
businesses  Developers:  
foreign investment 
USD 30 million or more,  
foreign investment equity 
ratio of 50% or higher, 
total investment of 
USD 500 million or more  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Classification  Foreign investment zone (FIZ)  Free trade zone (FTZ)  Free economic zone 
(FEZ)  
Requirements 
for tax 
reduction  • Manufacturing: 
USD 10 million 
or more  
• Logistics: 
USD 5 million or 
more Identical to 
occupancy 
requirements 
above  • Manufacturing: 
USD 10 million or more  
• Logist ics: USD  5 million 
or more  • Manufacturing, tourism: 
USD 10 million or more  
• Logistics, medical 
institution: USD  5 million 
or more  
• R&D: USD  1 million or 
more (employing 10 or 
more researchers)  
Local tax  For up to 15 years  
 For up to 15 years  For up to 15 years  
Customs duty  Exempted for five years from the day 
on which imported capital goods 
have been declared  Customs duty exempted on 
the imports of machinery or 
parts for industrial facilities, 
raw materials, construction 
materials, and other goods 
necessary for 
accomplishing the purpose 
of business  Customs duty on 
imported capital goods 
exempted for five years  
Source:  Information provided by the authorities.  
2.6.4   Other  
2.86.   Korea is a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA) 
and the International Convention on the Settlement of Investment Disputes between States and 
Nationals of other States (ICSID Convention), and is party to the Convention on the Recognition and 
Enforcement of Foreign Arbitral Awards (the New York Con vention). It abides by OECD Codes of 
Liberalization of Capital Movements and of Current Invisible Operations, and the National Treatment 
Instrument.  
2.87.   According to the UNCTAD website, Korea has 105 bilateral investment treaties (BITs), 89 of 
which are in for ce. During the review period, the BITs with Armenia (3 October 2019), Myanmar 
(31 October 2018), Cameroon (13 April 2018), and Kenya (3 May 2017) went into force. Korea 
signed a BIT with Uzbekistan on 19 April 2019, which has not yet entered into force.65 Many of 
Korea's RTAs also contain investment provisions.66 
2.88.   As at March 2021, Korea has bilateral tax treaties (conventions for the avoidance of double 
taxation and the prevention of fiscal evasion with respect to taxes on income and capital) in force 
with 94 countries. Among them, nine have entered into force since 2016: Brunei  Darussalam; 
Cambodia; Ethiopia; Georgia; Hong Kong, China; Kenya; Tajikistan; Turkmenistan; and Serbia.  
2.89.   The authorities indicate that Korea does not maintain any restrictions on inve stment abroad. 
Investors are required to give their bank prior notice or an ex post  facto report.  
 
 
65 UNCTAD, Investment Policy Hub – Korea, Rep. of. Viewed at: 
https://investmentpolicy.unctad.org/international -investment -agreements/countries/111/korea -republic -of. 
66 UNCTAD, Investment Policy Hub – Korea, Rep. of. Viewed at: 
https://investmentpolicy.unctad.org/international -investment -agreements/coun tries/111/korea -republic -of. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3  TRADE POLICIES AND PRACTICES BY MEASURE  
3.1.  Since the previous Trade Policy Review, the general thrust of the Republic of Korea's trade 
policy  has remained relatively unchanged. The tariff remains one of Korea's main trade policy 
instruments, and a relatively significant, albeit declining, source of tax revenue. The 2021 customs 
tariff remains transparent but relatively complex, involving a mult iplicity of rates. The average 
applied MFN  tariff dropped slightly from 14.1% in 2016 to 13.9% in 2021. Peak ad valorem  rates 
also remained unchanged and concentrated in agricultural items. Korea has bound rates on 90.7% 
of its tariff lines and has continu ed to use this gap between the average bound and applied MFN 
tariff rates to apply higher duties (e.g. adjustment duties) termed "flexible tariffs". Tariff rate quotas 
(TRQs) remain in place under Korea's multilateral agricultural market access commitments , and 
other measures continue to selectively reduce tariffs on inputs.  
3.2.  During the review period, trade facilitation developments included initiatives to mitigate the 
damage from the COVID -19 pandemic. Regarding customs valuation, Customs introduced service s 
to protect taxpayers' rights and reinforced cooperative schemes against tax evasion. Rice imports 
remained tariffied. Import licensing requirements covered numerous tariff items, and prohibitions 
were maintained. During the review period, recourse to ant i-dumping initiation action remained 
relatively stable. Price -based special safeguard provisions (SSGs) under the WTO Agreement on 
Agriculture were used.  
3.3.  Korea retained the option to restrict or monitor certain exports to ensure adequate domestic 
supplies;  in response to COVID -19 pandemic needs, a temporary export ban on certain health items 
was implemented. Direct export subsidies remained in place to reduce marketing costs for certain 
agricultural products. A drawback scheme continued to provide refunds o f border taxes on raw 
materials used in exports, whereas internal indirect taxes on exports are reimbursed. Corporation 
tax relief to foreign investment enterprises located in free trade zones (FTZs) was eliminated for 
applicants as from 2019. Exporters co ntinue to benefit from finance, insurance, and guarantees 
provided by state -owned institutions.  
3.4.  Measures involving grants, tax concessions, and low -interest loans continued to support 
production and trade of various agricultural, forestry, fishing, coal mi ning, renewable energy, 
Fourth  Industrial Revolution, and manufactured products, and to encourage SMEs, innovation, 
research and development (R&D), environmental protection, and FDI activities. Regulatory and other 
initiatives to, inter alia , improve food and drug safety, as well as to align domestic standards to 
international standards, were undertaken. Control over imported safety food hazards was reinforced; 
the shift to a "positive list" system (PLS) to all pesticides in agricultural products except for  those 
with domestically set maximum residue levels (MRLs) was completed. State involvement in the 
economy persists. Changes were made to the main legislation of government procurement, which is 
still seemingly used as a policy tool. Several legislative am endments were undertaken in competition 
policy. A prohibition on new cross -shareholding between subsidiaries under large business groups 
remained in place, while large corporations and SMEs continued to be encouraged to voluntarily sign 
agreements on fair trade and shared growth. Price controls remain in place in specific areas. 
Consumer protection transparency and enforcement were reinforced. Korea's intellectual property 
rights (IPRs) regime continued to evolve rapidly, and legislation was strengthened; a ction was taken 
in response to COVID -19 challenges in this area.  
3.1  Measures Directly  Affecting Imports  
3.1.1   Customs procedures, valuation, and requirements  
3.1.1.1   Procedures  
3.5.  Import declarations must be made by the owner of goods, a licensed customs broker, a customs 
brokers’ corporation, or a corporation for handling clearance  under the Licensed Customs Broker 
Act. 
3.6.  Customs clearance, including declaration procedures, and cargo management systems remain 
fully computerized. T he Korea Customs Service (KCS) operates a seven -fields paperless e -clearance 
system (UNI -PASS, a KCS brand name) to handle export/import clearance operations , import cargo 
management, duties collection, the duties drawback system, and a single window system covering WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  requirement -confirmation processes (s ee below), including quarantine and inspection . The 
UNI-PASS portal, which allows for trade and customs formalities anytime without having to visit 
each government entity, continues to be exported to other countries and was last updated in 
April 2016.1 In 2020, the KCS's single window system was linked to 29 agencies (40 in 2016) 
(handling 90% (88% at end -2015) of total import verification in 2020) responsible for approving 
certain imports subject to requirements that need to be verified electronically.2 The number of items 
requiring such clearance ‑related checks under Article  226 of the Customs Act and another 38 laws 
(same as at previous TPR) increased  from 5,566 10 -digit HS items in 2016 to 6,152 in 2020. The 
payment of commissions or fees for regulator y permits and licences, as well as duties and taxes, for 
the clearance of merchandise is done online anytime. In 2021, cargo management and import 
declarations remain 100% paperless.  
3.7.  Since 2009, Korea has used a standard e -document management system, a too l for connecting 
customs networks around the world, to promote trade efficiency and security within the framework 
of a global (networked) single window concept consisting of an export declaration in one country 
substituting the import declaration in the co untry of destination.3 Considering the need for 
interconnectivity with neighbouring countries and foreign customs in achieving the objective of a 
global single window, the UNI -PASS system applies international standards such as World Customs 
Organization (WCO) Data Model (DM) 3 .0, UN Codes, and open technology standards. To expand 
the application of the global standard of customs administration, the KCS uses the system to design 
e-documents circulated within its internal networks; at present, 96.9% (same as in 2016) of 
Extensibl e Markup Language (XML)  documents used within the KCS's network are based on WCO 
DM 3.0. Business support centers  have operated at six main customs offices since 2015; they 
provide personalized consultations for any difficulties arising within the RTA/FTA utilization process 
as well as post -management company assistance (Section 3.1.3.7).4 As from March 2018, the KCS 
has operated FTA Portal ( https://www.customs.go.kr/enportal/main.do ) to support SMEs which cannot 
afford to visit customs offices for consultation in utilizing FTAs; this service supported 385,833 
businesses in 2020, and their exports to FTA partner countries decreased by 3.9% yea r-on-year.5 
3.8.  As at March 2021, customs declarations were processed within 1.5 hours, compared to 
2.0 hours on average in 2015; the drop was due to expanding the application of electronic customs 
clearance utilizing artificial intelligence (AI) on low -risk cargo since 2019.6 Prior-entry import 
declarations are allowed (up to five days for sea and one day for air). Virtually all imports (99% in 
March 2021, about 96% in 2016) are now cleared after being taken into a bonded area; the average 
clearance time fro m port entry to release from a bonded warehouse was 1.4 days in March 2021, 
down from 1.9  days in May 2016. The KCS prides itself on the world's fastest turnaround in 
 
1 Since 2005, the UNI -PASS e -clearance scheme, the world's first 100% electronic clearance portal 
system, has been exported to: Kazakhstan (2005), the Kyrgyz  Republic (2008), the Dominican  Republic 
(2008), Mongolia (2009), Guat emala (2009), Ecuador (2010, 2011), Nepal (2011), Tanzania (2011, 2012), 
Uzbekistan (2012), Cameroon (2015), Ethiopia (2017, 2019), Ghana (2018), Algeria (2018), Tajikistan (2019), 
and Paraguay (2020). The UNI -PASS system has been operated with its 4th generation system as from 
April 2016. Under the Smart clearance system, the Smart customs administrations use mobile devices (e.g. 
small computing device) to provide their services to the public. WTO document WT/TPR/S/346/Rev.1, 
6 January 2017.  
2 The Korea Fe ed Association, the Korea Feed Ingredient Association, the Animal and Plant Quarantine 
Association, KOTITI Testing and Research Institute, and the Korea Gas Safety Corporation seemingly remain 
among the agencies that joined the system.  
3 More information a bout this system is available in WTO documents WT/TPR/S/268/Rev.1, 
8 November  2012 and WT/TPR/S/346/Rev.1, 6 January 2017. There is considerable impetus in regional and 
international fora for greater connectivity between countries and regions and across co ntinents. The ratification 
of the Protocol on the Legal Framework to Implement the ASEAN Single Window (ASW) (PLF) has enabled the 
Live Operation of the ASW between Indonesia, Malaysia, Singapore, Thailand, and Viet  Nam since 
1 January  2018, which was foll owed by Brunei  Darussalam, Cambodia, Lao People's Democratic Republic, 
Myanmar, and the Philippines in 2019. Viewed at: http://asw.asean.org/about -asw. 
4 Post management is what AEO -certified companies should do after the AEO authorization in order to 
maintain its validity. More specifically, it means management of post -authorization acts, such as reporting any 
changes, conducting regular self -inspections, and performing comprehensive audits.  
5 KCS, Yes FTA Mob ile Consulting Service, Notice , 8 March 2018. Viewed at: 
https://www.customs.go.kr/engportal/na/ntt/selectNttInfo.do?mi=7329&bbsId=1682&nttSn=42238 . 
6 According to World Bank Doing Business data, in 2019 importing a shipment of goods required border 
and documentary compliance equivalent to six hours and USD  315, and one hour and USD  27, respectively, 
same as in 2015. World Bank (2020), Doing Business 2 020: Comparing Business Regulation in 190 Economies  
– Economy Profile: Korea, Rep.  Viewed at:  
https://www.doingbusiness.org/content/dam/doingBusiness/country/k/korea/KOR.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  processing shipments, claiming that the average time for customs clearance for imports is  less than 
1.5 hours (less than two minutes for export clearance) (Section 3.2.1).7 During the review period, 
the KCS conducted time release studies with computerized systems in line with the WCO's guidelines. 
A cargo selectivity system automatically sele cts high -risk cargo for documentary and possibly 
physical inspection; in the period 2011 -15, an annual average of 3% of customs clearance cases 
were subject to physical inspection. The KCS operates, on request, an "on -dock" immediate 
clearance system with clearance and inspection implemented on dock, if the total goods are shipped 
in one container with one owner of goods at the major ports of Busan, Incheon, Gwangyang, and 
Pyeongtaek.  
3.9.  Clearance continues to proceed through a two -track control management sys tem consisting of 
low-risk (safe track) fast clearance (e.g. exemption of inspection, and self -audits) and high -risk 
(non-safe track) clearance (e.g. document audits and physical inspections).8 Since 2009, an 
Authorized Economic Operator (AEO) Programme h as been in place for nine types of entities: 
exporters, importers, customs brokers, warehouse operators, bonded transporters, freight 
forwarders, sea carriers, air carriers, and ground handlers.9 As from October 2017, the electronic 
clearance examination has been operational for all goods imported by AEO companies.10 As of 2020, 
under the Enforcement Rule on the Authorization and Management of Authorized Economic 
Operators (AEO Enforcement Rule), 832 certified entities (815 in 2016), consisting of 143 impo rters, 
275 exporters, 309 logistics, and 105 brokers, were qualified for special treatment in customs 
procedures, including fewer physical inspections, exemption from customs audit, and fewer 
administrative fines.11 In 2020, 26% (same as in 2015) of import s entered under the AEO system. 
Korea continued to expand its AEO -related mutual recognition arrangements (MRAs); as at 
June 2021, it had signed MRAs with 13  partners: the United  States (25 June 2010); Canada 
(25 June 2010); Singapore  (25 June 2010); Japan  (20 May 2011); New  Zealand (25 June 2011); 
China  (27 June 2013); Hong  Kong, China (13  February 2014); Mexico (11 March 2014); 
Turkey  (9 June 2014); Israel (22  March  2015); the Dominican  Republic (23 April 2015); 
India (8 October 2015); the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu 
(Chinese  Taipei) (22  December  2015); Thailand (27  December  2016); Australia (6 July 2017); 
United Arab Emirates (6 July 2017); Malaysia (16  October 2017); Peru (14 December 2017); 
Uruguay (15 December 2017); Kazakhstan (22  April 2019); Mongolia (30 September 2019); and 
Indonesia (6 February 2020). According to the KCS, MRA benefits for 286 (300 in 2018) importers 
and exporters in 2019  amounted to USD  385.8 million (USD  357.7  million in 2018) and, inter alia , 
related to faster clearance and duty payment for the former and lower inspection fee in overseas 
customs territory for the latter.  
3.10.   Since July 2014, a de minimis  clearance requirement for consumption goods purchased online 
and priced at USD  150 (as from Dece mber 2015) or lower has been in place and the goods have 
been exempt from documentation and taxation requirements; for goods bought from United  States 
websites, the cap is raised to USD  200 under the KORUS FTA. To ensure consumer safety, foodstuff 
subject to inspection quarantine requirements and certain medication are not eligible for the 
simplified process; they involve goods deemed inappropriate by the head of a customs office. 
Procedures for customs clearance of e -commerce merchandise depends on the tra nsportation 
means.12 If an express cargo company transports and takes in the goods, the customs clearance 
procedure for express cargo is applied. If the goods are taken in through the post office, the customs 
clearance procedure for postal items is applied . If a general transportation company transports and 
takes in the goods, the general import clearance procedures apply. Of the 4.07 million e -transactions 
 
7 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
8 High-risk cargo remains screened out for audit and inspection through automatic checks on the degree 
of risk, base d on compliance record, type of item, etc. Audit and inspection by customs authorities mainly aim 
at preventing illicit importation and tax evasion.  
9 An AEO is a company validated and authorized by the KCS in accordance with criteria under the Law 
on Comp liance, Internal Control System, Financial Solvency and Security Management. Viewed at: 
http://aeo.or.kr/eng/aeoAboutaeo.do . These criteria enable eligible companies to qualify for different controls 
and benefits depending on their AEO classification level.  
10 WTO document WT/TPR/OV/21, 27 November 2018.  
11 WTO Trade Facilitation Agreement database. Viewed at: https://tfada tabase.org/members/korea -
republic -of/experience -sharing . 
12 KCS, Customs Clearance Procedures for Overseas Purchases . Viewed at: 
https://www.customs.go.kr/englis h/cm/cntnts/cntntsView.do?mi=8067&cntntsId=2741 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  in 2020 (11.2 million in 2013), 64% (34% in 2013) benefited from the simplified clearance 
procedure.  
3.11.   Under the KCS's 2020 Future Customs Administration Strategy, action is envisaged in areas 
including the innovation of customs administration, the reinforcement of cooperation among customs 
border agencies, the prevention of tax avoidance -related fraudulent  practices and goods prohibited, 
the nurture of customs experts, and the preparation for the unification era. Under the KCS's 2015 
Future Customs Administration Strategy for the medium and long -term, action was envisaged in 
areas including the setting of a new silk trade road using FTAs and AEO programmes, the creation 
of an advanced import/export environment via cross -national risk management, the prevention of 
tax avoidance -related fraudulent practices, the eradication of illicit trade, the pr ovision of 
high-quality public services, and the overall reorganization of the national trade information 
system.13 
3.12.   Korea ratified the WTO Trade Facilitation Agreement (TFA) on 30  July 2015 and had it fully 
implemented by 22 February 2017.14 As at January 2021, Korea submitted its 
implementation -related (ABC) notification – designating all provisions contained in Articles 1 -12 of 
the TFA under Category A – and its transparency notification under Articles 1.4, 10.4.3, 10.6.2, and 
12.2.2.15 Korea acceded to t he revised Kyoto Convention (International Convention on the 
Simplification and Harmonization of Customs Procedures) in February 2003, subject to certain 
reservations at the time of the previous Review; the Convention took effect in February 2006.16 No 
information on whether these reservations were lifted or whether any new international 
arrangements have been signed since 2016 was available from the authorities.  
3.13.   To further facilitate trade, since August 2018 the KCS has implemented a number of pilot 
projec ts using blockchain technology (e.g. certificate of origin and e -commerce).17 In addition, as at 
May 2021 the establishment of a new UNI -PASS platform based on blockchain technology to 
strengthen data accuracy, process reliability, promptness, and efficien cy was under consideration.  
3.14.   Trade -facilitating efforts to stop the spread of COVID -19 and mitigate the damage caused by 
the pandemic have been undertaken by the KCS through actions to speed up customs clearance and 
address clearance difficulties, tax benef its for exporters and importers, collaboration with other 
agencies to speed clearance of protective face masks, implementation of special clearance 
procedures on personal effects, and the preparation of a UNI -PASS Emergency/Crisis Response 
Manual.18 The KC S established and operated Customs Clearance Support Centers for COVID -19 at 
major Customs offices across the country, focused on safeguarding the global supply chain by 
facilitating the movement of inbound and outbound raw materials for importers and expo rters. A 
 
13 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
14 WTO Trade Facilitation Agreement database. Viewed at: https://tfadatabase.org/members/ko rea-
republic -of. 
15 Category A: provisions that the Member will implement by the time the Agreement enters into force. 
WTO documents WT/PCTF/N/KOR/1, 4 June 2014; G/TFA/N/KOR/1, 24 July 2017; and G/TFA/N/KOR/1/Rev.1, 
10 July 2020.  
16 Korea accepted 14 of the  25 Chapters in Specific Annexes of the Protocol, and maintained 
reservations on 18 recommended practices, mainly relating to areas unsuitable to Korea's trade environment.  
17 Blockchain technology may prevent forgery and falsification of documents and simp lify the issuance 
procedures. These projects include: (i)  public -private maritime export logistics consortium led by SAMSUNG 
SDC Co. and the KCS exploring the use of blockchain technology -based platform to share logistics documents 
among various actors; (i i) export/import clearance project (led by SAMSUNG SDS Co. and KCNET Co. 
consortium) allowing participants to share export/import documents in real time and add them on the ledger; 
(iii) development of a platform for e -commerce transactions to enable real -time information sharing between 
e-commerce, transport companies, and the KCS; and (iv)  establishing automatic cross -border data exchange – 
e.g. certificates of origin – between Customs administrations. WCO, "Korea Pilots Blockchain Technology as It 
Prepar es for the Future", WCO News , No. 88, February 2019, pp. 32 -35. Viewed at: 
https://mag.wcoomd.org/uploads/2019/02/WCONews88_UK.pdf . 
18 Specific trade -facilitating measures included: (i)  acceptance of a copy instead of the original 
document of the certificate of origin to impose preferential tariffs; (ii)  omittance of document screening and 
visit inspection in the process of issuing certificates of origin; (iii)  inclusion of surgical and protective masks, 
hand sanitizers, and thermometers in the list of tariff exemptions for self -use of small quantities of goods; and 
(iv) minimization of customs clearance procedures for protective masks imported for the purposes of relief, 
donation, and fr ee distribution to employees by companies. WTO documents G/TFA/W/24, 29  September  2020 
and WT/TPR/OV/23,30 November 2020; and KCS, Measures Taken by KCS to Minimize the Impact of the 
COVID -19, 21 April 2020. Viewed at: 
https://www.customs.go.kr/english/na/ntt/selectNttInfo.do?mi=8016&bbsId=1744&nttSn=10052422 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  24/7 customs clearance system has provided speedy clearance for sanitary products, medical 
devices/equipment, and raw materials imports for the sound operation of domestic manufacturers. 
To address delays at airports and seaports, cargo was allowe d to be transported directly to 
manufacturing plants without entry into the terminal upon arrival so as to cope with delayed 
unloading and shortage of storage space at airports and seaports due to concentration of imports. 
The KCS adopted a series of tax r elief measures for companies importing raw materials for domestic 
production that include extension of payment of duties, instalment payment of duties, and duty 
drawback on the same day of application (Section 3.2.4.2). Meanwhile, the KCS took steps to 
mitigate customs investigations, foreign exchange inspections, and origin verification of the 
companies above to the extent possible.  
3.15.   Korea's trade facilitation efforts remain appreciated at the international level, and the KCS is 
considered to be at the cutt ing edge of international best practice .19 According to World Bank Doing 
Business data, in 2020 Korea ranked 36th among 190 economies (31st of 189 economies in 2016) in 
ease of trading across borders, while gains from its trade facilitation by 2020 were es timated at 
2.18% of GDP (USD  29 billion) and 8.18% of exports (USD  52 billion).20 According to the OECD 
trade facilitation indicators, as of 2019, Korea matched or exceeded best performance across the 
more than 160 participating countries in the areas of i nformation availability, involvement of trade 
community, advance rulings, fees and charges, simplification and harmonization of documents, 
automation of border processes, streamlining of procedures, internal border agency cooperation, 
cross-border agency c ooperation, governance, and impartiality. Between 2017 and 2019, 
performance improved in the areas of involvement of the trade community and advance rulings.21 
The 2019 OECD appraisal indicated that possible improvements could involve the availability of 
comprehensive information about applicable fees and charges, the percentage of procedures 
expedited electronically, the expansion of the use of pre -arrival processing of goods and of 
post-clearance audits, and the expansion of the use of AEO programmes.  
3.16.   Blended products remain classified depending on their materials or components with intrinsic 
properties; the KCS is enforcing an advanced classification ruling under the WCO's 
recommendation.22 When a dispute occurs, the KCS Tariff Classification Committee, c onsisting of 
experts from the public and private sectors, makes the final decision. Whenever necessary, the 
Committee requests an opinion from the WCO Secretariat or its Harmonized System Committee 
through the Ministry of Economy and Finance (MOEF); since 2017 the number of advance rulings in 
this area increased rapidly, with over 29,425 advance rulings issued in total, compared to over 
28,178 in the entire period between 2012 and 2016.  
3.17.   The KCS continues to provide prompt responses to enquiries made online and maintain a 
Roadmap for Integrity. A  Customs Irregularities Reporting Centre is in place, and the Cyber Center 
for Reporting Corruption advises customs staff and other stakeholders to report customs 
irregularities to the KCS website. R eporting of  corruption is received at the Cyber Center for 
Reporting Corruption via websites, etc., and the received reports are swiftly processed and handled. 
To eradicate acts of corruption, various policies are implemented, including dissemination of 
corruption ca ses and training.  
3.18.   Seized items at customs offices continue to be liquidated through electronic bids (i.e. general 
competitive bidding, designated competitive bidding), negotiated contract, auction, or outsourcing. 
Seized items still include gold, jewellery , cosmetics, clothes, liquors, and watches.  
3.1.1.2   Customs valuation  
3.19.   According to the authorities, Korea's customs valuation legislation (subsection 2 of the 
Customs Act 1949) is in line with the WTO Customs Valuation Agreement. Imports are valued at 
 
19 WTO document WT/TPR/S/346/Rev.1, 6  January 2017.  
20 World Bank (2020), Doing Business 2020: Comparing Business Regulation in 190 Economies  – 
Economy Profile: Korea, Rep.  Viewed at: 
https://www.doingbusiness.org/content/dam/doingBusiness/country/k/korea/KOR.pdf ; World Economic Forum 
(2014),  The Global Enabling Trade Report 2014 – Insight Report . Viewed at: 
http://www3.weforum.org/docs/WEF_GlobalEnablingTrade_Repor t_2014.pdf; and WTO document 
WT/TPR/S/346/Rev.1, 6 January 2017 . 
21 OECD trade facilitation indicators identify areas for action and enable the potential impact of reforms 
to be assessed. OECD, Trade Facilitation . Viewed at: https://www.oecd.org/trade/topics/trade -facilitation/ . 
22 WTO document WT/TPR/S/346/Rev.1, 6 January 2017 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  their c.i.f.  price; a 30% decrease of the dutiable freight rate applied to express cargo with a weight 
of 3 kg or less has been effective since 14 October 2015. The main method used is transaction value 
(based on the price actually paid or to be paid by the buyer); ab out 96% of imports in 2020 (same 
as in 2016) are subject to this method. When the transaction value method cannot be used, valuation 
is determined using, in order, identical goods, similar goods, domestic sale price, or computed value; 
upon the importer's request, the order of application of value based on domestic sale price and 
computed value may be reversed.23 
3.20.   While the KCS may, in principle, set special customs valuation and documentary requirements 
for second -hand imports (Presidential Decree of the Cu stoms Act), it applies the same customs 
valuation methods as for new items. However, as a last resort, Customs may determine the valuation 
of second -hand imports using "reasonable standards", whereby prices paid are adjusted based on 
appraised prices from certified appraisal institutes, domestic wholesale prices, or other recognized 
price lists. To prevent tax evasion, the KCS checks declared values of imported used cars, including 
comparisons with transaction values of new cars of the same model that have been recognized as 
customs values, with the deduction of depreciation (depreciated value). The transaction value is 
accepted  where insignificant differences exist, unless there is reason to suspect the authenticity or 
accuracy of the declared value, in whi ch case an alternative WTO -consistent valuation method is 
used.  
3.21.   During the review period, the Customs Act was last revised on 22 December 2020 and came 
into effect on 1 January 2021. In 2020, the MOEF prepared a plan to rewrite the existing regulations 
of the Customs Act. The plan would focus on simplifying existing terms, particularly those related to 
customs clearance and trade; incorporating the matters on the rights and duties of taxpayers and 
people into the Customs Act; and rewriting existing customs rules and regulations for clarity and 
better understanding in light of the increased use of the small and individual customs clearances 
using digital technologies.24 
3.22.   Between 2016 and 2020, KRW  172.2 billion was collected on undervalued imports, compared 
to KRW 99.4 billion in the period 2012 -15. The 2007 SIREN, a KCS early warning system to block 
undervalued imports of agricultural goods, plants, and fishery products,  remains in place. Based on 
the result, undervalued products go through audit, while normal  products are cleared promptly. 
SIREN seems to have increased tax revenue and prevented undervalued products . 
3.23.   Customs duties (including domestic taxes) must be paid within 15 days of acceptance of the 
import declaration (where a security has been lodged). Late payments are subject to an additional 
3% of the amount owed for the first month, and .0025% for each day thereafter (up to a maximum 
of 60 months). Criminal penalties (up to three years' imprisonment with "hard" labour or a fine not 
exceeding the high er amount between five times the amount of evaded customs duties and the 
prime cost of the relevant goods) apply for fraudulent declaration of dutiable value, false tariff rates, 
or incorrect tariff classifications with the intention of affecting the deter mination of the amount of 
duty to be paid. Penalties also apply for imports of goods as components and other unfinished, 
incomplete, or finished goods having major characteristics as partial components for the purpose of 
avoiding import restrictions impose d under statutes.  
3.24.   Administrative adjudication may be appealed to the KCS, the National Tax Tribunal, or the 
Board of Audit and Investigation. In this case, the Customs Appeal Committee, comprising five  KCS 
internal staff members and six external experts, d ecides after an in -depth examination. A lawsuit 
may be filed against its decisions. In 2020, with the aim to protect taxpayers' rights and help 
taxpayers with problems that have not been resolved through tax appeals, the KCS introduced a 
taxpayer's advocat e service, including a taxpayer's advocate officer and a taxpayer's advocate 
commission, effective from 1 July 2020.25 
 
23 Article  7, Paragraph 2, of the Agreement on Implementation of Article  VII of the GATT  1994 stipulates 
that no customs value shall be determined on the basis of, inter alia, the selling price in the country of 
importation of goods produced in the country, or the price of goods on the domestic market of the country of 
exportation. Viewed at: http://www.wto.org/english/docs_e/legal_e/20 -val_01_e.htm . 
24 Pricewaterhouse Coopers,  Samil Commentary: Korean Tax Update , 15 June 2020. Viewed at: 
https://www.pwc.com/kr/ko/publications/samil -commentary/samilcommentary_jun2020_en.pdf . 
25 The taxpayer's advocate commission is an independent body within the KCS and comprises a 
taxpayer's advocate officer and private sector's representatives with tax expertise. The advocate service allows 
taxpayers to request the advocate's assistance in claiming remedies for infringed taxpayer's rights when the WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.25.   To narrow the gap between transfer pricing and customs valuation, Korea maintains some 
cooperative schemes whereby it carries out stringe nt enforcement action against tax evasion of any 
form, while encouraging enterprises to be voluntarily tax compliant. These schemes include: 
(i) Advance Customs Valuation Arrangement (ACVA); (ii)  Advance Tax -Duty Harmonization Scheme; 
(iii) Post Tax -Duty H armonization Scheme; and (iv)  provisional value declaration for a compensating 
adjustment (launched in 2017).26 
3.1.2   Rules of origin  
3.26.   Preferential rules of origin apply to imports under preferential trading arrangements and 
RTAs/FTAs, and such application increa ses the complexity of implementing preferential tariffs.27 
Korea considers that rules should be transparent and promote trade and investment. For LDCs to 
receive duty -free access on eligible imports, goods must be either "wholly produced or obtained" in 
the exporting country, or manufactured from originating materials comprising at least 40% of the 
finished product's f.o.b. price (i.e.  non-originating materials must not exceed 60% of the f.o.b. 
price).28 Vessels catching fish must be registered in the exporting country and have at least 60% 
domestic equity. Under the Asia -Pacific Trade Agreement (APTA), eligible imports  are subject to 
APTA preferential rules of origin.  
3.27.   All of Korea's RTAs/FTAs are based o n common principles, such as "goods wholly obtained" 
and the "substantial transformation" criteria, under the FTA Special Customs Act. The value -added 
rule is also applied to selected agricultural and industrial products in the form of the regional value 
content (RVC) method or the import content (MC) method. Regarding RVC, some of Korea's 
RTAs/FTAs allow exporters to use a "build -up" or a "build -down" method on a selective basis; for 
example, the Korea –Peru, Korea –Colombia (in force as of 15 July 2016), an d Korea -Central America 
(in force as of 1 November 2019) FTAs provide for RVC of not less than 45% using the "build -down" 
method or of not less than 35% under the "build -up" method for automobiles and some electronic 
devices.29 A number of clothing items a re subject to specific -process rules. In addition to the 
"build -up" and "build -down" methods, based on the value of non -originating materials, the Korea –
United  States FTA also provides for the "net cost" (NC) method, based on the production costs for 
certain automotive goods; furthermore, de minimis  clauses allow for a good containing a 
non-originating material that does not undergo the tariff classification change to still originate if 
either the value of all non -originating materials does not exceed 10% o f the adjusted value of the 
good (non -textiles), or the total weight of all fibres or yarns in a component of a textile or apparel 
good is not more than 7% of the total weight of that component.30 Under the Korea –Canada FTA, 
product -specific rules of origi n require, inter alia , a change from a heading, whether or not there is 
also a change from any other heading, provided that the value of the non -originating materials of 
the heading does not exceed 10% or 55% of the transaction value or ex -works price of t he good.31 
Under the Korea –United  Kingdom FTA – based on the European  Union -Korea Agreement – some 
product -specific rules of origin require, inter alia,  a change in tariff classification or a change in tariff 
 
infringement is caused by unfair treatment and conduct of customs administration during the course of 
customs clearance, customs duty assessment and collection, customs audits, etc. Viewed at: 
https://www.pwc.com/kr/ko/ publications/samil -commentary/samilcommentary_jul2020_en.pdf . 
26 WCO (2018). Guide to Customs Valuation and Transfer Price . Viewed at: http://www.wcoomd.org/ -
/media/wco/public/global/pdf/topics/key -issues/revenue -package/wco -guide-to-customs -valuation -and-
transfer -pricing.pdf?la=en . 
27 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
28 A list of products considered as wholly produced or obtained is available under Article  5 of Presidential 
Degree No.  27759. Viewed at: https://www.law.go.kr/LSW/eng/engLsSc.do?menuId=2#liBgcolor0 . 
29 Build-down method is based on: (i) RVC = (Adjusted Value - Value of Non -Originating 
Materials)/Adjusted Value X 100; or (ii)  RVC = (f.o.b. - Value of Non -Originating Materials)/f.o.b. X 100. The 
build-up method derives from: RVC = (Value of Originating Ma terials/Adjusted Value) X 100. The adjusted 
value or f.o.b. is applied in accordance with the Agreement. Korea -Peru FTA . Viewed at: 
http://ww w.sice.oas.org/TPD/PER_KOR/PER_KOR_Texts_e/03A_KPFTA_Rules_of_Origin_Annex_3A_Part_II.pdf ; 
Korea -Colombia FTA . Viewed at: 
http://www.customs.go.kr/download/ftaportalkor/_down/trty/03%20Rules%20of%20Origin_PSR%20and%20G
aesong_Final_Kor.pdf ; and Korea -Central America FTA . Viewed at: 
http://www.customs.go.kr/download/ftaportalkor/_down/trty/han_ma_10_eng.pdf .  
30 The net cost method derives from RVC = (NC - Value of Non -Originating Materials)/NC X 100. The 
basis of the Origin Criteria under the Korea -United  States RTA/FTA on HS  2002 was chan ged to HS  2012 as of 
1 January  2014. WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
31 Korea -Canada FTA, Chapter  3. Viewed at: https://www.international.gc.ca/trade -commerce/trade -
agreements -accords -commerciaux/agr -acc/korea -coree/fta -ale/03.aspx?lang=eng . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  classification complemented by a value -added ru le setting a maximum ex -works value that 
non-originating materials should not exceed.32 
3.28.   The KCS continues to undertake RTA/FTA promotion activities to help companies utilize trade 
preferences subject to diverse and complicated rules of origin. For the simp lification of proof of origin 
and supporting documents, the KCS operates a system – launched in 2010 – whereby an exporter 
with the capability to prove the country of origin of its products is designated as an approved 
exporter.33 Korea operates FTA -PASS ( launched on 7  September 2010) for origin determination and 
management purposes; it also made the FTA -PASS connectable to UNI -PASS (Section 3.1.1.1) so 
that origin supporting documents can be issued promptly and conveniently. Since 2010, the KCS 
has operate d an FTA Utilization e -Alert System that indicates the goods subject to preferential tariff 
treatment on the e -Customs Clearance System at the time of importation. For SMEs, a self -origin 
management solution programme, which determines the origin status of  goods has been distributed 
online, free of charge, since September  2010. Since October 2010, it has operated a website 
(https://www.origin.or.kr ) that provides access to information and data about all RTAs/FTAs 
concluded so far. Efforts to raise public awareness are made through seminars, workshops, contests, 
and RTA/FTA -related courses.34 
3.29.   Korea applies non -preferential rules of origin to all other imports. Korea's non -preferential 
rules of origin are also based on the "wholly obtained goods" and "substantial transformation" 
criteria.  The tariff shift rule is applied, except on cameras (value -added rule) and textile articles 
(specified process rule). The origin for certain live animals is the territory where they wer e bred for 
over six (bovine) or two (swine) months.35 
3.1.3   Tariffs  
3.30.   Since January 2017, Korea has used the 2017 version of the Harmonized System of Tariff 
Classification (HS), at present consisting of 12,242 10 -digit lines (1 line fewer than in 2016). The 
general tariff schedule is in the form of an Annex to the Customs Ac t. It is revised whenever required 
to, inter alia , implement changes relating to the use of "flexible tariffs" (Section 3. 1.3.3) under 
procedures involving the relevant ministries and interested parties, including the MOEF, the Customs 
and Tariff Deliberat ion Committee, the State Council, and the National Assembly. Its basic/general 
structure has remained unchanged since 2016.  
3.31.   The tariff comprises several rates according to the source of imports. These are the MFN  tariffs 
from non -preferential sources (term ed general rates) and various preferential tariffs, including for 
imports from other Members of the APTA (Bangkok Agreement), RTA/FTAs, and least developed 
countries (Sections 2.5.2 and 3. 1.3.7). The WTO bound rates are also contained in the tariff.  
3.1.3.1   Applie d MFN rate 
3.32.   The tariff structure has changed little since the last Review. The 2021 simple average 
(unweighted) MFN decreased slightly to 13.9% (14.1% in 2016) (Table 3.1  and Chart  3.1), mainly 
as a result of the implementation of commitments relating to the expansion of the Information 
Technology Agreement.36 Tariff protection varies substantially across and within sectors, averaging 
60.4% for agricultural products (60.0% in 2016) and 6.3% for industrial goods (6.6% in 2016) in 
 
32 Korea -United  Kingdom FTA. Viewed at: 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/830523/U
K_Korea_Free_Trade_Agreement_v2.pt3.pdf ; and WTO document WT/R EG296/1/Rev.1, 31 August 2012.  
33 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
34 As from 6 January 2015, an Import and Export Business Support Centre has been leading education 
on RTA/FTA utilization and consultation.  
35 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
36 The tariff analysis follows the Secretariat's practice of including out -of-quota duties for tariff quotas 
(i.e. excluding the in -quota rate) and the ad valorem  part of alternate -type duties when official ad valorem  
equivalents are unavailable, as for Korea. As out -of-quota rates are much higher than in -quota rates, this is 
likely to overstate tariff protection where no out -of-quota imports occur. However, using the ad valorem  rate of 
Korea's alternate tariffs, in ca ses where the "whichever is the greater" rate applies, will slightly understate 
tariff protection when the alternate specific rate is operative. Higher adjustment tariffs are also excluded.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2021 (WTO defin itions).37 Average tariffs are higher for vegetable products (HS  Section 2), at 
107.9% (Chart  3.1). Manufacturing tariffs are higher for footwear and headgear (HS  Section 12) at 
10.1%, and for textiles and articles (HS  Section  11) at 9.7%. By according var ied and substantial 
levels of protection to selected industries, especially agriculture, tariffs distort competition by 
favouring some activities. Reducing high tariffs (mainly out -of-quota agricultural duties) would 
improve Korea's resource allocation and  national welfare, a view not shared by the authorities. 
According to the authorities, agricultural tariffs, including out -of-quota duties, are maintained in line 
with corresponding international and domestic laws, taking market conditions into account.  
Table 3.1 Tariff structure, 2016 and 2021  
(%, unless otherwise indicated)   
MFN applied  Final  
2016  2021  bounda 
Bound tariff lines (% of all tariff lines)  90.1 90.7 90.7 
Simple average rate  14.1 13.9 18.1 
 HS Chapters 01 -24 51.3 50.7 66.9 
 HS Chapters 25 -97 6.4 6.0 9.2 
 WTO agricultural products  60.0 60.4 69.0 
 WTO non -agricultural products  6.6 6.3 8.8 
Duty-free tariff lines (% of all tariff lines)  15.9 19.6 17.4 
Simple average of dutiable lines only 16.8 17.3 22.4 
Tariff quotas (% of all tariff lines)  1.9 1.9 1.9 
Non-ad valorem  tariffs (% of all tariff lines)  0.8 0.7 0.9 
Domestic tariff "peaks" (% of all tariff lines)b 2.7 2.8 2.0 
International tariff "peaks" (% of all tariff lines)c 10.7 11.0 18.5 
Coefficient of variation  4.1 4.2 3.2 
Nuisance applied rates (% of all tariff lines)d 1.9 2.0 1.9 
Total number of tariff lines  12,243  12,242  12,242  
 Duty-free rates  1,952  2,403  2,132  
 Ad valorem  rates (>0%)  10,197  9,751  8,856  
 Alternate rates  93 88 116 
 Specific rates  1 0 0 
 Unbound  n.a. n.a. 1,138  
n.a. Not applicable.  
a Bound rates are based on the 2021 tariff schedule. Calculations are based on 11,104 bound tariff 
lines, including partially bound tariff lines.  
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied 
rate. 
c International tariff peaks are defined as those exceeding 15%.  
d Nuisance rates are those greater than zero, but less than or equal to 2%.  
Note:  The 2016 and 2021 tariffs are based on the HS12 and HS17 nomenclature, respectively. Calculations 
are based on national tariff line level (10 -digit), excluding in -quota rates and including ad valorem  
equivalents (AVEs) for non -ad valorem  rates provided by the  authorities. In 2016, of 
94 non-ad valorem  rates, 64 AVEs are provided based on 2014 import data. In 2021, of 
88 non-ad valorem  rates, 62 AVEs are provided based on 2019 import data. In case of unavailability 
of AVEs, the ad valorem  part of alternate rate s is included.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
 
37 WTO definition of industrial products covers all non -agricultura l products, i.e. products not covered by 
the WTO Agreement on Agriculture. WTO agricultural products include all processed and unprocessed 
agricultural commodities (HS Chapters 1 to 24, less fish and fish products, plus some additional HS items).  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Chart 3.1 Average applied MFN and bound tariff rates, by HS section, 2016 and 2021  
 
Note:  Calculations for avera ges exclude in -quota tariff rates and include AVEs, as available. In case of 
unavailability of AVEs, the ad valorem  part of alternate rates is included. Only HS Sections 03, 12, 
14, 19, and 21 are fully bound. Final bound rates are based on the 2021 tariff  schedule.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.33.   Over 99% of tariffs are levied at ad valorem  duties, and therefore transparent. There are 
some 129 (130 in 2016) different rates (88  ad valorem duties and 41  altern ate duties) of which 
about 39 ad valorem  tariffs (i.e. excluding the ad valorem  part of alternate rates) involve decimal 
rates38; alternate duties apply to 0.7% of total tariff lines (88). Tariff rates continue to range from 
zero to 887.4% ( Table A3. 1). Almost 85% of rates are 10% or below, and rates of over 30% apply 
to 3.4% of tariff items (Chart  3.2). The Korean tariff could be rationalized, for example, by reducing 
the large number of different rates and removing decimal rates.  
3.34.   Non-ad valorem  tariffs continue to consist of alternate duties on several tariff items, mainly 
manufacturing products such as cinematographic film and diagnostic or laboratory reagents; the 
specific duty on recorded video tapes in place in 2016 was replaced by a zero rate ( Table  A3.2). 
They apply either the greater (agricultural products) or the lower (other items) component, 
i.e. either an ad valorem  or a specific duty, whereby the ad valorem  alternate rate sets a floor or a 
ceiling on the import duty rate.39 According to calcul ations by the authorities, in 2021 the ad valorem 
equivalents (AVEs) of the specific part of alternate duties could range from zero 
(e.g. cinematographic film, sweet peppers, garlic, chestnuts shelled, jujubes, ginger, pine nuts in 
shell, soybeans, and raw  silk) to 374% (ginger), and most of them were lower than the ad valorem  
component of the alternate duty ( Table A3. 2). These alternate duties form part of Korea's WTO tariff 
binding commitments.40 Alternate duties also apply to 43 agricultural tariff lines  as out -of-quota 
 
38 Excludi ng tariff quotas and alternate tariffs, Korea's tariff rates still range from zero to 72%, and have 
around 42 rates, often with very small rate differences and decimal rates. For example, there are 
20 ad valorem  rates of 10% or below, and around 34% and 11 % of tariff lines have a rate of 8% and 6.5%, 
respectively . 
39 The authorities indicate that they continue without specific regulations on the application of the higher 
or the lower component of alternate duties for manufacturing items; therefore, taxpayers  may freely choose 
the component to apply.  
40 AVEs were calculated on the specific duty components of 62 of 88 10 -digit tariff lines subject to 
alternate duties. In 5 cases (involving carrots, oak (two tariff lines) and ling chiu mushrooms, and 1 tariff lin e 
under cinematographic film (HS Code 3706105020)), the AVE of the specific duty component was higher than 
the ad valorem  part of the alternate rate, whereas 53 AVEs were lower and 4 were equal to it ( Table A3. 2). 
These calculations are based on the 2019 i mport value and volume supplied by the authorities.  
0%20%40%60%80%100%120%
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Calculations for averages exclude in -quota tariff rates and include AVEs, as available.  In case of unavailability of AVEs the ad 
valorem part of alternate rates is included.   Only HS sections 03, 12, 14, 19 and 21 are fully bound.  Final bound rates are based o n 
the 2021 tariff schedule.
WTO Secretariat calculations, based on data provided by the Korean authorities.Chart 3.1   Average applied MFN and bound tariff rates, by HS section, 2016 and 2021
Note:
Source:01   Live animals & products        
02   Vegetable products
03   Fats & oils      
04   Prepared food, etc.
05   Mineral products
06   Chemicals & products07   Plastic & rubber
08   Hides & skins
09   Wood & articles
10   Pulp, paper, etc.
11   Textiles & articles
12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.
15   Base metals & products
16   Machinery
17   Transport equipment
18   Precision instrument19   Arms & ammunition
20   Miscellaneous manufacturing
21   Works of art, etc.Average applied rate 2016 and 2021 
(14.1% and 13.9%, respectively)Average final bound rate
(18.1%)MFN 2016 MFN 2021 Final boundWT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  duties; they involve very high minimum ad valorem  rate components peaking at levels such as 
566.8% on pine nuts, 611.5% on jujubes, and 630% on sesame seeds (Section  3.1.3.8.1).  
Chart 3.2 Distribution of MFN tariff rates, 2016 and 2021  
 
Note:  Figures above the bars refer to the percentage of total lines. Calculations exclude in -quota rates and 
include AVEs, as available. In case of unavailability of AVEs, the ad valorem  part of alternate rates  is 
included.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.35.   In the Doha Development Agenda (DDA) negotiations, Korea supported the elimination of 
non-ad valorem  duties to some extent.41 
3.1.3.2   MFN tariff dispersion and escalation  
3.36.   As at the previous Review, indicators of tariff dispersion and escalation showed little change 
during the review period (Table  3.1 and Chart 3.3).  
 
41 At the time of the 2008 -12 review period, the authorities indicated that non -ad valorem  duties would 
be removed to a large extent from Korea's tariff schedule if agreed at the DDA  negotiation.  
15.9
11.557.7
4.1 4.7
2.61.81.1 0.519.6
11.953.3
4.14.9
2.61.81.1 0.6
05001.0001.5002.0002.5003.0003.5004.0004.5005.0005.5006.0006.5007.0007.500
Duty free >0%-5% >5%-10% >10%-15% >15%-20% >20%-30% >30%-50% >50%-500% >500%-750%
Note:  Figures above the bars refer to the percentage of total lines.   Calculations exclude in -quota rates and include AVEs, as
available.  In case of unavailability of AVEs the ad valorem part of alternate rates is included.   
Source:  WTO Secretariat calculations, based on data provided by the Korean authorities.Number of tariff linesChart 3.2  Distribution of MFN tariff rates, 2016 and 2021
MFN 2016 MFN 2021WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Chart 3.3 Tariff escalation by 2 -digit ISIC industr y, 2016 and 2021  
 
n.a. Not applicable.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.1.3.3   "Flexible" tariffs  
3.37.   Korea continues to apply temporary MFN duties (termed "flexible" tariffs).42 The flexible tariffs 
mechanism includes  not just the adjustment and seasonal duties (see below), but also autonomous 
tariff quotas and "usage" tariffs, as well as safeguard and special safeguard duties 
(Sections  3.1.3.8.2 and 3.1.6.2).43 The system allows the increase or decrease of certain tar iffs at 
the authorities' discretion, providing considerable scope to encourage or discourage imports of 
 
42 Pursua nt to Articles 51 through 75 (except for Article  73) of the Customs Act (on anti -dumping duties, 
countervailing duties, seasonal duties, adjustment duties, etc.). KCS, Guide to Customs Declarations  (2015). 
Viewed at: http://customs.go.kr/download/report_guidance_booklet_eng.pdf . 
43 Autonomous tariff quotas are also referred to as flexible tariffs and are discussed in Section 3.2.4.2. 
WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
n.a.n.a.0%10%20%30%40%50%60%70%80%90%100%
Food,
beverages
and tobaccoTextiles and
leatherWood and
furniturePaper,
printing
and
publishingChemicals Non-
metallic
mineral
productsBasic metal Fabricated
metal
products
and
machineryOtherChart 3.3    Tariff escalation by 2 -digit ISIC industry, 2016 and 2021
n.a.n.a.0%10%20%30%40%50%60%70%80%90%100%
Food,
beverages
and
tobaccoTextiles
and leatherWood and
furniturePaper,
printing
and
publishingChemicals Non-
metallic
mineral
productsBasic metal Fabricated
metal
products
and
machineryOtherAverage applied rate in manufacturing
(11.3%)
n.a.   Not applicable.
Source:  WTO Secretariat calculations, based on data provided by the Korean authorities.First stage of processing Fully processed Semi-processedAverage applied rate in manufacturing
(10.9%)2016
2021WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  particular items to stabilize prices, protect local producers, ensure a steady supply, and implement 
other industrial policy. In 2016, the authorities r educed the role of the flexible tariff system on price 
stabilization, considering the country's low inflation and continued drops in prices of oil and other 
raw materials and sought to increase its support for vulnerable domestic industries; the situation 
remains unchanged. Furthermore, at the time of the previous Review, to help offset a rise in costs 
for farmers, the Government offered lower import duties on animal feed.  
3.38.   The number of items covered by flexible tariffs increased from 145 (HS six -digit leve l) in 2016 
to 184 in 2021. According to the authorities at the time of the previous Review, the leading principle 
of flexible tariffs was to maintain their application to a minimum as prescribed by the law. The 
Government intended to reduce or gradually re move these tariffs in line with the reduction of tariff 
rates resulting from DDA and RTA negotiations.  
Adjustment duties  
3.39.   Adjustment duties aim to protect domestic industries from import surges and lighten the 
shock from trade liberalization. They only affe ct MFN rates and are set annually by the MOEF in 
accordance with the request from the relevant government authorities.  
3.40.   In 2021, adjustment duties applied to 19 six -digit tariff items (or 14 different types of 
product), covering mainly certain fish and seaf ood, rice preparations, sauces, plywood, and naphtha, 
compared to 18  six-digit tariff items (or 13 different types of product) in 2016 ( Table A3. 3).44 
Ad valorem adjustment duties now range from 0.5% on naphtha to 50% on steamed or boiled rice, 
compared to  general rates ranging from 8% (e.g. rice, plywood, and sauces) to 30% (oak 
mushrooms), with the biggest difference affecting rice preparations.  Alternate duties, where 
applicable duties are the higher of an ad valorem  or a specific duty, affect four six -digit tariff lines 
in 2021. Several products subject to adjustment duties, such as certain fish and plywood items, 
remain unbound; adjustment duty rates for the four bound items are below their binding level. In 
2017, the adjustment tariff for frozen saury was lowered from 28% to 26% in consideration of 
increased demand for fish bait.45 In 2021, this tariff was adjusted to 24%, considering the outbreak 
of COVID -19 and domestic and international market situations.  
Seasonal duties  
3.41.   As at the previous TPR, the a uthorities indicate that no seasonal duties were applied on an 
MFN basis during the review period. Preferential tariff treatment of certain agricultural items under 
the RTAs/FTAs with Chile, the European  Union, Peru, and the United  States is applied only d uring 
the Korean off -season. In the case of the Korea –Chile FTA, seasonal preferential duties have been 
levied on grapes imported from Chile since 2004; under both the Korea -European  Union FTA and 
the Korea –Peru FTA, seasonal preferential duties on grapes and oranges originating in these trading 
partners have been in place since 2011. Under the Korea –United  States FTA, in addition to oranges 
and grapes, seasonal preferential duties have applied to potatoes for chipping since the entry into 
force of t he Agreement in March 2012. Seasonal preferential duties are also levied: on potatoes for 
chipping and pumpkins (buttercup squash) from New  Zealand since 2015 under the 
Korea -New Zealand FTA; on potatoes for chipping from Canada since 2015 under the Korea –Canada 
FTA; and on potatoes for chipping, oranges, mandarins, grapes, and kiwis from Australia since 2014 
under the Korea –Australia FTA. Furthermore, the seasonal duties have been levied on grapes under 
the Korea –Colombia FTA since it entered into force in  2016. Most recently, under the 
Korea -United  Kingdom FTA, seasonal duties have been applied to grapes and oranges since 
1 January 2021.  
3.1.3.4   Bound tariff  
3.42.   Korea bound rates at 90.7% (2021 tariff schedule) of all tariff lines in the Uruguay Round, 
covering 99.7% of agricultural tariff lines (excluding seaweeds and bait for fishing) and 89.2% of 
 
44 Naphtha/natural gas liquid was added to the list, while croakers, limited to sciaenidae  and excluding 
yellow corvina and yellow croaker, were removed.  
45 USDA Foreign Agricultural Service (2018), 2018 Korea's Adjustment and Quota Tariffs Schedule , GAIN 
Report Number KS1805, 30 January. Viewed at: https://kr.usembassy.gov/wp -content/uploads/sites/75/KS -
1805-2018-Korea s-Adjustment -and-Quota -Tariffs -Schedule_1 -30-2018.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  industrial tariff lines (WTO definitions). On a tariff classification basis, 79.9% of agricultural tariff 
lines (HS  Chapters 01 -24) and 93% of industrial lines (HS Chapters  25-97) are bound.  
3.43.   The simple average bound tariff rate rose slightly during the review period due to 
nomenclature change (Table  3.1); as of 2009, all Uruguay Round commitments were fully 
implemented and those related to the Declaration on the Expansion of  Trade in Information 
Technology Products as of 1 July 2021.46 Following the past "tariffication" of non -tariff measures, 
very high bound (and applied) tariffs apply to many commodities. Korea's average bound rates on 
agricultural and industrial products ( WTO definitions) are 69.0% and 8.8%, respectively (in 2021). 
The overall gap between the simple average MFN applied and bound rates stands at 4.2  percentage 
points (4.4 in 2016). The gap is 8.6  percentage points for rates affecting agricultural items 
(WTO  definition). Korea uses this scope mainly to raise MFN tariffs annually by applying higher 
adjustment duties (Section 3. 1.3.3) on a number of products to temporarily protect domestic 
producers.  
3.44.   Korea has been included in several collective waivers that sus pended the application of the 
provisions of Article  II of GATT  1994 in order to allow it to reflect the changes resulting from the 
HS 2012 and HS 2017 nomenclatures in its Schedule of T ariff Concessions.47 Since 1  January  2012, 
Korea has benefited from col lective waivers for the introduction of HS  2012 changes in its Schedule 
of Tariff Concessions.48 Since 1  January  2017, Korea has benefited from the collective waivers for 
the introduction of HS  2017.49 
3.1.3.5   Duty concessions/exemptions  
3.45.   The application of import duty relief through duty concessions and exemptions granted by the 
MOEF for various purposes, su ch as industrial development (Articles 88 -109 of the Customs Act), 
has not changed since the previous Review. The Customs Act also allows duty -free imports of aircraft 
parts and semiconductor manufacturing equipment not produced domestically. The revenue f orgone 
from import duty relief was USD  1 billion (equivalent to 12% of total tariff revenue) in 2015; no 
recent data were available from the authorities (with resulting revenue forgone amounting to 
KRW 117 billion in 2018, up from KRW  70.8 billion in 2014) .50 
COVID -19-related measures  
3.46.   In an effort to fight the shortage of personal protective equipment (PPE) supply caused by 
the COVID -19 pandemic, Korea temporarily eliminated import tariffs on surgical and sanitary masks 
and melt blown filters (HS  6307.90.90 , 5603.12.10, 5603.12.90, and 5603.92.00).51 In addition, in 
April 2020, the Government deferred taxes on crude oil imports for three months to help refiners 
and other buyers weather a slump in fuel demand.52 Also, the KCS introduced the measure for the 
determent of customs duty payment from 6 February 2020 to support businesses that suffer liquidity 
shortages amid the COVID -19 economic crisis. The deferment measure allows companies to delay 
the payment of customs duties by suspending the customs authoritie s' collection or enforcement 
procedures, such as demands for duty payment or seizure in relation to overdue customs duties. 
 
46 WTO document G/MA/TAR/RS/433, 27 May 2016.  
47 Modifications and rectifications to Schedule LX resulting from the HS  2002 and HS 2007 changes 
became effective as of 1 July 2011 and 5 November 2015 (pur suant to the Committee on Market Access 
approval on 7  July 2015), respectively. WTO  documents WT/L/808, 16 December 2010; WT/Let/804, 
25 July 2011; and WLI/100, 23  November 2015.  
48 WTO documents WT/L/998, 12 December 2016; WT/L/1028, 1 December 2017; WT/L/ 1050, 
13 December 2018; WT/L/1084, 12 December 2019; and WT/L/1106, 21 December 2020.  
49 WT documents WT/L/999, 12 December 2016; WT/L/1029, 1 December 2017; WT/L/1051, 
13 December 2018; WT/L/1085, 12 December 2019; and WT/L/1107, 21 December 2020.  
50 WTO do cuments G/SCM/N/343/KOR, 22 July 2019 and G/SCM/N/284/KOR, 6 July 2015.  
51 WTO document G/MA/W/147, 14 April 2020.  
52 Import taxes for April, May, and June 2020 would be postponed, giving crude processors financial 
relief amid the current collapse in demand.  The tax is KRW  16/litre (USD  2.09/barrel), a potentially significant 
savings for an industry that is facing negative profit margins on refined fuels. MOTIE expected the tax deferral 
to save Korea's oil importers about KRW  900 billion over the three months . Companies that buy oil from 
suppliers outside the Middle East already receive rebates as high as KRW  16/litre on their import taxes, as part 
of government efforts to diversify supplies. Argus, "South Korea Defers Crude Import Taxes to Aid Refiners", 
8 April 2020. Viewed at: https://www.argusmedia.com/en/news/2094571 -south -korea -defers -crude -import -
taxes -to-aid-refiners . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  The KCS extended the time limit for customs duties paid without security (up to a maximum of 
12 months).  
3.1.3.6   "Usage" tariff rates  
3.47.   Import ed inputs for specified end -uses may be exempt from tariffs under the "usage" tariff 
rates scheme (Article  83 of the Customs Act). Korea continues to treat usage tariff rates, 
autonomous tariff quotas, and duty concessions on inputs as part of its industri al policy, to encourage 
certain manufacturing activities (Sections 3.1.3.5 and 3.3.1). Since 2012, usage tariff rates have 
been used for inputs in activities such as sowing, animal feeding, and semiconductor manufacturing. 
No further information on this po licy instrument was available from the authorities.  
3.1.3.7   Tariff preferences  
3.48.   Korea's efforts to expand its bilateral and regional free trade agreements during the review 
period meant that its simple average tariff rate on imports from RTAs/FTAs (e.g. 2.5% for im ports 
from the United  States, 6.1% from Colombia, 2.9% from the European  Union, 5.4% from ASEAN, 
and 5% from Viet  Nam), the APTA (13.3%), and LDC trading partners (7.8%) remained considerably 
below the 13.9% MFN average tariff rate (Table 3.2). However, it  remains unchanged for imports 
from countries receiving preferences under the Global System of Trade Preferences Among 
Developing Countries (GSTP) and the GATT Protocol Relating to Trade Negotiations Among 
Developing Countries (TNDC) (Section 2.5.2 and Tab le 3.2). Since its last Review, Korea has kept 
virtually unchanged the number of items eligible for unilateral (non -reciprocal) duty -free and quota -
free tariff preferences to LDCs (Section 2.5.3 and Table  3.2). The Minister of Economy and Finance 
may withd raw or modify unilateral trade preferences if considered inappropriate, taking into account 
the country's income level, volume of imports, and international competitiveness of the product and 
country concerned. The KCS maintains a webpage containing all pr eferential import tariffs 
(https://www.customs.go.kr/ftaportalkor/ad/ftaCnvn/txrtInfo.do?mi=3526 ). RTAs signed with the 
European  Union (in force since January 2011) and the United  States (renegotiated agreement in 
force since January 2019) have led to a substantial elimination of tariffs; however, the Government 
continues to use "adjustment tariffs" according to a schedule published at the start of each year to 
manage  imports of specific items, largely to prevent dumping and protect domestic producers.53 
Table 3.2 Summary analysis of the preferential tariff, 2021  
 Total  WTO agriculture  WTO non -agriculture  
Average 
(%) Duty -
free 
ratesa 
(%) Coverageb 
(%) Average 
(%) Duty -free 
ratesa (%) Average 
(%) Duty -free 
ratesa (%) 
MFN 13.9 19.6  
60.4 5.4 6.3 22.0 
Regional 
Agreements         
 APTAc 13.3 19.6 21.1 59.9 5.4 5.7 22.0 
 APTA for 
Bangladesh  12.7 26.8 26.5 59.5 7.6 5.0 30.0 
 APTA for 
Lao PDR 12.7 26.8 26.5 59.3 7.8 5.0 29.9 
 ASEAN  5.4 91.1 78.2 35.8 68.4 0.4 94.8 
Bilateral 
Agreements         
 Australia FTA  5.9 89.9 78.5 40.9 45.9 0.1 97.0 
 Canada FTA  5.0 91.2 78.3 35.0 54.5 0.1 97.3 
 Central America 
 FTA        
 Costa Rica  8.3 80.8 75.9 54.4 19.3 0.8 90.9 
 El Salvador  8.8 79.5 75.8 56.4 17.0 0.9 89.8 
 Honduras  8.4 80.5 75.4 55.1 19.2 0.8 90.5 
 Nicaragua  8.4 80.5 75.8 54.7 19.3 0.8 90.5 
 Panama  9.1 79.4 75.9 57.6 16.6 1.1 89.8 
 Chile FTA  7.0 95.8 76.2 49.3 70.6 0.0 100.0d 
 China FTA  8.7 61.0 72.7 52.2 25.6 1.6 66.8 
 Colombia FTA  6.1 88.8 78.9 41.6 49.1 0.2 95.3 
 EFTA FTA         
 
53 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https:// country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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   Total  WTO agriculture  WTO non -agriculture  
Average 
(%) Duty -
free 
ratesa 
(%) Coverageb 
(%) Average 
(%) Duty -free 
ratesa (%) Average 
(%) Duty -free 
ratesa (%) 
 Iceland  8.2 88.5 73.2 58.1 21.1 0.1 99.5 
 Norway  8.3 88.2 71.7 58.4 18.9 0.1 99.5 
 Switzerland  8.3 87.9 70.4 58.2 17.3 0.1 99.5 
 EU FTAe 2.9 97.8 79.8 20.5 84.9 0.0 99.9 
 India FTA  8.1 86.7 72.0 54.6 34.5 0.5 95.2 
 New Zealand 
 FTA 6.5 89.9 78.2 45.5 44.7 0.1 97.3 
 Peru FTA  3.9 97.2 79.4 27.5 80.4 0.0 99.9 
 Singapore FTA  7.4 89.2 70.0 47.4 66.0 0.8 93.0 
 Turkey FTA  8.2 85.0 72.9 55.5 24.0 0.4 95.0 
 United Kingdom 
 FTAe 2.9 97.8 79.8 20.5 84.9 0.0 99.9 
 United  States 
 FTA 2.5 97.8 80.0 17.8 85.5 0.0 99.9 
 Viet Nam FTA  5.0 94.7 78.9 34.2 73.4 0.2 98.2 
TNDC  13.9 19.6 0.1 60.0 5.4 6.3 22.0 
GSTP  13.9 19.6 0.1 60.0 5.4 6.3 22.0 
LDC 7.8 89.9 70.3 51.4 59.3 0.7 94.9 
a Duty-free lines as a percentage of total tariff lines.  
b Per cent of total number of lines. Only rates that are lower than the corresponding MFN rate are 
taken into account.  
c Preferential rates under the APTA are applicable to China, Sri Lanka, Bangladesh, India, and 
Lao People's Democratic Republic.  
d Two tariff lines under fishery products have a duty rate >0%.  
e As at 1 July.  
Note:  Calculations are based on national tariff l ine level (10 -digit), excluding in -quota rates and including 
AVEs, as available, provided by the authorities. In case of unavailability of AVEs, the ad valorem  part 
of alternate rates is included.  
Source:  WTO Secretariat calculations, based on data provide d by the authorities.  
3.1.3.8   Tariff quotas  
3.1.3.8.1   Agricultural tariff quotas  
3.49.   Korea applied TRQs, under its multilateral  agricultural market access commitments, on 
229 10-digit tariff items (including rice as from 2015 (Sections  3.1.5.2 and  4.1.2.1.1)) in 2021 
(Table A3. 4), the same number as in 2015 and 2016. Whereas in -quota tariff rates are much lower, 
ranging from zero to 50%, many out -of-quota rates remain very high (e.g.  beans, pine nuts, green 
tea, jujubes, cereal grains, starches, and ginseng) and peak at 887.4% ( manioc) ad valorem . Many 
out-of-quota rates are alternate duties. According to the latest data provided by the authorities, the 
average fill rate of tariff quotas dropped to 58% in 2020 (59.5% in 2015). Fill ratios were low for 
several product groupings ( Table A3. 5). As indicated by the authorities at the time of the previous 
Review, the consistently large unfilled share of TRQs on some items, even with relatively low in -quota 
tariffs, resulted, inter alia,  from lack of sufficient or decreased domestic dema nd, increased imports 
from RTA/FTA partners, increased domestic production, or sanitary measures related to the outbreak 
of diseases in exporting countries. They also indicated that the fill rate of TRQ products allocated 
through state trading or auctionin g (see below) is much higher (88% in 2020, compared to 78% in 
2015) than the level attained under the first -come, first -served allocation method (29% in 2020, 
compared 42% in 2015). Other reasons for low fill rates in 2020 are decreased domestic demand 
due to COVID -19 and substitution by FTA duty exemptions. Moreover, when certain TRQ volume is 
below domestic demand, the M AFRA increases TRQ import volume by expanding quotas; as of 2021, 
15 products (17 in 2015) were imported at a much higher level than originally committed, and in 
volume terms, 2,639,727 tonnes (5,069,283  tonnes in 2015) of additional TRQ products entered the 
Korean market.  
3.50.   Tariff quotas continue to be administered or allocated by 24 different organizations as of 2021 
(same as in 2016), including ministries, state trading entities (such as the Korea Agro -Fisheries and 
Food Trade Corporation (aT) commissioned by MAFRA), and various producer associations. In some 
cases, the administering agency is owned or controlled by domestic producers competing with the 
imported item. With the exception of the National Agricultural Cooperatives Federation, the National WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Forestry  Cooperative Federation producers' associations include members that process foodstuff 
imported under tariff quotas. Credible import administration would require that directly interested 
parties are not directly involved in controlling imports. As at the t ime of the previous TPR, the 
authorities indicated that in most cases the administering agency (e.g. Korea Feed Association, the 
Korea Corn Processing Industry Association, the Korea Paper Association, the Korea Dairy Industry 
Association, and the Korean S oybean Processors' Association) does not produce goods competing 
with the imported items but utilizes them for processing foodstuff or for breeding animals, as 
domestic agricultural production cannot meet demand for ingredients or raw materials used for 
processed food.  
3.51.   Mechanisms used for quota allocation (depending on the product) include auctioning, 
allocation to designated agency, real demand allocation54, and a combination thereof. State trading 
enterprises impose additional mark -ups on top of the in -quota tariff on various items 
(Section  3.3.5.1) . Most state trading enterprises are engaged directly in marketing imports by selling 
through wholesale markets or distributing directly to final users. State trading enterprises, producer 
associations, processo r associations, and importing companies allocate quotas. The authorities 
indicate that, as of 2021, as in 2016, 2 items (rice and sesame seeds) were state traded, 2 items 
(chestnuts and ginseng) were auctioned, 49 items (including maize, barley, and ginger ) were 
allocated on a real demand basis, and 10 (11 in 2016) other items (including potatoes and onion) 
were allocated through state trading and other methods.  
3.1.3.8.2   Autonomous tariff quotas  
3.52.   Korea grants concessional tariffs using autonomous tariff quotas, mainl y for raw materials, 
inputs, semi -processed goods, components, parts, and machines ( Table A3. 6); this measure is 
aimed at helping stabilize prices through increased supply and/or increasing the competitiveness of 
the domestic agricultural and livestock ind ustries, which are faced with increasing pressure from 
imports under RTA/FTA preferential treatment challenging domestic products.55 In 2020, these TRQs 
covered 134  six-digit tariff items (including 4 additional sub -items under the same tariff line) (116  in 
2016), of which 114 items were quota -free; in 2021, they covered 150 six -digit tariff items, of which 
124 items were quota -free. 
3.53.   To increase the competitiveness of the domestic agricultural and livestock industries, in 2018 
Korea voluntarily announced du ty-free MFN TRQs for the feed grain complex, made up of 
19 commodities (as of June 2021) including corn, soymeal, barley, and oats.56 In 2020, Korea 
proceeded with listing 17 import -depending feeding commodities (19 commodities in 2017), 
including maize (c orn), soymeal, barley, and oats.57 The tariff quotas were reduced for whey, manioc 
chips for spirits, barley, maize, soybeans, fodder roots, lactose, wheat, and soybean -oil cake, and 
they were increased for sugar, beet -pulp for mushroom farming, and other preparations.58 In-quota 
tariff rates continued to range from zero to 10% (manioc chips for alcoholic beverages), whereas 
out-of-quota rates ranged from 1% to 40% (whey for feeding). Autonomous tariff quotas are revised 
annually.  
 
54 This term refers to quota allocation on a first -come, first -served basis without any qualification 
requirement or quota allocation to buyers meeting certain qualification requirements.  
55 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
56 USTR (2020), 2020 National Trade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/defaul t/files/2020_National_Trade_Estimate_Report.pdf . 
57 Cane molasses for food and oil cake of cotton seeds were removed from the list.  
58 Reduced for whey (from 25,000 MT to 22,000 MT), for manioc chips for spirits (from 135,300 MT to 
118,000  MT), for barley (from 50,000 MT to 40,000 MT), for maize (from 10,000,000 MT to 9,200,000 MT), 
soybeans (from 1,500,000 MT to 1,200,000 MT), for fodde r roots and other vegetables (from 1,217,000 MT to 
600,000 MT), lactose and lactose syrup (from 8,700 MT to 6,500 MT), wheat (56,000 MT to 30,000 MT), 
soybean -oil cake (from 2,451,000 MT to 2,450,000 MT); increased for sugar (from 85,000 MT to 98,000  MT), 
beet-pulp for mushroom farming (from 20,000 MT to 25,000 MT), and other preparations for a kind used in 
animal feeding (from 6,000 MT to 9,000 MT). USDA Foreign Agricultural Service (2017), 2017 Korea's 
Adjustment and Quota Tariffs Schedule , GAIN Report Nu mber KS1704. Viewed at: 
https://kr.usembassy.gov/wp -content/uploads/sites/75/2017/02/KS -1704-2017-Koreas -Adjustment -and-
Quota -Tariffs -Schedule_2 -6-2017.pdf ; and USDA Foreign Agricultural Service (2020), 2020 Korea's Adjustment 
and Quota Tariffs Schedule , GAIN Report Number KS2020 -0003. Viewed at: 
https://www.fas.usda.gov/data/south -korea -2020-koreas -adjustment -and-quota -tariffs -schedule . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.1.4   Other charges affecting im ports  
3.54.   A surcharge levied on petroleum imports (Petroleum Business and Alternative Fuel Business 
Act, 1977, last amended by Act No.  15179, 12 December 2017) continues to provide funds to ensure 
adequate supply and price stability.59 The surcharge on crude o il remains at KRW  16 per litre, and 
Korea's refiners get a similar amount of rebate on oil product exports.  
3.55.   The Government continues to promote oil imports from the Americas, Africa, and Europe, 
including the Russian  Federation (Section 4.3). In 2019, the Government extended freight incentives 
in the form of a rebate on surcharges on imported oils for refiners buying crude oil from regions 
other than the Middle East for three years until the end of 2021.60 Surcharges on non -Middle East 
oil imports are lower to offset their higher transport costs. Korea continued efforts to reduce the 
country's reliance on Middle East crude imports by compensating refiners that import from farther 
away than the Middle East for a part of additional costs; budgetary outlay s relating to these costs 
amounted to KRW  193 billion in 2020 (KRW  47 billion in 2015).61 
3.1.5   Import prohibitions, restrictions, and licensing  
3.1.5.1   Prohibitions  
3.56.   Korea prohibits certain imports (prohibition except under defined conditions), mainly to 
protect human, animal, and plant life and health; safeguard the environment; and comply with other 
international commitments. These product categories include: (i)  narcotics, psychotropic drugs, 
cannabis, and precursors; (ii)  defence materials; (iii)  certain chemicals; a nd (iv)  pollutants.62 Korea 
does not maintain any trade embargoes with other countries. Between 2017 and 2020, there was 
no trade with the Democratic People's Republic of Korea.63 
3.57.   Korea has maintained certain import bans on the importation of food products  from Japan 
since the 2011 Fukushima Daiichi Nuclear Power Plant accident (Section 3.3.3.2); WTO dispute 
settlement proceedings, initiated by Japan on 21 May 2015, were finalized in 2019.64 
3.1.5.2   Quotas  
3.58.   Following the January 2015 rice market liberalization throu gh tariffication, during the review 
period the regime in place continued to operate through a tariff rate quota of 5% (408,700 tonnes 
per year) and a virtually prohibitive 513% out -of-quota duty (see below and Sections 3.1.3.8, 
4.1.2.1.1, and 4.1.3.1).65 After five years of bilateral negotiations, in January 2020, Korea concluded 
 
59 As one of the world's largest importers of oil and liquefied natural gas Korea is likely to remain 
vulnerable to unexpe cted shifts in global energy prices. EIU (2020), Country Commerce: South Korea , August. 
Viewed at: https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf ; Petroleum and 
alternative fuel business act (Article  18). Viewed at: 
https://elaw.klri.re.kr/eng_mobile/viewer.do?hseq=46333&type=part&key=31 . 
60 Platts, " South Korea to grant freight incentives for non -Middle East crude purchases until 2021", 
7 May 2019. Viewed at: https://www.spglobal.com/platts/en/market -insights/latest -news/shipping/050719 -
south -korea -to-grant -freight -incentives -for-non-middle -east-crude -purchases -until-2021. 
61 According to the authorities, compensatory rebates are determ ined as the smallest of the two 
amounts, i.e. the World scale/Actual Freight difference and total rebates -including exports, etc. -should this be 
under KRW  16 per litre, which is surcharge levied on every crude oil imports. In 2017, producers across the 
Middle East supplied around 74% of crude oil flows to Korea, this share dropped to 68% in 2018 and to 64% in 
2019. IHS Markit, Crude Oil Trade: South Korea importing more U.S.  barrels, mitigating potential disruption 
through the Strait of Hormuz, 16 January 2 020. Viewed at: https://ihsmarkit.com/research -analysis/crude -oil-
trade -south -korea -importing -more-us-barrels.html , and WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
62 WTO documents G/MA/QR/N/KOR/2, 31 October 2019 and G/MA/QR/N/KOR/3, 13 October 2020.  
63 Trade with the Democratic People's Republic of Korea requires approval from the Ministry of 
Unification; bilateral trade was prohib ited by the Republic of Korea as of 24 May 2010, except for goods 
manufactured in the Kaesong (Gaeseong) Industrial Complex (located in the Democratic People's Republic of 
Korea) until its closure on 10 February 2016. WTO document WT/TPR/S/346/Rev.1, 6 Jan uary 2017.  
64 Detailed information on the dispute may be viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds495_e.htm . Korean Broadcasting System . Viewed 
at: https://world.kbs.co.kr/service/news_view.htm?lang=e&Seq_Code=156172 . 
65 As it was indicated at the time of the previous TPR by the authorities, this out -of-quota rate was 
calculated in conformity with the principles of the WTO Agreement on Agriculture. The authorities consider that 
this rate is not virtually prohibitive. WTO  document WT/TPR/S/346/Rev.1, 6 January 2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  the process of modification and rectification of its Schedule of Concessions (Section 3.1.3.4), which 
now incorporates the TRQ on rice imports, and received consent from WTO Member s.66 MAFRA has 
been the only organization in charge of importing and managing minimum market access (MMA) 
commitments on rice since 1995 (Section 3.3.5.1); its agency, aT, is in charge of rice trading.67 
Imported rice is procured through open bidding; rice  for table use is sold by aT through open bidding, 
and rice for food processing by local authorities by MAFRA .68 Annual rice imports under the MMA 
commitments stood at 408,700  tonnes; actual imports rose from to 449,355 tonnes in 2018 to 
449,666 in 2019.69 
3.59.   According to data provided by the authorities, the cost of rice producers' protection in terms 
of consumer burden, i.e. the ratio of the domestic price compared to the international price, rose 
from 1.94 in 2015 to 2.52 in 2019. At the time of the previou s TPR, the authorities indicated that, 
as Korea continued to impose the in -quota tariff of 5% after tariffication, the implementation of the 
513% out -of-quota rate would not affect the ratio; most of the imported rice is in -quota .70 
3.1.5.3   Licensing  
3.60.   During the re view period, the legislative framework in this area was expanded and revised.71 
Import approval or authorization continues to be governed by the Foreign Trade Act and 64 other 
laws (56 in 2016).72 The M OTIE regularly updates the Export -Import Notice that l ists items under 
import restriction; as of April 2021, the only item on the list remained aircraft parts. MOTIE also 
updates the Consolidated Public Notice containing all export and import certification requirements. 
Import licensing procedures are maintai ned to: (i)  protect public morals; (ii)  protect human, animal, 
and plant life and health, hygiene, and sanitation; (iii)  protect aquatic animal and aquatic plant 
health; (iv)  safeguard the environment; (v)  protect national security; and (vi) comply with 
international commitments.73 In 2016, these requirements covered some 3,000 six -digit HS tariff 
items, including petroleum, liquefied petroleum gas (LPG) , agricultural fertilizers, crop seeds, 
animals and animal products, nuclear materials , narcotics, foods and food additives, foreign 
publications, firearms, and explosives; no recent data were available from the authorities.  
 
66 WTO document WT/Let/1461, 24 January 2020.  
67 According t o Korea's latest WTO notifications on state trading, domestic sales by MAFRA 
(i.e. imported rice) represented 0.69%, 1.20%, 1.39%, and 1.46% of national consumption in 2016, 2017, 
2018, and 2019, respectively. A global tariff quota allocated on an MFN basi s according to Korea's schedule 
(WTO document G/MA/TAR/RS/98, 6 January 2005) has been in place since 2015. WTO documents 
G/STR/N/16/KOR, 14 July 2016; G/STR/N/17/KOR, 9 July 2018; G/STR/N/18/KOR, 12 October 2020; and 
WT/TPR/S/346/Rev.1, 6 January 2017.  
68 Imported table rice reaches consumers through trade marketing routes, wholesalers, and dealers. In 
2015, 592 companies participated in the public auction, including grain wholesale companies (329) and 
agricultural produce wholesale or retail companies (263 ). In practice, any company can participate in the 
auction as long as it is registered and equipped with the required facilities.  
69 WTO documents WT/TPR/S/268/Rev.1, 8 November 2012; WT/TPR/S/346/Rev.1, 6 January 2017; 
G/STR/N/15/KOR, 17 October 2014; G/ST R/N/16/KOR, 14 July 2016; G/STR/N/17/KOR, 9 July 2018; and 
G/STR/N/18/KOR, 12 October 2020.  
70 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
71 New regulations included Special Act on the Safety of Products for Children; Energy Use 
Rationalization Act; Sp ecial Act on Imported Food Safety Control; Hygiene Products Control Act; Act on 
Registration, Evaluation, etc. of Chemicals; Persistent Organic Pollutants Control Act; Act on Chemical Products 
and Biocides; Act on Protective Action Guidelines Against Radia tion in the Natural Environment; and Plant 
Protection Act. WTO document G/LIC/N/3/KOR/13, 2 December 2020.  
72 WTO document G/LIC/N/3/KOR/13, 2 December 2020.  
73 With respect to international commitments, Korea is a participant in the following conventions an d 
treaties: Kimberley Process; Rotterdam Convention on the Prior Informed Consent Procedure for Certain 
Hazardous Chemicals and Pesticides in International Trade; Basel Convention on the Control of Transboundary 
Movements of Hazardous Wastes and their Disp osal; Stockholm Convention on Persistent Organic Pollutants 
(POPs); Montreal Protocol on Substances that Deplete the Ozone Layer; Convention against Illicit Traffic in 
Narcotic Drugs and Psychotropic Substances; Convention on International Trade in Endange red Species of Wild 
Fauna and Flora (CITES); the Chemical Weapons Convention; the Biological Weapons Convention; and the 
Nuclear Non -proliferation Treaty.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.61.   The export control system on strategic items that also have import -related implications was 
modified by revising the Foreign Trade Act and related regulations (i.e. the Regulations on Export 
Control of Strategic Goods) in September 2019 and June 2020 (Section 3.2.3.2).74 
3.62.   Implementation of Korea's import approval and authorization regime is the responsibility of 
15 minist ries and/or agencies, an increase from 13 in 2016 due to the reorganization and 
restructuring of some agencies.75 As indicated by the authorities at the time of the previous Review, 
import licence applications are screened or checked in a "fair" manner.  
3.63.   During the review period, Korea submitted 39 notifications on new laws and regulations, as 
well as two Replies to the Questionnaire on Import Licensing Procedures (for 2019 and 2020) to the 
WTO Committee on Import Licensing.76 
3.1.6   Anti-dumping, countervailing,  and safeguard measures  
3.64.   According to Korea's last WTO notification on laws and regulations, the main legal framework 
governing contingency measures remained virtually unchanged since March 2011.77 Contingency 
(trade remedy) measures remain authorized under  the Customs Act (last amended in 2020) and the 
Act on the Investigation of Unfair International Trade Practices and Remedy Against Injury to 
Industry (2001) (last amended in 2017), and implemented under their Enforcement Decrees last 
amended in 2020 and 2 016, respectively.78 The revision of the Enforcement Decree of the Customs 
Act, in force as of 1 January 2021, involved the strengthening of the procedural interest protection 
of parties, supplementing the investigation procedure, and amending the industry  injury 
investigation procedures.  
3.65.   Korea's RTAs haven specific trade remedies provisions. At the time of the previous Review, 
five of its RTAs contained a specific trade remedies chapter in which the parties' WTO rights and 
obligations on the application of  safeguard, anti -dumping, and countervailing measures were 
preserved.79 Certain provisions requiring clarification included: (i)  the possibility of excluding imports 
of products covered under the relevant bilateral agreement from the application of safegua rd 
measures80; (ii) the provision of written notice of an application for anti -dumping measures81, or 
anti-dumping and countervailing measures, prior to the initiation of an investigation82; (iii)  the 
possibility of holding a meeting or consultations prior  to the initiation of an anti -dumping and 
countervailing measure investigation83; (iv)  the transmission of written information regarding 
procedures for requesting price undertakings and an obligation to duly consider or give reasonable 
consideration to und ertakings proposed or requested by exporters84; (v) the consideration of 
 
74 Under the previous rules, all 29 signatories to the four major export controls systems on strategic  
goods, including the Wassenaar Arrangement, that were classified as "Region A" countries benefited from 
simplified export screening, while other countries were classified as "Region B." Under the revised rules, 
Region  A has been divided into A1 and A2, th e latter referring to countries that do not run their systems in line 
with the principles of the four major systems, despite being signatories to such agreements. Exports from 
A2-listed countries need to receive comprehensive or separate authorization ever y three years in principle, 
which represents a tightening of regulations that effectively relegates them to a level on par with Region B. The 
Hankyoreh , "Despite S. Korea's New Export Controls, Both Sides Should Still Seek Dialogue", 13  August 2019. 
Viewed  at: http://english.hani.co.kr/arti/english_edition/english_editorials/905599.html . 
75 The relevant changes included: (i)  name changes (Ministry of Government Admi nistration and Home 
Affairs into Ministry of the Interior and Safety; Ministry of Health and Welfare into Ministry of Food and Drug 
Safety; National Tax Administration into Ministry of Economy and Finance); and (ii)  new ministries (Ministry of 
Oceans and F isheries; Nuclear Safety and Security Commission). WTO document G/LIC/N/3/KOR/13, 
2 December 2020.  
76 WTO documents G/LIC/N/3/KOR/12, 20 December 2019 and G/LIC/N/3/KOR/13, 2 December 2020.  
77 WTO document G/ADP/N/1/KOR/6, 23 March 2011.  
78 Korea Trade Commis sion, Customs Act . Viewed at: 
https://www.ktc.go.kr/en/pageLink.do?link=/contents/en/EG25110 . 
79 Korea -Australia FTA, Articles 6.5 and 6.8(1); Korea -Canada FTA, Articles 7.1(1) a nd 7.7(1)(a); 
Korea -China FTA, Articles 7.5 and 7.7; Korea -New Zealand FTA, Articles 7.6 and 7.7(1); Korea -Viet Nam FTA, 
Articles 7.5 and 7.6(1); and WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
80 Korea -Australia FTA, Article  6.5; Korea -Canada FTA, Article  7.1(1); Korea –New Zealand FTA, 
Article  7.6; and Korea -Viet Nam FTA, Article  7.5. 
81 Korea -Australia FTA, Article  6.9(1); and Korea -New Zealand FTA, Article  7.8(1).  
82 Korea -Canada FTA, Article  7.7(2); Korea -China FTA, Article  7.8; and Korea -Viet Nam FTA, Article  7.7. 
83 Korea -Canada FTA, Article  7.7(2); Korea -China FTA, Article  7.8; and Korea -Viet Nam FTA, Article  7.7. 
84 Korea -Australia FTA, Article  6.10; Korea -Canada FTA, Article  7.7(4); Korea -China  FTA, Article  7.9; 
Korea -New Zealand FTA, Article  7.9; and Korea -Viet Nam FTA, Article  7.8. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  applications for anti -dumping measures with respect to goods on which anti -dumping measures have 
been terminated in the previous 12  months as a result of a review85; (vi) the applicat ion of the 
de minimis  dumping margin threshold set out in Article  5.8 of the Anti -Dumping Agreement in new 
shipper reviews86; and (vii)  the creation of a Committee on Trade Remedies, to be convened at least 
once a year, to oversee the trade remedies chapte r of the relevant RTA and to discuss various other 
matters relating to trade remedies agreed by the parties.87 
3.66.   The Korea Trade Commission (KTC), under MOTIE,  administers the  measures and investigates 
and determines whether imports are dumped or subsidized and whether they cause or threaten to 
cause injury to the domestic industry. KTC investigations under emergency safeguard provisions 
determine whether imports have caused or threatened to cause "serious" injury to the domestic 
industry. The decision on the  imposition of anti -dumping and countervailing duties is taken by the 
MOEF.  
3.1.6.1   Anti-dumping and countervailing measures  
3.67.   During the review period, recourse to anti -dumping initiation action remained relatively 
stable, but there has been an increase in the numb er of definitive measures in place.88 Between 
2016 and 2020, Korea initiated 24  anti-dumping investigations (20 in 2011 -15) involving, inter alia , 
ethyl acetate (China, India, Japan, and Singapore), PET film (China and India), oriented 
polypropylene film ( China,  Indonesia, and Thailand), uncoated paper (Brazil, China, and Indonesia), 
glassine paper (China,  Chinese  Taipei, Italy, and Japan), plywood (China, Malaysia, and Viet  Nam), 
coniferous wood plywood (China), structural steel sections (China), stainless  steel bar (India, Japan, 
and Spain), stainless steel plate (Japan), and presensitized aluminium plate for offset printing 
(China).89 As of 30  March  2021, 39 anti -dumping measures (32 in 2015) were in force mainly on 
PET film (5 cases), stainless steel bar  (5 cases), ethyl acetate (4 cases), ethanolamine (4 cases), 
oriented polypropylene film (3 cases), coated printing paper (3 cases), ferro -silico-manganese 
(3 cases), butyl glycol ether (2 cases), plywood (2 cases), ceramic tile (1  case), coniferous wood 
plywood (1 case), float glass (1 case), structural steel sections (1 case), stainless steel plate 
(1 case), galvanized low -carbon steel wires (1 case), presensitized aluminium plate for offset 
printing (1 case), and valves for pneumatic transmissions (1 cas e). As of 31 December 2020, action 
affected mostly products originating in Asia (32,  mainly China (11), Japan (6), India (4), Thailand 
(3), Malaysia (2), and Chinese  Taipei (2)), and to a lesser extent the European  Union (Finland, 
France, Italy, and Spain (4)) and the United  States (2).90 Virtually all final measures consisted of 
definitive duties (except for two undertakings). Between 2016 and end -December 2020, Korea 
completed 32  sunset reviews, 27 of which resulted in the extension of measures; 7 measures were 
terminated without a review.91 
3.68.   Korea has been a respondent in two WTO dispute settlement cases in this area. Regarding 
the case on Korea's anti -dumping duties on valves for pneumatic transmission (pneumatic valves) 
raised by Japan, on 12 Apri l 2018, the panel report was circulated to Members and was appealed by 
Japan and cross -appealed by Korea; on 10 September 2019, the Appellate  Body report was 
circulated to Members and on 28 May 2020 Korea informed the WTO of its compliance in this 
dispute.92 On 18 June 2018, Japan requested consultations with Korea concerning Korea's 
determination to continue the imposition of anti -dumping duties on stainless steel bars from Japan, 
based on the conclusion of the third sunset review of anti -dumping duties on  stainless steel bars 
 
85 Korea -China FTA, Article  7.12; and Korea -Viet Nam FTA, Article  7.9. 
86 Korea -China FTA, Article  7.14. 
87 Korea -Canada FTA, Article  7.8; Korea -China FTA, Article  7.15; and Korea -Viet Nam FTA, Article  7.11. 
88 With 155  cases initiated between 1995 and 2020, Korea remained the world's 12th major user of 
anti-dumping measures. WTO, Anti-dumping Initiations by Reporting Member 01/01/1995 -31/12/2020 . Viewed 
at: https://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByRepMem.pdf . 
89 WTO documents G/ADP/N/335/KOR, 28 May 2020; G/ADP/N/342/KOR, 6 October 2020; and 
G/ADP/N/350/KOR, 22 April 2021.  
90 WTO documents G/ADP/N/342/KOR, 6 October 2020 and G/ADP/N/350/KOR, 22  April 2021.  
91 WTO documents G/ADP/N/286/KOR, 28 September 2016; G/ADP/N/294/KOR, 15 February 2017; 
G/ADP/N/300/KOR, 17 August 2017; G/ADP/N/308/KOR, 12 April 2018; G/ADP/N/314/KOR, 4 October 2018; 
G/ADP/N/322/KOR, 8 April 2019; G/ADP/N/328/KOR, 22 Octobe r 2019; G/ADP/N/335/KOR, 28 May 2020; 
G/ADP/N/342/KOR, 6 October 2020; and G/ADP/N/350/KOR, 22 April 2021.  
92 WTO, DS504: Korea – Anti-Dumping Duties on Pneumatic Valves from Japan . Viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds504_e.htm . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  from Japan, India, and Spain.93 A panel was established on 29 October 2018; China, the 
European  Union, India, Kazakhstan, the Russian  Federation, Chinese  Taipei, and the United  States 
reserved their third -party rights. On 21 January 2 019, the Director -General composed the panel, 
which issued its final report to the parties on 30 November 2020.94 
3.69.   Korea has never taken countervailing measures. Since its last Review, Korea has regularly 
submitted semi -annual reports on anti-dumping and countervailing actions to the relevant 
WTO Committees.  
3.1.6.2   Safeguards  
General  
3.70.   Safeguard measures, including provisional measures, may be applied when as a result of 
unforeseen developments and the effect of obligations incurred under the GATT  1994, increased 
imports cause or threaten to cause serious injury to domestic producers of a like or directly 
competitive product. In deciding on the type and duration of measures to be imposed, the KTC takes 
into account the impact on the industries conce rned, domestic price levels, consumer interests, and 
international trade relations.95 Safeguard measures apply for up to four years (200  days if 
provisional), but may be extended by four years subject to a further review.96 Since the previous 
Review, no sa feguard measures have been applied. However, on 5 April 2018, Korea notified the 
WTO, under Article  12.5 of the Agreement on Safeguards, that it proposed to suspend concessions 
and other obligations on certain imports from the United  States, following the imposition of 
safeguard duties on imports of certain large residential washers and parts thereof by the 
United  States.97 Furthermore, on 2  April 2019, Korea notified the WTO under the same Agreement 
of proposed suspension of concessions and other obligatio ns on some imports from the 
European  Union, following the imposition of definitive safeguard duties on imports of certain steel 
products by the European  Union.98 
Sector -specific  
3.71.   During the review period, Korea had a more focused recourse to the special saf eguard (SSG) 
provisions under Article  5 of the WTO  Agreement on Agriculture compared to its last Review. Korea 
reserved the right to take SSG action on crop and related products (e.g. grains, potatoes, ginseng, 
and soybean) under the WTO Agreement on Agric ulture. The decision to implement such measures 
is made annually by the MOEF through a ministerial ordinance, at the request of MAFRA. Korea 
reserved the right to apply SSG provisions to 124 agricultural 10 -digit tariff items (as of 2011), but 
so far they have been applied to a small subset of items. The Special Safeguard Tariff Schedule is 
issued annually to implement these provisions; its coverage was raised as from 2015, inter alia , due 
to the introduction of rice and rice items eligible for volume - and/or price -based action.99 Between 
 
93 WTO, DS553: Korea – Sunset Review of Anti -Dumping Duties on Stainless Steel Bars . Viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds553_e.htm . 
94 WTO, DS553: Korea – Sunset Review of Anti -Dumping Duties on Stainless Steel Bars . Viewed at: 
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds553_e.htm . 
95 Law No.  6417, Article  17, in WTO document G/SG/N/1/KOR/5, 26 October 2001.  
96 Law No.  6417, Article  19.5, in WTO document G/ SG/N/1/KOR/5, 26 October 2001.  
97 The suspension was to come into effect on 7 February 2021, if the United  States decided to extend 
the period of application of its safeguard measures, or following the date of a decision from the WTO Dispute 
Settlement Body  that the safeguard measure imposed by the United  States is incompatible with the WTO 
Agreement on Safeguards, whichever is earlier. The suspension is to continue until the safeguard measure 
maintained by the United  States is lifted. Global Trade Alert , Republic of Korea: Second Immediate Notification 
of Suspension of Concessions towards the United  States , 6 April 2018. Viewed at: 
https://www.globaltradealert.org/state -act/30786/republic -of-korea -second -immediate -notification -of-
suspension -of-concessions -towards -the-united -states . WTO documents G/L/1223 -G/SG/N/12/KOR/2, 
6 April 2018; and G/L/1 224-G/SG/N/12/KOR/3, 6 April 2018.  
98 Korea reserves the right to impose additional duties within 30 days of this notification. The duty is to 
be in place for a period equal to the duty imposed by the European  Union. Global Trade Alert, Republic of 
Korea: I mmediate Notification of Proposed Suspension of WTO Concessions towards the EU , 2 April 2019. 
Viewed at: https://www.globaltradealert.org/state -act/36807/republic -of-korea -immediate -notification -of-
proposed -suspension -of-wto-concessions -towards -the-eu. WTO document G/L/1306, G/SG/N/12/KOR/4, 
2 April 2019.  
99 The Special Safeguard Tariff Schedule co vered 22 10 -digit items eligible for price -based action and 
22 for volume -based action in 2012 and 2013, 18 10 -digit items eligible for price -based action in 2014, and WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  2016 and 2020, solely price -based SSG measures only on ginseng, also affected at the previous 
review, were implemented; more specifically, they applied to ginseng root (raw ginseng/other) 
(HS 1211.20.1190) in 2016, 2017, 20 18, 2019, and 2020, as well as ginseng powder (red 
ginseng/other) (HS 1211.20.2290) and other products of red ginseng (HS 2106.90.3029) in 2018, 
and wild cultivated ginseng (HS 1211.20.1291) in 2020.100 
3.2  Measures Directly Affecting Exports  
3.2.1   Customs procedures  and requirements  
3.72.   More than 95% of export declarations are submitted electronically to Customs without 
supporting documents and are accepted automatically by the e -clearance system.101 The KCS boasts 
the world's fastest turnaround in processing shipments, c laiming that the average time for customs 
clearance for exports is less than two minutes (less than 1.5 hours for import clearance) 
(Section  3.1.1.1).102 
3.73.   Third-party goods are prohibited from falsely claiming Korean origin. A simplified export 
declaration p rocess for e -commerce remains in place. Since 14 October 2020, the KCS has operated 
a declaration system that converts the express cargo outbound manifest into a simplified export 
declaration based on shipping information; KCS has been promoting the utiliz ation of this system 
via corporate consulting and public relations activities.103 
3.2.2   Taxes, charges, and levies  
3.74.   No export taxes, charges, or levies are applied by Korea (Sections 3.1.3.5, 3.2.4.2, and 
3.3.1.1.1).  
3.2.3   Export prohibitions, restrictions, and licensin g 
3.2.3.1   Prohibitions  
3.75.   During the review period, the negative list of banned exports remained unchanged. Pursuant 
to Korea's WTO notification, export prohibitions, affecting 11 six -digit HS items, are in place to, 
inter alia: protect animal rights (e.g. dog fur sk ins and their products); protect human, animal, plant 
life or health (e.g. whale meat and its products, defence materials, and narcotics and drugs); and 
preserve natural resources (e.g. uncut pieces of natural granite stones).104 Korea also prohibits 
 
38 10-digit items eligible for price -based action and 27 for volume -based action in 2015  and 2016, as 
compared to 33 10 -digit items in 2008, 29 in 2009, 25 in 2010, and 23 in 2011 eligible for price -based action 
only. 
100 At the previous Review, volume -based SSGs on cereal flour and other worked grain had been used. 
WTO documents G/AG/N/KOR/59,  20 March 2017; G/AG/N/KOR/69, 16 October 2019; G/AG/N/KOR/70, 
16 October 2019; and G/AG/N/KOR/76, 6 October 2020.  
101 All customs declarations should be made in accordance with the relevant laws – the Customs Act and 
the Foreign Trade Act.  
102 According to Wo rld Bank Doing Business data, exporting a shipment of goods required border and 
documentary compliance equivalent to 13 hours and USD  185, and 1 hour and USD  11 (lower than the OECD 
average except for time and cost of border compliance), respectively, in 2 020. World Bank (2020), Doing 
Business 2020:  Comparing Business Regulation in 190 Economies  – Economy Profile: Korea, Rep.  Viewed at: 
https://www.doingbusiness.org/content/dam/doingBusiness/country/k/korea/KOR.pdf ; and EIU (2020), 
Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com /FileHandler.ashx?issue_id=1090089892&mode=pdf . 
103 WTO document WT/TPR/S/346/Rev.1, 6 January 2017; OECD (2020), OECD Economic Surveys: 
Korea  2020, 11 August. Viewed at: https://www.oecd -ilibrary.org/economics/oecd -economic -surveys -
korea_19990707 ; and WCO, "Supporting E -commerce: Korea Customs Service's Strategy", WCO News , No. 78, 
October 2015. Viewed at: http://www.wcoomd.org/ -/media/wco/public/global/pdf/topics/facilitation/activities -
and-programme s/ecommerce/wco -news/supporting -ecommerce -korea -customs -services -strategy -wco-news-
78-october -2106.pdf?db=web . 
104 Korea notified export prohibitions for whale meat and its products, uncut pieces of natural granite 
stones, dog fur skins and their products, o bjects over 50 years old and recognized valuable; conditional 
prohibitions (prohibition except under defined conditions) apply to narcotics and drugs, defence materials, 
certain chemicals, and pollutants (for pollutants both conditional prohibition and non -automatic import 
licensing apply) under the Foreign Trade Act (Article  XI) and Notification of Export and Import. WTO documents 
G/MA/QR/N/KOR/2, 31 October 2019; and G/MA/QR/N/KOR/3, 13 October 2020.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  export s of books, videos, records, and other similar goods that interfere with constitutional and 
public order and public safety, and corrupt public morals; goods that infringe upon IPRs; goods 
containing confidential government information or that are utilized in intelligence operations; and 
counterfeit, forged, or copied currencies, bonds, and securities.105 
3.76.   In response to domestic needs related to the global outbreak of COVID -19 pandemic, Korea 
introduced a temporary export ban (entirely lifted on 23 October 2020) on surgical and sanitary 
masks, filtering respirators and melt blown filters in accordance with Article  XI:2(a) and Article  XX(b) 
of the GATT.106 These prohibitions we re initially imposed for the period from 6 March to 31  May 2020 
to prevent a critical shortage of PPE; they were lifted as of 23 October 2020. As production volume 
increased, the prohibition was gradually replaced by a prohibition except under defined cond itions. 
As of 18 June 2020, Korea lifted the restriction on filtering respirator producers and those who have 
concluded contracts with the producers for the purpose of exportation and allowed to export up to 
30% of the total daily production volume of filt ering respirators. Later this measure was revised and, 
as of 12 July 2020, filtering respirators were allowed for exportation on the condition that producers' 
monthly export volume does not exceed 50% of the monthly average production volume of the 
domesti c filtering respirators in the last two months, unless it is for government -approved 
humanitarian purposes. Similarly, with the stabilization of mask supply, exports of surgical and 
anti-droplet masks were allowed on identical conditions as of 15 September  2020.107 
3.77.   The export ban on melt blown filters was extended until 5 August 2020. As of 6 August 2020, 
producers and those who have concluded contracts with the producers for the purpose of exportation 
have been allowed to export only melt blown filters for filtering respirators on the condition that 
their monthly export volume does not exceed 15% of the monthly average production volume of the 
melt blown filters in the last two months. A producer who wants to export melt blown filters for 
filtering respirato rs in excess of the allowable amount must obtain prior approval from the Minister 
of Trade, Industry and Energy according to the relevant regulation. Exports of melt blown filters for 
surgical masks and Spunbond Meltblown Spunbond (SMS) filters have been p rohibited until 
22 October 2020. Also all overseas shipments of surgical, sanitary, and anti -droplet masks for 
humanitarian purposes were allowed to be exported after consulting with MOTIE and obtaining 
approval from the Ministry of Food and Drug Safety (M FDS).108 
3.2.3.2   Restrictions and licensing  
3.78.   As per Korea's notifications to the WTO in 2020, sand and gravel -related items, endangered 
species, waste, and persistent organic pollutants remain subject to non -automatic licensing to 
protect natural resources and human , animal, and plant life and health.109 
3.79.   Approval from competent institutions is required for the export of goods under the Directive 
on the Designation of Goods Subject to Customs Confirmation of Clearance Requirements and 
Methods of the Confirmation under Article 226 of the Customs Act or goods subject to export control 
 
105 Securus Strategic Trade Solutions. Export Regulations  in South Korea , fourth quarter 2018. Viewed 
at: http://securustrade.com/wp -content/uploads/2018/10/SECURUS_South -Korea -Export -
Regulations_ 2018Q4.pdf . 
106 WTO documents G/MA/QR/N/KOR/2/Add.2, 22 June 2020 and G/MA/QR/N/KOR/2/Add.3, 
20 July 2020. 
107 WTO documents G/MA/QR/N/KOR/2/Add.1, 14 April 2020; G/MA/QR/N/KOR/2/Add.1/Corr.1, 
22 June 2020; G/MA/QR/N/KOR/2/Add.2, 22 June 2020; and G/MA/QR/N/KO R/2/Add.5, 6 October 2020; 
EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf ; Global Tra de Alert, Republic of 
Korea: Temporary Export Restriction on Filtering Respirators . Viewed at:  
https:// www.globaltradealert.org/intervention/80430/export -quota/republic -of-korea -temporary -export -
restriction -on-filtering -respirators ; and Global Trade Alert, Republic of Korea: Blanket Export Ban on Surgical 
Face Masks , 6 March 2020. Viewed at:  https://www.globaltradealert.org/state -act/43513/republic -of-korea -
blanket -export -ban-on-surgical -face-masks . 
108 WTO document G/MA/QR/N/KOR/2/Add.4 , 31 August 2020.  
109 Exports of sand and gravel items require approval by the Korean Aggregate Association. Only sand 
and gravel that are a by -product of raw ore processing are approved for export. The authorities indicate that 
no export quotas for these it ems were operated during the review period. WTO documents G/MA/QR/N/KOR/2, 
31 October 2019 and G/MA/QR/N/KOR/3, 13 October 2020.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  under Article  19 of the Foreign Trade Act or other relevant laws. These goods include ginseng seeds, 
goods subject to foreign exchange control, and animals.110 
3.80.   Korea may restrict exports of c ertain products periodically to ensure adequate domestic 
supplies, again potentially assisting downstream processing of these products. During the review 
period, no quantitative export restrictions for rice or any other agricultural products were in place,  
as Article  2-2 of the Implementing Regulation of the Grain Management Act and a related notification 
requirement were repealed in March 2015. Until that time, rice was the only product requiring export 
authorization (termed a "recommendation" by the autho rities).  
3.81.   As Korea is a member of all four major international export control systems (Wassenaar 
Arrangement on Export Controls for Conventional Arms and Dual -Use Goods and Technologies (WA), 
the Missile Technology Control Regime (MTCR), the Nuclear Supplie rs Group (NSG), the Australia 
Group (AG)), exports of military items, nuclear -related items, and dual -use items for international 
peace and security require approval. They include certain electronics; specified computers and 
related equipment; telecommunic ation and information security systems; sensors and lasers; 
navigation and avionics systems; and marine, aerospace, and propulsion systems.111 Export 
approval from the Minister of Trade, Industry and Energy is also required for specific chemicals and 
biolog ical agents, as Korea is a member of the Chemical Weapons Convention and the Biological 
Weapons Convention.112 
3.82.   According to the authorities, with a view to complying with the basic principles of the 
international export control system as well as strengthening export controls, MOTIE modified the 
export control system on strategic items by revising the Foreign Trade Act and related regulations 
(i.e. the Regulations on Export Control of Strategic Goods) in September 2019 and June 2020. First, 
the revised regulations subdivided the regions exporting strategic items from the previous A and B 
into A -1, A-2, and B; the pur pose of this revision was to enhance export controls for countries with 
which there are difficulties in international coordination (e.g. countries operating systems against 
the basic principles of international export control systems). When it comes to doc uments that 
exporters are required to submit when applying for export approval, three types of documents are 
required for economies designated as A -1, five for those at A -2, and seven for those at B. In addition, 
the period required to process an individua l export approval is 5 or fewer days for A -1 economies, 
and 15 or fewer days for both A -2 and B. Second, the modifications clarified certain matters relating 
to Catch -All controls. Third, with a view to improving the quality of self -classification (accurac y, 
etc.), the completion of pre -training courses became mandatory when an entity makes a self -
classification. The authorities indicate that, the same as other major countries with an export control 
system, Korea categorizes countries into export regions an d differentiates the review period, 
necessary information, required documentation, etc. In this context, following the September  2019 
revision, national categories became more diversified, and countries were reclassified. Korea 
conducts strict reviews for all countries, but the review period and required documentation differ 
according to the category where the country is classified. Companies affected by these recent 
regulatory changes are not predetermined; the authorities provided information and guidelin es on 
these changes beforehand to companies exporting strategic items so that they proceed smoothly 
and without unnecessary difficulties in their operations. At the time of the previous Review, the 
Regulations' amendments had involved, inter alia: the revi sion of the definition of eligibility for an 
export licence; the expansion of exemptions from the export licence requirement; the exemption 
from the export licence requirement of the transfer of strategic technology to the expatriate 
employees and executiv es who have an employment agreement with a Korean entity; and the list 
of the National Core Technologies whose export is controlled under the Act on Prevention of Leakage 
 
110 KCS, Export Declaration Guideline . Viewed at: 
https://www.customs.go.kr/english/cm/cntnts/cntntsView.do?mi=8056&cntntsId=2732 . 
111 Export laws and regulations include Public Notice on Trade of Strategic Goods a nd Technologies; 
Safety Management of Guns, Swords, Explosives, Etc. Act; Defence Acquisition Program Act; Prohibition of 
Chemical and Biological Weapons Act; Chemicals Control Act; Narcotics Control Act; Plant Protection Act; and 
Wildlife Protection and M anagement Act. Securus Strategic Trade Solutions, Export Regulation in South Korea , 
fourth quarter 2018. Viewed at: http://securustrade.com /wp-content/uploads/2018/10/SECURUS_South -
Korea -Export -Regulations_2018Q4.pdf . 
112 Act on the Control of the Manufacture, Export and Import, etc. of Specific Chemicals and Chemical 
Agents for the Prohibition of Chemical and Biological Weapons, Article 11. Ko rean Law Information Center. 
Viewed at: https://www.law.go.kr/LSW/eng/engLsSc.do?menuId=2#liBgcolor0 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  and Protection of Industrial Technology. As of 2015, a total of 47 technology categor ies were listed; 
no recent data were available from the authorities.  
3.2.4   Export support and promotion  
3.2.4.1   Subsidies  
3.83.   Korea does not have export subsidy commitments; during the review period, it continued to 
use export subsidies for certain farm products under the p rovisions of Article  9.4 of the 
WTO Agreement on Agriculture for developing countries.113 Despite their intention at the time of the 
previous Review, the authorities notified to the Committee on Agriculture pending export subsidy 
data (2009 -13) in 2017 rath er than in 2016, as well as relatively recent export subsidy data 
(2014 -17) in 2019.114 These subsidies totalled KRW  32.92  billion (2015), KRW  36.72 billion (2016), 
KRW 39.6 billion (2017), KRW  26.52 billion (2018), and KRW  34.41 billion (2019), and they 
continued to cover fruit, flowers, vegetables, kimchi, ginseng, livestock, grain and processed food, 
and traditional liquor. The subsidies were used to reduce exporters' marketing/logistics costs in 
accordance with the Framework Act on Agriculture, Rural Com munity, and Food Industry 
(Article  59), and are exempt from WTO reduction commitments. Corporate income tax relief to 
industries located in export -oriented FTZs was eliminated in 2019 (Sections 2. 6.3.1 and 
3.3.1.2.2.2); nevertheless, firms having applied f or it on or before 31 December 2018 may still 
benefit.  
3.2.4.2   Duty and tax concessions  
3.84.   Raw materials used in exports are exempt from customs duties (Section 3.1.3.5), and a 
customs drawback scheme provides refunds. The KCS operates an Internet drawback system 
allowing refund requests to be filed online; a real -time electronic treasury transfer system allows 
the Bank of Korea to make electronic refunds to exporters. Refunds totalled USD  2.2 billion,  
equivalent to about 24% of tariff revenue in 2020 (down from USD  3.4 billion, equivalent to 29% of 
tariff revenue in 2015).  
3.2.4.3   Promotion and marketing  
3.85.   Korean exporters continue to benefit from promotional activities of the state -owned Korea 
Trade and Investment Promotion Agency (KOTRA). With 127 (126 in 2016) Korea Business  Centers 
(KBCs) in 84 countries, the agency operates a "business matchmaking" service introducing foreign 
importers to Korean businesses.115 KOTRA also organizes or assists with trade missions and 
exhibitions domestically and overseas, providing SMEs with e xport -related information and 
consulting services. During the review period, in response to internal and external challenges calling 
for further innovation, its resources focused on full support for SMEs to explore overseas market 
opportunities, global job  creation, diversification of exporting goods and markets, and identification 
of new overseas expansion opportunities.116 The buyKOREA ( www.buyKOREA.org ) tool, operated by 
KOTRA, is a global B2B powerhouse that connects international buyers and Korean suppl iers; it 
allows overseas buyers to send inquiries and make online purchases with a credit card (KOPS) or 
PayPal for over 270,000  Korean products.  
3.86.   The Public Procurement Service (PPS) (Section 3.3.6.3) continued to operate and manage the 
Global Korea Market , the online export promotion tool in place since 31 December 2015 where 
government procurement -related products of Korean companies with an excellent domestic 
 
113 Korea considers that, in line with the 2005 Hong Kong [China] Minister ial Declaration, which 
stipulates that "Developing country Members will continue to benefit from the provisions of Article  9.4 of the 
Agreement on Agriculture for five years after the end -date for elimination of all forms of export subsidies" (i.e. 
2016), and the 2015 Nairobi Ministerial Declaration, which specifies that developing country Members "shall 
continue to benefit from the provisions of Article  9.4 of the Agreement on Agriculture for five years after the 
end-date for elimination of all forms of ex port subsidies" (i.e. 2018), it would be entitled to maintain export 
subsidies covering marketing and transport costs for agriculture exports listed in paragraphs 9.1(d) and 9.1(e) 
of the Agreement until 2023.  
114 WTO documents G/AG/N/KOR/58, 6 January 2017;  G/AG/N/KOR/65, 4 July 2019; G/AG/N/KOR/66, 
4 July 2019; G/AG/N/KOR/67, 4 July 2019; G/AG/N/KOR/68, 4 July 2019; G/AG/N/KOR/78, 9 April 2021; and 
G/AG/N/KOR/79, 9 April 2021.  
115 KOTRA. Viewed at: https://www.kotra.or.kr/foreign/main/KHEMUI010M.html . 
116 KOTRA, CEO's Message . Viewed at: https://www.kotra.or.kr/foreig n/kotra/KHENKT010M.html . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  government procurement record (Government Performance Assured Companies (G -PASS)) can also 
be so ld to foreign companies. G -PASS firms may participate in PPS -hosted events such as overseas 
exhibits and public procurement conferences, and be provided with services of online promotion and 
information on overseas procurement markets for five years (exten ded through re -examination). In 
2020, there were 832  domestic companies (261 in 2015) under this project.  
3.2.5   Export finance, insurance, and guarantees  
3.87.   The government -owned Export -Import Bank of Korea (EXIM Bank) (Section 3.3.5), a recipient 
of high marks by international credit rating firms, provides export credit and financial guarantees to 
support Korean enterprises in conducting overseas business.117 Project -related guarantees are also 
provided to foreign buyers in the event of exporters' failure to meet co ntractual arrangements. The 
Government ensures the EXIM Bank's solvency by covering any net losses beyond reserves; between 
2016 and 2020, the EXIM Bank accumulated KRW  12.45  trillion in paid -up capital with the 
Government funding a total of KRW  1.90 trillion, and has been profitable except for 2016 when it 
registered a KRW  1.47 trillion loss. Direct loans to foreign buyers and export loans to Korean firms, 
its primary activities, cover mainly capital goods, such as industrial plants, machinery, and ships. 
Export loans of up to 100% of the contract value (less any required cash payment) are available, 
provided the "minimum foreign exchange earnings ratio" is no less than 25%. Export credits are 
subject to the minimum commercial interest reference rate (CIRR)  and other terms. The EXIM Bank's 
support for ship exports meets the requirements of the OECD's Sector Understanding on Export 
Credits for Ships.118 
3.88.   Overall, export -related loan disbursements involving export promotion loan, growth, project, 
and facilitatio n tools showed a decrease of 18.5% from KRW  35.7 trillion (USD  30.8 billion) in 2016 
to KRW  29.1 trillion (USD  25.0 billion) in 2019.119 The shipbuilding industry accounted for the largest 
portion of supported items with KRW  5.4 trillion (USD  4.6 billion, 1 6.4%), followed by the plant 
construction industry and petrochemical products with KRW  3.6 trillion (USD  3.1 billion, 12.4%) and 
KRW 4.1 trillion (USD  3.6 billion, 14.2%), respectively, in 2019. Under the Interbank Credit Facility 
offered to creditworthy f oreign banks in the form of a credit line that can be utilized for loans to local 
clients importing Korean goods, the amount disbursed rose from USD  1,697 million in 2016 to 
USD 1,943 million  in 2019, whereas the amount disbursed in 2020 was slightly lower  at 
USD 1,915  million. By end -2019, the total volume of credit lines extended under the Interbank 
Credit Facility stood at USD  7,620 million made available to 28 banks in 11 countries, as compared 
to USD  8,519  million to 39 banks in 18 countries in 2016. I n 2020, despite the challenges posed by 
the COVID -19 pandemic, credit lines with 14 banks in 10 countries totalling USD  2,700 million were 
newly established; consequently, the total volume of credit lines established stood at 
USD 8,040  million with 34 bank s in 14 countries by the end of 2020. To strengthen the 
competitiveness of SMEs, the EXIM Bank continued to expand support, mostly provided in the form 
of comprehensive export loans for SMEs and trade finance. The total of loans to SMEs in 2019 
amounted to  KRW 25.8 trillion (USD  22.1 billion), accounting for 50.1% of the EXIM Bank's total 
loans, compared to KRW  22.2 trillion (USD  19.1 billion) and 39.1% in 2016, while the total volume 
of credit, including loans and guarantees, to SMEs of KRW  26.8 trillion r epresented 44.7% of the 
EXIM Bank's total credit, compared to KRW  23.7 trillion and 34.3% in 2016.  
3.89.   The state -owned Korea Trade Insurance Corporation (K -SURE, previously KEIC), under 
MOTIE, continues to provide export credit insurance against non -payment ri sks (Trade Insurance 
Act, 1968), and during the review period emphasis was placed on SME support (see below).120 
K-SURE  promotes exports by insuring against risks that are not privately insurable and, according 
to the authorities, seeks to foster a level -playing field for official support, in order to encourage 
competition among exporters based on quality and price of exported goods and services. K -SURE 
supplies export insurance against losses due to political and commercial risks, and whole -turnover 
 
117 Korea EXIM Bank. Viewed at: https://www.koreaexim.go.kr/site/main/index002 . 
118 Korea has fully implemented the OECD Arrangement as from 31  March  2002 when transitional  
arrangements expired. Maximum repayment periods remain 12 years for ships, and non -nuclear power plants; 
18 years for nuclear power plants; and 8.5 -10 years for other products, pursuant to the OECD Arrangement.  
119 Korea EXIM Bank (2017), Annual Report 2016  – Adding Value for Shaping the Future . Viewed at: 
https://www.koreaexim.go.kr/site/program/board/basicboard/list?boardtypeid=8 2&phototype=list&menuid=00
2001006004 ; and Korea EXIM Bank (2020), Annual Report 2019 – We Finance Global Korea . Viewed at: 
https://www.koreaexim.go.kr/site/program/board/basicboard/list?boardtypeid=82&phototype=list&menuid=00
2001006004 . 
120 K-SURE. Viewed at: https://www.ksure.or.kr/en/index.do . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  insuran ce policies at a 50% discount to specific policies. It continues to offer 13 different types of 
export insurance and 2 types of guarantees with most underwriting remaining in the form of 
short-term insurance. The maximum coverage for medium - and long -term export insurance is, in 
principle, 85% of the export contract value as per OECD Guidelines on Officially Supported Export 
Credits. During the review period, K -SURE, inter alia : introduced Export Safety Net Insurance 
(2016), Power Plus+ Insurance (2017), an d contract -based Export Credit Guarantee (Pre -shipment) 
and Export Credit Guarantee (Negotiation) (2019); opened new representative offices (in Mexico 
City and Dubai (2016), Chengdu (2018), and Hanoi (2019)); reached KRW  47.9 trillion (2017) and 
KRW 52 tri llion (2018) in support for SMEs; opened a Trade Sure Consulting Center for supporting 
SMEs' exports (2018); and opened an online K -SURE Research Center offering information on 
overseas companies, industries, and countries (2018).121 In response to the expe cted decline in 
exports in 2020 due to the outbreak of the COVID -19 pandemic, K -SURE was focused on reinforcing 
support for advancement into new markets and innovative industries, strengthening the 
competitiveness of SMEs, implementing fintech infrastructu re, and improving customer satisfaction. 
K-SURE's underwriting (business) volume bottomed to KRW  144.8 trillion and gradually rose to 
KRW 155.8  trillion in 2019 without attaining its 2014 level; the SME support share to the volume 
rose steadily from 28.3% in 2016 to 36.1% in 2019. Total exports underwritten by K -SURE 
represented 21.7% (22% in 2016) of total exports and 91% (88% in 2016) of covered short -term 
insurance.  
3.3  Measures Affecting Production and Trade  
3.3.1   Incentives  
3.3.1.1   Taxation122 
3.90.   Total national tax revenue as a share of GDP rose and remains relatively low (15.3% in 2019, 
Table  1.1). Korea's reliance on indirect taxes was steadily reduced to 33% of tax revenues 
(Table  3.3) due to an increase in direct tax revenues caused by rising income tax levels. Income 
(since 2015) and corporation (since 2018) taxes became the main sources of tax receipts, followed 
by the VAT, which remains the main indirect tax component, followed by the transportation -energy -
environment tax. As a result of a decrease of import volume and  the expansion of preferential tariffs 
coverage, the share of customs duties declined considerably to 2.4% of total tax revenues in 2020 
(Table 3.3). Overall, the tax system, in particular its trade -related part, remains complicated by the 
so-called tax -on-tax (cascading) schemes and various surtaxes. As indicated by the authorities at 
the time of the previous Review, the Korean tax regime adheres to the globally accepted OECD 
International Tax Standards on exchange of information.123 
3.3.1.1.1   Indirect  taxation  
3.91.   Korea's relatively complex indirect tax structure remains unchanged. It comprises a 
broad -based VAT, individual consumption (special excise) taxes, and other taxes on liquor, property 
transactions (stamp tax), and securities transactions. There is also a t ransportation 
(energy -environment) tax, education tax, and special tax on rural development. Exports are 
generally exempt from indirect taxes. Exports are zero -rated for VAT.  
Table 3.3 Structure of direct and indirect tax revenue , 2012 -20 
 
2012  2013  2014  2015  2016  2017  2018  2019  2020  
Total tax revenue 
(USD billion)  180.2  184.4  195.1  192.6  209.1  234.7  266.8  251.7  242.0  
 
 (% of total)  
Direct taxes  47.1 47.5 49.0 50.9 51.9 53.2 55.5 55.9 53.5 
 Income tax  22.5 23.7 25.9 27.9 28.2 28.3 28.8 28.5 31.3 
 Corporation tax  22.6 21.7 20.8 20.7 21.5 22.3 24.2 24.6 18.7 
 
121 Korea Trade Insurance Corporation (2020), Annual Report 2019 - Turning Challenges into 
Opportunities . Viewed at: https://www.ksure.or.kr/en/company/annualRptListInq.do . 
122 For more information on taxes, see MOEF (2020), Korean Taxation 2020 . Viewed at: 
https://english.moef.go.kr/sh/searchList.do?range=anywhere&searchTerm=taxation .  
123 WTO document WT/TPR/S/346/Rev.1, 6 January 20 17. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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2012  2013  2014  2015  2016  2017  2018  2019  2020  
 Inheritance tax  2.0 2.1 2.3 2.3 2.2 2.6 2.5 2.8 3.5 
Indirect taxes  43.1 43.7 42.6 40.5 40.1 39.2 36.7 36.3 33.0 
 Value added tax  27.4 27.7 27.8 24.9 25.5 25.3 23.8 24.1 21.8 
 Transportation tax  6.8 6.6 6.5 6.5 6.3 5.9 5.2 5 4.7 
 Customs duties  4.8 5.2 4.2 3.9 3.3 3.2 3.0 2.7 2.4 
 Individual consumption 
tax 2.6 2.7 2.7 3.7 3.7 3.7 3.6 3.3 3.1 
 Liquor tax  1.5 1.5 1.4 1.5 1.3 1.1 1.1 1.2 1.0 
Othera 9.8 8.8 8.4 8.6 8.0 7.6 7.8 7.8 13.5 
a Unspecified revenue information.  
Source:  Data provided by the authorities.  
3.92.   The VAT applies to goods and services at a rate of 10%, which was below the 19.3% average 
OECD VAT/GST standard as of 1 January 2019.124 The sales of digital services on offshore open 
market app stores and non -traditional financial services, including investment advisory, insurance 
and pension actuarial services, real estate trust businesses, and investments in real estate a nd 
non-financial assets, are also subject to VAT. Exemptions cover, inter alia , unprocessed foodstuff, 
agricultural products, livestock products, marine products, and forest products produced in Korea 
but not used for food; anthracite coal (see below); pip ed water; certain passenger transportation 
services; social welfare services; books; educational services; and financial and insurance services. 
The VAT is levied on top of other taxes, including import duties, where applicable.125 
3.93.   The individual consumptio n (special excise) tax continues to apply to a wide range of goods. 
Rates vary from 5% on cars of more than 1,000 cc and motorcycles with engine displacement in 
excess of 125 cc to 20% (e.g.  on luxury items including bags (as from 2014)). Flexible rates (s ee 
below) are temporarily used to boost or discourage consumption of certain products to allow efficient 
management of the economy in case of the need to adjust the business cycle, price stabilization, 
fiscal stimulus, etc. Hybrid (from 2009 to 2021) and e lectric cars (from 2012 to 2022) remain exempt 
from the individual consumption tax (up to KRW  1 million and KRW  3 million, respectively). 
Individual consumption taxes in form of specific rates also apply, in principle, to cigarettes, 
petroleum products oth er than gasoline, and diesel oil that are subject to a transportation 
(energy -environment) tax (see below) until end -2021.126 Anthracite coal, a domestically produced 
item (Section  4.3), is not subject to this tax. Conditional exemptions apply, inter alia , to oil and its 
products used for aircraft; deep sea fishing vessels, or vessels in international navigation; medical 
use; manufacture of medical goods; fertilizers, agricultural chemicals, or raw materials for the 
petrochemical industry; and certain automo biles (e.g. purchased by people with disabilities, used 
exclusively for the purpose of transportation of patients and rental business purpose). To mitigate 
the negative impact of the pandemic, the individual consumption tax on motor vehicles was cut by 
70% from March to June 2020 without further extension; nevertheless, a 3.5% flexible rate (up to 
KRW 1 million) has applied from July 2020 to June 2021.127 
3.94.   The transportation -energy -environment tax law was last amended on 1 January 2019. Under 
this fourth  three-year extension of its sunset clause, the transportation -energy -environment tax 
 
124 OECD (2020), Consumption Tax Trends – Korea . Viewed at: 
https://www.oecd.org/tax/consumption/consumption -tax-trends -korea.pdf . 
125 The VAT base for imports is the c.i .f. price plus customs duties and other taxes, where applicable.  
126 As at 2020, the rates stood at kerosene KRW  90 per litre (KRW  63 per litre effective from 
1 July 2014); heavy fuel oil KRW  17 per litre; propane gas KRW  20 per kg for domestic and commercia l use 
(KRW  14 per kg effective from 1 July 2014); butane gas KRW  275 per kg (flexible rates KRW  275 per kg); 
natural gas (including a liquified form) KRW  12 per kg, KRW  60 per kg (for other than that for power 
generation purposes (flexible rates of KRW  42 per kg)), and KRW  8.4 per kg (for integrated energy suppliers, 
new and renewable energy suppliers, and persons setting up electric installations for private use); bituminous 
coal for electric power generation (effective from February 2018) KRW  49 per kg ap plicable to net calorific 
value of 5,500 kcal per kg or more, and KRW  46 per kg applicable to net calorific value of not less than 
5,000  kcal per kg and less than 5,500 kcal per kg, and KRW  43 per kg applicable to net calorific value of less 
than 5,000 kcal per kg; and KRW  594 per 20 cigarettes. MOEF (2020), Korean Taxation 2020 . Viewed at: 
https://english.moef.go.kr/sh/searchList.do?range=anywhere&searchTerm=taxa tion. 
127 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  continues to be levied on gasoline (KRW  475 per litre) and diesel oil (KRW  340 per litre) until 
end-2021 (instead of the individual consumption tax); its rates remain unchange d. As of 2021, the 
flexible transportation -energy -environment tax framework set on 21  May 2009 continued to apply 
to gasoline and diesel oil within a 30% range of the statutory tax rates, i.e. KRW  529 per litre and 
KRW 375 per litre, respectively. Conditio nal exemptions under the individual consumption tax apply 
to gasoline and diesel for certain use.  
3.95.   The liquor tax on alcoholic beverages was slightly changed. As at 2021, its rates were as 
follows: spirits (KRW  57,000 per kl (KRW  600 is added for every addi tional 1% that exceeds 95% of 
alcohol content)), beer (KRW  830,300 per kl, until February 2021; KRW  834,400 per kl, after 
March  2021) and Takju (KRW  41,700 per kl, until February 2021; KRW  41,900 per kl after 
March  2021); and liquor (30% (Yakju, Cheongju, and fruit wine) and 72% (Soju, whisky, brandy, 
liqueur, etc.)). Inflation -linked tax rates for Takju and beer released from breweries for sale or 
declared for import after 1 March 2021 are determined by applying a specific formula.128 
3.96.   The securities transac tion tax continues to be levied on transfers of shares or stocks of a 
business entity. The standard rate is being slightly reduced (0.45% in 2020, 0.43% from 2021 to 
2022, 0.35% as from 2023 ) and applies to the value of securities transferred.129 Until 2020 , 
temporary tax rates of 0.1% for Securities Market -listed stocks, 0.25% for KOSDAQ -listed stocks, 
0.1% for Korea New Exchange (KONEX) -listed stocks, and 0. 25% for KOTC -listed stocks may be 
applied if deemed necessary to boost the capital market . Between 2 021 and 2022, these temporary 
tax rates would be at 0.08% for Securities Market -listed stocks, 0.23% for KOSDAQ -listed  stocks, 
0.1%  for KONEX -listed stocks, and 0.23% for KOTC -listed stocks, and as from 2023 they would be 
further reduced.  
3.97.   The education tax , levied on banking and insurance services and on all goods subject to the 
individual consumption tax, the transportation tax, and the liquor tax (excluding spirits, Takju, and 
Yakju), remains set at 0.5% of gross receipts for banking and insurance (includ es commissions, 
interest, dividends, and insurance premiums); 30% of the individual consumption tax (15% in the 
case of kerosene, heavy oil, butane or LPG, and nonane plus gas (C9 +)); 15% of the transportation 
tax; and 10% of the liquor tax (30% for beer, distilled liquor, and other liquors taxed at over 70%).  
3.98.   The special tax for rural development, a surtax levied on income exempted from company 
and personal tax, on the value of customs duty concessions, and on the amount of individual 
consumption tax and s ecurities transaction tax, remains unchanged.130 It continues to be levied at 
the following rates: 0.15% for the value the securities tran sferred (only securities market -listed 
stocks) , 10% or 30% (golf courses) for the individual consumption tax, and 20% f or exemptions of 
company and income taxes as well as customs duties. The tax was extended for a third 10 -year 
period on 1 July 2014 and is scheduled to end on 30 June 2024.  
3.99.   Korea imposes environmental waste charges on certain items that contain harmful sub stances 
and are difficult to recycle (Act on Promotion of Saving and Recycling of Resources). The charge is 
intended to ensure that manufacturers bear the cost of processing waste. It applies equally to 
imports and domestic goods.131 
Local taxes  
3.100.   During the review period, Korea's 11 local taxes remained unchanged. An acquisition tax on 
purchases of and a property tax on real estate, motor vehicles, heavy equipment, and boats 
remained in place. A registration and licence tax continues to be levied on property and motor 
vehicles, boats, aircraft, and construction machines, as well as certain business registrations and 
intangible assets, such as transfers of mining, fishing, and IP rights. An automobile tax on passenger 
 
128 The formula for these rates  is as follows: base rate as of 31 December of the previous year × (1+ 
increase rate of consumer prices in the previous year announced by the Commissioner of Statistics Korea).  
129 EY, Korea Announces 2020 Tax Reform Proposals , 4 August 2020. Viewed at: 
https://www.ey.com/en_gl/tax -alerts/korea -announces -2020-tax-reform -proposals . 
130 It includes exemptions specified under the Special Tax Treatment Control Law, the Loc al Tax Law, 
and the Customs Law. Exemptions under the Company Tax Law, Income Tax Law, and the Foreign Investment 
Promotion Law are excluded.  
131 At the time of the previous Review, the charges were set at e.g. KRW  24.9 per plastic container of 
insecticide o r KRW  30.7 if the container exceeds 500  ml; and KRW  75 or KRW  150 per kg of the plastic or 
synthetic resin used for domestic goods.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  vehicles (depending upon engine size), buse s, and trucks (depending upon carrying capacity) 
remains in place. A tobacco consumption tax is levied at various specific rates. Other such taxes 
include local education, income, and consumption taxes.  
3.3.1.1.2   Direct taxation  
3.101.   Personal income tax and corporation t ax turned into the first - and second -largest single 
sources of revenue (Table 3.3). Progressive personal income tax rates and base were partly revised 
in 2018. As at May 2021, they consisted of eight (previously six) brackets and ranged from 6% 
(income of KRW 12 million or less) to KRW  384.6 million plus 45% of the excess over KRW  1 billion 
(income over KRW  1 billion). The new brackets aimed to improve income redistribution, reduce 
inequality, and facilitate economic recovery from the COVID -19 pandemic.132 To mitigate the 
negative impact of the COVID -19 pandemic on individuals, between April and end -July 2020 
individual taxpayers were allowed to deduct from taxable income up to 80% of spending using credit 
cards, cash, or debit cards, or expenses paid in trad itional markets and public transportation; the 
deduction was reduced to a maximum 15% for credit cards, 30% for cash and debit cards, and 40% 
for spending in traditional markets and public transport from July to end -2020.133 Foreign workers 
can avail themse lves of a flat 19% tax rate (plus a 1.9% surcharge). Foreigners beginning work 
between 2017 and 2021 may elect to use the flat rate for their first five consecutive years in the 
country.134 At present the flat tax is not meant to apply to foreign workers ar riving after 2021, 
although this may be extended in future years. Foreigners, apart from foreign engineers, who use 
the flat tax are not eligible for any other income deductions, exemptions, or credits. Foreign 
engineers who started work prior to 31  Decemb er 2021 are entitled to a 50% reduction on their 
income tax for five years.  
3.102.   Corporation tax brackets and rates were slightly changed in 2018. Four (previously three) 
brackets have been in place: 10% for KRW  200 million or less; 20% for income between 
KRW 200 million and KRW  20 billion; 22% for income between KRW  20 billion and KRW  300 billion; 
and the new rate of 25% for income over KRW  300 billion. Since 2018, a 20% additional levy could 
apply on corporate income for large companies (whose net  equity exceeded KRW  50 billion and are 
not classified as SMEs) until December 2022.135 In July 2020, corporation tax regime reform, 
including the broadening of the application of a simplified tax -filing process and the introduction of 
VAT exemptions (Secti on 3.3.1.1.1) for businesses with annual sales below KRW  48 million and a 
20% capital gains tax on profits of over KRW  50 million from transactions of listed shares (as from 
2023) to reduce inequality and facilitate economic recovery from the COVID -19 pand emic, was under 
consideration.136 Following a December 2020 VAT law amendment, the application of the simplified 
tax-filing process was expanded from businesses with annual sales below KRW  48 million to 
KRW 80 million as from 2021; among businesses subject to a simplified tax -filing process, VAT duty 
exemptions were also expanded from businesses with annual sales below KRW  30 million to 
KRW 48 million as from 2021.  
 
132 Taxation for higher income (i.e. above KRW  12 million) consists of a fixed amount (depending on the 
income scale) plus a p ercentage on the amount exceeding the lowest value of the tax base; the percentage 
components are 6%, 15%, 24%, 35%, 38%, 40%, and 42%, and a resident surcharge of 10% is also levied on 
income tax liability, thus raising these rates to 6.60%, 16.5%, 26.4%,  38.5%, 41.8%, 44%, and 46.2%, 
respectively. At the time of the previous Review in 2016, personal income tax rates were up to 38% plus a 
fixed amount of KRW  37.6 million (for income over KRW  150 million. EIU (2020), Country Commerce: South 
Korea , August. V iewed at: https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
133 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
134 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
135 Reportedly, the levy applies when the percentage of retained earnings used to fund dividend 
payments, payroll increases, and facility investments falls below 70% (Method A). Companies can also choose 
to use a 15% threshold instead, which applies only to dividend payments and payroll increases; the levy would 
be applicable if the percentage of retained earnings used to fund dividend payme nts and payroll increases (but 
not facility investments) fell below 15% (Method B). Companies are free to switch between the two methods. 
Companies choosing Method A should maintain it for three tax years. Those choosing Method B should 
maintain it for one  tax year. EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
136 EIU (2020), Country Comm erce: South Korea , August. Viewed at: 
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  3.3.1.2   Tax and non -tax incentives  
3.103.   Korea continued to support production and trade -related activities through numerous tax 
and non -tax incentives with, inter alia , persisting emphasis on SMEs through more favourable 
incentives including preferential treatment in public procurement and COVID -19 response action as 
well as the establishment of the Ministry of SMEs and Startups (MSS) in 2017 ( Table A1. 1 and 
Sections  1.1, 1.2.1, 1.2.4.1, 1.2.4.5, 2.3, and 3.3.6).137 During the review period, Korea notified 
some activity -specific support programmes to the WTO  Committee on Subsidies and Countervailing 
Measures. Its latest notification, in June 2019, covered the period 2017 -18 and indicated that there 
were 24 subsidy schemes, virtually all of which were also notified in 2017. There were four new 
scheme s (i.e. Support for Management of Fisheries, Support for Fisheries Resources Management, 
New Hydrogen Fuel Cell Vehicle Distribution, and Development of Core Technology in Industrial 
Fields), and two were eliminated (i.e. Support for Fishing Activities and  (Forestry) Board Assistance 
Programme).138 Grants, concessional loans, and one tariff reduction continue to be used to assist a 
range of agricultural, forestry, fishing, coal mining, energy, environmental technology R&D, and 
environmental protection activi ties. No expiry date was indicated for the notified schemes except for 
measures relating to vessel decommissioning (until 2023), tariff reduction on aircraft parts (until 
2025 for non -SMEs), and development of core technology in industrial fields (until 20 19). 
3.3.1.2.1   Tax incentives  
3.104.   During the review period, in addition to customs duties and tax concessions on imports 
(Section 3.1.3.5), numerous and complex tax incentives continued to be used extensively as an 
instrument of industrial policy to encourage investment , especially from overseas, and production 
of certain goods, including by SMEs (Special Tax Treatment Control Law, 1999 (STTCL), which was 
last amended in 2021). They cover a range of activities, and include income tax relief (rate 
reductions, exemptions, credits, special deductions, and other concessions), or credits and 
commodity tax concessions (such as VAT exemptions and zero -rating). Many tax incentives under 
the STTCL expire within one to five years, unless they are extended periodically. Originally t ax 
incentives were to terminate at end -2003, but many were extended until end -2009, 2010, 2011, or 
2012; similarly, as of 2015, many incentives scheduled to terminate between 2012 and 2017 were 
extended.139 As at end -2020, many incentives were to terminate in 2019, 2020, 2021, and 2022. 
According to the authorities, of 54 (88 in 2016, 42 in 2012) "non -taxation" and tax 
reduction/exemption benefits due to expire in 2020, 43 (62 in 2015, 30 in 2012) were extended, 
while the remainder were abolished or scaled b ack. In determining whether to repeal or scale back 
a certain tax incentive, factors considered continued to include the extent to which the objective had 
been achieved and whether the benefit was in line with "international standards".  
 
137 Korea is the OECD country with the largest share of firms w ith less than 250 employees; 
furthermore, the share of employees in micro firms with less than 9 employees is also one of highest among 
OECD economies. Between 2015 and 2018, SMEs accounted for 99.9% of all companies (12.7% rise in number 
of firms) and 83. 1% of employment (6.7% increase in employees) in Korea. The concentration of SMEs in 
labour -intensive sectors makes them the main source of job creation. As at 2017, Korea had in place 288 
central government programmes and over 1,000 programmes at the loca l government level to support SMEs. 
In 2017, central government spending on such programs was estimated at around 0.8% of GDP. Support to 
SMEs through credit guarantees at 3.8% of GDP in 2016 was the second largest of OECD economies 
(Section  3.3.1.2.1). Th e BOK (Bank of Korea) and the FSS (Financial Supervisory Service) have the same 
definition of SMEs: a SME is an establishment with total assets less than KRW  500 billion whose average sales 
or annual sales meet the amounts set per activity under the Articl e 2 of the Framework Act on Small and 
Medium Enterprises and Article  3 of its enforcement decree. IMF (2019), Republic of Korea:  Selected Issues , 
Country Report No.  19/133. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2019/05/13/Republic -
of-Korea -Selected -Issues -46891 ; OECD, Financing SMEs and Entrepreneurs 2020: An OECD Scoreboard: 
Korea . Viewed at: https://www.oecd -ilibrary.org/sites/9fd590e7 -
en/index.html?itemId=/content/component/9fd590e7 -en; and MSS, Statistics . Viewed at: 
https://www.mss.go.kr/site/eng/02/20204000000002019110624.jsp . 
138 The authorities indicate that a new notification was to be submitted by June 2021, but this was not 
the case by the end of that month. WTO documents G/SCM/N/315 /KOR, 6 July 2017 and G/SCM/N/343/KOR, 
22 July 2019.  
139 In creating a new tax incentive, since 2009 a sunset clause has generally been included. More 
information on the type of tax and non -tax incentives in place or due to expire is available in MOEF (2020) , 
Korean Taxation 2020 . Viewed at: 
https://english.moef.go.kr/sh/searchList.do?range=anywhere&searchTerm=taxation . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.105.   Associated with the  above income tax incentives, Korea had 135 tax expenditures (153 in 
2014, 141 in 2010) under its income taxes in 2020. At the time of the 2012 Review, the general 
business incentives category counted for the highest number of tax expenditures followed by specific 
industry relief.140 Korea had another 81 tax expenditures under other taxes in 2020; the two largest 
contributing taxes remained the VAT (40 tax expenditures in 2020), and the individual consumption 
tax (20 in 2020), which replaced the securities t ransaction tax (3 in 2020) in terms of importance. 
Korea had another 81 tax expenditures under other taxes in 2020 (77 in 2014, 93 in 2010); the 
two largest contributing taxes remained the VAT (40 tax expenditures in 2020, 39 in 2014, and 26  in 
2010), and the individual consumption tax (20 in 2020, 13 in 2014), which replaced the securities 
transaction tax (3 in 2020, 17 in 2010) in terms of importance.  
3.106.   According to government data, rising tax expenditures stood at USD  32.3 billion, 
USD 35.1 billion, USD  39.9 billion, USD  42.5 billion, and USD  45.7 billion in 2016, 2017, 2018, 2019, 
and 2020, respectively, or 2.4% of GDP over these years. In 2020, the main recipients remained 
social welfare (35.1%); industry, SMEs, and energy (25.0%); agriculture, forestry, and fisheries 
(11.5%); and health (13.7%).141 The effectiveness of tax incentives, both in terms of meeting 
specific objectives and impact on the economy's overall efficiency, needs to be reviewed regularly. 
Since 2011, an annual report on tax expenditure h as been published in the Korean language only.  
3.107.   SMEs continue to benefit substantially from larger tax incentives than those generally 
available (see also below) – for example, much larger tax credits for investment in technology and 
human resource developm ent. As of 2021, they continued to benefit, inter alia , from income tax or 
corporation tax credit for investment in business assets (extended until 31  December  2021), a 
five-year 50% income tax or the corporation tax reduction for newly established SMEs  in areas other 
than the Seoul metropolitan area or its adjacent areas (extended until 31 December 2021), and a 
special tax incentive for SMEs involving corporation tax or income tax reductions of 10% or 20% 
(metropolitan area) and 5% to 30% (non -metropolitan  area) (extended until 31 December 2022). 
SMEs now receive 10% (wage reduction) and 15% (wage compensation) tax credits (previously 
1%-3%) for maintaining status quo employment and job sharing. In 2017, enterprises enhancing 
the quality of jobs have been g ranted reinforced tax benefits, namely, expansion of tax incentives 
for SMEs increasing wages or changing the employment status of their workers from temporary to 
permanent, extension of tax support periods for SME employees, and more tax reduction for 
companies shortening their working hours.  
3.108.   Several tax credits continue to apply to, inter alia,  investment in technology, human 
resources development, and the R&D expenses for new growth industries/engines and basic 
technologies (extended until 31 December 20 21), as well as for job creation. Investments in facilities 
or equipment to improve productivity or increase safety continue to receive 1% (3% for 
middle -market enterprises and 7% for SMEs) and 1% (5% for middle -market enterprises and 10% 
for SMEs) of the investment amount (extended until 31 December 2021) as tax credit, respectively; 
in 2020, these rates were increased temporarily. Investment in facilities for the purpose of 
environmental conservation continues to receive a 3% (5% in the case of middle -market enterprises 
and 10% for SMEs) tax credit (extended until 31 December 2021), which may be carried forward 
five years if unused. An additional 4% -8% tax credit (depending on size and location) for creating 
new jobs capped at KRW  4 million per new employe e for large companies and at KRW  12 million for 
SMEs (outside the Seoul metropolitan area) has been in place since 2018. SMEs that rehire female 
employees who have been out of the workforce for a period of time are also eligible for a tax credit 
for a peri od of two years. Between 2015 and end -2022, a 15% -30% temporary tax credit on any 
increases in corporate payroll is in place, provided that companies do not reduce the number of 
full-time employees over that period.142 
 
140 Korea's tax expenditures under the income taxes equalled 1.76% of GDP in 2006; those under other 
taxes were 0.72% of GDP, of which almost two thirds came under the VAT . 
141 At the time of the previous Review, tax expenditures stood at USD  29.6 billion, USD  30.9 billion, and 
USD 32.6 billion in 2012, 2013, and 2014, respectively, or 2.3% of GDP over these years; in 2014, the main 
recipients were industry, SMEs, and energy (30.6%) ; social welfare (23.4%); agriculture, forestry, and 
fisheries (17.3%); and health (11.6%). Tax expenditures can be measured via the revenue forgone, the 
revenue gain, and outlay equivalence approaches. Viewed at: https://treasury.gov.au/sites/default/files/2019 -
03/ch3 -3.pdf. 
142 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
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  3.109.   A concessional income tax rate of 9% ( 8% in 2012) continues to apply to certain activities 
to enhance social welfare, including fisheries cooperative associations and the tobacco production 
association (extended until 31 December 2022). A 50% tax exemption for forestry income expired 
in 2018. Interest income (up to KRW  30 million in payment amount) and partnership dividends (up 
to KRW  10 million in payment amount) are non -taxable for farmers and fishermen. Primary 
producers also continue to benefit from zero -rating for VAT on machinery, fertili zer, and pesticides, 
and on fishing gear, including nets, and from exemption of taxes on petroleum products, inter alia , 
supplied directly to the Central Federation of Fisheries Cooperatives used for auxiliary private power 
generation for island areas wher e it is impossible or difficult for a considerable period to supply 
electricity, to the Korea Shipping Association for use by passenger boats operated in coastal waters, 
as well as for public transportation (buses) operating on natural gas.  
3.110.   Limits on the m aximum of cumulative tax incentives apply to some tax reduction or 
exemption measures, including those claimed under the STTCL. According to the authorities, the 
limit was revised in 2018 and is an aggregate of the upper limit for cumulative tax incentives  for 
domestic investment, which is 50% of the accumulated investment amount, and the amount 
between the value derived by multiplying the number of regular workers at the beneficiary company 
by KRW  15 million.  
3.111.   Expatriates remain subject to a flat income tax  rate rather than the country's complex 
income tax regulations (Section 3.3.1.1.2). Under an amendment to the STTCL, as from 2017, 
services provided by foreign executives or employees (excluding labourers hired on a daily basis) 
have been subject to a flat  tax rate of 19%, compared to 17% (18.7% after the resident surcharge) 
since 2013 and 15% until December 2012. Provisions relating to tax exemption, deduction, 
reduction, or tax credit are not applicable. However, as from 2020, foreign engineers prescribed  by 
the Presidential Decree may be entitled to a tax exemption on 70% (previously 50%) of their income 
tax on earned income derived from services to a national within Korea for the first three (previously 
two) years since the first date on which the foreig n engineer concerned offered his services in the 
country; a 50% exemption rate is applied from the following month to the next two years.  
3.112.   During the first half of 2020, several temporary tax relief measures aimed at coping with the 
negative impact of the C OVID -19 pandemic were introduced (Box 1.1, and Sections 1.2.4.1, 
3.3.1.1.1, and 3.3.1.1.2).143 They involved personal income tax spending -related deductions 
(April  to June  2020), corporation tax reductions and early tax refunds (equal to the amount of 
suffered deficits) for SMEs (first half of 2020), VAT reduction for small proprietors (fiscal year 2020), 
VAT exemption for small -revenue taxpayers (fiscal year 2020), and reductions on the individual 
consumption tax on motor vehicles (March to June 2020).  
3.3.1.2.2   Non-tax incentives  
3.3.1.2.2.1   Access to finance  
3.113.   State -owned financial institutions retain a major role in assisting Korea's industrial 
development. State intervention dominates the large venture capital market, which benefits mainly 
SMEs. Since 2005, the government -backe d Korea Fund of Funds has invested in limited partnership 
funds (LPFs) and contributed to the formation of the private venture investment market. As of 
February 2021, its assets amounted to USD  6.4 billion (KRW  7.0 trillion) (KRW  2.23 trillion in 2015, 
KRW 1.36 trillion in 2011), were mostly financed by government funds, and had been invested in 
several areas (SMEs, cultural industries, movies, intellectual property (IP), broadcasting, 
telecommunications, and environmental industries).144 The number of ventu re corporations 
increased from 31,260 in 2015 to 39, 511 in 2021. The Korea Fund of Funds' Innovation Venture 
Capital Fund planned to raise KRW  10 trillion (of which KRW  3.7 trillion from the Government) over 
the next three years, beginning in 2018.145 
 
143 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf  and 
http://english.korcham.net/nChamEng/Service/Publications/appl/02Detail.asp . 
144 Korea Venture Investment Corp., Korea Fund of Funds . Viewed at: 
https://www.kvic.or.kr/en/business/business1_1 . 
145 OECD, Financing SMEs and Entrepreneurs 2020: An OECD Scoreboard: Korea . Viewed  at: 
https://www.oecd -ilibrary.org/sites/9fd590e7 -en/index.html?itemId=/content/component/9fd590e7 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.114.   The KONEX continued to help SMEs and venture businesses obtain direct financing from the 
capital market. In January 2019, the Financial Services Commission (FSC) disclosed policy measures 
to revitalize KONEX so as to function as a financing vehicle of star t-ups and an effective divestiture 
tool for venture capitalists.146 As at 31 December 2020, KONEX had increased to 143 listed 
companies (89 in 2015), and market capitalization had reached KRW  5.6 trillion (KRW  3.7 trillion in 
2015).  
3.115.   Two major public institu tions, the Industrial Bank of Korea (IBK) and the Korea Development 
Bank (KDB), continued to play a substantial role in financing industrial development. In principle, 
the IBK and the KDB remain commercially run, but by owning 100% of the KDB Financial Gro up, the 
Government guarantees the KDB's solvency. While the Government has no direct control over the 
banks' lending programmes, it has injected approximately KRW  11 trillion (KRW  6 trillion until 2015) 
since 2004 for the purpose of capital increase, of wh ich KRW  5 trillion since 2016; no replenishment 
of losses has been made for the IBK since its establishment.147 
3.116.   The IBK supports SMEs mainly through low -interest loans in line with government policy for 
working capital for technology development, productivi ty improvement or automation, constructing 
facilities, and buying plant and machinery.148 With market share of SME loans at 23.1% in 2020, it 
remains the leader in SME finance; in 2020, loans extended to SMEs amounted to KRW  186.8  trillion 
(KRW  134.4  trillion in 2016), or (80.0% in 2020) of total IBK loans.149 Most SME loans are financed 
by retail banking or debt capital market (DCM) funding, just like other commercial banks in Korea, 
while some are funded through government -originated loans; as at 2020, the average interest rate 
for new loans stood at 3.02% (3.89% in 2016). The IBK does not maximize profits given its public 
policy role; its financial performance is directly influenced by government policies.  
3.117.   The KDB continued to ensure a constant and reliable  supply of funds for industries, with a 
particular focus on SMEs and micro enterprises (MEs), as well as the industries of the future. It 
provides a broad range of industrial capital, including loans to finance tangible and intangible (e.g. 
R&D) investment s, underwrite corporate mergers and acquisitions, and provide operating capital. It 
offers corporate banking services by extending corporate loans generated through the issuance of 
industrial finance bonds in the market. No loans are extended at a preferen tial rate to firms of a 
particular industry. Nevertheless, lower interest rates (around 1  percentage point lower than 
commercial rates) are seemingly available to SMEs willing to relocate production facilities to rural 
areas (excluding Seoul, Gyeonggi -do, and Chungcheong -do) or for regional development 
purposes.150 Its Mutual Growth Fund is aimed at joint growth shared between large companies and 
SMEs and MEs in a win -win cooperation (i.e. whereby large firms are provided loans to be spent on 
ordering goods/ services from SMEs); in 2019 the development of regional economies and the growth 
of innovative companies were encouraged by establishing a fund that supports cooperation between 
local MEs and innovative SMEs and start -ups.151 In 2019, KDB partnered with th e country's top seven 
venture capital firms to launch the "Mega -7 Club", a joint investment council aimed at helping Korean 
companies grow into global unicorns. The same year, it supplied funds totalling KRW  72.9 trillion, of 
 
146 Korean LII, KONEX . Viewed at: http://koreanlii.or.kr/w/index.php/KONEX?ckattempt=1 . 
147 Replenishment of losses can be made under Article  43 of the Small and Medium Business Bank Act.  
148 In 2019, the IBK On -Lending Fund financed  SMEs with the desirable growth potential in future/new 
growth engine businesses, export industries, those headquartered in regional areas, start -up and venture 
business support, and the establishment of smart factories. As at end -2019, its balance reached  
KRW 6.2 trillion. The IBK Overseas On -Lending Fund financed SMEs that possessed experience in offshore 
projects with export/import performances; as at end -2019, KRW  2.5 trillion had been provided. The IBK SME 
Startup and Promotion Fund financed SME start -ups, restarters, and those who are in the market of building 
new growth drivers based on the recommendation of the Small & Medium Business Corporation. IBK (2020), 
Annual Report 2019 – Connect to the Future . Viewed at: 
https://www.banktrack.org/download/an nual_report_2018_102/191001_koreadevelopmentbankannualreport2
018.pdf . 
149 IBK (2020), Annual Report 2019 – Connect to the Future . Viewed at: 
https://www.banktrack.org/download/annual_report_2018_102/191001_koreadevelopmentbankannualreport2
018.pdf . 
150 Regional development is promoted by providing loans whose interest is partially covered by local 
authorities or the bank itself.  
151 Under the Mutual  Growth Funds facility, KDB's own financial resources are added to deposits from 
large companies to provide SME and ME suppliers with loans with competitive interest rates. KDB manages 
17 mutual growth funds (11 in 2016) worth KRW  734 billion in partnershi p with 11 large companies and 5 MEs 
benefiting 238 companies as of the end of 2019 (217 in 2016). KDB (2020), 2019 Annual Report . Viewed at: 
https://www.banktrack.org/download/annual_report_2019_93/kdb_ar_20191.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  which 65.4% was provided to SM Es and MEs; a total of KRW  5.4 trillion was provided to 
333 companies through its Corporate Investment Support Program, which supports SMEs and MEs 
in their green and workplace safety investments.152 In 2019, KDB's on -lending programme supplied 
a total of KRW  7.6 trillion to 7,397 qualified SMEs and MEs, 41.1% of which was directed to 
companies with low credit ratings and 63.9% was provided with maturities of three years or longer, 
thus helping them g ain a competitive edge. Nevertheless, in 2019 KDB's corporate loans were mainly 
directed to large enterprises (80.4%) and the rest to SMEs. KDB recorded a net profit of 
KRW 279 billion in 2019, KRW  427 billion less than the previous year, as operating inco me decreased 
due to a reduction in net interest income and an increase in general and administrative expenses.  
3.118.   On 27 May 2020, the EXIM Bank announced it would be increasing its investment through a 
"win-win" loan scheme (see above) in the domestic shipbui lding industry by USD  971 million 
(KRW  1.2 trillion), taking the total investment for 2020 up to USD  4.21 billion (KRW  5.2 trillion).153 
The authorities indicate that this a small part of the Bank's financial portfolio in the shipbuilding 
sector.  
3.119.   The Korea Credit Guarantee Fund (KODIT) and Korea Technology Finance Corporation 
(KOTEC) continue to provide credit guarantees to enable emerging innovation firms, especially SMEs, 
to gain access to finance. They are commercially run, and their operations are conduc ted according 
to market principles; however, capital funds are raised through contributions from the Government, 
financial institutions, etc., and the Government would cover any losses relating to the operations of 
the capital funds.154 The supply of all te chnology appraisal guarantees depends upon technology 
ratings by KODIT's future growth evaluation system, i.e. Future Growth Potential Rating System, 
and KOTEC's technology appraisal system, i.e. the KIBO Technology Rating System (KTRS). The 
number of firm s receiving KOTEC's technology appraisal guarantee services continued to grow – 
from 71,285 in 2016 to 78,244 in 2018 to 83,875 in 2020.155 During the review period, KODIT set 
start-ups, exports, major industries, the Fourth Industrial Revolution industries , and job creation as 
"priority sectors" to comply with government policies. It offers underwriting of up to 95% of an IP 
valuation amount for lending or securitization, while the cost of the valuation activity is partly 
subsidized by the Korean Intellectu al Property Office (KIPO) (Section 3.3.7.1), and the valuation 
work itself is done by others such as KODIT and the Korea Invention Promotion Association (KIPA).156 
In 2019 KODIT provided KRW  49.1 trillion (USD  42.4 billion) in credit guarantees, a KRW  2 trillion 
(USD  1.9 billion) increase over the previous year; it also underwrote KRW  20.1 trillion 
(USD  17.4 billion) in credit insurance.157 In 2020 KODIT provided KRW  65.4 trillion 
(USD  58.5 billion) in credit guarantees, a KRW  16.3 trillion (USD  14.6 billion)  increase over the 
previous year; it also underwrote KRW  20.4 trillion (USD  18.2 billion) in credit insurance. In 2019, 
KODIT provided KRW  1.7 trillion (USD  1.5 billion) in primary collateralized bond obligations (P -CBO) 
guarantees to SMEs and financially strapped middle -market and large enterprises affected by the 
COVID -19 pandemic. By easing the eligibility requirements for credit insurance, it planned to 
promptly underwrite enterprises incurring losses due to the COVID -19 outbreak, thus helping 
prevent t heir risk of insolvency. In 2020, KODIT provided KRW  6.7 trillion (USD  6 billion) in P -CBO 
guarantees to SMEs and financially strapped middle -market (middle -standing) and large enterprises 
affected by the COVID -19 pandemic. KOTEC has mainly focused on supp orting the sectors related 
to the non -face-to-face and digital economies in DNA ( Data, Network, AI) + BIG3 (bio/health, 
non-memory semiconductor, future car), the Fourth Industrial Revolution, and smart manufacturing. 
In 2020, it provided KRW  3.75 trillion  in technology appraisal guarantee to SMEs hit hard by 
COVID -19. In addition, the Government sets an annual total risk target to manage the soundness 
 
152 KDB (2020), 2019 Annual Report . Viewed  at: 
https://www.banktrack.org/download/annual_report_2019_93/kdb_ar_20191.pdf . 
153 Global Trade Alert, Republic of Korea: Eximbank Announces Increased Support of Almost $1bn for 
Domestic Shipbuilders , 27 May 2020. Viewed at: https://www.globaltradealert.org/state -act/45614/republic -
of-korea -eximbank -announces -increased -support -of-almost -1bn-for-domest ic-shipbuilders . 
154 Between 2016 and 2020, KOTEC lost an annual average of KRW  172 billion in its operations, and 
received average annual government contributions of KRW  156 billion to compensate for the losses.  
155 Kim Bo -eun, "KOTEC's Tech Rating System Gai ns Global Recognition", The Korea Times , 
27 March  2019. Viewed at: 
https://www.koreatimes.co.kr/www/biz/2020/08/488_266053.html#:~:text=In%202005%2C%20KOTEC%20
developed%20its,Technology%20Rating%20System%20(KTRS).&text=The%20system%20assesses%20comm
ercial%20viability,assets%20owned%20by%20SME%20clients . 
156 OECD, Financing SMEs and Entrepreneurs 2020: An OECD Scoreboard: Korea . Viewed at: 
https:/ /www.oecd -ilibrary.org/sites/9fd590e7 -en/index.html?itemId=/content/component/9fd590e7 -en. 
157 KODIT (2020), 2019 Annual Report . Viewed at: 
https://www.kodit.co.kr/annualMgt/annual_2 0200706182206.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  of the fund, recognizes risk factors early through regular monitoring and early warning models, and 
prepar es for future insolvency through pre -emptive follow -up management.  
3.120.   According to OECD data, the share of government guaranteed loans to all loans to SMEs 
dropped slightly from 10.3% (2016) to 9.7% (2018); direct government loans to SMEs rose from 
KRW 4.551 trillion (2016) to KRW  4.666 trillion (2017) before dropping to KRW  4.415 trillion (2018) 
or 0.6% of all outstanding business loans to SMEs and then rose to KRW  4.358 trillion (2019) and 
KRW 6.29 trillion (2020).158 The FSC financial policy roadmap for 2019  provided for KRW  4.6 trillion 
in government -backed loans and loan guarantees for small and medium -sized shipbuilders and 
equipment and auto parts manufacturers; a financial support programme of KRW  15 trillion over the 
next three years to support SMEs' in vestment in equipment, environmental safety facilities, and 
business reshuffling; and financing mechanisms to enable start -ups and SMEs to borrow or raise 
funds based on their growth potential.  
3.121.   On 31 March  2020, the EXIM Bank (Section 3.2.5) announced that  it would expand funding 
for domestic SMEs struggling with the negative economic effects of the COVID -19 pandemic through 
an extra USD  162 million (KRW  200 billion) preferential loan programme.159 Through this loan 
programme (i.e. SME Speed -Up Loan Program) , the EXIM Bank has been able to promptly provide 
financing to SMEs  efficiently  through a streamlined process; no further information was available on 
the concessional terms of these loans . As of 2020, the number of beneficiaries was 139.  
3.122.   In line  with Arti cle 32 of the 2010 Low -Carbon, Green -Growth Framework Act, measures to 
promote green certification entail extending loans for the purpose of disseminating new and 
renewable energy, providing linkages to the SME policy fund, intensive support for technology  
guarantees, and support for export financing and insurance. As at end -2020, new technology 
appraisal guarantees of KRW  885.5 billion were provided to 1,470 leading green -growth industry 
companies.  
3.3.1.2.2.2   Other support  
Sector -specific  
3.123.   In light of the COVID -19 pan demic circumstances, certain manufacturing activities, including 
medical supplies, mobile telephone distribution and telecommunication equipment, and 5G network 
infrastructure, have benefited from additional support. Under the Enforcement Decree of the Med ical 
Devices Industry Act, in force as from 1 May 2020, medical supply manufacturing companies that 
maintain a certain level of R&D spending have been approved to sign up for a "certification of 
innovation" and benefit from preferential participation in na tional projects,  etc. Also, under the same 
Act, basis for the benefits such as  exemptions when constructing R&D facilities in areas other than 
those that are designated for such usages, and various tax privileges for innovative medical device 
companies , were established .160 According to the MOEF minutes of the 1  April 2020 Crisis 
Management Policy meeting containing several measures aimed at supporting domestic businesses' 
capacity, a provision for USD  344 million (KRW  420 billion) to SME mobile telephone distribution 
stores  and telecommunication equipment construction companies and a commitment to increase 
investment in 5G network infrastructure providers, from USD  2.21 billion to USD  3.29 billion 
(KRW  2.7 trillion to KRW  4 trillion) for first half of 2020, were envisaged.161 
 
158 OECD, Financing SMEs and Entrepreneurs 2020: An OECD Scoreboard: Korea . Viewed at: 
https://www.oecd -ilibrary.org/sites/9fd590e7 -en/index.html?itemId=/content/component/9fd590e7 -en. 
159 Global Trade Alert , Republic of Korea: Nation al Eximbank Announces Extra $162m of COVID -19 
Support Funding for SMEs , 5 April 2020. Viewed at: https://www.globaltradealert.org/state -
act/45612/republic -of-korea -national -eximbank -announces -extra-162m -of-covid-19-support -funding -for-smes. 
160 Innovative medical supply manufacturers are categorized as "innovation pioneer firms" or 
"innovation take -off firms". Innovation pioneer firms are companies with R&D investment proportion of at least 
6% of total sales. Innovation take -off firms are companies with total sales of at least KRW  50 billion and R&D 
spending of over KRW  3 billion or 8% of total sales. Th ese companies can be granted a certification of 
innovation by the Ministry of Health and Welfare. Reportedly, experts anticipate that the enforcement decree 
will speed up the development and globalization of Korea's medical supply manufacturers. Viewed at:  
http://english.korcham.net/nChamEng/Service/Publications/appl/02Detail.asp . 
161 To resolve the financial difficulties of SME mobile telephone distribution stores and 
telecommunication equipment construction companies, Korea's major telecom companies (SKT, K T, and LGU+) 
provided support for rental fees and operation cost of distribution stores and postponement of interest WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.124.   A July 2020 Korean New Deal initiative (Sections 1.2.1 and 1.2.4) to invest KRW  160 trillion 
(USD  133 billion) over 2020 -25 based on two main policies, the Digital New Deal (KRW  58.2 trillion) 
and the Green New Deal (KRW  73.4 trillion), aimed to bolster j ob creation and enhance the 
competitiveness of the domestic manufacturing sector by increasing public investment in digital and 
green energy infrastructure.162 It aims to also to strengthen the employment and social safety net 
(KRW  28.4 trillion) by, inter alia, expanding unemployment insurance coverage to all forms of 
employment. Local governments and the private sector would contribute KRW  25.2 trillion and 
KRW 20.7 trillion, respectively, while the Central Government would cover the remaining amount. 
The initiative includes projects for expanding the integration of 5G and AI into industries, promoting 
remote working in SMEs, promoting prospective businesses to lead the green industry, establishing 
low-carbon and green industrial complexes, promoting renewa ble energy use and supporting a fair 
transition, and expanding the supply of electric and hydrogen vehicles. Under the Digital New Deal 
initiative, several support measures, including vouchers, funds, grants, and guarantees, for four 
sectors (strengthening  the D NA (Data, Network, AI)  ecosystem, digitalizing educational 
infrastructure, nurturing the contactless industry, and digitalizing social overhead capital) are 
envisaged.  
3.125.   During the review period, sector -specific support measures benefited the shipbuilding, 
automotive, and Fourth Industrial Revolution industries (above and Sections 3.3.1.2.2.2, 4.3.2, 4.4, 
and 4.5.4.1).  
3.126.   Energy subsidization appears to remain in place for the coal industry and electricity 
production and pricing (above and Section 4.3). Korea has few explicit subsidi es for fossil fuels, and 
these subsidies do not protect any important domestic industries; the main subsidy (VAT and 
individual consumption tax relief, and grants) is for the production of anthracite coal used in the 
form of charcoal briquettes by low -income households and was to end in 2020, but this has not been 
the case (Section 3.3.1.1.1). As at the time of the previous Review, the authorities indicate that 
electricity prices should not be seen as a subsidy because the cost recovery rate stood at 106.7%  in 
2016, 101.1% in 2017, 94.1% in 2018, 93.1% in 2019, and 100.5% (preliminary) in 2020. 
Furthermore, as the total unit cost included the power generation cost and compensation on 
investment for power supply facilities, the fact that the cost recovery rat e is less than 100% does 
not indicate the existence of a subsidy. In addition, the electricity price continued to vary widely 
between sectors, thus creating cross -subsidies between consumers. Tariffs for industrial, residential, 
and commercial consumers re mained considerably higher than those for agricultural consumers, 
standing at KRW  107.35 per kWh, KRW  107.89 per kWh, KRW  131.60 per kWh, and KRW  48.45 per 
kWh, respectively, in 2020. Subsidies for promotion of solar panels and other renewable energy 
sourc es to support the shifting away from nuclear and fossil fuel have been on the rise, from 
KRW 0.51 trillion in 2016 to KRW  0.5 trillion in 2017, KRW  0.6 trillion in 2018, and KRW  0.64 trillion 
in 2019 on the basis of government budget expenditure. According  to another source, these amounts 
were much higher at KRW  1.79 trillion in 2016, KRW  2.06 trillion in 2017, and KRW  2.6 trillion in 
2018.163 Subsidies under a renewable energy certificate (REC) system that requires a power 
generator to buy the certificate f rom the private power market when it fails to meet a quota 
requirement for power generation using renewable sources have been in place.  
 
repayment on mobile telephone accounts payable and early payment of construction costs, maintenance 
expenses, and supplies for construction  companies, as well as a low -interest loan, with an aim to pursue 
win-win cooperation between conglomerates and SMEs. They provided KRW  420 billion in the form of support 
for operating expenses and low -interest loans to pursue this partnership during the C OVID -19 crisis. 
Furthermore, major telecom companies (SKT, KT, LGU+, and SKB) increased their capital expenditure (CAPEX) 
for telecommunication infrastructure, such as 5G base stations, to provide greater business opportunities to 
SME telecommunication con struction and equipment companies. Global Trade Alert, Republic of Korea: MOEF 
Holds Third "Crisis Management Policy" Meeting, Announcing Increased Targeted Government Support , 
1 April 2020. Viewed at: https://www.globaltradealert.org/state -act/45609/republic -of-korea -moef-holds -third-
crisis-management -policy -meeting -announcing -increased -targeted -government -support . 
162 Government of the Republic of Korea (2020), The Korean New Deal – National Strategy for a Great 
Transformation , July 2020. Viewed at: 
https://english.moef.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=4948#:~:text=The%20Korean
%20New%20Deal%2C%20announced,employment%20and%20 social%20safety%20net ; and EIU (2020), 
Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
163 Baek Sang -kyung and Minu Kim, "Korea's Renewable Energy Subsidy Hits $2.29 bn Last Year", Pulse 
News , 11 March 2019. Viewed at: https://pulsenews.co.kr/view.php?year=2019&no=145510 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.127.   Korea continues to heavily subsidize agriculture with support levels remaining well above 
the OECD average and the poten tially most distorting forms of assistance predominate.164 Producer 
support estimate (PSE) as a share of gross farm receipts stood at 47.9% in 2017 -19, compared to 
an OECD average of 17.6%. Market price support (MPS) remained the dominant component of the 
PSE, accounting for 89% of PSE over the same period. Budgetary payments to general services 
directed at the sector as a whole (general services support estimate (GSSE)) averaged 14% of total 
support (total support estimate (TSE)) in 2017 -19; its main elemen ts remain expenditure on 
infrastructure (62% of GSSE), while government funding for the agricultural knowledge and 
innovation system accounted for 18%. Total budgetary support estimate (TBSE) dropped slightly 
from 0.4% (2018) to 0.3% (2019) of GDP.  
3.128.   Accordi ng to Korea's latest WTO notifications of April 2021, covering the period 2016 -18, 
the current total aggregate measure of support (AMS) rose from KRW  748.38 billion in 2016 to 
KRW 1,489.78 billion in 2017 and dropped to KRW  2.91 billion in 2018 (remaining below its final 
bound level of KRW  1.49 trillion), in line with WTO provisions and scheduled commitments.165 
Soybeans remained the only item subject to MPS; this support rose from KRW  7.26 billion (2016) to 
KRW 33.27 billion (2017) and dropped to KRW  8.82 b illion (2018). Total domestic agricultural 
support (including Green Box, development programmes subject to special and differential (S&D) 
treatment, and de minimis  support not subject to reduction commitments), rose from 
KRW 8.6 trillion (KRW  1.37 trillion  excluding Green Box and S&D assistance) in 2016 to 
KRW 9.1 trillion (about KRW  1.4 trillion in 2018 excluding Green Box and S&D assistance) 
(Table  A3.7). In 2018, de minimis  support included MPS (soybeans), other product -specific 
assistance (e.g. rice def iciency payment of KRW  539.3 billion, milk deficiency payment of 
KRW 15.0 billion, and loan interest subsidies for numerous items), and non -product -specific support 
of KRW  789.4 billion (mainly crop insurance, direct payments, and self -help fund raising). In 2018, 
Green Box support remained over five times (virtually the same as in 2016) the size of Korea's total 
product - and non -product -specific AMS.  
Foreign investment location incentives  
3.129.   During the review period, Korea continued to promote or induce FDI ( including joint ventures 
with domestic investors) with the operation of foreign investment zones (FIZs), export -oriented 
FTZs, and free economic zones (FEZs) that are divided into complex -type, individual -type, and 
service -type zones (Section 2. 6.3). The K orea Industrial Complex Corporation (KICOX), which 
administers state industrial complexes, also helps foreign investors find factory sites and obtain 
building and related permits.166 Investors are eligible for tax, cash grant, and industrial site support. 
Locations vary in terms of eligibility for occupation, targeted industries, and investment incentives 
in form of rent reduction/fixing, acquisition/property tax holidays, customs duty/VAT exemption, 
and cash grant, depending on their purpose of designation.  Corporate tax incentives apply only to 
those foreign -invested enterprises that applied for them on or before 31  December 2018. This 
assistance, notified to the WTO pursuant to Article  XVI:1 of the GATT  1994 and Article  25 of the 
Agreement on Subsidies and  Countervailing Measures in 2013 and 2015, was not contained at the 
June 2019 notification (Section 3.3.1.2).167 The amount of cash grants resulting from this type of 
support stood at KRW  6,051 million in 2016, KRW  4,126 million in 2017, KRW  6,000  million i n 2018, 
and KRW  6,018 million in 2019; in addition, the support in the form of forgone tax revenue from the 
reduction or exemption of corporation tax for all foreign -invested corporations in FIZs and FEZs 
stood at KRW  72 billion in 2016, KRW  74 billion in 2017, KRW  114 billion in 2018, and KRW  77 billion 
 
164 The OECD has been publishing reviews of agricultural policies in Korea, other OECD countries, and  
some other economies for several years. In these publications, the value of transfers to agricultural producers 
is measured using the producer support estimate (PSE) and associated indicators. The methodology for 
calculating these indicators is different from that used to calculate the aggregate measure of support (AMS), 
and the two sets of data are neither compatible nor comparable. The authorities consider that the level of 
domestic agricultural support for the purpose of the WTO Trade Policy Review shou ld be calculated in the 
context of WTO rules described in the Agreement on Agriculture. OECD (2020), Agricultural Policy Monitoring 
and Evaluation 2020: Korea . Viewed at: https://www.oecd -ilibrary.org/sites/6f3ac4dd -
en/index.html?itemId=/content/component/6f3ac4dd -en. 
165 Schedule LX – Republic of Korea (WTO document WT/LET/804, 25 July 2011), Part IV, Section I, and 
WTO documents G/AG/N/KOR/80, 26  April 2021; G/AG/N/KOR/81, 26 April 2021; and G/AG/N/KOR/82, 
26 April 2021.  
166 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
167 Korea did not consider that corporation tax relief to industries located in FTZs was subject to 
WTO notification. WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  in 2019. As of 2020, there were 113 FIZs (98 in 2015), 13 FTZs (same as in 2015), and 7 FEZs (8  in 
2015); between 2016 and 2020, five new FDI -promoting sites were set.168 As of 2020, total FDI in 
these zones , where 925 companies (682 in 2015) employing 197,000 persons (149,000 in 2015) 
operated, amounted to USD 4.5  billion (USD  2 billion in 2015).  
Other  
3.130.   Under the 2013 Act on Assistance to Korean Off -Shore Enterprises in Repatriation (amended 
by Act No.  17731 , 22 December 2020 , the so -called "U -Turn" companies enjoy various tax and 
non-tax benefits. Corporation and income taxes are cut in proportion to the decrease in sales of 
overseas operations for five to seven years, and plant and equipment investment is su bsidized . SMEs 
can enjoy employment incentives for two years. Companies can also be subject to preferential 
guarantee limits from trust guarantee funds, technology guarantee funds, and trade guarantee 
funds, while receiving construction subsidies for build ing smart factories. Under the 2019 
amendment of the Act, support was extended to IT services and information and communications 
firms. Companies based outside metropolitan areas are eligible to rent cuts for long -term leases (of 
50 years) and permission t o implement private contracts. To accommodate firms applying for U -
Turn qualifications, "One -Stop" services to aid receiving and transporting application forms have 
been provided since 2019 by KOTRA.  
3.131.   Under the Act on Trade Adjustment Assistance (TAA), sinc e April 2007, Korean 
manufacturers adversely affected by a bilateral FTA have been able to seek compensation from 
MOTIE and the MOEL (Ministry of Employment and Labour) through loans, investments, and 
job-placement support for workers. Measures to facilita te industry adjustment are adopted if sales 
or production are reduced by more than 10% (since 2012; reduced from 25% to 20% in 2011) or, 
considering the operating income, number of employees, operation rate, and inventory of the 
enterprise, the damage is d eemed to amount to more than 10% over an extended period because 
of import competition.  
3.3.2   Standards and other technical requirements  
3.3.2.1   Standards, testing, and certification  
3.132.   During the review period, the institutional setting in this area remained unchanged.169 The 
Korean Agency for Technology and Standards (KATS), under MOTIE, develops, manages, and 
implements Korean Industrial Standards (KS), based on the Framework Act on National Standards 
and the Industrial Standardization Act, jointly with nine ministries in cluding the Ministry of Science 
and ICT (MSIT), Ministry of Environment (MOE), and Ministry of Oceans and Fisheries (MOF). KATS, 
the official enquiry point on industrial products under the WTO Agreement on Technical Barriers to 
Trade (TBT Agreement),  is in charge of planning and coordinating national standards policy; MAFRA's 
Quarantine Policy Division is the enquiry point on agricultural products.  The Korea Standards 
Association (KSA), a KATS affiliate with public - and private -sector membership, provides 
comprehensive knowledge services (standardization, standards, certification, and training), and 
several private bodies perform standardization -related tasks.170 Other bodies performing 
standards -related work include the Korea Research Institute of Standards and Science (KRISS) 
(responsible for metrology), affiliated with the National Research Council of Science and Technology 
under the MSIT as from July 2017 (previously with the Ministry of Education, Science and 
Technology), and the Telecommunications Techno logy Association (TTA), an agency affiliated with 
the MSIT, which is responsible for group standards for telecommunications, IT, radio 
 
168 Invest Korea, Foreign-Invested Company Priority Zones . Viewed at: https://www.investkorea.org/ik -
en/cntnts/i -371/web.do . 
169 At the time of the previous Review, Korea faced huge testing and certification de mand, and its 
testing and certification agencies appeared to lag behind their counterparts overseas (e.g. BV of France, SGS 
of Switzerland, and Intertek of the United  Kingdom), inter alia , in terms of brand power and service diversity. 
According to the aut horities, speedy and inexpensive services were provided, and there was a high level of 
digitalization and the ability to respond quickly to market changes. No information is available on the current 
state of play in terms of delays and action taken to impr ove overall capabilities in this area since 2016. WTO 
document WT/TPR/S/346/Rev.1, 6  January 2017.  
170 The KSA maintains a KS Certification Support Centre and a Global Standardization Support Centre. 
KSA, CEO Message . Viewed at: https://eng.ksa.or.kr/ksa_english/5953/subview.do . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  communications, and broadcasting.171 The National Standards Council reviews general plans for the 
introduction of national  standards and coordinates the standards -related activities of the different 
ministries.  
3.133.   Standard development remains government -led and a significant element of Korea's 
industrial policy. Under the inter -ministerial fourth National Standards Plan (2016 -20), key policy 
goals included the development of standards for new growth -engine activities for improving people's 
daily life and the eradication of redundant certification systems. The Plan aimed to advance the 
national standards system, strengthen the sta ndard technology infrastructure, promote active 
participation in international standardization activities, and assist the private sector in increasing its 
capacity to develop standards.172 A fifth National Standards Plan will be established in the second 
quarter of 2021. During the review period, KATS implemented standardization strategies required 
for competitiveness in emerging industries and adaption to technological changes of the Fourt h 
Industrial Revolution; efforts for KS to be reflected in the fields of the Fourth Industrial Revolution, 
such as a smart factory, a smart city, the Internet of Things (IoT), and big data, were undertaken.  
3.134.   Under the Framework Act on Administrative Regulat ions (last amended by Act No.  16954, 
4 February 2020), a regulatory impact analysis (RIA), including a cost -benefit analysis, has been 
required since 1997, prior to introducing a new regulation or reinforcing existing regulations.173 The 
RIA continues to be  carried out by three divisions of ministries in different fields. KATS, as one of 
them, is implementing a technical regulatory impact assessment (TRIA) aiming to comprehensively 
review costs, advantages, impacts, and compatibility of regulations for techn ical regulation issues. 
In 2020, of 79 cases suggested for adjustment 72% were adjusted, compared to 102 and 52% in 
2015.  
3.3.2.2   Voluntary, compulsory, national, and aligned standards  
3.135.   The Korean standardization system consists of technical regulations (mandatory standards) 
developed by ministries and government agencies, as well as standards (voluntary) set by KATS 
(KSs) and the Radio Research Agency (Korea Communications Standards (KCSs)). The KCSs, set on 
the basis of the Framework Act on Broadcasting and Commun ications Development and operated by 
the MSIT, are "consolidated" into KSs. Seven  ministries and two agencies (the MSIT; the MOE; 
MAFRA; the MOEL; the Ministry of Land, Infrastructure and Transport; the MOF; MFDS; the Korea 
Forest Service; and the Korea Me teorological Administration) continue to participate in the 
development of KSs. KATS performs the role of general management and adjustment in developing 
and operating standards in each sector and cooperating with each government ministry; as of 2020,  
it transferred 3,867  KSs, such as food products, medical devices, wood, and paper, to the seven 
ministries.174 As from 2008, KATS has progressively been transferring its standards development 
role to the Cooperation Organization for Standards Development (COSD) , thus enhancing private -
led standards development. All categories of KSs have been entrusted to the COSD, covering more 
than 90% of KSs.175 
3.136.   KATS prepares the roadmap for standardization and carries forward standard development 
in connection with government  policies and R&D. In 2016, KATS was to proceed with national 
standards coordination projects in the fields of smart factory, smart health, next -generation steel, 
next-generation material, and wearable smart equipment. In practice, projects in the field of smart 
cities, autonomous vehicles, and AI/big data were carried out during the review period.  
3.137.   As of 2016, about 15% of all KSs (3,072) were contained in 5,470 technical regulations 
issued by 19  government ministries. No recent data were available from the authorities.  
 
171 KRISS also manages the National Center for Standard Reference Data (NCSRD). The TTA sets 
industry standards and has been instrumental in creating the current Korean I nformation and Communication 
Standards. The TTA also collaborates with international and national standards organizations, such as the ITU.  
172 Between 2016 and 2019, Korea made 314 proposals for new international standards at ISO (247) 
and IEC (67), compare d to 236 in 2010 -13. KATS, Annual Report 2018 . Viewed at: 
https://www.kats.go.kr/en/content.do?cmsid=543&mode=view&page=&cid=21289 ; and KATS, Annual Report 
2019. Viewe d at: https://www.kats.go.kr/en/content.do?cmsid=543&mode=view&page=&cid=21768 . 
173 The authorities indicated that KATS continues to prepare, adopt, and apply standards in line with the 
provisions of Annex 3 of the WTO TBT Agreement (Code of Good Practice).  
174 KATS, Standards . Viewed at: https://www.kats.go.kr/en/content.do?cmsid=533 . 
175 KATS, Standards . Viewed at: https://www.kats.go.kr/en/content.do?cmsid=533 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.138.   As at 2020, 20,916 KSs had been adopted (20,495  in 2016) and mainly allocated as follows: 
chemicals, textiles, and ceramics (4,564, 21.8%); machinery (3,206, 15.3%); electricity (3,733, 
17.8%); metal, mining, and construction (2,310, 11%); transportation machines, shipbuilding, and 
the aerospace industry (1,456, 7%); IT (1,811, 8.7%); and food, environment, etc. (1,339, 6.4%). 
Roughly 3% (same as in 2016) of KSs have been established without any reference to international 
standards. As  at 2020, 20,280 (97%) of KSs had been harmonized with corresponding international 
standards, compared to 19,880 (97%) in 2016. Non -harmonized standards, i.e. those that are either 
unique to Korea, with no corresponding international norm (e.g. for kimchi and domestic services 
for customers), or cannot be harmonized because of their link to other domestic regulations, remain 
in place.176 In 2020, approximately 67% (66% in 2016) of all KSs were subject to international 
ISO/IEC harmonization.  
3.139.   In 2020, Korea ma intained bilateral MOUs with 76 agencies (42 in 2016) from 41 countries 
(31 in 2016) for mutual cooperation in global standardization activities, exchange of technical 
information related to standards and conformity assessment, organization of standardizat ion 
meetings, operation of joint education programmes, and exchange of experts.177 
3.3.2.3   Food, health -related, and other measures  
3.140.   Legislative responsibility for food safety and quality remains divided between several 
ministries. MFDS regulates food safety (includ ing foods of plant, animal, and aquatic origin), whereas 
MAFRA deals with animal and plant health (including import quarantine measures for animal, 
livestock products, and plants). The MOF deals with aquatic health including import quarantine 
measures for live aquatic animals and their products. Safety of foods, pharmaceuticals, medical 
devices, and cosmetics is governed by MFDS, whose main role is to protect public health and safety, 
including the safety of food such as agricultural, fishery, and livestock  products. MFDS, with its 
six regional offices, and the National Institute of Food and Drug Safety Evaluation are responsible 
for establishing and enforcing basic legislation and its implementing regulations, as well as setting 
standards and specifications  for domestic and imported foods, including livestock products, 
functional foods, food additives, food packaging, containers, and equipment (Sections  3.3.2.6 and 
3.3.3.1). Standards and specifications for meat, dairy, and egg products are handled by MFDS, 
whereas quarantine standards for animals and animal products are handled by MAFRA (Section 
3.3.3.2).  
3.141.   MFDS 2020 policy objectives involved communication and cooperation with all stakeholders, 
support to innovative growth by reforming regulations, making Kor ea a global powerhouse in food 
and drug safety (Section 3.3.3), and preparation for the future through pre -emptive R&D.178 Shifting 
from product -centred to people -centred approaches, MFDS in 2020 pursued the following objectives: 
enhancing food safety for b etterment of the public health, creating an environment for safer use of 
drug and medical devices, and introducing food and drug safety measures that are innovative yet 
resonate with people.  
3.142.   During the review period, several initiatives were undertaken to,  inter alia , improve drug 
safety and align with international standards.179 The entire Korean Pharmacopoeia was amended to 
reflect international standards and new technologies; furthermore, in November 2019, an integrated 
information system ranging from lic ensing of medical devices based on standard codes to their 
distribution and usage was established. In 2019, MFDS prepared 19 guidelines and guidances, 
 
176 No information on developments on "Korea specific" standards was available from the authorities at 
the 2016 Review. At the time of the 2012 Review, according to the authorities, there were very few 
"Korea -specific" standards, and these were maintained onl y where there were no equivalent international 
standards and when there was sufficient justification. Moreover, "Korea -specific" standards were not aimed at 
creating unnecessary obstacles to international trade; they involved Korean traditional food produc ts and 
related items, such as gwamegi  (dried Pacific saury or mackerel pike), doenjang  (fermented soybean paste), 
gochujang  (thick soy and red pepper paste), and kimchi refrigerators. WTO document WT/TPR/S/268/Rev.1, 
8 November 2012.  
177 KATS, MoU Activities . Viewed at: http://www.kats.go.kr/en/content.do?cmsid=408 . 
178 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
179 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/b rd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  including the "Questions and answers (Q&As) for structure and content of clinical study results" 
based on  International Council on Harmonization of Technical Requirements for Registration of 
Pharmaceuticals for Human Use (ICH) guidelines ; while in 2020, MFDS prepared a total of 13 
guidelines and guidances including the "Guideline on Clinical Evaluation of Car diovascular Safety" 
based on the ICH  guidelines.  Fifty-one subjects of its Good Review Practices Manuals of Policies and 
Practices (GRPMaPP) were newly prepared or revised to improve predictability and consistency of 
the clinical study process.  MFDS contin ues to develop and revise guidelines regarding drug 
evaluation (e.g. implementing ICH guidelines) to harmonize with international standards. In 2019, 
the preliminary registration of overseas manufacturing facilities of pharmaceuticals, etc. and on -site 
inspection were strengthened to enable systematic and effective post -management of the facilities 
on par with those of domestic pharmaceuticals for which inspection was enhanced  to prevent  
potential hazards . MFDS registered overseas manufacturing facilities a nd in 2019 , inspected 20 
facilities where  potential  risks were found  in evaluation.180 The safety in biopharmaceuticals, such 
as vaccines and cells, was enhanced. MFDS registered Korean drugs with the EU Whitelist (7th 
country doing so) in May 2019, signed the Korea -Switzerland Mutual Trust Agreement (December 
2019), and maintained a national bidding grade in Viet  Nam (July 2019).  
3.143.   Imports of pharmaceuticals continue to require a free sale certificate, issued by an authority 
of the exporting country  (the Medi cal Device Act Enforcement Regulations, revised as of May 2009) . 
Any person intending to import medical devices or pharmaceuticals must obtain an item -specific 
approval from, or file a notification with, MFDS in accordance with the relevant law. Item -specific 
pre-approval involves the submission of extensive clinical trial data and other safety and efficacy -
related data as prescribed by the Regulation on Safety of Pharmaceuticals.181 Manufacturers must 
submit detailed data on certain active pharmaceutical in gredients under MFDS's Drug Master File.  
3.144.   Imported biological drugs remains subject to batch release testing by MFDS, even if the 
drugs have already been tested and released by the manufacturer and the health authority of the 
country of origin. The authorit ies indicate that the same rules and regulations continue to be applied 
in accordance with the Pharmaceutical Affairs Act to domestically distributed biological drugs (locally 
and foreign produced), and results of tests conducted by foreign manufacturers o r health authorities 
of the exporting country must not substitute results of batch or lot release tests conducted by MFDS. 
For some medical devices used for medical practice, the Government needs to determine whether 
they are eligible for reimbursement bef ore they are used at healthcare institutions including 
hospitals, since all healthcare institutions in Korea are reimbursed by the Government for medical 
services provided to patients. With regard to medical devices subject to health technology 
assessment,  under the relevant laws, it now takes up to 14.3 months or 430  days (17 months or 
510 days in 2016) from the date of application for MFDS approval by a device manufacturer to the 
date when MFDS approval is granted and the product is launched onto the mark et: approval 
continues to take 80  days; health technology assessment takes 250 days (280 in 2016); and as 
from 2017 listing the product for reimbursement takes 100  days (150 in 2016).182 
3.145.   Cosmetics are regulated by MFDS and fall under two categories: "functional" cosmetics and 
regular cosmetics.183 Functional cosmetics include whitening, anti -wrinkle, and sunscreen and 
tanning products. MFDS reviews only functional cosmetics for pre -market approval. For all other 
regular cosmetics, the Korea  Pharmaceutical Traders Association (KPTA) has been authorized by  
 
180 The legal framework for implementing overseas inspection required the passing of the 
Pharmaceutical Affairs Act, 11 Decemb er 2018, and the amendment of subordinate instruments (Regulation on 
Safety of Drugs, etc., 6 December 2019) that define criteria and procedures for concrete enforcement.  
181 Most regulations in this area are harmonized with the International Conference on H armonization 
(ICH) guidelines. Since March 2016, MFDS has participated in ICH as an observer and later became a 
regulatory member.  
182 Yet, in the case of the health technology related to in -vitro diagnostic tests or genetic tests, the 
result of the assessme nt shall be notified within 140 days after receipt of an application, subject to a one -time 
extension of 110 days if additional examination is required or any other unavoidable circumstances exist.  
183 In 2020, Korea was among the world's 10 largest cosmetic s markets, removed from the 8th position 
by India in 2018. According to 2021 revenue projections, it is to drop to the 12th position, representing nearly 
1.8% of the global market and worth USD  1.6 billion (USD  1.4 billion in 2016). International Trade 
Administration, South Korea: Cosmetics . Viewed at: 
http://www.export.gov/southkorea/doingbusinessinskorea/leadingsectorsforusexport sinvestment/cosmetics/in
dex.asp ; Cosmetic Obs, COVID -19: Overview of the South Korean Cosmetic Market , 14 April 2020. Viewed at: 
https://cosmeticobs.com/en/articles/cosmetics -news-7/covid -19-overview -of-the-south -korean -cosmetic -
market -5253; and Statista, Cosmetics: South Korea . Viewed at: 
https://ww w.statista.com/outlook/70010000/125/cosmetics/south -korea . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  MFDS to review and certify import permission requests submitted by the Korean importer. MFDS 
administers registration requirements on imported and domestically produced functional cosmetics . 
Importers must conduct "self -regulated" quality inspections for each product type to ensure 
conformity with the cosmetic standards and test methods.184 MFDS determines compliance of 
cosmetic manufacturers to Cosmetic Good Manufacturing Practices (CGMP) th rough inspection and 
evaluation prior to awarding them with the certification; as of end -December 2020, 165 companies 
were registered as CGMP -compliant firms.185 Cosmetics importers are required to file a customs 
report to, and obtain prior approval from, t he KPTA on all products. Test results submitted by 
overseas manufacturers using quality standards that are internationally accepted or certified, or that 
are more stringent than the Korea Cosmetic Good Manufacturing Practice (KCGMP) standards, are 
accepted  without any additional quality testing in Korea. Quality inspection by the importer of 
cosmetics is required, according to manufacturing serial/batch number. Certain products classified 
as cosmetics overseas are not considered as such in Korea; reportedly , this makes it hard to 
harmonize regulations with other countries. Depilatory and hair dye products were placed under the 
category of cosmetics pursuant to the amendment of the Enforcement Rule of the Cosmetics Act on 
12 January 2017, enforced from 30 May  2017. Among industrial or uncontrolled products, the 
chemicals directly used on the human body, such as cosmetic soaps (solid soaps) for cleaning the 
human body, instant hair thickeners, and hair removal wax, were placed under the category of 
cosmetics by  the amendment of the Enforcement Rule of the Cosmetics Act on 31  December 2018, 
enforced from 31 December 2019.186 
3.146.   During the review period, further action was taken in the areas of registering and notification  
of toxic chemicals. The amendments of the 2015 Act on Registration and Evaluation, etc. of Chemical 
Substances (AREC or K -REACH), which went into effect on 1 January 2019, brought a significant 
deviation from the regulatory mechanisms outlined in the prev ious version.187 They provide existing 
substances (≥1  t/a) with the corresponding grace period – from 2021 to 2030 – according to 
manufacturing or importing quantity if their pre -registration is made before 30 June 2019. All new 
chemical substances are requ ired to be registered. Pre -registration of existing chemical substances 
(≥1 t/a) before 30  June 2019 has been necessary to be eligible for the corresponding grace period. 
All new chemical substances are required to be registered. However, new chemical subs tances 
(<100  kg/a) only require notification rather than registration. AREC requires manufacturers and 
importers of chemical substances to register or notify it before manufacture or import. Concerns 
relating to the lack of guidance around implementation, the insufficient time for companies to 
implement the requirements, and AREC's lack of protection for confidential business information 
have been raised (Section 3.3.2.5).188 
3.147.   The Chemicals Control Act (CCA), which protects public health and prevents environm ental 
harm caused by chemical substances by strengthening the criteria for the handling and management 
of chemicals, previously managed under the Toxic Chemicals Control Act (TCCA), was amended in 
and enforced from 2015. Several additional revisions of the  amended CCA were enforced from 
April 2021.189 It now requires that business places handling hazardous chemicals shall prepare and 
implement a chemical accident prevention management plan, comply with standards of handling 
facility, undergo regular inspecti ons, and fulfil other obligations such as business permission and 
regular education programs.  MFDS's Standards & Specifications for Equipment and 
Container/Packaging (Packaging and Container Code) provides general standards for equipment, 
containers, and p ackaging for food products and specifications for individual packaging materials.190 
 
184 WTO document WT/TPR/S/268/Rev.1, 8 November 2012.  
185 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
186 MFDS (2020 ), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/vie w.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
187 REACH24H, K-REACH.  Viewed at: https://www.reach24h.com/en/service/chemical -service/k -
reachact -on-registration -and-evaluation -etc-of-chemical -substances.html . 
188 USTR (2020), 2020 National Trade Estimate Report on Foreign Trade Barriers . Viewed at:  
https://ustr.gov/sites/default/files/2020_National_Trade_Estimate_Report.pdf . 
189 REACH24H, Korea CCA (Chemical Control Act) . Viewed at: 
https://www.reach24h.com/en/service/chemical -service/korea -cca-chemical -control -act-compliance.html . 
190 USDA Foreign Agricultural Service, Food and Agricultural Import Regulations and Standards, Country 
Report: Korea, Republic of , GAIN Report Number KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20AgriWT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  In 2019, the MOE published partial amendments to the Rule of the Act on the Promotion of Saving 
and Recycling of Resources to promote recycling and reduce unnecessary waste . These amendments 
require packages to be evaluated, graded, and labelled for the recyclability of packaging materials.  
3.3.2.4   Conformity assessment  
3.148.   KATS remains responsible for conformity assessment, certification, registration, and testing 
of industrial product s for voluntary (KS) standards. It runs the Korea Laboratory Accreditation 
Scheme (KOLAS), which accredits testing, calibration, and medical testing laboratories, as well as 
the Korea Accreditation System (KAS), which accredits product certification bodies . Accreditation 
accords with internationally recognized standards. As of end -March 2021, there were 613 testing 
laboratories (496 in 2016), 260 calibration laboratories (212 in 2016), 12 medical testing 
laboratories accredited by KOLAS (6 in 2016), and 23 product certification bodies accredited by KAS 
(20 in 2016).191 
3.149.   Korea maintains a single national integrated certification mark, the Korea Certification (KC) 
mark, which has been fully implemented since January 2011. The KC mark and the corresponding 
KC cer tificate are valid for 730 different products, such as automotive parts, machines, and many 
electronic products.192 This test mark confirms that the product meets the relevant Korean Safety 
Standard, called K  Standard. K Standard requirements are often simi lar to the respective IEC 
Standard (Standard of International Electrotechnical Commission).  
3.150.   The 4th Comprehensive Plan on Quality Management for 2016 -20 consisted of four main 
projects: fundamental establishment on smart quality management, global trend on  quality 
management, capability reinforcement for enhancing quality management of small and 
medium -sized manufacturing companies, and advancement of quality management infrastructure.  
3.151.   Certification authorities are encouraged to negotiate MRAs with foreign counterparts. KOLAS 
is a signatory to the International Laboratory Accreditation Cooperation (ILAC) Multilateral 
Recognition Arrangement (MLA) for testing, calibration, and medical testing; as of March 2021, 
103 accreditation bodies from 105 economies had signed the ILAC MRA MLA. KAS is a signatory to 
the International Accreditation Forum (IAF) MLA for product certification. The Korean Accreditation 
Board (KAB) is a signatory to the IAF MLA for management systems certification and certification of 
persons. KOLAS, KAS, and KAB are the signatories to the APAC (Asia -Pacific Accreditation 
Cooperation) MRA. The main scope of KOLAS under the APAC MRA is testing, calibration, and medical 
testing, while the main scope of KAS is product certification, and those of KA B are management 
systems certification and certification of persons. Korea is also a member of the Asia -Pacific 
Economic Cooperation (APEC) MRA on Conformity Assessment of Telecommunications Equipment 
(Phases I and II) and of Part I of the APEC Electrical MRA; it does not intend to participate in Parts  II 
and III of the latter. It joined the MRA on Conformity Assessment of Electrical and Electronic 
Equipment in 2015.  
3.152.   Korea maintains  an APEC -TEL MRA Phase I  with Canada (1997), the United  States (2005), 
Viet Nam (2006), and Chile (2007) on recognition of test results for telecommunications equipment 
and Phase II with Canada (2017) on recognition of certification results for telecommunications 
equipment; RTAs with the European  Union (2011) and the United  Kingdom (2021) with provisions 
on recognition of conformity assessment for electronics equipment; and an MRA with Singapore 
(2006) on electrical and electronic appliances under the Korea –Singapore RTA. Under the Industrial 
Technolo gy Innovation Promotion Act, the New Excellent Product (NEP) certification system 
continues to cover products manufactured with new technologies developed first in Korea or 
improved with innovative technologies.193 The certificate is valid for three years. NEP-certified 
products receive government support to expand sales channels and accelerate technology 
development. NEP -certified p roducts receive an additional qualification point in procurement by 
 
cultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. 
191 KOLAS, Calibration . Viewed at: https://www.knab.go.kr/en/Calibration_Search.do . 
192 MPR International – Korea Certification, What Is KC Certification for South Korea?  Viewed at: 
https://www.korea -certification.com/en/kc/what -is-kc-certification/ . 
193 KOITA, Awards & Certifications . Viewed at: 
http://eng.koita.or.kr/activitie s/activities/awardcertification.asp . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  government and public organizations. According to the autho rities, the NEP system does not affect 
international trade.  
3.153.   MFDS facilitates food imports through the "authorization of foreign testing laboratories" 
system, which covers inspection agencies authorized by the Government of the exporting countries 
and MFDS;  it includes 60 agencies in 8 countries. As of 31 December 2020, the total number of 
agencies classified by categories were as follows: food (163 including 60 foreign institutions and 
25 statutory institutions), livestock (80 including 26 statutory institu tions), pharmaceuticals 
(47 including 24 statutory institutions), cosmetics (41 including 24 statutory institutions), medical 
devices (14 including 1 statutory institution), and sanitary goods (36 including 24 statutory 
institutions).194 Test results issued  by foreign agencies are recognized by MFDS, and therefore , 
relevant imports are exempt from laboratory inspection  when they are imported for the first time  
to Korea . Korea has not joined the APEC MRA on Conformity Assessment of Foods and Food Products.  
3.154.   Under the Act on the Management and Support for the Promotion of Eco -Friendly 
Agriculture/Fisheries and Organic Foods (New Organic Act) (last amended by Act No.  18026, 
13 April 2021), as from 2  June 2013 a mandatory organic certification programme requires all 
domestic and imported organic fresh (unprocessed) and processed produce and livestock products 
to be certified by a MAFRA National Agricultural Products Quality Management Service (NAQS).195 
As of December 2020, 29 Korean certifying agencies (15 in 2015 ) and 2 foreign certifying agencies 
(4 in 2015) were accredited by MAFRA's NAQS for certification of organic processed food products.196 
Korea maintains a zero -tolerance policy for the inadvertent presence of biotech content in processed 
organic products (S ections  3.3.2.6 and 3.3.3.1); for any organic products that test positive for 
genetically modified organisms  (GMOs), importers/producers can be instructed to remove an organic 
claim from the product label, and NAQS may investigate the case to see if there is any intentional 
violation. In lieu of certification by accredited certifying agents, the Act allows MAFRA to have an 
equivalency agreement on processed organic products with foreign trade partners; two  bilateral 
equivalency arrangements (Korea –United  States (2014), Korea -European  Union (2015)) allow for 
processed food products certified as organic in the United  States, the European  Union, or Korea to 
be sold as organic in any of the three markets without having to go through another costly 
certification process under the importing country's standards.  
3.3.2.5   Transparency  
3.155.   New and/or revised legislation and the implementing guidelines are published in the 
government gazette for public comments; these changes are also notified regularly to the WTO for 
Members' comm ents. Between 2016 and  12 February 2021, Korea made  348 new notifications 
(281 in 2012 -15), of which 323 were regular, under the WTO TBT Agreement; the majority remained 
under Article  2.9 of the Agreement, and in  83.3%  of the notified cases (91.1% in 2012 -15) the 
timeliness of the submission allowed for a comment period of 60  days or more, while in only  9% of 
cases (11% in 2012 -15) the period was less than 45 days.197 To help Korean companies respond to 
technical barriers to trade, KATS maintains a TBT  division, which is exclusively responsible for 
WTO/TBT -related affairs. KATS maintains an online information service on technical regulations of 
respective countries, which are notified to the WTO.198 KATS runs a TBT  Notifications Alert Service, 
 
194 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
195 The certification for organic produce is classified into two categories: organic and  no-pesticide. For 
livestock products, two categories of certification are available: organic and no -antibiotic.  
196 USDA Foreign Agricultural Service, Food and Agricultural Import Regulations and Standards, Country 
Report: Korea, Republic of , GAIN Report Nu mber KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agri
cultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. 
197 Since 2015, Korea has used the online TBT notification submission system to submit all notifications 
of Technical Regulations and Conformity Assessment Procedures. WTO documents G/TBT/39/Rev.1, 
24 May 2017; G/TBT/40, 12  March  2018; G/TBT/42, 25 February 2019; G/TBT/44, 19 February 2020; and 
G/TBT/ 45, 18  February  2021.  
198 Korean Network on World TBT, TBT Central Secretariat – Introduction . Viewed at: 
https://www.knowtbt.kr/main.do?menuNo=2001110&nttId=null . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  which transmits TBT notifications to stakeholders by email and encourages them to submit their 
comments.  
3.156.   During the review period, Members raised specific trade concerns (STCs) at the Committee 
on Technical Barriers to Trade regarding several measures under consideration or taken by Korea 
(e.g. ballast water, textile products for infants, warning on alcoholic beverages drinking, package 
recycling, energy efficiency management equipment, household chemical and biocidal products, and 
wood products).199 
3.3.2.6   Labelling  and packaging  
3.157.   MFDS continues to develop labelling standards for food including livestock products, while 
regional offices inspect imported foods and enforce labelling requirements upon arrival; provincial 
authorities verify labelling of domestic and impor ted goods in the marketplace.200 All imported food 
products are required to carry legible Korean  language labels. Labelling requirements include 
nutritional labelling, voluntary colour -coded labelling, high caffeine content labelling for liquid 
products, fu nctional food labelling, liquor labelling, country of origin labelling (COOL) (by MAFRA), 
and genetically modified (GM) labelling for unprocessed agricultural products and processed food 
(see below).201 
3.158.   Beef retailers and distributors remain required to kee p track of all transactions from the 
importing stage to the final retail level.202 A traceability system for infant/baby food, health 
functional food, and milk formula is also required. In December 2019, MFDS introduced a four -part 
traceability system for f ood for pregnant/lactating woman, special medical -purpose food, and 
weight -control food depending on the annual sales value; its fourth phase covering all manufacturers 
of these products is to be implemented in December 2021.203 Importers are required to establish a 
traceability system from the point when imported products arrive in Korea throughout distribution.  
3.159.   GM corn, soybeans, cotton, rapeseed, sugar beets, and alfalfa (including sprouts originating 
from these items), as wel l as foods suitable for consumption containing these products and notified 
as such by  MFDS, remain subject to mandatory GMO labelling requirements. GMO  foods for which 
identity preservation documents or government -issued certificates were submitted are exe mpted 
from GMO labelling requirements. Concerning food from the United  States, Korea accepts a notarized 
self-declaration, instead of requiring full documentation, to certify products that are exempt from 
biotechnology requirements. Importers must  keep rec ords for up to two years to prove that 
unlabelled foods subject to GMO labelling requirements are GMO free. The Living Modified Organisms 
(LMO) Act (Section  3.3.3.1) continues to provide standards required for the labelling of biotech crops 
and food, inclu ding processed food products containing corn, soybeans, cotton, canola, and sugar 
beets with 3% or higher GMO content. In 2017, MFDS implemented new biotech labelling 
 
199 Historically, Korea n measures are frequently subject to TBT STCs. Overall, from 1995 to 2020, 
130 STCs (7 new in 2016 -20) were raised against Korean measures before the TBT Committee. As at its 
previous Review, Korea remains the 4th WTO Member most subject to STCs discussed in the Committee, only 
behind the European  Union, China, and India or the United  States depending on the year. WTO documents 
G/TBT/39/Rev.1, 24 May 2017; G/TBT/40, 12 March 2018; G/TBT/42, 25 February 2019; G/TBT/44, 
19 February 2020; and G/TBT/4 5, 18 February 2021.  
200 MFDS, Food Labeling System . Viewed at: 
https://www.mfds.go.kr/eng/wpge/m_14/de011005l001.do ; and USDA Foreign Agricultural Service, Food and 
Agricultural Import Reg ulations and Standards, Country Report: Korea, Republic of , GAIN Report Number 
KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agri
cultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. 
201 The Act on Origin Labelling of Agricultural and Fishery Products was last partially amended by Act 
No. 16119, 31 December 2018 and enforced from 1 July 2019.  
202 USDA Foreign Agricultural Service, Food and Agricultural Import Regulations and Standards, Country 
Report: Korea, Republic of , GAIN Report Number KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agri
cultural%20Impo rt%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. 
203 Tingmin Koe, "Special Purpose Foods Law: South Korea's Third Phase of Mandatory Traceability 
Programme Kicks in this December", NutraIngredients -Asia, 10 Fe bruary 2021. Viewed at: 
https://www.nutraingredients -asia.com/Article/20 21/02/10/Special -purpose -foods -law-South -Korea -s-third-
phase -of-mandatory -traceability -programme -kicks-in-this-December . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  requirements that expanded mandatory labelling to all detectable products.204 Soy, corn, c otton, 
canola, sugar beets, alfalfa, and any newly approved GM crops or food products containing these 
crops are subject to the biotech labelling requirement. If detectable biotech DNA is present in the 
final product, biotech labelling is required. If an i mported product arrives without appropriate 
supporting documents or a test certificate, it can either be labelled as GM food or tested by 
MFDS -accredited laboratories in Korea prior to customs clearance. If the product tests negative, it 
may be exempt from  biotech labelling. In 2020, MFDS planned to introduce a use -by-date labelling 
system that informs consumers of a safe consumption period (instead of sell -by date of food) and 
submit the draft of the amendment to the Act on Labelling and Advertising of Foo ds to the National 
Assembly.205 
3.160.   Origin labelling remains mandatory for food and many other imports of 681 four -digit tariff 
lines (674 in 2015) in 2021. The use of the term "Assembled in Country X"  has been allowed since 
October 2010. The KCS's Origin Mark Registration and Retrieval System enables users to check 
origin markings by trader or item.  
3.161.   MFDS's Packaging and Container Code provides general standards for equipment, 
containers, and packaging for food products and specifications for individual packagin g materials.206 
In 2019, the MOE published partial amendments to the Rule of the Act on the Promotion of Saving 
and Recycling of Resources to promote recycling and reduce unnecessary waste. These amendments 
require packages to be evaluated, graded, and labe lled for the recyclability of packaging materials.  
3.3.3   Sanitary and phytosanitary requirements  
3.3.3.1   Food standards -setting framework  
3.162.   Korea's regulatory system takes into account the opinions of consumers and industry, and 
reflects them in the decision -making proces s.207 The main laws affecting food standards and 
specification are the Food Sanitation Act (last amended by Act No.  16431, 30 April 2019), the Food 
Code, and the Food Additive Code. Since 2008, a Food Safety Policy Committee has comprehensively 
revised and coordinated food safety management tasks dispersed across the various ministries and 
agencies; so far, each relevant agency has developed comprehensive three -year food safety plans 
(2008 -11, 2012 -14, and 2015 -16) to carry out food safety control schemes to  prevent hazardous 
food at all stages of the food chain from production to distribution. Under the amended Special Act 
on Imported Food Safety Control , published on 7 April 2020, MFDS applies mandatory Hazard 
Analysis of Critical Control Point (HACCP) cert ification  to imported foods prescribed by Ordinance of 
the Prime Minister  in an effort to enhance control over imported food hazards. This requirement 
applies to the foreign food facilities that manufacture food products  and that are highly likely to 
incorporate hazardous substances or be contaminated during raw material storage or the 
manufacturing.208 
 
204 MFDS, Food Labeling System . Viewed at: 
https://www.mfds.go.kr/en g/wpge/m_14/de011005l001.do ; and USDA Foreign Agricultural Service, Food and 
Agricultural Import Regulations and Standards, Country Report: Korea, Republic of , GAIN Report Number 
KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName= Food%20and%20Agri
cultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. 
205 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&p age=8 . 
206 USDA Foreign Agricultural Service, Food and Agricultural Import Regulations and Standards, Country 
Report: Korea, Republic of , GAIN Report Number KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newga inapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agri
cultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. 
207 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
208 "Imported foods prescr ibed by Ordinance of the Prime Minister” refers to kimchi among kimchi 
products, a subcategory of pickled foods or boiled foods in accordance with Article 3 (3) Foods Subject to 
Certification of the Enforcement Rule of the Special Act on Imported Food Safe ty Control which came into effect 
with promulgation as of July 1, 2021.  Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.163.   The responsibility of implementing the HACCP programme and the recall systems for food, 
livestock, and dairy products remains under MFDS. During the review p eriod, the programme's 
coverage and implementation continued to rise. In 2020, the HACCP system was expanded to cover 
up to about 87.5% of all processed foods (86.5% in 2019).209 The number of HACCP -certified 
businesses increased significantly from 13,991 f irms in 2015 to 17,152 in 2017 and 21,665 in 2020 
(7,685 food; 13,980  livestock). MFDS blanket inspections without notice on companies requiring 
HACCP compliance showed an increasing non -conformity rate that stood at 8.4% for the period 
January -December 20 20 (4.4% in 2018). In order to secure efficiency of HACCP -related tasks, on 
13 February 2017 MFDS established the Korea Institute for Food Safety Management Accreditation 
(KIFSMA) by integrating HACCP certification organizations for foods and livestock pro ducts that had 
been individually operated; this development also addressed inconveniences of businesses by 
unifying the HACCP certification process. In 2020, MFDS planned to support expenses (KRW  6 billion) 
for the setting of a smart HACCP system in connec tion with the MSS Smart Factory Project by signing 
an MFDS -MSS MOU for building 60 smart factories.210 In addition, MFDS sets and implements 
regulations governing safety evaluations of agricultural products that have been enhanced through 
biotechnology and labelling requirements for both agricultural products and processed food products 
manufactured using GMO ingredients (see below).  
Maximum residue levels (MRLs)  
3.164.   MFDS remains responsible for regulating pesticide residues in foodstuff, in accordance with 
the MRLs set in the Food Code and the Regulation on Pesticide and Veterinary Drug Residue and 
applied for both domestic and foreign products.211 The authorities indicate that MRLs are established 
based on the scientific residue data. Korea maintains three categ ories of MRLs in its Food Code: 
(i) national MRLs based upon domestic registration; (ii)  import tolerances based upon residue data 
from a third country; and (iii)  several thousand temporary MRLs set for a smooth implementation of 
the Positive List System ( PLS) (see below).212 The temporary MRLs would be deleted after the end 
of 2021, unless national MRLs or import tolerances are set by that time.213 As of December 2020, 
MFDS had set MRLs for 516 pesticides in agricultural products compared to 454  in June 2016 . The 
Food Code also listed MRLs for 101 pesticides (82 in 2016)  and 212 veterinary drugs in meat, fish, 
eggs and milk products (185 in 2016).214 In addition to the Food Code, MFDS maintains an MRLs 
database (Pesticide Residue Database) for agricultural pro ducts, in Korean with English subtitles.  
 
209 In 2017 whe n pesticide -contaminated eggs were detected, MFDS established an edible egg 
packaging system and designated it as a mandatory requirement to conform to HACCP standards so as to 
enhance sanitation quality of the egg distribution and management system. Manda tory application of HACCP on 
processed meat product businesses dealing with ground processed meat (such as hamburger patties) is being 
enforced from 2018 to 2024 in multiple phases based on annual sales. The scope of mandatory HACCP 
certification was expan ded (December 2014 -December 2020) to eight food items including kids' favourite 
foods. MFDS  (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
210 MFDS (2020), White Paper 2020 , 29 Ap ril. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&src hTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
211 In addition to MFDS, MAFRA and the MOE continue to handle pesticide -related matters. The Rural 
Development Administration (RDA) remains responsible for pestici de registration, MAFRA's NAQS is responsible 
for testing pesticide levels in agricultural products, and the MOE for testing pesticide levels in water and soil.  
212 USTR (2020), 2020 National Trade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2020_National_Trade_Estimate_Report.pdf . 
213 According to the authorities, at present if MRLs are not established on certain agricultur al products in 
the Korean Food Code, uniform MRLs of 0.01  mg/kg will be adapted. At the time of the previous Review, it was 
indicated that if an MRL was established in the Food Code for a pesticide in a particular agricultural product, 
other tolerance leve ls, such as CODEX, were not accepted. However, for pesticides where tolerance levels had 
not been established in the Korean Food Code, the following rules applied: the CODEX standards set for a 
particular agricultural product (excluding crop groupings) in question should apply; if the previous provision 
was not applicable, the lowest residue limit for the pesticide in question for a similar agricultural product should 
apply; and if both previous provisions were not applicable, the lowest of the residue limi ts of the pesticide for 
any agricultural crop applied.  
214 USDA Foreign Agricultural Service, Food and Agricultural Import Regulations and Standards, Country 
Report: Korea, Republic of , GAIN Report Number: KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadR eportByFileName?fileName=Food%20and%20Agri
cultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.165.   As from 1 January 2019, MFDS fully implemented the PLS that to all pesticides in agricultural 
products except for those with MRLs set in Korea.215 In addition, to minimize possible damage from 
non-standardized pesticides, MFDS set 5,320 MRLs for 314 pesticides that are needed at home and 
abroad; the limits were set at a level considered safe for the human body. Under the PLS, Korea 
would no longer a llow imports of food containing agro -chemical residues unless the substance has 
been approved for the commodity in question and an MRL has been established. Korea implemented 
the PLS for tropical fruits, oilseeds, and tree nuts in December 2016.  
3.166.   Korea plan s to introduce a PLS for veterinary drugs in fish and five livestock products, 
including beef, pork, chicken, egg, and milk, which is to be implemented as from 2024.  In 2019, the 
first stage in laying the ground for a PLS on residues present in livestock/f ishery products was 
launched. Prior to implementing this PLS, the default MRL for antimicrobials that have no MRL set in 
the Korea Food Code is to be lowered from 0.03  mg/kg to 0.01  mg/kg as from 2022; Korea maintains 
import tolerances based on residue dat a from exporting countries to help them export 
livestock/fishery products to Korea.216 To push ahead with the PLS for residues in livestock/fishery 
products, MFDS also operated a Pan -Ministry Council on the Safe Control of Residues, consisting of 
nine agencies, including MAFRA.  
Food additives  
3.167.    All food additives require prior approval. Food  importers have to provide lists of all food 
ingredients and additives to  MFDS and the Animal and Plant Quarantine Agency (QIA) 
(Section  3.3.3.2) for customs clearance; the ingredient content ratio (mixture ratio of materials) is 
not required. As of Decemb er 2020, Korea had a positive list of 619 approved food additives (605 in 
2015). During the review period, Korea integrated chemical synthetics and natural additives into 
food additives and reorganized the classification system with 32 uses. Food additives  and related 
items are now grouped into 2 categories (previously 3): food additives (619 items) and mixed 
substances (7 categories of mixture of approved additives).217 Most additives and/or preservatives 
are approved and tolerance levels are established on  a product -by-product basis, therefore 
tolerances can vary from product to product. Reportedly, even though there may be an established 
CODEX standard for a given food additive, domestic or imported foods with "reasonable" levels of a 
food additive may not  be marketed, either because their food additive is not registered in the Korean 
Food Additives Standards Code, or because it failed to comply with item -specific standards specified 
in the Code or its usage in a certain food product is not specified in the  existing Food Additive 
Code.218 Getting a new additive added to the approved list usually takes a year or more. In 2019 
MFDS established a rule for banning direct consumption of food additives to prevent safety accidents, 
amended the definition of natural flavours, allowed gilt for external decoration of food, expanded 
the standards for the sorbic acid or sorbate routinely utilized in mayonnaise, established the scope 
and use standards for food additives available for culturing microbes, and eased requireme nts for 
 
215 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&src hTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
216 More specifically, MFDS enlarged the list of "substances that shall not be detected in food" (from 18 
to 25 types) to prevent unsafe veterinary drugs with carcinogenicity or gen etic toxicity from being used in 
food, enhanced a uniform detection limit relevant to antibiotics with no limit from 0.03  mg/kg to 0.01  mg/kg to 
ensure consumer safety by preventing consequences such as antibiotics resistance resulting from misuse and 
abuse, set MRLs for 17 veterinary drugs under use approval and 14 pesticide ingredients that tend to be 
unintentionally present through feeds at a level safe for the human body, and created a list of substances 
exempt from MRLs (veterinary drugs of 177, pestic ides of 61). MFDS (2020), White Paper 2020 , 29 April. 
Viewed at: 
https://www.mfds .go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
217 USDA Foreign Agricultural Service, Food and Agricultural Import Regulations and Standards, Country 
Report: Kor ea, Republic of , GAIN Report Number KS2020 -0081. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agri
cultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Seoul_Korea%20 -
%20Republic%20of_12 -31-2020. 
218 WTO documen t WT/TPR/S/346/Rev.1, 6 January 2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  safety data submission while applying for new designation of food additives (e.g. enzymes) made 
using those microbes.219 
3.168.   A 2009 system of managing safety of original equipment manufacturing (OEM) food imports 
in the Food Sanitation Act  mandates OEM food importers to perform on -the-spot inspection and 
self-quality control for OEM food products.220 OEM product importers are subject to on -site sanitation 
audits of foreign food facilities/establishments conducted by imported food sanitation audit 
institut ions according to the sanitation inspection standards prescribed by MFDS. MFDS and 
city/province authorities conduct regular on -site inspections for domestically produced food 
products. If imported OEM food products prove to be safe, their imports are to i ncrease once 
consumer confidence is gained.  
Genetically modified products and LMOs  
3.169.   During the review period, legislation on the marketing of genetically modified agricultural 
products (GMAPs) remained unchanged and continues to apply equally to domestic an d imported 
GMAPs.  The 2008 Act on Transboundary Movement of Living Modified Organisms (LMO Act) 
implements the Cartagena Protocol on Biosafety to the Convention on Biological Diversity. Imports 
of biotech grains, as well as genetically engineered animals, are regulated under the Food Sanitation 
Act and the LMO Act, which was revised in December 2017 and became effective in December  2018, 
to amend the scope of "Contained Use" to expand from GM microorganisms to GMOs (including 
animals and plants); in Decembe r 2018, the Enforcement Decree, the Enforcement Regulations, and 
the Consolidated Notice were revised simultaneously to reflect the revised LMO Act. The LMO Act 
was last revised in December 2018 to improve the composition of the Bio -Safety Commission and 
became effective in June 2019.  
3.170.   Food safety and environmental risk assessments (ERAs) are mandatory on biotechnology 
crops and LMOs. As indicated by the authorities at the previous Review, in accordance with CODEX 
guidelines and OECD Biosafety Consensus Docu ments, safety of LMOs for food is evaluated under 
the principle of substantial equivalence based on scientifically valid and justified data, such as 
comparison of toxicity, allergenicity, and the nutrients of the GM food in question and its non -GM 
counterp art. The authorities consider that the approval procedure is legitimate and does not lead to 
unnecessary delays. MFDS remains responsible for risk assessment for human health of food -related 
GMAPs.  It has authority to conduct mandatory safety assessments t o evaluate GMOs in products 
used for human consumption. The Rural Development Administration (crop cultivation environment), 
the National Institute of Ecology overseen by the MOE (natural ecosystem), and the National 
Fisheries Research and Development Inst itute (marine ecosystem) are responsible for ERAs. In 
accordance with  the LMO Act, MFDS conducts  risk assessment for human health on food, and the 
Korea Centers for Disease Control and Prevention (KCDC) carries out  the same on feed for industrial 
use. As i ndicated at the previous Review, the authorities consider that there were neither overlaps 
of data requirements nor unnecessary delays in the LMO food -approval process. As of 31 December 
2020, 193 GMAP applications were submitted, and 178 events (corn (92) , cotton (30), beans (29), 
canola (17), potato  (4), sugar beets (1), and alfalfa (5)) were approved; in addition, GM 
microorganisms (7) and food additives derived from GM microorganisms (26) were approved for 
food safety.221 So far, no  GM crops have been gr own in Korea and, therefore, the process for crop 
and food -approval has been applied only to imported products. By 31 March 2021, MAFRA had 
completed 169 applications for review of environmental risks of LMOs for industrial use in 
agroforestry and livestoc k sectors, including soybeans (29), maize (87), cotton (31), canola (17), 
and alfalfa (5).  
 
219 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
220 OEM food products refer to imported foods, food additives, health functional foods,  and processed 
livestock products manufactured or processed by overseas contractors and labelled with an importer's brand. 
Agricultural and forestry products are excluded.  
221 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0 &multi_itm_seq=0&company_cd=&company_nm=&page=8 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.171.   Korea implements the Advance Informed Agreement Procedure for the first intentional 
transboundary movement of an LMO for intentional introduction into the environmen t of a country, 
as well as labelling requirements for GMOs and LMOs (Section 3.3.2.6).  
3.3.3.2   Quarantine regulations  
3.172.   During the review period, the main laws on quarantine requirements for imports (and 
exports), the Plant Protection Act (last amended by Act No.  16784, 10 December 2019), the 
Contagious Animal Disease Prevention Act (last amended by Act No.  17653, 22 December 2020), 
and the Aquatic Creatures Disease Control Act (last amended by Act No.  17036, 18 February 2020) 
were revised.  SPS measures are taken mai nly against diseases that are foreign/unknown to Korea 
and that are subject to strict domestic control measures. Animal and plant quarantine and inspection 
continue to be handled by the Animal and Plant Quarantine Agency (APQA) under MAFRA, and 
fisheries b y the National Fishery Products Quality Management Service (NFQS) under the MOF.  
3.173.   Imports of plants and plant products must have a phytosanitary certificate issued by the 
competent authority in the exporting country. Imports of soil, plants with soil, and c ertain plants or 
vegetable materials are banned. Imports of rice in the husk, chaff, and rice straw from all origins, 
except Japan and Chinese  Taipei, are prohibited for pest reasons. Plants for planting from countries 
with prohibited quarantine pests, suc h as Citrus huanglongbing  (greening) disease and Radopholus 
similis , etc., are also prohibited or restricted.  
3.174.   Animal and animal products are subject to inspection and quarantine. Document and 
organoleptic inspections and laboratory testing, if necessary, a re undertaken to verify that no 
contagious animal disease is brought into Korea and that no hazard is posed to public health. Korea 
bans the import of animals and their products from countries affected by exotic animal diseases, 
such as foot -and-mouth dise ase and African swine fever (ASF). Upon request of the exporting 
country, the import ban may be lifted depending on the outcome of import risk analysis. Imports 
from countries affected by highly pathogenic avian influenza (HPAI) are banned, but those of po ultry 
meat that is heat -processed to inactivate the HPAI virus are allowed. Suspension of imports because 
of an ASF outbreak in several countries was also enforced during the review period. The 
comprehensive list of all HPAI -, ASF -, and bovine spongiform e ncephalopathy (BSE) -related import 
suspensions by product and origin is available on the APQA website 
(https://www.qia.go.kr/english/html/Animal_liv estock/02AnimalLivestock_quar_ins_info_eng.jsp ). 
Cheese imports must meet Korea's pasteurization requirements.222 
3.175.   In May 2019, Korea lifted import restrictions on beef from the Netherlands and Denmark in 
place since 2000 in response to the outbreak of BSE i n Europe; applications from some other 
EU Member  States concerning the lifting of these restrictions are being considered.223 
3.176.   As of June 2021, Korea maintained the import restriction on Japanese foods, such as fishery 
products from Fukushima, and planned a pan-government response in preparation for circumstances 
like contaminated water released into the sea from the Fukushima nuclear plant.224 Following the 
disaster at the Fukushima nuclear plant, since March 2011 Korea has prohibited imports of 
27 agricultural products from 14  prefectures that were under distribution restriction in Japan 
(Section 3.1.5).225 Since May 2011, food products with possible radioactive contamination from 
these prefectures have been subject to certificate of origin requir ements and a test certificate issued 
by the Japanese Government proving that the food products in question were not contaminated. In 
April 2011, Korea imposed an import ban on 50 fishery products from 8 prefectures (Aomori, Chiba, 
Fukushima, Gunma, Ibaraki , Iwate, Miyagi, and Tochigi) that were under distribution restriction in 
Japan. Following the discovery of continuing leakages of contaminated water, in September 2013 
Korea implemented temporary measures including testing requirements; in 2013, it also e xtended 
this import ban to all Japanese fishery products from the eight prefectures, and the ban remains in 
 
222 In Korea, pasteurization temperature is regarded as 63°C -65°C for 30 minutes, 72°C -75°C for 
15 seconds or equivalent methods.  
223 OECD (2020), Agricultural Policy Monitoring and Evaluation 2020 . Viewed at: 
https://doi.org/10.1787/928181a8 -en. 
224 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0&multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
225 The items subject to this action included rice, tea, spinach, mushrooms, chestnuts, kiwi, leafy 
greens, and bamboo shoots. WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  place. Some of these measures led to a WTO dispute settlement case in 2015 that was settled as of 
30 May 2019.226 
3.177.   During the review period, the demand for simplifying sanitary conditions for import has 
increased in the wake of growing multilateral trade agreements such as the Regional Comprehensive 
Economic Partnership (RCEP) and the Comprehensive and Progressive Trans -Pacific Partnership 
(CPTPP).227 In November 2019, MFDS introduced a Rapid Clearance System for Planned Import, 
allowing reliable business operators with a long -time record of importing food safely with no record 
of non -compliance to pass the customs clearance procedure immediately aft er import declaration; 
in 2020, 72 planned import items of 23 firms were to benefit from this facility. As from April 2020, 
rapidly blocking customs clearance of food (and medicine) by linking information on hazardous 
products with the KSA's Integrated Ris k Management -PASS (IRM -PASS) has been possible. 
Furthermore, in 2019, MFDS introduced an Inspection Order System for the Distribution Stage, 
requiring business operators to voluntarily examine distributed food imports that may pose harm 
and prove the safet y of their products; orders to inspect distributed barley bud powder products 
(content more than 50%) with many non -conformity records at the customs clearance stage were 
issued.  
3.3.3.3   Transparency  
3.178.   Between January 2016 and 17 February 2021,  227 notifications (16 1 in 2012 -June 2016) 
were submitted under the WTO Agreement on Sanitary and Phytosanitary Measures (SPS 
Agreement). This number includes 177 regular notifications, 7  emergency notifications, and 
43 addenda/corrigenda. Korea maintains MOUs on food safety an d quality standards with China's 
General Administration of Quality Supervision, Inspection and Quarantine (signed October 2003, 
revised December 2013), Chile (June 2006), Viet  Nam (May 2018), Food Standards Australia 
New Zealand (FSANZ) (July 2011), and th e Philippines (Manila) WHO Western Pacific Regional Office 
(WPRO) (July 2011, revised June 2016).  
3.3.4   Competition policy and price controls  
3.3.4.1   Competition policy  
3.3.4.1.1   Policy, institutional, and regulatory framework  
3.179.   With the advent of new competition law issues in the age of the Fourth Industrial Revolution 
in 2018, the Korea Fair Trade Commission (KFTC) set out a vision of Raising the Living Quality of 
the People through Establishment of a Fair Market Economy for realizing a fair economy and 
promoting innovation and co mpetition.228 Under the vision, the KFTC pursued five policy tasks: 
(i) create a foundation for fair trade between large enterprises and SMEs by greatly bolstering 
protection for disadvantaged parties in subcontract, distribution, and franchise sectors; (ii ) prevent 
abuse of dominant position by large enterprise groups; (iii)  promote innovation -driven growth; 
(iv) protect consumers' rights and interests; and (v)  revise the Monopoly Regulation and Fair Trade 
Act (see below) to establish a market order suitabl e for the economic environment in the 
21st century.  
3.180.   Responsibility for competition policy continues to rest primarily with the independent KFTC, 
which is the only ministerial -level government agency that administers competition law. It consists 
of a Secret ariat responsible for formulating competition policies and investigating cases, and a 
 
226 WTO, DS495: Korea – Import Bans, and Testing and Certification Requirements for R adionuclides . 
Viewed at: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds495_e.htm . 
227 MFDS (2020), White Paper 2020 , 29 April. Viewed at: 
https://www.mfds.go.kr/eng/brd/m_60/view.do?seq=74498&srchFr=&srchTo=&srchWord=&srchTp=&itm_seq
_1=0&itm_seq_2=0 &multi_itm_seq=0&company_cd=&company_nm=&page=8 . 
228 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/b bs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Commission responsible for deliberating and making decisions on competition and consumer 
protection issues (Section 3.3.4.3).229 
3.181.   In 2020, the KFTC reviewed 815 bills (302 in 2018) containing newly created or reinforced 
regulations and determined 18 of them (15 in 2018) to be anti -competitive. Of these 18 bills, 
14 were revised to remove or improve on the newly created or reinforced regulations contained 
therein (77.8% of op inions accepted).230 
3.182.   To respond to the changes in the economic landscape, fair economy, and innovative growth, 
legislation was amended during the review period. The main legislation, the 1980 Monopoly 
Regulation and Fair Trade Act (MRFTA), has been amended seven times since 2016. Since 2017, the 
KFTC pushed ahead with the complete revision of the MRFTA to update the law according to 
environmental changes and times. Its complete revision passed the National Assembly twice in 
April 2020 (the part related to pr ocedures) and in December 2020 (the rest of the amendments). In 
accordance with MRFTA amendments allowing the KFTC to ex officio  request for dispute mediations 
with certain unfair trade practices to the Dispute Mediation Committee, promulgated on 
18 Septem ber 2018 and which went into effect on 19 March 2019, amendments to the Enforcement 
Decree of the MFRTA, including the revised procedures for making an ex officio  request for dispute 
mediations and prior notification procedures for imposing enforcement fin es, entered into effect the 
same date.231 MRFTA amendments passed in April 2020, to be enforced by mid -2021, seemingly 
enhanced the rights of defendants, improved due process, and increased the transparency of 
proceedings by the KFTC; the statute of limitat ions also was shortened, except for cartels.232 A 
second 2020 MRFTA amendment, passed on 9  December  2020, to be enforced within one year of 
the date of its promulgation, i.e. 2021, addressed, inter alia , reinforcement of cartel regulation on 
information exc hange, expansion of entities subject to the private profit -taking regulation, 
strengthening of regulation on the shareholding ratio of the holding company, permission of general 
holding companies to hold capital venture companies (CVC), easing of regulatio ns on venture holding 
companies, stipulation of public notice related to foreign affiliates, supplementation of the merger 
report threshold (see below), increase of the upper limit of fines, implementation of an individual's 
claim for injunctive relief, mo dification of provisions on criminal penalty, and creation of a 
corporation's obligation to submit evidence in a lawsuit for damage claim.233 According to the KFTC, 
this amendment is to remove the blind spot of regulation, and increase the deterrence of vio lation, 
while reinvigorating venture investment and enhancing procedural rights of investigated companies.  
3.183.   Amendments to the Rules on the KFTC's Committee Operation and Case Handling Procedure, 
ensuring stronger examinees' right to defence and effectivenes s in handling cases, were 
implemented on 27 December 2019.234 Amendments to the merger review guidelines (implemented 
as of 27 February 2019), which clarified the criteria for assessing market definition, market 
concentration, and anti -competitive effects, made it more effective to review the anti -competitive 
effects, for instance, resulting from acquisitions of potential competitors in innovation -based 
industries. In December 2020, the KFTC enacted the Guidelines on Access to Evidence and 
established an evi dence room for restricted access to evidence, in which the respondent's legal 
 
229 Eileen Jaiyoung Shin, Suruyn Kim, and Ji Hyun Yu, "The Pharmaceutical Intellectual Property and 
Competition Law Review: South Korea", The Law Reviews , 5 October 2020. Viewed at: 
https://thelawreviews.co.uk/title/the -pharmaceutical -intellectual -property -and-competition -law-review/south -
korea ; and KFTC, Who We Are . Viewed at: https://www.ftc.go.kr/eng/contents.do?key=493 . 
230 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
231 OECD (2020), Annual Report on Competition Policy Developments in Korea - 2019. Viewed at: 
http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/AR(2020)19&docLanguag
e=En . 
232 Defendants now may have access to all data, such as evidence against them, except when the 
information is protected by trade secrets or laws. After a  hearing has begun, investigators are now prohibited 
from conducting dawn raids or collecting further evidence unless requested or approved by the KFTC case 
team. EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
233 Lee & Ko, Bill to Amend the Monopoly Regulation and Fair Trade Act Passed by the National 
Assembly , 22 December 2020. Viewed at:  https://www.legal500.com/developments/thought -leadership/bill -to-
amend -the-monopoly -regulati on-and-fair-trade -act-passed -by-the-national -assembly/ . 
234 OECD (2020), Annual Report on Competition Policy Developments in Korea - 2019. Viewed at: 
http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/AR(2020)19&docLanguag
e=En . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  counsel can access the trade secrets of a third party adopted as evidence of a disposition. This 
system will help the KFTC protect trade secrets and ensure the respondent's right  to access evidence 
data, while still guaranteeing the effective exercise of defence rights.  
3.184.   Competition law covers all sectors and all undertakings, including state entities. However, 
liner shipping conferences are exempted. Activities of undertakings mee ting certain conditions can 
be exempted from prohibitions specified in the competition law. For example, a collective agreement 
on a rate or a trade term among liner shipping service providers can be exempted from the 
competition law under certain conditio ns (e.g. negotiating fully with their customers, reporting an 
agreement in advance to the MOF, and allowing individual service providers to leave the agreement 
freely). Also, activities of a voluntary association (e.g. in the agricultural, forestry, and li vestock 
industries, and consumer protection) that meet certain conditions may also be exempted, unless 
they constitute unfair trade practices or unfairly restricting competition resulting in price 
increases.235 
3.185.   Legislation covers all principal competition a reas, including horizontal practices (cartels and 
collusion), vertical constraints, abuse of dominant market position, and mergers. It prohibits unfair 
collaborative acts and unfair trade practices; resale price maintenance, unless exempt by the rule 
of reason; and abuse of dominant position. An enterprise is presumed to be market -dominant if its 
market share is at least 50% or where the share of the largest three firms is at least 75%, except 
for enterprises whose market share is less than 10% or their ann ual sales or procurement of related 
goods or services in a relevant market is less than KRW  4 billion.236 
3.186.   Mergers to "practically suppress competition" are prohibited, unless parties can prove to the 
KFTC that the efficiency -enhancing effect will exceed the  anti-competitive effects or the acquired 
firm is insolvent. The KFTC may approve a merger subject to certain conditional corrective measures 
to address anti -competitive concerns, such as limiting the scope of the merged firm's operations. 
The criteria to assess dominance (i.e. control over the acquired firm) resulting from a merger or 
acquisition consider whether the acquiring firm can influence the targeted firm through agreements 
with other shareholders (including veto rights). In addition, companies eng aged in entirely different 
businesses are subject to a simplified review, where regulators assume that, unless any specific 
instance raises concerns, there is no anti -competitive activity being undertaken. Parties must notify 
proposed mergers to the KFTC i f assets or turnover of one party exceed KRW  300 billion and those 
of the other exceed KRW  30 billion. A merger involving a large -scale enterprise (assets or turnover 
above KRW  2 trillion) should be notified any time prior to the date of completion of the transaction 
and the transaction must not be completed until the KFTC finishes the review. Between 2016 and 
2020, there were 3647 mergers and acquisitions (M&As) (1,825 in 2012 -15), of which about 35% 
involved manufacturing (46% in 2012 -15). KFTC monitored M&As involving foreign enterprises with 
a turnover of more than KRW  30 billion in Korea. The number of notifications concerning M&As 
involving a foreign company decreased from 156 in 2016 to 133 in 2020. In 2020, the KFTC reviewed 
865 merger cases (up by 9 9 from 2019), of which 732 cases were mergers by domestic companies, 
mostly conglomerate mergers followed by horizontal and vertical mergers, while 133 cases were 
mergers involving foreign companies. Fifteen cases were reviewed under the in -depth investiga tion 
for their potential anti -competitiveness, and the KFTC concluded that four cases had competitive 
concerns.237 Parties to a merger may appeal a decision within 30  days to the KFTC, which has 
60 days (extendable to 90 days) to decide.  
3.187.   A prohibition on ne w cross -shareholding (i.e.  circular shareholding) between subsidiaries 
under a large business group, effective as from July 2014, remains in place. In 2015, 11 business 
groups held 459 circular shareholdings, but this decreased to 4 business groups and 16  circular 
shareholdings in 2020. Circular shareholding between subsidiaries under a large business group (i.e. 
not less than KRW  5 trillion of total assets) is banned under the MRFTA; 64 large business 
conglomerates (61 in 2015) (see below) were officially designated as large business groups as of 
 
235 Conditions include being established to assist small enterprises or consumers, having a goal of 
mutual cooperation and benefits for small  businesses and consumers, and that members are free to enter and 
exit, and have equal voting rights.  
236 MRFTA, Article  4. 
237 OECD (2020), Annual Report on Competition Policy Developments in Korea – 2019, 31 August 2020. 
Viewed at: 
http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/AR(2020)19&docLanguag
e=En . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  May 2020.238 According to the KFTC, the number of circular shareholdings among large business 
groups dropped from 483 in 2014 to 13 in 2019. The merger involving a large enterprise must be 
notified at any time prior to the date of the completion of the transaction. A  financial or insurance 
company belonging to a large business conglomerate is allowed to exercise its voting right for up to 
15% of its shares of a domestic non -financial or insurance -affiliated company in certain cases, 
including for the merger of the affi liated company with another company; however, pursuant to the 
revision of the MRFTA (see above), exercise of voting rights for a merger between affiliates would 
be prohibited as from 2022. The KFTC requires large business groups to prepare combined financi al 
statements, as well as their regular consolidated financial statements. A combined financial 
statement puts together balance -sheet accounts or income statement accounts of a related group 
of entities as a single reporting entity. Foreign -invested compan ies, as recognized under the Foreign 
Investment Promotion Act of 1998 (Section 2. 6), are exempt from regulations affecting domestic 
large business groups.  
3.3.4.1.2   Operational developments  
3.188.   Monopoly power seemingly remains unchanged and market concentration relative ly high. 
The market concentration ratio of the top three leading companies on a weighted average basis 
remained relatively stable from 2016 to 2017, from 62% to 62.6%, while the industry concentration 
ratio rose from 49.8% to 50.6%. On the other hand, 64 l arge business conglomerates (61 in 2015) 
and their affiliates with control over 2,284 companies (1,696 companies in 2015) were on the KFTC's 
watch list as of 2010. When necessary for antitrust purposes, certain enterprises are presumed to 
be market -dominat ing if their market share is at least 50% or where the share of the largest three 
firms is at least 75%, except for enterprises whose market share is less than 10% or their total 
annual sales or procurement of related goods or services is less than KRW  4 billion.  
3.189.   Despite past action to encourage large corporations and SMEs to voluntarily sign agreements 
under a 2007 Fair Trade and Mutual Growth Pact between Large Companies and SMEs and efforts 
of a government -set Korea Commission for Corporate Partnership ( KCCP), large business groups are 
still considered as stifling growth of the country's SMEs in certain activities. They have resisted 
efforts to increase competition and have been consolidating their ownership structures, thereby 
reinforcing their influence  as they seemingly control (directly or indirectly) nearly the entire supply 
chain in virtually every industry.239 Under the Pact, large companies promise fair transactions in 
subcontracting, such as reflection of an increase in the raw material price when determining the unit 
price of a contract product, increment of the cash payment ratio, and shortening of payment terms. 
In return, SMEs promise to grow together through innovation activities, such as the improvement of 
productivity and technology developme nt for cost savings, process improvement, quality 
improvement, and logistics improvement. The fair trade agreement system is about enhancing the 
competitiveness of both SMEs and large companies. As of June, 2021, a KCCP list of business sectors 
where large  companies would be excluded in favour of smaller ones covered 1 good (feed -oil) and 
4 services (wholesale egg business, stationery retail, car rental business, and Maintenance  
Construction Hoist  rental business), compared to 73 goods (ranging from everyday items to 
high-tech products, including tofu, and light -emitting diodes) in 2016.240 Voluntary fair trade 
agreements can be signed, and the KFTC assesses the execution status of the firms involve d and 
rewards excellent companies with incentives, such as an exemption from its investigation. Between 
2016 and 2020, the number of companies signing cooperation agreements increased by an average 
annual rate of 10%, increasing from 220 companies in 2016 to 343 companies in 2020. From 2016 
to 2020, 1,442 large companies entered into subcontracting agreements with approximately 
299,000 SMEs (based on cumulative number of companies); between 2016 and 2020, 858 large 
companies were appraised, of which 420  (49%) qualified for a grade of "outstanding" or higher, thus 
receiving incentives such as exemption from KFTC's ex officio  investigation.  
3.190.   As from 2017, the KFTC developed general plans for the franchise, distribution, 
subcontracting, and agency sectors, and t ook strict actions against unfair price reduction by principal 
 
238 EIU (2020), Country Commerce: South Korea , August. View ed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
239 EIU (2020), Country Commerce: South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
240 A KCCP list of business sectors where large companies would be excluded in favour of smaller ones is 
designated on the premis e of an agreement between large and small businesses. It has a maximum duration of 
six years. KCCP recommends to large companies the restraint of entry, the restraint of expansion, the 
reduction, and their transfer from the list of business sectors.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  contractors and forced purchase by franchisors and distributors.241 To prevent abuse of dominant 
position by large enterprise groups, the KFTC strictly enforced the relevant law against fraudule nt 
pursuit of private interests and unfair support, and induced voluntary changes from large enterprise 
groups by continuing to communicate with the business community to induce voluntary 
improvement of the ownership and governance structures and practices . 
3.191.   In 2019, the KFTC conducted market analysis on agricultural products distribution and the 
broadcasting media industry to examine the current status of the market and relevant institutions, 
and to come up with measures to stimulate competition.242 The mark et analysis on the oligopolistic 
wholesale market for agricultural products shows that it is necessary to promote competition in the 
field of agricultural products distribution and to improve regulations for shippers and consumers. 
The current situation of  the Korean market shows that, unlike in other countries, Over -The-Top 
(OTT) services are less likely to replace or threaten the existing broadcasting services. In 2020, the 
KFTC conducted market analysis on the wholesale distribution of marine products an d the vocational 
education industry based on ICT to monitor the current status of such markets and market 
participants and develop measures for improving policy to promote competition.  
3.3.4.1.3   Enforcement  
3.192.   The Board of Audit and Inspection, the Public Procurement S ervice (Section 3.3.6.3), and 
the MSS may also request the KFTC to lodge complaints for alleged violations of the MRFTA. Upon 
receiving a request from any of these agencies, the KFTC is required to file a complaint with the 
Prosecutor's Office. Entities fi ling for leniency in cartel cases will remain exempt from criminal 
prosecution. Between 2016 and 2020, the PPS and the MSS requested the KFTC to refer 
39 enterprises (12 as of 2016) to the Prosecution; the KFTC immediately filed criminal complaints 
with th e Prosecution against 35 of them (10 as of 2016), and decided not to charge the remaining 
4 companies (2 as of 2016), as they applied for leniency and were exempted from criminal charges.  
3.193.   The KFTC may issue warnings or corrective measures, impose penalty s urcharges and fines, 
and request criminal prosecutions. It investigates and addresses various kinds of unfair trade 
practices, such as abuse of dominance by dominant enterprises. As from November 2019, the KFTC 
has launched and operated the special ICT Tas k Force to strengthen expertise in law enforcement 
against abuse of dominance and practices restricting innovation in key ICT sectors, such as platform, 
mobile, semiconductor, and IPRs. As at 2018, the KFTC strictly monitored the abuse of monopolistic 
positions and technology by large enterprises. It also discovered and took actions against the abuse 
of monopolistic positions in the pharmaceutical, bio, and insurance sectors, including interference 
with business activities in the medical equipment after -sale service market by Siemens, and the 
exclusion of competitors from the aviation insurance/reinsurance markets by Korean Reinsurance 
Company. Moreover, it did the same for the abuse of SME technologies by large enterprises in the 
machinery and electronics s ectors.243 In 2019, the KFTC handled 3,063 cases allegedly violating laws 
under its jurisdiction (10 laws including the MRFTA, and laws on consumer protection, subcontracts, 
and franchise transactions), a 24.9% decrease from 2014; the same year, it issued v oluntary 
corrections, warnings, or more severe sanctions in 1,728 cases, a 29% decrease from 2014. Also in 
the same year, the number of complaints under the MRFTA provisions dropped from 867 to 569, 
and such complaints related to unfair business practices (208 cases), improper concerted acts 
(184 cases), prohibited acts of trade associations (enterprise organizations) (72 cases), and M&As 
(20 cases). The number of severe sanctions more than a warning under the MRFTA was 233, while 
fines (66) and surcharges (69) were imposed in a reduced number of cases in 2019. According to 
the authorities, 290 criminal complaints were filed during the period 2016 -19, and corrective orders 
were issued in 1,048 cases. The cases of improper concerted acts account for the large st share of 
law enforcement under the MRFTA in 2016 -19 (992  cases). Unfair trade practices take up the second 
largest share of the cases related to the MRFTA handled during 2016 -19, totalling 956 cases; these 
 
241 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
242 OECD (2020), Annual Report on  Competition Policy Developments in Korea – 2019, 31 August 2020. 
Viewed at: 
http://www.oecd.org/officialdocuments/publicdisplaydocument pdf/?cote=DAF/COMP/AR(2020)19&docLanguag
e=En . 
243 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/ selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  practices include abuse of business position (4 29 cases), unfair inducing (116 cases), refusal to 
deal/trade (77 cases)244, unfair assistance (64 cases), and interference with the business activities 
of other companies (55 cases).  
3.194.   Between 2016 and 2019, penalty surcharges were levied on 592 cases. In 20 19, there were 
151 penalty surcharges imposed, a 16.5% decrease from 2018 (181 cases). Also in 2019, the total 
amount of penalty surcharges stood at KRW  127.3 billion. In 2018, the cases with the largest 
surcharges were unfair cartel conduct by seven steel makers (KRW  114.3 billion), by six aluminium 
condenser manufacturers and sellers, and by seven tantalum condenser manufacturers and sellers 
(KRW  35.8 billion each); and provision of unfair support to affiliates of LS  Group (KRW  26 billion).245 
In 2019, the cases with the largest surcharges were unfair joint activities of three ready -mixed 
concrete cooperatives in Daejeon, Sejong, and South  Chungcheong Provinces (KRW  14.7 billion), 
the unfair joint practices of four operators involved in bidding for exclusive  line projects in the public 
sector (KRW  13.3 billion), and the unfair joint practices of seven operators involved in bidding for 
import of transportation services ordered by eight local governments and the aT 
(KRW  12.7 billion).246 
3.195.   The KFTC operates a perm anent monitoring system to detect and prevent bid -rigging (a type 
of illegal cartel conduct) in the public sector. When a central administrative agency, a local 
municipality, or a corporation in which the State has a shareholding of 50% or more makes a bid  for 
construction work worth KRW  5 billion or for procurement of goods or services worth 
KRW 500 million or more, it is required to submit information on the project bidding to the KFTC. 
Strict penalties are imposed on bid -riggers, and criminal prosecution s are possible. The maximum 
surcharge for bid -rigging is 10%. A KFTC division, the Bid Rigging Investigation Division, ensures 
efficient handling of bid -rigging cases regarding government contracts, so that long -pending cases 
whose period of prescription i s soon to end can be settled in time. Between 2016 and 2020, the 
KFTC uncovered 356 bid -rigging cases, which account for the biggest portion of the offences and 
were followed by price fixing (70 cases). Bid -rigging cases during this period represented a 90 .3% 
increase compared to 2011 -15 (187 cases). Bid -rigging cases in 2018 stood at 139 cases, accounting 
for the highest portion of the violation, followed by 17 cases of price cartels. The KFTC discovered 
and sanctioned the enterprises that attempted to mai ntain monopoly through bid -rigging for the 
waterworks and dam maintenance and repair contracts awarded by public corporations.  
3.196.   The government -funded Korea Fair Trade Mediation Agency continued to, inter alia,  carry 
out assessments of companies participatin g in the 2001 Compliance Programme (CP), which 
promotes voluntary compliance with the MRFTA. A corporation that qualifies for grade A or higher 
benefits from immunity from investigation for a certain period. In 2018, three Franchise Dispute 
Mediation Counc ils were set up in Seoul, Incheon, and Gyeonggi -do; another Council was established 
in Busan in 2020.247 In addition, mediation protocols now carry the same effect as settlements in 
court, which means a franchisee can file a request for compulsive execution  with a court against a 
franchisor who refuses to comply with the protocol, without filing a separate lawsuit. By 2020, 
702 companies (636 in 2015) were participating in the CP.  
3.197.   Korea's extraterritorial application of its competition law remains unchanged;  as indicated 
by the authorities at the time of the previous Review, extraterritorial application intends to protect 
competition rather than Korean companies. The KFTC has jurisdiction to address international cartels 
exporting to Korea, especially in area s such as critical parts and materials, that can cause direct and 
extensive harm to the domestic market.248 If a cartel is formed inside the country, Korea applies 
pertinent laws following international norms, regardless of the origin of participants. Also,  
irrespective of the jurisdiction of a cartel, if such an attempt could have a negative effect on 
 
244 The term "refusal to deal" means, inter alia,  to decline to start a deal, discontinue a deal, or limit 
considerably the quantity or terms and conditions of a deal.  
245 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
246 The amount of fines for each of these cases is before applying the reduction with the leniency 
programme.  
247 KFTC (2019), Annual Report 2019 , October . Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 .  
248 Over 60 nations exercise their authority extraterritorially, making extraterritorial application an 
internation al norm.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  competition in the domestic market, Korea applies the law extraterritorially. In 2017, the KFTC 
decided to impose remedies on 10 automobile shipping companies  for colluding to fix prices and 
divide the market, and levied a penalty surcharge of KRW  43 billion in total, while referring 8 of 
them for prosecution. In addition, in 2018, the KFTC discovered that nine Japanese condenser 
manufacturers and sellers collu ded to raise and maintain the supply prices of aluminium and 
tantalum condensers, and imposed corrective orders and KRW  35.8 billion in penalty surcharges; it 
also referred four corporations and one individual for prosecution.249 
3.198.   During the review period, t he KFTC held bilaterals with foreign competition authorities to 
strengthen international cooperation.250 In 2018, these bilaterals were with the European  Union and 
the United  States, as well as several Asian countries including China, Japan, Malaysia, the 
Philippines, and Viet  Nam. The KFTC maintains MOUs on competition policy dialogue, establishing 
the basis for a formal dialogue on competition law enforcement, as well as exchange of information, 
with the competition authorities of the Russian  Federation (1 999), Romania (2002), Australia 
(2002), Latvia (2003), the Commonwealth of Independent States (2003), Mexico (2004), the 
European  Union (2004), Turkey (2005), Canada (2006), Indonesia (2013), Brazil (2014), Japan 
(2014), the United  States (2015), and China  (2019). In addition to the 2009 Korea -European  Union 
cooperation agreement on the application and enforcement of competition laws in relation to 
anti-competitive practices, Korea's RTAs/FTAs with Chile  (2004), Singapore (2006), the European 
Free Trade Ass ociation (2006), India (2010), the European  Union (2011), Peru (2011), the 
United  States (2012), Turkey (2013), Australia (2014), Canada (2015), China (2015), 
New Zealand  (2015), Viet  Nam (2015), Colombia (2016), the RCEP (2020), the United  Kingdom 
(2021),  and Panama -Costa Rica -Honduras -El Salvador -Nicaragua (2021) contain provisions on 
competition matters (Section 2.6.2). As a founding member of the International Competition 
Network (ICN), the KFTC led discussions on technical assistance and competition ad vocacy.251 Under 
the OECD -Korea Policy Centre Competition Programme, five  workshops were held on various 
competition law enforcement issues, including the innovation and competition in the taxi and 
ride-sharing service market, improvement of efficiency of p ublic medical services, and improvement 
and international harmonization of leniency programs and consumer -oriented corrective 
measures.252 
3.3.4.2   Price controls and monitoring  
3.199.   During the review period, the main legislation in this area, the Price Stabilization Act and its 
Enforcement Decree (last amended in December 2016), remained unchanged.253 The President can 
order the control of prices on a range of products through "emergency demand and supply 
adjustment measure" decrees; measures were taken t o stabilize the prices of masks that were 
lacking due to COVID -19 in 2020 (see below).254 The Government may, when deemed necessary to 
stabilize the people's livelihood and the national economy, designate a ceiling price on important 
commodities, rent for r eal estate, or charges for services.255 Price controls and monitoring are 
operated under the Coal Business Law, the Petroleum and Alternative Fuel Business Law, and the 
Electricity Business Act.  
3.200.   Price controls remain in place in specific areas. As indicated  by the authorities at the time of 
the previous Review, in principle, prices are determined by the market with no intervention from the 
Government except for in the following exceptional circumstances. First, the Government can 
approve the price adjustment  of public goods or services that are deemed necessary to stabilize the 
people's livelihood or supplied by a monopoly state -owned provider upon their provider's requests. 
Second, in case of urgent financial or economic crises or other extraordinary circums tances including 
 
249 Between April 2002 and December 2019, the penalty surcharges imposed on the international cartels 
by the KFTC equalled KRW  890.5 billion on enterprises across 23 countries. KFTC (2020), Annual Report 2020 . 
250 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
251 In 2018 , the ICN had a total membership of 139  competition authorities from 126 countries.  
252 KFTC (2019), Annual Report 2019 , October . Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
253 Statutes of the Republic of Korea. Viewed at: 
https://e law.klri.re.kr/eng_mobile/viewer.do?hseq=41794&type=sogan&key=5 . 
254 Price Stabilization Act, Article  6. 
255 Price Stabilization Act, Article  2. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  natural disasters and emergencies at home or abroad, an emergency demand and supply adjustment 
measure can be adopted. Third, if necessary, the Government may designate a ceiling price if a 
commodity's supply condition changes dramatically  to stabilize the livelihood of consumers or spur 
industrial restructuring. Charges on public goods and services may be adjusted by central and 
regional governments. The Central Government approves the wholesale price of gas products used 
for home heating;  the rates for metropolitan region waterworks service (wholesale only) and 
electricity; fees for telecoms, television services, and postal services; fares for railway, intercity bus 
fares, motorway tolls, and international airfares; medical expenses eligib le for health insurance 
coverage; education; and childcare. Regional governments are responsible for determining the retail 
price of gas products used for home heating, the ticket price of art exhibitions and performances, 
rates for water and sewage, fares  for inner -city buses and taxis; entrance fees for local museums 
and memorials; and the price of septic tank cleaning and food garbage bags.  
3.201.   Since May 2017, under the New and Renewable Energy (Renewable Portfolio Standard 
(RPS)), and the Renewable Fuel Mix  Standard (RFS) Management and Operation Guidelines 
promulgated by MOTIE, a fixed -price contract system has been implemented in parallel with the spot 
market trading system to reduce volatility risks associated with movements in the price of RECs and 
the system marginal price (SMP) on the spot market, with the objective of promoting investment in 
new and renewable energy projects (photovoltaic energy sources).256 
3.202.   Korea's 2006 PLS for new drugs allows only for cost -effective drugs to be listed in the 
national  drug formulary and reimbursed at a premium.257 Since May 2015, exemptions from 
economic -efficiency analysis (cost -effectiveness analysis) regarding reimbursement appropriateness 
have been in place for anti -cancer drugs and rare disease treatments, where th ere are no alternative 
treatments and producing evidence is challenging due to the small number of patients. In 
October  2020, this exemption scheme was expanded to tuberculosis treatments, anti -microbial 
drugs, and emergency antidotes. Nevertheless, eviden ce-based evaluations seemingly lower access 
to novel drugs that are essential to patients but cannot be subjected to a cost -effectiveness analysis 
because of challenges in producing clinical evidence and high costs that may not necessarily be 
reimbursed by  insurance.258 On 7 July 2016, Korea enacted provisions for innovative pharmaceutical 
companies to apply for premium pricing for innovative products. Reportedly, although amendments 
made in December 2018 removed discriminatory elements of the premium pricin g system, the 
revisions to the programme's criteria by the Ministry of Health and Welfare (MOHW) also 
substantially narrowed the programme's scope in a manner that may dramatically limit the ability 
of any company, foreign or domestic, to qualify for premi um pricing.259 The authorities indicate that 
the revision of the premium pricing system was put together on the basis of sufficient opinions from 
relevant associations, and several applications had been submitted and evaluated since its 
implementation.  
3.203.   During the review period, emergency measures were imposed under Article  6 of the Price 
Stabilization Act, in response to the COVID -19 pandemic, and such measures were implemented on 
some basic healthcare products.260 In addition to export restrictions (Section 3.2.3.1), as from 
1 June 2020, 60% of domestically produced filtering respirators were provided under the public 
mask rationing system, compared to the original 80%; as at 18 June 2020, the ratio decreased to 
50%, and public rationing ended on 12 July 2020.261 In order to combat illegal distribution of certain 
health products, between 12 February and 11 July 2020 the sale and production of filtering 
 
256 Chinpyo Park and Robert Dooley, "Electricity Regulation in South Korea: Overview", Thomson 
Reuters Practical Law , 1 February 2019. Viewed at: https://uk.practicallaw.thomsonreuters.com/w -019-
2523?transitionType=Default&contextData=(sc.D efault)&firstPage=true . 
257 The PLS for new drugs is aimed to allow for more rational management of drug expenditure. Seung -
Lai Yoo, Dae -Jung Kim, et al. (2019), "Improving Patient Access to New Drugs in South Korea: Evaluation of 
the National Drug Formulary  System", International Journal of Environmental Research and Public Health , 
Vol. 16(2), 21 January.  
258 A health technology assessment (HTA) and a post -listing pricing control system to reduce prices 
through various mechanisms, even after a drug is listed, have been implemented. Sungju Kim and Jong Hyuk 
Lee (2020), "Price -Cutting Trends in New Drugs after Listing in South Korea: The Effect of the Reimbursement 
Review Pathway on Price Reduction", Healthcare , Vol. 8(3), 26  July. 
259 USTR (2020), 2020 National Tr ade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2020_National_Trade_Estimate_Report.pdf . 
260 Do-Hoon Woo, "Korea's Tariff & Trade Policy Responses to Mitigate Impact of COVID -19", Chambers 
and Partners , 6 April 2020. Viewed at: https://chambers.com/articles/korea -s-tariff-trade-policy -responses -to-
mitigate -impact -of-covid-19. 
261 MFDS, Latest COVID -19 News . Viewed at: mfds.go.kr   WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  respirators and hand sanitizers had to be reported to the MFDS.  Sales of masks needed to be 
reported until 22 October, and production of masks needed to be reported until 11 May 2021.262 
Furthermore, to mitigate the shortage of filtering respirators, price controls were imposed.263 
3.3.4.3   Consumer protection  
3.204.   Since 2008, the KFTC  has been the sole competent authority in consumer policy. It remains 
in charge of setting the consumer policy plan and monitoring the Korea Consumer Agency. Its 
jurisdiction covers, inter alia , the Framework Act on Consumers, the Product Liability Act, th e 
Consumer's Cooperative Union Act, the Act on the Consumer Protection in Electronic Commerce 
(E-Commerce Act), the Compliance Measures for Mobile Electronic Commerce Businesses, the Act 
on the Regulation of Terms and Conditions, and the Act on Fair Labell ing and Advertising. In 2018, 
amendments to the Standard for Resolution of Consumer Disputes focused on areas related to 
people's livelihoods; in 2020, modifications were made in sectors such as travel, aviation, and 
accommodation to smoothly resolve penal ty disputes caused by the COVID -19 pandemic. A triple 
damages provision was proposed to the Product Liability Act, and a new provision on expedited 
processing of dispute mediation was introduced to the Framework Act. The E -Commerce Act was 
also amended on 12 June 2018 to include a new provision on recurring acts and a new provision on 
administrative fines.264 Adjustments were made to the regulation in order to provide important 
product information, such as shipping costs and safety precautions when using e -commerce, and in 
2018, a triple damages provision was adopted into the Product Liability Act. Laws protecting digital 
privacy, including the Act on Promotion of Information and Communication Network Utili zation and 
Data Protection (Network Act of 2001), the  Personal Information Protection Act (PIPA of 2011), and 
the Act on the Use and Protection of Credit Information (wholly amended in 2009), were amended 
in January 2020, and most of the amendments took effect in August 2020.265 This unified system 
entails th at consumers do not only enjoy protection but are also able to exercise sovereignty.266 
3.205.   The KFTC establishes a basic master plan for consumer policies every three years, which 
serves as a baseline for all the central administrative bodies including the KFTC  itself, as well as 
17 local metropolitan governments, the Korea Consumer Agency, and other consumer groups. 
During the review period, its fourth Master/Framework Plan 2018 -20 contained five policy goals 
including Preemptive Securing of Consumer Safety und er the vision of Fostering a Fair and 
Consumer -Centered Market Environment, and outlined the consumer safety tasks for 17 ministries 
and 16 upper -level local governments.267 The fifth Master/Framework Plan 2021 -23 contains five 
policy goals including Enhanc ed and Effective Safety for Consumers and Strengthening Consumer 
Capabilities during the Digital Transition under the vision of Fostering a Fair and Win -Win Market 
Environment Led by New Consumers in the Digital Era, and outlined the consumer safety tasks for 
17 ministries and 16 upper -level local governments. Parallel imports continued to be accepted as a 
necessary mechanism to ensure consumer protection from unfair product pricing; parallel imports 
of genuine products may enter Korea legally, in some circ umstances, provided they meet certain 
requirements (Section 3.3.7.1).268 In recognizing the role of local governments in promoting 
 
262 MFDS, Latest COVID -19 News . Viewed at: mfds.go.kr . 
263 E. Tammy Kim, "How South Korea Solved Its Face M ask Shortage", New York Times , 1 April 2020. 
Viewed at: https://www.nytimes.com/2020/04/01/opinion/covid -face-mask -shortage.html ; Jung Min -kyung, 
"South Korean Governm ent Takes Full Control of Face Mask Supply, Bans Exports", Korea Herald , 
5 March  2020. Viewed at: http://www.koreaherald.com/view.php?ud=20200305000730 ; and  Amihai Glazer, 
"Price Control s Don't Work – But Mask Rationing Is the Exception That Proves the Rule", The Conversation , 
24 April 2020. Viewed at: https://theconversation.com/price -controls -dont-work-but-mask -rationing -is-the-
exception -that-proves -the-rule-136595 . 
264 KFTC (2019), Annual Report 2019 , October . Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
265 EIU (2020), Country Commerce:  South Korea , August. Viewed at: 
https://country.eiu.com/FileHandler.ashx?issue_id=1090089892&mode=pdf . 
266 KFTC, Publications . Viewed at: 
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=524&bbsId=BBSMSTR_000000002406&bbsTyCode
=BBST11 . 
267 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
268 Parallel imports must meet the fol lowing requirements: (i)  they must be genuine; (ii)  they must be 
of the same quality as goods sold in Korea; and (iii)  the party that placed the trademark on the parallel WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  consumers' rights and interest, the KFTC spent KRW  445 million in subsidies for providing consumer 
counselling services at the  local consumer centres of 16 upper -level local governments. A further 
KRW 446 million in subsidies was spent on 2 0 programmes selected through public tender.  
3.206.   In 2018, the KFTC launched the Integrated Consumer Support System or Haengbok Dream, 
a single win dow where consumers can find customized information for each stage of consumption 
and seek remedies. The Enforcement Decree of the Framework Act was thereby amended to 
establish criteria for the outsourcing of Haengbok Dream operations. Within one year of its launch, 
Haengbok Dream had reached 1.4 million users; it brought together scattered consumer information 
from 102 websites of 68 organizations.269 In 2020, Haengbok Dream provided recall and certification 
information of 26 organizations and also an inte grated window of 69  organizations for remedy of 
consumer damage. In addition to the development of promotional material, in 2018 the KFTC 
organized 564 consumer education workshops for 17,000  members of vulnerable groups , while in 
2020, 486 workshops were organized for 10,603 members of vulnerable groups .270 
3.207.   To ensure efficient prevention and remedy of consumer damage, the KFTC operates the 
Consumer Counselling Center (CCC) and the Consumer -Centered Management (CCM) Certification 
Program.271 In 2020, the CCC received 709,714 calls and scored a response rate of 88.3% in its 
effort to provide consumer damage remedies, compared to 792,446 calls and a rate of 85.2% in 
2018. The CCM, run by the Korea Consumer Agency and certified by the KFTC, cont inued to evaluate 
whether or not an enterprise is conducting all its activities from a consumer's perspective and is 
consistently improving its management in a consumer -centred way; as of 2021, the CCM accounted 
for 185 CCM -certified enterprises, compared to 130 in 2014 and 170 in 2019.272 
3.208.   During the review period, action to prevent consumer harm by strengthening law 
enforcement with respect to products and areas that closely affect consumers' lives, such as daily 
necessities and e -commerce, was taken. In th e period 2016 -19, 538 terms and conditions reviews 
were conducted by the KFTC, of which 55 resulted in the issuance of corrective measures and 442  in 
voluntary correction.273 Service businesses amounted to 6 0.9% of these rectification cases.274 
Sanctions wer e also imposed in 767 unfair labelling and advertising cases. Violation against the 
E-Commerce Act resulted in 76 corrective orders, 286 warnings, and 133 voluntary corrections.275 
3.3.5   State trading, state -owned enterprises, and privatization  
3.3.5.1   State trading  
3.209.   The State continues to participate in a wide range of trade and/or trade -related activities 
(Section 3.3.5.2). According to Korea's latest WTO notifications on state trading (see below), since 
2016, two government agencies (MAFRA and the aT) have remained auth orized to allocate and/or 
operate tariff quotas, as well as quotas, in the context of Korea's WTO  commitments in agriculture, 
thus affecting quota utilization and price mark -ups (Section  3.1.5.2).276 Since 1995, MAFRA has  
 
imports must be the Korean trademark holder or closely related. WTO document WT/TPR/S /346/Rev.1, 
6 January  2017.  
269 Viewed at: www.consumer.go.kr . 
270 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go. kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
271 The CCC with its network of 1,372 agencies run jointly by the public sector and private consumer 
groups continues to enable quick responses to consumer complaints; the  telephone counselling system allows 
for efficient counselling services by networking 10 consumer agencies, the Korea Consumer Agency, and 
17 metropolitan governments' counsellors . 
272 KFTC, Consumer Policy . Viewed at: https://www.ftc.go.kr/eng/contents.do?key=3056 . 
273 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
274 These businesses were in the field of telecommunications, electricity, travel, transport, sports, and 
health.  
275 KFTC (2019), Annual Report 2019 , October. Viewed at:  
https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=517&bbsId=BBSMSTR_000000002404&bbsTyCode
=BBST11 . 
276 Korea's rights to impose mark -ups on WTO -related TRQs are stipulated in Note 4, Section 1: 
Agricultural Products, Part 1: Most -Favoured -Nation Tari ff of Schedule LX of the Republic of Korea on 
Agricultural Products (WTO documents WT/LET/492, 12 April 2005; and WT/LET/504, 5 December 2005).  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  maintained  exclusive rights on rice imports within the tariff quota and controlled the importation of 
MMA-related rice in order to, inter alia,  smoothly implement WTO commitments, ensure food 
security, and avoid domestic market disturbances caused by a sudden influx of rice (Section 3.2.6.2). 
The operations of aT are, inter alia,  aimed at stabilizing the domestic market  for some other 
agricultural items . Since 2016, MAFRA has remained the sole importer of rice, while aT undertook 
some imports of other agricultural ite ms; all agricultural items were subject either to important 
mark-ups or to a lesser extent to mark -downs.277 
3.210.   During the review period, Korea maintained its record on WTO notification of state trading 
by making two submissions in July 2018 and October 2020, covering activities in the period 
2016-19.278 No written questions were submitted by Members regarding these notifications, and no 
questions were raised at the meetings of the Working Party on State Trading Enterprises held during 
the review period.  
3.3.5.2   State i nvolvement in the economy and privatization  
3.211.   State involvement in the economy persists, as a result of the limited privatization efforts 
during the review period; at the same time, the level of government shareholding at several entities 
rose for different reasons (Table 3.4). State -owned enterprises (SOEs) remain active in areas such 
as agriculture, mining and energy, financial services, transport, broadcasting, and media. As of 2020, 
36 SOEs employed 1 50,721  people; the total assets of 36 SOEs were KRW  615.7 trillion .279 According 
to an Asian Development Bank Institute (ADBI) Working Paper, as of January  2019, 339  institutions 
designated as public institutions under the 2007 Act on the Management of Public Institutions (AMPI) 
provided basic goods and service s needed for daily life, including electricity, gas, roads, airports, 
ports, finance, medical and social welfare services, four major insurance policies, safety -related 
public inspections, and R&D.280 As of 2020, there were 340 public institutions, 36  SOEs (self-
generating revenue ≥50%), and 95 quasi -government organizations ((self -generating revenue 
<50%), including 13 fund management -type institutions and 82 commissioned service -type 
institutions). As of 2020, the budget for government support for public i nstitutions was 
KRW 100.6  trillion, accounting for 18.4% of the total government budget of KRW  546.9 trillion, 
compared to KRW  77 trillion, accounting for 15. 9% of the total government budget of 
KRW 485.1 trillion in 2019.  
3.212.   During the review period, the sol e partial privatization achievement related to the Woori 
Bank in  November  2016; although the Government planned to sell its remaining 18% stake in Woori 
Financial Group during 2020 -22, the process stalled amid the COVID -19 pandemic.281 At the time of 
 
277 Between 2016 and 2019, the share of sales of aT to national domestic consumption of items 
concerned varied, e. g. up to 63.4% for soybeans, 72.6% for small red beans, 48.7% for green beans, 34.9% 
for buckwheat, 4.7% for genus Capsicum , 3.3% for garlic, 1.6% for onions, 39.5% for sesame seeds, and 
0.5% for potatoes. Considerable mark -ups (average representative dome stic sales price higher than average 
import price) affected soybeans (up to 63.1%), small red beans (up to 57.6%), green beans (up to 177%), 
buckwheat (up to 190.8%), onions (up to 9.3%), and sesame seeds (up to 86.6%). Mark -downs (average 
representative d omestic sales price lower than average import price) affected garlic (down to 55.3%) and 
potatoes (down to 34.6%). Mark -ups of up to 63.2% were imposed on semi -milled or wholly milled 
(non-glutinous) rice (HS  1006.30.1000), whereas mark -downs down to 43.1%  affected husked (brown, 
non-glutinous) rice and semi -milled or wholly milled rice (glutinous), whether or not polished or glazed 
(HS 1006.20.1000 and HS  1006.30.2000). As indicated by the authorities at the time of the previous Review, 
the mark -up for imp orted table rice is not predetermined but presumably ex post facto  the gap between the 
purchase price from abroad and the sales price of domestic buyers; concerning rice for processing usage, the 
mark-ups are not imposed because its selling price is lower than the import price due to low consumer 
preference. WTO documents G/STR/N/17/KOR, 9 July 2018 and G/STR/N/18/KOR, 12 October 2020.  
278 WTO documents G/STR/N/17/KOR, 9 July 2018 and G/STR/N/18/KOR, 12 October 2020.  
279 According to a 2011 OECD paper, Korea ha d 59 SOEs in 2009, with assets valued at 
USD 177.6  billion and employing 120,655 persons. This was the highest valuation of SOEs among 27  OECD 
reporting countries.  
280 Jhungsoo Park, et al. (2019), Is the Management Evaluation System of State -Owned Enterpris es in 
the Republic of Korea a Good Tool for Better Performance?  ADBI Working Paper Series, No.  1055, 
December  2019. Viewed at: https://www.econstor.eu/bitstream/10419/222822/1/ 1686372124.pdf . 
281 The Government invested about KRW  12 trillion in public funds to normalize management in the 
process of clearing up the insolvency of five financial companies, including Woori Financial Group, and has 
recovered public funds through the re sale of acquired shares. The authorities indicated that Woori Financial 
Group has never been a public institution under the relevant law, meaning that the Government holds shares 
of private financial companies temporarily as a result of investing funds. Th erefore, they consider that Woori 
Financial Group is not related to privatization of public entities. EIU (2020), Country Commerce: South Korea , WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  the pr evious Review, plans to restart privatization of public services (e.g. the KDB, the IBK, Woori 
Financial Group, and Incheon International Airport) had stalled.282 Furthermore, a 2013 Public 
Institution Reform Plan involved actions for increased transparency  by making information on public 
institutions' debt burdens and fringe benefit expenditures accessible, reducing the debt level of public 
institutions below 200% of their total capital by 2017, improving public institutions' management 
efficiency, and redu cing the pay of executive board members of public institutions. According to the 
authorities, the debt ratio of public institutions has been stable and dropped from 157.3% in 2017 
to 152.4% in 2020.  
Table 3.4 State involvement in the economy, 2021  
Entity  Activity  Degree of state ownership 
(%)/ Situation in 
privatization programme  
GOODS  
Agriculture    
Korea Agro -Fisheries and Food 
Trade Corp. (aT)  Manufacture and export of 
agricultural products, seafood, and 
beverages  100% / ..  
Mining and energy   
Korea Coal Corp.  Price stabilization; stockpiling coal  100% / ..  
Korea Resources Corp.  Support of domestic mining 
industry; survey and research of 
geological structures and mineral 
deposits; technical and monetary 
subsidies  100% (99.9% Government, 
0.14% KDB) /.. 
Korea National Oil Corp.  Domestic and overseas oil 
exploration and development; 
export, import stockpiling, 
transportation; lease, and sales of 
crude oil and its products  100% / ..  
Korea Gas Corp. (KOGAS)  Production and distribution of 
natural gas; exploration and 
import/export of natural gas  26.2% / ..  
Korea Electric Power Corp. 
(KEPCO)  Power generation; power 
transmission and distribution; 
electricity sales  51.1% (18.2% Government , 
32.9% KDB) /..  
Korea District Heating Corp. 
(KDHC)  Thermal energy supply for space 
heating, cooling, tap -water heating, 
and industrial process heating  34.5% / ..  
SERVICES  
Financial services    
Industrial Bank of Korea (IBK)  Specialized bank  59.5% (50.9% in 2016, 
ownership increase mainly due to 
government capital injections to 
enhance the policy role in SME 
lending and COVID -19 loan 
purposes KRW  225 billion in 
2019, KRW  1,269 billion in 2020) 
/.. 
Korea Deposit Insurance Corp. 
(KDIC)  Management of deposit insurance 
funds; risk management; resolution 
of insolvent financial institutions; 
management of bankruptcy 
estates; insolvency -related 
investigations  100% (non -capital special 
corporation) / ..  
 
Korea Development Bank (KDB)  Development institution  100% / ..  
Export -Import Bank of Korea  Development institution  68.7% (72.9% in 2016, 
ownership decline mainly due to 
KDB's in -kind contribution of 
approximately KRW  1.2 trillion in 
2017 to comply  with prudential 
standards and practi ces on 
capital adequacy) /..  
 
August. Viewed at: https://investmentpolicy.unctad.org/investment -policy -
monitor/measures/3017/korea -republic -of-korean -government -sells-its-29-7-stake -in-woori -bank    
282 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Entity  Activity  Degree of state ownership 
(%)/ Situation in 
privatization programme  
Korea Asset Management 
Corporation (KAMCO)  Collect public funds through 
resolving non -performing loans 
acquired by financial institutions, 
and perform public sale of the 
assets entrusted by the 
government agencies and others  77.0% (56.8% in 2016, increase 
due to January 2021 in -kind 
contribution of KRW  650 billion to 
improve its financial soundness 
and support businesses affected 
by COVID -19) /..  
Korea Housing Finance Corp. 
(KHFC)  Mortgage securitization and 
management of housing credit 
guarantee fund  68.7% (64.8% in 2016, increase 
due to government investment of 
KRW 90 billion in 2018, KRW  90 
billion in 2019, and KRW  50 
billion in 2021) /..  
Broadcasting and media    
Korea Broadcasting System  Public broadcasting service  100% / ..  
The Seoul Shimmun  Newspaper publishing  30.5% / ..  
Transport    
Korea Expressway Corp.  Expressway construction and 
management  87.7% (84.1% in 2016, increase 
due to government matching in 
construction investment projects) 
/.. 
Korean Railroad Corp.  Railway operation and maintenance  100% / ..  
Busan Port Authority (BPA)  Management and development of 
the port  87.3% (100% in 2016, decline 
due to government investment of 
its shares to the Korean Ocean 
Business Corporation (KOBC)) / ..  
Incheon Port Authority (IPA)  Management and development of 
the port  80.7% (100% in 2016, decline 
due to government investment of 
its shares to KOBC) / ..  
Incheon International Airport 
Corp.  Incheon International Airport 
development and operation  100% / ..  
Other    
Korea Real Estate Board 
(previously Korea Appraisal 
Board)  Appraisal; real estate consulting; 
real estate transaction information 
network  49.4% / ..  
Korea Minting and Security 
Printing Corp. (KOMSCO)  Local currency supply  100% / ..  
Korea Land & Housing Corp.  (LH) Acquisition, stockpiling, 
development, and supply of land; 
urban development and 
maintenance; housing construction, 
supply, and management  88.6% (87.2% in 2016, increase 
due to the constructi on and 
purchase of public rental housing 
projects) / ..  
Korea Housing & Urban 
Guarantee Corp.  Housing guarantee for tenants and 
guarantee for construction 
companies; urban regeneration  
 70.3% (55.0% in 2016, increase 
due to rise in supply of 
guarantees for government 
trusts) / ..  
Korea National Tourism Corp.  Overseas publicity of Korean 
tourism; managing an overseas 
marketing network  55.2% / ..  
Korea Rural Community Corp.  Contribution to rural economic and 
social development; development 
of agricultural land and ground 
water resources; improvement of 
rural living environment  100% / ..  
Korea Water Resources Corp.  Water supply, and distribution -
related works; water quality 
improvement  93.8% (91.3% in 2016, gradually 
increase of government 
contribution) / ..  
Korea Post  Postal service, postal banking and 
insurance services  100% / ..  
.. Not available.  
Source:  Information provided by the Korean authorities.  
3.3.6   Government procurement  
3.213.   Korea's government procurement market (goods, services, and construction) grew almost 
steadily from KRW  116.9 trillion or 6.7% of GDP (2016) to KRW  123.4 trillion (2018) or 6.5% of WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  GDP to an estimated KRW  134.98 trillion (May 2019) or 7% of GDP .283 Although  government 
procurement is directed at achieving value for money, it also remains focused on future -oriented 
public procurement; technology innovation; quality -first procurement; socially responsible public 
procurement allowing easier entry and broader mar ket opportunities for social enterprises, SMEs, 
and other socially disadvantaged businesses; and preparing for global public procurement.284 As part 
of its post -pandemic strategy, Korea planned to put  in place flexible procurement procedures for 
publicly fu nded projects to provide intensified support to small businesses negatively affected by the 
pandemic, and to intensify investment in Innovation Procurement. Since 2020, Korea has 
implemented the regime to buy innovative products so that the products can ac count for 1% of the 
total goods purchased through government procurement. In this context, the PPS (Section 3.3.6.3) 
conducted a project to purchase prototypes of innovative products to help them get into wider 
markets. In addition, an E -innovation Procure ment Marketplace (http://ppi.g2b.go.kr), established 
in 2020, has also been in operation.  
3.214.   Korea operates international tendering and other procurement procedures in accordance 
with its commitments under the WTO Plurilateral Agreement on Government Procurem ent (GPA).285 
During the review period, its WTO GPA threshold for goods and services for central government 
entities (SDR 130,000) was reduced from KRW  210 million (2017 -18) to KRW  200 million  (2019 -20) 
and then returning to KRW  210 million (2021 -22).286 Under the KORUS FTA, Korea's central 
government entities' threshold for goods and services from the United  States has remained at 
KRW 100 million.287 Korea's international tendering system remains based on open competitive 
tendering; as the authorities ind icated at the time of the previous Review, restricted/limited 
tendering is rarely used (see below).288 In 2018, the value of contracts subject to Korea's GPA 
commitments stood as follows: central government entities' international tendering was 
KRW 4.2 trillion (KRW  4.4 trillion in 2017) and limited tendering was KRW  6.3 billion or 8.5% of the 
value of the entire government procurement market; and for other entities (SOEs) it was 
KRW 9.2 trillion (KRW  14.5 trillion in 2017) or 7.4% of the value of the entire  government 
procurement market.289 In the case of contracts subject to Korea's WTO GPA commitments, 
centralized procurement (see below on the PPS) represented 14.1% (15% in 2015) of total 
procurement of GPA -covered entities in 2020.  
3.3.6.1   Legislation  
3.215.   During the r eview period, changes were made to the government procurement legislation. 
The 1995 Act on Contracts to Which the State Is a Party (last amended by Act No.  17816, 5 January  
2021) covers international and domestic procurement of goods and services, includin g construction, 
by all central government agencies. Amendments that entered into force on 20  March  2018 involved 
the method of contracting, agreement on dispute resolution methods, state contract disputes 
conciliation, competition among tenders eligible fo r preferential purchase, and dispute resolution 
through arbitration or conciliation by the State Contract Disputes Conciliation Committee.290 
Amendments enforced from 27 May 2020 related to,  inter alia , principles of contracting, preparation 
of estimated pr ice, determination of successful tenderer in competitive tendering procedure, and 
adjustment of contract amount according to other modifications of terms and conditions  of a 
 
283 PPS, Procurement Policy and Statistics . Viewed at: 
https://www.pps.go.kr/kor/content.do?key=00159#none ; and Statista, Value of Publ ic Procurement Market in 
South Korea from 2014 to May 2019 . Viewed at: https://www.statista.com/statistics/1128501/south -korea -
value -of-public -procu rement -market/ . 
284 PPS (2020), Innovation for the Future and Better Service  – 2019 Annual Report , 9 June. Viewed at: 
https://www.pps.go.kr/eng/bbs/list.do?key=00798#none ; and WTO docu ment WT/TPR/S/346/Rev.1, 
6 January 2017.  
285 The original WTO Agreement on Government Procurement (GPA) came into force in Korea on 
1 January 1997 and the revised GPA on 14 January 2016.  
286 WTO documents GPA/W/336/Add.6/Rev.1, 13 January 2017; GPA/THR/KOR/1, 1 February 2019; and 
GPA/THR/KOR/2, 8 January 2021.  
287 Furthermore, Korean procuring entities do not require a US supplier/bidder to have been previously 
awarded one or more contracts by a procuring entity in Korea or to have had prior work experience in Ko rea in 
order to participate in procurement or be awarded a contract. WTO  document WT/TPR/S/346/Rev.1, 
6 January  2017.  
288 Restricted tendering consists of limited (by invitation) or nominated (by nomination) competitive 
bidding and private contracts where a specific supplier is used.  
289 WTO documents GPA/STAT(17)/KOR/1, 6 June 2019 and GPA/STAT(18)/KOR/1, 5 November 2020.  
290 Act No.  15219, 19 December 2017. Viewed at: 
https://www.law.go.kr/LSW/eng/engLsSc.do?menuId=1&query=contract&y=33&x=22#liBgcolor0 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  contract.291 The latest amendment to the Government Procurement Act, passed on 17 J anuary 2017 
and enforced from 18  July 2017, was made for giving the PPS clear grounds for investigation into 
unfair procurement practices for demand commodities.292 Although purchase of agricultural, 
fisheries, and livestock products is not subject to inter national tendering under the GPA, their 
procurement is covered by the Act on Contracts to Which the State Is a Party.  
3.216.   Procurement by local government entities and public entities is regulated by the Act on 
Contracts to Which the Local Government Is a Party  (last amended in 2020), and the Act on the 
Management of Non -Departmental Public Entities. The partial amendment to the Act on Contracts 
to Which the Local Government Is a Party, enforced from 24 December 2018, included issues such 
as the restriction on q ualifications for participation of persons who have evaded taxes in tendering, 
new insertion of conciliation and arbitration as methods of dispute settlement, extension of contract 
period and adjustment of contract price due to grounds such as typhoons, re strictions on 
qualifications for participation of unjust enterprisers in tendering, as prescribed by Presidential 
Decree, and legal training of civilians who perform public duties as public officials in applying penalty 
provisions.293 
3.217.   Procurement from SMEs remains covered by the main procurement legislation and the Act 
on Facilitation of Purchase of Small and Medium Enterprise -manufactured Products and Support for 
Development of Their Markets; its company classification criteria seemingly raises concern.294 The 
2005 Act on Encouragement of Purchase of Green Products (known as the Law on the Promotion of 
Environmentally Friendly Products) requires government agencies and SOEs to purchase 
environmentally friendly products; as of 2021, it applied to 47 central government agencies ( 45 in 
2015), 24 3 local government bodies ( 243 in 2015), 151 public enterprises, 96 local public 
enterprises, 95 quasi -governmental organizations (Section 3.3.5.2), 17 education authorities, 6 
other special corporations, 35 local medica l centers , and 2 18 other public institutions (in total 849 
agencies in 2021 and  765 in 2015).295 Although the Law makes mandatory the purchase of 
environmentally friendly products, it provides exceptions for quality and availability reasons, as well 
as emer gency procurement needs.  
3.218.   The MRFTA enables the PPS (see below) to request the KFTC to lodge complaints on alleged 
violations with the Prosecution (Section  3.3.4.1).  
3.219.   Information on Korea's government procurement framework and operations is available on 
the websites of the Korean Law Information Center (http://gwanbo.go.kr), the Korea Ministry of 
Government Legislation ( http://www.law.go.kr ), and the Korea Online e -Procurement System 
(http://www.g2b.go.kr ). 
 
291 Act No.  16578, 26 November 2019, Partial Amendment. Viewed at:  
https://www.law.go.kr/LSW/eng/engLsSc.do?menuId=1&query=contract&y=33&x=22#liBgcolor0 . 
292 Act No.  14526, 17 January 2017, Partial Amendment. Viewed a t: 
https://www.law.go.kr/LSW/eng/engLsSc.do?menuId=1&query=contract&y=33&x=22#liBgcolor1 . 
293 Act No.  16042, 24. December 2018, Partial Amendment. Viewed at: 
https://www.law.go.kr/LSW/eng/engLsSc.do?menuId=1&query=contract&y=33&x=22#liBgcolor3 . 
294 Reportedly, the Act categorizes companies by size, with multinationals frequently labelled as "large" 
(regardless of their actual size) simply by virtue of them be ing foreign -based or multinational, while local 
companies get categorized as "small" or "medium." As such, "large" foreign companies are only able to bid on 
(the rare) projects larger than USD  220,000, while most local companies can bid on the majority of projects 
available. Similarly, it appears that the Software Industry Promotion Act restricts bids for certain government 
contracts for software services to SMEs, leaving multinationals out of the government procurement process. 
USTR (2020), 2020 National T rade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2020_National_Trade_Estimate_Report.pdf . 
295 In 2017, green product p rocurement over the total expenditure was 47.5%, for which total 
expenditure on green products amounted to KRW  3.3 trillion; the same year, 97.4% of the 910 government 
agencies fulfilled that obligation. UN Environment Programme and Korea Environmental Ind ustry and 
Technology Institute (2019), Green Public Procurement in the Republic of Korea: A Decade of Progress and 
Lessons Learned . Viewed at: 
https://www.oneplanetnetwork.org/sites/default/files/green_public_procurement_in_the_republic_of_korea -
_a_decade_of_progress_and_lessons_learned.pdf , and its website: 
https://www.oneplanetnetwork.org/resource/green -public -procurement -republic -korea -decade -progress -and-
lessons -learned -0; and Green Finance Platform. Viewed a t: http://greenfinanceplatform.org . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.3.6.2   Procurement methods  
3.220.   Under the Act on Contracts to Which the State Is a Party, contracts are awarded in close 
connection with the utilization of public procurement for industrial policy objectives through 
four methods: (i)  open compe tition bidding; (ii) limited competition bidding; (iii)  selective 
competition bidding; and (iv) direct contracting.296 Open competition bidding is the principal method 
used, and the other types are allowed only when specific legal requirements are met; howe ver, the 
limited or no competition methods total the highest share, reflecting the importance posed by Korea 
on government procurement as a policy tool.297 Between 2016 and 2019, the share of open 
competition bidding rose from 32.3% in 2016 to 35.9% in 2019 , whereas the share of limited 
competition decreased from 48.8% to 43.6%. At the same period, the share of selective competition 
bidding remained stable at 0.2%, whereas the share of direct contracting increased from 18.7% to 
20.3%. Although defence procur ement is covered by the main procurement legislation (but only 
partly by Korea's WTO GPA obligations) and, in principle, conducted by open competition, 
procurement procedures tend to follow defence acquisition management practices, and selective 
competitio n tendering is often used. Although direct contracts are occasionally used for purchases 
of goods and services not exceeding KRW  50 million (KRW  200 million for construction works) in 
accordance with relevant laws, competitive contracting is generally used  for such purchases from 
SMEs. The amount for direct contracts to firms owned by women and people with disabilities 
remained unchanged.298 No price preference schemes in favour of SMEs and other socially 
disadvantaged sectors were introduced or maintained.  
3.3.6.3   Public Procurement Service (PPS)299 
3.221.   Korea has been increasingly focused on centralized procurement (see below).300 A 
substantive part of procurement for the Central Government, local governments, and public 
enterprises is conducted by the central procurement  agency, the PPS. Central government agencies 
must use the PPS to procure goods and services at KRW  100 million or above; the threshold for 
foreign goods and services remains at over USD  200,000.301 Below that threshold, individual 
government agencies may c onduct their own purchasing directly. All other public institutions, 
including SOEs, may procure goods and services directly or through the PPS. Local governments are 
authorized to procure goods and services independently and to conduct foreign procurement ; for 
construction works with an estimated value exceeding KRW10  billion, the PPS reviews the cost 
calculation basis of the construction budget prior to the tendering procedure, so as to prevent 
 
296 The authorities indicate that public procurement methods are chosen in accordance with the Act on 
Contracts to Which the State Is a Party. Open competition bidding is to be made in principle. However, if 
deemed necessary, given the purpose, nature, and size of a contract, tenders involving limited and/or selective 
competition and direct contracting are also made available. The authorities also indicate that although some 
methods are selected for industrial purposes, other limited tendering methods on construction contracting are 
used by considering the severity of construction works. Furthermore, direct contracting and limited 
competition -based bidding are also used in case s of more than two failed biddings, and natural disasters and 
the like. Dae -in Kim (2021), Korean Public Procurement Law , Korea Legislation Research Institute, January. 
Viewed at: https://www.researchgate.net/publication/348618992_Korean_Public_Procurement_Law . 
297 For example, limited -competition bidding is allowed for the manufacturing and purchase of articles 
designated and noticed by the Minister of SMEs and S tartups according to the Act on Facilitation of Purchase of 
Small and Medium Enterprise -manufactured Products and Support for Development of Their Markets. Direct 
contracting is allowed when any product certified for performance under the Act on Facilitati on of Purchase of 
Small and Medium Enterprise -manufactured Products and Support for Development of Their Markets is 
purchased from an SME.  
298 Public organizations subject to the Act have their maximum amount of direct contracting to these 
firms at below KRW  50 million. For general -purpose construction projects between KRW  50 million and 
KRW 100 million, only these firms are allowed to compete in biddings. Firms led by women and people with 
disabilities can compete for direct contracts for technology -based se rvice projects below KRW  50 million.  
299 More information on PPS activities, requirements, and procedures is available in WTO document 
WT/TPR/S/346/Rev.1, 6 January 2017.  
300 Centralized procurement has merits of forming economies of scale and reinforcing the expertise of 
contracting officials, but it is more susceptible to large -scale corruption. Decentralized procurement is more 
likely to satisfy demand, as procurement occurs close to consumers but can make it difficult to prevent 
corruption as a wider range of agencies need to be monitored for anti -corruption. Dae -in Kim (2021), Korean 
Public Procurement Law , Korea Legislation Research Institute, January. Viewed at: 
https://www.researchgate.net/publication/348618992_Korean_Public_Procurement_Law . 
301 A higher threshold of KRW  3 billion applies to construction contracts . PPS (2019), 2018 Annual 
Report , 10 May. Viewed at: https://www.pps.go.kr/eng/bbs/list.do?key=00798#none . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  possible budget waste.302 The PPS's main functions remain supp lying goods and services for 
government use303, contracting and managing public works, stockpiling 15 types of essential raw 
and construction materials to secure price stability and supplies304, coordinating and auditing 
government goods and real estate property management, and operating the Korea Online 
e-Procurement System (KONEPS).  
3.222.   All bidders wishing to participate in PPS -conducted tenders must register with the PPS. For 
construction works below KRW10 billion, it uses an eligibility screening s ystem. "Abnormally low or 
dumping" tenders are rejected.305 The best value award method is used for contracts exceeding 
KRW 10 billion after conducting a pre -qualification evaluation followed by a comprehensive 
evaluation on the bid price, performance, and social responsibility to determine the successful 
bidder. A pre -qualification  system (PQ  System) is also used to determine eligible bidders. While the 
procuring entities may decide to use the PQ system, its utilization is compulsory for construction 
projec ts subject to the best value award method. Separate pre -qualification  lists are maintained for 
each construction project, based on objective criteria.306 Bid results, including tenders, pre -
qualification  evaluation, and contract awards are released on the K ONEPS site 
(http://www.g2b.go.kr ). As indicated by the authorities at the time of the previous Review, there 
are no special pre -qualification  requirements or restrictions imposed on foreign suppliers.  
3.223.   The PPS handles procurement from SMEs and socially disadvantaged sectors, such as 
regional companies, women -owned businesses, businesses owned by persons with disabilities, and 
social enterprises.307 The MSS (previously the Small and Medium Business Administration (SMBA) 
(Sections 3.3.1.2 and 3.3.3.1)) provides the list of set -aside products to be procured through 
competition from SMEs only as an exception under the GPA.308 The PPS maintains various policies 
to increase opportunities for SMEs. The PPS's "competitive bidding system restricted by region" and 
"compulsory joint subcontracting and single source contracting system" expand regional 
opportunities.309 Under its 18 August 2010 notice Competitive  Bidding among Joint Ventures of 
SMEs, the PPS designated 10  standard items, including ready -mixed concrete, for which only joint 
ventures with at least 20% ownership by small -sized suppliers may compete.310 In particular, since 
2018 the MSS has purchased t echnology development products developed by SMEs in priority from 
public institutions/organizations, and launched the Technology Development Product Priority 
 
302 Foreign procurement refers to purchase of goods and services that are not domestically produced or 
supplied, and therefore procu red through international tendering in accordance with international commercial 
practice.  
303 Defence -related procurement is conducted by the Defence Acquisition Programme Administration.  
304 Each year t he Minister of Economy and Finance determines which essen tial materials are highly 
dependent on imports. As of June 2016, the PPS had designated six base metals (aluminium, copper, lead, 
zinc, tin, and nickel) and nine rare metals (silicon, cobalt, vanadium, indium, lithium, strontium, manganese, 
bismuth, and ta ntalum). These metals are purchased by the PPS using international competitive tenders, and, 
upon request, the stocks are made available to the private industry, including SMEs, at the prevailing 
international market price.  The nine  types of rare materials  are stockpiled by the PPS and are to be managed 
by the SOE Korea Resources Corporation (Section 3.3.5.2) as from 2022. In addition, 150 million face masks 
were stockpiled in case of a resurgent and prolonged pandemic, along with designation of the masks a s goods 
for emergent supply control on 24 April 2020.  
305 Bids are evaluated based on estimated prices prepared by the PPS. Those that exceed these 
estimates are precluded, as are bids that fall below a certain level . 
306 Bidding is only open to suppliers that  receive a certain pass score in a comprehensive evaluation 
based on experience, technical capacity, financial status, and credibility (record of the supplier's integrity in 
abiding by relevant laws).  
307 As of 2015, the approach for defining SMEs was the a verage sales in the past three years. The 
average sales criterion is different for each industry. For example, the average sales amount for manufacturing 
industries, such as clothes, bags/shoes, or primary materials, is KRW  150 billion, whereas for the 
transportation industry it was KRW  80 billion.  
308 The scope of restricted tendering procurement includes five types of technology development 
products, and products provided by SMEs in four special support regions. The list is renewed every three years, 
from 2 009 onwards. There were 204 SME products for set -asides until 2018 (SMBA Notification No.  2015-69).  
309 In 2016, the competitive bidding system "restricted by region" applied to projects valued up to 
KRW 8.2 billion, and allowed companies located in the con struction region to participate in the open 
competitive tender. The compulsory joint -venture system (up to KRW  8.2 billion as from 2016) required a 
bidder to form a joint venture with a company located in the construction region. Both methods applied only to 
projects whose estimated value does not exceed the WTO GPA threshold.  
310 In April 2016, the 10 designated items were ready -mixed concrete, asphalt concrete, manhole boxes, 
iron poles for street lighting, stainless water tanks, vinyl insulated wire (2 ite ms), stranded electrical wire 
(2 items), and reinforced concrete under -drain blocks.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Purchase System to support innovative SMEs and start -ups with marketing during the initial stages 
and expansion of their business.311 
3.224.   To support liquidity, SMEs remain entitled to an upfront payment of up to 70% of the value 
of a government contract. In many cases, SMEs are also entitled to instant payment upon 
presentation of an accepted invoice – and KONEPS facilitates this payment in four working hours. 
SMEs are offered loans of up to 80% of the value of a government contract with no other collateral.  
3.225.   In order to protect SMEs and the socially underprivileged, the Government sets (and 
operates) the pub lic procurement goals of recommended purchasing ratio of public 
institutions/organizations – such as 50% from SMEs, 10% of technology development products, 5% 
from female -owned businesses, and 1% from businesses owned by persons with a disability. In 
2020,  79.8% (73. 7% in 2016) of total PPS procurement contracts for goods, services, and 
construction works were awarded to SMEs followed by innovative technology development products 
at 14.7% (see above), products created by women -owned businesses at 8.6%, and products created 
by businesses owned by people with a disability at 1.6%.312 
3.226.   During the review period, the PPS maintained its 2009 Action Plan for Green Purchasing and 
its 2010 Purchasing Guidelines for the Promotion of Public Purchase of Green Products, wh ich were 
revised in 2019 to include provisions for lump -sum contracts. To expand demand for green products, 
as of 2020, 109 items (100 in 2015) highly in demand by public -sector entities, such as previously 
used office machines, recycled products, LED lamp s, hybrid vehicles, high -efficiency equipment, 
synthetic wood, and renewable energy facilities, were designated by the PPS as Minimum 
Environmental Standard products. The PPS provides preferential treatment for companies with green 
construction works in pr e-qualification  eligibility examination. In 2017, the PPS purchased green 
products accounting for 25.7% (18.6% in 2015) of the total value of domestic procurement of 
goods.313 
3.227.   The PPS handled 33.5% (30% in 2016) of Korea's total domestic and foreign governm ent 
procurement of goods and services (excluding defence equipment) and construction contracting in 
2019.314 Its total annual procurement grew steadily from KRW  35 trillion in 2016 to KRW  45.2 trillion 
in 2019; it remained dominated by goods and constructio n works and related services at 58.3% and 
28.9%, respectively, in 2019. The share of foreign supplies remained low, ranging from 1.2% to 
1.5% (2017) of the PPS's total procurement operations, a significant decline compared with 1991 -95 
(immediately prior t o Korea's accession to the GPA), when government procurement of foreign -
sourced goods by the Office of Supply averaged 9.9% of the agency's purchases. During the review 
period, more than 92.5% of foreign procurement (91.8% in 2015) was subject to competiti ve 
tendering.315 In 2019, foreign supplies involved research (62%), transport (17.6%), computer 
(11.4%), communications (1.2%), medical (4.1%), and measuring (3.7%) equipment, originating 
mainly in Europe (33.7%) and the Americas (30.6%) (Americas (48.1%) a nd Europe (32.2%) in 
2014).  
3.228.   KONEPS remains a primary electronic system for procurement services; its services are open 
to private entities for their procurement needs. As at 2019, the KONEPS Online Shopping Mall 
provided a catalogue of 535,725 product mode ls (367,243 in 2016) with capabilities for purchasers 
to order directly, and discounted quotations can be requested for orders larger than KRW  50 million 
 
311 MSS, "2018 Pilot Purchase Plan for Products with SME -Developed Technologies", 10 May 2018. 
Viewed at: https://www.mss.go.kr/site/eng/ex/bbs/View.do?cbIdx=244&bcIdx=1006273 . 
312 PPS (2020), Innovation for the Future and Better Service  – 2019 Annual Report , 9 June. Viewed at: 
https://www.pps.go.kr/eng/bbs/list.do?key=00798#none . 
313 UN Environment Programme (2017), Comparative Analysis of Green Public Procurement and 
Ecolabelling Programmes in China, Japan, Thailand and the Republic of Korea: Lessons Learned and Common 
Success Factors . Viewed at: 
https://wedocs.unep.org/bitstream/handle/20.500.11822/33377/CAGPP.pdf?sequence=1&isAllowed=y . 
314 Dae-in Kim (2021), Korean Public Procurement Law , Korea Legislation Research Institute, January. 
Viewed at: https://www.researchgate.net/publication/348618992_Korean_Public_Procurement_Law . 
315 The authorities indicate that the reason for the then high share of foreign supplies was that those 
supplies were made on forei gn loans. Since 1995, when Korea got out of the recipient status, with no more 
foreign supplies on overseas loans, foreign supplies have given way to domestic supplies due to R&D and 
technological innovation invested in by domestic companies.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  (KRW  100 million for goods directly manufactured by SMEs) (USD  42,400 in 2016).316 In 2019, 
KRW 19.6 trillion (KRW  14.4 trillion in 2016) were processed as orders through the Online Shopping 
Mall, representing 43.4% of PPS's total procurement (41% in 2016). The PPS continued to operate 
a Multiple Award Schedules (MAS) system of framework agreements, i.e. co ntracts containing set 
terms from which individual orders can be placed. As of 2020, 557,499  items (360,964  in 2015) 
were contracted with MAS, accounting for 85%  (88.1% in 2015) of total goods registered in KONEPS, 
totalling KRW  14.7 trillion (USD  53.9 mil lion in 2015). As from 2016, the PPS's Venture Nara platform 
has given start -ups and ventures that do not meet KONEPS requirements the opportunity to 
participate in the government procurement market; its targets were particularly start -ups and 
ventures off ering innovative technology products.317 In 2018, at least 19 start -ups and ventures 
were able to advance further in the government procurement market through registration with the 
KONEPS Online Shopping Mall. As at end -2019, a total contract value of KRW  49 billion was reached 
through Venture Nara, which had registered 7,064 products from 1,118  start-ups and ventures.318 
In an effort to keep KONEPS up to date, in 2018 PPS initiated the Inno -KONEPS project (also referred 
to as the next -generation KONEPS), whi ch would offer multiple functionalities using the latest ICT 
innovations such AI and big data. A preliminary feasibility test was concluded in 2019, and the 
Information System Master Plan (ISMP) was to be finalized in 2020 so as to be fully functional in 
2024.319 
3.229.   As at March 2021, KONEPS had links with 225 external systems (194 in 2016), including 
5 (banks same as in 2016), 23 guarantee corporations (21 in 2016), 8 construction -related 
associations (same as in 2016), 5 industrial associations (4 in 2016), 10  credit rating authorities 
(10 in 2016), 5 certified authorities (same as in 2016), and 5 e -signature authorities (same as in 
2016). The value of transactions conducted through KONEPS rose from KRW  78.1 trillion, or 66.8%, 
of total government procurement i n 2016 to KRW  102.8 trillion, or 76.2%, of total government 
procurement in 2019, of which 44.7% was centrally procured.320 KONEPS was in use by 
57,734  public organizations and 434,062 suppliers in 2019, representing an increase of 10.6% and 
24.7%, respectiv ely, compared to 2016.  
3.230.   Reportedly, centralized procurement has proven to be beneficial in Korea in making public 
procurement more transparent and efficient by establishing an E -Procurement System, mainly led 
by the PPS, and allowing various procuring entit ies to use it. However, it seems that there are 
concerns about the purchase price via the PPS and the level of commission paid by procuring entities 
to the PPS.321 According to a 2015 OECD assessment of the PPS procurement system, KONEPS 
contributes substan tially to the efficiency, effectiveness, and integrity of public procurement in 
Korea.322 According to the 2019 OECD Government at a Glance report, KONEPS provides the highest 
connectivity to external databases, as it is interconnected to over 200.323 So far, KONEPS has been 
exported to seven countries, including Viet  Nam and Costa Rica. Betwee n 2021 and 2023, the PPS 
would have to rebuild the current KONEPS into Inno -KONEPS based on digital technologies (e.g. 
cloud, big data, and AI) to reduce overlapped operation and waste in public funds, as well as to 
 
316 PPS (2020),  Innovation for the Future and Better Service  – 2019 Annual Report , 9 June. Viewed at: 
https://www.pps.go.kr/eng/bbs/list.do?key=00798#none . 
317 OECD, Observatory of the Public Sector Innovation, 'VENTURE NARA' Cyber Shopping Mall for 
Start-Up and Venture Compan[ies] , Viewed at: https://oecd -opsi.org/innovations/venture -nara-cyber -
shopping -mall-for-start-up-and-venture -company/ . 
318 PPS (2020), Innovation for the Future and Better Service  – 2019 Annual Report , 9 June. Viewed at: 
https://www.pps.go.kr/eng/bbs/list.do?key=00798#none . 
319 PPS (2020), Innovation for the Future and Better Service  – 2019 Annual Report , 9 June. Viewed at: 
https://www.pps.go.kr/eng/bbs/list.do?key=00798#none . 
320 PPS (2020), Innovation for the Future and Better Service  – 2019 Annual Report , 9 June. Viewed at: 
https://www.pps.go.kr/eng/bbs/list.do?key=00798#none . 
321 The authorities indicate that the PPS has run the procurement price report centre for price 
management of the KONEPS Online Shopping Mall, giving rewards for reporting unfair procureme nt practices 
and intensifying investigation into procurement practices disturbing the fairly set procurement price system. In 
addition, a revolving fund is built out of commissions to make payments for suppliers on behalf of public 
agencies on the demand s ide. Commission is also spent for stockpiling to support SMEs and stabilizing prices. 
Dae-in Kim (2021), Korean Public Procurement Law , Korea Legislation Research Institute, January. Viewed at: 
https://www.researchgate.net/publication/348618992_Korean_Public_Procurement_Law . 
322 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
323 OECD (2019), Government at  a Glance 2019 , 14 November. Viewed at: 
https://doi.org/10.1787/8ccf5c38 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  enhance public access to procurement inf ormation by integrating respective procurement systems 
of local governments into Inno -KONEPS.  
3.231.   In 2019, 66.5% of Korea's procurement market involved procurement directly by public 
institutions (i.e. outside the PPS's scope), compared to 70% in 2016.324 
3.3.7   Intel lectual property rights  
3.232.   Korea's IP regime, an important infrastructure for enhancing national and corporate 
competitiveness, has continued to evolve rapidly in response to technology developments and the 
pursue of public policy objectives. According to the  authorities, by progressing into the creative and 
innovation era of the Fourth Industrial Revolution, IPRs are rapidly becoming an essential component 
of society.325 During the review period, Korea maintained its international IPR and innovation 
rankings.326 Trade receipts (charges for the use of IP, exports) from IP royalties and licensing fees 
grew steadily from USD  4.3 billion in 2013 to USD  6.9 billion in 2016 to USD  7.7 billion in 2019, thus 
narrowing significantly the trade deficit in the IP area and r ecording a trade surplus in copyright.327 
3.233.   Under the 2011 Framework Act on Intellectual Property (IPFA), a Presidential Council on 
Intellectual Property (PCIP) to review and adjust the key IP policies, as well as to evaluate and 
monitor the progress of IP, r emains in place. Its December 2016 Second National Intellectual 
Property Master Plan (2017 -21) set forth the policy direction and strategic goals under the vision of 
"securing IP national competitiveness to lead the 4th Industrial Revolution".328 Its implem entation is 
to provide advancement of the IP system and economic ripple effects, such as generation of 
KRW 7,725.1  billion, added value of KRW  3,601.7 billion, and employment of 79,076. In 2019, the 
Plan's six key directions were: (i)  creation of IP -based jobs; (ii)  strong IP for preparation of the 
Fourth Industrial Revolution and creation of new industries; (iii)  enhancement of IP capabilities and 
establishment of a process order for growth of start -up companies and SMEs; (iv)  creation of a 
foundation for a copyright ecosystem corresponding to the digital environment; (v) reinforcement 
of global IP capabilities; and (vi)  spread of a culture of respect for IP. The direction of Korea key 
policies changed to IP creation focused on quality rather than quantity;  expansion of IP transactions, 
IP finance, and IP service areas centred on the private sector; and strengthened protection of IP. 
For 2021, the five major areas of strategy are: (i)  converting IP into assets based on market 
analysis; (ii)  strengthening SME  start-up growth, and protection; (iii)  supporting domestic IP to 
enter the global market; (iv)  creating an ecosystem of fairness and coexistence corresponding to 
the digital environment; and (v)  establishing an IP field centred around people and culture. 
Furthermore, between 2016 and 2020, the total amount of IP -backed financing transactions rose by 
257% to KRW  2.64 trillion (USD  18.35 billion).329 
3.234.   As of February 2021, Korea continued to participate in 20 of 25  treaties administered by the 
World  Intellectua l Property Organization (WIPO) and is a party to the International Convention for 
 
324 Dae-in Kim (2021), Korean Public Procurement Law , Korea Legislation Research Institute, January. 
Viewed at: https://www.researchgate.net/publication/348618992_Korean_Public_Procurement_Law . 
325 Korean Intellectual Property Office (2020), Annual Report 2019 . Viewed at: 
https://www.kipo.go.kr/en/HtmlApp?c=60114&catmenu=ek07_01_01_19 . 
326 According to the WEF's 2019 Global Competitiveness Report, in 2019 Korea ranked 13th of 
141 economies and had progressed two ranks compared to 2018; it was a world leader in the criterion of 
macroeconomic stability and IP -intensive information and communications technology adoption. According to 
the 2020 Global Innovation Index, in 2020 Korea ranked 2nd in the Asia -Pacific region and 10th of 
131 economies for the first time; it is  the second Asian country to have entered the top 10 countries group and 
ranked 3rd in gross expenditure in R&D. World Economic Forum (2019), The Global Competitiveness Report 
2019. Viewed at: http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf ; Soumitra 
Dutta, Bruno Lanvin, and Sacha Wunsch -Vincent (2020), Global Innovation Index 2020: Who Will Finance 
Innovation? , 13th ed., Cornell University, INSEA D, WIPO. Viewed at: 
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf . 
327 WTO Data portal. Viewed at: https://data.wto.org/ ; and Mini stry of Culture, Sports and Tourism, 
"The Copyright Trade Balance in the First Half of 2020 Records the Highest Surplus Ever of Approx. 
KRW 1.2 Trillion", 20 September 2020. Viewed at: 
http://www.mcst.go.kr/english/ministry/press/pressView.jsp?pSeq=7 . 
328 Presidential Council on Intellectual Property (2020), 2019 Annual Report on Intellectual Property 
Enforcement in Korea . Viewed at: https://www.ipkorea.go.kr/Eng/2019.pdf . 
329 IP-backed financing consists of loans guaranteed by IP, loans collateralized by IP, and IP -based 
investments. Presidential Council on Intellectual Property (2020 ), 2019 Annual Report on Intellectual Property 
Enforcement in Korea . Viewed at: https://www.ipkorea.go.kr/Eng/2019.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  the Protection of New Varieties of Plants (UPOV) Convention.330 Korea is a signatory to the 
October  2011 Anti -Counterfeiting Trade Agreement (ACTA) establishing international standards on 
IPR enforcement, which has not entered in force so far.331 
3.235.   During the review period, Korea's active participation in the TRIPS Council included IP -Plug 
(2015), Inclusive Innovation and MSME Growth (2017), The Societal Value of IP in the New 
Economy  – IP Improving Lives (2018), Public -Private Collaborations in Innovation (2019), 
IP Commercialization (2019), and Intellectual Property and Innovation (2020). The TRIPS Council 
reviewed Korea's IPR legislation in 2000. Recent amendments to the Patent Act (Act No.  14112), 
the Trademark Act (Act  No. 11690), the Enforcement Decree of the Patent Act (Presidential Decree 
No. 24491), the Administrative Procedures Act, the Copyright Act (Act No.  14634), and the 
Enforcement Decree of the Copyright Act (Preside ntial Decree No.  28251) were notified to the TRIPS 
Council between 2019 and 2021 (Sections 3.3.7.1 and 3.3.7.2).332 
3.236.   Virtually all of Korea's RTAs (except for the Korea -ASEAN FTA) contain IPR chapters 
(Section  2.6.2). Those with Australia, Canada, Central Am erica, China, Colombia, the 
European  Union, New  Zealand, Peru, the United Kingdom, the United  States, and Viet  Nam protect 
IPR beyond the TRIPS Agreement.333 Chapter 11 of the RCEP Agreement contains IP -related 
provisions aimed at harmonizing IPR protection  among the parties to the Agreement (Section 
2.5.2.1).  
3.3.7.1   Industrial property  
3.237.   The KIPO continues to handle industrial property protection. It  examines and registers 
patents, utility models, industrial designs, trademarks (including service marks), and layout designs 
of integrated circuits, and it develops policies to protect trade secrets. It resolves IPR disputes 
through "trial decisions" (administrative judgements) of the Intellectual Property Trial and Appeal 
Board (IPTAB). Trial decisions on patents, utili ty models, trademarks, and industrial designs can be 
appealed to the Patent Court and subsequently to the Supreme Court. The Patent Court is a court 
of special jurisdiction that hears appeals from trial decisions of the IPTAB (Section  3.3.7.3). Korea 
restricts parallel imports except where specific legal criteria are met (Section  3.3.4.3).334 Despite 
the lack of official data on parallel imports, according to a major trading partner, for some brands, 
at the time of the previous Review, parallel import sales volumes were estimated at 50% to 80% of 
authorized sales; no recent data were available from the authorities.  
3.238.   In response to the challenges posed by the COVID -19 pandemic, as of 31 March 2020 KIPO 
extended ex officio  twice (1 -30 April 2020 and 2 -31 May 202 0) the deadlines applicable under the 
Patent Act, the Utility Model Act (Article  15(2) of the Patent Act would apply mutatis mutandis ), the 
Design Protection Act, and the Trademark Act.335 However, the period for possible disputes between 
parties was exclud ed from the ex officio  extension. Furthermore, as from 19 March 2020 KIPO has 
operated a COVID -19 Patents Information Navigation to facilitate online access to IPRs that can help 
 
330 Korea acceded to the Beijing Treaty on Audiovisual Performances on 22 April 202 0, which entered in 
force for Korea on 22 July 2020. WIPO IP portal, WIPO -Administered Treaties: Contracting Parties: Republic of 
Korea . Viewed at: http://www.wipo.int/treaties/ en/ShowResults.jsp?country_id=95C . 
331 Other ACTA signatories are Australia, Canada, the European  Union (22 member States only), Japan, 
Mexico, Morocco, New  Zealand, Singapore, and the United  States. The ACTA can enter into force only upon 
ratification by si x countries; so far only one signatory has done so.  
332 WTO documents IP/N/1/KOR/7 -IP/N/1/KOR/P/8, 18 November 2019; IP/N/1/KOR/8 -IP/N/1/KOR/P/9, 
12 December 2019; IP/N/1/KOR/11 -IP/N/1/KOR/T/5, 24 January 2020; IP/N/1/KOR/10 -IP/N/1/KOR/P/11 -
IP/N/1/KOR/E/10, 24 January 2020; IP/N/1/KOR/9 -IP/N/1/KOR/P/10, 24 January 2020; IP/N/1/KOR/12 -
IP/N/1/KOR/E/11, 12 February 2021; IP/N/1/KOR/14 -IP/N/1/KOR/C/6, 25 February 2021; and 
IP/N/1/KOR/13 -IP/N/1/KOR/C/5, 25 February 2021.  
333 Ministry of Culture, Sports and Tourism, Korea Copyright Commission, and Korea Copyright 
Protection Agency (2018), 2018 Annual Report on Copyright in Korea . Viewed at: 
https://www.copyright.or.kr/eng/activities/annu al-report/index.do . 
334 Korea considers that parallel imports promote competition  and lower prices . Therefore, it prohibits 
conduct that unreasonably restricts parallel imports and treats them as unfair trade practices. Parallel imports 
infringing trademark rights are banned . WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
335 KIPO (2020), Official Notice of 2nd Ex -officio Extension for Designated Periods Due to the Effects of 
the COVID -19, Public Notice No.  2020-98, 28 April 2020. Viewed at: 
https://www.kipo.go.kr/en/BoardApp/UEngBodApp?c=1003&board_id=kiponews&catmenu=ek06_01_01&seq=
1695. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  fight against COVID -19.336 It provides patent information categorized under pr otection/prevention, 
diagnosis/testing, treatment/vaccine, waste disposal, and others, and the patent documentation is 
available online.  
3.239.   IPR administration continued to raise its already high -efficiency level. The rate of electronic 
applications (e -applica tion) made to KIPO has remained among the highest in the world since 2005; 
in 98.2 % in 2020 (96.3% in 2015) of all applications were filed online. In 2020, KIPO's first action 
pendency period (i.e. the time it takes for a new application to receive an ini tial response) was an 
average of 11.1 months (10.0 in 2015) for patent and utility model examinations, and 8.7 months 
(4.7 in 2015) and 4.4 months (same as in 2015) for trademark and design examinations, 
respectively. In 2020, 134,766 patents (101,873 in 2 015), 2,056 utility models (3,253 in 2015), 
50,694 industrial designs (54,551 in 2015), and 116,153 trademarks (114,747 in 2015) were 
registered, representing a total increase of 10.7% compared to 2015. According to KIPO, 
557,256  IPR applications (475,802 in 2015), including patents, utility models, designs, and 
trademarks, were filed in 2020,  17.1% higher  than in 2015; 226,759 were patent applications 
(213,694 in 2015, a 6.1% increase), 46, 282 (46,4 21 in 2015), or 20.4% (21.7% in 2015), of which 
were from non-residents.  
3.240.   In 2020, KIPO hosted the 20th Trilateral Intellectual Property Offices (TRIPO) Heads Meeting, 
i.e. KIPO, the China National Intellectual Property Administration (CNIPA), and Japan Patent Office 
(JPO), where it was discussed how to share information about their ongoing or planned coope ration 
programs or initiatives for ASEAN countries and pursue collective efforts towards developing a joint 
cooperation to assist countries in reforming their IP laws and enforcing the IP -related provisions of 
the RCEP Agreement.337 Since the start of their cooperation in 2001, the three offices sought to 
share IP practices and harmonize their IP systems, thus enhancing the level of IP  protection. This 
led to an increase of their global patent filings share, from around 42% in 2001 t o about 60% in 
2019, and global trademark applications from 20.20% to 57.2% in those same years.  
3.241.   Penal provisions involving imprisonment or fines for right infringements of patents, utility 
models, trademarks, and industrial designs were revised  as follows : imprisonment of up to number 
of seven years or a fine of up to KRW 100 million compared to imprisonment of up to seven years 
or fine up to KRW 100 million in 2016; or imprisonment of up to number of three years or a fine of 
up to KRW 30 million compared to imprisonment of up to three years or a fine of KRW 20 million for 
falsely indicating such a right or fraudulently obtaining one in 2016 . Civil remedies include injunctions 
against further infringement and damages. Provisional measures for preventing inf ringements are 
provided in each industrial property act and the Civil Execution Act. Specific criteria exist for 
increasing or decreasing fines.  
3.3.7.1.1   Patent and utility models338 
3.242.   Patent protection under the Patent Act of 1946 (last amended in 2020) is for 20 yea rs from 
the date of filing (extendable for up to five years for pharmaceuticals and agricultural chemicals 
undergoing certain market -approval procedures). Both product and process patents may be granted. 
The grace period for filing is 12 months, and the te rm of the patent right may be extended when its 
registration is delayed by more than 4 years after the filing date, or 3 years after request for 
examination when the reason is not attributable to the applicant. Green technology is allowed speedy 
screening/ examination. KIPO may grant a compulsory non -exclusive licence to work a patent if the 
holder has not worked it for more than three  consecutive years.339 During the review period, no 
compulsory licence was issued; to date, one compulsory licence has been is sued.  
 
336 KIPO, COVID -19 Patents Information Navigation . Viewed at: 
https://www.kipo.go.kr/ncov/index_e.html . 
337 KIPO, Heads of KIPO, CNIPA and JPO Join Hands for ASEAN Cooperation , 11 December 2020. Viewed 
at: 
https://www.kipo.go.kr/en/BoardApp/UEngBodApp?c=1003&board_id=kiponews&catmenu=ek06_01_01&seq=
1706. 
338 More information on application, examination, and regi stration requirements and procedures is 
available in WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
339 Except for semiconductor technology, for which this is only possible after four years, and when 
consultations with the patent holder or exclusive licens ee were not possible or did not enable an agreement. 
The authorities indicated that a non -exclusive compulsory licence may be granted upon request by least WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.243.   The 2019 amendments to the Patent Act and related rules seemingly reinforced patent 
holders' protection. The method for calculating and awarding damages was substantially changed; 
now the damages claimed can go beyond "ordinarily expected" royalties to an amount that is 
"reasonably expected".340 This allows for more compensation of patent owners. Moreover, in case of 
intentional infringement of patent rights, the courts can award compensation up to three times the 
recognized amount of damages. The accu sed infringer would have to present specific details on his 
or her use of the technology to the court in order to deny infringement allegations, which would 
relieve the burden of proof on the right holder.  
3.244.   Amendments to the Patent Attorney Act (1961, last amended in 2020) provided for new 
penalties. The act of accepting or mediating the lending of a patent attorney qualification certificate 
is punishable by up to five years imprisonment or a KRW million fine.  
3.245.   The Utility Model Act (1961, last amended in 201 9) continues to protect the shape, structure, 
or combination of articles/products for 10 years from the date of filing the application. The same 
procedures for establishing patent rights apply to utility models. It is mandatory for utility model 
applicatio ns to disclose information on prior art related to the invention. Submission of claims in 
foreign languages is allowed. Commercial acts of manufacturing, assigning, leasing, or importing a 
product embodying the utility model are deemed to infringe the excl usive right of the holder or 
licensee of a registered utility model, and are therefore prohibited.  
3.246.   During the review period, KIPO implemented policies aimed at encouraging the use of patent 
data in the R&D process. Between 2019 and 2020, it expanded drasti cally the implementation of 
KIPO's IP -R&D Plan, aiming to improve the efficiency of R&D projects and secure core 
technologies.341 This plan consists of expanding IP -R&D programs in public R&D projects, supporting 
IP-R&D customized to each stage of growth of  business, and strengthening the foundation for IP -
R&D proliferation in industry, academia, and research. Furthermore, in 2019 KIPO restructured its 
patent examination management structure in five of its bureaus.342 To improve patent examination 
capabilitie s, it established a new Convergence Technology Examination Bureau dedicated to the 
examination of technologies related to the Fourth Industrial Revolution, big data, and bio -health.  
3.247.   KIPO is a member of the Five IP offices (IP5), an international patent coo peration framework 
that intends to eliminate the unnecessary duplication of work between offices while enhancing patent 
examination efficiency via the Patent Prosecution Highway (PPH); as at 2020, the PPH regrouped 
34 countries.343 In October 2020, the IP5 agreed to extend the implementation of the IP5 PPH until 
5 January 2023.  
3.248.   According to WIPO data, between 2016 and 2019 total patent applications rose by 4.9%; in 
2019, Korea ranked 4th worldwide with 218,975 applications, of which 78.84% were from resident  
applicants.344 With 7,779 resident patent applications per unit of USD  100 billion GDP, it continued 
 
developed countries for the import of pharmaceuticals; also, the Government may non -commercially pra ctice a 
patented invention due to a national or dire emergency, or for the public interest.  
340 Korean Intellectual Property Office (2020), Annual Report 2019 . Viewed at: 
https:/ /www.kipo.go.kr/en/HtmlApp?c=60114&catmenu=ek07_01_01_19 . 
341 Korean Intellectual Property Office (2020), Annual Report 2019 . Viewed at: 
https://www.kipo.go.kr/en/HtmlApp?c=60114 &catmenu=ek07_01_01_19 . 
342 These offices are the Patent Examination Policy Bureau, the Convergence Technology Examination 
Bureau, the Electricity & Communications Examination Bureau, the Chemical & Biotechnology Examination 
Bureau, and the Machinery & Metal s Examination Bureau. KIPO (2020), Annual Report 2019 . Viewed at: 
https://www.kipo.go.kr/en/HtmlApp?c=60114&catmenu=ek07_01_01_19 . 
343 The IP5 is composed of KIPO, the JPO, the C NIPA, the United  States Patent and Trademark Office 
(USPTO), and the European Patent Office (EPO). The PPH participants are Australia, Austria, Canada, China, 
Colombia, Denmark, Eurasia, the EPO, Estonia, Finland, Germany, Hungary, Iceland, Israel, Japan, Mexico, 
New Zealand, Norway, Peru, the Philippines, Poland, Portugal, the Russian  Federation, the Kingdom of 
Saudi  Arabia, Singapore, Spain, Sweden, Chinese  Taipei, the United Kingdom, the United  States, and 
Viet Nam; its three new participants (as from 20 16) are Brazil, Chile, and Malaysia. The PPH is a patent filing 
system in which when the office of first filing has assessed the patentability of a patent application the office of 
second filing offers an accelerated examination to the applicant. KIPO, Patent Prosecution Highway . Viewed at: 
https://www.kipo.go.kr/en/HtmlApp?c=100016&catmenu=ek02_02_03 ; KIPO (2020), Annual Report 2019 . 
Viewed at: https://www.kipo.go.kr/en/HtmlApp?c=60114&catmenu=ek07_01_01_19 ; and KIPO, IP5 
Cooperation . Viewed at: https://www.kipo.go.kr/en/HtmlApp?c=100015&catmenu=ek02_02_02 . 
344 WIPO (2020), World Intellectual Property Indicators 2020 . Viewed at: 
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2020.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  to file the greatest number of patent applications worldwide; it also retained the lead resident 
applications per million of population. At the global scal e, it was positioned 5th for applications filed 
abroad, with 76,824 equivalent patent applications.345 In 2019, KIPO reduced its stock of pending 
patent applications by 31.9%, and issued the registration of its second millionth patent, thus 
becoming the 7th country in the world to reach that milestone.346 
3.3.7.1.2   Trademarks347 
3.249.   The Trademark Act (1949, last amended in 2020) protects trademarks on goods and services 
for 10 years upon registration, renewable indefinitely for 10 -year periods. As of 2020, KIPO had 
designat ed 56,000 names of goods and services (45,000 in 2015) as a reference for applicants in 
order to increase their convenience and reflect industrial development.  
3.250.   During the review period, the amendments to the Act (entirely amended by Act No.  14033, 
29 Febru ary 2016) were aimed at revising the non -use cancellation of the registered mark, the prior 
registration or application evaluation, and penalties. When a registered trademark has not been used 
for three consecutive years, any third party may seek to cancel  it on the grounds of non -use. A legal 
standing for the third party is no longer required. Concerning the evaluation of prior registration, 
the timing to judge whether a later -applied trademark violates the preregistered trademark changed 
from the applicat ion date of the later trademark to the date of determining its registrability; this 
amendment was aimed at avoiding a rejection of the junior application even if the senior application 
is removed as the senior mark existed at the time of filing of the juni or application. Finally, the 
penalty for perjury is punishable by imprisonment with up to five years' labour or a fine of 
KRW 50 million. False indication and fraud are punishable by imprisonment with up to three years' 
labour or a fine of KRW  30 million.  
3.251.   Amendments to the Act enforced from 20 October 2020 would allow the courts to award 
higher compensation for intentional trademark infringement, revise the calculation of damages 
based on royalties, and increase the maximum statutory awards.348 The amendment  allowed a claim 
for a "reasonably expected" amount of damages of trademark infringement that is beyond the 
calculation of "ordinarily expected" royalties. The maximum amount courts can award was increased 
from KRW  50 million to KRW  100 million. Courts wou ld be able to award up to triple the amount of 
confirmed damages in case of intentional trademark infringement.349 The basis for damage 
computation changed from royalties that are ordinarily expected to royalties that are reasonably 
expected.350 This amendment aims to address the issue of awarding insufficient damages and should 
allow trademark holders to receive higher compensation.  
3.252.   The Unfair Competition Prevention and Trade Secrets Protection Act prohibits unfairly 
tarnishing a well-known mark or causing confusion by use of a similar or identical mark, including 
distributing, importing, or exporting such goods. Civil remedies include injunctions to stop improper 
use, compensation for damages, and restoration of reputation. Penal provisions are up to 
three  years' imprisonment or a fine of up to KRW  30 million.  
3.253.   According to WIPO data, between 2016 and 2019 total trademark applications rose by 
22.6%; in 2019, Korea ranked 9th worldwide in trademark application (class count) and 18th 
regarding applications filed abroad.351 
 
345 Applications at regional IP offices are equivalent to multiple applications in countries that are 
members of the organizations establishing those offices. WIPO (20 20), World Intellectual Property Indicators 
2020. Viewed at: https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2020.pdf . 
346 KIPO (2020), Annual Report 2019 . Viewed at: 
https://www.kipo.go.kr/en/HtmlApp?c=60114&catmenu=ek07_01_01_19 . 
347 More information on application, examination, and registration requirements and procedures is 
available in WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
348 Lee & Ko, Korea Introduces New Law Strengthening Protection Against International Infringement of  
IP Rights , 27 October 2020 Viewed at: https://www.legal500.com/developments/thought -leadership/korea -
introduces -new-law-strengthening -protection -against -intentional -infringement -of-ip-rights/ . 
349 Trademark Act, Article  110(7), enforced from 20 October 2020.  
350 Trademark Act, Article  110(4), enforced from 20 October 2020.  
351 Resident applicati on class counts are those adjusted with regard to GDP or the size of population. 
WIPO (2020), World Intellectual Property Indicators 2020 . Viewed at: 
https://www.wipo.int/edocs/pub docs/en/wipo_pub_941_2020.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Geographical indications  
3.254.   Geographical indications (GIs) remain protected under the Trademark Act, the Agricultural 
and Fishery Products Quality Control Act, and the Unfair Competition and Trade Secrets Protection 
Act; no changes were made to the GI -related provisions of this regulatory framework during the 
review period.352 The Trademark Act and the Fishery Products Quality Control Act protect GIs that 
are registered and provide a registration process, while the Unfair Competition and Trade Secrets 
Protection Act protects unregistered GIs when their protection under the Trademark Act or the 
Agricultural and Fishery Products Quality Control Act has become ineffective.  
3.255.    The Trademark Act denies application for registration  of GIs that are the same or similar to 
GIs protected under multilateral or bilateral agreements; material used in infringement of GIs and 
trademarks is confiscated as are the equipment and infringing products. Under the Unfair 
Competition Prevention and T rade Secrets Protection Act, unauthorized use of GIs is penalized. 
Foreign GIs can be registered according to the same procedures and criteria as for domestic goods 
and are protected under various laws; they receive the same protection as domestic register ed GIs. 
The Trademark Act bans registration of labels that violate GIs; it also prevents deceptive labelling 
and advertising, including any vague or false labelling or advertising that may mislead consumers 
as to the product's origin. The trademark legisla tion prevents registration of trademarks consisting 
of a "conspicuous geographical name"; it allows them to be registered as geographical collective 
marks. The owner of a GI collective mark has the right to use it exclusively and prevent others from 
using identical or similar signs for identical goods, where it might result in confusion. Imports or 
exports with false origin indications or infringing GIs are prohibited (Foreign Trade Act).  
3.256.   The Agricultural and Fishery Product Quality Management Act (2011) sp ecifies GIs for 
agricultural and fish products. These must be registered with the Geographical Indication 
Registration Council of the NAQS, the Korea Forest Service, or the NFQS. Using a false mark of a 
registered GI on agricultural or fishery products is punishable by imprisonment of up to three years 
or a maximum fine of KRW  30 million.  
3.257.   A trademark containing GIs for wines or spirits originating in any WTO Member may not be 
registered (Trademark Act, Article  7(1)(xiv)). The use of GIs to identify wines or  spirits that do not 
originate in the place indicated is prohibited, even if the true origin is given or the GI uses 
expressions such as "kind", "type", "style", or "imitation".  
3.3.7.1.3   Plant variety protection  
3.258.   Protection for plant varieties is provided under the Patent Act and the New Varieties of Plants 
Protection Act (2012, last amended in 2019). Breeders' rights are protected for 20 years from the 
registration date (25 years for fruit and forest trees). Protection is administered by MAFRA and the 
MOF. The regis tration of plant varieties remains entrusted to the Korea Seed and Variety Service 
(KSVS) for agricultural plants, MAFRA's National Forest Seed Variety Center (NFSV) for forest plants, 
and the MOF's National Institute of Fisheries Service (NIFS) for aquati c plants. The breeder must 
apply for a plant variety protection under the KSVS's Plant Variety Protection System. A plant variety 
must fulfil the test of novelty, distinctness, uniformity, stability, and denomination to be registered 
and protect the breede r's rights. The 2019 amendments to the Act provided for the punishment of 
perjury with sentences of less than five years' imprisonment or a fine of less than KRW  50 million, 
instead of less than five years' imprisonment or a fine of less than KRW  10 millio n in terms of 
regulation efficiency.  
3.259.   The amendments to the New Varieties of Plants Protection Act aimed at revising penalties. 
The penalty for perjury now involves up to 5 years' imprisonment or a fine of KRW  50 million. The 
penalty for false indication co nsists of up to 3 years' imprisonment or a fine of KRW  30 million.  
3.260.   Since the last Review, plant variety protection has been strengthened; in 2019, with 
695 applications and 5,694 plant variety titles (9,217 and 6,537, respectively, in 2016) in force, the 
 
352 Korean Legislation Research Institute (2014), A Study on Geographical Indication Under FTAs and Its 
Domestic Implementation . Viewed at: https://www.klri.re .kr/eng/publication/1420/view.do . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  KIPO was positioned 8th worldwide in plant variety applications.353 In 2020, there were 
12,151  applications and 8,620 entitled breeder's rights.  
3.261.   As from 2018, a Genetic Resource Information Center has operated and a special judicial 
police (Section 3.3.7.3) was expanded to crack down on violations of breed protection rights and 
protect the development of new plant varieties in response to new international norms concerning 
biological and genetic resources, such as the Nagoya Protocol.354 
3.3.7.1.4   Industrial designs and  layout designs of integrated circuits (topographies)355 
3.262.   Protection under the Design Protection Act (1961, last amended in 2019) remains for 
20 years (non -renewable) from the filing date and extends to partial designs and typeface. The Act 
prohibits copying  the shape of goods produced by another person. The registered owner has the 
exclusive right to work a registered design, commercially and industrially. Amendments during the 
review period were aimed at extending the grace period for design application, ea sing proof of 
priority, and revising penalties (see below). A design would not lose novelty if the design application 
is filed within one year of the date on which an identical or similar design was filed. The grace period 
was extended from six months to o ne year. Applicants can use WIPO's Digital Access Service to 
submit priority documents to confirm a foreign priority application.  
3.263.   Amendments, enforced from 20 October 2020, provide that the penalty for perjury would be 
punishable by up to five years' impri sonment with labour or a fine of KRW  50 million. The penalty 
for false indication and fraud would be punishable by up to three years' imprisonment with labour 
or a fine of KRW  30 million.356 Similar to the Patent Act amendments, these amendments adopt 
punitive awards up to the triple amount of damages in case of intentional design infringement, as 
well as the standard of reasonably expected royalties for damage computation.357 
3.264.   Layout designs of semiconductor integrated circuits (topographies) remain protected  (under 
the Semiconductor Integrated Circuits Layout Design Act, 1992). The registered owner has the 
exclusive right of commercial use of layout design. Protection is for 10 years from the registration 
date (not exceeding 10 years from initial commercial u se or 15 years from creation date). Civil 
remedies include "cease and desist" orders, destruction of offending circuits, damages, and royalties. 
Penal provisions also apply: up to three years' imprisonment and/or a fine of up to KRW  30 million, 
for right i nfringements; and up to one year of imprisonment, or a fine of KRW  10 million, for falsely 
marking a circuit as registered or obtaining registration fraudulently.  
3.265.   According to WIPO data, between 2016 and 2019 total industrial design applications rose by 
0.3%; in 2019, KIPO ranked 3rd in industrial design applications counts (38.7% non -resident) and 
Korea was positioned 1st in resident design count per million of population.358 
3.3.7.1.5   Trade secrets359 
3.266.   Protection under the Unfair Competition Prevention and Trade Secrets Protection Act (1961) 
(last amended in 2019) and related rules cover information acquired by an "act of improper 
acquisition" (e.g. theft, deception, or coercion), or subsequently used or  disclosed secret 
information; trade secrets are defined as technical or business information useful to business 
activities. Under amendments during the review period, the definition of trade secret infringement 
activities ("subject to reasonable efforts t o maintain its secrecy") was broadened so as to consider 
 
353 WIPO (2020), World Intellectual Property Indicators 2020 . Viewed at: 
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2020.pdf . 
354 Presidential Council on Intellectual Property (2020), 2019 Annual Report on Intellectual Property 
Enforcement in Korea . Viewed at: https://www.ipkorea.go.kr/Eng/2019.pdf . 
355 More information on applica tion and registration requirements and procedures is available in 
WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  
356 Lee & Ko, Korea Introduces New Law Strengthening Protection Against International Infringement of 
IP Rights , 27 October 2020. Viewed at: https://www.legal500.com/developments/thought -leadership/korea -
introduces -new-law-streng thening -protection -against -intentional -infringement -of-ip-rights/ . 
357 Design Protection Act, Articles 53(2), 115(7) -(8), and 115(4), enforced from 20  October  2020.  
358 WIPO (2020), World Intellectual Property Indicators 2020 . Viewed at: 
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2020.pdf . 
359 More information on application and registration requirements and procedures is available in 
WTO document WT/TPR/S/346/Rev.1, 6 January 201 7. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  as trade secrets the secret information that has been hidden with a lack of reasonable effort 
("managed as a secret"); this change allowed protection of trade secrets without the need for 
excessive e ffort.360 
3.267.   Furthermore, amendments during the review period were also aimed at allowing courts to 
award compensation up to three times the damages incurred in case of intentional infringement of 
trade secrets, introducing better protection against the theft of ideas and new penalty provisions.361 
The use of another person's technical or business ideas with economic value in the process of 
negotiating or conducting transactions, such as a business proposal, auction, and public offering, is 
considered an act of unfair competition and may subject the offender to administrative or civil 
liability. The penalty for the use of trade secrets was strengthened and would be punishable by up 
to 15 years' imprisonment or a fine of KRW  1.5 billion. At the time of the previou s Review, fines 
were up to KRW  50 million for domestic infringement and KRW  100 million for international 
infringement, but if the illegally obtained monetary profit exceeded by 10 times the maximum 
amount of the fine, the fine could be equivalent to 2 -10 times the profit.  
3.268.   Confidential data submitted to authorities for registration of pharmaceuticals and agricultural 
chemicals are prohibited from public disclosure unless the authorities see a public interest need 
(i.e. health, safety, or environmental prote ction), particularly with respect to pesticides and their 
ingredients (Agrochemicals Control Act and Pharmaceuticals Affairs Act). Penalties are up to 
three  years  of imprisonment with labor or fines of up to KRW  30 million for pharmaceuticals and for 
agri-chemicals. Unfair commercial use of such data is also prohibited.  
3.269.   Officials involved in registering layout designs for semiconductor integrated circuits must 
maintain confidentiality (Semiconductor Integrated Circuits Layout Design Act). Imprisonment of up  
to five years or fines of up to KRW  50 million apply to those infringing the legislation.  
3.270.   As from 2015, KIPO has operated a trade secret management system aimed at supporting 
businesses to manage their trade secrets.362 Government experts provide advice to  businesses 
aimed at improvement measures and verification of their implementation so as to help them 
pre-emptively block unauthorized trade secret disclosure. In 2019, the Trade Secret Protection 
Center ( http://www.tradesecret.or.kr ), in place since 2012,  undertook consultations with 
101 companies, an increase of 30 companies compared to the previous year, to help establish a 
trade secret management system that suits their size and status. Between 2016 and 2019, online 
and offline consultations related to trade secrets increased almost five -fold to 798 (822 in 2018); in 
addition, in 2019, trade secrets protection consulting and legal advice on leakage dispute stood at 
101 and 30, respectively.  In 2020, a new in -depth consulting system was implemented where an 
expert would directly visit a business for eight weeks and help establish a trade secret management 
system. As a result of supporting 50 businesses, the capacity of establishing a trade secret 
management system increased about 32%. Moreover, trademark m anagement systems were 
provided to 101 businesses, online and offline counselling related to trade secret was provided 
860 times, and legal counsel on trade secret leakage disputes was carried out 30 times. Also, 
considering the COVID -19 crisis, the offlin e format of the trade secret protection training was 
modified to be an online seminar, and education video content was produced for businesses to utilize 
as a resource for their internal training (the videos have been published on KIPO's website).  
3.3.7.2   Copyrigh t and related rights  
3.271.   To create a healthy copyright ecosystem where the establishment of a virtuous cycle of 
creation -distribution -use would help to realize the Creative Economy, since 2018 Korea's policy goal 
has been the "Creation of a Copyright Ecosystem  Promoting Balance and Coexistence" through 
four main projects: (i)  strengthening the rights and interests of creators and preparing a fair and 
just rewards system; (ii)  preparing a foundation to vitalize a fair copyright distribution system; 
(iii) strengt hening responses to domestic and overseas copyright infringement and raising 
 
360 Presidential Council on Intellectual Property (2020), 2019 Annual Report on Intellectual Property 
Enforcement in Korea . Viewed at: https://www.ipkorea.go.kr/Eng/2019.pdf . 
361 KIPO (2020), Annual Rep ort 2019 . Viewed at: 
https://www.kipo.go.kr/en/HtmlApp?c=60114&catmenu=ek07_01_01_19 . 
362 WTO document WT/TPR/S/346/Rev.1, 6 January 2017; Presidential Council on Intellectual Pr operty 
(2020), 2019 Annual Report on Intellectual Property Enforcement in Korea . Viewed at: 
https://www.ipkorea.go.kr/Eng/2019.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  pan-national awareness; and (iv)  strengthening international competitiveness of cultural service 
copyright.363 To pre -emptively and proactively respond to the changing environment,  set up a stable 
copyright ecosystem, and support development of relevant industries, Korea created a copyright 
policy vision in 2020 (Copyright Vision 2030) with the goal of being a "Copyright Powerhouse Where 
Culture Drives Economy" through four core tas ks: (i)  create a foundation for copyright conducive to 
the era of the Fourth Industrial Revolution; (ii)  forge an environment for fair and transparent use 
and distribution; (iii)  tighten the response to copyright infringement; and (iv)  strengthen 
infrastru cture for protection of works overseas.  
3.272.   The Ministry of Culture, Sports and Tourism (MCST) and its Korea Copyright Commission 
(KCC), as well as the Korea Copyright Protection Agency (KCOPA), which is a non -classified public 
institution under the MCST found ed in 2016, remain in charge of policy formulation and 
implementation in this area.364 
3.273.   During the review period, the main copyright protection framework remained virtually 
unchanged (see below). Although c opyrights do not need to be registered to obtain protection during 
the author's life plus 70 years, registration offers advantages. The term of protection for the rights 
of performers and phonogram producers, who have neighbouring rights, also remains at 70  years 
after the date of performance or p ublication. A registered author is the presumed genuine author, 
and the work is presumed to have been first published on the date reported on the registration. 
Compulsory/statutory licences (e.g. where the right holder cannot be identified or traced) relat ing 
to uses of performances, phonograms, broadcasts, and databases may be granted under strict 
procedural conditions; 653 such licences on literary, cinematographic, and musical works were 
granted from 2016 to 2020, compared to 24 from 2012 to 2015. Copyri ght also applies to "interactive 
transmissions" for authors. Databases, including compilation of data in machine -readable form, may 
be protected.  
3.274.   The amendments to the Copyright Act (1957, last amended in 2019) and related rules 
allowed a compensation grou p to use remuneration left undistributed from three to five years from 
the date of the public announcement of the remuneration distribution. This undistributed 
remuneration can be used only for specific purposes with MCST approval, for example, for educati on 
or copyright protection projects. In addition, the amendments provide that a certain part of 
undistributed remuneration shall be accumulated to pay remuneration to a rights holder, when 
information about him or her is verified. Furthermore, they require  a certain percentage of the 
undistributed remuneration to be deposited for public purposes to enable payment to the right 
copyright holders after five years.  
3.275.   RTA/FTA -driven amendments to the Copyright Act continued to bring improvements to 
copyright prote ction that go beyond TRIPS negotiation criteria (see above).  
3.276.   Regarding copyrights, Korea recorded the highest number of films and videos deposited in 
legal deposits with 18,591 items worldwide in 2019.365 In addition, with 331,937 registrations, it 
was the second country with the most registered ISBN identifiers in 2019.366 
3.277.   Copyright cases are handled by ordinary courts. Civil remedies against copyright 
infringements (including computer programs) include injunctions, destruction of counterfeit 
products, and d amages. Penal provisions of up to five years' imprisonment or a fine of up to 
KRW 50 million also apply for copyright infringements. With heightened public awareness of 
copyright in recent years, the number of disputes is also on the rise. In order to reso lve such disputes 
in a fair manner, the MCST runs a wide range of dispute resolution systems. Since 2013, a 
court-connected mediation system has been in place to induce parties in a dispute to reach 
consensus before the case is brought to the court. The Se oul Central District Court (since 2013) and 
the Seoul Southern District Court (since September 2014) were the only courts applying this 
 
363 Korea Copyright Commission (2019), 2018 Annual Report on Copyright in Korea – Korea Copyright 
White Paper , December. Viewed at: https://www.copyright.or.kr/eng/activities/annual -report/index.do . 
364 KCOPA supports the establishment of policies  and effective law enforcement regarding copyright 
protection and performs activities to handle domestic and overseas copyright infringement.  
365 WIPO (2020), World Intellectual Property Indicators 2020 . Viewed at: 
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2020.pdf . 
366 An ISBN is a permanent international standard book identifier assigned to individual publications. 
According to ISBN data, Korea has the second biggest publishing market in the world.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  court-connected mediation system until the Seoul Eastern District Court and the Seoul Western 
District Court made MOUs f or the court -connected mediation system in 2018. Between 2016 and 
2019, 554 cases (496 in 2013 -15) were dealt with, and the settlement rates were 42.2% in 2016, 
46.0% in 2017, 19.8% in 2018, and 30.5% in 2019, compared to 40.4% in 2013, 44.9% in 2014, 
and 28.9% in 2015.  
3.3.7.3   Enforcement  
3.278.   Korea continues to generally provide strong IPR protection and enforcement.367 Between 
2013 and 2017, its unlicensed software installation rates were estimated to have dropped from 38% 
(USD  712 million) to 32% (USD  598 million).368 Reportedly, IP -related concerns relate to, inter alia : 
counterfeit transhipments, especially via small express -shipped parcels; GIs; and a lack of 
deterrent -level civil and criminal penalties for IP violations.369 A survey about illegal media 
consumption c onducted in 2019 showed that 24% of respondents pirated media two or three times 
a week; overall, the survey results showed that 57.1% of respondents illegally consumed media at 
least once a week.370 In 2018, the piracy rates for music, films, TV programmes , entertainment 
software (games), and books were 19.3%, 21.1%, 7.7%, 7.9%, and 6.5%, respectively; in the past, 
Korea's counterfeit market consisted mainly of auto parts, medicines, luxury goods, and fake 
banknotes, and no recent data were available from t he authorities for this Review.  
3.279.   Most IPR prosecutions, with the exception of trademarks, require a complaint from the right 
holder. KIPO can initiate investigations of unfair competition, such as the manufacture, sale, and 
import or export of counterfeit g oods (Unfair Competition Prevention and Trade Secrets Protection 
Act). KIPO reinforced investigations into counterfeit goods that greatly impact people's lives, such 
as large -scale illegal manufacturing and the distribution of counterfeits related to healt h and safety, 
thereby eradicating their distribution channels. As a result of the 2018 amendment to the Persons 
Executing the Duties of Judicial Police Officers and the Scope of their Duties Act (Judicial Police Duty 
Act), the scope of duties for KIPO spec ial judicial police management has been expanded, as of 
March 2019, to include infringements of patent right, trade secrets, and design rights, as well as 
product form imitation under unfair competition activities, from previously limited scope covering 
trademarks and the confusion of the product subject under unfair competition activities.371 Since 
2006, KIPO has implemented a reward system to encourage the reporting of counterfeit goods and 
their distribution. By 2020, there had been 1,644 reported cases ( 1,294 by 2015) with a total of 
KRW 24.1 billion  (KRW  1.9 billion by 2015) awarded; the seized counterfeit goods were valued at 
KRW 4 trillion when matched to the retail prices of the genuine articles. Between 2016 and 2020, 
the number of arrests increased by 76% and the number of confiscated goods rose by 23%. Between 
2016 and 2020, the Special Judicial Police arrested 2,445 individuals producing and/or selling 
counterfeit goods (including clothes, shoes, health foods, and cosmetics), and a total of 8.8  million 
counterfeit items were seized. Through the Online Counterfeit Products Monitoring System, action 
continued to be taken to suspend sales by illegal sites, or close down the sites entirely, and online 
sellers of counterfeit goods were arrested.  
 
367 In 2020, Korea ranked 8th in Asia and the Pacific (of 20 countries) a nd 31st (38th in 2015) in the world 
(of 129  countries) on the International Property Rights Index, which, since 2007, has served as a barometer 
for the status of property rights across the world and consists of three core components: the legal and politica l 
environment, physical property rights, and IPRs. Property Rights Alliance (2020), International Property Rights 
Index 2020 . Viewed at: https://www.internationalpropertyrightsindex.org/ ; and About the Property Rights 
Alliance . Viewed at: http://internationalpropertyrightsindex.org/about . Korea was removed for the first time 
from the USTR's Special 301 Watch List in 2009 and ne ver inserted again . WTO document 
WT/TPR/S/268/Rev.1, 8  November  2012.  
368 According to the Business Software Alliance's (BSA) Global Software Survey 2018, in 2017, this rate 
was the 5th lowest in Asia -Pacific, and well below the regional average of 57%, but above top performers 
Australia (18%), Japan (16%), and New  Zealand (16%). BSA (2018), BSA Global Software Survey: Software 
Management: Security Imperative, Business Opportunity , June. Viewed at: https://gss.bsa.org/wp -
content/uploads/2018/05/2018_BSA_GSS_Report_en.pdf . 
369 USTR (2020), 2020 National Trade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2020_National_Trade_Estimate_Report.pdf . 
370 Statista, Distribution of People Who Pirated Media in South Korea in 2019, by Frequency , April 2020. 
Viewed at: https://www.statista.com/statistics/1133719/south -korea -media -piracy -by-
frequency/#:~:text=A%20survey%20about%20 illegal%20media,at%20least%20once%20a%20week . 
371 Presidential Council on Intellectual Property (2020), 2019 Annual Report on Intellectual Property 
Enforcement in Korea . Viewed at: https://www.ipkorea.go .kr/Eng/2019.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.280.   In October 2020, KIPO announced Measures to Prevent Online Counterfeits to more 
effectively combat the rapidly increasing online distribution of counterfeit products due to the 
COVID -19 pandemic while minimizing damage to consumers; the number of reports c oncerning 
online counterfeits increased by 150% year -on-year (2019 -2020) following the increase in online 
shopping.372 Offline enforcement personnel are temporarily handling online monitoring, whereas the 
Special Judicial Police are directly investigating m ass distributors and frequent sellers of counterfeit 
products, reinforcing investigative manpower, and promoting the advancement of investigation 
techniques, such as digital forensics. A damages compensation system, under which online open 
market platforms  compensate for damage resulting from the purchase of counterfeit products first 
and then claim indemnity from the individual seller, has been established.  
3.281.   Customs is authorized to investigate, ex officio,  IPR infringements concerning imports and 
exports. It can initiate investigations, including of criminal activity, and would suspend release of 
counterfeit goods that infringe patent, trademark, design, plant variety protection, or copyright 
rights (Customs Act, Foreign Trade Act, and Customs Clearance Reg ulation of Counterfeit Goods). 
When goods suspected of infringing IPRs are detected in the course of the import/export process, 
the KCS electronically informs the IPR holders, who in return can register their assessment of the 
case at a customs office onli ne. Between 2016 and 2020, 15,845 cases of IPR infringement (6,330  in 
2012-15) were appraised through this system. Right holders may request the KCS to suspend the 
release of suspected counterfeit goods, on payment of collateral of 120% of the dutiable val ue of 
the goods. The KCS withholds clearance of goods suspected of violating IPRs; clearance suspensions 
rose from a total of 320 cases in 2016 to 354 in early 2021. In cooperation with Japanese and 
Chinese customs authorities, the KCS implemented the Fake  Zero Project for exchanging information 
on counterfeit activities from 2007 to 2011, and its resumption was agreed in October 2015; its 
8th working group is to be held in Korea.  
3.282.   According to the 2019 KCS report, there were 30,856 seizures in 2019, a 41% d ecrease 
compared with the previous year, which represented a 313% increase from 2016.373 Trademark 
infringement -related cases continued to make up 88.8% of the seizures, and postal items and 
express cargo made up the largest number of cases, as well as the largest share by weight. Seizures 
of shoes and watches increased, and most seized items continued to originate in China (88.7% in 
2019, 92.9% in 2018), where Korean producers of counterfeit items (e.g. bags, home appliances, 
machinery, watches, footwear, g eneral merchandise, toys/stationery, exercise equipment, and 
wearing apparel/textiles) had reportedly relocated. A significant increase in seizures was largely due 
to the operation of "the system of Postal Items disposal infringing upon intellectual proper ty rights" 
as from 26 November 2018, as well as its improved ability to inspect smaller postal items due to 
collaboration between the Trade Related IPR Protection Association (TIPA) and Incheon Airport 
International (Postal) Customs Office.  
3.283.   The 2014 compre hensive policy to protect Korean brands (K -brands) in regions where the 
distribution of counterfeit Korean products is increasing remains in place. Its main objectives are 
building a system for responding to foreign brokers of Korean trademarks, launching a support 
centre for crackdowns on imported counterfeit goods, jointly engaging industries in recognizing and 
cracking down on counterfeits, and enhancing international border measures with foreign customs 
offices. In an effort to enhance the creation and protection of IPRs owned by Korean industries and 
put them to use in foreign markets, as of April 2021, KIPO operated IP Desks in 15 cities (11 in 
2015): Beijing, Shanghai, Qingdao, Shenyang, and Guangzhou (China); Bangkok (Thailand); 
Ho Chi Minh City (Vie t Nam); Los  Angeles and New York (United  States); Frankfurt (Germany); 
Tokyo (Japan); Hong Kong, China; New Delhi (India); Jakarta (Indonesia); and Manila (the 
Philippines). In 20 20, KIPO enhanced functions and expertise by establishing a  new overseas IP 
centre in Manila and promoting specialized projects that address each type of dispute in different 
countries and expanded its efforts to protect K -brands in the ASEAN region.  374 In cooperation with 
the Ministry of Foreign Affairs, the Ministry of Industry, and the Supreme Prosecutors' Office (SPO), 
 
372 Jae-Sang Lim, "KIPO Measures to Prevent Online Counterfeits", 18 January 2021. Viewed at: 
https://www.internationallawoffice.com/Newsletters/Intellectual -Property/South -Korea/NAM -NAM/KIPO -
measures -to-prevent -online -counterfeits . 
373 KCS (2019), 2018 Annual Statistical Report: Intellectual Property Rights Seizures . Viewed at: 
http://customs.go.kr/download/IPRS_2018_eng.pdf ; and Kim & Chang, Huge Increase in Counterfeit Seizures 
in Korea Due to Improved Inspection of Small Postal Items , 12 February 2020. Viewed at: 
https://www.ip.kimchang.com/en/insights/detail.kc?sch_section=4&idx=20796 . 
374 Presidential Council on Intellectual Property (2020), 2019 Annual Report on Intellectual Pr operty 
Enforcement in Korea . Viewed at: https://www.ipkorea.go.kr/Eng/2019.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  KIPO formed a joint task force to respond to companies that copy Korean products and pursued local 
resolution through country -specific fact -finding efforts and enforcement requests. During the review 
period, Korea  (e.g. KIPO) expanded cooperation with international organizations, including the WTO, 
WIPO, and APEC, to lead IP -related issues on the global stage.375 
3.284.   The MCST may collect, delete, or destroy illegally acquired computer programs, and instruct 
Internet service providers to reject, suspend, or limit pirated products and services. During the 
review period, responsiveness to copyright infringements was reinforced. The Copyright Special 
Judicial Police (CSJP) aim to respond immediately to online and  offline illegal reproduction of 
copyrights (see below). Regarding online copyright infringement, as of 2016  the KCOPA 
(Section  3.3.7.2) tracked and acted against the first distributor of an illegal reproduction on 
Torrent.376 The MCST maintains overseas of fices in Bangkok (Thailand), Manila (Philippines), Hanoi 
(Viet Nam), and Beijing (China) that provide measures against copyright infringement rectification 
in response to illegal distribution and copyright infringement of Korean contents in foreign countri es. 
In May 2018, the Government announced "measures to prevent copyright infringement through 
overseas sites", a collaboration between the MCST, the Korea Communications Commission, and the 
National Police Agency. They planned investigations of overseas si tes, launched copyright protection 
campaigns, and blocked access to certain websites, so as to stop the distribution of illegal 
reproductions and expand enforcement. As a result, in 2019 the Government managed to block 
20 sites and arrested 19  operators of  9 websites.  
3.285.   The CSJP, with regional offices in major cities (Seoul, Busan, Daejeon, Gwangju, and Daegu), 
continued to investigate counterfeit computer software, sound recordings, and video movies, 
including through online activities. Copyright infringemen t cases forwarded by the CSJP stood at 
378 cases in 2016, 536 in 2017, 671 in 2018, and 762 in 2019.377 In 2019, 707,746 items (of which 
98.8% were music) of illegal reproductions in 455 cases were collected and disposed, compared to 
7,816,798 items and 1,8 18 cases in 201 7. The number of pirated video/music products among the 
illegal materials collected and disposed significantly has declined since 2017, as use of reproductions 
is being diversified and users switched from CD/DVD formats to downloading digita l files or 
streaming in offline illegal markets. The KCOPA promoted 553 forensic inspections on digital 
copyright infringement in 2019, compared to 464 in 2016. In 2018, it conducted planned 
investigations on illegal cartoon -sharing sites with the MCST and  blocked 11 sites and arrested 5  site 
operators. It tried to interrupt encroachment of legal markets by massificating overseas copyright 
infringement sites. Furthermore, it expanded a forensics assistance system to protect copyright by 
arresting operators of the sites Night Rabbit and Torrent Kim. It also conducted forensic inspections 
on copyright infringement for 70 accounts that habitually uploaded software crack versions and non -
partnered illegal reproductions on Webhard to prevent copyright infringemen t on diverse distribution 
routes by improving the illegal software eradication effect and encouraging the use of genuine 
content. The joint planned investigation between the MCST and the Korean National Police Agency 
(18 regional police) targeted illegal w ebsites that moved servers overseas to avoid domestic 
crackdowns and distributed the illegal copies, blocked major infringing websites, such as Marumaru 
2 and Childish Adult.com, and cooperated in arresting illegal website operators. In 2019, MCST also 
conducted forensic inspections on copyright infringement for 52 accounts that habitually uploaded 
non-partnered illegal reproductions on Webhard to enhance the eradication effect of illegal 
reproductions from Webhard and to encourage the use of genuine conten t. As such, it prevented 
copyright infringements in diverse distribution channels.  
3.286.   Under the Copyright Act, the MCST has administrative authority to inspect business 
establishments, and to seize and order the disposal of illegally copied publications. Rela tively small 
fines, of up to KRW  3 million, may be levied for the refusal to obey such orders. Copyright 
enforcement activities for illegally copied publications are carried out mainly by the KCOPA. Cases 
of seizure of illegally copied publications online increased from 8,308 in 2017 to 8,855 in 2018, while 
those of publications offline declined from 510 in 2015 to 302 in 2018.  
 
375 Presidential Council on Intellectual Property (2020), 2019 Annual Report on Intellectual Property 
Enforcement in Korea . Viewed at: https://www.ipkorea.go.kr/Eng/2019.pdf . 
376 Ministry of Culture, Sports and Tourism, Korea Copyright Commission, and Korea Copyright 
Protection Agency (2018), 2018 Annual Report on Copyright in Korea . Viewed at: 
https://www.copyright.or.kr/eng/activities/annual -report/index.do . 
377 Ministry of Culture, Sports and Tourism, Korea Copyright Commission, and Korea Copyright 
Protection Agency (2018), 2018 Annual Report on Copyright in Korea . Viewed at: 
https://www.copyright.or.kr/eng/activities/annual -report/index.do . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  3.287.   During the review period, both KIPO and the MCST, in collaboration with the KCS, local 
governments, and non -governmental organizati ons (NGOs), continued to concentrate on education 
and public awareness programmes, urged consumers to buy genuine goods, and implemented a 
wide range of policy measures to alert consumers to the safety issues surrounding counterfeits and 
nurture a culture that is respectful of IPRs.378 KIPO has selected and managed a general IP 
advancement school programme since 2017. In 2020, KIPO selected 14  universities from a pool of 
all the 4 -year universities nationwide, to provide regular IP courses, and offer converg ence 
education. Furthermore, KIPO has held invention promotion events, such as invention competitions 
and invention festivals through local governments, to continuously raise awareness of IP among the 
public, businesspeople, and local government officials,  and it operated IP managers' clubs and local 
government policy councils to create an environment that reinforces voluntary cooperation. 
Nationwide industrial property awareness campaigns were increased, and 40 were held between 
2016 and 2019; KIPO and its  affiliate, the Korea Intellectual Property Protection Agency (KOIPA), 
held a nationwide tour to promote protection of IP for general consumers and sellers. In addition, 
KIPO tried to strengthen communication with online community users through blogs and s ocial 
media; in the period 2016 -19, the number of blog visitors rose to 2,527,917. In 2019, various media, 
such as public transportation means, radio broadcasting, Internet, and social media, were used to 
promote the IPR dispute settlement system; there we re 282 public advertisements between 2016 
and 2019. The MCST and the KCC continued to offer Hands -on Copyright Classes; between 2016 
and 2019, there was an annual average of 293 classes enrolling 235  teachers and 11,256  students. 
Furthermore, the MCST expa nded its Visiting Courses on Copyright (adults), Copyright for Artist and 
Copyright (Public) course, and its online copyright education courses tailored to the needs of various 
target audiences. In 2019, the MCST undertook, inter alia, a total of 2,746  cases (3,704 in 2016) of 
large-scale preventive/advisor campaigns for SMEs in conjunction with enforcement activities on 
pirated materials (e.g. software). In 2019, in order to strengthen capabilities of customs officers, 
the KCS conducted 14 training session s on identifying genuine and fake products by brands at 
8 customs offices for 512 customs officers.  
3.288.   Between 2015 and 2020, trial requests concerning industrial property issues increased to 
63,430 (54,172 in 2011 -14) cases; most cases continued to involve p atents (53%) and trademarks 
(41%) and were mostly requested by Korean holders (6 6%). Between 2016 and 2019, there were 
3,564 cases (5,2 70 in 2011 -15) cases for revocation of trial decision (mostly patent -related) filed at 
the Patent Court (Section  3.3.7.1) , an appellate -level court, of which 3,54 5 were handled. The 
average time for handling cases of rose from 204 to 237 days for revocations and from 137 to 286 
days for civil appeals, whereas the cases in which at least one party was a foreigner dropped from  
301 (2018) to 190 (2019).379 At the time of the previous Review, it seemed that sentences for IP 
infringements remained lower than international norms, and in particular compared with other 
countries in Asia and Europe. The authorities indicate that, in th e case of other countries, there is a 
distinction between similar and identical infringement, whereas in Korea, they are penalized under 
the same sentencing, thus making them hard to compare.  
 
 
378 More information on the numerous activities in this area is available at Presidential Council on 
Intellectual Property (2020), 2019 Annual Report on Intellectual Property Enforcement in Korea . Viewed at: 
https://www.ipkorea.go.kr/Eng/2019.pdf . 
379 Patent Court of Korea, Statistics . Viewed at: 
http://patent.scourt.go.kr/patent_e/judicial/judicial_02/index.html . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4  TRADE POLICIES BY SECTOR  
4.1.  The Republic of Kor ea is a land -scarce country with a high population density, and it is a net 
food importer. Agriculture accounts for a small share in GDP (2% in 2020). Despite this, the 
Government has been using a wide range of policy tools, both at the border and domestic ally, to 
facilitate its development and to improve the welfare of rural residents. At the border, tariffs peak 
at 887.4%, and the average applied MFN tariff protection for agricultural goods is much higher than 
for non -agricultural goods. Tariff rate quota s (TRQs), state trading arrangements, special safeguard 
(SSG) measures, export approval requirements, and export subsidies all continue to be applied. 
Korea committed to eliminate its export subsidies by 2023, in line with the 2015 Nairobi Ministerial 
Declaration.  Domestic support continues to affect agricultural production and trade, and Korean 
consumers pay much higher prices than world levels. Other support in the form of tax and non -tax 
policy tools continue to be used. Foreign investment in rice and ba rley growing is prohibited, and 
rice is excluded from all of Korea's RTA concessions.  
4.2.  Korea is a net fish importer. Its fisheries resources in distant and adjacent waters continue to 
deplete. The Government has been promoting the development of aquaculture  production in shallow 
sea areas. Foreign direct investment (FDI) restriction on fisheries was removed in 2016, while border 
protection mainly takes the form of tariffs and adjustment tariffs. The Government continues to fight 
against illegal, unreported, and unregulated (IUU) fishing.  
4.3.  Mining accounts for a tiny share of GDP, and Korea relies heavily on imported energy, 
particularly fossil fuels. Korea remains an energy -intensive country. The Government is committed 
to advance the country's energy transitio n by increasing the share of renewable electricity to 20% 
by 2030, and to 30% -35% by 2040, to gradually phase out coal and nuclear from the energy mix, 
while significantly improving energy efficiency, and fostering the hydrogen industry. State -owned 
compan ies continue to play a major role in the energy sector. Prices are often regulated (for coal 
and electricity), while cross -subsidization continues.  
4.4.  Manufacturing remains an important activity and is heavily export -oriented (91.4% of total 
merchandise expor ts in 2020). The sector is dominated by large conglomerates, and the 
concentration rate is high. The labour productivity gap between large firms and small and 
medium -sized enterprises (SMEs) remains large. Several tax and non -tax incentives continue to be 
used to facilitate the development of the Fourth Industrial Revolution, other manufacturing activities, 
and SMEs. Foreign investment in manufacturing in general is allowed, while border measures are 
confined to tariffs, adjustment duties, and autonomous TR Qs. Sector -specific measures include those 
to promote the purchase of eco -friendly vehicles, use information and communication technologies 
(ICT), and meet environmental requirements set by international organizations in the shipbuilding 
industry.  
4.5.  During t he review period, ICT was emphasized, as requested in the Korean New Deal, as an 
important tool for the Government to employ to facilitate the development of various sectors, and 
to meet its environmental protection targets. Korea committed, under the Pari s Agreement, to limit 
its emissions of carbon dioxide equivalent. Various support has been provided to help the economy, 
which is facing difficulties caused by the COVID -19 pandemic.  
4.6.  During the review period, the contribution of services to GDP rose slight ly, and Korea's trade 
deficit persists. Labour productivity of the services sector remains lower than that of the 
manufacturing sector. FDI restrictions remain in some services activities, mainly due to national 
security reasons, such as civil aviation, so me broadcasting services, and certain types of banks. 
Notably, from 2017, foreign investment in supporting air transport activities, including aircraft 
maintenance, repair, and overhaul, is allowed, and the previous foreign equity cap at 50% was 
removed.  
4.7.  The financial services sector grew robustly despite the pandemic. Notable developments include 
the application of digital technologies, including the setting up of Internet banks and the opening of 
digital insurers. The Government continues to encourage ba nks, which had a traditionally close 
relationship with large conglomerates and their subsidiaries, to shift lending to consumers and SMEs, 
and to invest overseas. Korea ranks high in information and communications services. The major 
players in both the fi xed-line and mobile phone markets are not state owned. Korea continues its 
efforts to make the country a global maritime power hub. The aviation sector was affected WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  significantly by the COVID -19 pandemic. Cabotage for air and land transport is not permitte d, 
although some exceptions exist for maritime transport. Distribution services contracted in 2020, and 
their regulatory framework and FDI constraints remain unchanged. E -commerce  recorded the 
strongest growth in 2020, reflecting changes in consumers' life styles due to COVID -19, which 
accelerated the adoption of online shopping. A Tourism 2020 Strategy identified policy tools to 
address challenges facing the sector. Tourism subsidies were raised, and online platforms are used 
to improve digital marketing.  
4.1  Agriculture and Livestock  
4.1.1   Main features and recent developments  
4.8.  The agriculture sector (including forestry and fisheries) recovered from a contraction in 2016 
(-5.6%), and registered positive growth in 2017 -19 (2.3%, 0.2%, and 3.9%, respectively) 
(Table  1.2). However, it declined again in 2020 ( -4% in 2020). Agriculture contributed to 2% of GDP 
in 2020 (same as in  2016) and accounted for 5.4% of employment (up from  4.8% in 2016). Although 
labour productivity in agriculture remains low compared with that in o ther sectors, the authorities 
state that it has been increasing over the past years. Not only is Korea a land -scarce country, but 
its farmland also continued to decline, from 1.68 million hectares in 2015 to 1.57 million hectares in 
2020, with more than ha lf (53%) of the farmland in rice paddies.1 Most farms are small family farms: 
at 1 December 2019, there were 1,007,000 farm households (a drop of 1.3% from 2018), of which 
70% are on an agricultural area of under 1  hectare.2 
4.9.  Korea is a net importer of agricultural products (WTO definition). Accor ding to UN Comtrade 
data, in 2020, it imported USD  28.5 billion in agricultural products (6.1% of total merchandise 
imports), and it exported USD  7.4 billion (1.4% of total merchandise exports). Korea maintains a 
trade deficit in most agricultural products . Self -sufficiency levels vary depending on the product 
category. On the one hand, in 2020, almost all of its domestic consumption of wheat, maize, sugar, 
and cotton was imported. Imports accounted for a large share of the domestic consumption of 
soybeans (94%), vegetable oils (79%), protein meals (75%), roots and tubers (74%), and beef and 
veal (67%). On the other hand, imports accounted for only 10% of the domestic consumption of 
rice, 18% of poultry meat, and 34% of pig meat (Chart 4.1).  
Chart 4.1 Korean major agricultural products: production, consumption, and trade, 2020  
('000 tonnes)  
 
Note:  Data for 2020 are provisional.  
Source:  OECD Statistics. Viewed at: http://stat s.oecd.org . 
 
1 Korean Statistical Information Service (KOSIS), Agricultural Land Area . Viewed at: 
https://kosis.kr/eng/statisticsList/statisticsListIndex.do?menuId=M_01_01&vwcd=MT_ETITLE &parmTabId=M_
01_01&statId=1999011&themaId=#SelectStatsBoxDiv . 
2 Statistics Korea (KOSAT),  Agriculture, Forestry, and Fishery Survey in 2019 . Viewed at: 
http://kostat.go.kr/portal/ eng/pressReleases/2/4/index.board . 
01,0002,0003,0004,0005,0006,0007,0008,0009,00010,00011,000
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Production
Imports
Consumption
Exports
Wheat Maize Rice Soybean Protein
mealsVegetable
oilsSugar Beef and
vealPigmeat Poultry
meatCotton Roots and
tubersChart 4.1   Korean major agricultural products: production, consumption, and trade, 2020  
Unit:  tonnes thousand
Source:  OECD Statistics.  Viewed at: http://stats.oecd.org .WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.1.2   Policy, institutional, and regulatory developments  
4.10.   The agriculture sector is regulated under the Framework Act on Agriculture, Rural Community 
and Food Industry, No.  17618 of 2020. The Act introduces basic policy directions: ensuring a stable 
supply of agricultural products and sustainable development of agriculture; promoting the 
development of agricultural and rural communities; and developing local agriculture and improving 
the welfare of rural residents.  
4.11.   The Act mandates the M AFRA to draw up  an Agricultural and Rural Community and Food 
Industry Development Plan every five years. The 2013 -17 plan emphasized adding value to 
agricultural products in an innovative way and improving agricultural productivity by integrating 
agriculture with other i ndustries, including manufacturing, processing, and ICT. The current five -
year plan, for 2018 -22, emphasizes enhancing food safety and strengthening the income safety net 
for farmers. It aims to reduce the income gap between agricultural and non -agricultur al sectors, 
improve living conditions in rural areas, achieve balanced development between agricultural 
production and environmental conservation, and strengthen the competitiveness and growth of 
agriculture by enhancing agricultural productivity.  
4.12.   To achie ve these policy objectives, Korea plans to strengthen its agricultural innovation 
capacity to produce environmentally friendly and safe foods. Key policies include introducing 
environmental compliance conditions to direct payments and a new agricultural en vironment 
preservation programme. The Government also aims to improve the environmental performance of 
livestock production by supporting the modernization of cattle sheds, and to revitalize the rural 
economy by promoting the return of people to rural area s to engage in agriculture.  
4.13.   The Act requires the Plan to set self -sufficiency targets in food and staples every five years, 
and action plans for their achievement. The targets cover calorie -based self -sufficiency and 
volume -based self -sufficiency in rice a nd barley, grains, livestock products, and forage. The target 
of the volume -based self -sufficiency ratio of grains (including animal feed) is set at 27.3% in 2022. 
The authorities indicate that main measures adopted to achieve these targets include conserv ation 
and expansion of agricultural production infrastructure, and encouraging economies of scale in crop 
production, distribution, and consumption.  
4.14.   There has been no change to foreign investment restrictions in the agriculture sector. Foreign 
investment i s allowed in:  
• the growing of cereal crops and other crops for food, except for rice and barley; and  
• the farming of animals, except farming of beef cattle and meat wholesale where a less 
than 50% foreign equity restriction applies.  
4.15.   Korea has been using a wi de range of policy tools, both at the border and domestically, to 
facilitate the development of the agricultural sector (see below). According to the OECD, Korea's 
level of support to agricultural producers, although still well above the OECD average, grad ually 
decreased during the last two decades, reflecting continued efforts towards market -oriented 
reforms. However, the OECD considers that the potentially most distorting forms of support 
predominate  (Section 4.1.2.2).3 The authorities disagree, and indicate that Korea's trade -distorting 
support (Amber Box) accounted for only 15% of the total domestic support and Green Box support 
was provided much more (84%) than trade -distorting support.  
4.1.2.1   Border measures  
4.16.   Tariffs continu e to be the main instrument supporting domestic prices, particularly on rice 
(Section 4.1.3.1). Other border measures include import licensing, SSG measures, and export 
subsidies.  
 
3 OECD (2020), Agricultural Policy Monitoring and Evaluation 2020 . Viewed at: 
https://doi.org/10.1787/928181a8 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.1.2.1.1   Tariffs and tariff quotas  
4.17.   MFN tariffs remain high on agricultural products, with the highest rate applying to manioc 
(887.4%). Alternative duties and possibly prohibitive out -of-quota rates remain in place for many 
commodities (Section 3.1.3). The average MFN tariff on agricultural products (WTO definition) 
reached 60.4% in 2021, slightly higher than that in 2016 (60%). The simple average MFN tariff for 
agricultural products remained much higher than the tariff rate for non -agricultural products (6.3%).  
4.18.   Korea continues to occasionally apply "flexible" (temporary) tariffs, such as a djustment 
duties, seasonal tariffs, autonomous TRQs, "usage" tariffs, and safeguard and SSG duties 
(Section  3.1.3.3).4 Adjustment tariffs applied to 19 6 -digit tariff items (or 14 different types of 
product) in 2021, including 4 agricultural items such as rice preparations and sauces. During the 
review period, no seasonal tariffs were applied on an MFN basis; rather, they were applied under 
preferential tariff treatment under some RTAs (Section 3.1.3.3).  The Government may also apply 
"usage" tariff rates on imported inputs for activities such as animal feeding (Section 3.1.3.6).  
4.19.   Korea applied agricultural TRQs on 229 10 -digit tariff lines in 2021, 2 more than in 2016 (due 
to split of tariff lines following a nomenclature change) (Section  3.1.3.8). In -quota tariffs range from 
zero to 50%, while out -of-quota rates range from 9% to 887.4% (for manioc). The average fill ratio 
of TRQs was 58% in 2019 ( Table A3. 5), down from 59.5% in 2015.5 All TRQs are global quotas, 
except rice. On 1 January 2020, Korea set the annual rice TRQ at 408,700 tonnes with an in -quota 
tariff rate of 5% and an out -of-quota tariff rate of 513%. Of the total TRQ of 408,700 tonnes, more 
than 95% is allocated to five countries: China (157,195 tonnes), the United  States (132,304 tonne s), 
Viet Nam (55,112 tonnes), Thailand (28,494 tonnes), and Australia (15,595 tonnes). The remaining 
20,000 tonnes are global quotas.  
4.20.   Quotas are valid for the whole calendar year, and import permits (valid for either 30 days or 
90 days) are required. TRQs are utilized, administered, or allocated by different organizations 
including ministries, state trading entities, or producer associations. Allocation of TRQs to importers 
may be based on auctioning, allocation to designated agencies, real demand allocatio n (on a 
first-come, first -served basis), or a combination thereof (Section 3.1.3.8).  
4.21.   Korea also applies autonomous TRQs aiming at, inter alia , helping to stabilize prices through 
increased supply, and increasing the competitiveness of the domestic agricult ure and livestock 
industries (Section 3.1.3.8 and Table A3. 6). In 2021 ( Table A3. 6), the autonomous TRQs covered 
21 6-digit tariff items for WTO  agricultural products (down from 25  in 2016). In -quota tariff rates 
ranged from zero to 10%, whereas out -of-quota rates ranged from 1% -30%. 
4.1.2.1.2   State trading, import licensing, and special safeguards  
4.22.   Korea notified two state trading arrangements involving:  
• MAFRA for the importation of rice within the TRQ; and  
• the Korea Agro -Fisheries & Food Trade Corporation (aT) for t he importation of genus 
Capsicum , garlic, onions, sesame seeds, soybeans, green beans, small red beans, 
buckwheat, and potatoes (Section  3.3.5).6 
4.23.   For buckwheat, onion, garlic, green beans, small red beans, potatoes, and genus Capsicum , 
private companies a re allowed to import part of the TRQs through open bidding, which refers to 
"public auction" where goods are sold to a participating company offering the highest price during 
the auction. For soybeans, potatoes, onion, garlic, and  genus Capsicum , part of t he TRQ is allocated 
to private companies on a first -come, first -served basis.  
4.24.   Korea has prohibited the importation of food products from Japan since the 2011 Fukushima 
Daiichi Nuclear Power Plant accident (Section 3.1.5.1). Import licensing procedures are maintained 
 
4 See also WTO documents WT/TPR/S/204/Rev.1, 4 Decembe r 2008; WT/TPR/S/268/Rev.1, 
8 November 2012; WT/TPR/S/137, 18 August 2004; WT/TPR/S/73, 28 August 2000; and WT/TPR/S/19, 
28 August 1996.  
5 WTO documents G/AG/N/KOR/56, 20  July 2016 and G/AG/N/KOR/77, 12  October  2020.  
6 WTO document G/STR/N/18/KOR, 12 Octob er 2020.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  on, inter alia , agricultural fertilizers, crop seeds, animals and animal products, and foods and food 
additives (Section 3.1.5.3).  In May 2019, Korea lifted import restrictions on beef from the 
Netherlands and Denmark. These restrictions had bee n in place since 2000, in response to the 
outbreak of bovine spongiform encephalopathy (BSE) in Europe.7 Applications from some other EU 
Member States concerning the lifting of these restrictions are being considered.  
4.25.   Korea reserved its right to apply SSG  measures (both price -based and volume -based) to 
124 agricultural 10 -digit tariff items. During the review period, price -based SSGs applied to ginseng 
root (2017 -19), ginseng powder (2018), other products of red ginseng (2018), and raw ginseng 
(2016) (Sect ion 3.1.6.2).8 
4.1.2.1.3   Export restrictions and export subsidy programmes  
4.26.   The rice export recommendation programme was abolished in March 2015.  
4.27.   Approval from competent authorities is required for the exportation of ginseng seeds and 
animals (Section 3.2.3.2). Acco rding to the authorities, this is to protect and conserve biological 
variety and diversity under the Act on the Protection of New Varieties of Plants and the Act on the 
Preservation, Management and Use of Agro -fishery Bioresources.  
4.28.   In January 2021, a group  of nearly 80 WTO Members, including Korea, issued a joint 
statement pledging not to impose export restrictions on foodstuffs purchased by the UN's World 
Food Programme (WFP) for humanitarian aid.9 
4.29.   The last notification from Korea on its export subsidy programme for certain farm products 
was in 2021, for 2019. In 2019, export subsidies totalled KRW  34.41 billion, and covered fruits 
(KRW  5.08 billion), flowers (KRW  0.39 billion), vegetables (KRW  20.54  billion), kimchi 
(KRW  2.13 billion), ginseng ( KRW 0.71 billion), livestock (KRW  3.31 billion), processed food 
(KRW  1.98 billion), and traditional liquor (KRW  0.27 billion).10 These subsidies were used to reduce 
exporters' marketing costs, and are exempt from the WTO reduction commitments.  
4.30.   The authorit ies state that exporters' logistics costs are covered by the Government to assist 
the exportation of agricultural products, in accordance with the Framework Act on Agriculture, Rural 
Community, and Food Industry (Article  59). Korea committed to eliminate i ts export subsidies by 
2023, in line with the 2015 Nairobi Ministerial Declaration.11 
4.1.2.2   Domestic support  
4.31.   Korea provides domestic support to the agriculture sector. Main indicators measuring the level 
of support include those calculated by the OECD, such as t he total support estimate (TSE), and the 
aggregate measure of support (AMS) notified to the WTO. The methodologies for calculating these 
indicators are different, and the data sets are neither compatible nor comparable.  
4.32.   The budgetary outlay also contains i nformation on budgetary spending on agriculture. In the 
2021 budget proposal, the Government proposed budgetary spending of KRW  22.4 trillion, or 4% of 
total spending (KRW  19.4 trillion in 2016), for agriculture, forestry, fisheries, and food.12 
4.1.2.2.1   OECD indicators  
4.33.   The OECD's TSE indicator contains support to producers individually (producer support 
estimates (PSEs)), support to producers collectively (general services support estimates (GSSEs)), 
and transfers from taxpayers to consumers, i.e. one componen t of the support (or burden) to 
 
7 OECD (2020), Agricultural Policy Monitoring and Evaluation 2020 . Viewed at: 
https://doi.org/10.1787/928181a8 -en. 
8 WTO documents G/AG/N/KOR/76, 6  October  2020; G/AG/N/KOR/70, 16 October 2019; 
G/AG/N/KOR/69, 16 October  2019; and G/AG/N/KOR/59, 20 March  2017.  
9 WTO document WT/L/1109, 21 January 2021.  
10 WTO document G/AG/N/KOR/79, 9 April 2021.  
11 WTO document WT/MIN(15)/45 -WT/L/980, 21 December 2015.  
12 Ministry of Economy and Finance, 2021 Budget Proposal . Viewed at: 
https://english.moef.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=4967 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  consumers (consumer support estimates (CSEs)). According to the OECD, Korea's support to 
agriculture remains well above the OECD average. Its TSE was equivalent to 1.5% of GDP in 2019, 
the same as in 2016 but still much high er than the OECD average (0.6%)13 (Table  4.1). 
Table 4.1 Agricultural support by commodity, 2016 -19 
(USD million)  
 2016  2017  2018  2019  
Total value of production (at farm gate)  40,734  42,605  45,493  43,253  
Total value of consumption (at farm gate)  51,857  54,907  64,066  60,635  
Total PSE  18,995  21,498  24,043  20,831  
 Support based on commodity output – MPSa 16,851  18,583  21,794  18,920  
 Direct payment  2,144  2,915  2,249  1,911  
 Based on input use  466 545 651 634 
 Based on current area planted/animal 
numbers/receipt/income, production required  920 1,596  813 542 
 Based on non -current area planted/animal 
numbers/receipt/income, production not required  758 774 785 736 
Percentage of PSE to gross farm receipts (%)  44.3 47.2 50.4 46.1 
General services support estimate (GSSE)  3,563  3,571  3,768  3,661  
 Agricultural knowledge and innovation system  864 646 683 617 
 Inspection and control  267 290 355 318 
 Development and maintenance of infrastructure  2,149  2,290  2,327  2,221  
 Marketing and promotion  43 38 40 37 
 Cost of public stocking  240 306 364 467 
Percentage GSSE (% of TSE)  15.8 14.2 13.5 14.9 
Consumer support estimate (CSE)  -21,025  -23,654  -29,692  -26,474  
 Transfers to producers from consumers  -16,214  -17,831  -21,329  -18,412  
 Other transfers from consumers  -4,842  -5,859  -8,400  -8,097  
 Transfers from taxpayers  31 35 37 35 
Percentage CSE (%)  -40.6 -43.1 -46.4 -43.7 
Total support estimate (TSE)  22,590  25,105  27,849  24,528  
Percentage of TSE to GDP (%)  1.5 1.5 1.6 1.5 
 Transfer from consumers  21,057  23,689  29,730  26,509  
 Transfer from taxpayers  6,375  7,274  6,520  6,116  
 Budget revenues  -4,842  -5,859  -8,400  -8,097  
Total budgetary support estimate (TBSE)  5,739  6,521  6,055  5,608  
Percentage TBSE to GDP (%)  0.4 0.4 0.4 0.3 
a Market price support (MPS) is net of producer levies and excess feed cost.  
Source:  OECD Agriculture Statistics. Viewed at: http://stats.oecd.org/BrandedView.aspx?oecd_bv_id=agr -
data-en&doi=data -00737 -en#. 
4.34.   To compare the degree of support to pr oducers across countries, the OECD calculates the 
share of gross farm receipts (including market revenue) that is coming from support policies, i.e.  PSE 
over gross farm receipts (%PSE). In 2019, producer support as a share of gross farm receipt (%PSE) 
reached 46% in Korea, much higher than the OECD average of 17.6%.14 
4.35.   Market price support (MPS) predominates support to producers. Producer support may take 
the form of an increased output price (MPS), or a direct payment (payment based on, inter alia, 
input use, area planted, and animal numbers).15 On the one hand, during the period 2017 -19, prices 
received by farmers were on average 80% higher than world market prices. The share of MPS 
increased from 86% of PSE in 2017 to 90% in 2019. MPS is maintained  mainly through some TRQs 
with high out -of-quota tariffs,16 as well as government purchases. Korea's main MPS commodities 
 
13 OECD, Table A.1:  Estimates to Support Agriculture ( EUR). Viewed at: https://www.oecd -
ilibrary.org/agriculture -and-food/oecd -estimates -of-support -to-agriculture -eur_6d3329fc -en. 
14 OECD  (2020), Agricultural Policy Monitoring and Evaluation 2020 . Viewed at: 
https://doi.org/10.1787/928181a8 -en. 
15 OECD (2016), OECD's Producer Support Estimate and Related Indicators of Agricultural Support:  
Concepts, Calculation, Interpretation and Use (the PSE Manual). Viewed at: 
http://www.oecd.org/agriculture /topics/agricultural -policy -monitoring -and-evaluation/documents/producer -
support -estimates -manual.pdf .  
16 The authorities state that out of 11 items subject to MPS, 5 are subject to TR Qs (rice, garlic, pepper, 
soybeans, and barley).  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  are barley, Chinese cabbage, garlic, red pepper, rice, soybeans, milk, beef and veal, pig meat, 
poultry, and eggs.  
4.36.   On the other hand, the share of direct payment to total PSE fell from about 13% in 2017 to 
about 9% in 2019  (Table 4.1).  In 2020, the rice income compensation scheme was replaced by a 
new direct payment programme, which integrates payments for rice, upland crops, and less fa voured 
areas. It aims to further decouple payments from production and reinforce cross -compliance of 
farmers. Under the new programme, farmers must meet requirements in five categories: 
(i) environmental protection; (ii) ecology preservation; (iii) rural c ommunity revitalization; (iv) food 
safety; and (v) capacity -building. Farmers conforming to these requirements may receive direct 
payments, while non -compliance will result in reduced payment.17 
4.37.   GSSE averaged 14% of TSE to the agricultural sector in 2017 -19. The main element was 
expenditure on infrastructure, representing 62% of the GSSE. Government funding for the 
agricultural knowledge and innovative system accounts for 18%. Support for drainage, seeds, and 
agricultural machines is also part of the Govern ment's efforts to promote crop diversification, aiming 
to mitigate the dependence of rice farmers on direct payments.  
4.38.   The negative CSE measures the annual monetary value of gross transfers from consumers of 
agricultural commodities, i.e. burdens on consume rs as they pay higher prices resulting from MPS.  
4.1.2.3   WTO notifications  
4.39.   The most recent notification made by Korea to the WTO regarding its domestic support to 
agriculture covers the 2018 calendar year (Section 3.3.1.2.2.2 and Table A3. 7).18 According to this 
notification, total support to agriculture reached KRW  9.1 trillion in 2018 (up from KRW  8.1 trillion 
in 2015). Green Box accounted for 85% of total domestic support, while trade -distorting support 
(AMS or Amber Box) occupied 15% (up from 9% in 2015). MPS measures were applied only to 
soybeans.  
4.40.   In 2018, Green Box support a mounted to KRW  7.7 trillion (up from KRW  7.4 trillion in 2015); 
41% of this was spent on infrastructure services, 18% on decoupled income support, 9% on 
research, and 7% on environmental programmes ( Table A3. 7). They were followed by investment 
aids (6%), public stockholding for food security purposes (4.7%), extension and advisory services 
(3.1%), pest and disease control (3.1%), and payment for relief from natural disasters (2.6%). 
Training services, inspection services, marketing and promotion services, domestic food aid, 
producer retirement, resource retirement, and regional assistance in total accounted for less than 
1%.19 
4.41.   Product -specific support to apples, beef, cabbage, carrots, garlic, ginseng, green onions, milk, 
oats, onions, potatoes, red peppers , rice, soybeans, white radishes, goats, mushrooms, special 
crops, walnuts, and non -product -specific AMS amounted to about KRW 1.4 trillion.20 All support, 
apart from that for oats and walnuts, was  de minimis. Support for soybeans took the form of MPS 
(KRW  8.8 billion).  
4.42.   Korea also notified its direct support programmes to the WTO Committee on Subsidies and 
Countervailing Measures; a number of the programmes were provided to the agriculture sector 
(Section  3.3.1.2). Korea's latest notification (in 2019) cove red subsidy programmes for the period 
2017-18.21 Grants or concessional loans were the main forms used (Table 4.2).  
  
 
17 Non-compliance with t he requirements results in 10% reduction of aggregate basic direct payment 
per item. The penalties increase and the reduction goes up to 100% for multiple and continuous violations.  
18 WTO document G/AG/N/KOR/82, 26 April 2021.  
19 Korea also notified some modified domestic support measures that are exempt from reduction: an 
R&D project to develop technology to manage foreign organisms threatening biodiversity; and building 
infrastructure for the Smart Horticultural Complex. WTO doc ument G/AG/N/KOR/83, 26 April 2021.  
20 WTO document G/AG/N/KOR/82, 26 April 2021.  
21 WTO document G/SCM/N/343/KOR, 22 July 2019.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Table 4.2 Subsidies notified, 2017 and 2018  
(KRW  million)  
Items  Type  2017  2018  
Food grain management programme  
Grains (except rice)  Direct subsidy  n.a. n.a. 
 Loan 10,316  9,089  
 Benefit of loana n.a. n.a. 
 Total (direct subsidy + benefit of loan)  n.a. n.a. 
Soybeans  Direct subsidy  44,042  2,443  
 Loan n.a. n.a. 
 Benefit of loana n.a. n.a. 
 Total (direct subsidy + benefit of loan)  44,042  2,443  
Variable direct payment for rice  
Rice Lump sum transfer (partial support for the 
difference between the target price and the 
actual average price during the harvesting 
season of the year) 1,489,778  539,331  
Support for marketing and promotion of agricultural and livestock products  
Exporters of fruits, flowering 
plants, kimchi, vegetables, 
ginseng, and livestock products  Lump sum transfer (partial support for costs 
in sorting, packaging, and transporting)  39,608  40,810  
Support for livestock products  
Calf breeding stabilization 
schedule  Lump sum transfer (Support is provided to 
compensate for loss in case the average 
market price of the calf is lower than the 
standard price in the schedule.)  452 376 
n.a. Not applicable.  
a Benefit of loan was estimated based on the difference between the loan rate and the market rate.  
Source:  WTO document G/SCM/N/343/KOR, 22 July 2019.  
4.1.2.3.1   Other support  measures  
4.43.   The agriculture sector also benefits from preferential tax treatment (Section 3.3.1):  
• Income from the production of grains and other human food crops is exempted from 
income tax, and income from plant cultivation is not taxed if the revenue is less than 
KRW 1 billion (USD  0.9 million).  
• VAT is exempted on the supply of unprocessed edible food; the authorities indicate that 
this is to free consumers from a tax burden on necessity goods.  
• Zero-rate VAT is applied to input items used exclusively for agricultural production, such 
as fertilizers, chemicals for plant protection, agricultural machines, equipment and 
materials for livestock farming, and feed. For some specific equipment and materials that 
can be used for purposes other than agricultural production, a VAT refund is availab le 
when they have been used for agricultural production.  
• VAT tax is deducted for the purchase of agricultural products by food processing 
businesses or restaurants.  
• Oil fuels used for agricultural machines, including tractors and heaters, are exempted from  
all fuel taxes, including the transportation -energy -environment tax, the auto tax, 
individual consumption tax, and VAT.  
4.44.   The OECD suggested that income tax exemptions could impede resource reallocation to more 
profitable and competitive non -grain agricultu ral sectors and reduce farmers' incentives to record 
and manage their farming business activities through bookkeeping, while the fuel tax exemption 
may create incentives for excessive use of inputs and natural resources.22 The authorities state that 
tax po licies are determined by considering various factors, including income distribution and food 
 
22 OECD (2018), Innovation, Agricultural Productivity and Sustainability in Korea , OECD Food and 
Agricultural Reviews. Viewed at: https://doi.org/10.1787/9789264307773 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  security. They consider that the effectiveness of tax policies should not be assessed only by looking 
at resource reallocation or farmers' incentives. According to  the authorities, Korea has many small, 
low-income farms with aged farmers, preferential tax treatment is thus essential for continuous 
agricultural production, and support for grains is highly relevant to achieving food self -sufficiency.  
4.45.   Farmers also bene fit from zero or low irrigation water fees; according to the authorities, this 
is because the irrigation facilities were built by farmers at their own expense. Irrigation water is 
either provided by the Korea Rural Community Corporation (KRC), a public com pany, or by local 
governments. The KRC provides irrigation water free of charge, and local governments' prices do 
not cover operation and maintenance fees. This arrangement reduces the farmers' motivation to 
conserve water, adopt water -saving technologies,  and diversify away from paddy rice production. 
The authorities disagree, and state that the facilities were built in the 1970s by the Farmland 
Improvement Corporative, formed by farmers. The facilities were transferred to the KRC in 2000, 
and it covers th e operation cost with its profits. The authorities also indicate that, as part of the 
efforts to achieve the Net Zero carbon emissions target by 2050 , Korea announced that it is adopting 
various water  saving technologies.  
4.46.   Other support measures include the  agricultural disaster insurance scheme, which aims to 
protect against losses in yields. The scheme has been gradually extended to cover more 
commodities. In 2020, its coverage increased to 83 agricultural products (67 crops and 16 livestock 
commodities), up from 66 agricultural products (50 crops and 16 livestock commodities) in 2016. 
The Government subsidizes half of the insurance premium.23 
4.47.   Public investment in the Smart Agriculture Project was increased, aiming to promote the use 
of ICT in farming. Tools such as smartphones and remote controls are used to check crop growth 
information in real time so as to create the optimal cultivation environment. The Government started 
to support the use of ICT equipment in greenhouses and animal housing in 2014, and announced a 
Smart Farm Dispersion Method in 2018. Since then, smart farms have been fully implemented. The 
authorities state that, compared to the period prior to the implementation of smart farming, average 
production volume, and production v olume per labour, increased by 32.1% and 17.9%, respectively.  
4.48.   The Smart Agriculture Project also includes the construction of Smart Farm Innovative Valleys, 
covering the entire value chain from smart farm equipment production companies to agro -food firms. 
These measures also help to bring people back to farm villages. The Government has been trying to 
encourage the return of people by providing advisory services on relocation or housing, and providing 
education and training on farming and marketing skills, as well as scholarship programmes for 
children of farmers and new farmers.24 
4.49.   To promote environmentally friendly and safe goods, the Government launched the Promotion 
Plan for Environmentally Friendly Agriculture (2016 -20), with a view to improving certifi cation 
policy25; establishing an eco -friendly agri -food industry linking production, processing, distribution, 
and consumption; and reducing chemical inputs in crop production. Measures adopted include direct 
payment adjustments: farm households or farm co rporations certified by the Environment -friendly 
Agricultural Product Certification System may receive direct payments. In 2020, 35,071 crop farms 
and 32 livestock farms received payments totalling KRW  23.9 billion (USD  21.6 million) under this 
Plan. 
4.50.   Facing the COVID -19 pandemic, the Government provided emergency funds to farming 
households to address liquidity problems. Under this initiative, farming households could obtain low -
interest -rate loans with favourable payment schedules.26 Leasing fees for agric ultural machinery and 
 
23 OECD (2020), Agricultural Policy Monitoring and Evaluation 2020 . Viewed at: 
https://doi.org/10.1787/928 181a8 -en. 
24 WTO document G/AG/N/KOR/64, 8 March 2019.  
25 The certification system is operated by private certification agencies. Under this system, organic 
processed food using 70% or more organic ingredients may be marked as "Organic 70%", but may not use the 
Korean Organic Food logo on its packaging.  
26 Intere st rates of loans to farmers under the 2020 Agricultural Policy Fund were reduced by 0.5 -1.0 
percentage points. The authorities state that the lowered interest rates apply to KRW  2 trillion in loans. The 
repayment schedule of loan principals of the 2020 Lo ng-term Major Facilities Fund (horticulture, livestock 
production, and agricultural processing industries) for farmers has been postponed for one year.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  equipment were also temporarily reduced. Other measures adopted, and their budgeted amounts, 
are: 
• KRW 7 billion budget was allocated to support manpower in rural areas, by recruiting and 
sending workers to rural areas, supporting thei r cost (including their insurance premiums), 
and improving the living conditions of foreign workers.  
• KRW 6.4 billion budget was allocated to support the promotion of flower consumption, by 
supporting flower farmers to sell online and encouraging public age ncies and companies 
to purchase flowers.  
• KRW 15.8 billion budget was allocated to provide a basket of organic produce to students 
and pregnant women.  
• KRW 8.9 billion budget was allocated to conduct an e -voucher project to help vulnerable 
people purchase fo od and beverages.  
4.1.3   Key subsectors  
4.1.3.1   Rice 
4.51.   Rice production, the area used to plant rice, and the output per hectare declined during the 
review period (Chart 4.2), perhaps reflecting the progress made under the crop diversification 
programme. The Government has been implementing this programme since 2017, to shift the 
demand for rice to other crops by reducing the area of rice paddies, and encouraging farmers to 
plant high -quality instead of high -yield variety seeds.  
Chart 4.2 Rice production, 2016 -20 
 
Source:  USDA Foreign Agricultural Service (2020), 2020 Rice Production Update , GAIN Report Number 
KS2020 -0071. Viewed at: 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=2 020%20R
ice%20Production%20Update_Seoul_Korea%20 -%20Republic%20of_11 -18-2020. 
4.52.   Per capita rice consumption continued to decline, as the changing diet associated with the 
rapid income growth in Korea diversified food consumption away from rice (Table 4.3).27 
4.53.   Korea imports about 10% of its rice for consumption (Section 4.1.1), and rice remains 
protected by a combination of border measures and domestic support. The authorities disagree and 
state that Korea completed its rice tariffication in 2015; the rice incom e compensation scheme was 
abolished in 2019, and replaced by a new direct payment programme that decouples eligibility 
criteria from production and prices of agricultural products in 2020 (Section 4.1.2.2.1). However, 
 
27 OECD (2018), Innovation, Agricultural Productivity and Sustainability in Korea , OECD Food and 
Agricult ural Reviews. Viewed at: https://doi.org/10.1787/9789264307773 -en. 
WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 148 - 
 
  foreign investment remains prohibited in the growing of rice (and barley), and rice remains excluded 
from the scope of concessions in all RTAs (Section  2.5.2).  
Table 4.3 Rice production, supply, and demand, 2016 -20 
 
2016  2017  2018  2019  2020  
Production ('000 tonnes)  4,196.69  3,972.47  3,868.05  3,848.71  3,829.46  
Imports ('000 tonnes)  470.46  354.75  363.70  429.00  428.96  
Consumption ('000 tonnes)  4,594.26  4,905.25  4,476.84  4,177.71  4,180.18  
Ending stocks ('000 tonnes)  1,790.00  1,150.00  850.00  900.00  928.24  
Exports ('000 tonnes)  2.89 61.96  54.90  50.00  50.00  
Producer price (KRW/tonne)  1,992.06  1,923.71  2,193.07  2,117.65  2,151.86  
Human consumption (kg per 
capita)  62.22  62.22  61.80  60.99  60.21  
Note:  Data for 2020 are provisional.  
Source:  OECD Statistics. Viewed at: http://stats.oecd.org . 
4.54.   Since 2015, import quotas on rice have been replaced by a TRQ system: an in -quota tariff 
rate of 5% and an out -of-quota tariff rate of 513%. In January 2020, Korea received consent from 
WTO Members on the modifications and rectifications to its Schedule  of Concessions.28 MAFRA has 
the exclusive right to import rice within the quot a (Section 3.1.5.2). The domestic price of rice was 
2.32 times world levels (consumer nominal protection coefficient (NPC)) in 2018, up from 1.88 in 
2016.29 
4.55.   The public stockholding scheme for rice, a purchase and release mechanism to deal with 
emergency si tuations such as grain shortages and natural disasters, is maintained. MAFRA is 
responsible for public stockholding for rice. The target amount of public stockholding for rice is 
around 17% -18% of annual consumption. To keep the stock in good, edible condi tion, the 
Government purchases half of the target amount during the harvest season, and replaces the stock 
every two years. The Government sells a certain amount of its stockpiled rice after considering the 
supply and demand for rice, as well as the amount  of private rice stocks, during the off season.  
4.1.3.2   Livestock – meat  
4.56.   In contrast to that of rice, per capita consumption of meat grew, and the livestock sector 
expanded during the review period (Chart 4.3). Imports accounted for 67% of domestic consumption 
for beef and veal, and 34% for pig meat (Chart 4.1). FDI of less than 50% of investment assets is 
permitted in cattle -raising and meat wholesale.  
4.57.   Reflecting preferential tariffs under Korea's various free trade agreements (FTAs) (Table 4.4), 
beef imports came  mainly from the United  States and Australia.  Based on 2019 UN Comtrade data, 
59.9% of beef imports came from the United  States, and 35.5% from Australia.30 
4.58.   In 2019, about half (50.5%) of pig meat (HS 0203 – meat of swine; fresh, chilled or frozen) 
came fr om the European  Union (EU -27), and 31% came from the United  States. When MFN applied 
tariffs on pig meat are 22.5% (on fresh or chilled pig meat) and 25% (on frozen pig meat), the 
applied duty on pig meat imported from the European  Union and the United  States is zero.  
4.59.   In 2018, domestic price was 1.4 times world levels (consumer NPC) for beef and veal, and 
about two times for pig meat.  
 
28 WTO document WT/Let/1461, 24 January 2020.  
29 Consumer NPC is the ratio between the average price paid by consumers (at farm gate) and the 
border price (measured at farm gate).  
30 Data on HS C odes 0201 (meat of bovine animals, fresh or chilled) and 0202 (meat of bovine animals, 
frozen).  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 149 - 
 
  Chart 4.3 Livestock production, importation, consumption, stocks, exportation , and 
per capita human consumption, 2016 -20 
 
Source:  OECD Statistics. Viewed at: http://stats.oecd.org . 
Table 4.4 Composition of beef import tariffs, 2021  
 KORUS FTA  Korea–Australia FTA  
Content of the FTA  Duty phased out in 15  years, plus 
agricultural safeguard  Duty phased out in 15  years, plus 
agricultural safeguard  
MFN tariff 2021 
(same  as in 2016)  40% 40% 
Applied duty in 2021  13.3%  18.6%  
Applied duty in 2022  10.6%  16% 
Applied duty in 2023  8% 13.3%  
Applied duty in 2024  5.3%  10.6%  
Applied duty in 2025  2.6%  8% 
Applied duty in 2026  0 5.3%  
Applied duty in 2027  0 2.6%  
Applied duty in 2028  0 0 
Source:  Data provided by the authorities.  
4.60.   Since the first case of African swine fever (ASF) disease was found in September 2019, Korea 
has successfully contained this viral disease along the Demilitarized Zone (DMZ) and has not seen 
further positive cases on commercial farms since October 2019. A total of 380,821 heads of swine 
were culled in 2019, and another 4,000 in 2020. ASF continues to be found in wild boar. MAFRA 
issued a guideline to allow affected farms to repopulate their herds, if they meet the q uarantine 
control standards provided in this guideline. In November 2020, the Government designated areas 
where ASF broke out as Central Quarantine Zones, where farms must establish strengthened 
biosecurity measures, such as fences around their facilities.  Repopulation is allowed exclusively at 
these farms. The authorities state that by now, 34,000 heads of pigs are populated and being raised 
at 64 of 261 farms subject to repopulation.  
4.2  Fisheries  
4.2.1   Overview  
4.61.   Korea's fisheries output continued to increase, from 3.3 million metric tonnes in 2016 to 
3.7 million metric tonnes in 2020. Reflecting depletion of fisheries resources in distant and adjacent 
01002003004005006007008009001.000
  Production   Imports   Consumption   Ending
stocks  Exports
2016 2017 2018 2019 2020Chart 4.[KOR] Livestock production, importation, consumption, stocks, exportation, and per capita human consumption,  2016 -20
Beef and veal
02004006008001.0001.2001.4001.6001.8002.0002.200
  Production   Imports   Consumption   Ending
stocks  Exports('000 tonnes) ('000 tonnes)
05101520253035
Beef and veal Pigmeat Poultry meat SheepmeatHuman consumption per capita (kg/capita)
Source: OECD Statistics. Viewed at: http://stats.oecd.orgPigmeatWT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 150 - 
 
  waters, the enforcement of exclusive economic zones by Korea's neighbouring countries, and 
constraints built into bi lateral and multilateral fishing accords, the shares of fish production from 
distant and adjacent waters have been declining. In 2020, 11.8% of fish production came from 
distant waters (down from 13.9% in 2016), and 25.1% from adjacent waters (down from 27 .8% in 
2016). The Government has been making efforts to boost aquaculture production in shallow sea 
areas, which accounted for 62% of total production in 2020, up from 57% in 2016 (Chart 4.4). 
Production from inland waters accounted for around 1% of total fish production.  
Chart 4.4 Domestic production, 2016 -20 
 
Source:  Korean Statistical Information Service (KOSIS), Fishery Production Survey . Viewed at: 
https://kosis.kr/statHtml/statHtml.do?orgId=101&tblId=DT_1EW0001&language=en&conn_path=I3 . 
4.62.   Korea is a major consumer of fish. Per capita seafood consumption continued to increase, 
from 57.4  kg in 2016 to 66. 9 kg in 2020 (Table 4.5). Consumption of seaweed in particular has been 
increasing quickly. The gap between domestic production and domestic consumption is filled by 
imports. In 2020, total fisheries imports reached USD  5.4 billion (1.2% of total merchandi se imports) 
(fish and fish products based on WTO definition), while exports totalled USD  1.6 billion (0.3% of 
total merchandise exports). Main sources of imports were  China (22.3%), the Russian  Federation 
(17.1%), Viet  Nam (13.9%), Norway (8.0%), and the U nited States (4.2%). Main export 
destinations were  Japan (29.2%), China (20.8%), the United  States (9.9%), Viet  Nam (8.3%), and 
Thailand (7.9%).  
Table 4.5 Fisheries trade data, 2016 -20 
 
2016  2017  2018 2019 2020 
Domestic consumption ('000 tonnes)  4,854  5,137  5,172a 5,230a .. 
Domestic productionb ('000 tonnes)  3,269  3,725  3,770  3,861  3,713  
Self-sufficiency ratio (%)  67.3 72.5 73.3a 73.8a .. 
Importsc (USD million) 4,631  5,110  5,928  5,592  5,408  
Exportsc (USD million)  1,674  1,714  1,749  1,816  1,612  
Per capita consumption of seafood 
products (kg/year)a      
 Fish and shellfish  36.3 38.2 39.0 38.4 39.1 
 Seaweed  21.1 27.7 26.6 28.5 27.8 
 Total 57.4 65.9 65.6 66.9 66.9 
.. Not available.  
a Data for 2018 -20 are estimates.  
b Korean Statistical Information Service (KOSIS), Statistical Database, Summary Table of Fishery 
Production Trend . Viewed at: 
https://kosis.kr/eng/statisticsList/statisticsListIndex.do?menuId=M_01_01&vwcd=MT_ETITLE&parm
TabId=M_01_01&statId=1971002&themaId=#SelectStatsBoxDiv . 
c UN Comtrade database.  
Source:  Ministr y of Oceans and Fisheries (MOF).  
05001.0001.5002.0002.5003.0003.5004.000
2016 2017 2018 2019 2020
Total Adjacent waters Distant waters Shallow sea aquaculture Inland watersChart 4.[Fisheries] Domestic production, 2016 -19   
('000 tonnes)
Source:  Statistics Korea, Fishery Production Survey.  Viewed at :  
https://kosis.kr/statHtml/statHtml.do?orgId=101&tblId=DT_1EW0001&language=en&conn_path=I3.WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 151 - 
 
  4.63.   The Ministry of Oceans and Fisheries (MOF) is responsible for providing a fully integrated 
approach to all marine issues, including fisheries. The Korea Fisheries Resources Agency (FIRA) 
intends to restore and enhance fishe ries resources and the marine ecosystem.  
4.64.   The Government has been fighting against IUU fishing. In accordance with the Distant Water 
Fisheries Development Act, all distant -water fishing vessels must obtain preauthorization for 
transhipment, install a vessel  monitoring system (VMS), and be monitored. Fishermen who conduct 
IUU fishing face imprisonment of up to five years, and/or a criminal fine of up to five times the 
wholesale value of illegal catches, or a criminal fine of at least KRW  500 million, whicheve r is higher. 
The authorities indicate that in 2019, MOF introduced an additional surcharge on IUU fishing vessels, 
with a view to improving the fight against IUU fishing.  
4.65.   MOF also maintains Total Allowable Catch (TAC) limits for 14 species found in offshor e and 
coastal fishing.31 It sets limits on the fishing season, fishing areas, the number of fishing boats, and 
fishing methods. The TAC for these 14 species reached 358,390 MT for the period 
July 2019-June 2020.32 The TAC quotas are allocated to fishermen in proportion to the catch in the 
three  most recent years and the gross tonnage of fishing vessels.  Quotas are transferable but not 
tradable.  In addition, bycatch of TAC -covered species is deducted from allocated quotas. The 
TAC-covered species are require d to be landed at designated landing points and monitored by FIRA.  
4.66.   Reflecting the reduction in fishery resources, the number of fishing vessels decreased, from 
66,970 vessels in 2016 to 65,835 in 2019. The Government is working to accelerate the downsizing  
of the fishing fleet.  
4.67.   The MOF programmed a future development plan for the fisheries sector into Fisheries 
Innovation 2030, with a vision to ensure sustainable fisheries.33 It aims to:  
• increase the sales value of fisheries products from KRW  67 trillion in 2016 to 
KRW 100 trillion in 2030;  
• increase fishing income from KRW  49 million in 2017 to KRW  80 million in 2030, through 
industrialization of fishing communities; and  
• create 40,000 more jobs in the fisheries industry, i.e. creating 3,100 more j obs every year 
from 2019.  
4.68.   To achieve these targets, various plans were formulated to:  
• transit offshore fishing to sustainable fisheries, by managing resources, expanding TAC, 
and eradicating illegal fishing;  
• improve revenue from aquaculture, and ensure the  supply of quality and eco -friendly 
aquaculture products, by, inter alia , increasing the smart aquaculture farm supply ratio 
from 2.5% in 2017 to 12.5% in 2030;  
• enhance fishing village vitality through innovative projects;  
• expand fishery business start -ups and investments, as small fishing enterprises create 
jobs and contribute to the development of local economy; and  
• modernize distribution facilities to ensure the supply of fresh and safe seafood.  
 
31 The 14 species are mackerels, Jack mackerels, red snow crabs, snow crabs, purplish Washington 
clams, pen shells, horned turban, blue crabs, squids, sailfin sandfish, mottled skate, hairtails, Manila clams, 
and yellow corvina.  
32 TAC limits were 338,827 MT in 2016, 340,060 MT in 2017, 289,643 MT in 2018 
(July 2018-June 2019), and 358,390 MT in 2019 (July 2019 -June 2020).  
33 MOF, Fisheries Innovation 2030 . Viewed at: https://www.mof.go.kr/en/page.do?menuIdx=1478 . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.2.2   Border policy  
4.69.   Fish and fisheries products are subject to ta riffs ranging from 0 to 32%, with a simple average 
applied tariff rate of 17.0% in 2021 ( Table A3. 1) (increased slightly from 16.9% in 2016 due to a 
nomenclature change). Adjustment tariffs ranging from 20% -32% ( Table A3. 3) are maintained for 
seven fish sp ecies that are not subject to tariff bindings in the WTO.  
4.70.   Korea applies TRQs on three fish species (Table 4.6). Importers use these quotas on a 
first-come, first -served basis. The duty -free allotment under the TRQs is increased each year.  
Table 4.6 Seafood under tariff quotas, 2021  
(MT)  
Flatfish – frozen  
(HS 0303.34.0000, 
0303.39.0000)  Alaska pollock – frozen  
(HS 0303.67.0000, 
0303.69.9000)  Croaker – frozen  
(HS 0303.79.9095)  
2020 2,832  7,970  1,477  
2021 3,058  8,688  1,551  
2022 3,303  9,469  1,629  
2023 
Unlimited  10,322  
Unlimited  2024 11,251  
2025 12,263  
2026 Unlimited  
Source:  Information provided by the authorities.  
4.71.   Since 2016, foreign investment in fishing has been fully allowed.  According to the authorities, 
this is to attract inward FDI and to keep up with global practice.  
4.2.3   Domestic support  
4.72.   Korea notified to the WTO under Article  XVI:1 of the GATT  1994 and Article  25 of the 
Agreement on Subsidies and Countervailing Measures that i t continues to provide financial support 
to the fisheries sector. Support takes the form of grants, or low -interest -rate loans (Table  4.7), in 
accordance with the Fisheries Act, the Fishery Resources Management Act,  the Aquaculture Industry 
Development Act , the Distant Water Fisheries Development Act, or the Act on Structural 
Improvements and Support for Domestic Fisheries.  
4.73.   Korea participates in the WTO Negotiating Group on Rules, including negotiations on 
disciplines in fisheries subsidies.  
Table 4.7 Fisheries subsidies, 2016 -19 
(KRW million)  
Item  Type  2016  2017  2018  2019  
Support for management of fisheries  
To support fishermen 
including aquaculture 
farmers suffering from 
disasters, by relieving 
financial burdens and 
maintaining stable 
management.  
No fixed time period.  Lump -sum transfer  n.a. n.a. n.a. n.a. 
Loan 2,072,194  2,045,749  2,135,931  2,296,700  
Benefit of loana 51,327  59,573  55,033  61,991  
Total (lump -sum 
transfer + benefit of 
loan) 51,327  59,573  55,033  61,991  
Support to aquaculture fishery development  
To support aquaculture 
fishermen.  
Terms of the grant: 
20%-30% of business 
expenses.  
Terms of the loan: 
2 years at an annual 
interest rate of 3%.  Lump -sum transfer  19,860  19,917  19,955  16,666  
Loan 1,800  2,800  2,800  2,240  
Benefit of loana n.a. 22 22 18 
Total (lump -sum 
transfer + benefit of 
loan) 19,860  19,939  19,977  16,684  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Item  Type  2016  2017  2018  2019  
Support for vessel decommissioning  
To reduce coastal fleet 
size to protect fish 
stocks and promote 
sustainable fisheries.  
Offshore fishing vessel 
decommissioning 
(government support 
100%), coastal fishing 
vessel decommissioning 
(government support 
80% and provincial 
support 20%).  
To be continued 
provisionally until 2023.  Lump -sum transfer  22,332  22,332  19,328  37,772  
Loan n.a. n.a. n.a. n.a. 
Benefit of loana n.a. n.a. n.a. n.a. 
Total (lump -sum 
transfer + benefit of 
loan) 22,332  22,332  19,328  37,772  
Support for management of overseas fisheries  
Grants are provided to 
support distant -water 
fishermen, to ensure 
stable supply and 
demand of fishery 
products.  Lump -sum transfer  1,065  977 1,044 1,384  
Loan n.a. n.a. n.a. n.a. 
Benefit of loana n.a. n.a. n.a. n.a. 
Total (lump -sum 
transfer + benefit of 
loan) 1,065  977 1,044  1,384  
Support for fisheries resources management  
To ensure sustainable 
use and conservation of 
fisheries resources and 
foster increased 
scientific and technical 
knowledge for resource 
management. It 
includes sea 
reforestation projects; 
developing marine 
ranches, marine 
forests, and artificial 
reefs; and 
implementation of 
resource management 
and restoration 
measures, such as TAC 
and self -management 
in fisheries.  Lump -sum transfer  n.a. 122,975  127,468  115,803  
Loan n.a. 9,174  8,274  8,274  
Benefit of loana n.a. n.a. n.a. n.a. 
     
Total (lump -sum 
transfer + benefit of 
loan) n.a. 132,149  135,742  115,803  
Support for replacement of old distant -fishing vessels and modernization of facilities  
To ensure navigational 
safety through 
replacement of old 
distant -water fishing 
vessels.  
Distant -water 
fishermen may obtain 
loans with 5-year grace 
period and 10 -year 
repayment at an annual 
interest rate of  3%. 
Ended in 2018.  Lump -sum transfer  n.a. n.a. n.a. n.a. 
Loan 11,700  2,700  2,430  n.a. 
Benefit of loana n.a. n.a. n.a. n.a. 
     
Total (lump -sum 
transfer + benefit of 
loan) n.a. n.a. n.a. n.a. 
n.a. Not applicable.  
a The benefit of the loan is estimated based on the difference between the loan rate and the market 
rate. 
Source:  WTO documents G/SCM/N/315/KOR, 6 July 2017 and G/SCM/N/343/KOR, 22 July 2019.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.3  Mining and Energy  
4.3.1   Mining and quarrying  
4.74.   The mining and quarrying industries account for a tiny share of GDP in Korea (0.1%), while 
its share in total employment is negligible (Table 1.2). In particular, coal has been an important 
source for electricity generation, while the Government has been implementing policies to gradually 
phase out coal from the energy mix (Section 4.3.2). Almost all coal used in Korea is imported, duty -
free. Coal price is controlled or monitored under the Coal Business Law (Section 3.3.4.2).  
4.75.   The Government has been providing subsidies in the form of VAT and individual consumption 
tax relief, and grants, to the production of anthra cite coal used in the form of charcoal briquettes by 
low-income households. This subsidy was to end in 2020; however, it seems that this has not been 
the case (Section 3.3.1.1.1). Korea also notified to the WTO the coal industry support programme 
(Table  4.8). 
Table 4.8 Subsidies to the energy sector, 2016 -19 
(KRW  million)  
Item  Type  2016  2017  2018  2019  
Coal industry support in the Special Accounting for energy and resource  
To stabilize the price of 
coal and briquettes to 
protect the livelihoods of 
people and ensure a stable 
supply of and demand for 
coal. 
To compensate for the 
difference between the 
production cost and sale 
price of coal and 
briquettes following the 
notification of a sale price 
ceiling.  Lump -sum transfer  202,854  175,915  151,781  99,588  
Loan n.a. n.a. n.a. n.a. 
Benefit of loana n.a. n.a. n.a. n.a. 
Total (lump -sum transfer + 
benefit of loan)  202,854  175,915  151,781  99,588  
n.a. Not applicable.  
a Benefit of loan was estimated based on the difference between the loan rate and the market rate.  
Source:  WTO documents G/SCM/N/315/KOR, 6 July 2017 and G/SCM/N/343/KOR, 22 July 2019.  
4.3.2   Energy  
4.3.2.1   Main features  
4.76.   Korea relies heavily on fossil fuels; of the 280 mega tonnes of oil equivalent (Mtoe) total 
primary energy supply (TPES) in 2019, oil, coal, and natural gas accounted for 83% (Chart 4.5). 
Renewable energy accounted for less than 4%.  
4.77.   Domestic energy production in Korea reached 49.5 Mtoe in 2019, with nuclear accounting for 
77% of total domestic energ y production. Domestic production of oil, natural gas, and coal covered 
only 1% of total demand.  
4.78.   Korea's high reliance on imported energy has led its energy policy to focus on the security of 
supply. In 2020, over 90% of its total energy consumption was im ported, and USD  86.4 billion was 
spent on importing energy, accounting for 18.5% of the import bill. Korea does not have any 
cross-border gas pipelines, oil pipelines, or electricity transmission lines.  
4.79.   Korea is an energy -intensive nation; in 2018 (the latest year for which data are available), its 
energy intensity measured in total final consumption (TFC) as a share of GDP (TFC/GDP), 
86 toe/USD  million purchasing power parity (PPP), and was the third highest among International 
Energy Agency (IEA) membe rs and was higher than the IEA average (67 toe/USD million PPP).34 
 
34 IEA (2020), Korea 2020 Energy Policy Review. Viewed at: https://www.iea.org/reports/korea -2020. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Industry remains the largest consumer, and its share in final consumption remained around 55%. 
Transport is the second -largest energy -consuming sector in Korea, accounting for 19%, followed  by 
services (14%), and residential use (12%).  
Chart 4.5 Energy supply sources, 2019  
 
Source:  International Energy Agency (IEA), World Energy Balances , 2020. Viewed at: 
https://www.iea.org/subscribe -to-data-services/world -energy -balances -and-statistics . 
4.3.2.2   Regulatory and institutional framework  
4.80.   Since the previous Review, there has not been any significant change to the institutional 
framework regulating the energy sector. The M OTIE is in charge of energy policy development and 
implementation. Energy -related environmental policy is overseen by the  Ministry of Environment. 
The Korea Electricity Regulatory Commission (KOREC) is the electricity supply regulator. A number 
of state -owned enterprises (SOEs) also play an active role in the sector, including the Korea National 
Oil Corporation (KNOC), the K orea Gas Corporation (KOGAS), and the Korea Electric Power 
Corporation (KEPCO).  
4.81.   The energy sector is regulated under the Basic Energy Law enacted in 2008, and the Energy 
Master Plans (EMPs) that are prepared every five years. The 3rd EMP, covering the peri od 2019 -40, 
sets out five initiatives to support its vision of securing sustainable growth and improving the quality 
of people's lives through energy transition:  
• Shift the focus of energy policy to innovation in demand management, by improving 
energy inten sity, reducing energy demand, revitalizing the demand management market, 
and rationalizing the energy pricing system;  
• Transition to a clean and safe energy mix, by gradually reducing nuclear power and 
drastically reducing coal, expanding the share of renew able energy generation to 
30%-35% by 2040, reducing "fine dust" (i.e. particulate matter) levels, and implementing 
the 2030 Greenhouse Gas Reduction Roadmap;  
• Expand the decentralized energy system and ensure broad stakeholder engagement, by 
expanding the s hare of distributed power supply and improving power grid resilience, 
promoting power prosumers35, and strengthening the role and responsibility of local 
governments;  
• Strengthen the global competitiveness of the energy industry, by fostering future energy 
industries such as renewable energy, hydrogen, and efficiency -related industries, and 
promoting a higher value -added conventional energy industry and maintaining the nuclear 
industry's ecosystem; and  
 
35 A prosumer is someone who both produces and consumes energ y. 
Chart 4.[Energy supply sources, 2019]
Source: IEA World Energy Balances 2020 https://www.iea.org/subscribe -to-data -services/world -energy -balances -and-statistics . Oil
37.9%
Biofuels and waste
2.8%
Wind, solar, etc.
0.7%Hydro
0.1%Nuclear
13.6%Natural gas
17.4%Coal
27.5%WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  • Secure the necessary infrastructure to accelerate the en ergy transition, by improving the 
market system for power, gas, and heat, and building a big data -based comprehensive 
energy platform to promote the creation of new industries.  
4.82.   To reach these targets, the Government has been making efforts to both improve energy 
supply and regulate energy demand. On the supply side, the Government committed to gradually 
reduce nuclear power in electricity generation, and to eventually halt power production from nuclear 
by 208 4 at the latest.36 The Government also committed to close old coal -fired plants that have been 
operating for over 30 years. In addition, in 2018 the Government granted local governments the 
authority to limit the output of coal -fired plants if air pollution and fine dust exceed the legal limits 
set by th e Government.  
4.83.   In 2019, the consumption tax on liquified natural gas (LNG) for power generation was reduced 
by 80% (from KRW  60 per kg to KRW  12 per kg), and the import surcharge on LNG was lowered by 
85% (from KRW  24.2 per kg to KRW  3.8 per kg), while the consumption tax on coal was increased 
by about 30% (from KRW  36 per kg to KRW  46 per kg), so that their prices adequately reflect their 
related environmental costs.  
4.84.   Demand -side efforts require Korea to substantially enhance decarbonization efforts across a ll 
energy sectors, and to apply its advanced technologies and innovative capacity. In February 2019, 
MOTIE established a new Energy Innovation Policy Bureau, dedicated to improving energy efficiency. 
In August 2019, MOTIE announced an Energy Efficiency Inn ovation Strategy that is expected to 
achieve a reduction in total final energy consumption of 14.4% in 2030 from the 2017 level, by 
applying ICT -based factory energy management systems and intelligent transport systems, to allow 
efficient exchange of energ y sources between major power plants.  
4.85.   Further, the Rational Energy Utilization Act, which sets the legal ground for all energy 
efficiency policies and legal obligations, requires major energy consumers to report their energy 
demand management plans to the Korean Energy Agency (KEA). KEA aimed to increase energy 
efficiency by granting financial and technical support to businesses investing in energy -saving 
technologies. Large energy consumers were required to conduct energy audits every five years, 
while up to 30% of the audit costs for SMEs (under 10  Ktoe/year) were subsidized. Industries 
investing in combined heat and power (CHP) plants for their own heat supply were entitled to tax 
reductions.  
4.86.   In July 2020, the Government issued the Korean New Deal (Sectio ns 1.2.1, 1.2.4, and 
3.3.1.2.2.2, and Table A1. 1), which consists of the Green New Deal and the Digital New Deal. It 
aims to achieve decarbonization of the industry sector, and decouple the sector's energy 
consumption from its economic activity, while main taining Korea's strong industrial export base. 
Linked closely to the Fourth Industrial Revolution, the Green New Deal aims at facilitating 
investments for electric vehicles, zero -energy buildings, smart grids, and establishing low -carbon 
and green industri al complex systems.  
4.87.   The Government is committed to leverage the benefits of the Fourth Industrial Revolution, 
not only for economic development, but also to support the energy transition by harnessing the 
opportunities offered by digitalization. Proposed m easures include industrial convergence with 5G 
networks and artificial intelligence (AI), and the promotion of smart working and low -carbon 
industrial complexes.  
4.88.   Korea introduced a nationwide Emission Trading System (ETS) in 2015; however, according 
to the  IEA, as over 90% of the emissions trading certificates are provided for free, the ETS resulted 
in a limited emissions reduction: 2.3% in 2019 from the 2018 level for all ETS sectors taken together, 
and 8.6% for the power generation sector. The authorities  state that Korea has been operating the 
third planning period of the ETS since 2021, during which period 73.5% of the country's total 
emissions are to be covered. According to the authorities, the share of the paid allocation of ETS 
certificates increased  from 3% to 10%, and the number of emission -benchmark applied sectors 
increased from 7 to 12.  
 
36 The ongoing construction of 5,600 megawatts (MW) of nuclear capacity is to continue, and nuclear 
capacity is expected to peak in 202 4. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.3.2.3   Policies  
4.3.2.3.1   Border policies  
4.89.   As Korea relies on imported energy products, import tariffs are often low. For example, in 
2021, imported crude oil is subject to a tariff of 3%  (same in 2016). Tariffs on refined products vary 
from zero to 8%: zero (waste oils of naphtha and natural liquid gas), 0.5% (naphtha and natural 
liquid gas), 3%, 5%, 7%, and 8% (such as greases and waxes). This is intended to encourage 
domesti c refining. Autonomous tariff quotas are applied to the imports of, inter alia , coke, liquefied 
petroleum gas (LPG) , natural gas, and petroleum oils and oils obtained from crude bituminous 
minerals in 2021 ( Table A3. 6). 
4.90.   In addition to tariffs, a surcharge (KRW  16 per litre on crude oil and petroleum products) is 
levied on petroleum imports (Section 3.1.4).  
4.3.2.3.2   Domestic support  
4.91.   The Government allocated a significant part of its budget to implement the Green New Deal 
(Section 4.3.2 and 3.3.1.2). In addition, subs idies are provided to reduce emissions for old diesel 
vehicles, and to support the purchase of natural gas, electric, and hydrogen fuel -cell vehicles.37 
Prices of electricity are monitored or controlled (Sections 3.3.1.2 and 3.3.4.2).  
4.3.2.4   Hydrocarbons  
4.3.2.4.1   Oil 
4.92.   Oil remains the largest source of energy supply in Korea, accounting for 38% of TPES and 
2.5% of electricity generation in 2019. Domestic oil production is very limited, covering less than 
1% of oil demand. Korea imports more than 99% of its crude oil requirem ents. In 2020, imports of 
crude oil (HS  2709) came largely from the Middle East (67 .2%), followed by the United  States 
(12.1%), the Russian  Federation (5.4%), Mexico (4.9%), and others. Korea continued its efforts to 
encourage the diversification of the cr ude oil supply: surcharges on imported crude oil are partly 
returned if they are from non -Middle East countries.  
4.93.   Imports of petroleum products other than crude (HS  2710) went up from USD  11.7 billion in 
2016 to USD  17.2 billion in 2019, and down again to U SD 12.7 billion in 2020. Korea imports oil 
products mainly from the Russian  Federation (21.5%), the United  Arab Emirates (12.4%), India 
(8.3%), the United  States (7.9%), and Iraq (5.9%). Korea is a net exporter of refined products; 
export values went up fr om USD  25.5 billion in 2016 to USD  39.3 billion in 2019, and down to 
USD 23.2 billion in 2020. The main export markets are China, Japan, the United  States, Singapore, 
Australia, and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu 
(Chines e Taipei).  
4.94.   The KNOC, an SOE, dominates the upstream oil market, and is responsible for domestic and 
overseas exploration, development, and production of oil and natural gas.  
4.95.   Daehan Oil Pipeline Corporation (DOPCO) is the only oil pipeline company in Korea,  
responsible for operating the nationwide oil pipeline system consisting of six oil pipelines. DOPCO is 
a private company jointly owned by SK Innovation, GS Caltex, S -Oil, Hyundai Heavy Industries, 
Korean Air, and the Korean Government. According to an IEA  report, there are no restrictions for 
market players that are not DOPCO shareholders to utilize the DOPCO pipelines on a commercial 
basis.38 
4.96.   The domestic downstream market has been largely liberalized: import and export restrictions 
on crude oil and oil p roducts have been lifted since the 1990s, when prices were fully liberalized as 
well. Although no barriers exist for new entrants to enter the downstream market, it remains 
dominated by four private companies: SK Innovation, GS Caltex, Hyundai Oilbank, and  S-Oil (whose 
 
37 WTO documents G/SCM/N/315/KOR, 6 July 2017 and G/SCM/N/343/KOR, 22 July 2019.  
38 IEA (2020), Korea 2020 Energy Poli cy Review. Viewed at: https://www.iea.org/reports/korea -2020. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  controlling shareholder is the Saudi Aramco). In 2020, among the 11,589 service stations, 88% 
carried their brand names.  
4.97.   Prices for diesel, gasoline, and fuel oil are relatively low compared with those of other IEA 
members. Taxes are an impor tant component of their prices, and include the transportation -energy -
environment tax, the driving tax, the education tax, and VAT.  
4.3.2.4.2   Natural gas  
4.98.   Natural gas accounted for 17.7% of TPES, and 25.6% of electricity generation in 2019. As 
domestic production cov ers only 0.5% of total gas consumption, Korea imports more than 99% of 
its demand for gas. Korea does not have international gas interconnections, thus all gas is imported 
as LNG. Domestic production comes from two offshore gas fields. The field operator, KNOC, plans 
to operate the fields until 2022, when the reserves are to be depleted.  
4.99.   The gas sector is regulated under the Urban Gas Business Act. MOTIE is responsible for 
enforcing Korea's natural gas policies, setting wholesale and retail prices, and arbi trating for 
third-party access to the transmission and distribution networks.  
4.100.   Korea is the third -largest importer of LNG in the world, after Japan and China. Korea Gas 
Corporation (KOGAS), a state -owned vertically integrated company, purchases most of the LNG. In 
2020, LNG (HS 2711.11) came mainly from Qatar (26.3%), Australia (19.3%), the United  States 
(13.3%), Oman (11.3%), Malaysia (10.7%), Indonesia (5.3%), the Russian  Federation (4.9%), and 
Peru (4.3%).  Korea exports LNG, but the export value seems rat her volatile. For example, in 2019, 
the export value of LNG was USD  54,602, of which 51.3% was exported to China, and the rest to 
the United  States. In 2020, Korea exported LNG worth USD  7.3 million, of which 99% went to the 
United  States, and the remainde r to the Philippines.  
4.101.   Companies meeting the requirements of the Urban Gas Business Act and its Presidential 
Decree are allowed to import natural gas for their own use, or resell their unused LNG to overseas 
markets. They cannot sell their gas on the domest ic market. Korea has 11 direct importers, including 
large industrial consumers and power generation companies.  
4.102.   KOGAS is the only wholesaler, and is also the transmission system operator, of gas in Korea. 
It is listed on the Korean Stock Exchange, and its o wners include the Central Government (26.15%), 
KEPCO (20.47%), and local governments (7.93%). KOGAS owns and operates five of Korea's seven 
LNG receiving terminals, representing 91% of Korea's storage capacity. Direct importers own two 
LNG terminals.  
4.103.   Whole sale prices are regulated by MOTIE, while retail prices are regulated by local 
governments (Section 3.3.4.2). On 6 January 2020, MOTIE approved a new pricing scheme for 
wholesale prices of natural gas. Under the new scheme, KOGAS may offer individual tarif fs to power 
generators, while under the previous scheme, all power generators paid the same tariff to KOGAS.  
4.104.   KOGAS supplied natural gas to 34 private city gas companies for retail distribution, and to 
82 power -generating plants (owned by 27 power producers ), as at end -2020. These distribution 
companies purchase gas at the wholesale level from KOGAS at government -set prices, and then sell 
gas to end users at retail prices set by local governments.  
4.3.2.5   Electricity  
4.105.   Electricity generation relies heavily on fossil f uels: in 2019, coal was the largest source 
(41.9%), followed by natural gas (26.8%), and nuclear power (23.4%). Renewable energy 
accounted for 6% of total electricity generation, and oil 1%. The Government, in its 8th Basic Plan 
for Long -Term Electricity S upply and Demand (BPLE) for the period 2017 -31, announced the target 
of gradually phasing out coal and nuclear power generation, and increasing the share of renewable 
energy in electricity generation to reach 20% of power generation by 2030. Its rate of tr ansmission 
and distribution losses is among the lowest in the world (3.56% in 2018, 1.59% for transmission 
and 2.01% for distribution).  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.106.   Korea has no electricity interconnection with neighbouring countries, and operates an 
isolated system. Given its isolate d grid, Korea requires generating plants to maintain an operating 
reserve margin of 15%. The 8th BPLE targets a reserve margin of 19% between 2018 and 2025, and 
22% between 2026 and 2031.  
4.107.   Total electricity consumption kept growing.  In 2019, i t was mostly u sed in industry (53.8%), 
services (32.7%), and the residential sector (13.5%). The energy and transport sectors accounted 
for minor shares: 2.57% and 0.56%, respectively.  
4.108.   An increase in electricity consumption is not only driven by strong economic growth, but also 
by low electricity retail prices that do not send price signals to consumers, and that do not vary in 
line with generation costs.  
4.109.   Retail prices are not set by the market; rather, they are regulated by the Government 
through MOTIE, in accordance with the Electricity Utility Act and the Price Stabilization Act. End -use 
electricity prices must be reviewed by KOREC, and approved by MOTIE  after consultation with the 
Ministry of Strategy and Finance. The electricity tariff system is complex, and has six categories: 
residential, commercial, educational, industrial, agricultural, and street lighting. Tariffs vary 
depending on voltage, season,  time of usage, rate option, and other factors. Retail consumers 
generally pay low tariffs compared to those in other IEA countries, but cross -subsidization between 
industrial and residential consumers continues: industrial users pay lower prices than resi dential 
consumers.39 The authorities disagree, and indicate that industrial electricity prices have increased 
by 83.8% since 2000 on a cumulative basis, while residential prices have declined by 2%. According 
to the authorities, the ratio of residential el ectricity tariffs to industrial tariffs in Korea (1.08) is much 
lower than the OECD average (1.59).  
4.110.   Tariffs for industrial, residential, and commercial consumers are higher than those for 
agricultural consumers, indicating that agricultural consumers are s ubsidized by other consumers in 
Korea . 
4.111.   The electricity market is governed by the Electricity Utility Act, the Nuclear Safety Act, and 
the Act on the Development, Use, and Diffusion of New and Renewable Energy. The Electricity Utility 
Act was amended in 201 8 to establish new licensing procedures for small -scale electricity brokerage 
businesses and electric vehicle charging businesses.40 Small -scale electricity brokerage businesses 
are now authorized to collect and trade electricity that is produced from rene wable sources and 
stored in energy storage devices, or electric vehicles, and can be traded on the Korea Electric Power 
Exchange (KPX). Both types of businesses must register with MOTIE.  
4.112.   According to the Electricity Utility Act, KOREC oversees the regulati on of the market, reviews 
issues concerning the rights of electricity consumers, and settle disputes related to the electricity 
business.  
4.113.   According to an IEA report, there is no independent electricity sector regulator in Korea.41 
MOTIE remains the key regulatory entity. Its responsibilities include granting electricity business 
licences; approving market rules, transmission and distribution tariffs, and retail sales prices; and 
regulating wholesale electricity prices.  
4.114.   Competition -related matters (such as monopoly behaviour and unfair business practices) 
are regulated by the Fair Trade Commission (FTC). The FTC and KOREC have memoranda of 
understanding on their respective roles and functions in the electricity sector.  
4.115.   KEPCO, a gover nment -owned corporation, dominates the electricity sector. As at 
31 December 2020, the Government holds 18.2% of KEPCO's equity, Korea Development Bank holds 
32.9%, National Pension Corporation 8.62%, foreign investors 16.58%, and Korean  investors 
23.7%. I ts generation business was split into six competing generating companies in 2001. All 
six companies remain state owned.  
 
39 IEA (2020), Korea 2020 Energy Policy Review. Viewed at: https://www.iea.org/report s/korea -2020. 
40 IEA (2020), Korea 2020 Energy Policy Review. Viewed at: https://www.iea.org/reports/korea -2020. 
41 IEA (2020), Korea 2020 Energy Policy Review. Viewed at: https://www.iea.org/reports/korea -2020. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.116.   In addition to KEPCO's six generating subsidiaries, there are private independent power 
producers. In December 2019, 20 independent foss il fuel producers and 3,442 new and renewable 
energy power generators (3,297 of which are solar power producers) were operating independently 
of KEPCO. They accounted for 21.7% of total installed capacity.  
4.117.   KEPCO owns the electricity transmission and distri bution systems in Korea. It is the only 
operator of the distribution system, and the only electricity retailer. Foreign nationals may purchase 
from KEPCO no more than 30% of domestic power generation facilities. Foreign investment in the 
transmission and d istribution of electric power faces an equity limit of 50%, and the largest 
shareholder must be Korean (Table 2.1).  
4.118.   KEPCO purchases all power generated through the Korea Power Exchange (KPX), and then 
supplies power to consumers. The KPX is a state -owned e lectricity pool, which is compulsory for all 
generators (above 20  MW) with a few exceptions. Electricity generators do not bid their prices into 
the mandatory pool. Instead, they must submit full details of their operating costs to the KPX, based 
on which the KPX calculates the system marginal price (SMP) used as the price for the next -day 
electricity market. Power generators then receive a remuneration that is equal to the SMP plus a 
reference capacity price, which is determined annually based on the plant 's fixed costs. Since 
April 2019, the SMP has also reflected environmental considerations: tax on eco -friendlier 
LNG-generated electricity was reduced, while tax on bituminous coal -generated electricity was 
increased.  
4.119.   The Government has been deploying a sm art grid project; the smart grid would first be 
developed in metropolitan areas by 2020 and extended nationwide by 2030. A national rollout of 
smart meters is also underway.  
4.120.   As at the time of the previous Review, fees were charged on the consumption of ele ctricity 
(3.7% of the consumption bill) in order to finance the Electric Basis Fund. The Fund was set up in 
2001 after the Power Industry Structure Reorganization to achieve public objectives and build 
infrastructure for sustainable growth of the power ind ustry. Subsidies were given to, inter alia , the 
diffusion of electricity generated by renewable energy, the maintenance of the stability between 
electricity demand and supply, and research and development (R&D) activities. The source of the 
Fund includes i nterest accrued from surplus funds and surcharges.  
4.3.2.6   New and renewable energy42 
4.121.   Promoting energy from renewable sources is the core of Korea's energy target. Korea is 
committed to increasing the share of renewables in power generation to 20% by 2030 and to 
30%-35% by 2040. Currently, the share of new and renewable energy in TPES (2.4% in 2019) is 
much lower than the IEA median (11%), and the share of renewable energy in power generation 
(4.9%) is also lower than the IEA median (27%).43 
4.122.   In 2019, Korea had 19,6 51 MW of new and renewable energy -generation capacity, up from 
19,027 MW in 2018. Solar photovoltaic (PV) accounted for 84.6% of total new and renewable power 
capacity, followed by biomass (6.5%) and wind (4.3%).  
4.123.   Pursuant to the Act on Development, Use and  Diffusion of New and Renewable Energy 
(Renewable Energy Act), MOTIE formulates basic national plans for the promotion of new and 
renewable energy every five years. MOTIE also oversees the regulations for renewable electricity 
generation, including the all ocation of permits. The KEA and the Korea New and Renewable Energy 
Center under it promote new and renewable energy by issuing renewable energy certificates (RECs) 
that serve as certified proof of renewable energy power generation.  
 
42 Korea refers to renewable energy as "new and renewable energy", where "new" energy includes 
hydro, fuel -cell, and energy converted from fossil fuels, such as an integrated gasification combined cycle. 
Before October 2019, Korea also included non -renewable waste energy (i.e. waste, wood pellet, by -product 
gas, etc.) in the definition of "renewable energy". IEA (2020), Korea 2020 Energy Policy Review. Viewed at: 
https://www.iea.org/reports/korea -2020. 
43 IEA, World Energy Balances, 2020 . Viewed at: https://www.iea.o rg/subscribe -to-data-services/world -
energy -balances -and-statistics . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.124.   Power generators are obl iged to generate a certain portion of electricity using renewable 
energy in order to meet renewable portfolio standards (RPSs). They may either generate electricity 
using new and renewable energy themselves to receive proportionate RECs from the KEA, or 
purchase RECs from the electricity market operated by the KPX. In practice, KEPCO is the only entity 
approved by the Government to directly purchase renewable electricity.44 
4.125.   RPSs are the principal measures that have been adopted to support the development of  
renewable energy in Korea. The Government also provides various subsidies, for example:  
• The Housing Support Scheme provides grants to households that use renewable heating 
or electricity. In 2018, KRW  230 billion was granted to households, more than doubl e the 
2017 level (KRW  100 billion).  
• A government plan announced in 2017 expanded the discount on those electricity bills 
linked to renewable energy generation and consumption. Previously, renewable energy 
producers and end users had been eligible for a max imum discount of 10% on their 
electricity bills under the condition that the amount of green electricity produced or 
consumed exceeded 20% of the total. From 2017 to end -2020, the discount was raised to 
up to 50% of the renewable electricity generated and consumed.  
4.4  Manufacturing  
4.126.   Korea is one of the main hubs in international production networks. According to the OECD 
Global Value Chain (GVC) Index, Korea was ranked 7th among the top 10 manufacturing hubs in 
GVCs.45 The manufacturing sector plays a very important role in the economy. Its share of GDP fell 
from 28.8% in 2016 to 27.2% in 2020, while that in total employment went down  slightly too (17.4% 
in 2016 to 16.3% in 2020) (Table  1.2). By taking into account GDP and employment data, 
productivity in manufacturing remains higher than in the agriculture sector.  
4.127.   During the review period, the manufacturing sector's growth rate went up from 2.3% in 
2016 to 3.7% in 2017, and then slowed to 1.1% in 2019, before contractin g in 2020 ( -0.9%).  
4.128.   Manufacturing remains an export -oriented sector, accounting for 91.4% of total merchandise 
exports in 2020 (86.4% in 2014). In terms of the shipment value, heavy industry accounted for 
85.2% of the total manufacturing sector in 2018, and  light industry accounted for 14.8%.46 
Important industries in terms of export values include machinery and electrical equipment, transport 
equipment, base metals and articles thereof, and chemicals (Chart 1.1).  
4.129.   The Korean New Deal initiative (Section 4.3. 2), announced in 2020, aims to, inter alia , 
enhance the competitiveness of the manufacturing sector by increasing public investment in digital 
and green energy infrastructure (Section 3.3.1.2). MOTIE is in charge of preparing policies to 
promote the develo pment of the manufacturing sector. It announced a number of policy reports 
covering green energy, the smart and green industrial complex, eco -friendly vehicles, and the digital 
transformation of industry. MOTIE has also been promoting private investment by  making regulatory 
improvement to meet the target set at the RE100 initiative.47 
4.130.   The manufacturing sector remains dominated by large business conglomerates, while the 
labour productivity gap between large firms and SMEs48 is substantial (Section 1.2.1). To  facilitate 
the development of SMEs, several tax and non -tax incentives in several policy areas were used 
(Section 3.3.1). In particular, the Ministry of SMEs and Startups (MSS) budgeted KRW  16.8 trillion 
 
44 The authorities indicate that, starting from October 2021, electricity consumers will be able to directly 
purchase renewable electricity.  
45 OECD (2021), Inclusive Growth Review of Korea – Creating Opportunities for All , OECD Publishing, 
Paris. Viewed at: https://doi.org/10.1787/4f713390 -en. 
46 Statistics Korea (2020), Explore Korea through Statistics 2020 . Viewed at: 
http://kostat.go.kr/portal/eng/news/3/index.board?bmode=read&aSeq=388486 . 
47 RE100 is a global collaborative initiative among companies committed to using 100% renewable 
energy. Viewed at: https://www.there100.org/ . 
48 Since 1  January 2016, Korea changed the definition of SMEs from the number of workers to the 
average sales for the recent three years of a company, which differs by industry according to the Korea 
Standard Industrial Classification.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  for 2021 (up from KRW  10.3 trillion for 2019) to pr omote manufacturing innovation in SMEs and 
support their scaling up.  
4.131.   The Government has been using grants, tax concessions, and low -interest loans to support 
the Fourth Industrial Revolution, and other manufacturing activities (Section 3.3.1.2.2). Measures  
include, inter alia, establishing manufacturing data centres, further increasing the penetration rate 
of smart manufacturing factories, extending the coverage of smart factories from manufacturing to 
services, and supporting R&D for technological innovati on and commercialization for SMEs.49 Smart 
factories are central to the Government's plan for the Fourth Industrial Revolution, which covers also 
smart cities, the Internet of Things (IoT), and big data.  
4.132.   Foreign investment in manufacturing in general is al lowed, except for the manufacture and 
supply of fuel for nuclear power generation (Table 2.1).  
4.133.   In 2021, the simple average applied MFN tariff rate was 10.9% (ISIC 3) on imports of 
manufacturing products, and the rate was 5.9% on manufacturing excluding foo d processing 
products ( Table A3. 1) (down from 11.3% and 6.3% in 2016, respectively). Adjustment duties 
protected one industrial item – plywood, at 10% instead of 8% ( Table A3. 3). Autonomous tariff 
quotas, allowing concessional tariff treatment for imports of inputs, are applied to sugar, manioc 
chips, silk yarn and many others in 2021 (Section  3.2.4.2, Table A3. 6). 
4.4.1   ICT industry  
4.134.   Korea has a large trade surplus in the ICT industry. In 2020, the ICT sector exported 
USD 183.5 billion, accounting for 35.8% of to tal merchandise exports; it imported USD  112.6 billion, 
accounting for 24.1% of total merchandise imports (Table  4.9 and Section 1). Korea is a participant 
in the WTO Information Technology Agreement (ITA). Tariffs on ICT products covered by the 
Agreement are all zero. There is no foreign investment restriction in the manufacturing of the ICT 
products covered by the ITA.  
Table 4.9 Production and trade in the ICT industry, 2018 -20 
 
2018  2019  2020  
Information, communications and broadcasting equipment – 
Production (KRW  trillion)  367.9  322.7  332.1 
 Electronic components (%)  64.7 61.9 61.6 
 Computers and peripherals (%)  3.3 3.2 4.6 
 Communications and broadcasting equipment (%)  11.3 11.4 11.3 
 Video and audio equipment (%)  2.7 2.7 2.5 
 Information and communications application and 
infrastructure equipment (%)  18.0 20.8 20.1 
Information, communications and broadcasting equipment – 
Export (USD billion)  220.3  176.9  183.5  
 Electronic components (%)  75.4 71.7 71.4 
 Computers and peripherals (%)  5.1 5.1 7.6 
 Communications and broadcasting equipment (%)  8.0 8.2 7.5 
 Video and audio equipment (%)  1.4 2.5 1.4 
 Information and communications application and 
infrastructure equipment (%)  10.2 12.5 12.1 
Information, communications and broadcasting equipment – 
Import (USD billion)  107.1  108.4  112.6  
 Electronic components (%)  54.7 53.9 54.7 
 Computers and peripherals (%)  12.0 10.6 11.9 
 Communications and broadcasting equipment (%)  13.0 14.2 12.9 
 Video and audio equipment (%)  2.8 4.2 3.0 
 Information and communications application and 
infrastructure equipment (%)  17.5 17.0 17.5 
Source:  Production: Ministry of Science and ICT, Information & Communication Technology Survey (2018 -
19, final), Monthly Survey of Information & Communication Technology Statistics (2020, 
preliminary).  
 
49 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.135.   The Ministry of Science and ICT (MSIT) is responsible for designing policies to facilitate the 
development of the ICT  sector, as well as promote the development of science, technology, and 
innovation.  
4.136.   Korea's ratio of R&D investment in ICT equipment to total business expenditure on R&D 
(BERD) is the highest among OECD countries, at 50.1% in 2017.50 Korea's ICT R&D achiev ement 
measured by patents is the third highest among OECD countries, after the United  States and Japan. 
However, the ranking of Korea in terms of technology transfers between companies and universities 
was not high: Korea ranked 23rd of 36 OECD countries i n 2019. In terms of how actively public - and 
private -sector ventures support technological development, Korea ranked 26th.51 
4.4.2   Automotive  
4.137.   In 2019, Korea was the world's 7th largest automobile producer. Most vehicles produced in 
Korea are exported (Table  4.10). Major export markets are the United  States (36.8%), the 
European  Union (21.5%), and the Middle East (10.2%).52 Imports of automobiles remained much 
smaller than export volumes. Notably, the share of electric cars in total imported vehicles went up 
about  six times from 2016 to 2020, and the share of hybrid cars more than doubled. During the 
same period, the share of gasoline -fuelled cars increased while that of diesel engine vehicles 
declined.  
Table 4.10 Auto mobile supply and demand, 2016 -20 
('000 cars)   
 2016  2017  2018  2019  2020  
Production  Passenger cars  3,860  3,735  3,662  3,613  3,212  
Commercial vehicles  369 379 367 338 295 
Total 4,229  4,114  4,029  3,951  3,507  
Domestic 
consumption  Passenger cars  1,343  1,297  1,298  1,294  1,375  
Commercial vehicles  257 263 254 245 237 
Total 1,600  1,560  1,552  1,539  1,612  
Export  Passenger cars  2,507  2,416  2,342  2,313  1,821  
Commercial vehicles  115 114 108 88 66 
Total 2,622  2,530  2,450  2,401  1,887  
Import  Total 304 297 324 320 338 
Gasoline (%)  33.9%  42.9%  47.3%  57.4%  54.2%  
Diesel (%)  58.7%  47.2%  41.0%  30.3%  27.7%  
 Hybrid (%)  7.2%  9.8%  11.6%  11.3%  16.9%  
 Electric (%)  0.2%  0.1%  0.1%  1.0%  1.2%  
Source:  Korea Automobile Manufacturers Association (2020), Korea Automobile Industry – Annual Report 
2020. 
4.138.   The automotive industry remains concentrated, with the three largest 
manufacturers  – Hyundai, Kia, and GM Korea  – collectively accounting for about 92.3% of total 
production.  
4.139.   There is no equity restriction on foreign investment in the automobile sector. Currently, 
GM Korea is 82.98% owned by foreign investors, including General Motors and SAIC Motor 
Corporation, Renault Samsung is 80.1% owned by Renault, while  Mahindra & Mahindra's share in 
Ssangyong Motors is 74.65%.  
4.140.   In 2021, the customs tariff is 8% on passenger vehicles (HS 8703) and averages 9.7% on 
commercial vehicles.53 Tariff rates are the same for new vehicles as for used cars, although a special 
customs valuation procedure is used for the imports of used vehicles.  
 
50 Korea Information Society Development Institute (2 020),  2020 ICT Industry Outlook of Korea . 
51 Korea Information Society Development Institute (2020),  2020 ICT Industry Outlook of Korea . 
52 Korea Automobile Manufacturers Association (2020), Korea Automobile Industry – Annual Report 
2020.  
53 The import tariff rate is zero for HS 870410 (dumpers for off -highway use), and is 10% for the other 
commercial vehicles (HS 8704) (both unchanged from 2016).  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.141.   To purchase, own, and use automobiles, various taxes are imposed (Table 4.11). The 
Government has been fa cilitating the development of eco -friendly cars by providing tax incentives.  
Table 4.11 Vehicle taxes and tax reduction for eco -friendly vehicles, 2020  
 Taxes  Rates  
Purchase  Individual consumption tax  5% of t he ex -factory price  
Education tax  30% of the individual consumption tax  
VAT 10% of the retail price  
Acquisition tax  Private: 5% -7%; business: 4% of the retail 
price 
Bond 0-20% of the retail price  
Possession  Automobile tax (annual)  1,000  cc and below: KRW  80/cc  
1,001  cc-1,600  cc: KRW  140/cc  
Over 1,600  cc: KRW  200/cc  
Education tax  30% of the automobile tax  
Use Fuel excise tax:   
 Transportation -energy -
environment tax  Unleaded gas: KRW  529/litre  
Diesel: KRW  375/litre  
 LPG KRW: 275/kg  
Education tax  15% of the fuel excise tax  
Motor fuel tax  26% of the transportation -energy -
environment tax  
VAT 10% of the fuel retail price  
Tax reductions for eco -friendly cars  
Category  Individual consumption 
tax Education tax  Acquisition tax  
Hybrids/plug -in hybrid 
electric vehicles (PHEVs)  Temporary tax reduction: 
maximum KRW  1 million 
per car (up to 
December  2021)  Tax cut: maximum 
KRW 0.3 million per car 
(up to December 2021)  Temporary tax 
reduction: 
maximum 
KRW 0.9 million 
per car (up to 
December 2021)  
Electric vehicles (EVs)  5% of ex -factory price  
Temporary tax reduction: 
maximum KRW  3 million 
per car (up to 
December  2020)  Tax cut: maximum 
KRW 0.9 million per car 
(up to December 2020)  Tax cut: 
maximum 
KRW 1.4 million 
per car (up to 
December 2021)  
Fuel-cell electric vehicles 
(FCEVs)  5% of ex -factory price  
Temporary tax reduction: 
maximum KRW  4 million 
per car (up to 
December  2022)  Tax cut: maximum 
KRW 1.2 million per car 
(up to December 2022)  Tax cut: 
maximum 
KRW 1.4 million 
per car (up to 
December 2021)  
Source:  Korea Automobile Manufacturers Association (2020), Korea Automobile Industry – Annual Report 
2020. 
4.142.   In January 2021, the Government announced, as part of the Green New Deal Initiative  
(Section 4.3.2 and above), subsidies of up to KRW  19 million to buyers of electric cars, and up to 
KRW 37.5 million to buyers of hydrogen fuel -cell electric vehicles. The Government aims to install 
96,000 electric vehicle charging systems and build more t han 180 hydrogen stations across the 
country by the end of 2021, to provide a more convenient charging infrastructure. Subsidies for 
electric taxis, buses, and trucks will also increase.54 
4.4.3   Shipbuilding  
4.143.   Korea remains the second -largest shipbuilder in the wo rld, after China. The shipbuilding 
industry has been going through a restructuring process, continuing the trend to move towards more 
specialized higher value -added ships, such as oil tankers, container ships, and gas (LNG) carriers 
(Chart 4.6).  
 
54 Bangkok Post News , "South Korea Ups Subsidies for Eco -Friendly Cars to Speed Up Green Push",  
24 January 2021. Viewed at: https://www.bangkokpost.com/business/2056259/south -korea -ups-subsidies -for-
eco-friendly -cars-to-speed-up-green -push. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Chart 4.6 Deliveries of newly built vessels, 2019  
 
a Other includes ferries and passenger ships (0.01%), general cargo ships (0.9%), offshore vessels 
(0.6%), chemical tankers (0.2%), and vessels n.e.s. (0.1%).  
Source:  UN Conference on Trade and Development (UNCTAD), Review of Maritime Transport 2020 . Viewed 
at: https://unctad.org/system/files/official -document/rmt2020_en.pdf . 
4.144.   The industry i s becoming more concentrated. In 2019, Hyundai Heavy Industries (HHI) and 
Korea Development Bank signed a contract to acquire Daewoo Shipbuilding & Marine Engineering 
(DSME). Since then, the three largest shipbuilders (HHI, DSME, and Samsung Heavy Industri es 
(SHI)) have been reorganized into two (HHI and SHI). According to the authorities, they accounted 
for 66.9% of the market share in Korea in 2019.  
4.145.   According to an Invest Korea report, most of the equipment and parts used for shipbuilding 
have been localized.55 SMEs may be able to play a bigger role as suppliers in the value chain of large 
shipbuilding companies. FDI in the shipbuilding sector is allowed, although it has been sluggish, as 
the commercial vessel market has cooled down since 2014.  
4.146.   In 20 21, tariff protection for ships ranges from zero to 8%, with a simple average of 3.6% 
(same as in 2016):  
• tariff rate of zero for HS 8901 (cruise ships, excursion boats, ferry -boats, cargo ships, 
barges and similar vessels for the transportation of persons or goods), HS 8902 (fishing 
vessels; factory ships and other vessels for processing or preserving fishery products), 
HS 8906 (other vessels, including warships and lifeboats other than rowing boats), and 
HS 8908 (vessels and other floating structures for b reaking -up); 
• tariff rate of 5% for HS 8904 (tugs and pusher craft), HS 8905 (light vessels, fire -floats, 
dredgers, floating cranes and other vessels the navigability of which is subsidiary to their 
main function; floating docks; floating or submersible dri lling or production platforms), 
and HS 8907 (other floating structures (for example, rafts, tanks, landing -stages)); and  
• tariff rate of 8% for HS 8903 (yachts and other vessels for pleasure or sports; rowing 
boats and canoes).  
4.147.   The industry employs various ICT technologies to "smarterize" ships and sailing, equipment, 
and production. The large shipbuilders are in the process of developing their own platforms and ship 
systems. The development of remote monitoring was completed and is currently in the process of 
commercialization.56 
 
55 Invest Korea (2020), Investment Opportunities in Korea – Shipbuilding & Marine. Viewed at: 
www.investkorea.org . 
56 Invest Korea (2020), Investment Opportunities in Korea – Shipbuilding & Marine. Viewed at: 
www.investkorea.org . 
Chart 4.[]   Deliveries of newly built vessels, 2019
Source:  UNCTAD, Review of Maritime Transport 2020. Viewed at: https://unctad.org/system/files/official -
document/rmt2020_en.pdf.Container ships
21.0%
Oil tankers
54.6%Gas carriers
17.9%
Bulk carriers
4.7%Othera
1.9%Total:
21,670
a    Other include ferries and passenger ships (0.01%); general cargo ships (0.9%); offshore vessels (0.6%); 
chemical tankers (0.2%); and vessels n.e.s. (0.1%).WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.148.   The shipbuilding industry is undergoing a restructuring process to meet environmental 
requirements set by the International Maritime Organization (IMO). In particular, IMO strengthened 
the standards for ship emissions, such as sulph ur oxide (SOx), nitrogen oxide, and carbon dioxide, 
to reduce marine pollutant emissions. SOx emission regulation, effective from 1  January 2020, aims 
to reduce the current sulphur emission from 3.5% to less than 0.5% worldwide. The shipping 
industry has t o use low -sulphur oil, install desulfurizer, or purchase LNG -fuelled ships.  
4.149.   To support the development of eco -friendly and high -efficiency ships, MOTIE plans to 
establish a mid - to long -term roadmap to respond to LNG demand, and build infrastructure for LN G 
bunkering at the ports of Busan, Ulsan, Gwangyang, Incheon, and Pyeongtaek by 2025. The 
authorities state that the construction of LNG bunkering at Ulsan Port started. In 2019, the MOF 
revised the Marine Environment Management Act to accommodate IMO's SO x content in ship fuel 
(SOx 0.5% or less).  
4.150.   Ship financing is provided mainly through two state -owned export credit agencies: K -SURE 
under MOTIE, and the EXIM Bank under the MOEF. K -SURE mainly deals with export credit insurance 
(covering lender's losses ag ainst buyer's non -payment on loans), while the EXIM Bank handles 
export credit loans (direct loans to ship owners, or to ship yards for the funds needed to produce 
vessels). In 2019, the shipbuilding industry accounted for the largest portion (16.4%, 
KRW 5.4 trillion) of the total export credit provided by the EXIM Bank (Section  3.2.5). On 
27 May 2020, the EXIM Bank announced it would increase its investment through a "win -win" loan 
scheme in the domestic shipbuilding industry by USD  971 million (KRW  1.2 tr illion) 
(Section  3.3.1.2).  
4.151.   In addition, local governments offer support for the installation of LNG -fuelled equipment 
developed by domestic companies in local government vessels.57 According to the authorities, this 
is to replace old government ships with eco-friendly ones.  
4.5  Services  
4.5.1   Features  
4.152.   During the review period, the growth rates of the services sector were relatively stable 
(averaging around 3% from 2016 to 2019), before declining in 2020 ( -1%) (Table 1.2). The share 
of services to GDP increased slight ly, from 60.5% in 2016 to 62.3% in 2020, while its share in total 
employment remained around 70%. In 2020, the largest contributor to gross value added within 
services was real estate, followed by wholesale and retail trade; public administration and defen ce; 
professional, scientific and technical services; and finance and insurance.  
4.153.   Services exports rose from USD  94.8 billion in 2016 to USD  103.8 billion in 2019, and then 
fell to USD  90.1 billion in 2020 ( Table 1. 4). The main destinations of services exports are China, the 
United  States, the European  Union, and Japan.58 Imports of services rose from USD  112.1  billion in 
2016 to USD  130.7 billion in 2019, before declining to USD  106.3 billion in 2020. Transportation, 
other business services, an d travel are the main traded services.  
4.154.   Labour productivity of the services sector, although higher than that of the agriculture sector, 
was still lower than that of the manufacturing sector and is far below the OECD average (85%).59 
Productivity in ICT ser vices and productivity in other business services are equal to 74% and 41%, 
respectively, of that of manufacturing. Productivity is even lower in wholesale and retail, transport, 
and accommodation (31% of manufacturing productivity). These subsectors tend to be less 
standardized and require more face -to-face interactions in their delivery, leading to lower labour 
productivity. The authorities indicate that, based on data published by the Korea Productivity Center, 
labour productivity indexes in the services  and manufacturing sectors were 108.7 and 117.2, 
respectively, in 2020. However, these indexes are not strictly comparable.60 
 
57 Invest Korea (2020), Investment Opportunities in Korea – Shipbuilding & Marine. Viewed at: 
www.investkorea.org . 
58 WTO, I -TIP Services: Korea . Viewed at: http://i -tip.wto.org/services/ChartRes ults.aspx . 
59 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -en. 
60 Korea Productivity Center, Smart KPC. Viewed at: https: //www.kpc.or.kr/eng/ . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.155.   The OECD suggested that servicification of manufacturing61 helps firms create value and 
increase their productivity. For example, banking, engineering, IT, legal, management, R&D, and 
after-sales or installation and maintenance services all help firms improve productivity, reduce costs, 
or increase their innovative capacity and production efficiency. According to the OECD, Korea lags  
behind most advanced OECD countries in the development of manufacturing servicification.62 
4.156.   Digital technologies, such as AI and advanced robotics, and digital platforms offer new ways 
of supplying and consuming services. Digital technologies improve the t radability of services and 
provide alternative ways of trading. According to an OECD report, Korea's barriers to digital service 
trade are among the lowest of OECD Members. Despite this, its exports of digitally deliverable 
services are well below the OECD  average.63 
4.157.   SMEs may also benefit from digital technologies to reduce costs and expand markets. 
However, an OECD report considers that digital technologies are not used to their full potential in 
SMEs, which are concentrated in low -productivity and less kn owledge -intensive services, such as 
wholesale and retail trade, transportation, accommodation, and food services. Compared with their 
counterparts in other OECD countries, Korean SMEs have more difficulties in hiring highly skilled 
university graduates bec ause they offer less attractive jobs than do larger conglomerates.64 The 
authorities disagree and state that SMEs across the globe are now struggling to recruit new 
employees, and there is little evidence that Korean SMEs face a disproportionally challenging 
situation compared to those in other OECD countries.  
4.5.2   GATS and RTA  commitments  
4.158.   Since the submission of its revised conditional offer concerning services in 2005, Korea has 
not made any new offers.65 Its GATS commitments cover 98 of the 155 sectors.66 
4.159.   Korea adopted services liberalization commitments under various RTAs wi th a view to 
achieving a higher level liberalization that goes beyond its GATS commitments (Section 2.5). During 
the review period, Korea notified to the WTO its RTAs with Colombia (entered into force in 2016), 
five Central America countries (entered into force in 2021), and the United Kingdom (entered into 
force in 2021), all of which contain services liberalization commitments (Section  2.5).67 
4.160.   In 2016, Korea signed, with Australia, Japan, New  Zealand, and Thailand, a Memorandum 
of Cooperation on the estab lishment and implementation of the Asia Region Funds Passport (ARFP) 
initiative. The ARFP intends to establish a regional market for collective investment schemes by 
facilitating cross -border offerings across participating economies.68 To implement this in itiative, the 
Financial Investment Services and Capital Markets Act was amended, and the amendment took 
effect in May 2020.  
4.161.   During the review period, Korea also notified to the WTO its mutual recognition agreements 
with the State of Texas (United  States), and with Australia, on professional engineers.69 
 
61 According to the OECD, the phenomenon that services are increasingly embedded in manufactured 
products is known as "servicification" of the manufacturing industry . OECD (2020), Economic Surveys: Korea 
2020. Viewed at: https://doi.org/10.1787/2dde9480 -en. 
62 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -en. 
63 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -en. 
64 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dd e9480 -en. 
65 WTO document TN/S/O/KOR/Rev.1, 14 June 2005.  
66 WTO document GATS/SC/48, 15 April 1994. Foreign equity limitations of 49% on commercial 
presence are scheduled for facilities -based basic telecommunication services. Specific national treatment 
limitations and/or additional commitments relate to accounting (auditing and book -keeping services), taxation, 
and architectural services. Foreign professionals in law and architecture can provide a limited range of services 
with approval of their qualificati on. Access to other services is mostly liberalized, except for certain sectors that 
retain regulatory measures (including educational services), and others that are subject to foreign equity 
ceilings (including aircraft rental and credit information servic es). 
67 WTO document WT/REG375/N/1 -S/C/N/868, 7 October 2016.  
68 WTO document S/C/N/961, 15 October 2019.  
69 WTO documents S/C/N/901, 3 May 2018 and S/C/N/902, 3 May 2018.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.5.3   Financial services  
4.162.   During the review period, the financial services sector had robust growth, registering a rate 
of 9.1% in 2020. Its contribution to GDP rose from 5.6% in 2016 to 6.3% in 2020, and it accoun ted 
for about 2.9% of total employment in 2020 (Table 1.2). It managed to weather the challenges 
posed by the COVID -19 pandemic, thanks to supportive measures from the Government. Between 
February 2020 and April 2021, the financial sector injected KRW  357 trillion (USD  323 billion) into 
the economy in new loans, loan rollovers, and payment guarantees.  
4.163.   The financial services sector includes banks, and non -bank financial institutions including 
insurance companies (Table 4.12). It is regulated under:  
• the Finan cial Holding Companies (FHCs) Act, most recently amended in December 2018 
to reflect a change in a notification requirement70; 
• the Financial Investment Services and Capital Markets Act, amended in May 2020, and 
whose major amendments include the conversion  of the pre -reporting principle for 
concurrent operation and incidental business to a post -reporting principle, the expansion 
of the scope for outsourcing of financial investment business and permission for 
re-outsourcing, and a stipulation related to the exchange of information; and  
• the Banking Act, amended in March 2020, and whose amendment was mainly on the 
prohibition of unfair trade practices and the regulation of advertising to protect financial 
consumers.  
4.164.   The Financial Services Commission (FSC) and i ts executive body, the Financial Supervisory 
Service (FSS), continue to regulate the financial services sector. The FSC is in charge of financial 
policies and supervision of financial institutions, while the FSS regulates financial markets and 
institutions  under the direction and supervision of the FSC. The Securities and Futures Commission 
(SFC) within the FSC supervises and regulates the securities and futures markets.  
Table 4.12 Structure of the financial sy stem, 2015 and 2020a 
Institutions  No. of 
establishments  Assets  
(KRW  billion)  Loans and discounts  
(KRW  billion)  
2015  2020  2015 2020  2015 2020  
Banks  56 55 2,709,032  3,749,521  1,520,999  2,076,586  
Commercial banks  51 50 1,837,716  2,550,028  975,533  1,354,758  
 Nationwide (including Internet 
 only) 6 8 1,389,968  2,021,484  828,915 1,161,423  
 Regional  6 6 187,294  246,579  122,020 163,401  
 Foreign bank branches  39 36 260,454  281,966  24,597  29,933  
Specialized banksb 5 5 871,316  1,199,493  545,466  721,829  
 Korea Development Bank  1 1 255,931  290,841  121,128  137,484  
 Export -Import Bank of Korea  1 1 81,890  97,590  65,602  70,222  
 Industrial Bank of Korea  1 1 241,806  381,793  167,041 237,460  
Non-bank financial 
institutions  1,211  1,460  1,310,034 1,916,861  308,644 533,475  
Mutual savings banks  79 79 43,859 92,101  35,590 77,610  
Credit unions  910 879 65,820  110,965  43,582  78,856  
Specialized credit financial 
companiesc 78 120  203,262 319,613  48,435 89,771  
Life insurance companies  25 24 724,9 30 977,284  114,699 169,432  
Non-life insurance companies  31 31 226,0 61 344,096  50,103 83,579  
Asset management companies  87 326 5,306 11,678  n.a.d 1 
 
70 Notification of whether the report on modification of capital or articles of incorpor ation has been 
accepted within 14 days of receipt.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Institutions  No. of 
establishments  Assets  
(KRW  billion)  Loans and discounts  
(KRW  billion)  
2015  2020  2015 2020  2015 2020  
Korea Securities Finance 
Corporation  1 1 40,796  61,124  16,235  34,226  
Totale 1,267  1,515  4,019,066 5,666,382  1,829,643 2,610,061  
n.a. Not applicable.  
a End-of-period figures.  
b The Korea Development Bank (KDB), the Export -Import Bank of Korea (EXIM Bank), the Industrial 
Bank of Korea (IBK), the National Agricultural Cooperative Federation, and the National Federation 
of Fisheries Cooperatives.  
c Credit card companies, leasing companies, instalment financing companies, and venture capital 
finance companies.  
d The authorities state that asset management companies do not provide loans to the market.  
e Does not include other quasi -non-bank financial institutions, such as securities companies, 
investment advisory companies, futures companies, or postal savings.  
Source:  Financial Supervisory Service.  
4.165.   Foreign investment is allowed in financial institutions, except for specialized banks. During 
the review period, more foreign financial companies left than entered the Korean market; according 
to an Economist Intelligence Unit (EIU) report, they could not compete with bigger local rivals and 
could not find a growth niche in a maturing market.71 The number of foreign bank branches dropped 
from 39 in 2015 to 36 in 2020. In 2021, foreign financial institutions accounted for about 10.6% of 
financial sector assets (11% in 2015). The two foreign bank subs idiaries and 36 branches from 
16 countries make up about 11.6% of the banking sector (14% in 2015). In the insurance sector, 
12 foreign  insurance companies' subsidiaries from 5 countries make up 9.8% of the domestic 
insurance sector. In the securities sect or, 23  foreign companies from 11 countries make up about 
5.7% of the securities sector's assets. Foreign or local non -bank financial companies' ownership in 
any commercial bank is restricted to 4% (15% for regional banks). This limit may be increased to 
10% for special cases, if approved by the FSC.  
4.166.   The financial services sector is undergoing significant changes to incorporate fast -developing 
digital technologies. This process has been sped up as a result of the economic impact of the 
COVID -19 pandemic and the closure of physical branches, and as a result:  
• two Internet banks were recently set up;  
• the two largest local social media and Internet search firms, Kakao and Naver, are 
emerging as key financial service providers (see below); and  
• the share of Interne t banking in money transactions went up from 59.3% in 
December  2019 to 64.3% in June 2020.  
4.167.   Kakao is licensed to provide electronic financial services, Internet -only banking services, and 
insurance services. Naver is licensed to provide electronic financial  services. As of December 2020, 
foreign investment accounted for 31% of Kakao Corporation and 11% of NHN Corporation (Naver).  
4.168.   Electronic financial services are defined under the Electronic Financial Transactions Act, 
enacted in 2006. The Act regulates fina ncial platforms controlled by big tech companies and aims to 
provide fair competition between fintech newcomers and conventional operators. Under this Act, 
electronic financial services cover electronic prepayment, payment gateway (or electronic payment 
settlement agency), and escrow services:  
• "Electronic prepayment" means certificates, or information on such certificates, issued 
with transferable monetary values and stored by electronic means. For examples, 
 
71 EIU (2021), Industry Report – Financial Services: South Korea. Viewed at: 
http://country.eiu.com/filehandler.ashx?issue _id=730761656&mode=pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  rechargeable "Naver Pay points", which may be use d to purchase products on Naver 
Shopping.  
• "Electronic payment settlement agency service" means any service to transmit or receive 
payment settlement information in purchasing goods or services by electronic means, or 
to execute as an agent or mediate the s ettlement of prices thereof. For example, the 
registration of a credit card on Naver Pay and using it to pay.  
• "Escrow" is a service in which payment is deposited from the buyer on an e -commerce 
platform, and the platform pays the payment to the seller afte r the consumer confirms the 
transaction. For example, after a user confirms the purchase of an item from Naver 
Shopping, Naver Shopping pays the seller the sales price.  
4.169.   During the review period, the FSC lowered and abolished certain regulatory entry barrie rs, 
such as minimum paid -in capital, for new entrants in financial services with a view to diversifying 
the market with participation from specialized niche players. Conventional financial institutions are 
joining fintech through partnerships with technolo gy start -ups. In September 2020, the FSC 
launched the Digital Finance Consultative Body, comprising both regulators and industry 
participants, to explore policy issues linked to technology companies' increasing participation in 
financial services. Accordin g to the FSC, there were about 600  fintech firms in operation in 2020, up 
from 131 in 2014.  Among them, 17% provide easy payment and remittance -related services, 14% 
provide robot advisor services, 8% provide security and authentication services, and 7% provide 
insurance -related technology services. The authorities indicate that foreign investment accounted 
for 7% of investment in these fintech companies in 2019.  
4.170.   Several pieces of legislation were revised, amended, or issued during the review period. The 
Special Law on Financial Innovation Support, aimed at promoting fintech by introducing deregulated 
"sandboxes" for emerging technologies and services, came into force in April  2019. Since then, the 
FSC has approved many sandbox projects. The Act on Online Investment -Linked Financing and User 
Protection came into force in August 2020. It requires peer -to-peer (P2P) lenders to register with 
the FSC and comply with existing money lender regulations, including the 24% statutory ceiling on -
lending rates. This li mit was lowered to 20% from 7 July 2021.  
4.171.   The FSC revised the Regulation on Financial Investment Business in 2018, to allow securities 
companies to provide payment gateway (PG) services. At of 10 May 2021, there were 129 PG service 
providers in the Korean m arket, along with 26 banks and credit card companies that also provide 
PG services.  
4.172.   Data management and storage for the digitization of financial services are high priorities. In 
December 2018, the FSC revised the Regulation on Supervision of Electronic Fi nancial Transactions, 
to allow financial institutions to store personal credit information and identifiable information on 
cloud -computing servers. Financial institutions' use of cloud -computing based abroad had been 
limited to "non -critical information", excluding such information about their customers' personal 
credit information and unique identification information. In addition, the Use and Protection of Credit 
Information Act, the Personal Information Protection Act, and the Act on Promotion of Informa tion 
and Communications Network Utilization and Information Protection were amended, to relax some 
data privacy rules for financial institutions and fintech operators seeking to exploit big data.  
4.173.   In connection with the legislative change, the FSC set up a dedicated financial data exchange 
at the Financial Security Institute in May 2020, to facilitate a secondary market for depersonalized 
financial data. In June 2020, the FSC allowed the private sector to access public data held by the 
FSC and nine public fi nancial institutions.  
4.174.   Korea started to regulate virtual assets (VAs)72 (such as cryptocurrencies) in line with 
anti-money laundering and combating the financing of terrorism (AML/CFT) guidelines. In 
March  2020, the Financial Transaction Reports Act was rev ised, to ensure the prevention of 
 
72 The authorities state that VAs refer to a digital representation of economic value (including all 
relevant rights thereby) that can be digitally traded or transferred, excluding tangible and intangible results 
obtained through the  use of game products, electronic prepayment means and electronic currency, 
electronically registered stocks, electronic bills, electronic bills of lading, and so on.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  VA-related criminal activities and the transparency of transactions.73 Since March 2021, virtual asset 
service providers (VASP) must register with the Financial Intelligence Unit (FIU), and fully comply 
with AML/CFT obliga tions, including reporting suspicious transactions to the FIU. Clients must use 
real-name bank accounts to transfer money for trading of VAs.  
4.175.   In December 2020, the Act on Supervision of Financial Groups was approved by the National 
Assembly, and is to come  into force in  2021. The Act intends to regulate the financial risk of business 
conglomerates holding two or more financial institutions with assets worth KRW  5 trillion, such as 
Samsung, in a similar way to those FHCs.  
4.176.   The Financial Consumer Protection Ac t came into force in March 2021. It combined and 
systemized legal provisions that were scattered in various laws to enforce fiduciary duty 
requirements for all types of financial products sold to consumers. It also seeks to improve dispute 
resolution syste ms for consumers, and enhance the effectiveness of relief measures for financial 
losses stemming from hard -sell marketing and other types of negligence from financial institutions. 
The practice of selling high -risk financial products, such as derivatives a nd structured financial 
instruments to poorly informed investors, is punished.  
4.5.3.1   Banking  
4.5.3.1.1   Structure and ownership  
4.177.   By the end of 2020, Korea had 55 banks, of which 50 were commercial banks and 5 were 
specialized banks. The 50 commercial banks comprised 8 natio nwide banks (including 2 Internet 
banks74), 6 regional banks, and 36 foreign bank branches. The commercial banking sector remains 
dominated by nationwide banks, which held 79% of the assets of commercial banks in 2020. Foreign 
bank branches accounted for a bout 11% of the assets, and regional banks 10% (Table 4.12).  
4.178.   Two Internet banks, Kakao Bank and K Bank, which do not have any physical branches, 
launched their operations in 2017. A third  – Toss Bank, controlled by the operator of the Toss Mobile 
P2P payme nt platform  – was granted a licence in December 2019. Internet banks are regulated 
under the Special Act on Establishment and Operation of Internet -Only Banks, which came into force 
in January 2019. This Act allows ICT firms to own up to 34% of an Internet  bank.  
4.179.   Four nationwide banks operate under holding companies, and all six regional banks have 
adopted a holding -company structure. FHCs have a variety of non -bank units specializing in credit -
card lending, brokerage, insurance, and consumer finance and wealth management. Subsidiaries of 
an FHC are prohibited from carrying credit exposure to each other in excess of 10% of equity capital.  
4.180.   Two nationwide banks – Standard Chartered Bank Korea and Citibank Korea – are foreign 
subsidiaries. Foreign banks opera te in Korea through locally incorporated subsidiaries, branches, 
and representative offices. Prudential requirements are the same for domestic and foreign financial 
institutions.  
4.181.   The five specialized banks are the Korea Development Bank (KDB), the Export -Import Bank 
of Korea (EXIM Bank), the Industrial Bank of Korea (IBK), the National Agricultural Cooperative 
Federation, and the National Federation of Fisheries Cooperatives. The Government fully owns the 
KDB, and 68. 0% of the EXIM Bank (Table 3.4). The IBK  specializes in providing loans to SMEs. As 
at 2020, the Government owned 59.2% of IBK's shares, up from 50.6% in 2015.  These banks, and 
the Korea Credit Guarantee Fund, are tasked with providing substantial financial relief to airlines and 
large industria l companies, to facilitate their recovery from the impacts of the COVID -19 pandemic.  
4.5.3.1.2   Prudential requirements, profitability, and non -performing loans  
4.182.   Korea continues to apply Basel III capital -adequacy regulations for banks. Banks are 
required to meet capi tal-adequacy ratios (CARs) for each tier of capital: at least 4.5% of risk -
weighted assets as common -equity capital and 6% as Tier  1 capital. They also must hold a capital 
 
73 Korea Financial Intelligence Unit (KoFIU), Financial Transaction Reports Act. Viewed at : 
https://www.kofiu.go.kr/eng/legislation/financial.do . 
74 The third Internet bank obtained a licence in December 2019.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  conservation buffer, initially set at 0.625% but which rose to 2.5% in 2019. Interne t banks have a 
three -year grace period to meet these CARs. Korean banks remain well capitalized: in 2020, their 
CAR was 16.5% and their Tier  1 capital ratio was 12.7%, both well above the Basel III requirements 
(Table  4.13) . 
Table 4.13 Banking indicatorsa, 2015 -20 
(%) 
 2015  2016  2017  2018  2019  2020b 
Capital -adequacy ratio  13.9 14.8 15.2 15.4 15.3 16.5 
Tier 1 capital ratio  11.3 12.5 13.2 13.3 13.2 12.7 
Non-performing loans net of provisions to 
capital  2.1 2.9 1.7 1.3 1.2 1.2 
Non-performing loans to total gross loans  0.5 0.5 0.4 0.3 0.3 0.2 
Return -on-assets  0.5 0.4 0.7 0.8 0.7 0.7 
Return on equity  6.5 4.5 8.5 9.8 8.9 9.3 
Net interest margin  1.6 1.5 1.6 1.7 1.6 1.4 
Interest margin to gross income  62.7 65.3 58.7 72.7 76.2 65.9 
Non-interest expenses to gross income  54.6 65.1 65.6 75.5 75.2 56.6 
Liquid assets to total assets (liquid asset ratio)  34.4 33.7 29.9 31.2 32.2 33.0 
Liquid assets to short -term liabilities  105.5  99.0 101.3  114.5  110.0  101.9  
Net open position in foreign exchange to capital  0.04 0.0 -1.0 0.04 0.11 -0.30 
a Depository corporations only.  
b Capital -adequacy ratio is based on end -2020, and other indicators are based on end -June 2020.  
Source:  IMF (2021), Republic of Korea: Staff Report for the 2021 Article  IV Consultation , IMF Country Report 
No. 2021/064. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2021/03/24/Republic -of-
Korea -2021-Article -IV-Consultation -Press -Release -Staff-Report -Staff-Statement -50306 ; and 
information provided by the authorities.  
4.183.   In April 2019, the FSC tentatively introdu ced the Basel Committee on Banking Supervision's 
standard to regulate banks' large exposure to connected counterparties, by placing a limit of 25% 
on Tier  1 capital. Its formal implementation began in September 2020. The Banking Act stipulates 
that banks' credit allowances to the c haebol  and other regulated conglomerates cannot go beyond 
25% of total capital.  
4.184.   In June 2020, the FSC and the FSS redesignated Shinhan Financial Group, Hana Financial 
Group, KB Financial Group, NH Financial Group, and Woori Financial Group as "domestic, 
systematically important bank holding companies", and listed their nationwide bank units as 
"domestic systematically important ba nks (D -SIBs)", in line with the Basel Committee on Banking 
Supervision.75 D-SIBs have faced an incremental 1% risk surcharge on their capital buffer since 
2019.  
4.185.   The banking sector is well positioned, and the risk of a liquidity crisis is low. In 2020, the 
non-performing loans ratio went down from 0.5% in 2015 to 0.2%, and their return -on-assets (ROA) 
ratio and return on equity (ROE) ratio both went up, to 0.7% and 9.3%, respectively (Table 4.13). 
The earning power of banks is under long -term pressure from t he country's low -interest rates, which 
constrain banks' ability to earn interest on loans (Chart 4.7). Interest income accounts for over 80% 
of the sector's revenue. The net interest margin changed from 1.6% in 2015 to 1.4% in 2020. 
Mortgage lending, the m ain source of domestic growth for banks, faces challenges, as the FSC issued 
directions for banks to tighten income -screening and to phase out interest -only mortgages.  
4.186.   Commercial banks are subject to a loan/deposit cap of 100%. The loan/deposit ratio 
regulation was extended to mutual savings banks (MSBs) in 2020: loans should not exceed 110% 
of deposits at MSBs in 2020, and 100% from 2021. The FSC rolled out a debt -service ratio (DSR) 
requirement across the financial sector as a further safeguard against ov erleveraging in the 
consumer lending segment. Tougher loan -screening standards based on DSR rules came into force 
for insurers and commercial banks in late 2018 and for the rest of the lending sector – the non -bank 
lenders – in late 2019.  
 
75 EIU (2021), Industry Report – Financial Services: South Korea. Viewed at: 
http://country.eiu.com/filehandler.ashx?issue_id=730761656&mode=pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Chart 4.7 Interest rate spread, 2016 -Q1 2021  
 
Source:  Bank of Korea, ECOS Economic Statistics System. Viewed at: ecos.bok.kr/flex/EasySearch_e.jsp . 
4.5.3.1.3   Non-banking  
4.187.   Non-bank financial institutions refer to MSBs, credit unions, specialized credit financial 
business companies76, insurance companies, asset management companies, and the Korea 
Securities Finance Corporation. From 2015 to 2020, the number of non -bank financial institutions 
went up, mainly because the number of  asset management companies increased from 87 to 
326 (Table  4.12). Their total asset value increased by 46.3%, and their total loans and discount 
value increased by 72.8%.  
4.188.   Among all non -bank financial institutions, MSBs and credit unions are deposit -taking  
institutions. Perhaps reflecting the Government's efforts to encourage financial institutions to shift 
their attention from large conglomerates to medium and small -sized customers, total assets of MSBs 
and credit unions increased even faster than assets a t other non -banking financial institutions:  
• The number of MSBs, which are small -scale deposit -taking institutions, remained the 
same, while their asset value more than doubled from 2015 to 2020. MSBs target 
low-income individuals and SMEs.  
• Credit unions, w hich are part of mutual credit cooperatives, are voluntary, not -for-profit 
organizations set up by groups of entities having shared (community) interests. They were 
established to promote the financial well -being of their members through a cycle of mutual 
assistance among themselves, to contribute to the development of their local economy. 
From 2015 to 2020, despite a reduction in number (because of mergers and voluntary 
dissolutions), their asset value rose by 68.6%.  
4.189.   The asset management sector comprises b oth public and private funds markets. Korea 
Investment Corporation (KIC) is the country's sovereign wealth fund, and the National Pension 
Service manages the world's third -largest national pension fund. The increase in the number of asset 
managers came mai nly from new private fund managers, particularly hedge fund managers. The 
FSC announced plans to tighten the supervision of the sector by, inter alia , conducting fund audits 
and increasing disclosure requirements.  
4.190.   When seeking to set up a securities or an asset management company in Korea, a foreign 
entity is subject to the same requirements as domestic firms, such as sound and feasible business 
 
76 Specialized credit financial business c ompanies comprise credit card companies, instalment financing 
companies, leasing companies, and new technology venture capital companies.  
0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
2016 2017 2018 2019 2020 2021Loans and discounts
Time and savings deposits
Interest spread
Source:   Bank of Korea.   ECOS Economic Statistics System.   Viewed at: ecos.bok.or.kr/flex/EasySearch_e.jsp.Chart 4.[KOR]   Interest rate spread, Q1 2016 to Q1 2021WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  planning, a sound balance -sheet, sufficient human and physical resources for investor protection, 
and a system fo r preventing conflicts of interest.  
4.5.3.2   Insurance  
4.5.3.2.1   Recent developments  
4.191.   Korea has a large and mature insurance sector, with one of the world's highest penetration 
rates in terms of premiums as a proportion of GDP (10.63% in 2020, when the world average was 
2.77% ).77 It has the third -largest insurance sector in Asia, after Japan and China. In 2020, Korea 
had 55 insurance companies – 24 life insurance and 31 non -life insurance companies (Table  4.12). 
From 2015 to 2020, total assets of life insurance companies went up by 35%, while those of non -life 
insurance companies went up by 52%.  
4.192.   Local firms dominate the industry, accounting for more than 80% of the life insurance market 
and 98% of non -life insurance market in 2018.78 The insurance market is concentrated: the to p 
three insurers have more than half of the total assets in each market. Foreign -owned ventures play 
mostly secondary roles. Korea has 10 reinsurance companies in 2021.  
4.193.   Digital operators are beginning to gain market shares in the insurance sector.79 Curren tly, 
Korea has two digital non -life insurers: Carrot General Insurance (owned by a consortium led by 
Hanwha General Insurance) and Hana Insurance (owned by Hana Financial Group). Kakao Pay, the 
mobile payment service provider unit of the Kakao social media  group, plans to set up a third digital 
non-life insurance company.  
4.194.   The insurance market is characterized by a very high number of insurance intermediaries – 
more than 400,000 insurance brokers and another 31,000 agents dominate the distribution channel. 
The bancassurance market is developed, and half of new business in life insurance is sold via banks. 
The Insurance Business Act allows insurance companies to sell policies through banking channels, 
but limits a bank's sale of insurance from the same insurer  to 25% of its total bancassurance sales.  
4.195.   Mergers and acquisitions are becoming more active in the insurance sector, with both 
domestic and foreign buyers driving realignment.80 For example, in 2019 and 2020, Lotte Insurance 
and MG Non -Life Insurance were sold to private equity investors. Large insurance companies began 
to seek growth in overseas markets by making strategic asset purchases.  
4.5.3.2.2   Regulatory framework  
4.196.   The Insurance Business Act is the main legislation regulating the insurance sector. In 
April 2020, the National Assembly approved a major amendment to this Act: from December 2020, 
the statutory limit on insurance companies' investment in overseas assets of their total assets was 
raised from 30% to 50%. Another amendment to the Insurance Business Act obtained approval from 
the National Assembly in November 2020. Under this amendment, some red tape on insurance 
companies' addition of new products and businesses was removed, and the criterion of capital for 
small -amount insurance and short -term insurance  was lowered.  
4.197.   The FSC and the FSS are responsible for supervising the insurance industry, and the FSC 
delegates supervision and inspection activities to the FSS. Other relevant institutions include the 
Korea Deposit Insurance Corporation (KDIC) and the Korea Insurance D evelopment Institute (KIDI). 
 
77 EIU (2021), Industry Report – Financial Services: South Korea. Viewed at: 
http://country.eiu.com/filehandler.ashx?issue_id=730761656&mode=pdf . 
78 IMF (2020), Republic of Korea: Financial Sector Assessment Program Technical Note – Financial 
Conglomerates Supervisions, IMF Country Report No . 20/275. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2020/09/18/Republ ic-of-Korea -Financial -Sector -Assessment -
Program -Technical -Note-Financial -Conglomerates -49747 . 
79 EIU (2021), Industry Report – Financial Services: South Korea. Viewed at: 
http://country.eiu.com/filehandler.ashx?issue_id=730761656&mode=pdf . The authorities state that digital 
operators are insurance companies specializing in telemarketing to solicit not less than 90% of the total 
number of insurance contracts and insurance prem iums by, inter alia , telephone, mail, and computer 
communication.  
80 EIU (2021), Industry Report – Financial Services: South Korea. Viewed at: 
http://country.eiu.com/filehandler.ashx?issue_id=730761656&mode=pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  The KDIC maintains a policy holder protection fund against insurance failure. It is an integrated 
insurance protection body that insures insurers, banks, financial investment businesses, and MSBs. 
The KDIC finances its deposit insurance fund with contributions from insured financial institutions, 
based on which it performs its functions including paying -out of deposit insurance. The KIDI 
calculates reference premium rates and statistical analysis to insurers and regulators based  on data 
collected from member companies.81 
4.198.   The regulators are working with insurance companies to upgrade insurers' risk -based capital 
(RBC) ratios, as part of their efforts to transit to the International Financial Reporting Standards 
(IFRS) 17 standard for insurance contracts by 2023. At the end of 2020, the RBC ratios averaged 
297.3% for life insurers, and 234.0% for non -life insurers in Korea; both were well above the 
statutory 100% minimum requirement under the Insurance Business Act.  
4.199.   Life insurance a nd non -life insurance are strictly divided. Life insurance companies are not 
allowed to provide non -life insurance business, and vice versa. In practice, life insurers lend heavily 
to the corporate sector, especially to large companies affiliated with the chaebol . 
4.200.   There are no foreign equity restrictions. Insurance companies, both domestic and foreign, 
must maintain funds of at least KRW  30 billion to do business in Korea. This requirement changed 
to KRW  3 billion for insurance branches. If  insurers seek to  handle certain insurance products, but 
not all, they need to maintain funds of at least KRW 5 billion, pursuant to presidential decrees.  
4.5.4   Communications and postal services  
4.5.4.1   Communications  
4.201.   The information and communications sector achieved an average annual  growth rate of 4.4% 
from 2016 to 2019, before slowing down to 3.2% in 2020. In 2020, it contributed to 5% of GDP and 
accounted for 3.2% of total employment (Table 1.2). Korea has high ICT rankings internationally. 
In the Network Readiness Index 2020, Kore a was ranked 14th of 134 countries.82 
4.202.   During the review period, fixed -line penetration continued to go down, while mobile phone 
penetration continued to go up and reached 134% in 2019 (Table 4.14). Fixed wired broadband 
subscriptions also went up, while th e percentage of individuals using the Internet increased from an 
already high base (92.8% in 2016 to 96.2% in 2019).  
Table 4.14 Selected telecommunications indicators, 2016 -19 
 2016  2017  2018  2019  
Fixed (number)  28,036,600  26,844,692  25,906,849  24,747,415  
Fixed (per 100 inhabitants)  55.0 52.5 50.6 48.3 
Mobile (number)  61,295,538  63,658,688  66,355,778  68,892,541  
Mobile (per 100 inhabitants)  120.2  124.6  129.7  134.5  
Fixed (wired) broadband subscriptions 
(number)  20,555,683  21,195,918  21,285,858  21,906,172  
Fixed (wired) broadband subscriptions (per 
100 inhabitants)  40.3 41.5 41.6 42.8 
Percentage of individuals using the Internet  92.8 95.1 96.0 96.2 
Source:  ITU, World Telecommunication/ICT Indicators Database. Viewed at: http://www.itu.int/en/ITU -
D/Statistics/Pages/stat/default.aspx ; and information provided by the authorities.  
 
4.203.   Three main fixed -line telecommunications service providers provide local, national, and 
international telephony services: Korea Telecom (KT), SK Broadband, and LG U+. KT is the dominant 
carrier, accounting for 80.8% of the local market and 81 .3% of the long -distance market. 
SK Broadband and LG U+ account for 15.4% and 3.8% of the local market, and 13.5% and 2.4% 
of the long -distance market, respectively. Some smaller companies also provide national 
long-distance services and international serv ices. 
 
81 KIDI. Viewed at: https://www.ki di.or.kr/user/nd90545.do?menuCode=engsite . 
82 Portulans Institute, Network Readiness Index 2020. Viewed at: 
https://networkreadinessindex.org/countries/korea -rep/. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.204.   Three main suppliers provide mobile telephony services in Korea: SK Telecom, KT, and 
LG U+. At the end of 2020, their market shares were 45.1%, 31.4%, and 23.5%, respectively. All 
three have foreign participation (Table  4.15), and they are not state owned. Several mobile virtual 
network operators (MVNOs) also provide mobile telephone services; however, their market shares 
are not significant.  
Table 4.15 Ownership structure of major telecom operators, Dece mber 2020  
Company  Market share (%)  State participation  Foreign participation  
Fixed line  Mobile phone  (% of shares)  
KT 80.8 31.4 None 43.97a 
SK Telecom  n.a. 45.1 None 33.93  
LG U+ 3.8 23.5 None 30.20  
SK Broadband  15.4 n.a. None .. 
.. Not available.  
n.a. Not applicable.  
a Korea's GATS commitments on KT said that it would not be more than 33% foreign owned, i.e. not 
subject to the normal 49% foreign equity restriction for other infrastructure -based suppliers. 
However, this policy was changed , and foreign participation is well above 33%.  
Source:  Korea Communications Commission, and the Ministry of Science and ICT.  
4.205.   The MSIT is responsible for granting licences and approving or monitoring prices of the 
telecommunications market. The Korean Commu nications Commission (KCC) under the President's 
Office is the regulatory entity responsible for the promotion of fair competition and consumer 
protection in the telecommunications market. From June 2019, the KCC has also been responsible 
for mediation in disputes between carriers and users. In 2020, 572 cases were submitted to the KCC 
for mediation. Among them, 31 were dropped, 246 were settled, and 295 were not settled.  
4.206.   The Korea Internet and Security Agency (KISA) specializes in promoting Internet and 
information security in the private sector. The National Information Society Agency (NIA) is 
responsible for the overall implementation and support of the informatization of the country. The 
National IT Industry Promotion Agency (NIPA) engages in a variety o f initiatives to raise national 
competitiveness and secure growth engines for the future by promoting increased use of, inter alia , 
AI, virtual reality/augmented reality (VR/AR), 5G, and cloud -computing in conventional industries. 
It also helps promising S MEs and start -ups expand into global markets.  
4.207.   The main legislation regulating the communications sector are the Telecommunications 
Business Act and its Enforcement Decree of 2021 (on registration requirements for 
telecommunication businesses and standards for mandatory wholesale services).  
4.208.   The Telecommunications Business Act was most recently amended in 2020 (Act No.  17352). 
It classified telecommunications business into facilities -based and value -added operators.83 Foreign 
investment in facilities -based te lecom services is subject to a ceiling of 49%, while value -added 
telecom services are fully open to foreign investment. For facilities -based telecom services, foreign 
corporations from certain RTA partners and that passed the public interest review are not  subject to 
this equity restriction. The MSIT may prohibit a foreign shareholder from becoming the largest 
individual shareholder (5% or more of shares) in KT.  
4.209.   Foreign investment in radio broadcasting and in over -the-air broadcasting is prohibited. 
Foreign  equity restrictions (up to 49%, 20%, or 10%) apply to programme broadcasting services as 
defined under the Broadcasting Act84, cable network providers, broadcasting via satellite and other 
 
83 Facilities -based operators provide those telecommunications services that transmit or receive 
information (voice, data, images, etc.) without changing the form or details, and that lease telecommunications 
line equipment to enable transmission or receptio n of information (voice, data, images, etc.), such as 
telephone services or Internet services. Value -added service operators provide telecommunications services 
other than those provided by facilities -based operators (Telecommunications Business Act). Exam ples of 
value -added services include online data processing, online data base storage and retrieval, electronic data 
interchange, and email.  
84 No more than 20% foreign equity for general service programming; and no more than 10% foreign 
equity for speciali zed programming of news reports.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  broadcasting, wired communications and wireless and satellite comm unications, and other electronic 
communications (Table 2.1).  
4.210.   Universal service covers the provision of any basic telecommunications service at a 
reasonable fee, regardless of time and place. Fixed broadband was designated as a universal service 
in 2020. Al l telecommunications business operators have the obligation to provide universal service, 
or compensate any loss caused by the provision of such service; the MSIT may exempt operators 
from this obligation. The authorities state that, by presidential decree , telecommunications business 
operators with an annual sale value from telecommunications services less than or equal to 
KRW 30 billion are exempted from this obligation. All value -added telecommunications business 
operators are also exempted.  
4.211.   The authorit ies state that facilities -based telecommunications business operators must 
report the terms of use (charges and conditions) of each telecommunications service it intends to 
provide to the MSIT. However, the terms of use reported by KT on an urban phone, an d that of 
SK Telecom on a mobile phone, may be rejected within 15 days if the MSIT deems there is a risk of 
harming users' interests or fair competition. Telecommunication tariffs that do not require MSIT 
approval need to be notified to the MSIT.  
4.212.   The Telec ommunications Business Act stipulates that telecommunications business 
operators need to conclude an interconnection agreement within 90 days85 of receiving a request 
from another operator. The MSIT determines and publicly notifies the scope of, and guidel ines for, 
the conditions, procedures, methods, and calculations of interconnection charges.  
4.213.   Telecommunications numbers, for both fixed -line telephone and mobile phones, are portable 
(in the same services) across operators.  
4.214.   In 2019, Korea rolled out a comprehensive strategy named 5G+, aimed at promoting a 
"5G ecosystem" where 5G is the underlying infrastructure connecting advanced devices and 
innovative services. 5G is characterized by the ability to connect all objects in a network and transmit 
large v olumes of data at high speeds and in real time, i.e. ultra -low latency. 5G can trigger a ripple 
effect in large investments and across upstream and downstream industries. The Government sees 
5G as a driving force for Korea's new economic growth. Among OECD  countries, Korea has the 
highest target for downloading speeds: 10 Gigabits per second (Gbps) to 50% of urban households 
(85 cities) by 2022.86 
4.215.   The 5G+ Strategy aims to create an environment where advanced devices and innovative 
services connecting all th ings are integrated into a 5G infrastructure. The Strategy plans to focus 
efforts on 10 core industries87, and 5 core services based on 5G networks (i.e. digital health care, 
immersive content, smart factories, autonomous vehicles, and smart cities). The G overnment aims 
to support 5G market growth by, inter alia , promoting public investment and accelerating private 
investment, supporting the adoption of 5G services and user protection through institutional 
improvements, developing companies and talent that match the global standard, and promoting 
globalization of Korea's 5G technology and services by supporting their overseas expansion.  
4.216.   Korea already adopted policies to enhance backhaul and backbone connectivity88, by 
requiring network operators to share fib re cables, including backhaul, but also maintaining incentives 
to invest. In Korea, the percentage of fibre in total fixed broadband connection was 84% in 2020.  
4.217.   With the development of the 5G network, 5G data traffic increased steadily from 121,444  TB 
in December 2019 to 302,278 TB in December 2020, more than doubled in one year. The number 
 
85 Telecommunications Business Act, Article  44. 
86 OECD (2020), Digital Economy Outlook 2020.  Viewed at: https://www.oecd.org /publications/oecd -
digital -economy -outlook -2020-bb167041 -en.htm . 
87 The 10 core industries are network equipment, next -generation 5G smartphones, AR and VR devices, 
wearable devices, intelligent CCTV, (future) drones, (connected) robots, 5G vehicle -to-every thing 
communication (V2X) for self -driving cars, information security, and edge computing. KISDI (2020),  2020 ICT 
Industry Outlook of Korea . 
88 In a hierarchical  telecommunications network, the  backhaul  portion of the network comprises the 
intermediate link s between the backbone network (core network) and the small subnetworks at the  edge of the 
network . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  of 5G mobile phone base stations reached 169,612 in December 2020, and the number of 
5G subscribers reached 11.85 million.  
4.218.   In December 2019, the MSIT announced a 5G+ Spe ctrum Plan, which incorporates 
three  policy directions:  
• Advance unlicensed technologies to the 5G performance level. Licensed frequency 
assignments are to be concentrated on strategic 5G+ industries including smart city, smart 
factory, autonomous vehicles,  drones, and digital healthcare. The Government plans to 
release unlicensed frequencies to each strategic 5G+ industry and improve technology 
regulations to help advance unlicensed technologies (Wi -Fi, Internet of Things (IoT), 
sensing, etc.) to the 5G lev el of performance.  
• Secure the world's widest 5G bands. The MSIT plans to secure additional spectrum, up to 
2,640  MHz, which will increase spectrum availability from 2,680  MHz now to 5,320  MHz 
by 2026.  
• Innovate spectrum management and systems, as well as institutional systems. The MSIT 
is to improve frequency supply approaches and management systems to respond to 
diversifying demand.  
4.219.   The Government, through the NIA, monitors the quality of broadband providers through "in 
the field" measurements, the result s of which are publicly accessible. According to the NIA, service 
quality evaluation significantly contributed to broadband development, as operators improved 
network quality after each publication of the results. The evaluation also helps increase competi tion 
by providing users with quality information on communication services.  
4.220.   In the ITU's Global Cybersecurity  Index (GCI), Korea was ranked 15th in 2018 among 
155 participants.89 The Government considers cyberspace crucial to people's daily lives, economic  
activities, and the Government's operations. Interconnection across various information and 
communications devices, including the application of IoT and the borderless nature of cyberspace, 
makes cyberspace safety control complex. In 2019, the Government devised Korea's first National 
Cybersecurity Strategy, which elaborates on the roles and responsibilities of all members of society 
to create a national culture of security practice, with a view to enhancing the country's cyber -defence 
capacity.90 The Gove rnment established the Private Sector Information Protection Comprehensive 
Plan 2019, to secure cyber -safety in the private sector and promote innovation in the information 
security industry. In addition, Korea promulgated privacy -related laws: the Act on Promotion of 
Information and Communication Network Utilization and Information Protection (most recently 
revised in June 2020) and the Personal Information Protection Act.  
4.221.   According to the OECD, digital technologies, such as blockchain, are powerful tools to 
strengthen the safety of transactions and information exchanges, and block hacking (quantum 
cryptography communication). The OECD suggests Korea allocate more R&D support to promote 
research and investment in next -generation security technologies.91 
4.222.   The Regulation on Outsourcing of Data Processing of Financial Companies contains provisions 
regarding the protection of specific information, i.e. personal identification information of individual 
customers should not be transferred to foreign countries when financial companies entrust 
information process to third parties. The Regulation on Supervision of Electronic Financial 
Transactions requires financial companies whose main office is established in Korea to establish an 
IT room and a disaster recovery cent re in the country. It also requires an electronic financial business 
 
89 ITU (2018), Global Cybersecurity Index (GCI) 2018. Viewed at: https: //www.itu.int/dms_pub/itu -
d/opb/str/D -STR-GCI.01 -2018-PDF-E.pdf. 
90 National Security Office (2019), National Cybersecurity Strategy. Viewed at: 
https://www.itu.int/en/ITU -
D/Cybersecurity/Documents/National_Strategies_Repository/National%20Cybersecurity%20Strategy_South%2
0Korea.pdf . 
91 OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -
en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  entity,92 when processing personal identification information or personal credit information through 
a cloud -computing service, to use or locate such service in the country.  
4.5.4.2   Postal servic es93 
4.223.   In accordance with the Postal Service Act, state -owned Korea Post (Table 3.4) is the national 
operator of postal services, under the MSIT. It is in charge of postal services, postal saving services, 
and postal life  insurance services.  
4.224.   Some postal serv ices are reserved for Korea Post, including:  
• delivery of letters if the weight of each letter is not more than 350 grams, and the postage 
charge for each such letter does not exceed 10 times the ordinary postal charge prescribed 
by presidential decree; and  
• registered letters dispatched by a state agency or local government.  
4.225.   Apart from these reserved services, delivery services are open to competition. According to 
the Foreign Investment Promotion Act, postal business is not open to foreign investment.  
4.226.   Unive rsal postal service, reserved for Korea Post, is defined as:  
• ordinary postal items weighing up to 2  kg per item;  
• parcels weighing up to 20  kg per item; and  
• special postal items, and other postal items, specified by presidential decree.  
4.227.   Korea Post sets post al rates in consultation with the Ministry of Strategy and Finance. 
Consultation is not required for postal rates for domestic and international parcels, express mail 
services, and postal money orders. The authorities indicate that in 2020 half the income was linked 
to postal financial services, 21% to letter services, 14.6% to parcel services, and 13.8% to other 
(Chart 4.8).  
Chart 4.8 Postal services, 2020  
 
Source:  Information provided by the authorities.  
 
92 These financial business entities do not include domestic branches of foreign financial companies that 
do not significantly affect the safety and reliability of electronic financi al transactions and electronic payment 
and settlement agencies for overseas cyber malls.  
93 UPU, Status and Structure of Postal Entities, Korea . Viewed at: 
https://www.upu.int/UPU/media/upu/PostalEntitiesFiles/statusOfPostalEntities/korEn.pdf . 
Chart 4.[]   Postal services, 2020
Source:  Information provided by the authorities.Letter services
21.0%
Parcel services
14.6%Postal financial
services
50.6%Other
13.8%WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.228.   During the review period, when postal services registered an annual average growth rate of 
1.46% from 2016 to 2020, courier services grew quickly, averaging 13.25% annually (Table 4.16).  
Table 4.16 Annual growth rates of postal and courier servicesa, 2016 -20 
 
2016  2017  2018  2019  2020  
Postal services  1.6%  -0.3%  2.9%  3.5%  -0.4%  
Courier services  12.7%  13.3%  9.6%  9.72%  20.93%  
a  The supervisory governmental bodies for postal services, and for courier services, are different.  
Source:  Information provided by the authorities.  
4.229.   Courier services are regulated under the Logistics Service Industry Development Act, 
enacted on 26 January 2021, by MOLIT. Currently, Korea has 2 1 courier service providers. From 
22 June 2021, foreigners with an H -2 visa (work and visit visa) are allowed to work as loading and 
unloading workers at logistics terminal operation businesses.  
4.5.5   Transport services  
4.230.   International transport of freight is main ly by sea, while international transport of passengers 
is mainly by air (96%). Domestic transport of passengers was dominated by road (around 85%) in 
2017, while rail and subway accounted for 4.5% and 10.8%, respectively (Table 4.17). Both road 
and air tra nsportation are subject to competition laws, while the international liner transport 
segment of maritime transport is exempt.  
Table 4.17 Annual international and domestic passenger transport by mode, 2016 -20 
(Million passengers)  
 2016  2017  2018  2019  2020  
International  75.8 79.7 .. .. .. 
 Shipping  2.8 2.7 .. .. .. 
 Aviation  73.0 77.0 85.9 90.1 14.2 
Domestic  33,158.7  33,336.7  .. .. .. 
 Railway  1,449.5  1,490.3  1,574.7  1,635.1  .. 
 Subway  3,572.1  3,604.7  3,444.6  3,521.8  .. 
 Road 28,090.7  28,192.4  28,409.6  n/a .. 
 Shipping  15.4 16.9 .. .. .. 
 Aviation  30.9 32.4 31.6 33.0 25.2 
.. Not available.  
Source:  Korean Statistical Information Service (KOSIS). Viewed at: https://kosis.kr/eng/ . 
4.5.5.1   Maritime transport  
4.231.   According to UNCTAD data, in 2020, Korea maintained its ranking as the 7th in the world by 
carrying capacity in dead -weight tonnes (DWT) (3.93% of total DWT). A total of 1,615 ve ssels carried 
80.5 million DWT, of which 837 foreign -flagged vessels carried 82% of this total tonnage.94 
4.232.   The maritime sector is regulated mainly under the Marine Transportation Act by the MOF.  
4.233.   Following the bankruptcy of Hanjin Shipping – once one of the world's top 10 shipping 
companies – in February 2017, MOF announced its five -year plan in April 2018 to rebuild the shipping 
industry. The Plan aims to:  
• secure stable cargo volumes based on competitive maritime services and freight rates, by 
operating a co operative mechanism for mutual benefit between shipping companies and 
shippers;  
 
94 UNCTAD (2020), Review of Maritime Transport 2020 . Viewed at: 
https://unctad.org/system/files/official -document/rmt2020_en.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  • restore shipping competitiveness by increasing the number of low -cost and high -efficiency 
ships, expanding the national flag fleet with an additional 200 new vessels including ultra 
large container ships, and supporting the introduction of eco -friendly ships; and  
• encourage shipping companies to continue maritime innovation by enhancing cooperation 
among themselves to secure their management stability, promoting cooperation among  
container shipping lines, supporting small and medium -sized shipping companies, securing 
domestic and overseas base port terminals, and monitoring shipping transactions.  
4.234.   The five -year plan helped HMM, formerly known as Hyundai Merchant Marine, move up its  
global ranking as the eighth -largest container carrier in the world in terms of capacity (up from 
13th before 2018). It also helped increase the operating revenue in the shipping sector, and the 
container shipping capacity.  
4.235.   The Government has also been ma king efforts to build a global maritime power hub by 
win-win partnerships between shipping and shipbuilding, and to enhance the competitiveness of the 
shipbuilding industry by developing technology to build eco -friendly vessels and supporting vessels 
going  green. Progress made includes:  (i) adjusting overlapped routes and developing new routes; 
(ii) providing subsidies (to shipping lines) to replace coastal cargo ships by eco -friendly vessels, with 
a target to build up to 100 green vessels by 2022; (iii)  establishing infrastructure for LNG -powered 
vessels; (iv)  rehabilitating the shipbuilding industry by localizing materials for marine plants until 
202295; and (v)  implementing renewal projects.96 
4.236.   The MOF prepared the Act on the Development and Promotion of Eco -friendly Vessels, 
effective from January 2020, with a view to reducing marine pollution.  The Government's National 
Plan for the Development and Popularization of Green Ship (2021 -30), which was announced on 
23 December  2020 and officially named the 2030 Green Ship -K Promotion Strategy, was based on 
this Act. This strategy aims to develop advanced green ship technologies to help phase out 
greenhouse gas emissions by up to 70% by 2030. The authorities indicate that, with the 
implementation of  this strategy, Korea is expected to lead the drive to create a sustainable and 
eco-friendly shipping industry, by renovating 15% (528 ships of 3,542) of the ships into eco -friendly 
ones, or "green ships".  
4.237.   The MOF also made efforts to strengthen marine saf ety by, inter alia , establishing the Korea 
Maritime Transportation Safety Authority (KOMSA) in 2019, and introducing and implementing 
maritime e -Navigation (e -Nav) services, which contain automatic predictions and warnings for 
collision and stranding, opti mal route guidance, automatic updates for electronic charts, and 
information on marine safety and weather. According to the MOF, these services will help: (i)  prevent 
human error on collision/stranding -related maritime accidents; (ii)  promote efficiency of  ships, 
ports, and maritime logistics; (iii)  establish maritime digital service infrastructure; and (iv)  establish 
and operate the Fourth Industrial Revolution service infrastructure in maritime transport. It 
established nine operation centres by 2021 to p rovide smooth e -Nav services. In this regard, the 
Act on Providing and Promoting Use of Intelligent Maritime Traffic Information Service (e -Nav Act) 
went into force on 30  January  2021.  
4.238.   In March 2019, Korea released guidelines based on international standar ds for type approval 
of maritime cybersecurity to help inspect the cybersecurity level and functioning of cyber -systems, 
including remote access equipment, integrated control, and monitoring systems on board ships.97 
4.239.   Given the pandemic crisis and growing u ncertainties on when and how demand will recover, 
Korea launched a USD  33 billion rescue fund to protect seven of its mainstay sectors, including the 
shipping and shipbuilding sectors. The state agency – Korea Ocean Business Corporation (KOBC) – 
planned to  buy KRW  100 billion worth of subordinated bonds from shippers by accepting the 
shippers' loan -to-value ratio of up to a maximum of 95% from the current average of 60% to 80%. 
 
95 According to the authorities, no measure has been taken to localize materials for marine plants.  
96 The "renewal  projects" are development projects aiming to revitalize the local economy of old and 
unused port facilities and their surroundings by transforming the area into an industrial, cultural, and living 
space.  
97 UNCTAD (2020), Review of Maritime Transport 2020 . Viewed at: 
https://unctad.org/system/files/official -document/rmt2020_en.pdf . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  The KOBC directly purchased KRW  24.9 billion corporate bonds of 10 small and med ium-sized 
shippers.  
4.240.   Sea water transport is open to foreign investment (Table 2.1). Foreign carriers have equal 
access to port facilities and port services. On ship registration, vessels that fly the Korean flag are 
required to be registered within 60 days after acquisition.98 The captain and chief engineer of an 
international vessel registered under Korean law must be of Korean nationality. For national essential 
vessels, the number of foreigners allowed on board is limited to six; these vessels include tho se 
transporting materials that significantly affect the national economy or national security, e.g. military 
supplies, petroleum, LNG, and coal.  
4.241.   Under the Ship Act (Article  6), foreign vessels are not permitted to engage in cabotage. 
However, coastal trade  is allowed if specified by law or treaty, approved by the MOF, or if it is to 
avoid marine accident or marine capture. For example, coastal trade has been allowed to be carried 
by foreign vessels between Busan and Gwangyang ports since 2003, and between I ncheon and 
Gwangyang ports since 2005, both with no time limit.  
4.242.   Foreigners may participate in goods and passenger transport between the Democratic 
People's Republic of Korea and the Republic of Korea, as minority joint -venture partners with a firm 
in the R epublic of Korea.  
4.243.   UNCTAD's Liner Shipping Connectivity Index ranked Korea as third in the world (after China 
and Singapore) in 2020, i.e. Korea was ranked third in terms of its level of integration into the 
existing liner shipping network.99 Korea is a con tracting party to the Convention on a Code of Conduct 
for Liner Conferences. Liner shipping companies are exempted from competition laws, and their 
concerted actions are allowed.  
4.244.   Various tax incentives are used. For example, the voluntary tonnage tax syste m (TTS), which 
is based on the net tonnage of individual vessels, is applied to shipping companies (foreign - or 
Korean -flagged vessels).100 Under the TTS, qualified shipping companies may divide their income 
into shipping income and non -shipping income. The  mandatory period for application of the TTS is 
five years, and companies that opt for it must pay it even when they experience operating losses. 
When operating profits are generated, the TTS allows for a lower effective tax rate than the corporate 
income tax system. In 2019, 64 companies participated in this system, down from 70 in 2015.  
4.245.   International vessels registered under Korean law benefit from tax breaks relating to 
acquisition, registration, and property taxes. The authorities state that those vesse ls with a 
designated port of shipment in Jeju -do could benefit more. "International vessels" mean any 
merchant ships engaged in international voyage and include, inter alia, ships owned by Koreans, 
ships owned by corporations established under Korean laws,  ships owned by corporations with main 
offices in Korea and where the representatives are Korean nationals, and ships operated by ocean -
going transport enterprises.  
4.246.   Ports are state -owned and are regulated by the MOF. Under its 2030 Port Policy and 
Implemen tation Strategy, the MOF aims to build high value -added smart ports with global 
competitiveness. The Strategy aims to ensure sustainability by implementing up -to-date port 
automation and digitalization, supporting going green, and expanding port facilities  and achieving 
coexistence between ports and communities.  
4.247.   Various port authorities, such as the Busan Port Authority and the Incheon Port Authority, 
which are majority owned by the State, manage ports (Section 3.3.5 and Table 3.4). Container 
 
98 Under Article  2 of the Ship Act, a vessel is eligible to fly a Korean flag if it is owned by th e State, by 
Koreans, by corporations established under Korean laws, or by corporations with main offices in Korea and the 
representatives are all Korean nationals.  
99 UNCTAD (2020), Review of Maritime Transport 2020 . Viewed at: 
https://unctad.org/system/files/official -document/rmt2020_en.pdf . The Liner Shipping Connectivity Index was 
updated and improved in 2019 to offer additional country coverage, and to add a component coveri ng the 
number of countries that can be reached without the need for transhipment. The other five components are the 
number of companies that provide services, the number of services, the number of ships that call per month, 
total annualized deployed contai ner-carrying capacity, and ship sizes.  
100 WTO document WT/TPR/S/346/Rev.1, 6 January 2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  throughput rea ched 29 million TEU (20 -foot equivalent unit) in 2019, up from 26.3 million TEU in 
2016.101 Korea has the fourth -largest container throughput capacity in the world, after China, the 
United  States, and Singapore.  
4.248.   In terms of cargo -handling capacity, Busan Po rt is the largest port in Korea (Chart 4.9). It 
invests in port -distribution centres (distriparks) to strengthen its position as a regional logistics 
centre.  
Chart 4.9 Cargo -handling capacity, 2020  
 
Source:  Korean Statistical Information Service (KOSIS). Viewed at: https://kosis.kr/eng/ . 
4.249.   Most maritime auxiliary services, including tug, freight forwarding, and maintenance and 
repair, are provided by the private sec tor; pilots must be Korean. According to the authorities, there 
is no restriction on foreign investment.  
4.250.   Port charges for imports and exports are the same, and include those for vessels (port dues, 
berth hire, anchorage, and laid -up charges), cargo (wharfa ge and demurrage), passenger terminal 
rental charges, and exclusive usage charges (warehouse and yard).  
4.5.5.2   Air transport  
4.251.   Korea's air transport services, particularly international scheduled flights, grew quickly 
during the review period until 2019 (Table 4.18 ). 
Table 4.18 Air transport, 2016 -20 
 2016  2017  2018  2019  2020  
International scheduled flights  
Aircraft movements  424,998  441,163  482,152  514,596  135,040  
Passengers  71,278,438  74,988,900  83,977,265  88,718,376  13,679,292  
Freight (tonne)  3,633,182  3,827,871  4,025,820  3,876,583  2,480,013  
Domestic scheduled flights  
Aircraft movements  188,293  193,186  191,135  190,859  149,060  
Passengers  30,453,160  31,854,452  31,067,088  32,236,818  21,759,005  
Freight (tonne)  289,745  287,304  270,482  255,578  168,430  
Source:  Korea Civil Aviation Development Association, Korea Airports Corporation, Aviation Statistics 2020 ; 
and information provided by the authorities.  
 
101 UNCTAD Stat, Container Port Throughput. Viewed at: 
https://unctadstat.un ctad.org/wds/TableViewer/tableView.aspx?ReportId=13321 . 
Chart 4.[]   Cargo handling capacity, 2020
Source:  Data provided by the authorities.Pyeongtaek -Dangjin Port
7.9%
Incheon Port
10.6%Busan Port
31.9%
Gwangyang Port
15.5%Other ports
20.3%
Total:
1,257.3 million tonnesUlsan Port
6.2%
Pohang Port
7.6%WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.252.   Reflecting the COVID -19 pandemic, the number of passengers carried by international flights 
dropped by 73% in 2020 from its 2019 level (Chart 4.10). Domestic flights contracted on average 
by 14.6% during the same period.  
Chart 4.10 International and domestic passenger flights, January to December, 2019 
and 2020  
 
Source:  International  Civil Aviation Organization (ICAO). Viewed at: https://d ata.icao.int/coVID -
19/operational.htm . 
4.253.   Air transport is regulated under the Aviation Act by MOLIT. Aviation policy aims to:  
• Provide convenient and safe air transport services, by building Korea into an aviation 
powerhouse leading the pan -Pacific region; ex pand the number of cities and international 
routes to make Korea the largest air transport hub in Asia; expand the international 
aviation network by negotiating with countries in America and Africa, and pursue open 
skies agreements with the European  Union (signed in 2020 ( Table A4. 1)) and the A SEAN ; 
promote open skies agreements with Asian economies; increase the supply capacity of 
low-cost carrier (LCC) services; and provide seamless air traffic control by establishing the 
second Area Control Center  in 2017. 
• Promote Incheon International Airport (IIA) as an airport hub in Northeast Asia, by 
implementing the fourth phase expansion project, and by building it into one of the world's 
best airports backed by its cargo -handling and passenger transport capacities . 
• Strengthen Korea's status as an aviation powerhouse, by maintaining the world's top level 
in aviation safety and security assessment; maintain the status as the ICAO Council 
member state in the Part III group; become a mid -sized aircraft design country b y 
establishing a national certification infrastructure for aircraft manufacturing; and 
implement aviation workforce training projects.102 
4.254.   Korea has 12 national flag carriers: 2 full -service carriers (Korean Air and Asiana Airlines), 
9 low -cost carriers (Jeju  Air, Air Busan, Jin  Air, Eastar Jet, t'way, Air Seoul, flygangwon, aero k and 
airpremia), and 1 cargo carrier (Air Incheon). All airlines are privately owned. It was reported that 
Korean Air planned to spend KRW  1.8 trillion to become the to p shareholder of Asiana Airlines, which 
 
102 MOLIT, Aviation . Viewed at: http://www.molit.go.kr/english/USR/WPGE0201/m_36861/DTL.jsp . 
02,0004,0006,0008,00010,00012,00014,00016,00018,00020,00022,00024,000Chart 4.[KOR]  International and domestic passenger flights, January to December , 2019 and 2020
Source:  ICAO. Viewed at: https://data.icao.int/coVID -19/operational.htm2019 20202020 over 2019:   -73.5%
-16.6
02,0004,0006,0008,00010,00012,00014,00016,00018,00020,00022,00024,000
2020 over 2019:  -14.6%International passenger flightsDomestic passenger flightsWT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  was in debt due to the COVID -19 pandemic. The KDB also plans to merge some low -cost carriers, 
i.e. Air Busan, Jin  Air, and Air Seoul.103 
4.255.   Foreign ownership of Korean airline operators is limited to less than 50%, and o perators 
must register their aircraft in Korea. Foreign investment in supporting air transport activities, 
including aircraft maintenance, repair, and overhaul, is now allowed with no foreign investment 
restrictions, and the previous foreign equity cap at 50% was removed  in 2017 (Section 2.6.2). 
National carriers may have their aircraft repaired or maintained abroad, but only by those overseas 
mechanics with Designated Overseas Maintenance Mechanic Certificates. There is no monopoly 
computer reservation sys tem (CRS) provider, nor an obligation to use a certain CRS supplier. 
Self-handling, mutual handling, and third -party handling are allowed, and there are no limits to the 
number of ground -handling suppliers at major airports.  
4.256.   Take-off and landing slots are allocated in the order of priority, according to slots retained 
from the previous season for scheduled air services, slots used for scheduled air services in the 
previous equivalent and non -equivalent seasons,  and new slots requested for scheduled and 
non-scheduled air services. Slots are not transferable. Unused slots are collected according to 
relevant regulations and are re -allocated if necessary.  
4.257.   Cabotage is not permitted.  
4.258.   International air services are governed by bilateral air services agreements (ASA s), and 
Korea has signed bilateral ASAs with 92  countries by 2021, including open skies agreements. The 
authorities state that since 2016, Korea has signed new ASAs (with Ethiopia, the European  Union, 
Georgia, Italy, Latvia, Paraguay, Portugal, Rwanda, Serbia, and the Seychelles), and updated others 
(with the Czech  Republic, Finland, Greece, the Kyrgyz  Republic, the Netherlands, Panama, the 
Philippines, Poland, Spain, and Turkmenistan). Table A4. 1 lists 81 ASAs.  
4.259.   Most ASAs score an Air Liberalization Index (ALI) of under 30 (of a possible 50).104 This is 
largely a reflection of the absence in those agreements of 7th freedom or cabotage traffic rights, of 
a withholding cla use mostly based on "substantial ownership and effective control", and not fully 
liberal pricing and capacity clauses. Notable exceptions are the ASAs concluded with Canada, Chile, 
Ecuador, and the United  States (which all score ALIs of 30 or over), essent ially because of the 
inclusion of more liberal pricing and capacity provisions.  The frequent unavailability of publicly 
available information about cooperation clauses is likely to have reduced the value of the total ALI 
scores.  
4.260.   The IIA continues to be Kor ea's major gateway. It is operated and managed by the Incheon 
International Airport Corporation, which is 100% owned by the Government. It is a global hub 
connecting  177 cities in 53 countries. MOLIT planned to implement the fourth phase expansion 
project in the IIA by 2024, the completion of which would enable the airport to be a stronger hub 
airport for northeast Asia.  
4.261.   Korea also has another 14 local airports, all of which are government -owned and managed 
and operated by the Korea Airports Corporation, a government -owned entity.  
4.5.5.3   Land transport  
4.262.   Domestic transport of passengers and freight is dominated by road (in 2018, 84.6% for 
passengers and 92.6% for freight), followed by rail and subways: 4.5% (rail) and 10.8% (subway) 
for passengers, and 1.5% (rail) fo r freight.105 Cabotage of land transport is not allowed.  
 
103 Heekyong  Yang and Joyce  Lee, "Korean Air to Spend USD  1.6 Billion to Become Asiana Airlines' Top 
Shareholder", Reuters , 15 November  2020. Viewed at: https://www.reuters.com/article/asiana -airlines -
ma/update -1-hanjin -kal-to-buy-asiana -airlines-after-getting -724-mln-kdb-injection -yonhap -idUSL1N2I202Z . 
104 The ALI is a synthetic measure of the openness of a given ASA devised by the WTO Secretariat for 
the purposes of the GATS -mandated Review of the Annex on Air Transport Services. The value of th e ALI 
ranges between 0 (for restrictive agreements) and 50 (for open ones). For more information, see WTO 
document S/C/W/270/Add.1, 30  November  2006.  
105 Figures provided by the authorities.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.263.   Road transport is regulated by MOLIT. Korea has over 112,977  km of road, with 
41 expressways and 52 national highways. Road transport operators must comply with an economic 
needs test to obtain licenc es.106 The Government encourages private investment in road 
construction, through build -transfer -operate (BTO) contracts. Foreigners may invest in the 
construction of roads promoted as private investment projects under relevant laws. According to the 
author ities, current relevant legislation does not have provisions distinguishing domestic and foreign 
nationals differently on investment terms.  
4.264.   Licensing conditions for bus services are regulated under the Passenger Transport Service 
Act. Private operators, in cluding foreign ones, are eligible for a licence if they meet requirements 
prescribed under the Act. Fares of buses operating within a city are regulated by local governments, 
while intercity bus fares are regulated by the Central Government.  
4.265.   According to the OECD, services like ride -hailing are subject to strict regulations, hindering 
the development of new business models or the commercialization of new digital products.107 For 
example, Uber and Kakao Carpool struggle to service the Korean market, because the Passenger 
Transport Service Act limits commercial use of private cars during rush hours (7  a.m.-9 a.m., and 
6 p.m.-8 p.m.). The authorities disagree, and state that Korea has been providing institutional 
assistance to support the growth of new business  models on mobility. For example, the Government 
set an institutional framework for passenger transport platforms in April 2021, and use 
ICT-connected transport operators with their consumers through these platforms. According to the 
authorities, the range  of commuting hours for the commercial use of non -commercial motor vehicles 
for passenger transport was agreed in March 2019 after social consensus was reached in the country. 
This led to the amendment of the Passenger Transport Service Act in August 2019.  
4.266.   Freight transport is regulated under the Trucking Transport Business Act. Permission does 
not vary depending on the nationality of the operator.  
4.267.   Railway transport is regulated under the Railroad Enterprise Act by the Rail Policy Bureau 
within MOLIT. The K orea National Railway, a government agency, is responsible for the construction 
of railways including high -speed, conventional, and urban rail infrastructure. The Korea Railroad 
Corporation (KORAIL) carries out management tasks, including the maintenance o f railway facilities. 
KORAIL and SR Corporation, both of which are designated public enterprises, are national railway 
operators. KORAIL manages high -speed railways, general railways, and freight railways, while SR 
manages some high -speed railways. Train f are changes (passenger rates) must be notified to MOLIT, 
but freight fare changes are not subject to this reporting requirement.  
4.268.   All railway operators must be licensed by MOLIT, and meet the requirements listed in the 
Railroad Enterprise Act. Foreign enter prises may supply rail transport services for routes built after 
1 July 2005, on the condition that they comply with an economic needs test  and the licensing 
requirements stipulated in the Railroad Enterprise Act. There are three private companies in the r ail 
transport sector.  
4.5.6   Distribution services with a specific focus on e -commerce  
4.269.   Distribution services (wholesale and retail trade) contributed to 7.6% of GDP in 2020, down 
from 8.1% in 2016 and 7.8% in 2019. The sector's share in total employment also decl ined, from 
14.2% in 2016 to 13.1% in 2020 (Table 1.2). Its growth rate changed from being positive from 
2016 to 2019  to negative in 2020 ( -1.9%).  
4.270.   The regulatory framework of and FDI constraints on the distribution sector remain 
unchanged. The sector is reg ulated under the Distribution Industries Development Act, and by 
competition policy and consumer protection legislation.  
4.271.   Foreign entry in trading activities is allowed, except in the areas of: (i)  firearms, explosives, 
and swords; (ii)  works of art and ant iques; and (iii)  operation of distribution services at public 
 
106 The test contains a cost -benefit ratio, a policy analysis (includ ing policy directions and job creation), 
and regional development concerns (including the level of underdevelopment in the region and the local 
economic ripple effect), based on which a decision is made on whether to carry out the road transport project.  
107 OECD (2020), Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  wholesale markets for agricultural, fishery, and livestock products. Foreign participants are accorded 
national treatment.  
4.272.   The sector remains regulated by MOTIE. Any person (domestic or foreign) intending to open 
a large store or a super supermarket (SSM) in any traditional commerce preservation area must 
register with the local government before commencing their business. A licence is not required.  For 
those superstores located within a 1 km radius of traditional markets, local governments may enact 
ordinances to restrict their registration. This regulation is valid until 2025.  
4.273.   From 2013, local governments may enact ordinances to restrict discount stores or SSMs to 
close their businesses twice per month to give smaller competitors opportunities to grow.  
E-commerce  
4.274.   Because Korea is a country where more than 90% of individuals use the Internet, 
e-commerce has developed quickly. Beginning in 2016, online purchases surpassed hypermarkets' 
sales, making e -commerce the biggest retail channel in Korea. Popular e -commerce sites include 
Auction, G -market, 11st, Coupang, and Naver Store. In 2020, e -commerce  recorded its strongest 
growth, reflecting changes in consumers' lifestyles due to COVID -19, wh ich accelerated the adoption 
of online shopping.  
4.275.   Domestic online purchases reached USD  115.4 billion in 2019, up from USD  100.8 billion in 
2018.108 The authorities state that domestic online purchase reached USD  135.1 billion in 2020. 
Online purchases from abroad are also rapidly increasing. Cross -border e -commerce reached 
USD 3.3 billion in 2019, up from USD  2.7 billion in 2018. Amazon.com and eBay are the most 
frequently used foreign online shopping sites visited by Koreans.109 
4.276.   The authorities indicate that  the most popular products sourced from domestic online 
retailers in 2019 were travel & transportation services (12.9%), home appliances & electronics 
(10.8%), clothing (10.7%), food & beverage (9.9%), cosmetics (9.2%), household items (7.4%), 
and food ser vices (7.2%). According to the Korea Customs Agency, the most popular foreign -sourced 
products from online retailers by Koreans in 2019 were food preparations (20%), electronics (12%), 
and cosmetics (7%).  
4.277.   E-commerce is mainly regulated under the Act on Con sumer Protection in Electronic 
Commerce (Act  No. 15141), which was partially amended in November 2017. The authorities state 
that this Act is currently being fully revised, and the pre -announcement of legislation was made in 
March 2021.  
4.278.   MOTIE is responsibl e for the development of e -commerce, while the FTC regulates 
competition -related e -commerce activities.  
4.279.   The development of e -commerce is linked to various aspects of the economy, including 
intellectual property right (IPR) protection, e -payment, and delive ry service. Measures adopted by 
the Government to promote e -commerce development include the standardization of the online 
commodities transaction data and the promotion of digital transformation.  
4.280.   The preferred payment method for online shopping is credit card. The average number of 
usages of PG services has been increasing quickly. In addition, mobile payment and digital wallet 
services, such as Samsung Pay and Naver Pay, are attracting more users.  
 
108 US International Trade Association, South Korea – Country Commercial Guide. Viewed at: 
https://www.trade.gov/knowledge -product/korea -ecommerce . 
109 US International Trade Association, South Korea – Country Commercial Guide . Viewed at: 
https://www.trade.gov/knowledge -product/korea -ecommerce . WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  4.5.7   Tourism110 
4.5.7.1   Recent developments  
4.281.   Tourism plays an important r ole in the economy, accounting for 4.7% of GDP in 2018. It is 
estimated to support 1.4 million jobs (both direct and indirect), or around 5.3% of total 
employment.111 Accommodation and food service activities accounted for 2.2% of GDP in 2020, and 
8.0% of e mployment (Table 1.2).  
4.282.   The sector contracted significantly in 2020, due to the COVID -19 pandemic. It is estimated 
that Korea's travel and tourism sector lost approximately KRW  16.6 trillion in 2020, due to a rapid 
decrease in international tourist arrivals  and outbound travel departures. In this regard, the 
Government implemented economic support measures worth a total of KRW  2 trillion for the tourism 
industry, including financial and fiscal support, and job support.  
4.283.   The authorities state that under the im pact of COVID -19, digital transformation has 
accelerated in the tourism sector, and the Government has enhanced R&D, data management, and 
workforce training with a view to facilitating tourism companies to convert or expand their businesses 
by utilizing bi g data, AI, and other advanced technologies.  
4.284.   The number of international visitors to Korea reached 15.3 million in 2018. The largest visitor 
flows are from Korea's neighbours (China, Japan, and Chinese  Taipei), followed by the United  States 
and Hong Kong, China. Tourism deficits expanded during the review period, as inbound tourism 
receipts declined while outbound tourism expenditure increased quickly (Table 4.19).  
4.285.   The number of domestic trips continues to increase, from 227.1  million in 2014 to 
311.2  million in 2018. The number of overnight visitors overtook that of same -day visitors for the 
first time in 2018, and the number of nights spent by domestic visitors in collective accommodation 
establishments totalled 408.9 million in 2018, up by 33% from 2017.  
Table 4.19 Tourism enterprises (2018) and employment, 2014 -18 
 Number of 
establishments  Number of persons employed  
2014 2015 2016 2017  2018  
Tourism industries  33,452  230,334  235,604  261,978  280,270  267,561  
 Accommodation services  2,110  67,465  70,305  73,631  71,769  69,926  
 Food and beverage serving 
industry  4,077  39,506  27,902  27,110  28,998  32,785  
 Travel agencies and other 
reservation services  19,039  69,400  84,558  98,421  107,209  99,077  
 Sports and recreation  7,340  36,633  37,707  50,219  60,129  56,673  
 Other  886 17,330  15,131  12,596  12,166  9,100  
Tourism flows ('000)  
Inbound tourism: total 
international arrivals   14,202  13,232  17,242  13,336  15,347  
 China   6,127  5,984  8,068  4,169  4,790  
 Japan   2,280  1,838  2,298  2,311  2,949  
 Chinese  Taipei   644 518 833 926 1,115  
 United  States   770 768 866 869 968 
 Hong Kong, China   558 523 651 658 684 
Outbound tourism: total 
international departures   16,081  19,310  22,383  26,496  28,696  
Domestic tourism: total domestic 
trips  227,100  238,297  241,750  284,966  311,153  
 Overnight visitors   98,521  99,776  101,068  112,784  163,204  
 Same -day visitors   128,579  138,522  140,682  172,182  147,949  
 Nights in all types of 
accommodation   269,268  268,297  271,696  307,492  408,941  
 
110 OECD (2020), OECD Tourism Trends and Policies 2020 . Viewed at: 
https://doi.org/10.1787/6b47b985 -en. 
111 OECD (2020), OECD Tourism Trends and Policies 2020 . Viewed at: 
https://doi.org/10.1787/6b47b985 -en. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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   Number of 
establishments  Number of persons employed  
2014 2015 2016 2017  2018  
Tourism receipts and expenditures (USD  million)  
Inbound tourism   22,390  18,712  20,923  17,173  19,856  
Outbound tourism   26,136  27,957  29,817  34,453  34,769  
Source:  OECD Tourism Statistics.  
4.5.7.2   Regulatory framework  
4.286.   The tourism sector is regulated by the Ministry of Culture, Sports and Tourism (MCST) and 
its Tourism Policy Bureau, and the Tourism Industry Policy Bureau. The MCST works closely with the 
Korea Tourism Organization, a publicly funded organization responsi ble for marketing and promoting 
Korea tourism both domestically and abroad. In addition, the National Tourism Strategy Meeting, 
established in 2017, is held annually to discuss ways to attract more international tourists and boost 
domestic travel.  
4.287.   After th e third National Tourism Strategy Meeting, Korea announced its Tourism Innovation 
Strategy in April 2019. It identified key challenges facing the tourism sector: securing continued 
growth in inbound tourists, strengthening the competitiveness of tourism SM Es, increasing the 
dispersal of visitors to less visited regions, and enhancing the attractiveness and quality of tourism 
products and services.  
4.288.   In the Tourism 2020 Strategy, the Government proposed a range of policy responses to 
address the challenges. It  plans to ease visa rules, develop local municipalities into regional tourism 
hubs, and include more cultural content into tour programmes. Furthermore, it plans to increase 
financial support to the tourism sector. The Government also plans to dedicate an online platform 
and improve digital marketing strategies to enhance the experience for independent travellers.  
4.289.   The Tourism Promotion and Development Fund supports tourism under the Framework Act 
of Tourism.112 In 2018, the total expenditure of the Fund was about KRW  811 billion.  
4.290.   With a view to promoting private investment, Korea also notified to the WTO that, pursuant 
to the Enforcement Decree of the Tourism Promotion Act:  
• the minimum number of guest rooms required for registration of a resort condominium 
business was reduced from 30 to 20, for a period of two years from 1  July 2016 to 
30 June 2018; and  
• the minimum business capital required for registration of a travel business (general, 
overseas, and domestic travel business) was reduced during the same peri od.113 
 
112 Sources of the Fund include government funds, profits from t he casino industry, a departure tax on 
Korean tourists going abroad, and profits from fund operation. The Fund is used for constructing and repairing 
tourism facilities, securing and repairing transportation, constructing and repairing infrastructure of 
tourism -related businesses, subsidizing corporations in charge of examination and research of tourism policies, 
and other activities that promote tourism.  
113 WTO documents S/C/N/892, 4 September 2017 and S/C/N/893, 4 September 2017.  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  5  APPENDIX TABLES  
Table A1. 1 COVID -19 policies to support the economy, as at June 2021  
Date  Measure  Amount  Main items  
  Total support of more 
than KRW  310 trillion 
(16.5% of GDP)  
 KRW 89 trillion: four supplementary budgets;  
KRW 229 trillion; financing support (loans 
and guarantees);  
KRW 8 trillion: overlapping support  
5-20 February 2020  Support for the 
quarantine 
system, 
affected 
families and 
businesses  KRW 4.3 trillion  
(budget: 
KRW 0.3 trillion; 
financing: 
KRW 4.0 trillion)  KRW 0.1 trillion: pre -emptive quarantine 
(budget)  
KRW 2.0 trillion: SMEs (loans and 
guarantees)  
KRW 0.3 trillion: low -cost carriers  (fee 
reduction)  
Policy preparation for worse -hit sectors, such 
as automobile, aviation, shipping, tourism 
and export industries  
28 February 2020  Support for 
households and 
reinforcing the 
financial sector  KRW 16 trillion  
(budget: 
KRW 2.8 trillion; 
financ ing: 
KRW 11.7 trillion; tax 
benefit: KRW  1.7 trillion)  KRW 2.8 trillion: consumption coupons and 
support for family care leave;  
KRW 2.5 trillion low -interest -rate loans and 
guarantees to SMEs;  
KRW 0.5 trillion: support to local credit 
guarantee funds (guar antees);  
KRW 8.2 trillion: liquidity support to the 
financial sector (liquidity);  
KRW 1.7 trillion: tax credit for reduction of 
rents and cut in individual consumption tax 
on cars (tax benefits)  
16 March 2020  Bank of Korea 
policy rate cut   50 basis point policy rate cut to 0.75%;  
interest rate cut on the Bank Intermediated 
Lending Support Facility to 0.25%  
Passed 
17 March  2020 First 
supplementary 
budget  KRW 11.7 trillion (0.6% 
of GDP)  
• Expansion expenditure 
of KRW  10.9 trillion  
• Revenue adjustment of 
KRW 0.8 trillion  KRW 2.1 trillion: virus prevention, diagnosis 
and treatment;  
KRW 4.1 trillion: loans to SMEs and small 
merchants;  
KRW 3.5 trillion: emergency livelihood 
support including gift vouchers and deduction 
in national health insurance;  
KRW 1.2 tr illion: aid to employees and 
severely affected provinces, including 
expanded employment retention subsidy and 
financial support;  
support for epidemic prevention and 
treatment for designated coronavirus disaster 
areas  
19 March 2020  
24 March 2020  Plan to provide 
financing to 
companies and 
stabilize 
financial 
markets (bonds 
and securities)  Initial amount of 
KRW 50 trillion raised to 
KRW 100 trillion (5.1% 
of GDP)  KRW 22.5 trillion: lending to SMEs, small 
merchants and self -employed (loans and 
guarantees);  
KRW 29.1 trillion: support for large and mid -
sized companies (loans and guarantees);  
KRW 17.8 trillion: to avoid a credit crunch 
(loans and guarantees);  
KRW 20.0 trillion: Bond Market Stabilization 
Fund to perform financial functions (liquidity 
provision fu nded by financial institutions);  
KRW 10.7 trillion: Securities Market 
Stabilization Fund (liquidity provision funded 
by financial institutions);  
expansion of foreign currency liquidity by 
raising ceilings on the foreign -exchange 
derivatives positions of ba nks and easing 
foreign -exchange market stability rules 
(26 and 28 March)  
19 March 2020  Currency swap 
agreement with 
the United 
States  USD 60 billion  Bilateral currency swap agreement between 
the Bank of Korea and the US Federal 
Reserve for six months (dol lar liquidity); 
extended three times  (30 July 2020 , 
17 December 2020 , and 17 June 2021 ) for 
the periods of 30  September 2020 to 31 
March 2021, and 31 March 2021 to 30 
September 2021 , and 30 September 2021 to 
31 December 2021  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Date  Measure  Amount  Main items  
20 March 2020,  
10 April 2020, 
2 July 2020, 
31 August 2020, 
24 September 2020, 
28 October 2020, 
27 November 2020, 
9 March 2021  
28 April 2021,  
3 June 2021,  
28 June 2021  Purchase of 
treasury bonds 
by the Bank of 
Korea  KRW 13 trillion (as at 
April 2021)  KRW 4.5 trillion (KRW  1.5 tril lion on 
20 March 2020, 10  April 2020, and 
2 July 2020);  
KRW 1.5 trillion (31 August 2020);  
KRW 2 trillion (24 September 2020);  
KRW 1.5 trillion (28 October 2020);  
KRW 1.5 trillion (27 November 2020); and  
KRW 2 trillion (9  March 2021) purchases of 
treasury bonds for market stabilization  
KRW 1 trillion (28 April 2021);  
KRW 1.5 trillion (3 June 2021); and  
KRW 1.5 trillion (28 June 2021) purchases of 
treasury bonds for market stabilization  
8 April 2020  Support for 
exports and 
start-ups KRW 10.4 trillion  KRW 10.4 trillion: financial support to export 
companies and start -ups and ventures (loans 
and guarantees)  
16 April 2020  Support for 
non-bank 
financial 
institutions  KRW 10 trillion  KRW 10 trillion: loans to bank and non -bank 
financial institution s such as securities and 
insurance companies for three months  
22 April 2020  Plan to support 
key industries 
and additional 
financing to 
SMEs and 
households  KRW 85.1 trillion  KRW 40 trillion: Key Industry Relief Fund 
guaranteed by government to purchase 
corporate debt and equity;  
KRW 35 trillion for additional financing to 
SMEs (loans and guarantees);  
KRW 10.1 trillion for special employment 
security measures  
Passed 30 April 2020  Second 
supplementary 
budget  KRW 12.2 trillion (0.6% 
of GDP);  
KRW 3.4 trillion financed 
by debt issuance (the 
remaining by spending 
cuts) Emergency relief grants of up to 
KRW 1 million (USD  814) to all 2 2.7 million 
households  
2.7 million lower income households can 
receive grants in cash.  
The remaining 19 million households receive 
grants in voucher or credit card points for 
incentive to consumption.  
A total of KRW  2.4 trillion in financial aid for 
micro businesses and SMEs (Contingency 
Livelihood Support Policy released on 
10 September 2020) consisting of a Credit 
Guarantee Support Program by KODIT 
(KRW  1.5 trillion) and a Credit Guarantee 
Support Program by KIBO (KRW  0.9 trillion)  
28 May 2020  Bank of Korea 
policy rate cut   25 basis point policy rate cut to 0.50%  
3 July 2020  Third 
supplementary 
budget  KRW 35.1 trillion  KRW 10.0 trillion: Creation of about 550,000 
jobs in publicly initiated programmes and 
strengthening social safety nets;  
KRW 5 trillion: Emergency loans to struggling 
small merchants, SMEs and large businesses;  
KRW 4.8 trillion: Korean New Deal projects 
investments  
Passed  
22 September 2020  Fourth  
supplementary 
budget  KRW 7.8 trillion (0.4% of 
GDP), KRW  7.5 trillion 
financed by debt 
issuance  KRW 3.9 trillion: support for small businesses 
and SMEs;  
KRW 1.5 trillion: emergency employment 
support,  
KRW 2.2 tril lion: low -income family support 
and childcare support;  
KRW 0.2 trillion: emergency disease 
prevention support  
Announced on 
29 December 2020, 
started as from 
January 2021  Customized 
damage 
support  KRW 9.3 trillion, 
KRW 4.8 trillion financed 
by reserve funds 
(designated),  
KRW 3.9 trillion financed 
by the 2021 budget, etc.  KRW 5.6 trillion: support for small business 
and emergency employment;  
KRW 0.8 trillion: COVID -19 testing, 
diagnosis, treatment and disease prevention;  
KRW 2.9 trillion: COVID -19 support for SMEs, 
small merchants and households  
Source:  OECD (2020), OECD Economic Surveys: Korea 2020 . Viewed at: https://doi.org/10.1787/2dde9480 -
en; and information provided by the  authorities.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Table A1. 2 Merchandise exports by HS section and major HS chapter/subheading, 
2015 -20  
HS section/chapter/subheading  2015  2016  2017  2018  2019  2020  
Total exports (USD billion)  526.8  495.4  573.6  604.8  542.2  512.7    
(% of total exports)  
01 Live animals and products  0.3 0.3 0.3 0.3 0.3 0.3 
02 Vegetable products  0.2 0.2 0.2 0.2 0.2 0.2 
03 Fats and oils  0.0 0.0 0.0 0.0 0.0 0.0 
04 Prepared food, beverages and tobacco  0.9 1.0 0.9 0.9 1.0 1.2 
05 Mineral products  6.4 5.6 6.4 8.1 7.9 5.1  
27 Mineral fuels and oils  6.3 5.5 6.3 7.9 7.8 5.0  
 2710 Petroleum oils and oils from bituminous 
minerals, not crude (..)  5.8 5.2 5.8 7.4 7.2 4.5 
06 Chemicals and products thereof  6.5 7.3 7.6 8.4 8.6 9.3  
29 Organic chemicals  3.5 3.6 4.0 4.2 3.9 3.0  
 2902 Cyclic hydrocarbons  1.6 1.6 1.8 1.9 1.7 1.1  
30 Pharmaceuticals  0.4 0.5 0.5 0.6 0.7 1.4  
 3002 Blood, antisera, immunological products, 
etc. 0.2 0.3 0.3 0.4 0.5 1.1 
 
33 Essential oils, perfumes, cosmetic or toilet 
preparations  0.6 0.8 0.9 1.0 1.2 1.5 
 
 3304 Cosmetic and toilet preparations; beauty, 
make -up and skin care  0.5 0.7 0.7 0.8 1.0 1.2 
 
38 Miscellaneous chemical products  0.6 0.6 0.6 0.8 0.8 1.3 
07 Plastics and rubber  6.7 7.0 6.8 7.1 7.4 7.4  
39 Plastics and articles thereof  5.4 5.6 5.5 5.8 6.0 6.2  
40 Rubber and articles thereof  1.3 1.4 1.4 1.3 1.3 1.3 
08 Raw hides and skins; leather, furskins and 
articles thereof  0.2 0.2 0.2 0.1 0.2 0.1 
09 Wood, cork, straw  0.0 0.0 0.0 0.0 0.0 0.0 
10 Pulp of wood; paper and paperboard  0.6 0.6 0.6 0.6 0.6 0.6 
11 Textiles and textile articles  2.7 2.7 2.3 2.2 2.3 2.1 
12 Footwear, headgear, etc.  0.1 0.1 0.1 0.1 0.1 0.1 
13 Articles of stone, plaster, cement  0.5 0.5 0.5 0.5 0.6 0.6 
14 Precious stones and metals  0.6 0.8 0.7 0.4 0.6 1.0 
15 Base metals and articles thereof  8.4 8.5 8.7 8.5 8.7 8.2  
72 Iron and steel  3.8 3.8 3.9 4.1 4.3 3.9  
73 Articles of iron and steel  2.1 2.2 2.3 1.7 1.7 1.5 
16 Machinery, electrical equipment  38.1 38.9 40.5 43.4 41.4 44.4  
84 Machinery and mechanical appliances, parts 
thereof  11.8 11.8 12.1 12.8 13.1 13.2 
 
 8473 Parts and accessories (..) principally for 
machines of headings 84.70 to 84.72  1.0 0.9 1.3 2.0 2.1 2.6 
 
 8486 Machines used for the manufacture of 
semiconductor boules or wafers (..)  0.9 0.8 1.2 1.4 1.4 1.6 
 
85 Electrical machineries and parts thereof  26.3 27.1 28.4 30.5 28.3 31.1  
 8507 Electric accumulators  0.9 1.0 1.0 1.2 1.4 1.5  
 8517 Telephone sets, including telephones for 
cellular networks (..)  5.7 5.0 2.7 2.4 3.3 3.5 
 
 8529 Transmission apparatus; parts suitable 
for use principally with the apparatus of 
heading 8525 to 8528  1.1 1.3 1.4 1.2 1.9 1.5 
 
 8523 Discs, tapes, solid -state non -volatile 
storage devices, smart cards (..)  0.2 0.2 0.1 0.4 1.0 2.1 
 
 8542 Electronic integrated circuits  9.9 10.6 15.0 18.2 14.6 16.2 
17 Transport equipment  20.9 19.8 18.4 14.0 15.6 14.7  
87 Vehicles, parts thereof  13.1 12.6 10.8 10.1 11.6 10.6  
 8703 Motor vehicles for the transport of 
persons  7.9 7.6 6.8 6.3 7.5 7.0 
 
 8708 Parts and accessories of motor vehicles of 
HS 8701 to 8705  4.4 4.4 3.4 3.2 3.5 3.1 
 
89 Ships, boats and other floating structures  7.3 6.7 7.1 3.4 3.5 3.7  
 8901 Cruise ships, ferry -boats, cargo ships and 
similar for transport of persons or goods  4.1 5.1 4.2 2.6 3.2 3.2 
18 Precision equipment  6.2 5.6 5.1 4.6 3.9 4.0  
90 Optical, photographic, measuring, medical 
instruments (..)  6.2 5.6 5.1 4.6 3.9 3.9 
 
 9013 Liquid crystal devices (..); lasers, not 
laser diodes; (..)  4.1 3.3 2.7 2.2 1.3 1.3 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  HS section/chapter/subheading  2015  2016  2017  2018  2019  2020  
19 Arms and ammunition  0.1 0.1 0.1 0.1 0.1 0.2 
20 Miscellaneous manufactured articles  0.6 0.6 0.5 0.5 0.5 0.5 
21 Works of art, etc.  0.1 0.1 0.0 0.0 0.0 0.0 
Source:  WTO Secretariat calculations, based on UN Comtrade database.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Table A1. 3 Merchandise imports by HS section and major HS chapter/subheading, 
2015 -20 
HS section/chapter/subheading  2015  2016  2017  2018  2019  2020  
Total imports (USD billion)  436.5  406.2  478.5  535.2  503.3  467.5    
(% of total imports)  
01 Live animals and products  1.9 2.2 2.1 2.1 2.2 2.4 
02 Vegetable products  2.1 2.1 1.8 1.7 1.8 2.0 
03 Fats and oils  0.2 0.3 0.3 0.2 0.3 0.3 
04 Prepared food, beverages and tobacco  1.9 2.2 1.9 1.9 2.1 2.3 
05 Mineral products  26.6 23.0 26.1 30.4 28.5 22.1  
26 Ores, slag and ash  2.8 2.7 3.0 2.8 3.0 3.4  
27 Mineral fuels and oils  23.7 20.1 23.0 27.5 25.3 18.5  
 2701 Coal; briquettes, ovoids and similar solid 
fuels manufactured from coal  2.3 2.3 3.1 3.1 2.8 2.0 
 
 2709 Petroleum oils and oils obtained from 
bituminous minerals; crude  12.6 10.9 12.5 15.0 14.0 9.5 
 
 2710 Petroleum oils and oils obtained from 
bituminous minerals; other than crude  3.5 2.9 3.1 3.9 3.4 2.7 
 
 2711 Petroleum gases and other gaseous 
hydrocarbons  4.9 3.7 3.9 5.1 4.8 4.0 
06 Chemicals and products thereof  8.3 8.8 8.5 8.7 8.7 9.2  
29 Organic chemicals  2.8 2.7 2.7 2.7 2.5 2.6 
07 Plastics and rubber  2.8 3.1 2.9 2.7 2.8 3.0  
39 Plastics and articles thereof  2.3 2.5 2.3 2.2 2.3 2.5 
08 Raw hides and skins; leather, furskins and 
articles thereof  0.8 0.8 0.7 0.7 0.7 0.8 
09 Wood, cork, straw  0.7 0.8 0.7 0.7 0.6 0.6 
10 Pulp of wood; paper and paperboard  0.9 0.9 0.8 0.8 0.8 0.7 
11 Textiles and textile articles  3.2 3.4 3.0 3.0 3.2 3.2 
12 Footwear, headgear, etc.  0.6 0.7 0.7 0.7 0.7 0.7 
13 Articles of stone, plaster, cement  1.2 1.3 1.1 1.1 1.1 1.1 
14 Precious stones and metals, pearls  0.8 0.8 0.9 0.6 0.8 1.1 
15 Base metals and articles thereof  8.9 8.7 8.2 7.6 7.7 6.9  
72 Iron and steel  3.5 3.5 3.5 3.1 3.1 2.4 
16 Machinery, electrical equipment  28.5 29.8 30.0 27.1 28.1 32.4  
84 Machinery and mechanical appliances. parts 
thereof  10.6 11.3 12.7 11.2 10.3 12.3 
 
 8486 Machines of a kind used for the 
manufacture of semiconductor boules or wafers 
(..) 1.8 2.4 4.2 3.2 1.8 3.3 
 
85 Electrical machineries and parts thereof  17.8 18.5 17.3 15.8 17.8 20.1  
 8517 Telephone sets, including telephones for 
cellular networks (..)  2.7 3.0 2.8 2.2 2.6 2.6 
 
 8542 Electronic integrated circuits  7.2 7.4 7.0 6.5 7.1 8.6 
17 Transport equipment  4.9 5.3 4.1 4.1 4.4 5.0  
87 Vehicles, parts thereof  3.4 3.8 3.3 3.1 3.3 3.9  
 8703 Motor vehicles for the transport of 
 persons  2.3 2.3 2.0 2.1 2.2 2.6 
18 Precision instruments  4.4 4.5 4.7 4.4 3.9 4.4  
90 Optical, photographic, measuring, medical 
instruments (..)  4.2 4.3 4.5 4.2 3.7 4.1 
19 Arms and ammunition  0.1 0.2 0.1 0.1 0.1 0.1 
20 Miscellaneous manufactured articles  1.2 1.4 1.2 1.2 1.3 1.5 
21 Works of art, collectors' pieces and antiques  0.0 0.1 0.1 0.1 0.1 0.1 
Source:  WTO Secretariat calculations, based on UN Comtrade database.  
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  Table A1. 4 Merchandise exports by destination, 2015 -20 
 
2015  2016  2017  2018  2019  2020  
Total exports (USD billion)  526.8  495.4  573.6  604.8  542.2  512.7   
(% of total)  
Americas  20.0 19.5 17.7 17.6 19.4 19.3 
 United  States  13.3 13.5 12.0 12.1 13.6 14.5 
 Other America  6.6 6.1 5.7 5.5 5.8 4.8 
 Mexico  2.1 2.0 1.9 1.9 2.0 1.6 
 Canada  0.9 1.0 0.8 0.9 1.0 1.1 
 Brazil  1.0 0.9 1.0 0.8 0.9 0.8 
Europe  11.7 11.5 11.6 11.2 11.3 11.8 
 EU-27 7.7 8.1 8.0 8.5 8.7 9.3 
 Germany  1.2 1.3 1.5 1.5 1.6 1.9 
 Poland  0.5 0.6 0.5 0.7 1.0 1.1 
 Netherlands  0.8 0.8 0.8 0.8 0.8 0.8 
 EFTA 1.2 0.8 0.9 0.6 0.5 0.4 
 Other Europe  2.7 2.6 2.6 2.1 2.1 2.1 
 Turkey  1.2 1.1 1.1 1.0 1.0 1.1 
 United Kingdom  1.5 1.4 1.5 1.1 1.0 0.9 
CISa 1.3 1.4 1.6 1.7 2.4 2.2 
 Russian Federation  0.9 1.0 1.2 1.2 1.4 1.3 
Africa  2.2 2.6 1.9 1.7 1.8 1.6 
Middle East  5.0 4.4 3.7 2.9 2.6 2.4 
Asia 59.8 60.5 63.6 64.9 62.5 62.7 
 China  26.0 25.1 24.8 26.8 25.1 25.9 
 Japan  4.9 4.9 4.7 5.0 5.2 4.9 
 Other Asia  29.0 30.5 34.2 33.0 32.1 31.9 
 Viet Nam 5.3 6.6 8.3 8.0 8.9 9.5 
 Hong Kong, China  5.8 6.6 6.8 7.6 5.9 6.0 
 Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu (Chinese Taipei)  2.3 2.5 2.6 3.4 2.9 3.2 
 India 2.3 2.3 2.6 2.6 2.8 2.3 
 Singapore  2.8 2.5 2.0 1.9 2.4 1.9 
 Malaysia  1.5 1.5 1.4 1.5 1.6 1.8 
 Philippines  1.6 1.5 1.8 2.0 1.5 1.4 
 Thailand  1.2 1.3 1.3 1.4 1.4 1.3 
 Indonesia  1.5 1.3 1.5 1.5 1.4 1.2 
 Australia  2.1 1.5 3.5 1.6 1.5 1.2 
 Marshall Islands  1.4 1.6 1.2 0.3 0.6 0.9 
Memorandum:        
APEC 72.9 73.6 75.3 77.7 76.5 77.4 
ASEAN  14.2 15.0 16.6 16.5 17.5 17.4 
EU-28 9.2 9.5 9.5 9.6 9.7 10.2 
a Commonwealth of Independent States, including certain associate and former member states.  
Source:  WTO Secretariat calculations, based on UN Comtrade database.  
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  Table A1. 5 Merchandise imports by origin, 2015 -20 
 
2015  2016  2017  2018  2019  2020  
Total imports (USD billion)  436.5  406.2  478.5  535.2  503.3  467.5   
(% of total)  
Americas  14.7 15.4 15.2 15.7 17.5 17.6 
 United  States  10.1 10.7 10.6 11.0 12.3 12.4 
 Other America  4.5 4.7 4.6 4.6 5.1 5.2 
 Mexico  0.8 0.9 0.9 1.0 1.2 1.4 
 Canada  0.9 1.0 1.1 1.1 1.1 0.9 
Europe  14.6 14.1 13.1 12.9 12.3 14.1 
 EU-27 11.7 11.5 10.7 10.4 10.3 11.8 
 Germany  4.8 4.7 4.1 3.9 4.0 4.4 
 Italy 1.3 1.3 1.2 1.2 1.3 1.4 
 Netherlands  1.0 1.0 1.3 1.3 0.8 1.3 
 France  1.4 1.4 1.2 1.1 1.2 1.3 
 EFTA 1.2 1.0 0.8 0.9 0.9 0.9 
 Other Europe  1.7 1.6 1.6 1.6 1.2 1.4 
 United Kingdom  1.4 1.3 1.3 1.3 0.8 0.9 
CISa 2.7 2.2 2.8 3.5 3.2 2.5 
 Russian Federation  2.6 2.1 2.5 3.3 2.9 2.3 
Africa  1.6 1.3 1.5 1.7 1.5 1.2 
Middle East  15.3 13.1 14.3 15.5 13.8 9.2 
 Saudi Arabia, Kingdom of  4.5 3.9 4.1 4.9 4.3 3.4 
 Qatar  3.8 2.5 2.4 3.0 2.6 1.6 
 Kuwait, State of  2.1 1.8 2.0 2.4 2.1 1.2 
 United Arab Emirates  2.0 1.7 2.0 1.7 1.8 1.2 
Asia 51.0 53.8 52.9 50.3 51.2 54.7 
 China  20.7 21.4 20.5 19.9 21.3 23.3 
 Japan  10.5 11.7 11.5 10.2 9.5 9.8 
 Other Asia  19.8 20.7 21.0 20.2 20.5 21.5 
 Viet Nam 2.2 3.1 3.4 3.7 4.2 4.4 
 Australia  3.8 3.7 4.0 3.9 4.1 4.0 
 Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu (Chinese Taipei)  3.8 4.0 3.8 3.1 3.1 3.8 
 Malaysia  2.0 1.8 1.8 1.9 1.8 1.9 
 Singapore  1.8 1.7 1.9 1.5 1.3 1.8 
 Indonesia  2.0 2.0 2.0 2.1 1.8 1.6 
 Thailand  1.1 1.1 1.1 1.0 1.1 1.1 
 India 1.0 1.0 1.0 1.1 1.1 1.0 
Other  0.1 0.1 0.2 0.4 0.5 0.7 
Memorandum:        
APEC 65.3 68.2 67.9 66.4 68.5 71.5 
ASEAN  10.3 10.9 11.2 11.1 11.2 11.7 
EU-28 13.1 12.8 12.0 11.6 11.1 11.3 
a Commonwealth of Independent States, including certain associate and former member states.  
Source:  WTO Secretariat calculations, based on UN Comtrade database.  
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  Table A2. 1 Notifications to the WTO, 1 July 2016 -1 July 2021  
Agreement/Article  Requirement  Symbol and date of latest 
notification  
Agreement on Agriculture  
Article  18.2 Export subsidy (ES:1)  G/AG/N/KOR/79, 09/04/2021  
Article  18.2 Export subsidy (ES:1 – ES:3)  G/AG/N/KOR/58, 06/01/2017  
Article  18.2 Domestic support (DS:1)  G/AG/N/KOR/82, 26/04/2021  
Article  18.2 
 Market access, administration of tariff 
and other quota commitments (MA:1)  G/AG/N/KOR/56, 20/07/2016  
 
Article  18.2 
 Market access, imports under tariff 
quotas (MA:2)  G/AG/N/KOR/77, 12/10/2020  
 
Article  18.3 
 New or modified domestic support 
measures exempt from reduction (DS:2)  G/AG/N/KOR/83, 26/04/2021  
Article  16.2 Decision on Measures Concerning the 
Possible Negative Effects of the Reform 
Progra mme on Least -Developed and Net 
Food-Importing Developing Countries 
(Table NF:1)  G/AG/N/KOR/75, 29/04/2020  
Articles 5.7 and 18.2  Market access, special safeguard (MA:5)  G/AG/N/KOR/76, 06/10/2020  
Article  5.7 Market access, special safeguard (MA:3)  G/AG/N/KOR/54, 08/07/2016  
General Agreement on Trade in Services  
Article  V:7(a)  Notification of regional trade agreement  
 S/C/N/868, WT/REG375/N/1, 
07/10/2016  
Article  III.3 
 Notification of investment -related 
legislation  S/C/N/894, 01/09/2017  
 
Article  VII:4 Notification of mutual recognition 
agreement or memorandum of 
cooperation  S/C/N/961, 15/10/2019  
GATT 1994  
Article  XXIV:7(a)  Notification of regional trade agreement  
 S/C/N/1054, WT/REG452/N/1, 
16/04/2021  
Agreement on the Implementation of Article  VI of the GATT 1994 (anti -dumping)  
Article  16.4 Anti-dumping actions ( ad hoc ) G/ADP/N/356, 9/06/2021   
Article  16.4 Anti-dumping actions (taken within the 
preceding 6 months)  G/ADP/N/350/KOR, 22/04/2021  
 
GATT 1994  
Article  XVII:4(a)  State trading activities  G/STR/N/18/KOR, 12/10/2020  
GPA 2012  
Article  XVI:4 of the 
revised GPA  Statistics  GPA/STAT(18)/KOR/1, 05/11/2020  
Appendix I  Procurement methods  GPA/THR/KOR/2, 08/01/2021  
Agreement on Import Licensing  
Article  7.3 Replies to questionnaire  G/LIC/N/3/KOR/13, 02/12/2020  
Articles  5.1, 5.2, 5.3  New licensing regulations and procedures  G/LIC/N/2/KOR/41, 27/10/2020  
Decision on Notification Procedures for Quantitative Restrictions  
G/L/59  Quantitative restrictions  G/MA/QR/N/KOR/3, 13/10/2020  
Agreement on Rules of Origin  
Paragraph 4 of Annex 
II Preferential rules of origin  
 G/RO/N/225, 29/04/2021  
 
WT/L/917/Add.1  Preferential rules of origin for LDCs  G/RO/LDC/N/KOR/1, 27/09/2017  
Agreement on Subsidies and Countervailing Measures  
Article  XVI:1, 
Article  25 Subsidies  G/SCM/N/343/KOR, 22/07/2019   
Agreement on Safeguards  
Articles  8.2 & 12.5  Notification of the proposed suspension 
of concessions and other obligations  G/L/1306, G/SG/N/12/KOR/4, 
02/04/2019  
Agreement on Sanitary and Phytosanitary Measures  
Article  7, Annex B  Sanitary/phytosanitary regulations  179 regular notifications  
http://spsims.wto.org/  
Agreement on Technical Barriers to Trade (latest document)  
Article  10.7 Notification of agreement reached by 
Members on issues related to technical 
regulations, standards or conformity 
assessment procedures  G/TBT/10.7/N/151, 17/02/2020  
Article  2.10 Notification of measures affecting 
environment  G/TBT/N/KOR/933, 22/10/2020  
Article  2.10 & 5.7  Notification of technical regulations  G/TBT/N/KOR/921, 23/09/2020  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Agreement/Article  Requirement  Symbol and date of latest 
notification  
Article  2.9 Technical regulations  351 notifications  
http://tbtims.wto.org  
Articles 2.9 and 5.6  Proposed amendments to laws and 
regulations  G/TBT/N/KOR/944, 22/02/2021  
Article  5.6 Proposed amendments to laws and 
regulations  G/TBT/N/KOR/917, 22/09/2020  
Article  5.7 Adoption of domestic law  G/TBT/N/KOR/905, 13/07/2020  
Agreement on Trade Facilitation  
WT/L/931  Notification of relevant institutions and 
their websites  G/TFA/N/KOR/1/Rev.1, 10/07/2020  
Agreement on Trade -Related Aspects of Intellectual Property Rights  
Article  63.2 Notification of laws  IP/N/1/KOR/21, IP/N/1/KOR/O/4 
08/06/2021  
IP/N/1/KOR/22, IP/N/1/KOR/O/5 
08/06/2021  
Article  69 Members' contact points  IP/N/3/KOR/2, 29/11/2019  
Source:  WTO Secretariat.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Table A2. 2 Main features of Korea's RTAs, 2021  
RTAs  Main features  
RTAs signed after 2016  
Regional Comprehensive Economic Partnership (RCEP) Agreement (10 ASEAN Member States, and 
Australia, China, Japan, Republic of Korea, and New Zealand)  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  20/11/2020  
Entry into force  Upon completion of internal ratification procedures in the Parties  
End of transition period for Korea  35 years after the en try into force  
Coverage (selected features)  Goods, services, investment, e -commerce, etc.  
Korea's merchandise trade with other 
RCEP members (2020)  49.12% of total imports; 49.61% of total exports  
WTO consideration status  Not notified  
WTO document series  Not notified  
Korea–United Kingdom  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  22/08/2019  
Entry into force  01/01/2021  
End of transition period for Korea  2031 
Coverage (selected features)  Goods and services  
Korea's merchandise trade with the 
United Kingdom (2020)  0.93% of total imports; 0.88% of total exports  
WTO consideration status  Awaiting data from the Parties  
WTO document series  WT/REG431/N/1 -S/C/N/1029, 7 January 2021  
Korea–Five Central American countries (Costa Rica, El Salvador, Honduras, Nicaragua, and Panama)  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  21/02/2018  
Entry into force  01/03/2021  
End of transition period for Korea  2039 
Coverage (selected features)  Goods and services  
Korea's merchandise trade with the five 
countries (2020)  0.13% of total imports came from, 0.35% of total exports  
WTO consideration status  Not notified  
WTO document series  WT/REG452/N/1, S/C/N/1054, 16 April 2021  
Korea–Israel  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  Not yet  
Entry into force  Not yet  
End of transition period for Korea  19 years after entry into force  
Coverage (selected features)  Goods and services  
Korea's merchandise trade with Israel 
(2020)  0.23% of total imports; 0.28% of total exports  
WTO consideration status  Not notified  
WTO document series  Not notified  
Korea–Indonesia  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  18/12/2020  
Entry into force  Upon completion of internal ratification procedures in the Parties  
End of transition period for Korea  20 years after the entry into force  
Coverage (selected features)  Goods and services, investment, etc.  
Korea's merchandise trade with 
Indonesia (2020)  1.62% of total imports; 1.23% of total exports  
WTO consideration status  Not notified  
WTO document series  Not notified  
RTAs entered into force before 2016  
ASEAN –Republic of Korea Free Trade Area (AKFTA)  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  24/08/2006 (goods)  
21/11/2008 (services)  
Entry into force  01/01/2010 (goods)  
14/10/2010 (services)  
End of transition period for Korea  On 1 June 2007 for goods, and on 1 May 2009 for services  
Coverage (selected features)  Goods and services. A Korea -ASEAN FTA in Trade in Investment 
entered into force in September 2009 for Korea.  
Korea's merchandise trade with ASEAN 
(2020)  11.73% of total imports; 17.37% of total exports  
WTO consideration status  Factual presentation issued  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  RTAs  Main features  
WTO document series  WT/REG287/N/1 -S/C/N/559, 8 July 2010; and 
WT/COMTD/N/33 -S/C/N /560, 8 July 2010  
Asia-Pacific Trade Agreement (APTA) (Bangladesh; China; India; Korea, Republic of; Lao People's 
Democratic Republic; Sri Lanka)  
Type of agreement  Partial scope agreement  
Date of signature  31/07/1975  
Entry into force  17/06/1976  
Remarks  Formerly known as "Bangkok Agreement". Entry into force of the 
amended Agreement: 01/09/2006.  
End of implementation period  02/11/1976  
Under this agreement, Korea grants concessions on 1,367 10 -digit HS 
items.  
Coverage  Goods  
Korea's merchandise trade with other 
APTA members (2020)  24.45% of total imports; 28.43% of total exports  
WTO consideration status  Report adopted  
WTO document series  WT/COMTD/N/22, 27 July 2007; WT/COMTD/62, 27 July 2007  
Korea–Australia  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  08/04/2014  
Entry into force  12/12/2014  
End of implementation period  2033 
Coverage (selected features)  Goods and services, investment  
Korea's merchandise trade with Australia 
(2020)  4.00% of total imports; 1.21% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG359/N/1 -S/C/N/786, 22 December 2014  
Korea–Canada  
Type of agreement  Free trade agreement and economic integrat ion agreement  
Date of signature  22/09/2014  
Entry into force  01/01/2015  
End of transition period for Korea  2032 
Coverage (selected features)  Goods and services, investment  
Korea's merchandise trade with Canada 
(2020)  0.94% of total imports; 1.07% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG362/N/1 -S/C/N/789, 20 January 2015  
Korea–Chile  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  01/02/2003  
Entry into force  01/04/2004  
End of transition period for Korea (goods 
liberalization)  Korea undertook to eliminate tariffs on over 96% of its tariff lines 
within 10 years, under a phased elimination schedule.  The transition 
period for Korea en ded in 2020.  
Coverage (selected features)  Goods, services, investment  
Korea's merchandise trade with Chile 
(2020)  0.75% of total imports; 0.17% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG169/N/1 -S/C/N/302, 19 April 2004  
Korea–China  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  01/06/2015  
Entry into force  20/12/2015  
End of transition period for Korea  2035 
Coverage (selected features)  Goods and services  
Korea's merchandise trade with China 
(2020)  23.29% of total imports; 25.85% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG370/N/1 -S/C/N/854, 2 March 2016  
Korea–Colombia  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  21/02/2013  
Entry into force  15/07/2016  
End of transition period for Korea  2035 
Coverage (selected features)  Goods and services  
Korea's merchandise trade with Colombia 
(2020)  0.15% of total imports; 0.12% of total exports  
WTO consideration status  Factual presentation issued  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  RTAs  Main features  
WTO document series  WT/REG375/N/1 -S/C/N/868, 7 October 2016  
Korea–EFTA (Iceland; Liechtenstein; Norway; Switzerland; Korea, Republic of)  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  15/12/2005  
Entry into force  01/09/2006  
End of transition period for Korea (goods 
liberalization)  Korea eliminated tariffs on 88 %-88.5% of its tariff lines (excluding 
basic agricultural items) by 2016, and ended its transition period by 
2016 
Coverage (selected features)  Goods and most services  
Korea's merchandise trade with EFTA 
members (2020)  0.92% of total imports; 0.43% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG217/N/1 -S/C/N/373, 28 August 2006  
Korea–EU 
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  06/10/2010  
Entry into force  01/07/2011  
End of transition period for Korea (goods 
liberalization)  By the end of the implementation period (2031), 11,843 of Korea's 
tariff lines (99.5%) will be duty -free for imports from the EU, 
representing more than 99.99% of the value of  Korea's imports from 
the EU; practically all customs duties on industrial goods will be fully 
removed within the first five years of implementation . 
Korea's 40% customs duty on beef is to be phased out over a period 
of 16 years; rice and a few other agricultural products (57 tariff lines), 
of which the EU is not a significant exporter, are excluded from the 
agreement.  
Coverage (selected features)  Goods and services  
Korea's merchandise trade with the EU 
(2020)  11.79% of total imports; 9.31% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG296/N/1 -S/C/N/594, 8 July 2011  
Korea–India  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  07/08/2009  
Entry into force  01/01/2010  
End of implementation period  Korea eliminated or reduced immediately tariffs on 93% of tariff items 
and 90% of the trade value of Indian goods. Trade liberalization 
excludes highly sensitive agriculture, fisheries and forestry produc ts. 
The end of implementation period for Korea is 2016.  
Coverage (selected features)  Goods, services  
Korea's merchandise trade with India 
(2020)  1.05% of total imports; 2.33% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG286/N/1 -S/C/N/558, 1 July 2010; 
WT/COMTD/N/36 -S/C/N/570, 29 September 2010  
Korea–New Zealand  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  23/03/2015  
Entry into force  20/12/2015  
End of transition period for Korea  2034 
Coverage (selected features)  Goods and services  
Korea's merchandise trade with New 
Zealand (2020)  0.25% of total imports; 0.29% of total exports  
WTO consideration status  Factual presentation issued  
WTO document s eries WT/REG367/N/1 -S/C/N/855, 4 January 2016  
Korea–Peru  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  21/03/2011  
Entry into force  01/08/2011  
End of implementation period  2027. All tariffs on the items currently traded between the two 
countries will be eliminated within 10  years. Both parties agreed to 
exclude rice from all concessions. Korea limits preferential treatment 
on several other sensitive agricultural goods with seasonal tariffs or 
safegu ard measures.  
Coverage (selected features)  Goods, services  
Korea's merchandise trade with Peru 
(2020)  0.59% of total imports; 0.09% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG298/N/1 -S/C/N/598, 10 August 2011  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  RTAs  Main features  
Korea–Singapore  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  04/08/2005  
Entry into force  02/03/2006  
End of implementation period  2016 
Coverage (selected features)  Goods and services  
Korea's merchandise trade with 
Singapore (2020)  1.81% of total imports; 1.92% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG210/N/1 -S/C/N/363, 24 February 2006  
  
Korea–Turkey  
Type of agreement  Free trade agreement  
Date of signature  01/08/2012  
Entry into force  01/05/2013  
End of implementation period  2023 
Coverage (selected features)  Goods  
Korea's merchandise trade with Turkey 
(2020)  0.28% of total imports; 1.08% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG339/N/1, 1 May 2013  
  
Korea–United  States (KORUS FTA)  
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  30/06/2007  
Entry into force  15/03/2012  
End of implementation period  2031. Korea undertook to eliminate tariffs on 96% of its 
non-agricultural tariff lines within 5 years, with virtually all remaining 
tariffs eliminated within 10 years. Tariffs and quotas on a broad range 
of agricultural products will be eliminated immediately or phased out; 
40% of Korea's agricultural product tariff lines or almost two thirds 
(by value) of its agriculture imports from the United  States became 
duty-free u pon entry into force.  
Rice is exempted from any tariff obligation.  
Coverage (selected features)  Goods, services  
Korea's merchandise trade with the 
United  States (2020)  12.36% of total imports; 14.51% of total exports  
WTO consideration status  Factual pre sentation issued  
WTO document series  WT/REG311/N/1 -S/C/N/621, 16 March 2012  
Korea–Viet Nam 
Type of agreement  Free trade agreement and economic integration agreement  
Date of signature  05/05/2015  
Entry into force  20/12/2015  
End of transition period for Korea  2029 
Coverage (selected features)  Goods and services  
Korea's merchandise trade with Viet  Nam 
(2020)  4.40% of total imports; 9.47% of total exports  
WTO consideration status  Factual presentation issued  
WTO document series  WT/REG371/N/1 -S/C/N/861, 10 March 2016  
Source:  WTO Secretariat, based on information from the WTO RTA database. Viewed at:  
http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx ; information provided by the authorities; and 
WTO Secretariat calculations based on UN Comtrade database.  
 
 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
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  Table A3. 1 Tariff summary, 2021  
 Number 
of lines  Average 
(%) Range 
(%) Coefficient 
of 
variation 
(%) Duty 
free 
(%) 
Total  12,242  13.9 0-887.4  4.2 19.6 
 HS Chapters 01 -24 2,157  50.7 0-887.4  2.5 2.5 
 HS Chapters 25 -97 10,085  6.0 0-754.3  2.2 23.3 
By WTO category       
WTO agricultural products  1,726  60.4 0-887.4  2.4 5.4 
 Animals and products thereof  210 21.6 0-89.1 0.7 4.8 
 Dairy products  54 61.4 8-176 0.7 0.0 
 Fruit, vegetables, and plants  500 78.6 0-887.4  2.2 0.2 
 Coffee and tea  53 51.4 2-513.6  2.6 0.0 
 Cereals and preparations  212 154.8  0-800.3  1.6 0.5 
 Oils seeds, fats, oil and their products  159 39.0 0-630 3.0 2.5 
 Sugars and confectionery  34 18.0 3-243 2.3 0.0 
 Beverages, spirits and tobacco  110 30.3 8-270 0.9 0.0 
 Cotton  10 0.0 0-0 0.0 100.0  
 Other agricultural products, n.e.s.  384 29.7 0-754.3  2.7 17.4 
WTO non -agricultural products  10,516  6.3 0-50 0.7 22.0 
 Fish and fishery products  590 17.0 0-32 0.3 1.2 
 Minerals and metals  1,777  4.8 0-8 0.7 25.9 
 Chemicals and photographic supplies  2,288  5.6 0-50 0.5 8.4 
 Wood, pulp, paper and furniture  677 2.9 0-13 1.3 57.0 
 Textiles  1,006  8.7 0-13 0.3 1.6 
 Clothing  321 12.5 8-13 0.1 0.0 
 Leather, rubber, footwear and travel goods  365 8.7 0-16 0.4 1.4 
 Non-electric machinery  1,286  5.1 0-13 0.7 32.4 
 Electric machinery  740 4.1 0-13 0.9 43.1 
 Transport equipment  316 6.2 0-10 0.6 21.2 
 Non-agricultural products, n.e.s.  1,026  4.4 0-13 0.9 42.7 
 Petroleum  124 5.5 0-8 0.4 1.6 
By ISIC sector       
 ISIC 1 – Agriculture, hunting and fishing  899 53.2 0-800.3  2.6 13.0 
 ISIC 2 – Mining  196 2.4 0-8 0.7 21.9 
 ISIC 3 – Manufacturing  11,146  10.9 0-887.4  4.1 20.1 
 Manufacturing excluding food processing  9,771  5.9 0-754.3  1.6 22.7 
 Electrical energy  1 5.0 5 0.0 0.0 
By stage of processing       
 First stage of processing  1,582  41.0 0-887.4  3.1 14.5 
 Semi-processed products  3,847  9.3 0-800.3  4.6 15.4 
 Fully processed products  6,813  10.2 0-800.3  3.2 23.2 
By HS section       
 01 Live animals and products  805 20.4 0-243 1.0 2.6 
 02 Vegetable products  699 107.9  0-887.4  1.9 4.1 
 03 Fats and oils  105 13.7 2-630 4.5 0.0 
 04 Prepared food, beverages and tobacco  548 29.3 0-754.3  2.4 0.5 
 05 Mineral products  388 3.8 0-8 0.6 11.6 
 06 Chemicals and products thereof  2,222  7.4 0-754.3  3.7 8.9 
 07 Plastics, rubber, and articles thereof  379 6.6 0-8 0.2 1.6 
 08 Raw hides and skins, leather, and its 
 products  236 7.8 0-16 0.6 11.0 
 09 Wood and articles of wood  344 5.7 0-10 0.6 14.5 
 10 Pulp of wood, paper and paperboard  285 0.0 0-0 0.0 100.0  
 11 Textiles and textile articles  1,282  9.7 0-51.7 0.4 2.2 
 12 Footwear, headgear, etc.  100 10.1 8-13 0.2 0.0 WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 204 - 
 
   Number 
of lines  Average 
(%) Range 
(%) Coefficient 
of 
variation 
(%) Duty 
free 
(%) 
 13 Articles of stone, plaster, cement  343 7.8 0-8 0.1 0.3 
 14 Precious stones and metals, pearls  115 5.1 0-8 0.5 4.3 
 15 Base metals and articles thereof  1,029  4.2 0-8 0.9 39.9 
 16 Machinery, electrical equipment, etc.  2,093  4.5 0-13 0.8 39.0 
 17 Transport equipment  345 5.9 0-10 0.6 24.6 
 18 Precision equipment  548 4.3 0-8 0.9 44.0 
 19 Arms and ammunition  81 3.4 0-8 1.2 58.0 
 20 Miscellaneous manufactured articles  280 5.4 0-13 0.7 32.5 
 21 Works of art, etc.  15 0.0 0-0 0.0 100.0  
Note:  Excluding in -quota rates and including AVEs, as available, provided by the authorities. In case of 
unavailability of AVEs, the ad valorem  part of alternate rates is included.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 205 - 
 
  Table A3. 2 Non-ad valorem  MFN applied tariffs and ad valorem equivalents  of their 
specific duty component, 2021  
HS code  Description  MFN 2021a AVE 
0301994090  Other  28% or KRW  2,052/kg  28.0%  
0409000000  Natural honey  243% or KRW 1,864/kg  13.0%  
0703101000  Onions  135% or KRW  180/kg  135.0%  
0703201000  Fresh peeled garlic  360% or KRW  1,800/kg  359.7%  
0703209000  Fresh garlic other than peeled  360% or KRW  1,800/kg  343.3%  
0706101000  Carrots  30% or KRW  134/kg  30.2%  
0709592000  Oak mushrooms  40% or KRW  1,625/kg  44.7%  
0709601000  Sweet peppers (bell type)  270% or KRW  6,210/kg  0.0%  
0709609000  Fruits of the genus Capsicum  or of the genus 
Pimenta  270% or KRW  6,210/kg  0.0%  
0711901000  Garlic  360% or KRW 1,800/kg  0.0%  
0711905091  Fruits of the genus Capsicum  or of the genus 
Pimenta  270% or KRW  6,210/kg  0.0%  
0712200000  Onions  135% or KRW  180/kg  101.7%  
0712319000  Mushrooms other than cultivated  30% or KRW  1,218/kg  0.5%  
0712320000  Wood ears ( Auriculari a spp.)  30% or KRW  1,218/kg  22.2%  
0712330000  Jelly fungi ( Tremella  spp.) 30% or KRW  1,218/kg  20.0%  
0712391020  Oak mushrooms  40% or KRW  1,625/kg  40.8%  
0712391030  Ling chiu mushrooms  30% or KRW  842/kg  30.5%  
0712391090  Other mushrooms  30% or KRW 1,218/kg  20.9%  
0712901000  Garlic  360% or KRW  1,800/kg  198.3%  
0712902010  Bracken  30% or KRW  1,807/kg  27.1%  
0712902030  Welsh onions  30% or KRW  1,159/kg  30.0%  
0712902040  Carrots  30% or KRW  864/kg  25.3%  
0712902094  Flowering ferns  30% or KRW 1,446/kg  0.0%  
0714201000  Fresh sweet potatoes  385% or KRW  338/kg  .. 
0802410000  Chestnuts in shell  219.4% or KRW  1,470/kg  66.8%  
0802420000  Chestnuts shelled  219.4% or KRW  1,470/kg  0.0%  
0802901010  Pine nuts in shell  566.8% or KRW  2,664/kg  0.0%  
0802901020  Pine nuts shelled  566.8% or KRW  2,664/kg  127.0%  
0810903000  Jujubes, fresh  611.5% or KRW  5,800/kg  0.0%  
0813402000  Jujubes, dried  611.5% or KRW  5,800/kg  47.0%  
0904210000  Fruits of the genus Capsicum  or of the genus 
Pimenta , dried  270% or KRW 6,210/kg  218.2%  
0904220000  Fruits of the genus Capsicum  or of the genus 
Pimenta , dried  270% or KRW  6,210/kg  236.5%  
0910111000  Ginger, fresh or chilled  377.3% or KRW  931/kg  303.3%  
0910112000  Ginger, dried  377.3% or KRW  931/kg  372.0%  
0910119000  Ginger, other than fresh, chilled or dried  377.3% or KRW  931/kg  374.0%  
0910121000  Ginger, fresh or chilled  377.3% or KRW  931/kg  0.0%  
0910122000  Ginger, dried  377.3% or KRW  931/kg  303.9%  
0910129000  Ginger, other than fresh, chilled or dried 377.3% or KRW  931/kg  244.0%  
1003102000  Unhulled barley  324% or KRW  326/kg  .. 
1003103000  Naked barley  299.7% or KRW  361/kg  .. 
1003902000  Unhulled barley  324% or KRW  326/kg  0.6%  
1003903000  Naked barley  299.7% or KRW  361/kg  0.0%  
1201101000  Soya beans for bean sprouts  487% or KRW  956/kg  0.0%  
1201109000  Other soya beans  487% or KRW  956/kg  0.0%  
1201901000  Soya beans for soya beans oil and oil cake  487% or KRW  956/kg  0.0%  
1201902000  Soya beans for feeding  487% or KRW 956/kg  0.0%  
1201903000  Soya beans for bean sprouts  487% or KRW  956/kg  3.9%  
1201909000  Other soya beans  487% or KRW  956/kg  5.4%  
1207400000  Sesame seeds  630% or KRW  6,660/kg  30.4%  
1207991000  Perilla seeds  40% or KRW  410/kg  35.4%  
1515500000  Sesame oil and its fractions  630% or KRW  12,060/kg  205.1%  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 206 - 
 
  HS code  Description  MFN 2021a AVE 
1902192000  Chinese vermicelli  26% or KRW  206/kg  25.0%  
2306901000  Oil cake of sesame seeds  63% or KRW  72/kg  0.0%  
3706101000  Cinematographic film  KRW 195/m or 6.5%  .. 
3706102000  Cinematographic film  KRW 4/m or 6.5%  .. 
3706103010  Cinematographic film  KRW 26/m or 6.5%  .. 
3706103020  Cinematographic film  KRW 468/m or 6.5%  .. 
3706103030  Cinematographic film  KRW 78/m or 6.5%  .. 
3706104000  Cinematographic film  KRW 26/m or 6.5%  0.0%  
3706105010  Cinematographic film  KRW 1,092/m or 6.5%  3.5%  
3706105020  Cinematographic film  KRW 182/m or 6.5%  7.5%  
3706106010  Cinematographic film  KRW 1,560/m or 6.5%  .. 
3706106020  Cinematographic film  KRW 260/m or 6.5%  .. 
3706901000  Cinematographic film  KRW 9/m or 6.5%  .. 
3706902000  Cinematographic film  KRW 5/m or 6.5%  .. 
3706903010  Cinematographic film  KRW 26/m or 6.5%  .. 
3706903020  Cinematographic film  KRW 468/m or 6.5%  .. 
3706903030  Cinematographic film  KRW 78/m or 6.5%  .. 
3706904000  Cinematographic film  KRW 26/m or 6.5%  .. 
3706905010  Cinematographic film  KRW 25/m or 6.5%  0.0%  
3706905020  Cinematographic film  KRW 8/m or 6.5%  0.3%  
3706906010  Cinematographic film  KRW 1,092/m or 6.5%  .. 
3706906020  Cinematographic film  KRW 182/m or 6.5%  4.6%  
3822003058  Diagnostic or laboratory reagents  KRW 182/m or 6.5%  .. 
3822003059  Diagnostic or laboratory reagents  KRW 4/m or 6.5%  .. 
3822003060  Diagnostic or laboratory reagents  KRW 26/m or 6.5%  6.5%  
3822003061  Diagnostic or laboratory reagents  KRW 468/m or 6.5%  .. 
3822003062  Diagnostic or laboratory reagents  KRW 78/m or 6.5%  .. 
3822003063  Diagnostic or laboratory reagents  KRW 1,092/m or 6.5%  .. 
3822003064  Diagnostic or laboratory reagents  KRW 1,560/m or 6.5%  .. 
3822003065  Diagnostic or laboratory reagents  KRW 260/m or 6.5%  .. 
3822003066  Diagnostic or laboratory reagents  KRW 8/m or 6.5%  .. 
3822003067  Diagnostic or laboratory reagents  KRW 25/m or 6.5%  2.6%  
5001000000  Silkworm cocoons suitable for reeling  51% or KRW  5,276/kg  0.0%  
5002001020  Raw silk (not thrown)  51.7% or KRW  17,215/kg  0.0%  
5002001030  Raw silk (not thrown)  51.7% or KRW  17,215/kg  .. 
5002001040  Raw silk (not thrown)  51.7% or KRW  17,215/kg  0.0%  
5002001050  Raw silk (not thrown)  51.7% or KRW  17,215/kg  0.0%  
.. Not available.  
a Whichever is the greater for agricultural items; whichever is the lower for manufacturing products.  
Note:  AVEs are calculated using 2019 import data.  
Source:  Information provided by the authorities.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 207 - 
 
  Table A3. 3 Adjustment tariff, 2020 and 2021  
HS Description  General  
(%) 2020  
(%) 2021  
(%) 
0301.92  Eels ( Anguilla  spp.), excluding glass eels for 
aquaculture  10 20 20 
0301.99  Sea-bream, excluding fry (for aquaculture)  10 28% or 
KRW 2,052/kg,  
whichever is 
greater  28% or 
KRW 2,052/kg,  
whichever is 
greater  
0301.99  Sea bass, excluding fry (for aquaculture)  10 28 28 
0303.59  Pacific saury ( Cololabis saira ), of a total length 
exceeding 22 cm from head to tail   26 24 
0303.67  Alaska Pollack ( Theragra chalcogramma ) 
Alaska Pollack,  excluding Theragra 
chalcogramma  10 
10 22 
22 22 
22 0303.69  
0306.95  
0307.43  Shrimps and prawns, salted or in brine  
Frozen squid, excluding cuttlefish, squid ( Loligo ) 
and fish surimi  20 
10 32 
22 32 
22 
0709.59  Oak mushrooms  30  40% or 
KRW 1,625/kg,  
whichever is  
greater  40% or 
KRW 1,625/kg,  
whichever is  
greater  
0712.39  Oak mushrooms  30 40% or 
KRW 1,625/kg,  
whichever is  
greater  40% or 
KRW 1,625/kg,  
whichever is  
greater   
1902.19  
 
  Chinese vermicelli  
 
  8 26% or 
KRW 206/kg,  
whichever is 
greater  26% or 
KRW 206/kg,  
whichever is 
greater  
1904.90  Steamed or boiled rice in grain form, not 
containing cocoa  8 
 50 
 50 
2103.90  Sauces, preparations thereof and mixed 
seasonings of the following: containing more 
than 20% of Capsicum  or garlic or onion or 
ginger; more than 40% of a mixture thereof  
Oriental sauces and bean paste; other mixed 
seasonings, Gochujang  8 
 
 
 
 
 
8 45 
 
 
 
 
 
32 45 
 
 
 
 
 
32  
2710.12  Naphtha, natural gas liquid  0 0.5 0.5 
2710.20  Naphtha, natural gas liquid  0 0.5 0.5 
4412.31  Other plywood, consisting solely of sheets of 
wood (other than bamboo), each ply not 
exceeding 6mm thickness, excluding at least one 
outer ply of tropical wood specified in National 
Note 1 to this chapter  8 10 10 
4412.33  
 Other, with at least one outer ply of non -
coniferous wood of the species alder ( Alnus  
spp.), ash ( Fraxinus  spp.), beech ( Fagus  spp.), 
birch ( Betula  spp.), cherry ( Prunus  spp.), 
chestnut ( Castanea  spp.), elm ( Ulmus  spp.), 
eucalyptus ( Eucalyptus  spp.), hickory ( Carya  
spp.), horse chestnut ( Aesculus  spp.), lime ( Tilia 
spp.), maple ( Acer spp.), oak ( Quercus  spp.), 
plane tree ( Platanus  spp.), poplar and aspen 
(Populus  spp.), robinia ( Robinia  spp.), tulipwood 
(Liriodendron  spp.) or walnut ( Juglans  spp.), of a 
thickness more than 6 mm  8 10 10 
4412.34  
 Other, with at least one outerply of non -
coniferous wood not specified under Subheading 
4412.33, of a thickness more than 6mm  8 10 10 
4412.39  
 Other, with both outer plies of coniferous wood, 
of a thickness more than 6  mm 8 10 10 
4412.99  Other, of a whole thickness not less than 6 mm, 
with each ply not exceeding 6 mm  thickness  8 10 10 
Source:  Data provided by the authorities.   WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 208 - 
 
  Table A3. 4 Tariff quotas on agricultural products, 2019 and 2021  
HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
0102211000  Cattle: Pure -bred 
breeding animals (for 
milk) 0 89.1 1,067 heads  
0102212000  Cattle: Pure-bred 
breeding animals (for 
meat)  0 89.1 1,067 heads  
0102219000  Cattle: Pure -bred 
breeding animals (other)  0 89.1 1,067 heads  
0102310000  Pure-bred breeding 
animals  0 89.1 1,067 heads  
0102901000  Pure-bred breeding 
animals  0 89.1 1,067 heads  
0103100000  Live swine: pure -bred 
breeding animals  0 18 1,850 heads  
0105111000  Live poultry: weighing 
not more than 185  g: 
fowls of the species 
Gallus domesticus : pure -
bred breeding animals  0 9 461,000 birds  
0105941000  Live poultry: weighing 
not more than 2,000  g: 
fowls of the species 
Gallus domesticus  
turkeys: pure -bred 
breeding animals  0 9 461,000 birds  
0402101010  Milk and cream: in 
powder, granules or 
other solid forms, of a 
fat content, by weight 
not exceeding 1.5%  20 176 1,034 tonnes  
0402101090  Milk and cream: in 
powder, granules or 
other solid forms, of a 
fat content, by weight 
not exceeding 1.5%  20 176 1,034 tonnes  
0402109000  Milk and cream: in 
powder, granules or 
other solid forms, of a 
fat content, by weight 
not exceeding 1.5%  20 176 1,034 tonnes  
0402211000  Milk and cream: in 
powder, granules or 
other solid forms, of a 
fat content, by weight 
exceeding 1.5%  40 176 573 tonnes  
0402219000  Milk and cream: in 
powder, granules or 
other solid forms, of a 
fat content, by weight 
exceeding 1.5%  40 176 573 tonnes  
0402290000  Milk and cream: in 
powder, granules or 
other solid forms, of a 
fat content, by weight 
exceeding 1.5%  40 176 573 tonnes  
0402911000  Other milk and cream 
not containing added 
sugar or other 
sweetening matter  40 89 130 tonnes  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 209 - 
 
  HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
0402919000  Other milk and cream 
not containing added 
sugar or other 
sweetening matter  40 89 130 tonnes  
0402991000  Other milk and cream  40 89 130 tonnes  
0402999000  Other milk and cream  40 89 130 tonnes  
0403901000  Butter milk  20 89 1,034 tonnes  
040410101 1 Whey: powder  (for 
feeding)  20 49.5 54,233 tonnes  
0404101019  Whey: powder (other)  20 49.5 54,233 tonnes  
040410109 1 Whey: other  (For 
feeding)  20 49.5 54,233 tonnes  
0404101099  Whey: other  20 49.5 54,233 tonnes  
040410211 1 Modified whey: lactose 
removed  (for feeding)  20 49.5 54,233 tonnes  
040410211 9 Modified whey: lactose 
removed (other)  20 49.5 54,233 tonnes  
040410212 1 Modified whey: 
demineralized  (for 
feeding)  20 49.5 54,233 tonnes  
0404102129  Modified whey: 
demineralized  (other)  20 49.5 54,233 tonnes  
040410213 1 Modified whey: whey 
protein concentrates  (for 
feeding)  20 49.5 54,233 tonnes  
0404102139  Modified whey: whey 
protein concentrates  
(other)  20 49.5 54,233 tonnes  
040410219 1 Modified whey: other  
(for feeding)  20 49.5 54,233 tonnes  
0404102199  Modified whey: other  20 49.5 54,233 tonnes  
04041029 10 Other modified whey  (for 
feeding)  20 49.5 54,233 tonnes  
0404102990  Other modified whey  
(other)  20 49.5 54,233 tonnes  
0405100000  Butter  40 89 420 tonnes  
0405900000  Other fats  40 89 420 tonnes  
0408991000  Eggs of fowls of the 
species Gallus 
domesticus  30 41.6 19,515.8 tonnes  
0409000000  Natural honey  20 243% or KRW 1,864/kgb 420 tonnes  
0506902000  Powder of bones  5 25.6 467.6 tonnes  
0511999010  Silkworm eggs  8 18 9,500 boxes  
0602201000  Apple trees  8 18 145,200 trees  
0602202000  Pear trees  8 18 145,200 trees  
0602203000  Peach trees  8 18 145,200 trees  
0602206000  Citrus trees  8 18 145,200 trees  
0602909030  Mulberry trees  8 18 1,402,700 trees  
0701100000  Potatoes: seeds  0 304 1,898 tonnes  
0701900000  Potatoes: other than 
seeds  30 304 18,810 tonnes  
0703101000  Onions  50 135% or KRW 180/kgb 20,645 tonnes  
0703201000  Garlic: peeled  50 360% or KRW 1,800 kgb 14,467 tonnes  
0703209000  Garlic: other than peeled  50 360% or KRW 1,800/kgb 14,467 tonnes  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 210 - 
 
  HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
0709601000  Sweet peppers (bell 
type)  50 270% or KRW 6,210/kgb 7,185 tonnes  
0709609000  Other pepper  50 270% or KRW 6,210/kgb 7,185 tonnes  
0711901000  Garlic – provisional 
preserved  50 360% or KRW 1,800/ 
kgb 14,467 tonnes  
0711905091  Fruits of the genus 
Capsicum  or other genus 
Pimenta  – provisionally 
preserved  50 270% or KRW 6,210/kgb 7,185 tonnes  
0712200000  Onions – dried 50 135% or KRW 180/kgb 20,645 tonnes  
0712901000  Garlic  50 360% or KRW 1,800/kgb 14,467 tonnes  
0712902091  Sweet corn for seeds  0 370 247 tonnes  
0712902092  Sweet corn other than 
those for seeds  3 370 6,102.1 tonnes  
0713311000  Beans  30 607.5  14,694 tonnes  
0713319000  Beans  30 607.5  14,694 tonnes  
0713321000  Small red beans  30 420.8  14,694 tonnes  
0713329000  Small red beans  30 420.8  14,694 tonnes  
0714101000  Fresh manioc  20 887.4  50,000 tonnes  
0714102010  Dried manioc  20 887.4  50,000 tonnes  
0714102020  Dried manioc  3 887.4  1,000 ,000 tonnes  
0714102090  Dried manioc  20 887.4  50,000 tonnes  
0714103000  Chilled manioc  20 887.4  50,000 tonnes  
0714201000  Sweet potatoes – fresh 20 385% or KRW 338/kgb 18,535 tonnes  
0714202000  Sweet potatoes – dried 20 385 18,535 tonnes  
0714203000  Sweet potatoes – chilled  20 385 18,535 tonnes  
0714309000  Yam ( Discorea  spp./ 
other)  20 385 326.7 tonnes  
0714409000  Taro ( Colocasia  spp./ 
other)  20 385 326.7 tonnes  
0714509000  Yautia ( Xanthosoma  
spp./other)  20 385 326.7 tonnes  
0714909090  Other roots and tubers  20 385 326.7 tonnes  
080241 0000 Chestnuts in shell  50 219.4% or 
KRW 1,470/kgb 2,170 tonnes  
080242 0000 Chestnuts – shelled  50 219.4% or 
KRW 1,470/kgb 2,170 tonnes  
0802901010  Pine nuts in shell  30 566.8% or 
KRW 2,664/kgb 52.9 tonnes  
0802901020  Pine nuts shelled  30 566.8% or 
KRW 2,664/kgb 52.9 tonnes  
0805100000  Oranges  50 50 57,017 tonnes  
0805211000  Korean citrus  50 144 2,097 tonnes  
0805219000  Other mandarins  50 144 2,097 tonnes  
0805220000  Clementine  50 144 2,097 tonnes  
0805290000  Similar citrus hybrids  50 144 2,097 tonnes  
0805502020  Citrus latifolia  50 144 2,097 tonnes  
0805900000  Other citrus  50 144 2,097 tonnes  
0810903000  Jujubes  50 611.5% or 
KRW 5,800/kgb 259.5 tonnes  
0813402000  Jujubes  50 611.5% or 
KRW 5,800/kgb 259.5 tonnes  
0902100000  Green tea  40 513.6  7.8 tonnes  
0902200000  Green tea  40 513.6  7.8 tonnes  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 211 - 
 
  HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
09042 10000 Fruits of the genus 
Capsicum  or Pimenta  
(dried/neither crushed 
nor ground)  50 270% or KRW 6,210/kgb 7,185 tonnes  
09042 20000 Fruits of the genus 
Capsicum  or Pimenta  
(crushed or ground)  50 270% or KRW 6,210/kgb 7,185 tonnes  
0910111000  Ginger (neither crushed 
nor ground/fresh or 
chilled)  20 377.3% or KRW 931/kgb 1,860 tonnes  
0910112000  Ginger (neither crushed 
nor ground/dried)  20 377.3% or KRW 931/kgb 1,860 tonnes  
0910119000  Ginger (neither crushed 
nor ground/other)  20 377.3% or KRW 931/kgb 1,860 tonnes  
0910121000  Ginger (crushed or 
ground/fresh or chilled)  20 377.3% or KRW 931/kgb 1,860 tonnes  
0910122000  Ginger (crushed or 
ground/dried)  20 377.3% or KRW 931/kgb 1,860 tonnes  
0910129000  Ginger (crushed or 
ground/other)  20 377.3% or KRW 931/kgb 1,860 tonnes  
1002100000 Rye for seed 3 108.7  1,327.3 tonnes  
1003101000  Malting barley (seed)  30 513 30,000 tonnes  
1003102000  Unhulled barley (seed)  20 324% or KRW 326/kgb 23,582 tonnes  
1003103000  Naked barley (seed)  20 299.7% or KRW 361/kgb 23,582 tonnes  
1003109000  Other barley (seed)  20 299.7  23,582 tonnes  
1003901000 Malting barley (other)  30 513 30,000 tonnes  
1003902000  Unhulled barley (other)  20 324% or KRW 326/kgb 23,582 tonnes  
1003903000  Naked barley (other)  20 299.7% or KRW 361/kgb 23,582 tonnes  
1003909000  Other barley (other)  20 299.7  23,582 tonnes  
1004100000 Oats for seed  3 554.8  597.3 tonnes  
1005100000  Maize (corn) for seed  0 328 247 tonnes  
1005901000  Maize (corn) for feeding  1.8 328 6,102.1 tonnes  
1005902000  Maize (corn) - popcorn  1.8 630 6,102.1 tonnes  
1005909000  Maize (corn) - other 3 328 6,102.1 tonnes  
1006100000  Rice in the husk (paddy 
or rough)  5 513 408,700 tonnes  
1006201000  Husked (brown) rice 
(non-glutinous)  5 513 408,700 tonnes  
1006202000  Husked (brown) rice 
(glutinous)  5 513 408,700 tonnes  
1006301000  Semi-milled or wholly 
milled rice 
(non-glutinous)  5 513 408,700 tonnes  
1006302000  Semi-milled or wholly 
milled rice (glutinous)  5 513 408,700 tonnes  
1006400000  Broken rice  5 513 408,700 tonnes  
1007100000 Grain sorghum  3 779.4  13.7 tonnes  
1008100000  Buckwheat  3 256.1  1,328 tonnes  
10082110000  Foxtail millet for seed  3 18 0.4 tonnes  
1008400000  Fonio ( Digitaria  spp.) 3 800.3  1,328 tonnes  
1008500000  Quinoa ( Chenopodium 
quinoa ) 3 800.3  1,328 tonnes  
1008600000  Triticale  3 800.3  1,328 tonnes  
1008900000  Other cereals  3 800.3  1,328 tonnes  
1102901000  Barley flour  20 260 23,582 tonnes  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 212 - 
 
  HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
1102902000  Rice flour  5 513 408,700 tonnes  
1102909000  Other flour  5 800.3  14.7 tonnes  
1103110000  Groats and meal of 
wheat  5 288.2  14.7 tonnes  
1103130000  Groats and meal of 
maize (corn)  3 162.9  6,102.1 tonnes  
1103191000  Groats and meal (barley)  20 260 23,582 tonnes  
1103192000  Groats and meal of oats  5 554.8  14.7 tonnes  
1103193000  Groats and meal (rice)  5 513 408,700 tonnes  
1103199000  Groats and meal: other  5 800.3  14.7 tonnes  
1103201000  Pellets of wheat  5 288.2  14.7 tonnes  
1103202000  Pellets (rice)  5 513 408,700 tonnes  
1103203000  Pellets (barley)  20 260 23,582 tonnes  
1103209000  Other pellets  5 800.3  14.7 tonnes  
1104120000  Rolled or flaked grains of 
oats 5 554.8  14.7 tonnes  
1104191000  Rolled of flaked (rice)  5 513 408,700 tonnes  
1104192000  Rolled of flaked (barley)  20 233 23,582 tonnes  
1104199000  Rolled or flaked grains – 
other  5 800.3  14.7 tonnes  
1104220000  Other worked grains: of 
oats 5 554.8  14.7 tonnes  
1104230000  Other worked grains: of 
maize (corn)  3 167 6,102.1 tonnes  
1104291000  Other worked grains: of 
coicis semen  5 800.3  14.7 tonnes  
1104292000  Other worked grains 
(barley)  20 126 23,582 tonnes  
1104299000  Other worked grains: of 
other  5 800.3  14.7 tonnes  
1105100000  Flour, meal and powder 
of potatoes  5.4 304 10 tonnes  
1105200000  Flakes, granules and 
pellets of powder  5.4 304 10 tonnes  
1107100000  Malt, not roasted  30 269 40,000 tonnes  
1107201000  Malt, smoked  30 269 40,000 tonnes  
1108110000  Wheat starch  8 50.9 227.4 tonnes  
1108121000  Maize (corn) starch: for 
food 1.8 226 6,102.1 tonnes  
1108129000  Maize (corn) starch: of 
other  1.8 226 6,102.1 tonnes  
1108130000  Potato starch  8 455 45,692 tonnes  
1108141000  Manioc starch: for food  9 455 2,400 tonnes  
1108149000  Manioc starch: of other  9 455 2,400 tonnes  
1108191000  Starches of seed potato  11 241.2  4,376 tonnes  
1108199000  Other starches  8 800.3  227.4 tonnes  
1108200000  Inulin  8 800.3  227.4 tonnes  
1201101000  Soya beans (seed/for 
bean sprouts)  5 487% or KRW 956/kgb 185,787 tonnes  
1201109000  Soya beans (seed/other)  5 487% or KRW 956/kgb 185,787 tonnes  
1201901000  Soya beans (other/for 
soya bean oil and oil 
cake)  5 487% or KRW 956/kgb 846,365  tonnes  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 213 - 
 
  HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
1201902000  Soya beans (other/for 
feeding)  5 487% or KRW 956/kgb 846,365  tonnes  
1201903000  Soya beans (other/for 
bean sprouts)  5 487% or KRW 956/kgb 185,787  tonnes  
1201909000  Soya beans 
(other/other)  5 487% or KRW 956/kgb 185,787  tonnes  
1202301000  Groundnuts (seed/in 
shell)  40 230.5  4,907.3 tonnes  
1202302000  Groundnuts 
(seed/shelled)  24 230.5  4,907.3 tonnes  
1202410000  Groundnuts (other/in 
shell)  40 230.5  4,907.3 tonnes  
1202420000  Groundnuts 
(other/shelled)  24 230.5  4,907.3 tonnes  
1207400000  Sesame seeds  40 630% or KRW 6,660/kgb 6,731 tonnes  
1211201110  Ginseng root (raw 
ginseng/ wild -simulated 
ginseng)  20 222.8  56.8 tonnes  
1211201190  Ginseng root (raw 
ginseng/other)  20 222.8  56.8 tonnes  
1211201211  Ginseng root (white, 
major roots ) 20 222.8  56.8 tonnes  
1211201219  Ginseng root (white, 
other)  20 222.8  56.8 tonnes  
1211201291  Ginseng root (white, 
major roots ) 20 222.8  56.8 tonnes  
1211201299  Ginseng root (white, 
other)  20 222.8  56.8 tonnes  
1211201311  Ginseng root (red, major 
roots) 20 754.3  56.8 tonnes  
1211201319  Ginseng root (red, other)  20 754.3  56.8 tonnes  
1211201391  Ginseng root (red, major 
roots) 20 754.3  56.8 tonnes  
1211201399  Ginseng root (red, other)  20 754.3  56.8 tonnes  
1211202210  Ginseng powder  20 754.3  56.8 tonnes  
1211202220  Ginseng powder  20 754.3  56.8 tonnes  
1211202290  Ginseng powder  20 754.3  56.8 tonnes  
1211203100  Leaves and stems of 
ginseng  20 754.3  56.8 tonnes  
1211203200  Ginseng seed  20 754.3  56.8 tonnes  
1211209300  Ginseng, fresh, chilled or 
dried 20 754.3  56.8 tonnes  
1211209900  Other ginseng  20 754.3  56.8 tonnes  
1214901000  Fodder roots  5 100.5  32,133.3 tonnes  
1214909090  Other forage products  5 100.5  32,133.3 tonnes  
1302191210  Saps and extracts of red 
ginseng  20 754.3  56.8 tonnes  
1302191220  Saps and extracts of red 
ginseng  20 754.3  56.8 tonnes  
1302191290  Saps and extracts of red 
ginseng  20 754.3  56.8 tonnes  
1515500000  Sesame oil and its 
fraction  40 630% or 
KRW 12,060/kgb 668 tonnes  
1702111000  Lactose  20 49.5 9,400 tonnes  
1702191000  Lactose  20 49.5 9,400 tonnes  
1702901000  Artificial honey  20 243 6 tonnes  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 214 - 
 
  HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
1806902290  Other (containing 
cocoa/other/mixed and 
doughs for preparation 
of baker's wares of 
heading 19.05)  5 513 408,700 tonnes  
1806902999  Other (containing 
cocoa/other/other)  5 513 408,700 tonnes  
1901201000  Rice flour (mixes and 
doughs for the 
preparation of baker's 
wares of heading 19.05)  5 513 408,700 tonnes  
1901209000  Other (mixes and doughs 
for the preparation of 
baker's wares of heading 
19.05)  5 513 408,700 tonnes  
1901909091  Other food preparations 
of goods (rice flour)  5 513 408,700 tonnes  
1901909099  Other food preparations 
of goods (other)  5 513 408,700 tonnes  
2008119000  Other groundnuts (other 
prepared or preserved)  40 63.9 4,907.3 tonnes  
2106903021  Red ginseng tea  20 754.3  56.8 tonnes  
2106903029  Other products of red 
ginseng  20 754.3  56.8 tonnes  
2207109010  Fermented alcohol for 
manufacture of liquors  30 270 10,333,800 litres  
2301101000  Flour, meals and pellets, 
of meat or meat offal  5 9 3,210 tonnes  
2306901000  Oil cake of sesame seeds  5 63% or KRW 72/kgb 212 tonnes  
2308009000  Other vegetable 
materials of a kind used 
in animal feeding  5 46.4 32,133.3 tonnes  
2309901091  Preparations of a kind 
used in animal feeding  4.2 71 627 tonnes  
2309902010  Preparations of a kind 
used in animal feeding  5 50.6 4,171.4 tonnes  
2309902020  Preparations of a kind 
used in animal feeding  5 50.6 4,171.4 tonnes  
2309902099  Preparations of a kind 
used in animal feeding  5 50.6 4,171.4 tonnes  
2309909090  Animal feeding 
preparations  5 50.6 4,171.4 tonnes  
3301904520  Oleoresin extracts of red 
ginseng  20 754.3  56.8 tonnes  
3505103000  Roasted starches  8 385.7  45,692 tonnes  
3505104010  Pre-gelatinized or 
swelling starch: for food  8 385.7  45,692 tonnes  
3505104090  Pre-gelatinized or 
swelling starch: of other  8 385.7  45,692 tonnes  
3505105010  Etherified or esterified 
starches: for food  8 385.7  45,692 tonnes  
3505105090  Etherified or esterified 
starches: of other  8 385.7  45,692 tonnes  
3505109010  Other modified starches: 
for food  8 385.7  45,692 tonnes  
3505109090  Other modified starches: 
of other  8 385.7  45,692 tonnes  
3505201000  Starch glues  8 201.2  45,692 tonnes  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 215 - 
 
  HS code  Description  In-quota 
rate 2021 
(%) Out-of-quota rate 2021 
(%) Quota levelsa 
2019  
3505202000  Dextrin glues  8 201.2  45,692 tonnes  
3505209000  Other glues  8 201.2  45,692 tonnes  
5001000000  Silkworm cocoons 
suitable for reeling  2 51% or KRW 5,276/kgb 1,143 tonnes  
5002001020  Raw silk more than 
20 decitex  8 51.7% or 
KRW 17,215/ kgb 2,254 tonnes  
5002001030  Raw silk more than 
20 decitex  8 51.7% or 
KRW 17,215/ kgb 2,254 tonnes  
5002001040  Raw silk more than 
20 decitex  8 51.7% or 
KRW 17,215/ kgb 2,254 tonnes  
5002001050  Raw silk more than 
20 decitex  8 51.7% or 
KRW 17,215/ kgb 2,254 tonnes  
a Quota levels correspond to the total volume/quantity available to items under the same product 
group, e.g. the quota for live bovine animals is 1,067 per head rather than 1,067 per each 
HS 10-digit item. These product groups are found in WTO document G/AG/N/KOR/77, 
12 October  2020. 
b Whichever is greater.  
Source:  Data provided by the authorities.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 216 - 
 
  Table A3. 5 Fill ratios for main agricultural tariff -rate quotas, 2019  
(%) 
Commodity grouping  TRQ fill ratio  Reason for low TRQ fill ratio  
Live bovine animals  0 Lack of demand  
Live swine for pure -bred 
breeding  0 Imports from RTA/FTA partners  
Fowls for pure-bred breeding  42.5 Imports from RTA/FTA partners  
Skim milk powder  99.7 n.a. 
Whole milk powder  99.9 n.a. 
Evaporated milk  19.6 Domestic production meets the demand  
Whey  39.4 Imports from RTA/FTA partners  
Butter  100 n.a. 
Bird's eggs  0 Lack of demand  
Natural honey  23.1 Imports from RTA/FTA partners  
Powder of bones  0 Lack of demand due to BSE  
Silkworm eggs  0 Lack of demand  
Apple, pear, peach and citrus 
trees 0 Lack of demand  
Mulberry trees  0 Lack of demand  
Potatoes for seed  0 Lack of demand  
Other potatoes  28.2 Increase in domestic production  
Onions  0 Increase in domestic production  
Garlic  0 Increase in domestic production  
Red peppers  13 Increase in domestic production  
Beans (red and green)  100 n.a. 
Manioc  100 n.a. 
Manioc pellets  11.1 Lack of demand  
Sweet potatoes  0.5 Lack of demand  
Roots and tubers  100 n.a. 
Chestnuts  100 n.a. 
Pine nuts  100 n.a. 
Oranges  0 Increase in imports from RTA/FTA partners  
Korean citrus  52.1 Lack of demand  
Jujubes  98.3 n.a. 
Green tea  66.7 n.a. 
Ginger  100 n.a. 
Rye for seed  99.9 n.a. 
Ginseng  0.0 Lack of demand  
Malting barley  100 n.a. 
Barley  82.3 n.a. 
Oats for seed  99.9 n.a. 
Corn 100 n.a. 
Rice 100 n.a. 
Grain sorghum for seed  13.6 Lack of demand  
Foxtail millet for seed  0 Lack of demand  
Buck wheat  95.5 n.a. 
Other processed cereals  84.4 n.a. 
Flour of potatoes  100 n.a. 
Malt 100 n.a. 
Wheat starch  100 n.a. 
Potato starch  100 n.a. 
Manioc starch  100 n.a. 
Sweet potato starch  100 n.a. 
Soybeans  100 n.a. 
Groundnuts  100 n.a. 
Maize for seed  46.8 Increase in imports from RTA/FTA partners  
Sesame seeds  100 n.a. 
Forage products  100 n.a. 
Sesame oil  66.1 n.a. 
Lactose  66.8 n.a. 
Artificial honey  100 n.a. 
Undenatured ethyl alcohol  99.1 n.a. 
Flour of meat  6.6 Lack of demand due to BSE  
Oil cake  0 Domestic production meets the demand  
Other mixed feeds  100 n.a. WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 217 - 
 
  Commodity grouping  TRQ fill ratio  Reason for low TRQ fill ratio  
Supplementary feeds  100 n.a. 
Silkworm cocoons  0 Lack of demand  
White silk  0 Lack of demand  
n.a. Not applicable.  
Source:  WTO document G/AG/N/KOR/77, 12 October 2020.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 218 - 
 
  Table A3. 6 Autonomous tariff quotas, 2021  
HS code  Item  Description  General 
(%) In-
quota 
(%) Quota  
030192  Eels ( Anguilla  spp.) Young eels (exceeding 
0.3 g and not 
exceeding 50  g per 
unit, for aquaculture)  5.0 3.0 50 MT  
040410  Whey and modified whey  For feeding  20.0 0.0 22,000 MT  
071410  Manioc(cassava)  Dried chips for 
alcoholic beverages  20.0 10.0 131,000 MT  
071410  Manioc(cassava)  Pellets for feeding  7.0 0.0 All imported  
100390  Unhulled barley  For feeding  5.0 0.0 40,000 MT  
100490  Oats For feeding  3.0 0.0 All imported  
100590  Maize(corn)  For feeding  3.0 0.0 10,000,000 MT 
120190  Soya beans  For soya beans oil and 
oil cake  3.0 0.0 1,200,000 MT  
120729  Cotton seeds  For feeding  2.0 0.0 All imported  
121410  Lucerne (alfalfa) mean and 
pellets  For feeding  1.0 0.0 All imported  
121490  Lucerne (alfalfa) bale  For feeding  1.0 0.0 All imported  
121490  Fodder roots  For feeding  20.0 0.0 600,000 MT  
230800  Other  For feeding  5.0 0.0 
151800  Animal or vegetable fats and oils 
and their fractions, boiled, 
oxidized, dehydrated, 
sulphurized, blown, polymerized 
by heat in vacuum or in inert 
gas or otherwise chemically 
modified, excluding those of 
heading 15.16; inedible 
mixtures or preparations of 
animal or vegetable fats or oils 
or of fraction of different fats or 
oils of this Chapter, not 
elsewhere specified or included  For feeding (excluding 
dehydrated castor oil 
and epoxidized soya 
bean oil)  5.0 0.0 30,000 MT  
170191  Containing added flavouring or 
colouring matter   
30.0 5.0 100,000 MT  
170199  Other   30.0 5.0 
170211  Lactose  For feeding  20.0 0.0 6,500 MT  
170219  Other  Lactose  20.0 0.0 
230320  Beet-pulp, bagasse and other 
waste of sugar manufacture  For feeding  5.0 0.0 All imported  
230320  Beet-pulp, bagasse and other 
waste of sugar manufacture  For mushroom 
cultivation  5.0 0.0 25,000 MT  
230330  Brewing or distilling dregs and 
waste  For feeding  2.0 0.0 All imported  
230400  Oil cake and other solid 
residues, whether or not ground 
or in the form of pellets, 
resulting from the extraction of 
soyabean oil.  For feeding  1.8 0.0 2,450,000 MT  
230800  Cotton seed hulls  For feeding  5.0 0.0 All imported  
230990  Preparations of a kind used in 
animal feeding   
5.0 0.0 10,000 MT  
270400  Coke (of coal)   
3 0.0 All imported  
270900  Petroleum oils and oils obtained 
from bituminous minerals, crude  For manufacturing 
naphtha  3.0 0.5 195,000,000 
BBL 
270900  Petroleum oils and oils obtained 
from bituminous minerals, crude  For manufacturing 
propane or butanes  3.0 2.0 33,000,000 BBL  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 219 - 
 
  HS code  Item  Description  General 
(%) In-
quota 
(%) Quota  
271111  Natural gas (liquefied)   3.0 2.0 All imported  
(1.1~3.31 and 
10.1~12.31)  
271121  Natural gas (in gaseous state)   3.0 2.0 All imported  
(1.1~3.31 and 
10.1~12.31)  
271112  LPG Propane  3.0 2.0 All imported  
271113  LPG Butanes  3.0 2.0 All imported  
280300  Carbon (carbon blacks and other 
forms of carbon not elsewhere 
specified or included).  For manufacturing 
secondary batteries  8.0 0.0 All imported  
280469  Other  Silicone metal  5.0 0.0 All imported  
282550  Copper hydroxide  Material for 
manufacturing 
agricultural chemicals 
(registered material 
under the Agricultural 
Chemicals Management 
Act) 2.0 0.0 All imported  
282741  Copper chloride oxides, Copper 
chloride hydroxide  
283325  Of copper  
290930  Aromatic ethers and their 
halogenated, sulphonated, 
nitrated or nitrosated derivatives  
 
290950  Ether -phenols, ether -alcohol -
phenols and their halogenated, 
sulphonated, nitrated or 
nitrosated derivatives  
Material for manufacturing 
agricultural chemicals  
291479  Other  
291539  Other  
291619  Other  
291620  Cyclanic, cyclenic or 
cycloterpenic monocarboxylic 
acids, their anhydrides, halides, 
peroxides, peroxyacids and their 
derivatives  
291631  Benzoic acid, its salts and esters  
291830  Carboxylic acids with aldehyde 
or ketone function but without 
other oxygen function, their 
anhydrides, halides, peroxides, 
peroxyacids and their 
derivatives  
291899  Other  
291990  Salts of phosphoric esters  
292011  Parathion (ISO) and parathion -
methyl (ISO) (methyl -parathion)  
292019  Other  
292090  Other  
292142  Aniline derivatives and their 
salts 
292143  Toluidines and their derivatives; 
salts thereof  
292149  Other  
292250  Amino -alcohol -phenols, amino -
acid-phenols and other amino -
compounds with oxygen function  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 220 - 
 
  HS code  Item  Description  General 
(%) In-
quota 
(%) Quota  
292412  Fluoroacetamide (ISO), 
monocrotophos (ISO) and 
phosphamidon (ISO)  
 
 
 Phosphamidon 
(registered material 
under the Agricultural 
Chemicals Management 
Act) 
292419  Other  
 
 
 
 
 
 
 Material for 
manufacturing 
agricultural chemicals 
(registered material 
under the Agricultural 
Chemicals Management 
Act) 
292421  Ureines and their derivatives; 
salts thereof  
292425  Alachlor (ISO)  
292429  Other  
292519  Other  
292529  Other  
292690  Other  
292800  Organic derivatives of hydrazine 
or of hydroxylamine  
293020  Thiocarbamates and 
dithiocarbamates  
293030  Thiuram mono -, di- or 
tetrasulphides  
 
 
 
 Thiuramdisulphides  
(registered material 
under the Agricultural 
Chemicals Management 
Act) 
293090  Other  
 
 
 
 
 
 Material for 
manufacturing 
chemicals (registered 
material under the 
Agricultural Chemicals 
Management Act)  
293139  Other  
293190  Other  
293219  Other  
293220  Lactones  
293299  Other  
293311  Phenazone (antipyrin) and its 
derivatives  
293319  Other  
293329  Other  
293339  Other  
293349  Other  
293359  Other  
293369  Other  
293379  Other lactams  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 221 - 
 
  HS code  Item  Description  General 
(%) In-
quota 
(%) Quota  
293399  Other  
293410  Compounds containing an 
unfused thiazole ring (whether 
or not hydrogenated) in the 
structure  
293420  Compounds containing in the 
structure a benzothiazole ring -
system (whether or not 
hydrogenated), not further fused  
293499  Other  
293590  Other  
294120  Streptomycins and their 
derivatives; salts thereof  
294130  Tetracyclines and their 
derivatives; salts thereof  
294190  Other  
340213  Non-ionic 
380891  Insecticides  
380892  Fungicides  
380893  Herbicides, anti -sprouting 
products and plant -growth 
regulators  Herbicides, plant -
growth regulators 
(registered material 
under the Agricultural 
Chemicals Management 
Act) 382499  Intermediate products of the 
antibiotics manufacturing 
process  
282590  Other  NCM Precursor (for 
manufacturing 
secondary battery)  8.0 0.0 All imported  
283329  Cobalt sulphates  For manufacturing 
secondary battery  5.0 0.0 All imported  
284190  Other  1. Lithium cobalt oxide  
(for manufacturing 
secondary battery)  
2. Lithium nickel cobalt 
manganese oxide (for 
manufacturing 
secondary battery)  
3. Lithium nickel cobalt 
alumin ium oxide (for 
manufacturing 
secondary battery)  8.0 0.0 All imported  
292159  Other  1. Xylene diamine 
(XDA) (for 
manufacturing 
Xylendisocyanate 
(XDI))  
2. For polymer mixing 
raw material ( TFMB)  
(for manufacturing flex 
supply display)  8.0 0.0 All imported  
292249  5-amino -2,4,6-triiodo 
isophthaloyl dichloride  For contrast medium  8 0.0 All imported  
292390  Quaternary ammonium salts and 
hydroxides; lecithins and other 
phosphoaminolipids, whether or 
not chemically defined (other)  Tetraethylammonium  
Tetrafluoroborate (for 
manufacturing 
secondary battery)  8 0.0 All imported  
310210  Urea Fertilizer, for making 
fertilizer  2.0 0.0 All imported  
320411  Disperse dyes and preparations 
based thereon (other)   4.0 0.0 All imported  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 222 - 
 
  HS code  Item  Description  General 
(%) In-
quota 
(%) Quota  
320611  Containing 80 % or more by 
weight of titanium dioxide 
calculated on the dry matter   8.0 0.0 All imported  
320890  Other  Ionomer variance 
solution (for fuel cell 
manufacturing)  8.0 0.0 All imported  
380110  Artificial graphite  For manufacturing 
secondary battery  8.0 0.0 All imported  
380130  Carbonaceous pastes For 
electrodes and similar pastes for 
furnace lining   8.0 0.0 All imported  
381512  Reaction initiators, reaction 
accelerators and catalytic 
preparations not elsewhere 
specified or included  With platinum metal or 
platinum compounds 
(for fuel cell 
manufacturing)  8.0 0.0 All imported  
382499  Prepared binders for foundry 
moulds or cores; chemical 
products and preparations of the 
chemical or allied industries  
(including those consisting of 
mixtures of natural products), 
not elsewhere specified or 
included (other)  Graphite compounds 
and E lectrolytes (for 
manufacturing 
secondary battery)  8.0 0.0 All imported  
390110  Polyethylene  Excluding of pulp  8.0 0.0 91,800 MT  
390120  Polyethylene   Except for pulp  8.0 0.0 36,000 MT  
390140  Polyethylene  For agriculture  8.0 0.0 18,000 MT  
390190  Other  Polyethylene (for 
manufacturing mobile 
phone plastic lens)  8.0 0.0 All imported  
390469  Polyethylene  Polyvinyl fluoride 
(PVDF)  binder (f or 
manufacturing 
secondary battery ) 8.0 0.0 All imported  
390740  Polycarbonates  For camera 
manufacturing  8.0 0.0 All imported  
392119  Other plastics  1. Separator  
2. Ion -exchange 
membrane (f or 
manufacturing 
secondary battery ) 8.0 0.0 All imported  
392190  Of polymers of propylene  Pouch (for 
manufacturing 
secondary battery)  8.0 0.0 All imported  
410411  
410419  
410441  
410449  Tanned or crust hides and skins 
of bovine (including buffalo) or 
equine animals, without hair on, 
whether or not split, but not 
further prepared   3.0 
3.0 
3.0 
3.0 1.0 
1.0 
1.0 
1.0 All imported  
500200  Raw silk (not thrown)   3.0 0.0 200 MT  
520512  Single yarn, unbleached or not 
mercerized  Measuring note more 
than 370.37 decitex 
but not less than 
232.56 decitex (not 
less than 27 metric 
number but not 
exceeding 43 metric 
number). Excluding 
open end yarn.  1.0 0.0 All imported  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 223 - 
 
  HS code  Item  Description  General 
(%) In-
quota 
(%) Quota  
520532  Multiple (folded) or cabled yarn, 
unbleached or not mercerized  Measuring not more 
than 370.37 decitex 
but not less than 
232.56 decitex (not 
less than 27 metric 
number but not 
exceeding 43 metric 
number). Excluding 
open end yarn.  1.0 0.0 All imported  
520533  Cotton yarn; Multiple (folded) or 
cabled yarn; Measuring per 
single yarn less than 232.56 
decitex but not less than 192.31 
decitex (exceeding 43 metric 
number but not exceeding 
52 metric number per single 
yarn)  Unbleached or not 
mercer ized 8.0 4.0 All imported  
550410  Artificial staple fibres, not 
carded, combed or otherwise 
processed for spinning  Of viscose rayon  1.0 0.0 All imported  
681510  Non-electrical articles of 
graphite or other carbon  For fuel cell 
manufacturing  8.0 0.0 All imported  
690320  Containing by weight more than 
50 % of alumina (Al2O3) or of a 
mixture or compound of alumina 
and of silica (SiO2)  For manufacturing 
secondary battery  8.0 0.0 All imported  
700600  Glass of heading 70.03, 70.04 or 
70.05, bent, edge-worked, 
engraved, drilled, enamelled or 
otherwise worked, but not 
framed or fitted with other 
materials  For blank mask used in 
the manufacture of 
semiconductors, or of 
flat panel displays 
(FPDs)  3.0 0.0 All imported  
711021  Palladium  For car smoke 
reduction for catalyst 
manufacturing  3.0 1.0 All imported  
711031  Rhodium  For car smoke 
reduction for catalyst 
manufacturing  3.0 1.0 All imported  
711299  Waste and scrap of precious 
metal or of metals clad with 
precious metal; other waste and 
scrap containing precious metal 
or precious metal compounds, of 
a kind used principally for the 
recovery of precious metal.   2.0 1.0 All imported  
720221  Ferro-silicon: Containing by 
weight more than 55 % of 
silicon   2.0 0.0 All imported  
720241  Ferro-chromium: Containing by 
weight more than 4 % of carbon   2.0 0.5 All imported  
720249  Other   2.0 0.5 All imported  
720260  Ferro-nickel   3.0 0.0 All imported  
720291  Ferrotitanium   3.0 1.0 All imported  
720293  Ferro-niobium   3.0 0.0 All imported  
741011  Not backed: Of refined copper  For manufacturing 
secondary battery  8.0 0.0 3,000 MT  
750210  Nickel, not alloyed (other)   3.0 1.0 All imported  
810820  Unwrought titanium; powders   2.0 0.5 All imported  
842139  Filtering or purifying machinery 
and apparatus for gases: other  For manufacturing 
secondary battery  8.0 0.0 All imported  
842199  Other (adsorbent for 
manufacturing ion -exchange 
membrane of secondary battery)  For manufacturing 
secondary battery  8.0 0.0 All imported  
847780  Other machinery  Elongator  8.0 0.0 All imported  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 224 - 
 
  HS code  Item  Description  General 
(%) In-
quota 
(%) Quota  
847989  Other  Coating Machine(For 
hydrogen electric 
vehicle electrolytic film 
manufacturing)  8.0 0.0 All imported  
850300  Parts suitable for use solely or 
principally with the machines of 
heading 85.01 or 85.02.  For fuel cell 
manufacturing  8.0 0.0 All imported  
850790  Electric accumulators, including 
separators therefor, whether or 
not rectangular (including 
square) (other)  For manufacturing 
secondary battery  8.0 0.0 All imported  
851410  Resistance heated furnaces and 
ovens  For fuel cell 
manufacturing and f or 
manufacturing 
secondary battery  8.0 0.0 All imported  
851680  Electric heating resistors(For 
manufacturing secondary 
battery)  For manufacturing 
secondary battery  8.0 0.0 All imported  
854511  Of a kind used for furnaces   5.0 0.0 All imported  
854590  Other (separation plates)  For fuel cell 
manufacturing  8.0 0.0 All imported  
901831 Syringes, with or without 
needles  Syringe of cartridge 
type (for growth 
hormone therapy)  8.0 0.0 All imported  
Source:  Data provided by the authorities.  
  WT/TPR/S/414 /Rev.1  • Republic of Korea  
 
- 225 - 
 
  Table A3. 7 Domestic agricultural support notified to the WTO, 2018  
(KRW  billion)    
Below de minimis  level of 10%a 
Product -specific AMS  606.3 5  
Soybean  8.82 Yes 
Chinese cabbage  4.55 Yes 
Radish  7.24 Yes 
Garlic  9.12 Yes 
Onion  14.54  Yes 
Green onion  0.44 Yes 
Goat 0.13 Yes 
Mushroom  0.20 Yes 
Walnut  1.68 No 
Oat 1.23 No 
Rice 539.33  Yes 
Beef 0.38 Yes 
Milk 15.00  Yes 
Red pepper  1.39 Yes 
Potato  0.24 Yes 
Carrot  0.17 Yes 
Ginseng  0.54 Yes 
Special crops  0.04 Yes 
Apple  1.31 Yes 
Non-product -specific AMS  789.44   
 Crop insurance  388.76   
 Direct payment  338.97   
 Loan programme  13.12   
 Self-help fund raising  30.35   
 Other  18.24   
Total AMS  1,395. 79  
Green box assistance  7,658.62   
 Research  716.43   
 Pest and disease control  238.26   
 Training services  74.43   
 Extension and advisory services  239.62   
 Inspection services  61.06   
 Marketing and promotion services  47.09   
 Infrastructural services  3,168.47   
 Public stockholding for food security purposes  356.31   
 Domestic food aid  37.02   
 Decoupled income support  1,367.17   
 Payments for relief from natural disasters  201.96   
 Producer retirement programmes  47.86   
 Resource retirement programmes  36.82   
 Investment aids  472.78   
 Environmental programmes  538.62   
 Regional assistance programmes  54.72   
S&D assistance  0  
 Investment subsidies generally available for agriculture  0  
Total notified assistance  9,054.4 1  
a Based on 2018 value of products.  
Source:  WTO document G/AG/N/KOR/82, 26  April 2021.  
   
  WT/TPR/S/414/Rev.1 • Republic of Korea  
 
- 226 - Table A4. 1 Air Transport Agreements, 2021  
Partner  Date Entry 
into 
force  5th1 7th2 Cabotage3 Coop4 Designation5 Withholding6 Pricing7 Capacity8 Stat9 ALI 
Algeria  01/2005  07/2009  N N N N/A M SOEC  DA PD Y 5 
Austria  05/1979  07/1979  Y N N N/A M SOEC  DA B1 Y 15 
Argentina  09/1996  01/2004  Y N N N/A M SOEC  DA PD Y 11 
Australia  02/1992  04/1992  Y N N N/A M SOEC  DA PD Y 11 
Azerbaijan  05/2006  12/2006  N N N N/A M SOEC  DD PD Y 11 
Bangladesh  02/1979  03/1979  N N N N/A S SOEC  DA PD Y 1 
Belarus  11/2007  11/2008  N N N N/A M SOEC  DA PD Y 5 
Belgium  10/1975  10/1975  N N N N/A S SOEC  DA PD Y 1 
Brazil  08/1992  05/1995  Y N N N/A M SOEC  DA PD Y 11 
Brunei 
Darussalam  08/1992  07/2003  Y N N N/A M SOEC  DA PD Y 11 
Bulgaria  08/1994  02/1995  N N N N/A M SOEC  DA PD Y 5 
Cambodia  04/2001  05/2001  N N N N/A M SOEC  DA PD Y 5 
Canada  09/1989  09/1989  Y Y N Y M SOEC  DD FD Y 37 
Chile 08/1979  10/1980  Y N N Y M SOEC  DD FD Y 31 
China  10/1994  10/1994  N N N N/A M SOEC  DA PD Y 5 
Croatia  12/2015  09/2016   N  N N N/A M SOEC/PPoB  DD PD Y 19 
Ecuador  12/2012  11/2015  Y N N Y M  SOEC  DD FD Y 31 
Egypt  07/1979  06/1988  N N N N/A S  SOEC  DA PD Y 1 
Ethiopia  05/2016  11/2017  Y N N N/A M SOEC  DD PD Y 17 
Fiji 10/1994  10/1994  Y N N N/A M SOEC  DA PD Y 11 
Finland  11/1996  02/1997  N N N N/A M SOEC/PPoB  DD PD Y 19 
France  06/1974  07/1974  N N N N/A M SOEC/PPoB  DA PD Y 13 
Georgia  02/2021  05/2021  N N N N/A M SOEC  DD PD Y 11  
  WT/TPR/S/414/Rev.1 • Republic of Korea  
 
- 227 - Partner  Date Entry 
into 
force  5th1 7th2 Cabotage3 Coop4 Designation5 Withholding6 Pricing7 Capacity8 Stat9 ALI 
Germany  02/1985  02/1985  Y N N N/A M SOEC  CoO PD Y 14 
Greece  01/1995  04/1996  Y N N N/A S SOEC  DA PD Y 7 
Hong Kong, 
China  03/1996  07/1996  Y N N N/A M SOEC/PPoB  DA PD Y 19 
Hungary  11/1989  05/1990  N N N N/A M SOEC/PPoB  DD PD Y 19 
India 03/1992  03/1992  Y N N N/A M SOEC  DA PD Y 11 
Indonesia  09/1989  09/1989  Y N N N/A S SOEC  DD PD Y 13 
Iran, Islamic 
Republic of  10/1998  03/2001  N N N N/A M SOEC  DA PD Y 5 
Iraq 05/1985  01/1986  N N N N/A S SOEC  DA PD Y 1 
Israel  12/1994  07/1997  N N N N/A S SOEC  DA PD Y 1 
Japan  05/1967  08/1967  Y N N N/A M SOEC  DA PD Y 11 
Jordan  05/1978  07/1978  N N N Y M SOEC  DD PD Y 17 
Kenya  01/1981  01/1981  N N N N/A S SOEC  DA PD Y 1 
Kuwait, State 
of 10/1981  01/1982  N N N N/A S SOEC  DA PD Y 1 
Kyrgyz 
Republic  07/2006  06/2007  N N N N/A M SOEC  DA PD Y 5 
Lao PDR  04/2010  06/2010  N N N N/A M SOEC  DD PD Y 11 
Latvia  09/2018  02/2019  N N N N/A M SOEC/PPoB  DD PD Y 19 
Liberia, 
Republic of  06/1978  09/1978  N N N/A N/A S SOEC  DA PD Y 1 
Luxembourg  09/2000  05/2003  N N N N/A M SOEC  DD PD Y 11 
Macao, China  04/1997  04/1997  Y N N N/A M SOEC/PPoB  DA PD Y 19 
Malaysia  03/1967  06/1967  Y N N N/A M SOEC  DA PD Y 11 
Maldives  06/1990  08/1990  Y N N N/A S SOEC  DD FD Y 21 
Malta  03/1997  05/1997  N N N N/A M SOEC  DA PD Y 5 
Mexico  07/1988  11/1989  Y N N Y M SOEC  DA PD Y 17  
  WT/TPR/S/414/Rev.1 • Republic of Korea  
 
- 228 - Partner  Date Entry 
into 
force  5th1 7th2 Cabotage3 Coop4 Designation5 Withholding6 Pricing7 Capacity8 Stat9 ALI 
Morocco  06/2000  04/2003  N N N N/A M SOEC  DA PD Y 5 
Mongolia  10/1991  11/1991  N N N N/A M SOEC  DA PD Y 5 
Myanmar  01/1978  01/1978  Y N N N/A S SOEC  DA PD Y 7 
Nepal  09/2004  03/2005  Y N N N/A M SOEC  DA PD Y 11 
Netherlands  06/1970  06/1970  N N N N/A M SOEC/PPoB  DA PD N/A 12 
New Zealand  05/1993  08/1993  Y N N N/A M SOEC  DD PD Y 17 
Oman  05/1983  02/1987  N N N N/A S SOEC  DA PD Y 1 
Pakistan  07/1996  08/1996  N N N N/A M SOEC  DA PD Y 5 
Palau  07/2009  08/2009  N N N N/A M SOEC  DD PD Y 11 
Panama  12/1979  10/1982  Y N N Y M SOEC  DD PD Y 23 
Papua New 
Guinea  11/2015  11/2016  N N N N/A M SOEC  DD PD Y 11 
Philippines  07/1969  08/1969  Y N N N/A M SOEC  DA PD N/A 10 
Poland  10/1991  04/1992  N N N N/A M SOEC/PPoB  DD PD Y 19 
Portugal  05/2018  12/2019  N N N N/A M SOEC/PPoB  DD PD Y 19 
Qatar  11/2005  02/2009  N N N N/A M SOEC  DA PD Y 5 
Romania  03/1994  07/1997  N N N N/A M SOEC  DA PD Y 5 
Russian 
Federation  03/2003  05/2003  Y N N N/A M SOEC  DA PD Y 11 
Saudi Arabia, 
Kingdom of  11/1976  01/1984  N N N N/A S SOEC  DA PD Y 1 
Serbia  02/2016   11/2016  N N N N/A M SOEC  DD PD Y 11 
Singapore  02/1972  02/1972  Y N N N/A M SOEC  DA PD Y 11 
South Africa  07/1995  07/1985  N N N N/A M SOEC  DA PD Y 5 
Spain  06/1989  01/1991  Y N N N/A M SOEC/PPoB  DD PD Y 25 
Sri Lanka  01/1978  01/1978  Y N N N/A S SOEC  DA PD Y 7 
Switzerland  12/1975  11/1976  N N N N/A S SOEC  DA PD Y 1  
  WT/TPR/S/414/Rev.1 • Republic of Korea  
 
- 229 - Partner  Date Entry 
into 
force  5th1 7th2 Cabotage3 Coop4 Designation5 Withholding6 Pricing7 Capacity8 Stat9 ALI 
Tajikistan  04/2015  08/2015  N N N N/A M SOEC  DD PD Y 11 
Thailand  07/1967  03/1968  Y N N N/A M SOEC  DA PD Y 11 
Tunisia  11/1994  02/1995  N N N N/A M SOEC  DA PD Y 5 
Turkmenistan  11/2008  01/2009  N N N N/A M SOEC  DD PD Y 11 
Turkey  06/1976  10/1979  N N N N/A S SOEC  DA PD Y 1 
Ukraine  12/1996  03/2003  N N N N/A M SOEC  DA PD Y 5 
United Arab 
Emirates  11/2005  07/2010  N N N N/A M SOEC  DA PD Y 5 
United 
Kingdom  03/1984  03/1984  N N N N/A M SOEC/PPoB  DD FD Y 27 
United  States  06/1998  06/1998  Y N N Y M SOEC  DD FD N/A 30 
Uzbekistan  06/1994  06/1994  N N N Y M SOEC  DD PD Y 17 
Viet Nam 05/1993  06/1993  Y N N N/A M SOEC  DD PD Y 17 
Note:  1 Fifth freedom rights.  
 2 Seventh freedom rights.  
 3 Cabotage rights.  
 4 Clauses on cooperation between airlines e.g. code -sharing.  
 5 Designation: single by an "S", multiple by an "M".  
 6 Type of withholding clause: SOEC – Substantial Ownership and Effective Control, PPoB – Principal Place of Business, N/A – not available.  
 7 Type of pricing clause: DA – Double Approval, DD – Double Disapproval, CoO – Country of Origin, ZP – Zone Pricing, FP – Free Pricing, N/A – not availab le. 
 8 Type of capacity clause: PD – Pre-Determination, B1 – Bermuda I, FD – Free Determination, O – other, N/A – not available.  
 9 If an exchange of statistics is foreseen by the agreement.  
Source:  Prepared by the authorities. ALI calculated by the WTO Secretariat, and an  "n/a" clause is assigned a value of "zero" in the calculation.  
 
__________  