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Most of Korea's export
transactions are made under irrevocable letters of credit, either
in the form of at-sight drafts or usance drafts. Exports on D/p and
D/A terms are also permissible. the exportation of goods requires
also a series of procedures such as the conclusion of an export
contract, the securing of export permission, the production of
export goods, customs clearance and shipment, and the collection of
payments.
As for exports, those
subject to optional export procedures are determined by the type of
transaction involved an the nature of the goods to be exported.
These optional steps comprise letters of credit, export
recommendations, procurement domestically or importation of raw
materials used in making export goods, finance loans, export
inspection and customs tariff refunds. This section focuses on the
L/c method.
Export Contracts and receipt of l/C
The initial step in the
export process is the construction of an export contract. The
exporter receives a letter of credit from the importer. After
receiving a letter of credit, the exporter should, prior to
obtaining an export permission, obtain a recommendation from an
export association assigned to review the items in question. This
step is necessary to determine whether or not the export items are
included on the list of products restricted from export under the
government's Export-Import Notice. Moreover, if the items in
question are restricted under special laws such as the Law on
Drugs, Cosmetics and Medical Instruments or the Law on Foods and
Hygenic, a recommendation should be obtained in accordance with
that law. If this procedure is followed, the exporter need not
obtain an export permission from a foreign exchange bank.
Export Approval
The exporter should
obtain an export approval for every export transaction he makes.
This system is designed to ensure that export procedures are
carried out in a lawful manner and to facilitate the collection of
export bills. Authority for issuing an export approval, except in
the case of plant exports and exports on deferred payment terms
under which the collection period exceeds one year, is delegated to
the heads of foreign exchange banks. In the case of an automatic
approval items, an exporter must apply for authorization to a
foreign exchange bank in order to export. On the application from
for an export approval, the exporter must include his name, the
port of lading, settlement method, and period of validity, as well
as specifications on the export items.
Export
Inspection
To maintain the good reputation of
Korean export goods and thus enhance their international credibility,
before clearing customs the government conducts uniform inspections of
designated export items. Inspection procedures can be classified into
four categories: quality, packaging condition, material, design and
manufacturing method inspection. Export inspection is not required of
all commodities but pertains only to those items designated by the
government. Currently, 582 items based on the H.S. 10-digit heading
require inspection.
Under the Export Inspection Act,
inspection exemption is granted when a letter of credit or an export
contract requires that goods be inspected by the buyer, or when the
exporter gains permission from the Industrial Advancement
Administration (IAA). Moreover, there are automatic exemption
conditions (for example, products accorded the KS Mark, or any foreign
standards recognized by the IAA).
Customs Clearance
In order to export, the exporter must
deposit the export commodities in a bonded area prior to submitting
documents to the head of the customs house. The customs house inspects
export commodities against invoices and export permits or approval
certificates. If all is found to be in order, the customs house issues
an export authorization for customs clearance. The required documents
when applying for export declaration are:
- Five copies of the application for
export declaration.
- One copy of the export license (E/L).
- One copy of the invoice.
- One copy of the packing list.
- Other documents as required.
Export Shipment
After obtaining an export permit from the
customs house, the exporter arranges with a shipping company for the
vessel and also obtains marine insurance from an insurance company.
Finally, the exporter will have the export commodities loaded on board
the vessel by the forwarder.
Collection of Export Proceeds
The final stage in the export process is
the collection of the export proceeds through a foreign exchange bank.
after the shipment of the export commodities, the exporter issues a
bill of exchange in order to collect the export proceeds. In addition
to the bill of exchange, the exporter should submit the shipping
document, letter of credit and other documents as required to the
foreign bank.
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General Section
