The importation of goods requires a series of procedures ranging from the conclusion of a contract top import payments. The general import procedures include the conclusion of import contracts, the securing of import permission, customs clearance, and payments for imports. Procedures included in the optional category depend on the type of transaction and the nature of the goods to be imported.
Imported goods legally enter into Korea when shipment has arrived at the port of entry, estimated duties have been paid, and delivery of the goods has been approved by the customs house concerned. There are many possible trading methods including the L/C, DA and DP procedures, but this section focuses on the L/C method.
Conclusion of Contract
An import contract is conducted when an offer based on a written agreement or a contact between a Korean trading agent and a foreign supplier is received, or an offer issued overseas from a foreign exporter is accepted. Imports to Korea have been liberalized extensively but are still being administered and restricted in accordance with the External Trade Act, the Foreign Exchange Control Act, the Customs Act and with special reference to the "Export & Import Notice" issued by the Ministry of Trade and Industry (MTI). All items can be freely imported unless they are specifically prohibited and/or the method of payment contradicts the Foreign Exchange Control Act.
If an import item is designated an import restricted item requiring import authorizing according to the MTI's Export & Import Notice, the item must receive an import recommendation from the competent authority or association in accordance with the applicable import announcement, it must also conform with the special notice as specified by the Ministry of Trade and Industry. But a freely importable item doesn't need any recommendation.
An import license must be obtained directly from the Ministry of Trade and Industry. However, in all other cases excluding counter-trade, the president of a foreign bank is delegated to issue an import license. An import license remains valid for one year in principle. Payment for imports as well as customs clearance of imported goods, should be completed within the term of the import license.
Establishment of Letter of Credit (L/C)
A party receiving an import license must establish an L/C/ through a foreign exchange bank within the effective time period. In an unavoidable circumstance, however, the period can be extended by submitting to the competent bank an application for amendment to the L/C. When arranging the L/C, the the same information as noted on the import authorization form must be used. The amount of the L/C should not exceed the authorized amount, and it must be expressed in the same currency specified in the import authorization form.
Receipt of Transport Documents
The foreign exporter having received the L/C, ships the goods according to the conditions of the L/C and negotiates with the exporter's bank a documentary bill which is issued using the transport documents as security. The exporter's bank then sends the transport documents to the bank which issued the L/C, and after the L/C opening bank has verified that the conditions of the transport documents are consistent with those of the L/C, it settles the account of the import transaction and transfers the transport documents to the importers. The importer submits the bill of lading (B/L) to the shipping company and collects the imported freight. If, however, the freight has already arrived but the transport documents have not, the importers may present a letter of guarantee (L/G) to the shipping company and receive the freight in advance, after receiving from the importer's bank the L/G prepared under fixed conditions.
The importer unloads the imported freight from the ship and places it in a bonded area, and then submits a report of import to the superintendent of the customs house. The customs clearance report can only be prepared by a consignee, employing a certified customs specialist or a certified customs clearance corporation. Upon receipt of the import report, the customs house inspector will verify that the contents of the imported merchandise cor-respond with that described in the import authorization form and confirms the documentation is in order. The tariff on the merchandise is then calculated and leived, and an import approval is presented to the person reporting the import. This person may remove the imported merchandise from the bonded area. After doing so, the import procedures are completed.