When goods of Chinese origin are imported into Korea via Hong Kong, if the consistency of container/seal numbers is proven at all transportation stages, is the direct transportation requirement for preferential tariffs met and applicable? Released

When goods originating from China are imported into Korea via Hong Kong, if the consistency of container numbers and seal numbers is documented and proven at all stages of transportation, it is highly probable that the direct consignment requirement for the application of preferential tariffs, such as under the Korea-China FTA, will be deemed satisfied. This approach is consistent with common trade practices and guidelines for operating preferential tariffs.

In Free Trade Agreements (FTAs), the 'Direct Consignment' requirement is one of the essential conditions for receiving preferential tariff benefits. This means that goods originating from the country of origin must be directly transported to the importing country, and no processing or manipulation should occur in a third country. However, for geographical or logistical reasons, goods may transit through or be temporarily stored in a third country. In such cases, it is crucial to prove that the nature of the goods has not been changed and no processing has occurred in that third country.

As mentioned in your question, the fact that container numbers and seal numbers match in the transportation process from China to Hong Kong (e.g., Cargo Manifest) and from Hong Kong to Korea (e.g., B/L) serves as strong evidence that the goods were transported in their original state, without being opened or having their contents altered during transit. In other words, it becomes key documentary evidence supporting the fact that only simple transshipment or temporary storage occurred during transit through Hong Kong, and no manipulation of the goods took place.

To satisfy these direct consignment requirements, the following documents serve as important evidence:

• Consistent Transport Documents: Container numbers and seal numbers must match on the transport documents between China and Hong Kong (e.g., Cargo Manifest, House B/L, etc.) and between Hong Kong and Korea (e.g., Master B/L, House B/L, etc.). If the numbers have changed, documents proving the reason for the change (e.g., transshipment due to container damage) and the continuity before and after the change (e.g., container handover certificate, transshipment report) are required.
• Through Bill of Lading: If a single transport document is issued from China to Korea, this constitutes the clearest evidence of direct consignment.
• Transit Country Customs Documents: Documents proving that the goods were temporarily stored or passed through Hong Kong customs (e.g., transshipment permit, bonded warehouse storage certificate, etc.) provide even stronger evidence. These documents must specify that the goods were under customs control and that no processing other than repackaging occurred.
• Valid Certificate of Origin: Of course, a validly issued Certificate of Origin must be submitted, regardless of satisfying the direct consignment requirement.

However, it is important to note that even if all such documents are provided, the final decision on the application of preferential tariffs may vary depending on the importing country's customs examination results. Particularly, during the post-import origin verification process, additional clarification or evidence may be requested regarding whether the goods meet the origin determination criteria and the preferential tariff application requirements (e.g., direct consignment requirement). If the submitted documents are deemed insufficient, or if circumstances such as forgery or alteration are discovered, the application of preferential tariffs may be denied.

Therefore, when importing goods via the China-Hong Kong-Korea route, it is very important to maintain consistency in container and seal numbers throughout the entire transportation process and to meticulously retain all related shipping documents. Furthermore, thoroughly reviewing whether the origin determination criteria are accurately met from the Certificate of Origin issuance stage and preemptively confirming that all FTA requirements are satisfied is the way to minimize risks. If there are any uncertainties, seeking advice from a professional customs broker is a wise approach.