Eligibility for Korea-EU FTA Preferential Tariffs: Can an Unapproved Italian Exporter Split Consignments Over €6,000 to Avoid REX Certification? Released

The issue regarding the application of preferential tariffs for unapproved Italian exporters involves a deep understanding of the Korea-EU FTA origin declaration regulations, specifically the €6,000 limit for unapproved exporters and the definition of a 'Single Consignment.' If an exporter simultaneously sends goods exceeding a total value of €6,000 using multiple B/Ls (each under €6,000) from various branches to avoid certification, the eligibility for FTA benefits must be scrutinized. Below is a detailed explanation from a Customs Broker’s perspective.

1. Principles of Origin Declaration and the Meaning of the €6,000 Threshold

Under the Korea-EU FTA, the Origin Declaration is the core document proving the origin of exported goods. The requirements for this declaration vary based on whether the exporter is an 'Approved Exporter' and the total value of the goods. The EU operates the Registered Exporter System (REX), and EU exporters must be registered in this system to be recognized as 'Approved Exporters.'

• Approved Exporters (REX Registered): They can issue Origin Declarations regardless of the value of the goods, as they are recognized for their capability to determine origin and manage related documentation.
• Unapproved Exporters: They may only issue Origin Declarations if the total value of a 'Single Consignment' does not exceed €6,000. For goods exceeding this amount, only Approved Exporters can legally issue the declaration. This threshold is intended to reduce administrative burdens for small transactions while maintaining strict oversight on higher-value trade.

2. Interpretation of 'Single Consignment' for Simultaneous Shipments

The core of this inquiry is the status of goods totaling over €6,000 that are shipped simultaneously via multiple B/Ls, each under €6,000. The concept of a 'Single Consignment' is critical under the Korea-EU FTA rules of origin.

• Simultaneous Shipments from One Exporter to One Consignee: Even if the shipment is divided into several commercial invoices or transport documents (B/L, AWB, etc.), if they are substantially shipped at the same time, they are considered a single consignment. This means the total value is aggregated. If the combined value exceeds €6,000, an Origin Declaration issued by an unapproved exporter is highly likely to be deemed invalid. This rule prevents the artificial splitting of shipments to bypass the €6,000 limit.
• Genuine Split Shipments: If shipments are sent on different dates via different means of transport and can be objectively proven as independent commercial transactions, they may be viewed as separate consignments. In such cases, if each B/L is under €6,000, the FTA may apply. However, customs authorities apply very strict standards when evaluating the reality of such transactions.

3. Impact of Deliberate Splitting to Avoid Certification

Customs authorities closely monitor the exporter's intent. Origin regulations exist to prevent the abuse of FTA benefits and maintain fair trade order.

• Invalidation due to Improper Splitting: If it is clearly identified that an exporter intentionally split a single commercial transaction into multiple B/Ls to avoid REX registration, the Origin Declaration will be voided. The importer will be denied preferential tariffs and must pay the general base rate. Furthermore, this can be viewed as an attempt to obtain unjust tax benefits, potentially leading to violations of the Customs Act and the imposition of additional taxes or penalties.
• Customs Scrutiny Criteria: Authorities review all related documents, including purchase orders (P/O), commercial invoices, transport documents, packing lists, and bank transfer records. If goods ordered under a single contract are shipped to the same importer at a similar time from the same origin, the intent to avoid certification is strongly presumed, especially if the exporter is not REX-registered.

4. Practical Measures for Importers

To ensure stable FTA application and prevent unforeseen financial losses, importers should take the following steps:

• Advance Consultation and Exporter Education: Clearly explain Korea-EU FTA requirements and the necessity of REX registration to Italian exporters during the contract stage. Require them to complete REX registration if the total transaction value exceeds €6,000.
• Encourage REX Registration: For long-term partners, the most secure method is to encourage them to obtain 'Approved Exporter' status via REX. This removes the €6,000 restriction and ensures stable tariff benefits.
• Ensure Consistency and Transparency: Verify that all documents accurately reflect the reality of the transaction and show no signs of intentional splitting. If split shipments are necessary due to commercial reasons (e.g., production delays), maintain objective evidence to prove these circumstances.
• Consult with Customs Experts: In complex situations, consult a Customs Broker to minimize legal risks and establish a proper compliance strategy.

In conclusion, if an unapproved Italian exporter simultaneously ships goods exceeding €6,000 via multiple B/Ls to avoid certification, it is considered an artificial split of a 'Single Consignment,' and preferential tariffs will likely be denied. Importers must ensure all procedures and requirements are met legally to secure FTA benefits.