Understanding Country of Origin (COO) Marking Violations and Legal Penalties under the Foreign Trade Act Released

Country of Origin (COO) marking is a critical element in maintaining international trade order and ensuring consumer protection. Violations of COO requirements can lead to severe consequences, ranging from administrative inconveniences to criminal penalties. As professional customs brokers, we deal with various cases of marking violations and fully understand the significant impact they have on business operations.

Specific Types of Country of Origin Marking Violations

The specific types of violations are detailed under Article 12 of the "Notice on the Operation of the Country of Origin Marking System." These are generally categorized into five types, with specific judgment criteria provided in the enforcement guidelines.

• False Marking: This involves falsely declaring the origin of a product. For example, marking a Chinese product as "Made in Korea" or a Vietnamese product as "Made in USA." This is considered the most serious violation as it intentionally deceives consumers and undermines fair trade.
• Misleading Marking: This refers to markings that may cause consumers to mistake the actual origin for another. An example is using Korean city names, brand names, or the Taegeuk (national flag) symbol on foreign-made products to imply they are domestic. While not a direct false statement, it is treated seriously as it impairs reasonable consumer judgment.
• Damage or Alteration of Marking: This involves intentionally damaging or changing a legally required origin mark to make it difficult to identify or to make it appear as if the product originated elsewhere. This is classified as a major violation similar to false marking due to the clear intent to conceal information.
• Inappropriate Marking: In this case, the origin is marked, but it fails to meet the standards (location, size, font, durability, etc.) set by the regulations. Examples include marks that are too small to read or those applied via easily removable stickers. While often lacking malicious intent compared to other types, it is still a failure to fulfill the duty of providing proper information.
• No Marking: This occurs when a product subject to COO requirements has no origin indication at all. This deprives consumers of their right to information and can sometimes involve intentional concealment.

Penalties and Application Standards for Violations

The repercussions for violating COO marking regulations vary significantly depending on the severity of the violation and the existence of intent.

Criminal Penalties and Denial of Clearance (Severe Violations)

Major violations such as false marking, misleading marking, alteration of marks, or intentional omission of marking are subject to criminal prosecution under the Foreign Trade Act.

• Criminal Penalties: Pursuant to Articles 53 and 56 of the Foreign Trade Act, individuals who falsely mark or cause misunderstanding regarding the country of origin, or those who damage or alter such marks, may face up to 7 years of imprisonment or a fine of up to 100 million KRW. Fines may be increased depending on the scale of criminal proceeds.
• Denial of Clearance: Customs authorities will not allow the clearance of goods with major COO violations. This measure prevents non-compliant goods from entering the domestic market. If clearance is denied, the goods must be returned or destroyed, leading to substantial financial losses for the importer.

These penalties are primarily applied when intentionality is established—meaning the importer actively sought to deceive or hide the origin rather than making a simple mistake.

Clearance via Corrective Action (Cases without Intent)

If a violation is judged to be unintentional—stemming from simple negligence, clerical error, or failure to meet technical standards (Inappropriate Marking)—clearance may be granted after corrective action is taken, without criminal penalties.

• Correction Orders: Upon discovering a violation, Customs will order the importer to correct the marking. This includes attaching the correct origin labels, removing misleading elements, or modifying illegal marks.
• Correction Process and Verification: The importer must perform the corrective work at a designated location (such as a bonded warehouse) under customs supervision. Once completed, Customs verifies the results and permits clearance if all requirements are met.
• Costs and Delays: All costs associated with corrective actions (labor, materials, bonded storage fees) are borne by the importer. Furthermore, the resulting delays in clearance can increase logistics costs and disrupt business schedules.

Conclusion

Country of Origin marking is a complex and vital regulatory matter. Violations can lead to more than just financial loss; they can damage corporate reputation and lead to criminal records. Therefore, it is essential to thoroughly review regulations before importing and to seek the expertise of a customs broker to ensure the accuracy of origin markings. Our firm is committed to supporting importers by providing precise interpretations of origin regulations to mitigate risks effectively.