South Korean exporters caught evading EU safeguards: reports

Two South Korean steel exporters have been referred to prosecutors after being accused of illegally shipping colour-coated steel sheet to the EU by allegedly falsifying documentation to avoid paying EU safeguard duties. So reports The Korea Post citing a July 7 announcement by the Seoul Main Customs Office.

The companies allegedly falsely reported their shipments as destined for non-EU countries such as Ukraine, Russia, Moldova, while sending the goods to EU member states including Romania, Poland and Belgium, Kallanish notes.

Korean exporters must obtain approval from the Korea Iron & Steel Association (KOSA) before exporting to the EU to ensure shipments are within the EU quota allocation. However, the companies under investigation allegedly bypassed this requirement by falsifying shipping documentation, while the goods in reality entered the EU market using Korea’s duty-free quota allocation, without proper authorisation.

If fraudulent exporters exhaust the quota early through false declarations, legitimate exporters will be forced to either pay the 25% safeguard tariff or delay shipments until the next quarter’s quota becomes available, incurring additional logistics costs in the process.

The Korea Customs Service suspected a significant discrepancy between the volume of steel exports to the EU reported by South Korea’s national statistics and the import figures recorded by the EU. An investigation was launched and authorities confirmed the suspicion following reports from industry sources.

Between June 2020 and February 2023, the companies are alleged to have conducted 147 such illegal shipments, sending approximately 126,000 tonnes of steel – worth an estimated KRW 230 billion ($166 million) – to the EU market.

Investigators revealed the exporters operated a coordinated scheme that included creating internal guidelines instructing staff to omit any EU country names from official shipping documents.

A Seoul Customs official called it a “serious trade crime”, noting that such practices undermine fair competition and damage legitimate steel exporters.

Korea has a tariff-rate quota for a large number of steel product imports into the EU. Imports within the quota are exempt from tariffs, while shipments exceeding the limit are subject to a 25% tariff.

Source: EU Taric