The Korean government will continuously monitor the entire process — from import to sale — of agricultural, livestock, and fisheries products subject to tariff rate quotas, to prevent tariff cuts aimed at stabilizing prices from being absorbed at the distribution stage. As criticism mounts that some companies are reaping the benefits of tariff cuts by delaying import declarations or the release of goods from bonded areas, authorities have decided to strengthen sanctions and pursue the establishment of a dedicated management organization.
The government discussed follow-up measures to improve the tariff rate quota system at a task force meeting of relevant ministers on special management of livelihood prices on Tuesday.
To stabilize prices, the government has been temporarily applying tariff rate quotas lower than the basic tariff rate on imported agricultural and fisheries products. The idea is that reducing the tariff burden lowers import costs, which can then translate into lower consumer prices.
The problem is that for some storable items, there have been cases of adjusting market release timing by delaying import declarations or the release of goods from bonded areas. Critics have also pointed out that the tariff cuts are being absorbed at the distribution stage, limiting the price reductions that consumers actually feel.
According to a government inspection of 58 sites — including bonded warehouses, importers, wholesale markets, processors, and distributors — conducted from March 9 to April 16, prices at large discount stores after the application of tariff rate quotas fell 4% for bananas, 20% for mangoes, 11% for pineapples, and 3% for frozen mackerel. While mangoes and pineapples saw double-digit price declines, the price drops for bananas and frozen mackerel — items closer to everyday living costs — were relatively limited.
Differences by distribution channel were also confirmed. When importers supplied large discount stores directly, the consumer price reduction effect was greater than when goods went through wholesale and retail channels. In the case of bananas, consumer prices were 50% higher than import prices through the wholesale and retail channel, but only 40% higher through the direct delivery channel.
The government will strengthen sanctions on delayed import declarations. Currently, penalty taxes for delayed import declarations are imposed only after 30 days have passed from the date goods enter a bonded area, but going forward, the government will push to impose penalty taxes starting from the 20-day mark. A new system will also be established allowing the minister of the relevant ministry to request customs chiefs to release goods when rapid supply is needed, with the customs chief able to issue release orders to cargo owners.
The government will shorten the mandatory release period for sugar from six months to four months and add frozen mackerel to the list of imported fisheries products subject to distribution history management. By the end of this year, the government plans to establish an integrated management system that continuously monitors the entire import, distribution, and sales process for tariff rate quota items. It will also consult with the Ministry of Economy and Finance and the Office for Government Policy Coordination on a plan to create a 30-person tariff rate quota management team at the Korea Agro-Fisheries & Food Trade Corporation (aT) in 2027.
"The tariff rate quota is not a system that ends with lowering tariffs; it is only meaningful when it leads to stable consumer prices," a government official said. "We will strengthen the management system for each item to block customs delays and price absorption issues at the distribution stage."
