[Intl-tobacco] S Korea To Levy Initial 10% Tobacco Import Tariff Jul (fwd)

[Robert Weissman]

S Korea To Levy Initial 10% Tobacco Import Tariff Jul
by Suh Hae-sung, Dow Jones Newswires; 822-732-2165; hae-sung.suh@dowjones.com
Source: The Wall Street Journal Interactive Edition, Wednesday, 6/13/01

SEOUL -- South Korea's Ministry of Finance and Economy said Thursday that
the country will levy an initial 10% duty on tobacco imports from July 1.

Korea has decided to start imposing tobacco tariffs while also lifting a
ban on foreign investment in the domestic industry, the ministry said in a
statement.

Under an agreement with the U.S., Korea permitted U.S. companies to import
tobacco duty-free from 1988 on condition that Korea still maintained a
monopoly in local tobacco production.

The most favored nation clause, or MFN, was granted to tobacco imports
from non-U.S. companies.

The clause required that Korea should impose its lowest tariff rates on
tobacco imports from other countries that it already applied to goods from
the U.S., a ministry official explained.

Korea and the U.S. have recently revised the 1988 bilateral agreement to
allow foreign companies to produce tobacco locally. The revision will also
call for a basic 40% tariff to be imposed on tobacco imports, he said.

In order to avoid a drastic market change and friction with tobacco
traders, the government has decided to start imposing a 10% duty on
tobacco imports from July this year and raise the rate by 10 basis points
a year up to the 40% by July 2004.

The tariff increase will be applied to non-U.S. tobacco companies under
the MFN clause, the ministry official said.


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