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[Editorial] Cross-border trade

Questions mount over why Korea attempted sudden regulation of cross-border purchases

By Korea Herald

Published : May 21, 2024 - 05:30

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The Yoon Suk Yeol administration’s embarrassing backtracking of its hastily formulated policy plan to block consumers from directly buying cross-border items -- mostly from China -- has sparked a wave of criticism, raising questions about its administrative capabilities, as well as its ulterior motives regarding the country’s safety certification system, which is saddled with some critical issues.

On Sunday, Lee Jeong-won, second vice minister of the Office for Government Policy Coordination, said in a briefing in Seoul that it is “not true” that the government had intended to carry out a “preemptive ban on all direct purchases of 80 types of items,” and that such a comprehensive measure would be “physically and legally impossible.”

Lee said the ban would be imposed only on items that are found to be hazardous based on a safety test, apologizing for confusing the public.

The government’s changed stance came just three days after it announced Thursday its controversial plan targeting 80 types of items bought directly from overseas.

Despite Lee’s official apology and clarification during Sunday’s briefing, however, it seems the government had initially announced an impossible plan in the first place. In a statement released Thursday, the government stated that 80 types of items directly purchased overseas would be banned if they did not carry the country’s Korea Certification (KC) safety mark, including 34 types of goods for children such as toys and strollers and 34 types of electrical and household products.

The KC safety mark is required for officially imported products before being circulated in the domestic market, but goods that consumers directly buy from overseas have been free from the otherwise mandatory certification.

Predictably, the government’s plan unveiled on Thursday touched off a firestorm of protests and complaints. On many online discussion forums, those who often buy overseas items slammed the measure, saying that it is too comprehensive in a way that limits their choice. Even political heavyweights such as Han Dong-hoon, former interim chair of the ruling People Power Party, criticized the plan as “overly restrictive” on Facebook on Saturday.

Enforcing a sudden ban on direct purchases of foreign goods is not a simple matter. After all, South Korea's consumers spent a total of 6.76 trillion won ($4.99 billion) on cross-border shopping last year, partly spurred by the strong marketing of Chinese e-commerce platforms such as AliExpress and Temu.

The Korea Customs Service has so far around 24 million personal customs clearance codes that are needed for the import declaration of personal items, and customs officials are now processing some 460,000 directly purchased items on a daily basis. This reality suggests the majority of Korea's consumers have already directly purchased goods from other countries.

A main reason for buying items from China and other countries is cheaper prices. According to the Korea Institute for Industrial Economics and Trade, directly purchased items from foreign sellers are 23.3 percent cheaper on average than officially imported goods. In addition, mobile platforms including AliExpress make it easier to browse and order items.

As cross-border shopping is now a significant part of life for Korea's consumers, there are safety issues that must be addressed. Some of the items turned out to contain carcinogenic materials, with certain toys for children tainted with harmful substances such as humidifier disinfectant.

As for those items that proved harmful, the government should have proactively taken other steps such as banning local distribution and holding irresponsible sellers and shopping firms accountable.

Instead, it opted for an all-out ban and attempted to mandate KC certification, which is not even a perfectly reliable safety filter. The KC, notorious for its complex and time-consuming certification procedure, is not compatible with US, EU or Chinese certifications, which means importers have to go through the costly KC certification process only for the Korean market again. Worse, some items with KC certifications have been found to have safety issues.

Questions also remain about the possibility that the initial plan would have brought massive profits to private firms handling KC certifications, which is now hotly debated among consumers.

It is not the first time that the Yoon administration has come under fire for half-baked and prematurely announced policies. To restore public trust, it has to address the safety issue properly, enhance the reliability of the KC system and overhaul its poor policy formulation process that often results in such unseemly retractions.