Korea to extend tariff quota on urea, fertilizer material over China's export curbs
Finance Minister Choo Kyung-ho speaks during a meeting on pan-gov't commission in Seoul, Dec. 11. Yonhap
Korea on Monday decided to extend the tariff-rate quota system on urea and ammonium phosphate, a fertilizer material, through next year in response to their growing supply chain risks stemming from China's export restrictions, the finance ministry said.
The quota system on urea, used to curb emissions in diesel cars and make agricultural fertilizers, was supposed to end this year, but it will be extended through the end of 2024, according to the Ministry of Economy and Finance.
The move aims to reduce burdens of companies that will bring urea from nations other than China, such as Indonesia and Saudi Arabia, as Beijing has suspended customs procedures for urea shipments to Korea, citing tight supplies for its domestic use, since late last month.
The tariff-rate quota is a system under which products are imported with favorable duty conditions within a designated volume.
The Seoul government also vowed to support part of importers' shipping expenses and to implement a swift evaluation system to boost the domestic production of urea solution.
The recent export curb has raised concerns over another supply chain crisis, as the country suffered major disruptions to urea supplies in 2021 following China's export restrictions.
According to government data, Korea imported more than 90 percent of urea for industrial purposes from China this year, rising from 71.8 percent the previous year, and the government has been working hard to encourage companies to diversify their import channels.
A gas station in Seoul has packages of urea solution in storage, Dec. 10. Yonhap
The government will also extend the quota system for ammonium phosphate through next June in an effort to mitigate the potential impact of China's export suspension.
"We've seen growing risk factors in supply chains of items directly linked to our major industries and the people's lives, such as urea, ammonium phosphate and graphite," Finance Minister Choo Kyung-ho said during a meeting with ministers on supply chain management.
It was the President Yoon Suk Yeol government's first ministerial-level meeting on the matter.
Currently, Korea has no urgent issues regarding the supplies and market prices of urea and urea solution, though demand at home for the items has somewhat increased.
It has urea inventory sufficient for 4.3 months as companies have recently signed fresh contracts with suppliers from nations other than China.
As a longer-term plan, the government will review the establishment of a domestic production facility to ensure stable supplies of the material, the ministry said.
On Friday, the National Assembly passed the Supply Chain Stabilization Act, which calls for the establishment of a commission for deliberating and adjusting relevant plans and the operation of an early warning system.
The act will take effect six months after promulgation.
Accordingly, the ministry said it will establish a government-wide commission for the comprehensive management of supply chains of items necessary for major industries and the people's everyday lives.
It will be headed by the finance minister and bring together relevant ministries and institutions, as well as experts in the economy and security fields.
The entity will finalize basic plans on how to boost supply chain stability next year, which will be under review every three years, the ministry said.
The government is expected to designate around 200 major raw materials and items as "economic security items" and extend support for their stable introduction, production and stock management through subsidies and other policy means.
Korea has sought to reduce dependence on China and a handful of other nations to better ensure stable supply chains of key items in the wake of a series of disruptions in supplies of major items.
"The government will continue close consultations with China through various dialogue channels for the swift resumption of customs procedures," Choo said. (Yonhap)