South Korea has the highest average tariff rate on food products in the world, according to the World Trade Organization (WTO) on July 4. When assessed by trade-weighted items, the rate nears 90%, sparking calls for long-term tariff reduction to stabilize prices.
WTO statistics show that South Korea’s simple average tariff rate on agricultural products stood at 57% in 2022, the highest among 138 countries. This rate was nearly 20 percentage points higher than second-ranked Turkmenistan (41.6%) and third-ranked India (39.6%).
The differences are even starker when looking at the trade-weighted average tariff rate, which is calculated by dividing the total tariff revenue by the total value of imports. South Korea tops the list with 89.3%, significantly higher than second-ranked India (48.6%), third-ranked Burundi (34.4%), and fourth-ranked Rwanda (30.6%).
The Ministry of Agriculture, Food and Rural Affairs claims high tariffs are imposed on certain goods to protect domestic farmers. For example, the standard tariff for garlic is 360%. According to the ‘2022 Customs Statistics Yearbook’ compiled last year, the actual tariff rates for chili peppers and garlic were 237.07% and 141.05%, respectively. The ministry argues that pointing out problems based on average figures can be misleading as the tariff rates for countries with which Korea has free trade agreements (FTAs) range from 0% to 6%, indicating that tariff rate differences between countries are quite large.
There is a growing perception within the government that these high tariffs contribute to rising living costs. The government’s frequent use of the ‘quota tariff reduction’ measure during price surges supports this view. According to a Ministry of Finance report on 2023 quota tariffs, 117 items were subjected to the quota tariff system last year, with rates set below the basic tax rate. The estimated support provided by this system amounted to 1.075 trillion won ($780 million).
The largest quota tariff supports were given to energy products such as liquefied natural gas (LNG), crude oil, and liquefied petroleum gas (LPG), with support amounts ranging from 100 billion to 240 billion won each. Food items such as chicken, corn, pork, sugar, soybean oil, and potato starch also ranked high among the supported items.
The Finance Ministry estimated that cutting import prices by applying quota tariffs lowers the price index for each item. For example, for every 1% reduction in import prices, pork is estimated to bring down the price index by 0.68%, sugar by 0.47%, and bananas by 0.84%.
However, there is significant opposition to broadly lowering tariff rates. Critics argue that such measures could reduce tariff revenue and hinder the growth of the domestic agricultural and livestock sector. They suggest that tariff rate adjustments should be applied gradually rather than at a steep pace.
