Korea Customs Service Reports Record-High Trade Security Violations Involving Semiconductor and Battery Equipment

The scale of trade security violations, such as mislabeling foreign products as domestic for export or smuggling items subject to export controls, has reached an all-time high this year.

The Korea Customs Service (KCS) announced on July 6 that the value of trade security violations detected as of the end of May reached 770.3 billion won. This figure has already surpassed the total of 655.6 billion won recorded for the entire year of 2025, marking the largest scale of such violations on record.

To counter illegal trade activities that threaten economic security, the KCS has separated trade security investigations from general economic crime investigations. The agency has also deployed dedicated teams and personnel to its headquarters and major customs offices to conduct intensive crackdowns.

By category, illegal circumvention exports, where foreign products are disguised as domestic goods and exported to third countries, amounted to 527.3 billion won. Illegal exports of strategic materials, involving the unauthorized shipment or false declaration of controlled items, totaled 243 billion won. Both categories have already exceeded their respective annual totals from last year.

The KCS is strengthening its surveillance, noting an increase in attempts to circumvent trade regulations by exploiting the reputation of K-brands or taking advantage of tariff differences between countries resulting from recent shifts in trade policies by major nations like the United States.

In one instance this past April, a company was caught exporting 4,606 foreign-made electric two-wheeler batteries, valued at 3 billion won, after disguising them as South Korean products.

The investigation revealed that the company had either attached "Made in Korea" labels to the batteries abroad or simply assembled foreign components in Korea before exporting them under false pretenses.

Authorities also uncovered cases of label switching aimed at exploiting tariff differences in the U.S. market. One company imported 230,000 units of semiconductor equipment, worth 12 billion won, from a specific country and exported them to the U.S. with "Made in Korea" labels attached without any processing.

Additionally, the KCS caught six companies attempting to circumvent export regulations for secondary battery manufacturing equipment. These firms had falsely declared that the equipment was being shipped to countries that do not require export permits, when they were actually destined for countries subject to strict controls.

Kim Jung, Director General of the Investigation Bureau at the KCS, stated, "Trade security violations are serious crimes that go beyond domestic legal infractions and negatively impact South Korea's international credibility." He added, "We will thoroughly block crimes that threaten our economic security by expanding our investigation infrastructure, strengthening our ability to analyze import and export data, and fostering cooperation with relevant agencies."

(Photo: Provided by Korea Customs Service, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.