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How much cheaper will U.S. wines be after the KORUS
FTA?
Many people are
anxious to know how much cheaper and earlier U.S. agricultural products will be
after the KORUS FTA. Especially, many
wine drinkers will be very much interested to know how much cheaper U.S. wines
will be.
The KORUS FTA is still
to be ratified by the Congress of both countries. Once it is ratified, the 15 percent tariff rate is to be
immediately abolished. U.S. wines will
be about 13 percent cheaper in general after implementation of the FTA than now
taking all taxes including wine tax, education tax and value added tax into
account.
This means that a
bottle of wine selling for 10,000 won now will be 8,700 won after
implementation of the FTA. However,
there are many variables in connection with this, that is, the selling price
may vary depending on the margins from the exporters, importers and retailers
after the FTA.
The following table
shows how to calculate the various kinds of taxes imposed on wines before and after the FTA.
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Description
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Current
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After FTA
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A
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CIF Price Per Bottle
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$ 10.00
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$ 10.00
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B
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Customs Duty: A x 15%
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$ 1.50
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0
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C
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Wine Liquor Tax : (A+B) x 30%
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$ 3.45
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$ 3.00
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D
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Education Tax : C x 10%
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$ 0.35
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$ 0.30
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E
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Subtotal: (A+B+C+D)
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$ 15.30
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$ 13.30
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F
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Value Added Tax1: E x 10%
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$ 1.53
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$ 1.33
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CIF
Price plus Taxes
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$ 16.83
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$ 14.63
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1 The Value Added Tax is refunded to the importer later because the tax is eventually carried over to the consumer.
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