South Korea's tariff revenue shrinks 10.7% in 2012

South Korea's tariff revenue dropped 10.7 percent on-year in 2012 as free trade deals with the Unite States and other countries resulted in lowering the overall tax rates on trade, data showed Tuesday. According to the data provided by the finance ministry, the country's customs agency collected 9.82 trillion won (US$8.98 billion) in tariffs last year, compared with 10.99 trillion won tallied a year earlier. This marked the first decline in seven years and also represented a 15.5 percent fall from what was expected in the government's budget plan for last year. South Korea's free trade deal with the U.S. went into effect on March 15 last year. This followed a similar deal with the European Union that took effect in July 2011. Government data showed that South Korea's exports to the U.S. reached $53.8 billion between March 2012 and January 2013, up 2.67 percent from a year earlier, while imports dropped 7.35 percent on-year to reach $39.1 billion over the cited period. The increased trade did not translate into more tariff income for the country as the overall tax rates for bilateral trade dropped.  The country's tariff revenue also declined despite other factors that could have increased the earnings such as higher oil prices and exchange rates, experts said. "Generally speaking, higher exchange rates mean more tax revenue," a ministry official said. The average price of imported crude oil stood at $114.3 per barrel last year, up 5.7 percent from a year earlier, which was another factor that could drive up the country's tariff income. The amount of imported oil also expanded 2.1 percent over the same period, according to government data.