Korea Customs Service chief Lee Jong-ok on securing borders, fair trade and AI transformation

Over the past half-century, South Korea's trade volume has grown 550-fold and the number of international travelers has increased 37-fold. This year, K-beauty exports reached $7 billion and K-food exports hit $6.57 billion, both setting all-time records, while the number of foreign tourists visiting South Korea surpassed 10 million in the first half of the year alone — the first time that milestone has been reached within a single half-year period.

Yet the darker side of open borders has grown alongside the economic gains. In the first half of this year, nearly one ton of narcotics was intercepted at the border, and the value of trade security violations blocked — including smuggling of strategic goods and core technologies — reached 1.3 trillion won, already surpassing the full-year figure for last year. At a crossroads where opportunity and risk converge, the Korea Customs Service must sharpen its role in managing and overseeing trade, travelers and foreign exchange transactions to protect both public safety and economic vitality.

The most urgent priority is stopping narcotics. South Korea has no domestic drug manufacturing base and is a consumption country where virtually all illicit drugs enter from abroad. Once drugs reach the domestic market, their highly addictive nature makes treatment and rehabilitation difficult, and the personal devastation — job loss, family breakdown — ripples outward, generating wide social costs. Intercepting drugs at the border is therefore both the most important and the most efficient line of defense.

The customs service has historically detected about 80 percent of all narcotics seized domestically through border inspections. Under the existing single-tier inspection system, however, officers conducting a single check must simultaneously verify not only for drugs but also tax compliance, import licensing and country of origin — making it difficult to focus on drug interdiction. The system has also struggled to detect narcotics in the wide variety of forms they take, including liquids and powders.

In response, the customs service has been building an "N-tier interdiction" system by adding dedicated second- and third-stage X-ray screening and inspection steps for every entry channel. The N-tier framework for international mail and general container cargo was completed and put into operation in the first half of this year. In the second half, the agency plans to extend it to cover travelers' carry-on baggage, express courier shipments, and crew members and port workers boarding and disembarking trade vessels.

The risks at the border are not confined to physical goods — they also lurk in financial flows. Crimes that exploit trade transactions to defraud public finances or distort capital markets are emerging as a new threat. Common schemes include manipulating trade figures to claim government subsidies fraudulently, relabeling imported goods as domestic products to win public procurement contracts, and inflating export records to create fictitious sales that drive share price manipulation. The result is fiscal leakage, erosion of market fairness and damage to investor confidence.

Recognizing the seriousness of these emerging crimes, the customs service has conceptualized them as "trade-based financial crime" (TBFC) to target them precisely. Drawing on the Customs Act and the Foreign Exchange Transactions Act, the agency conducts integrated analysis of trade records and international fund flows to strengthen its monitoring system for anomalies hidden behind trade transactions. In the second half of this year, it will build a comprehensive TBFC prevention and enforcement framework that links data on government support programs, public procurement and stock listings to identify and crack down on suspected fraudulent beneficiaries, sharing findings with relevant agencies.

Equally important to protecting public safety is building a fair foundation for economic growth. The moment low-quality imports are passed off as domestic products, genuinely made Korean goods are crowded out and jobs disappear. Fair competition cannot exist when law-abiding companies that compete on quality are undercut by rivals profiting from origin fraud or undervalued declarations.

Country-of-origin enforcement has traditionally focused on consumer protection for agricultural and fishery products, but the paradigm must now shift toward protecting domestic manufacturing. The customs service plans to build a tripartite "comprehensive origin-fraud enforcement system" in collaboration with local governments and producer associations. Under the framework, the customs service will use clearance data to detect signs of origin fraud, local governments will assess damage to regional industries, and producer associations will identify affected products by sector. The agency will also conduct targeted customs investigations into undervaluation and tax evasion, work with foreign customs authorities to build local protection against counterfeit K-brand goods, and expand joint special enforcement operations to level the playing field.

Growing the overall economic pie must go hand in hand with these efforts. The domestic market is finite, but global consumer markets are wide open. For more economic participants to join and grow together, everyone must be able to compete in the world market — it is time to move beyond "entrepreneurship for all" to "exports for all." Cross-border reverse e-commerce in particular offers individuals and small businesses a practical channel to reach overseas consumers directly. To that end, the customs service plans to streamline tax refund procedures related to reverse e-commerce exports to ease the tax burden on exporters, and to expand maritime express shipping cooperation with neighboring countries to help cut clearance and logistics costs.

Maritime express shipping — transporting small cargo to nearby countries by sea — matches air express in speed while costing significantly less, lowering the logistics barrier for e-commerce exports. The agency will also develop e-commerce export statistics based on clearance data and provide them to export newcomers to support strategy development, market discovery and new business opportunities. It will additionally simplify certificate-of-origin procedures for promising export categories such as K-beauty, K-food and used vehicles to help open new overseas markets.

Underpinning all of these changes is an AI transformation. Given the vast volumes of customs and trade data the agency handles, the potential for AI is significant. Since 2017, the customs service has been cultivating in-house talent that combines domain expertise with AI development skills, and earlier this year it established an AI Transformation (AX) task force. Going forward, the agency will complete an AI information strategy plan centered on that team to drive AI adoption across all areas of customs administration, and will hold biannual "AX Challenges" to embed a culture in which frontline staff develop and apply AI models themselves. Innovation that starts on the ground will raise both the accuracy and the speed of border management.

A safe border protects citizens. A fair border — one that upholds the rules — grows businesses. And an open border that makes exporting easy becomes the engine of an irreplaceable South Korea. The Korea Customs Service will stand at the front line of the border, closing every gap against transnational crime, establishing a fair trade order, and supporting more companies as they take on the world market.