Safety Management Act on Electronic and Industrial Products

In an effort to consolidate and manage safety measures for electronic products and industrial products, the Safety Management Act on Electronic Products and the Quality Control and Safety Management of Industrial Products Act will be consolidated under the Safety Management Act on Electronic and Industrial Products (the "Consolidated Act")) (Act No. 13859 promulgated on January 27, 2016). The Consolidated Act will go into effect on January 28, 2017.

The main features of the Consolidated Act are as follows:

1. Consolidation of Safety Management (Articles 5, 15 and 23 of the Consolidated Act)

The Safety Management Act on Electronic Products provides measures for safety certification, safety confirmation and measures to verify the appropriateness of a distributer. The Quality Control and Safety Management of Industrial Products Act includes quality management, safety certification, voluntary safety confirmation by a distributer, and safety quality labeling and packaging for children's safety. It has been criticized that the two laws created confusion to the public that needed to confirm the safety of a product and hindered the efficiency of the safety management procedures.

Under the Consolidated Act, safety management measures have been consolidated to include safety certification, safety confirmation and measures to verify the appropriateness of a distributer, and the quality control previously governed under the Quality Control and Safety Management of Industrial Products Act shall be managed separately as of January 28, 2017 with the Industry Safety Act.

For your reference, reports filed with the relevant administrative agencies in accordance with the individual laws in the past shall be deemed to be in accordance with the Consolidated Act, and certifications previously obtained under the previous laws are not required to obtain new certifications pursuant to the Consolidated Act.

2. Consolidation of inspection procedures and timeline (Article 7 of the Consolidated Act)

In the past, products that had previously obtained safety certifications(e.g., electronic products), were required to obtain regular inspections more than once every year from a safety inspection institution, and if the results of the regular inspection were acceptable, an exemption from all or part of the regulation inspection may be granted. On the other hand, for industrial products that previous obtained safety certifications, regular inspections were conducted once every 2 years, provided that under special circumstances, additional inspections could be conducted. Based on these results, the period for regular inspections was different and it was unclear when additional inspections were necessary.

Under the Consolidated Act, all products that require safety certification shall be inspected regularly, once every 2 years. Additional inspections will no longer be necessary. Products that have completed regular inspections prior to the effective date of the Consolidated Act shall be deemed to have completed regular inspections under Article 7.1 of the amended regulations.

3.Obligation to disclose information for online sales (Articles 9, 18 and 25 of the Consolidated Act)

Anyone who intends to sell, lease, sell as a broker, buy by proxy or import by proxy products that require safety certification, safety confirmation, or verification regarding the appropriateness of a distributer, must disclose information regarding the certification to ensure that the safety of the products have been verified regularly. Distributors that violate these obligations shall be subject to administrative fines of not more than KRW 5,000,000.

4. New provision to regulate invalidity of reporting safety confirmation (Article 20 of the Consolidated Act)

Before the Consolidated Act, it was only possible to issue a correction order, or prohibit the use of safety confirmation labels on safety certification notices that were made by fraudulent or wrongful means. However, under the Consolidated Act, additional measures such as invalidating the safety confirmation will become available.

5. New reporting requirements to verify the appropriateness of a distributer (Article 23 of the Consolidated Act)

Prior to the Consolidated Act, it was sufficient for a manufacturer or importer (which was required to verify the appropriateness of the distributor of the product) to conduct an inspection internally or through a third party to confirm the product had met safety standards. Under the Consolidated Act, for electronic products (not industrial products), verification of safety standards must be reported to the Ministry of Trade Industry and Energy. Furthermore, distributers that violate these obligations may be subject to administrative fines of not more than KRW 5,000,000.

In addition to the above, there are other amendments in the Consolidated Act including (i) an exemption for certification of products manufactured or imported on a one-time basis (Article 6 of the Consolidated Act) and (ii) abolishment of the expiration period of safety confirmation.

The Ministry of Trade Industry and Energy will announce the Proposed Enforcement Decree to the Consolidated Act as well as the Proposed Enforcement Regulations to the Consolidated Act by November 25, 2016. According to the proposed announcements of the Enforcement Decree, it is expected to include clarification on types of models for industrial products, improvements to the exemptions available for KC Certification of KS certified products, and new provisions regarding regular inspections of importers subject to safety certification. We will inform you once the Enforcement Decree to the Consolidated Act as well as the Enforcement Regulations to the Consolidated Act have been announced.