South Korea:

Black Marketing of U.S. Goods and Efforts to Prevent It

T-NSIAD-90-1: Published: Oct 19, 1989. Publicly Released: Oct 19, 1989.

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GAO discussed its review of U.S. military and Department of Defense civilian personnel involvement in black marketing activities in South Korea, involving the transfer of duty-free goods acquired from commissaries and base exchanges to unauthorized individuals for profit. GAO noted that: (1) neither the U.S. nor South Korean government was satisfied with the other government's attempts to prevent black marketing; (2) the U.S. government also criticized South Korea's trade restrictions and high tariffs; (3) the exact extent of black marketing and its costs to the U.S. government are unknown; (4) numerous South Korean markets' large displays of duty-free goods and the corresponding high volume of commissary and exchange sales of those goods indicated widespread black market activity; (5) exchange and commissary management and employees did not enforce the ration control system for maintaining data on personnel expenditures and reporting suspicious expenditures; (6) black marketers could avoid detection by purchasing a few items at several stores, using commissary and exchange cashiers as accomplices, and using fraudulent ration control documents; (7) some officials believed that military personnel allowance limits for consumable goods were too high, since most military personnel lived on base and ate at military dining facilities; and (8) some ration-free items were also popular black market items.

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