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This paper analyzes Korea's tariff policy since 1980s and proposes policy recommendations by utilizing the effective protection theory. Specifically, we focus on the tariff structure in 1995∼2002 by estimating the effective tariff rates of IO 58 tradeable industries. The result shows that overall effective rates are not as high as nominal rates would indicate and substantial change in effective tariff structure has occurred from 1995 to 2002. In fact, 41 out of 58 industries' effective tariff rates are lower or similar to nominal rates. Also the effective rate of 43 industries are lower than 10% and those of 21 industries are lower than 5%. These estimation results implies that the policy principles established since 1980s, i.e., tariff escalation and equal tariff rate for goods of the same production stage were beginning to falter. Therefore, we recommends that while maintaining current tariff level, tariff rate on raw materials be lowered and those on intermediate goods be readjusted. These recommendations reflect the fact that, faced by changes in production structure and globalization, the government needs to encourage small size firm's growth as globalization creates polarization, distorted growth in service sector, and reduce employment opportunities. This is more so when one recalls that the basic function of tariff policy, perhaps the only justification, is correcting market failure.