Why are import goods so expensive?

Here’s this week’s tip on Korean language and customs:

Q:
One thing I have noticed about living in Korea is an apparent price disparity between the price of consumer durables on the domestic market and the cost of the same or similar model on foreign markets, especially with regard to electronic products. Invariably, there appears to be about a 20 to 25 percent difference, the product being more expensive here than in, for example, the United States or India. I recently brought an iPod (M9244LL/A 10gb) for 235,000 won at the Yongsan Electronics Market to the derision of a colleague, who remarked that I could have gotten it for $180 (180,000 won) on eBay. Also, in surfing Web sites of Korean companies, I found a similar differential in pricing for products according to the country they were sold in. Why is this?

A:
For years, the Korean government has protected its domestic market by charging high tariffs and taxes on imported goods. While made-in-Korea products were sold at discount prices overseas, locals paid higher prices in Korea. The disparities between the prices of the same imported goods sold in Korea and overseas are becoming smaller each year, though, as the government lowers import taxes.