The Trump administration expands the definition of illegal transshipment, fearing scrutiny of Chinese raw materials and investment participation

The Trump administration is expanding the definition of illegal transshipment (origin laundering), which may further examine whether Chinese raw materials and components are used, or even whether Chinese investment or corporate participation is involved. (Reuters file photo)

[Compiled by Lu Yongshan, reporter Liao Jianing/Comprehensive Report] Think tank Hinrich Foundation warned that the Trump administration is expanding the definition of illegal transshipment (origin laundering). In the future, the United States may not only trace where the goods were finally produced, but may further examine whether Chinese raw materials and components are used, and whether Chinese investment or corporate participation is involved.

Deborah Elms, director of trade policy at the foundation, published an article on the Channel News Asia (CNA) website on the 10th, pointing out that White House economic adviser Navarro released a report in August, accusing more than 40 countries around the world of participating in the so-called "large transshipment scam" to help Chinese goods enter the United States through third countries to bypass tariffs in order to avoid tariffs.

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Illegal transshipment usually refers to the fact that the goods themselves are not actually processed, but only relabeled or forged documents, pretending to be from another country to avoid tariffs, which is illegal.

The White House report named the electronics industry in Ho Chi Minh City, Vietnam, and the plastics manufacturing industry in Penang, Malaysia, as taking away jobs from American workers, and listed Singapore as a logistics node that may help Chinese goods to detour. Ames pointed out that the United States has required trading partners to check whether products contain Chinese raw materials and components during bilateral negotiations.

There are risks in using Chinese raw materials and components

Trade Department: Business operators can apply for pre-qualification of origin

The United States is also strengthening its customs declaration and tracking system, requiring imported goods to provide more information, and may even trace the source of raw materials in the future. Ames said that this may eventually evolve into a purity test of goods, that is, although the goods have been legally produced in a third country, they may still be questioned by the United States as long as China's input is too high.

The Trade Administration of the Ministry of Economic Affairs pointed out that the origin of imported goods is determined by the customs at the place of import; the U.S. Customs considers the name of the goods, characteristics, whether the use has changed, the processing process, past cases, interpretation letters, etc. for substantive examination. Business operators should fully communicate with U.S. customers before exporting, or apply for "pre-approval of origin" through U.S. Customs to safeguard their own rights and interests.

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