Transshipping Hubs Stepping Up Enforcement, Customs Lawyer Says
Countries frequently used to hide the origin of goods from China before import in the U.S. seem to be making strides in preventing transshipment, Sidley Austin lawyer Ted Murphy said in a blog post. Murphy highlights one recent story in which Vietnam Customs "seized $4.3 billion worth of Chinese-origin aluminum that had been relabeled as Vietnam-origin and destined for" the U.S. "The story also mentions recent seizures of bicycles, machinery, clothes, shoes and electronics that were falsely labeled as being of Vietnam origin after being transshipped from China, through Vietnam, to the United States."
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Countries such as Vietnam, Malaysia and Thailand are benefiting from suppliers moving out of China, he said. "The governments of these countries have a meaningful incentive to root out that behavior and stop it, so as not to draw the ire" of the U.S., he said. Those countries "are increasingly comparing import data to export data and scrutinizing export shipments to identify possible transshipment situations," he said. "Certain countries, like Vietnam, are also drafting new rules to address when an article can be labeled 'Made in Vietnam' (to the extent these rules impose standards that are inconsistent with the U.S. Customs and Border Protection substantial transformation test, it will create additional headaches for U.S. importers -- e.g., if a product that must be labeled as being 'Made in Vietnam' under the U.S. rules cannot be labeled as 'Made in Vietnam' under the new rules in Vietnam)."
CBP will also likely be taking a closer look at goods from those countries and companies moving production out of China should review the new operations before CBP does, he said. "We expect that CBP will increasingly be asking importers about this issue (i.e., to validate non-China country of origin)," Murphy said. "Those who can pull the answer out of the file will fare much better than those who have to scramble to put the answer together at that point. Make sure you are part of the former group, and not the latter."