Transshipment Standard Rumors Flying, Lawyer Says
Crowell & Moring partner David Stepp, a trade expert in the Los Angeles office, said that he and other trade lawyers have been hearing rumors about how the Trump administration will define "transshipment" in its reciprocal trade agreements. He said the rumor is that details will be released "in coming days."
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Stepp said clearly it's not just going to be goods that were made in China, sent to another country, relabeled, and misdeclared, as the term has traditionally been used.
"It seems it’s broadened in scope," he said. Originally, he said, they were hearing that goods of Vietnamese origin, for instance, would only be allowed to have 30% or 40% of their value in Chinese inputs and still be considered Vietnamese, even if they could pass a substantial transformation test. Now, he said, they're hearing 50% Chinese value would be allowed.
"We’re all waiting to see how that might work out," he said on a Aug. 21 webinar for compliance officials on transshipment tariffs and Uyghur Forced Labor Prevention Act compliance, hosted by Zeus Trade.
The lawyers on the webinar linked the two issues because proving that a good does not have too much Chinese content, and proving that a good has no Uyghur labor content involve the same detailed tracing techniques that go far beyond tier 1 supplier relationships.
Stepp said that Crowell had a client who was given a CF28, or CBP request for information, a few weeks ago, and although that client has had a number of UFLPA detentions over the years, this form was not related to another UFLPA detention. "It was just a general, 'We want to know about your supply chain'; our guess was they suspected transshipment."
Stepp said that CBP will have to substantially increase enforcement of even the traditional definition of transshipment, given all the new -- and big deltas between the levels of -- tariffs.
"There is going to be a lot of monkey business," he said.
Jon Guyett, a vice president of corporate development for Hayco Group, a large Hong Kong-based manufacturer with factories in China and the Dominican Republic, also participated in the webinar. Hayco makes brushes of all types, plastic bottles and baby bottles and pacifiers, and squeegees.
"There’s going to be changes in value hurdles and transformation rules," Guyett said. "When you put goods on the vessel they may have different rules [for country of origin] when they come off the vessel."