Articles Tagged with transshipping

There are companies in China which offer services to Chinese companies to transship their products to other nations such as Malaysia in order to evade U.S. tariffs and re-label them as if they came from Malaysia, Vietnam, Cambodia, Mexico and other nations. One such company is Settle Logistics which stated on its website “…For those unfair trade barriers targeting our industries from certain countries, we can adopt other approaches to bypass trade tariffs to expand markets,” according to the New York Times. Another Chinese company CT-Chan also promises that it can help manufacturers avoid American tariffs. “Product requirement: Do not have ‘Made in China logo” said its website.

Yet another company, Top & Profit International Forwarding in Shenzhen says that it is “breaking the barriers of international trade and anti-dumping to let Chinese products enter international markets successfully” Settle Logistics in Hangzhou says that it works with a factory in Malaysia and can obtain Malaysian certificates of origin for goods made in China.

Shipping goods from China to Malaysia costs $3,000 to $4,000 per 40-foot shipping container which is about $2,000 more than shipping directly to the U.S. There are additional costs for Malaysian certificates of origin and packing and unpacking the goods in different containers.

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By Jeffrey A. Newman

The United States customs authorities are well aware that thousands of Chinese and other foreign goods are being illegally shipped into the U.S. in ways designed to evade U.S. customs duties on such things as steel, honey, furniture, clothing, shrimp, catfish and much more. These products are being “transshipped” from China into other nations and re-labeled to hide their actual country of origin. The countries accepting the Chinese products and sending them here include Mexico, Malaysia, Vietnam, Philippines, Sri Lanka, India and others.  The injection of these goods into the stream of America commerce without payment of U.S. tariffs harms American businesses and our economy at large.

While U.S. customs laws are strong and can be effective, the process is slow. Now, however, Whistleblower cases filed under The False Claims Act (FCA) are being used by U.S. companies to combat this unfair competition. In addition, the Federal Government is now coming to rely on whistleblowers who report tariff evasion to reveal the details of the fraudulent schemes. U.S. Customs and Border Protection (CBP) knows these illegal activities are ongoing, but they do not know enough about the players and plans to bring actions. However, now many U.S. companies and their C-level employees are becoming aware of the details through their contacts in China and elsewhere and through their own trading partners who are also placed in a weakened position by the schemers who evade US customs laws and sanctions. In addition, the False Claims Act has real teeth in that the Government may seek up to three times the amount the companies have evaded in customs tariffs. This has a great potential for deterrence. The defendants are not just the foreign companies but also the importers when it can be shown that they knew and were therefore complicit in the tariff evasions.