Thailand will work with the U.S. to prevent tariff circumvention

Officials from Thailand’s Department of Customs will meet with their counterparts from the United States to find ways to ensure that products made in other countries subject to high U.S. tariffs aren’t being shipped through or modified in Thailand in attempts to avoid those tariffs.

Thailand strives to maintain friendly and balanced relations with all countries, but as America’s oldest treaty ally in Asia, the Kingdom wants to ensure that is not used as a base by other countries attempting to undermine United States trade policies. The administration of President Donald J. Trump has made trade a cornerstone of its foreign policy, and Thailand has been seeking to cooperate more closely with the United States on trade issues.

“The U.S., in particular, is concerned that there may be circumvention through transshipment and assembly operations in Thailand, with products being imported from countries subject to U.S. tariff hikes and then re-exported to subrogate the import rights of Thai-made products,” said Wanchai Varavithya, deputy director-general of the Foreign Trade Department.

Thailand has built one of the most successful economies in Southeast Asia by serving as a manufacturing base for large foreign corporations seeking a strategic location, developed infrastructure, low-cost but hard-working skilled labor, friendly investment policies and economic openness. Many U.S. companies such as Ford Motor Corporation and Seagate Technology, also manufacture in the Kingdom.

Few companies have chosen to invest in Thailand for tariff avoidance purposes in the past. The discussions with U.S. officials are aimed at preventing that limited phenomenon from increasing in any significant way.

The Trump administration feels the U.S. has not been receiving fair treatment in trade from some countries and so has hiked tariffs on their goods in an effort to draw them into negotiations for trade deals it believes will be fairer.

Wanchai said that the Ministry of Commerce is conducting an investigation to determine if any foreign companies in Thailand have been set up to circumvent tariffs. If any are found, the government will revoke their certificates of origin and blacklist them, he said.

The Ministry has also been drafting a watch list of products that are likely to be redirected into Thailand for slight modifications and transshipment to avoid higher tariffs.

Officials have also asked for cooperation from the Federation of Thai Industries to carry out thorough inspections of practices to prevent circumvention.