Proof of origin required for Taiwan's exports to the U.S.

Taipei, April 26 (CNA) Starting May 7, documents declaring the origin of products made in Taiwan for export to the United States will be required, to prevent items produced elsewhere from using Taiwan as a transit channel to evade higher tariffs imposed by Washington, according to the International Trade Administration (ITA) of the Ministry of Economic Affairs (MOEA).

Exporters who fail to submit a signed declaration of origin will face a fine of up to NT$3 million (US$92,164), according to the ITA.

In a statement, the ITA said that after the Trump administration on April 2 imposed varying levels of "reciprocal tariffs" on countries with a high trade surplus with Washington, manufacturers in other countries could be tempted to change the origin of their products and use Taiwan as a transshipment channel to shun heavier tariffs.

Taiwan faces a 32 percent tariff, whereas other countries in the region have been slapped with higher levels, including 46 percent for Vietnam and 37 percent for Thailand.

After the April 2 announcement, the U.S. president announced a 90-day pause on the new tariffs on April 9, deciding instead to apply a 10 percent baseline duty to most countries except for China, which faces up to 245 percent tariffs on certain imports.

The ITA said the signed declaration of origin is expected to prevent manufacturers in other countries from taking advantage of Taiwan by simply repackaging or reprocessing their products before shipping them to the U.S. market.

If preventative actions are not taken, the ITA said, Taiwan could see its international credit, reputation, and chances of seeking a tariff cut during its negotiations with the U.S. diminished.

The ITA emphasized that the requirement for a signed declaration of product origin is not aimed at restricting Taiwanese exporters at all. Instead, the agency hopes they would collaborate with the government to close any loopholes, which is expected to protect Taiwan's interests in international trade and economic development.

Citing the Foreign Trade Act, the ITA said violators will face a warning, a fine ranging from NT$60,000 to NT$3 million, and the harshest penalty - revocation of their exporter and importer licenses.

The ITA said that since the method of determining the origin of a product is different in Taiwan and the U.S., exporters have been advised to apply with the U.S. Customs and Border Protection (CBP) for an advance review of the origin of their products to protect their interests.

In addition, the ITA said Taiwanese companies should communicate with their American buyers about the origin before shipping products to the U.S. market.

Meanwhile, the MOEA held a forum on Friday to help about 3,000 Taiwanese exporters, including those in the machinery and machine tools industries, understand how to meet the requirements.

At the forum, American lawyers who specialize in cases involving the origin of products were invited by the MOEA to share their understanding of how the U.S. Customs determines the origin of products.

The ITA cited U.S. lawyers as saying the U.S. Customs usually figures out the origin of products on a case-by-case basis.