Singapore, together with China & EU, pushes back against US’ ‘Transshipment Scam’ accusations

SINGAPORE: After the White House published a report earlier this month saying that China, along with 40 other economies, had been aiding in getting Chinese goods to the US while avoiding U.S. tariffs, China, Singapore, and the European Union rejected these accusations.

The report, titled “The Great Transshipment Scam,” claims that products made in China have been at times sent through other countries before they reached the US, which made it appear that they were made in those countries instead of in China.

The White House report says that this “shadow transshipment network” may have cost the US as much as  $303 billion (S$387 billion).

According to reporting from Fortune, China said in response that its companies have been unfairly targeted through national-security arguments, and the EU said that its rules and regulatory independence are non-negotiable.

As for Singapore, the Ministry of Trade and Industry (MTI) underlined that it takes a serious view of trade compliance, adding that the firms that operate in the city-state are required to declare accurately where their goods come from. Moreover, the government has said that it does not tolerate companies that use it to evade the laws of other countries.

Concerns over transshipment from the US stem from instances when businesses just relabel, repackage, or lightly process goods from China, and then claim that the finished product is from another country, doing this in order to avoid tariffs.

The 40 economies in the report from the White House were classified into three tiers based on the extent of an economy’s trade with China. The first tier consists of economies with significant China-related trade, including the EU, Canada, Japan, and South Korea. The second tier has economies that are heavily integrated with China, including some of Singapore’s nearest neighbours in Southeast Asia: Indonesia, Malaysia, Thailand, and Vietnam.

Singapore, along with more than two dozen economies, is in the third tier of smaller countries considered by the US as potential “weak links” for transshipment. Included on this list are Switzerland, Oman, the Philippines, and Myanmar.

While no penalties have been announced against Singapore, according to industry experts, what is likely to happen is that the city-state will be under additional pressure to show that its ports and trade infrastructure are not being used to disguise Chinese goods. This is significant because Singapore is a key regional trading hub. /TISG

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