Taiwan's Exports to the U.S. Get a New Scrutiny: Proof of Origin Now Mandatory

New Regulations Aim to Safeguard Taiwan's Trade Interests and Prevent Tariff Evasion

Taipei, April 26 - Starting May 7, the Ministry of Economic Affairs (MOEA)'s International Trade Administration (ITA) in Taiwan will require documentation declaring the origin of products manufactured in Taiwan and exported to the United States. This measure aims to prevent goods produced elsewhere from using Taiwan as a transit point to circumvent higher tariffs imposed by Washington.

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

The ITA stated that following the implementation of varying "reciprocal tariffs" by the U.S. on April 2 on countries with significant trade surpluses, manufacturers in other nations could be incentivized to manipulate product origins. They could potentially utilize Taiwan as a transshipment channel to avoid stricter tariffs.

Taiwan currently faces a 32 percent tariff. Some countries in the region have been subjected to even higher tariffs, including 46 percent for Vietnam and 37 percent for Thailand.

Following the initial tariff announcement on April 2, the U.S. paused the new tariffs for 90 days on April 9, deciding instead to implement a 10 percent baseline duty on most countries, excluding China, which faces tariffs up to 245 percent on select imports.

The ITA explained that the signed declaration of origin is designed to prevent manufacturers in other nations from exploiting Taiwan by repackaging or processing their products before shipping them to the U.S. market.

The ITA warned that failure to implement these preventative measures could jeopardize Taiwan's international standing, reputation, and its chances of securing tariff reductions during negotiations with the U.S.

The ITA emphasized that this new requirement is not intended to hinder Taiwanese exporters. Instead, it encourages collaboration between exporters and the government to eliminate any loopholes, thereby protecting Taiwan's interests in international trade and economic growth.

Citing the Foreign Trade Act, the ITA highlighted that violators will face penalties ranging from a warning to a fine of NT$60,000 to NT$3 million. The most severe penalty involves the revocation of exporter and importer licenses.

The ITA advised exporters to consult with U.S. Customs and Border Protection (CBP) for an advance review of their product origins. This is due to different methodologies in determining product origin between Taiwan and the U.S. This proactive step is encouraged to protect the interests of Taiwanese exporters.

Furthermore, the ITA suggested that Taiwanese companies should communicate with their American buyers regarding the origin of their products prior to shipment to the U.S.

In addition, the MOEA organized a forum on Friday to assist approximately 3,000 Taiwanese exporters, including those in the machinery and machine tools sectors, in understanding and meeting the new requirements.

American lawyers specializing in product origin cases were invited by the MOEA to share insights on how U.S. Customs determines product origins during the forum.

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.