Creative origin classification can circumvent tariffs - but be careful

Origin Calculation | | MIC Customs Solutions |

A law expert has provided tips on reducing the impact of tariffs, but caution is always advised.


The trade wars that have been rumbling on for about a year now - most notably between the US and China - have presented numerous challenges for importers and exporters.

One of the most significant has been the array of tariffs applied to a range of goods including steel, with some traders facing significantly higher prices as they try to sell their wares in other countries as a result of these levies.

However, one legal expert has pointed out there is a legal way for companies to get around these tariff challenges - as long as they are careful.

Speaking to Global Trade Review, law firm partner and professional services network IR Global member Robert Silverman said opportunities are available in global customs and trade laws to minimise tariffs and quotas by shifting country of origin classification.

He recommended finding out the origin rules for the country of importation and then working out if it is possible to shift the country of origin to an intermediate country consistent with those rules.

Mr Silverman pointed out that not all origin rules are the same in all countries, so this will need to be done on a case-by-case basis.

Then, once you think you have a method of shifting to avoid the sanctions, the expert said it is a good idea to ask the relevant customs authorities to sign it off. This will ensure that the plan will achieve the intended goal, which is altering the country of origin.

However, Mr Silverman warned any traders considering doing this to be extremely careful.

"Customs authorities will penalise traders who make mis-declarations, with penalties ranging from shipment seizures, huge monetary penalties, and even criminal prosecution," he concluded.

Indeed, we are well aware here at MIC that companies can achieve significant savings and a competitive advantage by compliantly following rules of origin - but we also agree that the key word here is 'compliantly'.

If you're at all unsure about this area of trading law, then take a look at MIC's Origin Calculation System (MIC OCS). It starts with automated solicitation of supplier declarations, followed by an optimised calculation of the origin of goods to calculate the origin of the goods and create all the appropriate certificate of origin documentation.

With each stage traceable and changes in the originating status of the goods reliably detected, you needn't worry about falling foul of compliance and ending up on the wrong side of the law.

Feel free to give us a call or drop us a line to find out more.