Thai trade officials this week will talk with their US customs counterparts to find ways to prevent circumvention practices and the redirection of Chinese products to Thailand that are subject to higher tariffs under the Trump administration.
Wanchai Varavithya, deputy director-general of the Foreign Trade Department, said department officials will also cooperate with US customs representatives in Thailand to share trade information about Thai products likely to be hit by higher US import tariffs, as well as the quantities of such products shipped every year.
"This will help cross-check information to determine whether Thailand is producing these goods," Mr Wanchai said. "The information could help curb attempts to circumvent the higher US tariffs."
Circumvention practices include making minor modifications to goods but leaving their essential characteristics unaltered; the export of goods (with minor modifications) from third countries; and the exporter reducing prices to skirt the full extent of dumping duties, thereby prolonging the injury intended to be prevented.
Mr Wanchai said the US administration itself is concerned that certain foreign firms may relocate production to Thailand and re-export to the US market after President Donald Trump on March 8 ordered a steep 25% tariff on steel and 10% tariff on aluminium imports into the US, citing national security considerations under Section 232 of the Trade Expansion Act of 1962.
"The US, in particular, is afraid that there may be circumvention through trans-shipment and assembly operations in Thailand, with products being imported from countries subject to US tariff hikes and anti-dumping measures, and then re-exported to subrogate the import rights of Thai-made products," he said.
Mr Wanchai said US officials have noted that diamond saw blades, clothes hangers and nails are products for which circumvention has potentially occurred.
An investigation is under way, while the department has said companies that are found to have circumvented the measures will be put on a blacklist and have their certificates of origin revoked by the Commerce Ministry.
Regarding the latest efforts to prevent circumvention, Mr Wanchai said the Foreign Trade Department has asked for cooperation from the Customs Department to devise stricter controls on imports and exports, particularly for items sensitive to higher US tariffs.
The department has also given Customs the lists of products subject to higher US tariffs and anti-dumping measures, as well as the names of foreign companies suspected of subrogating Thai import rights.
The department has asked for cooperation from the Federation of Thai Industries and the Board of Trade to help inspect practices.
In June, Deputy Commerce Minister Chutima Bunyapraphasara said the government was drafting a watch list for items expected to be redirected into Thailand in light of higher retaliatory tariffs by China and the US in a bid to mitigate harm from the two countries' deepening trade spat, as Thailand could become a dumping ground for their products, affecting local industries.
More importantly, Mr Wanchai said a draft amendment to the Anti-Dumping and Countervailing (ADC) Act prepared by the Commerce Ministry to protect domestic entrepreneurs, with a new chapter regarding anti-circumvention penalties, is being proposed to the National Legislative Assembly.
The amendment would empower the Anti-Dumping and Countervailing Board to carry out an investigation into suspected circumvention and impose anti-circumvention duties in response.
If circumvention is found to be taking place, the anti-dumping or countervailing duties imposed in the original investigation will be extended to the product from the circumventing third country, to the parts/components of the product, or to the slightly modified product, depending on the individual case.
The Commerce Ministry over the years has received many complaints from domestic industries, saying that since the ADC Act came into force foreign manufacturers and exporters to Thailand have been circumventing anti-dumping or countervailing duties by various means.
Some methods include modifying a product so that it can be classified under a combined nomenclature code that is not subject to duties; exporting through a producer with a lower duty rate; or exporting a product in parts and having it assembled in Thailand, where the parts are not subject to duties.
These practices are detrimental to domestic industries and rendered the anti-dumping and countervailing duties ineffective for many years.
Seven steel-related groups have called on the government to step up applying anti-circumvention duties to curb related imports, saying foreign steel exporters have been exploring loopholes and opportunities to avoid the anti-dumping and countervailing duties.
Mr Wanchai expects the new act to come into force later this year.