Report: China goods transship at Malaysian ports to avoid paying US tariffs

KUALA LUMPUR, April 23 — A company based in China is working with a Malaysian company to re-label goods of origin made in China before they are shipped back to the US to dodge tariffs, the New York Times reported yesterday.

This way, when goods are diverted some 6,000 kilometres to Malaysian ports for transshipment and subsequently shipped back to the US, it will arrive as products of Malaysian origin and thus dodge tariffs that were recently imposed by US President Donald Trump on a number of goods that mainly come from China.

“For those unfair trade barriers targeting our industries from certain countries. We can adopt other approaches to bypass those trade tariffs in order to expand markets,” said Settle Logistics, a broker company based in Hangzhou was quoted as saying on its website.

The diversion would cost freight companies an additional US2,000 (RM9,738.75) per 40-foot container just to transship at a Malaysian port, but entering the US this way is a cheaper alternative to paying the tariffs, the report said.

The report said transshipments were legal in “most cases”, clarifying that it was only unlawful when the country of origin of the goods is disguised.

In the case of transshipping at Malaysian ports, the report said Settle Logistics worked with a “Malaysian factory” to obtain Malaysian certificates of origin for goods made in China.

Goods are also said to be segregated into a series of shipments from ports scattered around China to reduce the chances of being caught by US authorities.

“If Chinese enterprises cannot export their products to the US and they are not qualified to build factories overseas, we can offer help to them,” John Zhao, one of the owners of Settle Logistics said in the company’s website.

Malaysian trade officials told New York Times that while there were no specific laws to tackle tariff circumvention, there were laws against the falsification of documents.

US customs officials, meanwhile, told the daily that it had its ways of identifying countries, manufacturers, importers and shipments that “are at high risk”.