The Ripple Effect EP.4: Thailand Responds to U.S. Trade Pressure with Tighter Measures on Origin Fraud

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The Ripple Effect EP.4: Thailand Responds to U.S. Trade Pressure with Tighter Measures on Origin Fraud

Thailand is facing mounting pressure from the United States regarding the implementation of reciprocal tariffs, particularly concerning “origin fraud” – the practice of transshipping goods from other countries through Southeast Asia to circumvent elevated U.S. import duties. In response, the Thai government has implemented more stringent inspection protocols and policy measures aimed at restoring the confidence of key trading partners, particularly the United States, with respect to high-risk commodities including steel, copper wire, and aluminum.

Enhanced International Cooperation

To strengthen cooperation and transparency, the Department of Foreign Trade (“DFT“) under the Ministry of Commerce convened a strategic meeting with U.S. Customs and Border Protection (“CBP“) to clarify tariff classifications of interest to U.S. authorities. During these discussions, Thailand requested that the U.S. provide more specific and detailed tariff codes, particularly for furniture products, to prevent overly broad enforcement that could inadvertently impact legitimate Thai exports.

Expanded Surveillance Measures

As a result of these discussions, the list of products under surveillance for potential origin fraud has been expanded from 49 to 65 product groups, encompassing 224 tariff lines. This comprehensive list remains subject to ongoing revision and will be submitted to the Thai Cabinet for approval before formal issuance by the DFT. Initially, 49 items were under surveillance, including solar panels, truck steel wheels, artificial stone slabs, and steel pipes. The surveillance list has recently been expanded to include additional steel and steel products, aluminum and aluminum products, automobiles and auto parts, solar panels, and medical equipment.

Domestic Regulatory Reforms

At the domestic level, the Ministry of Finance, the Ministry of Commerce, the Ministry of Interior, and other relevant authorities have convened to address violations by foreign businesses and the misuse of Thai Certificates of Origin (“C/Os“). A proposal has been advanced to consolidate full authority for issuing C/Os with the DFT, replacing the current shared responsibility with the Thai Chamber of Commerce, the Board of Trade of Thailand, and the Federation of Thai Industries. This measure aims to strengthen oversight and minimize fraudulent claims.

Phased Implementation Strategy

Thailand has initiated inspections of potentially fraudulent imports under the observation of U.S. officials. These inspections have thus far met expected standards, and the Thai government has outlined a structured three-phase action plan to address the issue comprehensively:

  • Short-term: Immediate inspection of imports; prohibition of goods lacking proper origin details or certification.
  • Medium-term: Implementation of stricter regulations for online platforms, mandatory registration in Thailand, and enforcement of the removal of non-compliant goods.
  • Long-term: Legal reforms to align with international norms and reassessment of restrictions on foreign business involvement.

Investment Policy Adjustments

To further prevent the misuse of Thai territory as a transshipment hub, the Board of Investment (“BOI“) has been tasked with recalibrating its incentive strategies. Future investment promotions will emphasize greater utilization of local content, particularly in the automotive and electric vehicle sectors, and encourage export diversification to reduce dependence on the U.S. market. The BOI continues to support domestic sourcing through its “Thai Content” program and business matching initiatives.

Conclusion

Thailand is implementing decisive measures to combat origin fraud, safeguard the integrity of its exports, and rebuild trust with the United States. Key initiatives include enhanced customs cooperation, centralized control over C/O issuance, more rigorous inspections, and strategic reforms to BOI investment policy. Sustained implementation and enforcement of these measures will be critical as Thailand navigates an increasingly complex global trade landscape.

Author: Panisa Suwanmatajarn, Managing Partner.

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