Southeast Asian nations are facing the prospect of steep US tariffs, aimed at preventing Chinese firms from rerouting exports to avoid high trade taxes. 
The practice, called transshipment, is common in global supply chains.  
Experts warn efforts to crack down on any trade fraud may be difficult to enforce.

Washington

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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The United States has called on countries in Southeast Asia to enhance their enforcement against transshipment, a practice where goods are rerouted through third countries to avoid tariffs. Singapore, the world’s largest transshipment hub, has implemented blockchain technology to improve transparency and prevent manipulation of shipment origins. 

Despite a significant drop in direct exports from China to the U.S. following the trade war, economists suggest that improperly accounted goods may still be entering the U.S. market via other countries in the region. While Vietnam has pledged to address trade fraud following a preliminary deal with the U.S., experts remain cautious about the effectiveness of such measures. Failure to strengthen controls could lead to sanctions from Washington.

U.S. cracks down on transshipment in Southeast Asia

Tracked and traced. At every point of transfer along global supply chains, goods are verified and accounted for. When it comes to logistics, it's ABC. Accept nothing, believe no one, check everything. This logistics terminal in Singapore uses blockchain technology to record goods transactions. Besides making it easier to track shipments, it also prevents information such as the source of origin from being manipulated. Andrew McKeown is the founder of a supply chain management platform backed by blockchain technology that's part of a drive towards the digitalisation of logistics. The industry has long been accused of being reliant on paperwork and prone to human error. McKeown says any resistance to change may be intentional. In the shadows is where the margin lies. The world still runs on clipboards and fax machines and post-it notes and chalk marks on the side of containers. We need to move past that. Singapore is the world's largest transshipment hub and has a strong track record for complying with rules on transshipment. It's an issue that's become front and centre in Washington's trade war. The US is demanding other countries in Southeast Asia step up enforcement to prevent countries from evading tariffs. Exports from China to rerouting hubs in the region, including Thailand and Vietnam, surged ahead of trade talks between Washington and Beijing held in May. Following the Trump administration's first trade war, the value of goods shipped from China to the US fell by about $240 billion. But the figure doesn't really paint a clear picture. Economists say tens of billions of dollars of improperly accounted goods could still have been entering the market via a third country. The practice still appears to be prevalent. These Chinese social media videos advertise services to help businesses evade export duties. After striking a preliminary trade deal with the US earlier this month, Vietnam vowed to crack down on trade fraud. But some experts are sceptical about how effective that might be. It's a hard game to catch that. It requires a lot of capacity building, but I think it's in the benefit of many countries to ramp up the controls they have. Failure to do so could result in stiff sanctions on trade being imposed by Washington. Patrick Fok, Al Jazeera, Singapore.

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U.S. cracks down on transshipment in Southeast Asia

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