You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

October 20, 2025

Thailand’s Role in Global Trade: Rules of Origin and Transshipment Tariffs

Subscribe to Updates

Global trade has become an everyday issue with immense effects on trade and the economy. Today’s global trade climate sees countries around the world engaged in trade negotiations aspiring to eliminate trade barriers. Customs tariffs and associated privileges are among the issues that most impact global trade flows and the import-export sector.

Thailand has negotiated customs tariff privileges as part of its 14 free trade agreements (FTAs) with 18 countries, including six bilateral and eight regional agreements. These FTAs set forth criteria for member states to comply with and adopt into national law. To achieve customs privileges, one of the most important criteria is rules of origin, which indicate the originating country of imported or exported goods and the accompanying duty rates or privileges for reduction or exemption.

Rules of Origin Under FTAs

The rules of origin mapped out in FTAs allow for duty exemptions or rate reductions based on the determination of goods’ country of origin. This largely includes two main categories:

  • Wholly obtained (WO) means the product was entirely produced in a single originating country and does not include any foreign (non-originating) content or manufacturing process.
  • Product specific rules (PSR) are detailed criteria that define how each product’s origin is determined. PSR criteria that are often found in FTAs include “change in tariff classification” (determining origin based on sufficient transformation of materials), “regional value content” (requiring a minimum percentage of value to be added locally), and specific manufacturing or processing operations (mandating particular production steps occur in the originating country). These criteria also extend to cover other subordinated methods of verification, such as accumulation rules and de minimis rules, to provide more flexibility for the establishment of origins and tariff privileges under such FTAs.

Compliance Challenges

Despite attempts to promote international trade and eliminate trade barriers through the establishment of FTAs, importers and exporters nevertheless face difficulties or disputes arising from FTAs, especially disputes concerning the origin of goods either at the time of importation/exportation or through the process of postclearance audit by customs officers. If imported goods are not originating goods as declared, the importer is subject to additional duty assessment. Declaration of non-originating goods as originating goods may constitute a criminal offense, such as false declaration to avoid duty payment.

Hence, it is of utmost importance that entrepreneurs understand and are aware of the criteria of rules of origin and associated procedural aspects, including requirements for certificates of origin, document retention periods, and dispute resolution mechanism pertaining to Customs disputes.

Thailand and US Reciprocal Tariffs

Tariff privileges have been a vital issue in the international trade arena and have continuously been pivotal points in trade negotiations. A prominent global issue that has been headlined worldwide this year is the “reciprocal tariff” regime executed by US President Donald Trump’s administration, which imposed significantly high and controversial tariff rates on nations trading with the US, which has been criticized as a trade barrier. For Thailand, the tariff was initially imposed at a rate of 36% and has since been reduced to 19% following a series of negotiations and tradeoffs between nations.

However, although the reciprocal tariff rate now appears settled, the US is still pursuing further agreements on “transshipment tariffs,” as this would likely prevent other countries, particularly China, from using supply chains in other countries to disguise products’ country of origin to benefit from lower tariffs or circumvent trade restrictions.

Thailand’s Transshipment Scrutiny

Pursuant to recent negotiations with the US, Thailand is being scrutinized regarding its transshipment practices, especially concerning the exportation of goods actually originating from China as “made in Thailand” with nominal or no local content added from Thai manufacturers. This practice occurs because the goods would encounter higher tariff rates if exported directly from China to the US.

To facilitate negotiations, Thailand has reportedly planned to set up a special task force to manage issues concerning certificates of origin, which are expected to be required under new trade rules being negotiated with the U.S.

While the agreed criteria for transshipment are still not well settled, it can be expected that transshipment practices will be more thoroughly tested and verified for goods being shipped to the US.

Conclusion

Based upon FTAs and the prospective rules on transshipment tariff classification, rules of origin and associated documentation such as certificates of origin are crucial considerations for entrepreneurs who wish to enjoy tariff privileges and prevent risks of higher tariff exposure. Thailand’s experience demonstrates how geopolitical trade tensions can quickly reshape compliance requirements for businesses operating in global supply chains. As transshipment rules continue to evolve, companies should regularly review their origin determinations and supply chain structures to ensure continued compliance and market access.

Related Professionals

Practices

Customs and International Trade

Location

RELATED INSIGHTS​ 

January 21, 2026
Spurred by global geopolitics and Canada’s Indo-Pacific Strategy, which aims to forge deeper ties with ASEAN, Canadian companies have been showing growing interest in Thailand and Southeast Asia in recent years. To understand the opportunities offered by the region, we sat down with Andrew Stoutley, a Toronto native and the chief operating officer of Tilleke & Gibbins, a leading Southeast Asian regional law firm with over 130 years of history in Thailand. Q: Why are Canadian companies looking at Thailand and Southeast Asia right now? A: Two reasons stand out. First, diversification has moved up the agenda. Many Canadian companies want options outside North America due to tariff volatility and policy uncertainty in the United States, as well as questions around the next Canada–United States–Mexico Agreement mandatory joint review. At the same time, the shift of global production from China to Southeast Asia is accelerating, driven by rising costs, geopolitics, and the need to avoid overreliance on a single market. As a result, Canadian companies are looking for a second production base or a regional hub, and Thailand and its neighbors are natural choices given their manufacturing depth, location, and established supply chains. Second, Canada’s own efforts in the region are gaining traction. The Indo-Pacific Strategy has led to more on-the-ground support, including larger trade missions, upgraded diplomatic posts, and new financing options. Export Development Canada (EDC) now has a presence in Bangkok, giving Canadian companies a direct line to financing and insurance in Thailand. There’s also steady progress on trade frameworks like the recently signed Canada–Indonesia Comprehensive Economic Partnership Agreement (which will come into effect pending domestic procedures), ongoing negotiations of a Canada–ASEAN FTA, and the exciting announcement about the launch of negotiations of a Canada–Thailand FTA. Together, these developments have the potential to make it much easier
Read More
January 14, 2026
Myanmar’s Ministry of Finance and Revenue has introduced new procedures allowing companies to temporarily export raw materials and semifinished goods for overseas processing before reimporting the finished products for domestic sale. The procedures are detailed in Notification No. 143/2025, which was issued on December 23, 2025, taking effect on February 1, 2026. The new procedures define outward processing as the temporary export of domestically circulating or manufactured goods for manufacturing, processing, treatment, or repair abroad, followed by reimportation. Core elements include the temporary export of the goods, the continuity and identifiability of the exported and reimported items, and the assessment of duties based on the value added abroad. Upon reimportation, customs duty, commercial tax, specific goods tax, and advance income tax are applied only to the foreign value added, rather than to the full value of the goods. No advance income tax applies at the time of export. Before these procedures, Myanmar lacked a unified outward processing system. The closest existing practice was the “repair and return” mechanism, used for goods such as machinery parts that required repair abroad. The definition covers a broader range of operations than simple repair. Eligible Goods and Shipment Points Outward processing is permitted only for goods that satisfy specific eligibility criteria. The scheme expressly excludes: Goods that are prohibited from export or import Goods that can be processed domestically within Myanmar Precious stones Goods that would lose their essential characteristics after processing Export and reimport activities related to outward processing must be conducted through designated ports, airports, or dry ports located within Yangon Region. Eligible Companies Only companies that are legally registered in Myanmar and authorized as exporters or importers—specifically, businesses holding a valid export/import registration certificate—are eligible to engage in outward processing activities. The Myanmar Customs Department serves as the governing authority
Read More
January 13, 2026
On December 31, 2025, Myanmar’s Department of Trade introduced new rules for import and export license applications. The rules were issued in Announcement No. 4/2025, which took effect on January 1, 2026. Under the announcement, all applications for licenses must now be submitted and approved through the online Myanmar TradeNet 2.0 system. The announcement sets a maximum review period of 180 days for each application. If approval is not granted within this period, the application will be automatically canceled by the system. In addition, companies may submit only one application per calendar month for goods of the same type (same HS code), and only one license will be approved. Businesses involved in importing goods should review their planning and ensure compliance with the new restrictions.
Read More
January 9, 2026
On January 7, 2026, the Central Bank of Myanmar (CBM) announced a further relaxation of foreign exchange regulations through Notification No. 2/2026, with an effective date of January 1, 2026. This notification reduces the mandatory conversion requirement for exporters’ earnings in foreign currency into Myanmar kyat (MMK). Under the new notification, exporters are required to convert only 15 percent of their foreign currency export earnings into MMK at official CBM reference exchange rates, down from the previous required minimum conversion level of 25 percent. The adjustment provides exporters with more flexibility to manage foreign currency, improving liquidity for international transactions and reducing cash flow pressure. However, companies must still comply with the foreign currency conversion procedures and timelines set out in the CBM’s Notification No. 12/2022.
Read More