Direct shipment / transport |
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Also known as direct consignment, prohibition of transhipment (trans-shipment), the non-manipulation rule.
This provision is closely connected with the principle of territoriality.
A direct shipment provision requires goods that are claiming preferential treatment under an FTA to be shipped directly from the FTA country of origin to the FTA country of destination. This is usually evidenced by shipping or transport documentation provided together with the proof of origin as part of the customs documentation provided upon import (see supporting documentation).
If the goods are transported via a non-FTA member, they are usually required to remain under customs control. The customs officers in the FTA country of destination may request documentary evidence of such supervision at the time of import.
The purpose of the direct shipment provision is to ensure that no further processing has occurred in a non-FTA country and that the goods that left one FTA country are the same as the ones imported into the other FTA country.
Under some FTAs, the direct shipment requirement is replaced by a non-manipulation principle. This is a less strict version of the direct shipment provision that simply requires the goods to not be further processed or tempered with during transportation from one FTA member to another. Documentary evidence of non-manipulation can be required upon import.
Many FTAs specify that certain processes necessary to preserve the goods in good condition can still take place during shipment. These are often listed in the text of the agreement. Many agreements also specify the type of document that needs to be provided as evidence of customs control.
Exporters and importers of originating goods need to familiarise themselves with the exact wording of the direct shipment provision under trade agreements they are planning to use.
Example:
Goods shipped from FTA country A are unloaded and unpacked from the shipping container in non-FTA country B. They remain under customs control and are repackaged and loaded into a smaller container and shipped to the country of final destination – FTA country C. Under such a scenario the goods comply with the direct shipment principle although customs authorities in the country of import may still require a documentary evidence of goods remaining under customs control issued by the customs authorities of the transit country.
Goods shipped from FTA country A are unloaded and unpacked from the shipping container in non-FTA country B. They are then further processed while they remain in the port in country B. After processing they are loaded into a shipping container and imported into FTA country C. Under such a scenario the goods do not comply with the direct shipment principle.
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