Transshipment

Transshipment in the United States

Transhipment Definition

In maritime law. The act of taking the cargo out of one ship, and loading it in another. When this is done from necessity, it does not affect the liability of an insurer on the goods. (…) But when the master tranships goods without necessity, he is answerable for the loss of them by capture by public enemies. (1)

Under NAFTA

Note: This is one of the provisions Relating to Origin in relation to the NAFTA. A good that does not meet the Rules of Origin requirements may, in some cases, qualify as originating by using the transhipment additional option.

Goods that qualify as originating will lose that status if they do not remain under Customs control or undergo any operation outside the NAFTA region, other than unloading, reloading, or any other operation necessary to preserve them in good condition or to transport the goods to Canada, Mexico or the United States.

Surgical instruments made in the United States (wholly of originating materials) and cotton gowns and bandages made in Mexico (from fibers and fabric wholly grown and produced in Mexico) are sent to the Dominican Republic where they are packaged together and then sterilized for use in operating rooms.

Upon their return to the United States, the medical sets are not eligible for preferential treatment under the NAFTA because they underwent operations in the Dominican Republic that were not necessary to preserve the goods in good condition or to transport them to the United States.

The main rules are:

Article 411 (Transshipment) of the NAFTA Agreement
19 CFR 181 Appendix, Section 16
19 CFR 181.23
General Note 12(L) of the Harmonized Tariff Schedule
General Note 12(a) of the Harmonized Tariff Schedule

Concept of Transshipment in Foreign Trade

A definition of Transshipment in relation with foreign trade is provided here: The transfer of merchandise from the country of origin to an intermediary country prior to shipment to the country of ultimate destination.

Resources

Notes

1. This definition of Transhipment is based on The Cyclopedic Law Dictionary.