United States accuses Thailand of falsifying origin labels on solar exports, Finance Ministry intensifies inspection measures
In a significant development, Thailand and the United States are negotiating the specifics of the rules of origin (ROO) and regional value content (RVC) under their new trade agreement, which was announced in August 2025.
The Finance Ministry Permanent Secretary, Lavaron Sangsnit, has revealed that further talks with the US are necessary to determine the RVC threshold. As of now, a general baseline threshold of 40% local or regional value content is being used tentatively in these talks to define origin requirements.
Both countries consider this 40% RVC threshold crucial for determining compliance with the ROO, which affects whether products qualify for preferential tariff treatment under the agreement.
Thailand is pushing for clearer, product-specific RVC percentages and more precise rules to ensure Thai goods meet origin criteria and avoid tariffs. The US, on the other hand, will enforce strong measures against goods routed through third countries to circumvent origin rules, applying a punitive 40% duty rate in cases of suspected transshipment.
The new tariff rate agreed upon is 19% on Thai goods imported into the US, effective from August 7, 2025, pending parliamentary and domestic legal approvals in Thailand. This tariff rate is closely related to the RVC rules being finalized.
It is worth noting that this special arrangement applies exclusively to the US and should not be extended to other countries. The RVC threshold is expected to be set at around 50%. A formal trade agreement with the US has yet to be signed, but key details, including timelines, will be outlined in that document.
The RVC percentage can include content from Thailand's trade partners but excludes Chinese-origin components due to the lack of a tariff agreement between the US and China. The Customs Department is tightening enforcement against transshipment and misdeclaration of origin, and these products will be monitored and verified by Thai authorities to ensure they are genuinely manufactured or assembled in Thailand.
One item under close scrutiny is solar panels, with the US suspecting that some shipments may contain Chinese components minimally processed in Thailand before re-export. The tariff agreement between Thailand and the US will impose a 19% reciprocal import tariff.
The Customs Department has been ordered to increase inspections of suspected transshipment goods from third countries. The US has submitted a list of high-risk products suspected of origin circumvention to Thailand via the Department of Foreign Trade.
The Thai Cabinet has approved a tariff agreement with the US, which will next be submitted to Parliament. However, the issue of origin is a top concern for the US, and Thailand must provide a clear timeline to address this.
Future free trade agreements with other partners should follow the universal principles of the World Trade Organisation (WTO). The tariff agreement aims to ensure compliance with origin rules to prevent circumvention.
- The Finance Ministry Permanent Secretary revealed that the 40% RVC threshold in the new trade agreement between Thailand and the United States is crucial because it determines whether products qualify for preferential tariff treatment in business.
- Both Thailand and the United States consider clearer, product-specific RVC percentages and precise rules essential to ensure compliance with the rules of origin (ROO) in their politics and trade.
- The tariff agreement between Thailand and the United States aims to prevent circumvention of origin rules by enforcing strong measures against goods routed through third countries in business, applying a punitive 40% duty rate in cases of suspected transshipment, which is closely related to the RVC rules being finalized.
