The purpose of the direct shipment provision is to ensure that there has been no further processing in a non-FTA country and that goods that have left a free trade agreement are identical to those that have been imported into the other free trade country. Signatories to a free trade agreement form a free trade area (e.g. B Switzerland-EU). It is not a customs union, i.e. the signatories to the agreement retain their own external customs duties. On the other hand, in the case of a customs union, there are only common external customs duties. Once the goods have passed through this limit and reached the market, they can move freely between different countries, without imposing any further tariffs. Examples of customs unions: European Union or Switzerland-Liechtenstein. The New Zealand-Hong Kong, China Closer Economic Partnership Agreement (NZ-HKC CEP) was signed in Hong Kong on 29 March 2010 and entered into force on 1 January 2011. The agreement allows goods exported from Hong Kong, China, to benefit from preferential tariff treatment on imports into New Zealand.

At present, all goods imported into Hong Kong, China, regardless of their origin, are exempt from customs duties. The agreement ensures that in the future, New Zealand goods imported into Hong Kong, China, will remain duty-free. Given the stringency of the rules of origin and the understanding that they must be intended to ensure that economic benefits are granted to the FTA partner, such failures are to be expected. Nothing can be more frustrating than seeing an otherwise qualified entry deny these FTA benefits because the goods were not shipped directly to the United States. Both Canada and the United States have transshipment rules, which means that transhipment goods considered originating lose that status if they do not remain under customs control or if they are not subject to an operation other than unloading, transshipment or any other operation necessary to keep them in good condition. The rules for determining the country of origin can be very simple when a product is entirely grown or manufactured and assembled in a country. However, if a finished product contains components from many countries, determining origin can be more complex. Rules of origin can be very detailed and specific and vary from agreement to agreement and product to product. Most (but not all) Swiss free trade agreements contain such a rule….