Debunking 8 Common Myths on Trade and Customs

Singapore-based companies must comply with international export regimes, especially when dealing with controlled goods, dual-use items, or sensitive technologies. Ignoring these obligations can lead to enforcement actions and reputational damage.

While international standards exist, each country enforces its own customs laws, documentation requirements, tariffs and procedures. These differences are influenced by national policies, trade agreements and enforcement practices. For example, the U.S. uses HS Codes up to 10 digits, while Singapore requires 8 digits. Enforcement practices also vary by product category.

For businesses, understanding the specific customs regulations of each market they operate in is key.

Each FTA has its own origin criteria, documentation requirements, and benefits. Misunderstanding these differences can result in denied preferential treatment or penalties. Businesses must assess eligibility carefully for each agreement.

The Harmonised System (HS) Code is a dynamic classification framework updated by the World Customs Organization (WCO) approximately every five years to reflect changes in technology, product patterns and trade patterns.

Contrary to the belief that a product’s HS code remains fixed, reclassification is driven by emerging product categories (e.g., electric vehicles, drones, or hybrid items like smartwatches and plant-based meat), environmental and policy shifts (such as sustainability or biosecurity regulations).

In short, HS codes require ongoing attention and expertise. Business must stay informed and agile to avoid misclassifications, penalties or missed opportunities for preferential treatment under trade agreements.

Although they are related, the country of origin is not always the same as where the product was made in. They serve distinct legal and commercial purposes and are determined by different criteria depending on the country and context.

Understanding the distinction is crucial – import duties, trade agreements and customs regulations hinge on correct origin identification. Labelling requirements also demand transparency, especially for sensitive items like food or pharmaceuticals. With the recent U.S. requirements, country of origin is key as this determines the reciprocal tariffs imposed on the different countries.

Routing goods through different countries does not change their origin. Origin is based on where the product was made or substantially transformed. Attempting to manipulate origin through logistics arrangements, such as transshipments can lead to compliance violations.

Even if provided free of charge, samples require a declared value for customs purposes. Authorities use this to assess duties and taxes, maintain trade statistics, and prevent undervaluation or fraud. Declaring zero value can trigger compliance issues and delays.

While 3PL providers are strategic partners in facilitating your supply chain, they are not a legal safety net. Signing a POA does not transfer ultimate responsibility, it simply authorises the 3PL to act on your behalf, often for tasks such as submitting customs declarations or paperwork.

You, as the importer/exporter of record, are legally accountable for compliance. Violations and misdeclarations, such as incorrect HS codes, can result in underpaid duties and penalties for your business – unless your contract explicitly holds them accountable and includes indemnification clauses.

Need help reviewing a POA or contract to see what liabilities you’ve already covered? KPMG in Singapore can walk you through the key clauses to look for and mitigate risk.