Validation of 'Through Bill of Lading' for AK-FTA: Can Malaysia be listed as the Port of Loading for goods originating from Thailand? Released

To benefit from preferential tariffs under the Korea-ASEAN FTA (AK-FTA), importers must not only ensure the goods originate from a member state but also strictly adhere to the Direct Consignment Rule. In cases where goods depart from Thailand and are transshipped through Malaysia to South Korea, the way the transport documents are drafted serves as critical legal evidence for eligibility.

1. Legal Definition and Requirements of a Through Bill of Lading (Through B/L)

A Through Bill of Lading (Through B/L) is a document issued by the initial carrier who assumes full responsibility for the entire transport journey, even when transshipment occurs or different modes of transport are used. To satisfy the direct consignment requirements under the AK-FTA, a Through B/L must meet the following criteria:

• Consistency of Responsibility: The initial carrier must bear responsibility for the entire journey from the exporting country (Thailand) to the importing country (South Korea).
• Clear Specification of Route: The document must clearly indicate the route from the exporting party to the importing party.
• Proof of Non-Manipulation: It must be demonstrated that the goods remained under customs control in the transit country (Malaysia) and underwent no operations other than unloading, reloading, or operations to preserve them in good condition.

2. Risks and Reasons for Rejection when Malaysia is listed as the Departure Point

If the Bill of Lading (B/L) lists 'Malaysia' as the place of departure and 'South Korea' as the destination, the carrier is interpreted as being responsible only for the segment from Malaysia to Korea. Since the initial leg from Thailand to Malaysia is missing from the document, customs authorities are unlikely to recognize this as a valid Through B/L.

Key risks associated with such documentation include:

• Violation of the Direct Consignment Rule: The goods may be considered as having been re-exported after a separate commercial transaction in Malaysia, rather than being shipped directly from Thailand.
• Denial of Preferential Tariffs: If evidence of direct consignment is insufficient, the AK-FTA preferential rate may be rejected, resulting in the application of higher general duty rates.
• Burden of Proof: Even if the discrepancy is a simple clerical error, the importer bears the heavy burden of providing additional evidence (e.g., the original B/L from Thailand, Transshipment Certificates) to prove the goods were under continuous customs control.

3. Professional Advice and Compliance Strategies

To successfully apply for AK-FTA benefits, a B/L issued solely for the Malaysia-to-Korea leg is insufficient. We recommend the following practical measures:

First, you must secure the initial B/L issued in Thailand. This document should explicitly state Thailand as the Port of Loading and South Korea as the Final Destination, with Malaysia listed only as the Port of Discharge or Transshipment. This is the most legally sound form of a Through B/L.

Second, if separate transport documents were inevitably issued, you must obtain a Certificate of Non-Manipulation from Malaysian Customs or provide warehouse entry/exit records proving the goods were under customs supervision while in Malaysia. However, please note that this process is far more complex than presenting a Through B/L and may still be subject to strict scrutiny by the Korea Customs Service.

In conclusion, a B/L showing Malaysia as the departure point is generally not recognized as a Through B/L for AK-FTA purposes. You must ensure your documentation covers the entire transport route or prepare comprehensive supplementary evidence to prevent unnecessary tax assessments.