re-exportation

Re-exportation may occur when one member of a free trade agreement charges lower tariffs to external nations to win trade, and then re-exports the same product to another partner in the trade agreement, but tariff-free. Re-exportation can be used to avoid sanctions by other nations. For example, the United Arab Emirates may have engaged in re-exportation of goods to Iran as a way for Iran to avoid U.S. trade sanctions against it. Thus re-exportation involves export without further processing or transformation of a good that has been imported. It is also called entrepot trade. In contrast, Finland imported crude oil from the Soviet Union as part of bilateral trade between these two countries and refined the oil for export to other Western European countries, while Soviet Union did not intend to sell oil to these capitalist countries, but this was not re-exportation because the crude oil was refined before selling.