{"### Purposeful Documents in Global Commerce":"
In international trade, where goods traverse borders and navigate across diverse regulations, the certificate of origin (CO) is a vital document. It not only establishes a product’s nationality—such as a good being marked "Made in the USA" or "Made in China"—but also plays a crucial role in fostering fair trade practices, protecting workers’ rights, and promoting economic cooperation among nations.
COs verify that traders are following customs and tariff requirements, help determine eligibility for preferential treatment under trade agreements, and ensure that goods aren’t from a country subject to trade sanctions or restrictions or produce goods under unethical or exploitative conditions.
In the U.S., COs are now primarily electronic. Americans can obtain them from the American World Trade Chamber of Commerce (AWTCC), accredited to provide them electronically. Let’s dive deeper into what COs are, why they are important, and how they are obtained.
Key Takeaways
- A certificate of origin (CO) records the country of origin of an imported good.
- Importing countries often mandate the CO to levy the appropriate import tax, if any.
- In the U.S., the American World Trade Chamber of Commerce (AWTCC) provides the electronic COs needed for export.
- Preferred COs are verified versions that meet criteria under a free-trade agreement.
Understanding Certificates of Origin (COs)
COs are vital tools for promoting transparency, accountability, and informed decision-making in international commerce. Most COs in the U.S. are digital, though paper versions are used more elsewhere.
These documents support fair labor practices, protect workers’ rights, and enable governments and intergovernmental bodies to enforce trade policies, sanctions, and embargoes. By requiring exporters to declare the origin of their goods, COs help identify products manufactured under unethical or exploitative conditions, supporting actions based on ethical, environmental, and socioeconomic considerations.
Governments rely on COs to enforce trade policies and uphold national security and foreign policy objectives. Customs officials use these electronic documents to identify and prevent the entry of prohibited goods from nations that engage in human rights abuses, support terrorism, or threaten international security.
Moreover, COs are essential for implementing international treaties to protect the environment, such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora. By mandating COs, governments can monitor and regulate the trade of endangered species, combat illegal wildlife trafficking, and promote sustainable resource use.
Chambers of commerce, designated government agencies, or other authorized bodies in the exporting country issue COs. These include essential information like exporter and importer details, goods description, country of origin, and a digital signature from the issuing authority.
In the U.S., exporters can obtain a CO from the AWTCC by registering on the AWTCC’s online certification system, submitting applications electronically, and receiving certificates by the next business day. The certificates include an ICC accreditation logo and can be verified electronically by customs authorities globally.
Exporters must ensure their COs are accurate and follow the relevant international guidelines to avoid shipping delays, additional fees, or goods being turned away.
Sometimes, the destination customs authority may request proof of review from a specific chamber of commerce. Chambers typically only certify verifiable information. However, when presented with a declaration attesting to unverifiable commercial details, the chamber will digitally stamp the document and attest to the identity of the signatory.
Additionally, the buyer may require a CO in a letter of credit as part of the documentary requirements, possibly specifying additional certifications or language needed in the CO.
Embracing Digital CO Applications and Certificates
The CO process is increasingly paperless, with many countries offering online CO services, making obtaining a CO quicker and easier.
With an electronic CO, you can submit required documentation online, get an electronic certificate stamped by a chamber of commerce in less than a day, or get an expedited paper certificate overnight. The ICC maintains a verification website for these certificates, widely used by customs authorities, banks, and other parties involved in international trade compliance.
Types of Certificates of Origin
There isn’t a standard CO form globally, but COs usually prepared by the exporter contain essential details about the product being shipped, tariff codes, exporter/importer information, and country of origin. The exporter documents these details, gets the CO notarized or confirmed by a chamber of commerce, and submits the form.
Details required depend on the goods’ type and destination.
Nonpreferential COs
Nonpreferential COs, or ordinary COs, indicate goods don’t qualify for reduced tariffs under trade arrangements between countries.
If there’s no treaty or trade agreement with the importing country or if the product is excluded from tariff relief, an ordinary CO is used.
Preferential COs
Preferential COs are for goods qualifying under a free-trade agreement for reduced tariffs. For example, exports between the U.S., Mexico, and Canada under the USMCA free trade agreement use a preferential CO.
In the U.S., the Generalized System of Preferences (GSP) promotes economic development in developing nations, eliminating duties on thousands of imported products from over 100 countries. Similar systems exist worldwide to foster economic growth through trade.
Free Trade Agreement Certificates of Origin
Free trade agreements between the U.S. and other countries often require exporters to use a specific form as proof of origin so products can qualify for preferential duty rates.
Steps for Obtaining a Certificate of Origin
The ICC offers an online platform for issuing and verifying electronic COs. Steps involve registration, application submission, verification, issuance, and importing country verification. Accredited companies can also assist with creating and certifying COs.
What’s Included in a Certificate of Origin?
Certificates of origin typically contain:
- Producer’s name and contact information, including the country of origin
- Exporting agent’s details
- Receiver/importing agent’s details
- Description of the goods with product codes
- Quantity, size, and weight of the items
- A waybill or bill of lading number
- Transportation means and route information
- A dated commercial invoice
Why Do You Need a Certificate of Origin?
Certificates of origin satisfy customs requirements in the destination country and determine the duty payable. Certain goods may qualify for tariff reductions or exemptions based on their origin or type.
Can I Produce My Own Certificate of Origin?
Only exporters can issue a CO. Contact your local chamber of commerce for more on the process and needed approvals.
Is a Certificate of Origin the Same As a Title?
COs specify a product’s origin, along with export and import information but don’t serve as a title for legal ownership transfer of the goods.
Conclusion: Ensuring Smooth International Trade
A certificate of origin is crucial in international trade, providing necessary information for customs purposes and ensuring compliance with trade agreements. Exporters must accurately issue and complete COs, endorsed by the relevant chamber of commerce, to avoid obstacles and benefit from preferential trade terms.
Related Terms: Tariffs, Free Trade Agreements, Customs Compliance, Import Duty.
References
- International Trade Association. “FTA Certificates of Origin”.
- International Chambers of Commerce. “Certificates of Origin”.
- American World Trade Chamber of Commerce. “Certificates of Origin”.
- NOAA Fisheries. “Convention on International Trade in Endangered Species of Wild Fauna and Flora.”
- ICC World Chambers Association. “International Certificate of Origin Guidelines”.
- International Trade Administration, U.S. Department of Commerce. “Basic Guide to Exporting: Certificate of Origin”.
- The World Trade Organization. “Trade Facilitation Agreement – Article 10”.
- Trade Financial Global. “Certificates of Origin”.
- European Commission. “Taxation and Customs Union: Rules of Origin”.
- Office of the United States Trade Representative. “Agreement Between the United States of America, the United Mexican States, and Canada”.
- Office of the United States Trade Representative. “Generalized System of Preferences (GSP)”.
- Office of the United States Trade Representative. “Countries Eligible for GSP (as of December 2020)”.
- Shipping Solutions. “Generate Electronic Certificate of Origin Forms”.
- International Chambers of Commerce. “Business Solutions”.
