A Certificate of Origin or Declaration of Origin (often abbreviated to C/O, CO or DOO) is a document widely used in international trade transactions which attests that the product listed therein has met certain criteria to be considered as originating in a particular country. A certificate of origin / declaration of origin is generally prepared and completed by the exporter or the manufacturer, and may be subject to official certification by an authorized third party. It is often submitted to a customs authority of the importing country to justify the product's eligibility for entry and/or its entitlement to preferential treatment. Guidelines for issuance of Certificates of Origin by chambers of commerce globally are issued by the International Chamber of Commerce.
Fundamentals of certificate of origin
Concept of certificate of origin It is noted that Chapter 2 of the Revised Kyoto Convention provides a strict definition of "certificate of origin". The scope of this concept covers only the specific form issued by an authorized third party.
in which, a "declaration of origin" is defined as follows:
However, the concept has been used in practice in a broader sense, which includes self-certified certificates of origin as well (e.g., in NAFTA). Taking into account this fact, the International Chamber of Commerce provides a simpler and more comprehensive definition which covers both self-certification and authorized certification:
In this topic, declaration of origin will also be mentioned because it is an important proof of origin beside the more popularly used certificate of origin.
The importance of certificate of origin
In general, a certificate of origin is essential in international trade transactions because it is the document certifying the origin of the product, which is in turn the basis to determine the tariffs and other trade measures that will be applied.
Although satisfying rules of origin in principle means that a product has qualified for the originating status and is thus entitled to preferential tariffs, in most cases, a claim for preferences must be accompanied by a certificate of origin presented to the customs authority at the port of entry. Unlike the exporter or manufacturer, who is responsible for (and capable of) proving to the issuing authority (or self-certifying) the origin of the product, the importer often has little knowledge of how the product meets the origin criteria. The importer is instead required to present proof, e.g., a certificate of origin issued or obtained by the exporter or manufacturer. Such a separation of obligations means that even if a product may actually originate in a particular country, the importer's failure to submit a certificate of origin may cause the goods to be barred from enjoying preferences.
For instance, the rules of origin in the free trade agreement between Chile and Thailand provide that:
Apart from customs purposes, a certificate of origin also plays a certain role in certifying the source of a product and thus its prestige (for instance Swiss watches). Therefore, the importer may need the document to show consumers in the destination market. In some cases, a certificate of origin helps to determine whether a product can be legally imported, particularly when the importing country is applying a ban or a sanction on goods originating in certain countries.
Certificate of origin, country of origin and rules of origin
These concepts are interrelated and sometimes cause confusion. Basically, a certificate of origin certifies the country of origin of the product listed in the certificate. As the term itself indicates, the country of origin of a product does not refer to the country of the exporter, but to the country where the product is obtained or produced. In many cases, the country of origin is also the country from which the product is exported. However, there are various cases where these countries are different. For instance, an exporter in country A may sign a contract with an importer in country C, and instruct that the goods be shipped from country B, where they were actually made. Regarding goods that are not directly shipped, the competent authority in a transit country may sometimes issue a back-to-back certificate of origin based on the original certificate, in which case the country of origin is different from the transit country.
The country of origin is determined based on the origin requirements provided in the rules of origin applied to the product at hand. In the simplest case, the country of origin will be the country in which the product is wholly obtained or produced. For instance, rice grown and harvested in Vietnam is considered to originate in Vietnam. In the event that the manufacture of a product involves two or more countries (e.g., crackers made in Korea from Vietnamese rice), the country of origin is defined as the country where the last substantial, economically justified working or processing is carried out.
Issuing and verifying certificate of origin
Issuing certificate of origin
For both preferential and non-preferential certificates of origin, the issuance thereof depends on whether self-certification is allowed, or authorized certification is required.
In the case of self-certification, the exporter or the manufacturer will have the right to assess the compliance of its product with the applicable origin criteria. It may then issue a certificate of origin using a prescribed form. Sometimes, there is no prescribed form, which means the exporter or the manufacturer is allowed to simply provide a (sworn) declaration about the origin of the goods. The declaration may either be made on a separate document, or incorporated in another trade document, such as an invoice.
Where third-party certification is required, normally the certificate of origin must be signed by the exporter or the manufacturer, and countersigned by a local issuing body, such as a chamber of commerce or a customs authority. The certification officer may require the exporter or manufacturer to submit documents relating to the manufacturing process, or even examine the manufacturing premises. The certification process will thus incur some costs, including the fees paid to the competent authority.
Waiver of certificate of origin
Determining the origin of a product is crucial because country of origin is the ground to apply tariffs and other trade measures. However, a certificate of origin is not systematically required for all shipments. It will depend on the trade regime under which a product is imported to a destination country, and also the value of the goods.
For non-preferential purposes, the submission of a certificate of origin is usually not necessary unless it is otherwise indicated, particularly during a period when the importing country is applying some trade remedies to certain products originating in certain countries. For preferential purposes, although a certificate of origin is usually mandatory, most certificates provide a provision on exemption applied to "small-value" consignments.
The threshold below which a certificate of origin is waived differs from one trade agreement to another. Therefore, it is important for traders to examine the applicable trade agreement carefully to find out whether or not they will need a certificate of origin for a certain shipment. The provision on the exemption or waiver of the certificate of origin is often provided unambiguously in the protocol or annex on rules of origin of the relevant agreement. They may also check and compare the exemption thresholds of various trade agreements by using the Rules of Origin Facilitator, a free tool developed as a joint initiative by the International Trade Centre, the WCO, and the WTO to assist small and medium-sized enterprises.
Verifying certificate of origin
Verification is a process carried out in the importing country to confirm the originating status of goods which have already been imported. In this process, verifying the certificate of origin submitted to customs authorities is an important step. The customs officer may need to check the authenticity of the certificate at hand by comparing the reference number thereof and examining the signature and stamp on it surface. He also needs to check to make sure all the fields in the certificate have been duly filled and the information in the certificate is consistent with that in other trade documents (e.g., commercial invoice, bill of lading). Where the certificate of origin is found to contain some errors, the certificate may be rejected; however, minor and formal errors is usually not the basis for an automatic rejection of the validity of a certificate.
A certificate must in principle be submitted within the validity period provided in the applicable rules of origin. Moreover, it should normally be submitted at the time of importation to claim for preferential treatment. However many agreements accepts the retroactive issuance of certificates of origin, and the possibility of a tariff refund. This relaxation rule applies if by the time of importation, for some justifiable reasons, the importer has not filed a claim for preferential tariff.
In the event that the customs authority remain in doubt despite there is no sign of non-compliance on the certificate of origin, it may ask to physically check the imported goods. Moreover, the customs authority may also contact the issuing authority in the exporting country to verify any information it considers necessary before making the decision.
Issuing and verifying authorities
Domestic institutions are those who direct deal with the issuance and verification of rules of origin. It differs from country to country and depends also on the specific agreement under which a shipment is classified. For instance, for goods shipped from the exporting country to the importing country under non-preferential regime, the certificate of origin may be certified by the Chamber of Commerce but for if those goods are traded under a free trade agreement, the issuing authority may be one agency of the Ministry of Trade.
Normally the issuing authority can be one of the following institutions:
- Chambers of commerce ICC accredited chambers using International Certificate of Origin Guidelines
- Customs authorities Under bilateral or regional trade agreements
- Other government bodies or agencies assigned by the agreement, normally belongs to the Ministry of Trade.
Verifying authorities In most cases where verifying authorities are specified, it would be the customs authorities of the importing countries. The reason is that rules of origin must pass the verification in the importing country so that the goods can be determined as eligible for preferential treatment or not.
Types, forms, and formats of certificate of origin
Types of certificate of origin Basically, because rules of origin may be established for preferential or non-preferential purposes, certificates of origin can also be classified into two types: preferential and non-preferential.
Non-preferential certificate of origin
Non-preferential certificate of origin is the form of certificate issued for the purpose of complying with non-preferential rules of origin. This type of certificate basically certifies the country of origin of the product without allowing it to be entitled to preferential tariffs under preferential trade regimes. To be specific, non-preferential certificate of origin is used within the WTO framework for most-favored-nation treatment as provided for in Article 1.2 of the Agreement on Rules of Origin.