Country of origin (COO) is an international term that indicates where a product is manufactured, produced, processed or grown. Think of it as where a product is born. On import/export shipments, a Country of Origin Certificate is important for the following reasons:
- Entitles business owners to a preferential duty program under U.S. Customs law or through a trade agreement. Many Free Trade Agreements (FTAs) have a specific COO Certificate; e.g., NAFTA.
- Determines the rate of duty (e.g., a producer or manufacturer usually completes a certificate of origin and makes sure the importer has a copy at the time the declaration is made).
- Determines whether goods can be legally imported/exported (a certificate of origin may be required by the government of an importing country).
- Sets control management on imports/exports; e.g., informs business owners of the countries subject to quotas or embargoed countries.
- Provides statistical reporting.
- Complies from a legal standpoint with a specific request for a Certificate of Origin (from an importer).
- Fulfills proper product marking requirements (the markings must be legible - of adequate size and clear enough to be easily read by a person with normal vision).
- Differentiates the product from competitors.
- Allows the product to clear customs smoothly (to validate country of origin, some countries require a COO document).
Two Varieties of Certificates
According to International Chamber of Commerce World Chambers Federation, there are two varieties of certificates. The main type issued by chambers is a "Non-Preferential CO." For example, an "ordinary CO," which certifies the country of origin of a particular product, does not qualify for any preferential treatment.
The second type is Preferential COs," which enable products to benefit from a tariff reduction or exemption when they are exported to countries extending these privileges.
An example of this is NAFTA. The NAFTA Certificate of Origin is used by the United States, Canada, and Mexico to determine if imported goods are eligible to receive reduced or eliminated duty as specified by the NAFTA.
According to the United States Trade Representative site,
"The Certificate of Origin must be completed and signed by the exporter of the goods. Where the exporter is not the producer, the exporter may complete the Certificate on the basis of knowledge that the good originates; reasonable reliance on the producer’s written representation that the good originates; or, a completed and signed Certificate of Origin for the good voluntarily provided to the exporter by the producer."
Country of Origin Certificates may be needed to comply with the terms and conditions of a Letter of Credit, fulfill a buyer's request or satisfy a foreign customs requirement and is most often accompanied by an invoice.
Prior to moving goods, check with an international transportation company to determine whether you need a certificate of origin (typically based on a certain shipment value) to accompany a standard invoice on an international shipment. The bigger global transport companies usually allow you to download a form online (once the shipment takes place, there is a nominal processing fee) and will assist in making sure the form is completed accurately.
Note: Should you make an incorrect origin declaration or misrepresent the country of origin (too vague or deliberately confusing), the shipment may be refused, confiscated at the border, assessed a penalty fee or subject to a rigorous compliance program. And you surely don't want that to happen, so err on the side of being overly cautious here!
When in doubt, consult with WCN World Chambers Network, an official online portal of Chambers of Commerce worldwide servicing importers and exporters to find their nearest chamber who may offer this service.