Certificates of origin: what do you need to know?
Trading internationally brings a wide range of compliance obligations and administrative tasks for businesses to deal with, from obtaining import and export licenses to making the appropriate customs declarations.
One of the most important tasks you'll need to complete when your company exports goods overseas is obtaining a certificate of origin (CO).
Read on to find out what you need to know about this crucial piece of paperwork and why it matters for your organization.
What is a certificate of origin?
A CO is an official document that gives confirmation of where a particular product was manufactured, processed or produced.
Businesses exporting goods to foreign countries are typically required to obtain and supply a CO under rules enforced by the importing country's customs authorities.
These documents provide a record of vital information about the export. That might include:
- Name, address and other contact details for both the consignor (exporter) and consignee (importer)
- Country of origin
- The date that the certificate was issued
- A description of the goods being exported, including any necessary product codes, amount, dimensions and weight
- Details of any necessary supporting documents, such as a supplier's declaration or manufacturer's invoice
COs can be broken down into two main categories: preferential and non-preferential. The former is used for goods that qualify for reduced tariffs or exemptions under the rules of specific trade agreements, while the latter applies to general trade where no such allowances are in place.
Examples of preferential COs include:
- EUR1 Movement Certificate: Used for exports of goods from the UK and EU to countries participating in relevant trade agreements, such as South Africa, Mexico, Israel and Switzerland.
- EU-MED Movement Certificate: Applies specifically to trade between the EU and Mediterranean countries.
- Generalized System of Preferences - Form A: Allows developing countries to export certain goods to developed nations at lower or zero tariff rates.
Why certificates of origin matter for businesses
COs are important because they allow businesses to benefit from any preferential trade agreements that exist between their country and the markets to which they're exporting.
Accessing reduced or zero tariffs could be crucial for organizations that are focused on managing costs and being able to offer the most competitive prices in international markets. This is likely to be particularly valuable for firms based in developing countries that are exporting to more developed economies.
It's also necessary to have a complete and accurate CO to avoid running into legal or regulatory problems when your exports arrive at their intended destination.
If local customs authorities in the importing country find that your certificates are missing or incorrect, you're likely to face issues such as:
- Delays in customs clearance
- Fines or penalties
- Goods being returned
As well as being required to pass customs and avoid hold-ups, COs could also offer a growth advantage for your business by allowing you to enter certain markets more easily.
How to obtain a certificate of origin
Acquiring a CO for the goods you're exporting should be a relatively straightforward process, as long as you understand the system and have all the necessary information.
Here's a breakdown of the key steps required to obtain these documents:
- Determine what type of CO you need: Does your target market allow you to use a preferential CO, or will a non-preferential CO be required? If you're not sure, you may need to contact customs in the importing country or your freight forwarder.
- Get in touch with the authorized issuing body: COs are typically issued by chambers of commerce or customs authorities.
- Gather the required information: The issuing body will tell you what documents are required to obtain your CO. This is likely to include commercial invoices, packing lists and proof of origin, such as supplier declarations.
- Submit your application: Many issuing bodies use digital platforms for online submissions, or you can provide physical forms and supporting documents.
- Confirm verification and certification: If all the information you've provided is in order, the issuing body will verify your documents and claims of origin, approve the CO and supply you with a certified copy for export.
COs are just one example of how international trade and customs compliance can become challenging to manage if you don't have access to the right technology and support.
Find out how MIC's software solutions and services could help your business.
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