Certificate of Origin

The certificate of origin is an international trade document that identifies the nationality of a product. The certificate declares that the product was produced, obtained, manufactured, processed, and belongs to the mentioned country. It is also referred to as a CO.

Every year, thousands of COs are issued. Exporters primarily use them as a declaration to clear customs and international trade requirements. Banks, importers, and stakeholders legally mandate this certificate. It can be produced as a hard copy or in a digital format—an electronic CO.

• A certificate of origin is a document that indicates the nationality of a product as to where it was obtained, processed, and manufactured initially. They are classified into two subtypes—preferential COs and non-preferential COs.
• The document is mandatory for customs clearance—the certificate signifies that the product has cleared pending customs duty liabilities. It is a safety measure that prevents the illegal exchange of goods between two countries.
• The manufacturer certificate of origin comprises an affidavit manufacturer's invoice (or a commercial invoice) that defines the manufacturing location.

A certificate of origin is a document furnishing details about the origin of a product, article, or goods. This document is required when goods are imported or exported to a different country. The certificate of origin is also called a CO.

COs are issued by the chamber of commerce and hence come under the purview of the ministry of trade. Customs authorities require COs to allow the export of a product. Thus, COs are crucial trade instruments.

Therefore, if a product is found without a CO, then customs officers are obligated to make sure that the goods do not leave the warehouse. A CO signifies that custom duty for the particular goods is paid; it ensures that the particular consignment does not have any liabilities attached to it. More importantly, this safety measure prevents illegal goods exchange between two countries.

The chamber of commerce facilitates worldwide trade and issues millions of COs annually. For this process, manufacturers can digitally acquire an online certificate of origin or follow the traditional methods to acquire a hard copy document. CO drafting fee differs from one country to another depending on trade policies, document verification procedures, and processing time.

The certificate of origin template comprises a list of mandatory documents. First, a form must be filled out and submitted along with the cover letter, product details, commercial invoice, a copy of the declaration, and the applicable fee. Those unfamiliar with it can look for CO samples online to understand the procedure.

The issuance of fake certificates is another worrying concern; The Ghana National Chamber of Commerce declared such incidents. Ghana admonished its citizens—the issuance of fake certificates can jeopardize the country's image—this can potentially ruin bilateral trade; relationships. Ghana further instructed traders and exporters to practice vigilance by taking immediate action against fraudsters.

COs are primarily classified into two subtypes.

#1 - Preferential CO

A preferential CO is used to allow the export and import of certain goods selectively. It is applicable to goods with exemptions, reduced tariffs, and curtailed custom duty charges.

These certificates fall under bilateral and multilateral free trade agreements. Usually, they are associated with regional trade agreements. Unfortunately, certificates with such caveats are rare—it is hard to acquire such certificates.

#2 - Non-preferential CO

A non-preferential CO is also called a normal CO. These products are not entitled to any preferential treatment through the import-export process. Instead, custom duties and trade charges are applied to these products by tariff regulations.

In international diplomacy, customs duties and charges control the exchange of goods between two countries.

Let us look at examples to understand COs better.

Example #1

Kane owns a company in the US; it manufactures earphones, Bluetooth speakers, battery-charged woofers, and audio gadgets. Initially, Kane sold only within the United States. Later, he expanded his business and started receiving orders from countries like Japan, India, and the UK.

To export products, a manufacturer requires an export certificate of origin. Imports follow the same protocol. In order to do that, Kane must register hits product with the chamber of commerce. This certificate is proof of verification—that all the products are manufactured, processed, and packaged within the United States.

For registration, Kane can opt for an online certificate of origin or fill out the form manually. For the manual method (offline), Kane has to attest all the required documents—commercial invoice, address proofs, and manufacturing location, and attach an affidavit. The customs officials treat the certificate invoice and packaging details as separate documents.

This document is mandatory—it is used to identify the nationality of a product. Every year the chamber of commerce issues millions of COs.

Example #2

Ajman is a city in the UAE; it has issued around 19000 COs worth Dhs4.3bn billion. The city has witnessed a surge of 13% in COs (compared to the previous year). Ajman chamber of commerce is interested in diversifying service channels to offer fast and flexible services.

These services can be accessed from ACCI's official website. In addition, Ajman's chamber of commerce released various commercial reports to its members and business owners. As a result, Ajman can identify global market opportunities that can boost local production and increase exports.

This article has been a guide to What is Certificate of Origin and its explanation. Here, we discuss its different types and examples. You can learn more about it from the following articles -

• Original Issue Discount
• Certificate of Deposit
• Documentary Collection