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—for example, a good may be 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 verify that goods aren't from a country subject to trade sanctions or restrictions or produce goods under unethical or exploitive conditions.
In the U.S., COs are now primarily electronic. Americans can obtain them from the American World Trade Chamber of Commerce (AWTCC), accredited by the International Chamber of Commerce (ICC) to provide them. Below, we explain what COs are, why they are important, and how they are obtained.
Key Takeaways
- A certificate of origin (CO) records the country of origin that an imported good has come from.
- The CO is often mandated by importing countries and included in trade agreements, as it is used 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 truncated versions that verify they qualify under a free-trade agreement.
Understanding Certificates of Origin (COs)
COs are important 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, such as sweatshops or forced labor. This transparency can support those wanting to take action based on ethical, environmental, and socioeconomic considerations.
For governments, COs are essential in enforcing trade policies and upholding national security and foreign policy objectives. Customs officials rely on 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.
They are also vital for implementing international treaties and agreements to protect the environment, such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora. By mandating COs for certain products, governments can better monitor and regulate the trade of endangered species, combat illegal wildlife trafficking, and promote the sustainable use of natural resources.
Chambers of commerce, designated government agencies, or other authorized bodies in the exporting country issue COs. They include essential information such as exporter and importer details, a description of the goods, the country of origin, and a digital signature and verification from the issuing authority.
To obtain a CO from the AWTCC, exporters can register in the AWTCC's online certification system. They can submit their applications electronically any time of the day, seven days a week, and receive their certificates within the next business day. The certificates issued by the AWTCC display the ICC accreditation logo and can be verified electronically by customs authorities worldwide.
Exporters must ensure that their COs are accurate and follow the relevant international rules and guidelines. Failing to do so can lead to delays in shipping, additional fees, or the goods being turned away altogether.
Sometimes, the destination customs authority may request proof of review from a specific chamber of commerce. Chambers of commerce usually only certify verifiable information. However, if presented with a declaration attesting to commercial details that can't be checked, the chamber will digitally stamp the document and attest to the position and identity of the signatory.
In addition, the buyer may require a CO in a letter of credit as part of the documentary requirements. The letter of credit may specify additional certifications or language that must be included in the CO for it to follow requirements.
Digital Applications and Certificates
The CO process is increasingly paperless. Many countries offer an online CO service, allowing exporters to apply and obtain certificates online. This has made getting a CO a lot quicker and easier.
With an electronic CO, you can submit the 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 issues the rules about COs and maintains a verification website for certificates, which are widely used by customs authorities, banks, and other parties involved in international trade compliance.
Types of Certificates of Origin
There are no standard CO forms in global trade, but a CO, usually prepared by the exporter of goods, has at least the essential details about the product being shipped, a tariff code, the exporter and importer, and the country of origin. The exporter, with knowledge of the specific border control requirements at the importing country, will document these details, get the CO notarized or electronically confirmed by a chamber of commerce, and submit the form.
The details required depend on the type of goods being exported and where they are going.
The two main types of COs are nonpreferential and preferential.
Nonpreferential COs
Nonpreferential COs, also known as ordinary COs, indicate that the goods do not qualify for reduced tariffs or tariff-free treatment under trade arrangements between countries.
If an exporting country does not have a treaty or trade agreement with the importing country, an ordinary CO is used. If a particular product being shipped has been excluded from tariff relief, it also must be declared using an ordinary CO.
Preferential COs
Preferential COs are for goods that qualify under a free-trade agreement for reduced tariffs between countries. For example, exports between the United States, Mexico, and Canada are exempt under theUSMCA free trade agreement. They would be shipped with a preferential CO. A commercial invoice or bill of lading is used in these and similar cases.
In the U.S., the Generalized System of Preferences (GSP) was enacted by Congress in 1974 to promote economic development in developing nations and eliminate duties on thousands of products imported from over 100 countries, given this status. Countries like Bolivia, Cambodia, Haiti, Namibia, and Pakistan are presently on the list, as are many other developing countries. The EU and countries worldwide have their versions of a GSP to foster economic growth through trade with friendly nations.
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. These forms can be found on the AWTCC platform.
Steps for Obtaining a Certificate of Origin
The ICC has an online platform to assist in issuing and verifying electronic COs. Third parties, too, can be used to help with the process. For the ICC, here are the steps:
- Registration: Exporters or their authorized representatives must register with an accredited chamber of commerce. Registration is done through the chamber's online platform.
- Apply: Once registered, the exporter can log in to the chamber's online system and submit an application for a CO. This involves providing detailed information about the shipment, including the exporter's and importer's details, a description of the goods, the country of origin, and other relevant information.
- Verification: The chamber of commerce will review the application to ensure it follows the relevant international rules and guidelines. This may involve verifying the origin of the goods and ensuring that all required documentation is in order.
- Issuance: Once the application is approved, the chamber will issue an electronic CO. This typically has a unique identification number and security elements like a QR code for verification.
- Verification by Importing Country: The importer or customs authorities in the destination country verify the authenticity of the CO using the ICC's CO verification platform. They can confirm its validity by entering the unique identification number or scanning the QR code on the CO.
Accredited companies can create valid certificates on your behalf and get them certified by chambers of commerce. All you need to do is provide them with all the relevant information and wait for the certificate.
What's Included in a Certificate of Origin?
Certificates of origin will typically contain the following information:
- The name and contact information of the producer of the product, including the country of origin
- The name and contact information of the exporting agent
- The name and contact information of the receiver/importing agent
- A description of the good(s), including the appropriate product codes
- The item's quantity, size, and weight
- A waybill or bill of lading number
- The item's means of transportation and route information
- A dated commercial invoice of payment
Why Do You Need a Certificate of Origin?
Certificates of origin serve several purposes. Above all, they satisfy custom requirements in the country where the items are heading and determine the amount of duty to pay. Certain goods may qualify for tariff reductions or exemptions if they originate from a certain country or are of a certain type.
Can I Produce My Own Certificate of Origin?
Only exporters can issue a certificate of origin. Contact your local chamber of commerce (or similar authority) to learn more about the process and what is needed for approval.
Is a Certificate of Origin the Same As a Title?
COs state a product's origin with its export and import information. However, it does not provide a title in the sense of a legal transfer of ownership of the good. This is done via a separate transaction involving an invoice or similar proof of sale.
The Bottom Line
A CO is a document used in international trade to identify a product's country of origin. The CO will also detail the product's specifications and the identities of the exporter and importer. The CO is used for customs purposes, especially when a tariff or other import duty is required. Preferential COs are used when a free-trade agreement is in place, in which case less information and scrutiny are needed. Exporters are responsible for issuing and filling out a CO, which is then endorsed by the relevant chamber of commerce.
