Certificate of Origin (Encyclopedia of Business)
A certificate of origin is a document attesting to the country from which a product or good is imported or the source country of any or all parts or materials that went into the completion of the product. Certificates of origin may be issued by various responsible organizations or institutions including chambers of commerce and national consulates. A certificate of origin is required of all goods imported into the United States.
Many countries require a certificate of origin for all imported goods while other countries may require such a document only on specified goods. A certificate of origin may be required for a variety of reasons including statistical record keeping or tariff schedules that may be part of a treaty such as the North American Free Trade Agreement (NAFTA). Certificates of origin also have political ends and may be employed during boycotts such as the one imposed on the Union of South Africa during the 1980s and early 1990s.
The certificate of origin document is usually a standard or generic form and is usually available from a country's consulate. Some importing countries, however, require their own specific forms. After completion, the form is then certified, usually by a chamber of commerce and returned to the respective official to be stamped and signed. There may or may not be nominal fees imposed for this service. Certificates of origin are generally lengthy and require the following information: exporter and importer; any intermediate agents such as customs brokers; freight forwarder; invoice and purchase order number; bill of lading or air waybill number; country of origin; export date and references; port of embarkation; carrier and planned route; physical description, including number of packages, gross and net weight, description of merchandise, and description of package markings; and the exporter and source of certification.
A certificate of value and origin also includes the value of the merchandise. A negative certificate of origin states that goods, final products, or any parts thereof did not originate in a particular country.
The North American Free Trade Agreement has rules requiring "NAFTA Certificates of Origin." NAFTA is a trade agreement between the United States, Canada, and Mexico intended to gradually reduce and then eliminate import duties on products originating in one or more of these countries. In order to qualify for a reduced rate of duty a product must be an "originating good" under NAFTA origin rules and there must be a certificate of origin supporting this claim.
The certificate of origin is prepared by the exporter or manufacturer and is not required to be filed with customs but it must be kept by the importer for five years. During this time customs may request to see the document and a fine of up to $100,000 may be imposed if the document cannot be produced. Under NAFTA regulations if there is an error in the certificate of origin the importing country has the right to "reach into" the exporting country to verify the accuracy of the document. This differs from most other situations whereby redress would be sought against the importer operating in the aggrieved importing country. This NAFTA regulation thus prevents a "safe haven" by virtue of being in a foreign country.
If the issuer detects an error in a certificate of origin, notification must be made within 30 days of detecting the error. Penalties against an exporter for falsifying a certificate of origin begin at $10,000 and can become significantly higher if the mistake was due to "gross negligence or intentional misrepresentation." If the importer is found at fault the products covered by the certificate of origin can be rerated at a higher non-NAFTA most-favored nation rate of duty. Importers can also be liable for fines of $10,000 or higher.
Generally, certificates of origin and other similar documents are lengthy and time consuming to complete. This is particularly true when they are done on a typewriter. The BASF Corporation, in an effort to reduce paperwork, has recreated a NAFTA Certificate of Origin electronically. The company now maintains an electronic file of completed certificates which expedites storage as well as auditing and compliance requirements.
"Certificate of Origin." Traffic Management, August 1990, 87a.
Hild, Kenneth. "The NAFTA 'Certificate of Origin." Export Observer Online, February 1996. Available from www.unzexport.com/observer/past/nafta.html.
Shayne, William C. "Why Do I Need a NAFTA Certificate of Origin?" 1996. Available from www.unzexport.com/observer/Nov96/nafta.html.