Certificate vs. country of origin
Abbreviation:
- CO
Definition:
- Usually marked in a “Made in” statement
- Exporter is responsible for this document
- Not required very often
- A document confirming in which country a good was manufactured
Purpose:
- Identifies where the product originated from
- Provides information about the goods to the country of import
- Sometimes needed for shipments to receive benefits of free trade agreements
- Confirms the status of the product
Example:
- “Made in China”
- If made in Italy, but shipped out of Germany, the CO will list Italy as the COO, not Germany
Steps to obtain a certificate of origin
Only exporters can issue a CO, and they must follow the steps below to acquire one for their shipment(s):
1. Determine products' COO
The COO is a section on the commercial invoice that is used when determining tariff rates. It also confirms the shipment’s legality and keeps track of the maximum quantity that can be imported into a country before incurring anti-dumping duty.
- How to determine the origin:
- Talk to the manufacturer to see if they can guarantee where the good is from. The marking on a good usually indicates where it is from as well.
- Wholly obtained or produced: A wholly obtained or produced good is produced entirely in one country with no foreign materials. If a good is made with imported materials or foreign labor, then a claim “Made in _____” (a single country) cannot be made. A good can only have the marking “Made in _____” (a single country) if it is made entirely of or nearly entirely of materials from a single country, with that same country’s labor.
- All goods of foreign origin must be marked indicating the product’s COO, and it must be legible and permanent.
- Substantial transformation: Substantial transformation is when a product goes through a considerable change compared to the item’s original form, resulting in a new use, name, and character. The Harmonized System (HS) code for a substantially transformed product is not the same as the original product’s code. If a good is substantially transformed, then the country where the good underwent the major change becomes the COO. Consider the following examples:
- Changing the color or print on a t-shirt does not change the COO.
- Assembling a screen, a computer chip, a battery, modems, sensors, and storage to create a smartphone does change the COO.
- Wholly obtained or produced: A wholly obtained or produced good is produced entirely in one country with no foreign materials. If a good is made with imported materials or foreign labor, then a claim “Made in _____” (a single country) cannot be made. A good can only have the marking “Made in _____” (a single country) if it is made entirely of or nearly entirely of materials from a single country, with that same country’s labor.
- Talk to the manufacturer to see if they can guarantee where the good is from. The marking on a good usually indicates where it is from as well.
2. Determine the certificate type
Definition:
- States that the goods do not qualify for preferential treatment
- Also referred to as “normal” or “ordinary” COs because this is the most common type of COs chambers can issue
Purpose:
- Used to apply for most-favored nation treatment (MFN) or for economic, political, or environmental reasons, including import quotas, boycotts, quantitative restrictions, countervailing or anti-dumping duties, etc.), such as regional, bilateral, and multilateral agreements
Purpose:
- Allow qualified products to be more competitive in foregin countries due to a 0% or highly discounted duty rate
- If shipped without a preferential CO, may receive standard tariff rate
- However, not all FTA shipments require COs; usually a simple declaration that contains data and information of how the product qualifies for an FTA is sufficient
- To determine what documentation is required, there must be communication between the retailer, consumer, and carrier
3. Contact local authority
The exporter’s chamber of commerce can help with the process of acquiring a CO. They can also let exporters know what is needed for certificate approval. Here is how it works:
- Provide the manufacturer's invoice or commercial invoice to show where the goods originate from.
- Fill out the CO document.
- Submit a notarized CO document and its corresponding invoices to the local chamber of commerce.
- Pay any applicable stamp fees for the documents that need to be stamped.
Additional CO information
When a CO is required
The CO contains information concerning the product, the shipment’s destination country, and the COO. A CO is not required for most shipments, but it is sometimes needed for shipments to receive the benefits of applicable free trade agreements.
Free trade agreements may require a CO to prove to the country of import’s customs authorities that the goods are eligible for import altogether or if the good qualifies for reduced import fees. If a good qualifies, it receives preferential treatment. Preferential treatment is when a qualifying import reaps benefits, such as reduced or exempted duty, based on the classification of the goods and the COO. However, there are scenarios where a CO is not needed to get a preferential duty rate. For example, USMCA only requires the certificate for shipments over 2,500 USD, but shipments valued below the threshold can still get the preferential tariff without the CO. Retailers should check the details of trade agreements to see what is required.
In addition to fulfilling trade agreement requirements for import and preferential treatment, COs are required for the following:
- Economical, political, or environmental reasons (import quotas, boycotts, or countervailing measures)
- Retailers should check the details of the trade agreement to see what is required. Sometimes it is a certificate, but not always.
- Plant and animal products that are subject to the Convention on International Trade in Endangered Species (CITES) agreement
While COs are usually requested by customs, banks, private stakeholders, and importers, if it is unclear whether or not a CO is needed, retailers can check with their local chamber of commerce. The local chamber of commerce refers to the exporter’s local chamber of commerce. Another reliable resource to check is the International Trade Administration. If retailers are trying to qualify their shipments for preferential treatment, then they should check the free trade agreements in which they are engaging. Trade agreements state if a certificate is required or if just the COO on the commercial invoice is sufficient.
Components of a certificate of origin
- The name and contact information of the product manufacturer, export agent, and import agent
- A description of the good(s), including HS codes
- The quantity, size, and weight of the item
- An air waybill or bill of lading number
- Transportation of the product
- A commercial invoice of payment, including the date
Paper or digital form
Certificates of origin can be in paper or digital form:
- Paper: The tangible form of the certificate that is obtained by the exporter contacting their local chamber of commerce for assistance or following the steps outline above in
- Electronic: The necessary documentation to verify the validity of the product's origin must be submitted online to obtain an electronically issued CO. Once the documents are verified, the exporter’s chamber of commerce then stamps the electronic certificate in less than 24 hours or (reverting back to the physical form) a paper certificate is expedited to the exporter overnight.
What a certificate of origin looks like:
Consequences of not complying with certificate of origin requirements
Failure to comply with the certification regulations, whether it is the exporter or any person involved in creating the required certification, can result in the following consequences:
- Duties and monetary penalties
- Denial of any further shipment by the retailer into the country of import
Example: In 2022, a Utah-based company, Lions Not Sheep, owned by Sean Whalen, claimed that their products were made in the U.S. The company had been replacing the “Made in China” tags and putting on their own fake “Made in the U.S.” tags. Whalen has been ordered to pay over 200,000 USD and cease all fraudulent claims.
Frequently asked questions
Do all countries accept electronic certificates of origin?
Electronically issued certificates of origin are not accepted in all countries as of 2023.
Will a CO automatically get my products preferential treatment?
No, preferential treatment is based on the classification of the goods (the HS code) and the COO. If the product’s HS code and COO qualify for a reduced duty rate, then a CO may be needed. Other times, the COO on the commercial invoice suffices.
How do I check to see if my products get a preferential duty rate or qualify for a free trade agreement?
You should check the free trade agreements from which you are trying to get preferential treatment. Trade agreements state which documents are required.
Certificate and country of origin
Learn about certificate and country of origin.A certificate of origin provides information about the goods in a shipment to the country of import, allows certain shipments to qualify for duty reductions or exemptions, and confirms the product’s validity. Determining a product’s country of origin and providing a certificate of origin to customs is required for particular goods.