While there are various types of origin of goods approval methods in international trade, origin declarations, ordinary certificates of origin and preferential certificates of origin are considered to be the most used ones.
Understanding the importance of origin of goods
- Origin declarations are the simplest form of origin of goods approval methods. Exporters simply insert a standard origin declaration text to any of the commercial documents, that is all.
- Ordinary certificates of origin is one of the most common way to identify and certify the origin of goods in international trade transactions.
- Some countries have preferential tariff agreements. If imported goods have been originated in a preferential country, then it would be possible to apply for a discounted import tariff rates during import stage.
One of the core conditions to be able to get benefited from a preferential tariff rate would be evidencing the origin of the goods in an acceptable format to the customs authorities.
Today I would like to write about the issuing bodies of the certificates of origin on this article.
Understanding the importance of origin of goods
Example 1: Exporting Oranges to Egypt
Origin of the oranges would make a great impact on the import duties according to Egyptian import legislation.
If oranges are EU origin, then tariff rate is 0%, which means that European origin oranges could enter Egypt without any import duties.
If oranges are originated from another country, then 30% tariff rate will apply.
South Korea applies different levels of import custom tariffs to the potatoes.
If oranges are EU origin, then tariff rate is 9%. If oranges are originated in another country, then 27% tariff rate will apply.
How to Prove Origin of Goods in International Trade?
The most common methods to prove origin of goods in international trade are:
- Origin Declarations
- Non-Preferential Certificates of Origin
- Preferential Certificates of Origin
Example: South Korean exporters could indicate the origin of the goods with an declaration of origin written on the commercial invoice or any other commercial document such as delivery note or packing list.
Non-Preferential Certificates of Origin: Non-preferential certificates of origin are also known as ordinary certificates of origin. They certify the origin of a particular product but they do not entitle the holder for any preferential tariff rates.
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| Origin Declaration on a Commercial Invoice |
By submitting an ordinary certificates of origin, the holder proves the origin of goods but this does not give him an advantage in terms of favorable tariff rates.
Ordinary certificates of origin are issued and certified by chambers of commerce all around the world.
Preferential Certificates of Origin: Preferential certificates of origin allow importers to enjoy discounted tariff rates when importing goods from certain countries.
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| Ordinary Certificate of Origin |
Preferential tariff rates are determined between countries via trade agreements such as free trade agreement signed between USA, Mexico and Canada also known as NAFTA.
North American Free Trade Agreement Certificate of Origin, EUR1, GSP and Commonwealth Preference Certificates are the most well-known examples of preferential certificates of origins.
Preferential certificates of origin could be issued by different parties such as exporters, chambers of commerce, custom authorities in accordance with the respected regulations of each certificate.
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| Generalized System of Preferences Certificate of Origin Form A |
