Certificate of Origin - Explained
What is a Certificate of Origin?
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Table of Contents
What is a Certificate of Origin?When a Certificate of Origin is UsedWhat is the eCO Task Force?Academic Research on Certificate of OriginWhat is a Certificate of Origin?
The certificate of origin refers to the document used by the exporter to show the origin of goods when they reached the destination. The document is used to a certain the origin of the goods imported to satisfy financial or custom requirements.
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When a Certificate of Origin is Used
A Certificate of Origin (CO) is an important document in the international business that helps the exporter to prove the country of origin of the products. It is also used as a declaration by the exporter. The CO occurs in two different types which include; non-preferential and preferential.
A Non-Preferential CO certifies the country of origin of the goods but are not subject to any preferential treatment. On the other hand, preferential Cos certify the origin of the goods, and it is subject to preferential treatment such as reduced tariffs, and other exemptions.
Most of the traders in the international markets use the agents to the delivery of the trade documents to deliver their products to various destinations.
Besides agents, there are also international bodies such as customs authorities, or ministries in some countries that have the privilege to deliver these documents. Some of these organizations include ICC WCF International Certificate of Origin (ICO).
The issuance of such trade documents help the countries to avoid tax evasion, and many countries rely on the network of chambers and experts to deliver the documents. The delegation of these documents began after the signing of the Geneva Convention in 1923.
The ICC WCF International Certificate of Origin (ICO) Council was established to improve and promote the functionality of the chambers as the main agents for issuing trade documents. This was meant to be meet through Coordinated and vigorous lobbying with international, regional and national governments and agencies via ICC structures. These bodies are based on the guidelines stated on the international COs guidelines.
The achievement of the objectives is also based on the development of various training programs to improve the level of professionalism. The bodies also seek for liberalization of the issuance of the preferential COs. These guidelines present in details the procedures in the international trade for the issuance of both preferential and non-preferential COs. This set of international regulations enhances the trust and integrity of the CO accreditation chain the traders. That benefits both the international customs administrators and traders. The international guidelines;
- Enhances transparency in the standard procedures issuance
- provide a guarantee for responsible, independent, and accountable issuance
- ensure credibility to the COs issued by chambers of business
- increases the acceptance level bus the business and the custom administration
The CO manual covers:
- The purpose and use of COs;
- Language and definitions
- the authority and role of chambers;
- the region of issue;
- distribution and printing of forms;
- issuing and pricing fees;
- presents the process of issuing
- verification and determination of origin;
- validating documents;
- prohibitions and concessions;
- requirements for training;
- problems or changes in the certificates of origin;
- a supplement for CEOs; and
- Printable sample forms and letters
The widely used guidelines are translated into six languages. They are considered to contribute to the harmonization of the procedures for issuance. They also create an efficient and effective environment to carry out international trade. The ICC WCF focuses on assisting the t chamber leaders in promoting universal certification processes and standards to serve the chamber of commerce better, as well as customs administrations and traders.
The Accreditation Chain ascertains that chambers are globally interconnected and mutually responsible, assuring businesses, banks, traders, and customs administrations that COs are delivered in harmony with worldwide best practices. The accreditation of the chambers has many advantages to the members. Being a member of ICC WCF international certificate of guidelines help the traders to receive a high level of quality and transparency in the issuance of trade documents. Some of the benefits of becoming a member of CO Accreditation Chain include:
- strengthened credibility to CO issuing;
- increased level of acceptance by customs administrators and exporters;
- ability to offer an assurance of independent, transparent, trustworthy and accountable issuing processes;
- enhances security and defense against possible false declarations;
- an assurance of compliance with worldwide issuance standards; and
- the worldwide affiliation and acknowledgment by the use of ICC WCF CO label on CO forms.
The verification website for CO enable the custom administrators to a certain the authenticity of the COs issued to the traders by the accreditation chain. This platform helps in reinforcing the mutual trust between the customs authorities and the chambers. This occurs by ensuring that the COs issued to meet the international standards.
The chambers and the customs authorities only to develop unique codes that conform with the codes presents in the accreditation site. This provides access to the date of issuance, basic references, and the name of the applying company. The contact information of the issuing chamber is also present to the customs and accredited chambers members in case of legitimacy concerns. In the event, there are any legitimacy concerns. If a CO number is or not issued by an accredited chamber, an immediate notification will be sent.
Due to increasing concerns on fraud and the need to improve the security of the supply chain, the chambers provide an online CO service to create a secure and safe trading environment and also increase the transparency as well as saving costs and time. Electronic Certificates of Origin (eCO) on the other hand comprises of measures to safeguard the trade such as online verification of the authenticity of the document and the watermarking technology. The eCO also offer electronic application digital rubber stamps and the signatures of the authorized officials. This ensures a higher level of reduced costs, transparency, reduce costs and save time among exporters, importers, customs administrations, banks, and stakeholders.
What is the eCO Task Force?
Chambers of Commerce issue a many numbers of CO annually. Therefore, to maintain the rapid shift to e-Business and improve efficiency, eCO systems are considered to be appropriate by the chambers. In this regard, a dedicated task force was established and charged with the following missions;
- improving and increasing the level of appropriateness of eCO by stakeholders such as banks, customs administrations, importers and insurance companies.
- Safeguarding the confidentiality and the integrity of eCO details;
- Determining the standards required for the issuance of eCO;
- Creating awareness of eCO developments;
- Organizing forums and offer conferences for the new developments regarding COS
- Supporting the implementation of eCO services internationally.
Academic Research on Certificate of Origin
- On the use of FTAs by Japanese firms: Further evidence, Takahashi, K., & Urata, S. (2010). Business and Politics, 12(1), 1-15. This article examines the application of free trade agreements by the Japanese companies. The paper examines the use of free trade agreements (FTAs) by Japanese firms. The paper used the data from various Japanese companies to investigate analyze the concept. The study revealed that the rate of utilization of free trade agreements ranges between 32.9% (Japan-Mexico FTA) and 12.2% (Japan-Malaysia FTA).
- Rules of origin and the web of East Asian free trade agreements, Manchin, M., & Pelkmans-Balaoing, A. O. (2007). This paper focuses on the rules of origin and the development of the web of Asian free trade agreement. The authors present an overview of the preferential rules of origin in East Asia, outlining the factors that might create some trade-chilling effects.
- FTA utilization: certificate of origin data versus customs data, Hayakawa, K., Kim, H., Nuttawut, L., & Shiino, K. (2013). (No. 428). Institute of Developing Economies, Japan External Trade Organization (JETRO). This paper critically examines various elements that affect the gap in free trade agreements (FTA) utilization regarding the COs data and custom data about customs data. The authors focus on Thai exports to Korea under the ASEAN-Korea FTA in 2011. The study revealed that the products with the higher demand volatility or the products with a larger number of tariff-line products within the same harmonized system (HS) have a larger gap.
- Asian FTAs: Trends, prospects and challenges, Kawai, M., & Wignaraja, G. (2011). Journal of Asian Economics, 22(1), 1-22. This paper focuses on the trends, prospects, and challenges of free trade agreements in Asia. The paper also provides evidence from company surveys, analysis of specific agreements, and computable general equilibrium estimates. The author presents that the free trade agreement in the Asian economy has sparked discussion, especially on its negative effects. Despite the limited progress of the World Trade Organization's (WTO), global financial crisis and Doha negotiations, Asian free trade agreement has been in existence over a long period of time. The authors, therefore, recommend the strengthen the support system for using FTAs, rationalization of the rules of origin and upgrade their administration.
- ASEAN rules of origin: Lessons and recommendations for best practice, Medalla, E. M., & Balboa, J. D. (2009). (No. 2009-36). This article provides some lessons regarding the ASEAN rules of origin. The paper examines some designs and implementation practice in ROO system, focusing on RTAs where the ASEAN is involved. The author presents that rules of origin (ROO) has greater benefits that have increased considerably over the past years especially in the countries that free trade agreements and treat products differently. Rules of origin (ROO) set the criteria in determining the nationality of a product and where a product was made. The paper concludes by recommending simplification of ROO and various reforms on administrative procedures, bringing in the developing country dimension, and the rules to follow to improve ROOs. Rules of origin, trade, and customs, Brenton, P., & Imagawa, H. (2005). Rules of origin, trade, and customs. CUSTOMS, 183. This paper focuses on to provide a brief overview of research conducted on ROO to introduce prospective researchers to the issues and research methodologies used. The paper briefly considers the broader historical context of the proliferation and the underutilization of FTAs, including how ROO came to attract researchers' attention. It then examines studies on ROO and the aspects of ROO that have been the subject of research.
- Rules of origin under the North American free trade agreement: a substantial transformation into objectively transparent protectionism, LaNasa III, J. A. (1993). Harv. Int'l. LJ, 34, 381. This paper focuses on incorporating intermediate inputs into a small-union general-equilibrium model. The study developed the welfare economics of preferential trading under the rules of origin. The outcome of the study revealed that an FTA that lowers joint welfare of the union and is rejected in the absence of the rules of origin might become feasible in the presence of these rules.
- Maximizing benefits from FTAs in ASEAN, Hiratsuka, D., Hayakawa, K., Shiino, K., & Sukegawa, S. (2009). Deepening East Asian Integration, ERIA Research Report 2008, 1. The article investigates the reasons for maximizing benefits from free trade agreement in ASEAN using the econometric analysis. The study revealed that FTAs are selectively utilized whereby it is effectively used in the automobiles and textile industries and not properly utilized in the electronic, electrical machinery industries. It was also revealed that larger the company the more they are likely to utilize the FTAs.
- Taking stock of the ROOs in the ASEAN+ 1 FTAs: toward deepening East Asian integration, Medalla, E. M. (2011). (No. 2011-36). PIDS Discussion Paper Series. This paper examines the rules of origin (ROOs) of the ASEAN plus 1 FTAs such as ASEAN-Korea FTA, ASEAN Trade in Goods Agreement, ASEAN-Australia-New Zealand FTA, ASEAN-China FTA, ASEAN-Japan Comprehensive Economic Partnership. The authors provide further insights into the database compilation. The paper also proposes additional methodologies for examination, especially where the database from the ERIA FTA mapping project could be useful.
- FTAs and Philippine business: Evidence from transport, food, and electronics firms, Wignaraja, G., Lazaro, D., & DeGuzman, G. (2010). This paper examines the FTAs and Philippine business: Evidence from transport, food, and electronics companies. The study revealed that the utilization of AFTA is developed than anticipated from prevailing studies and is set to double in the future. The author presents that factors such as firm age, awareness of FTAs, domestic ownership, and membership in the transport sector increase the chances of using AFTA. The paper concludes by making the study for better mainstreaming of FTAs into national trade policy of Philippine and for advancing support services to companies.
- Origin Management, Van de Heetkamp, A., & Tusveld, R. (2011). (pp. 157-176). This paper discusses the origin management and their benefits to the companies that utilize FTAs. The authors present that the Origin Management is an effective approach to origin-related problems and offers firms with a well-defined set-up and auditable procedure so the firm can benefit from all preferential agreements existing to them.
- Validation of Route Origination Using the Resource Certificate Public Key Infrastructure (PKI) and Route Origin Authorizations (ROAs), Huston, G., & Michaelson, G. (2012). (No. RFC 6483). In this paper, the authors describe the semantics of the ROA (Route Origin Authorization) in the context of the resource certificate PKI (Public Key Infrastructure) application. The purpose is to confirm the validation of routes origination advertised in the BGP (Border Gateway Protocol) using PKI and ROAs. This paper is not an IST (Internet Standards Track) specification. It was published to spread information.
- Seafood traceability: current needs, available tools, and biotechnological challenges for origin certification, Leal, M. C., Pimentel, T., Ricardo, F., Rosa, R., & Calado, R. (2015). Trends in biotechnology, 33(6), 331-336. Today, consumers are better aware of the food traceability due to food safety alerts and market globalization. This is especially true for the seafood because it is perishable but the main protein source for us. This paper overviews the seafood traceability with the challenges and limitations to implementing it. The authors emphasize the molecular, geochemical and biochemical tools and the way, we should optimize them to implement on the international level and to fulfil our societal requirements. The authors conclude by suggesting seafood traceability as the main regulation of food safety, combat fraud and fisheries control and accomplishing all needs of consumers and producers.
- Meat traceability and consumer assurance in Japan, Clemens, R. L. (2003). Japanese consumers are highly aware of food safety and quality. The latest series of the national and global crisis of food safety examine the significance of meat safety among them. Their food industry and government are going to implement new strategies for wholesome food supply. This article evaluates the demand for these policies for meat retailers, importers and processors in Japan. The author elaborates the latest history of this crisis, a few strategies already being implemented and a potential need for assurance plans of imported goods and the United States and other exporters ability to provide food assurance.
- The role of the region of origin and EU certificates of origin in consumer evaluation of food products, Van der Lans, I. A., Van Ittersum, K., De Cicco, A., & Loseby, M. (2001). European Review of Agricultural Economics, 28(4), 451-477. This research examines the hypothesis that the European Union certificates of origin and region of origin stimuli, directly, affect domestic food preferences. The authors apply conjoint analysis to data on quality perceptions of consumers for additional virgin olive oils from Canino and Sabina areas of Lazio, Italy. The findings are that the Hypothesis is true but the impact is limited to particular consumer segments. The region of origin stimuli has a direct influence on domestic product preference for some users segments, specifically the residents. The authors did not find any direct impact of PDO (Protected Designation of Origin) labels on product preference.
- Conjoint effect of environmental labeling, disclosure of forest of origin and price on consumer preferences for wood products in the US and UK, Aguilar, F. X., & Cai, Z. (2010). Ecological Economics, 70(2), 308-316. This paper conjointly analyses the impacts of wood products pricing on consumer preferences, the disclosure of forest and environmental labelling in the United Kingdom and the United States. The authors used a selection-based elicitation tool to choose a single product from a set of options. Then, they analyzed the collected data with the help of a conditional Logit technique. The findings are that disclosing data of a product of tropical forests have a negative impact on consumer preferences. They observed a decrease in product preference with higher price premiums. Demographic features influenced the price changes. They used model coefficients to estimate the tropical wood products market shares.
- A profile for route origin authorizations (ROAs), Lepinski, M., Kent, S., & Kong, D. (2012). (No. RFC 6482). This paper presents a standard profile for ROAs (Route Origin Authorizations) which is an object providing a source of verification that block holder of an Internal Protocol (IP) address authorizes an AS (Autonomous System). This is digitally signed and for originating routes within the address block to 1 or more prefixes.
- Rules of origin under the North American free trade agreement: a substantial transformation into objectively transparent protectionism, LaNasa III, J. A. (1993). Harv. Int'l. LJ, 34, 381. This paper defines the Rules of Origin (ROA) mentioned in the North American agreement of free trade. ROAs are a significant aspect of trading activities that determine importing patterns commercially. Companies, which aim to buy cost-effective parts of products, think about how to define the origin and end product so that they may come to know the tariffs or entry conditions. It is a significant transformation into transparent protectionism, objectively.
- Certificate of Origin, Policy, C. I. (2017). Contract of Carriage, Single Administrative Document (da). This article explains the Certificate of Origin (CO) which is a significant global trade document certifying that products in a specific export shipment have been completely received, produced, processed or manufactured in a specific country. This CO was issued, stamped and duly signed by the official bodies of the Chamber of Commerce, Geneva Convention 1923. The exporter also makes the same declaration. Worldwide, all countries virtually consider the imported goods origin while determining the duty on the goods and all legal proceedings of import.
- The effect of attitudinal and sociodemographic factors on the likelihood of buying locally produced food, Cranfield, J., Henson, S., & Blandon, J. (2012). Agribusiness, 28(2), 205-221. This paper considers the factors linked to Canadian consumers intention of domestically produced food purchase. The authors analyzed data from a survey of 1139 consumers applying the Bivariate Probit Model. It is relevant to the factors of socio-demography, attitude and behaviour to the intention to buy fresh and unfresh domestically produced foods. The attitudinal factor affected the most. Positive views to local farmers, generally agriculture and food quality have a positive relation to buying intention. Brand specific quality importance has an inverse relation to buying intention. Consumers highly involved in preparing food from scratch or growing it, tend to buy local foods.
- Software Intellectual Property Management through Self-Claiming of the Certificate of Origin of the Source Code, Bei, L., & Yuan, S. (2013, June). In Computational and Information Sciences (ICCIS), 2013 Fifth International Conference on (pp. 613-615). IEEE. Open Source Software (OSS) is free to use, however, it has certain license obligations, one must meet. This research presents programmers claim process about COO (Certificate of Origin) of source code and a tool-based verification workflow of this claim for the management of software intellectual property in a project of software development. After 5 years of experience, the findings are that this process of COO self-claiming is helpful in identifying software components (might conflict with the licensing model of a project early in the process of software development), lessening the rework effort due to late improper content detection and minimizing legal issues risk of a company.
- European Regional Meeting on an Internationally Recognized Certificate of Origin/Source/Legal Provenance, Feit, U., & Wolff, F. (2006, October). In Report of an international workshop hosted by the German Federal Agency for Nature Conservation, Isle of Vilm, Germany (pp. 24-29). This paper is a comprehensive overview of the European regional meeting on the CO (Certificate of Origin) or the worldwide recognized certificate of legal provenance or source. This meeting was held on 24 to 29 of Oct 2006 in Germany (Isle of Vilm). It was not conducted to offer any agreed-on positions. It was rather restricted to express opinions. The authors have tried to bring the comments into consideration got from the participants of the meeting following the preliminary draft circulation.