Certificate of Origin: Why It’s Crucial for International Trade

A Certificate of Origin is an important commercial document which plays a vital role in international trade. It states the country where the goods in the shipment are obtained, produced, processed and manufactured. Besides the information about the goods in a consignment, the certificate is also essential to determine if the goods comply with the trade agreements. It also helps in customs clearance processes, as it informs customer authorities about the correct imposition of taxes. As per a study by WCO, the Certificate of Origin can be digitised in the future. It thus becomes essential to know the intricacies of the Certificate of Origin.
In this article, we will learn the definition of a Certificate of Origin, the types of Certificates of Origin, the process of obtaining a Certificate of Origin, and other important aspects.
What Is a Certificate of Origin?
When it comes to the meaning of Certificate of Origin, it is the document used in international trade. It verifies the origin of the goods being exported and is critical for determining which taxes will be levied according to trade agreements. It is also known as the country of origin certificate.
Some of the details that are mentioned on the Certificate of Origin are:
- Name and the address of the exporter
- Manufacturer Details
- Description of the product
- The country of origin
- Quantity and weight of the product
- Importer details
- HSN code
- Modes of transportation
- Invoice number
- Digital signature
- Verification from the issuing authority
Significance of a Certificate of Origin in International Trade
Since the Certificate of Origin for export contains all the details about a shipment, it plays a pivotal role in international trade. Below is the list of the importance of the COO:
- It ensures smooth transit of goods across the borders by providing all the necessary information about the shipment to the customs authorities.
- The Certificate of Origin ensures compliance with international tax and trade regulations, allowing companies to benefit from favourable international trade conditions.
- The tax rate and tariff applicable to the exported goods are decided based on the Certificate of Origin. This document is detrimental and helps determine trade measures to be taken on the exported goods.
- Some countries can qualify for preferential treatment, and a COO can be a deciding factor in whether they receive preferential treatment or not. It also helps avoid duties under different trade agreements.
- It also helps access the international market, where the Certificate of Origin is mandatory.
- A Certificate of Origin helps maintain accurate statistics and records for economic analysis.
- It serves as a critical document in resolving disputes relating to the origin of goods between countries.
Different Types of Certificate of Origin
There are two categories of Certificate of Origin, and they are explained below:
- Non-Preferential Certificate of Origin
It is an ordinary certificate that contains information about the exporter and other important details about the shipment. These details signify that the shipment of goods is not qualified for preferential treatment under a trade agreement. Hence, the exporting country must pay the normal tariffs and taxes as per the agreement.
- Preferential Certificate of Origin
As the name suggests, preferential COO indicates that the type of goods shipped by the exporter can avail of preferential treatment under the trade agreement. With the preferential COO, the exporter can get reduced tariffs and certain exemptions under the free trade agreements.
For example, exports between Mexico, the United States, and Canada are provided with exemptions under the USMCA free trade agreement. When trade occurs between these countries, a preferential Certificate of Origin is required. However, in some cases, a bill of lading or commercial invoice can also suffice.
Who Issues A Certificate of Origin?
The Chamber of Commerce primarily issues Certificates of Origin, but certain government agencies and trade associations also have the authority to do so.
However, the DGFT (Directorate General of Foreign Trade) or the Union Ministry of Commerce and Industry should authorise the issuing body.
How To Get a Certificate of Origin?
Obtaining a COO requires several steps, which are mentioned below:
Check Eligibility
The first step in obtaining a Certificate of Origin is to check if the products you are exporting are eligible for application according to the importing country’s trade regulations and agreements.
Collate Documents
Once you know you are eligible, the next step is to gather the documents required to obtain the COO. Some of the documents/information that you would need include:
- Duly filled COO form
- Invoice
- Packing list
- Bill of lading
- Cover letter
- Product Description
- IEC Code
- Digital signature certificate
- Purchase order from the importer
- Shipping bill
- Cover letter
Application
Complete the Certificate of Origin application form and attach the required documents. Then, submit it to an authorised body that issues the COO.
COO Type Selection
Based on the trade agreements with the importer’s country, select whether it will be a Preferential COO or a non-preferential COO.
Verification
The authorised body will conduct verification to check the authenticity of the submitted documents and the origin of the goods. Further enquiries or inspections might be necessary.
Payment of Fees
Once the inspection is satisfactorily completed, you can pay the fee. After the payment, the authorities will issue the COO.
You can now include the COO with the shipping documents for smooth customs clearance. Also, if the customer authorities have any further requirements, you can coordinate with the issuing authority for next steps. This can also be done in case of discrepancies.
Also read – MSDS Certificate: Essential Guide for Safety and Compliance in India
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Conclusion
A Certificate of Origin (COO) is one of the key documents when an exporter exports goods to another country. It is essential for a smooth customer clearance process and compliance with trade regulations, and it also helps in availing of application tariff exemptions, if any. Whether the goods are being exported to a country with which the country of origin has a Free Trade Agreement or not, a COO is necessary. Depending on the destination country, an exporter can choose a preferential Certificate of Origin (COO) or a non-preferential one. A DGFT-authorised body can issue a COO; hence, it is necessary to submit proper documents to the issuing body to receive a COO.
Related – Certificate of Conformity in Global Trade
FAQs About Certificate of Origin
What is the Certificate of Origin used for?
A Certificate of Origin (COO) helps verify the country of origin for exported goods. It is also a necessary document for knowing the applicable tariff rates and maintaining compliance with trade regulations.
Can a Certificate of Origin be availed online?
Yes, it can be availed of electronically. The process to obtain a COO has to be completed online.
What is the difference between a Preferential COO and a Non-preferential COO?
Preferential COOs are COOs that certify that the goods being exported qualify for reduced tariff rates as per trade agreements. On the other hand, Non-preferential COOs are ordinary COOs which certify that goods do not qualify for reduced tariffs.
What details are present on the COO?
The Certificate of Origin contains details about the manufacturer, the exporter, the importer, a product description, the weight and quantity of goods, the country of origin, a commercial invoice, and shipping details.
Who issues a Certificate of Origin?
A Certificate of Origin is issued by bodies authorised by the DGFT (Directorate General of Foreign Trade). In India, the COO is authorised and issued by the Indian Chamber of Commerce (ICC) and the Trade Promotion Council of India (TPCI).