Guide to compliance for international shipping

For businesses engaged in international trade, the Certificate of Origin (CO) is a vital document. It certifies the country where the goods were manufactured, which can significantly impact duties, taxes, and compliance with trade agreements. In other words, this certification is crucial for customs authorities in the importing country, as it helps them determine the correct levies to apply. 

Additionally, the CO verifies that the goods meet the requirements of any applicable trade agreements, such as the U.S.-Mexico-Canada Agreement (USMCA) and its predecessor NAFTA, which can provide tariff benefits and facilitate smoother trade relations.

This guide will go beyond the definition to go over the contents and uses of a Certificate of Origin, and provide tips to ensure it’s correctly prepared and utilized.

What is included in a certificate of origin?

Navigating the complexities of international shipping can be challenging, but understanding the CO is a crucial step in ensuring trouble-free cross-border transactions. A comprehensive Certificate of Origin should include the following key elements:

Exporter Information – The name and address of the exporter are essential details that provide a point of contact for customs authorities. This information ensures that the exporter can be easily identified and contacted if there are any issues or questions regarding the shipment.
Consignee Information – Similarly, the name and address of the consignee, or recipient, must be included. This ensures that customs authorities know exactly who is receiving the goods and where they are headed.
Description of Goods – A detailed description of the goods being shipped is necessary. This includes the quantity, unit price, and total value of the goods. Providing clear and precise descriptions helps customs officials verify the contents of the shipment and ensures that the correct duties and taxes are applied.
Country of Origin – The country where the goods were manufactured must be clearly stated. This information is critical for determining the applicable duties and for ensuring compliance with trade agreements that may offer reduced tariffs or other benefits.
Certification – A statement certifying the origin of the goods is required, often signed by an authorized body such as a Chamber of Commerce. This certification adds an additional layer of verification and credibility to the document, helping to prevent fraud and ensure accuracy.

What is the Certificate of Origin used for?

The Certificate of Origin is used for several important purposes in international trade:

Verifying the Origin of Goods – Customs authorities use the CO to verify the origin of the goods being imported. This verification is essential for determining the correct duties and taxes that need to be applied to the shipment.
Ensuring Compliance with Trade Agreements – Trade agreements, such as the aforementioned USMCA and NAFTA, provide various benefits like reduced tariffs or duty-free treatment for goods that meet specific criteria. The CO helps customs authorities determine whether the goods qualify for these benefits, ensuring that both the exporter and importer can take full advantage of applicable trade agreements.
Facilitating Smooth Customs Clearance – Having a properly prepared Certificate of Origin can expedite the customs clearance process, reducing the likelihood of delays, fines, or other issues that can arise from incomplete or inaccurate documentation.

How the Certificate of Origin can save your company money

The Certificate of Origin can save companies money when properly included in multiple ways. A particular example is a provision in the Harmonized Tariff Schedule of the United States (HTSUS) that allows for a partial duty exemption for U.S. goods assembled abroad if they are made with U.S. components. 

This exemption is provided under subheading 9802.00.80 and applies to articles that are exported from the U.S. in a condition that allows them to be assembled without further fabrication.

If the assembled products are then imported back into the country, the company only has to pay customs duties for the foreign goods within the assembly. The U.S.-made components will not be subject to customs duties. Thus, having the country of origin certificates for all the US components within a produced assembled abroad will allow your company to reduce its customs duty obligations on its imports.

Beyond that example are the previously noted savings realized from a trouble-free customs process including on-time delivery and lack of detention or storage fees, as well as savings from properly applied trade agreements.

Tips, Tricks, and Common Mistakes

Ensure Accurate Information – Ensure all details on the CO are accurate and match other shipping documents, such as the commercial invoice and bill of lading. Inconsistent information can lead to delays, increased scrutiny, and potential fines.
Obtain Proper Certification – Obtain certification from an authorized body, such as a Chamber of Commerce. This adds an extra layer of credibility to the document and helps prevent fraud. Ensure that the certification is up-to-date and complies with the requirements of the importing country.
Keep Copies – Retain copies of the Certificate of Origin for your records. This practice not only helps in case the original document is lost or damaged but also provides a reference for future shipments and audits.
Stay Informed – Keep updated on changes to trade agreements and regulations that may affect your shipments. Trade laws and agreements can change, and staying informed ensures that your documentation remains compliant and that you can continue to benefit from any applicable trade advantages.

Conclusion

The Certificate of Origin is a critical document in international trade, serving as proof of the goods’ origin and helping to determine the correct duties and taxes. By ensuring that your CO is accurately prepared and properly certified, you can facilitate smoother customs clearance, comply with trade agreements, and potentially save on tariffs.

At InTek Freight & Logistics, Inc., we are here to support you with expert advice and comprehensive freight services to make your international shipping experience as seamless as possible. With our commitment to excellence, we can provide the support you need to ensure your shipments arrive on time and in good condition.

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