A Certificate of Origin, or CO, is a document used to authenticate the country of origin of merchandise being shipped. The Certificate of Origin may be required because of established Treaty arrangements, varying duty rates, and preferential duty treatment dependent on the shipment’s country of origin.
The Certificate of Origin verifies the country in which the goods were manufactured. Determining whether a Certificate of Origin is needed depends on the commodity being exported and its destination. Some nations may restrict or limit imports from certain countries. Other nations may give preferential treatment to goods manufactured in a specific country.
A traditional Certificate of Origin states from what country the shipped goods are originated in. However, “originated” here does not mean from what country the goods are being exported from. Rather, “originated” means what country the goods were manufactured in.
In some instances, a Certificate of Origin may be an informal one that is created and signed by the exporter. However, many countries insist on formal certificates. Formal certificates are obtained from an official body within the exporting country. A Chamber of Commerce is typically the official body that certifies Certificates of Origins.
Conflicts with the country of origin arise when a good has been manufactured in several countries. In this case the country of origin is determined by how much value is added in each country. A 50% value-added benchmark is often used to determine the country of origin. For instance, Mexico provides 100% of the raw materials, but the final product is manufactured in Germany. If the value-added in Germany is 50% or more of the sales-price, then the country of origin is Germany.
The NAFTA (North American Free Trade Agreement) Certificate of Origion is used by the United States (including Puerto Rico), Canada, and Mexico. This special Certificate of Origin is used to determine whether goods shipped between these nations qualify for reduced or eliminated duties specified by NAFTA. In order to obtain preferential treatment, the Certificate must be filled-out legibly and in full by the exporter. The Certificate must also be in the possession of the importer at the time the declaration is made.
- world trade image by Chad McDermott from Fotolia.com