Certificate of origin
Encyclopedia
A Certificate of Origin (often abbreviated to CO or COO) is a document
Document
The term document has multiple meanings in ordinary language and in scholarship. WordNet 3.1. lists four meanings :* document, written document, papers...

 used in international trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...

. It traditionally states from what country the shipped goods originate, but "originate" in a CO does not mean the country the goods are shipped from, but the country where the goodtion problem in cases where less than 100% of the raw material
Raw material
A raw material or feedstock is the basic material from which a product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state. Latex, iron ore, logs, and crude...

s and processes and added value
Added value
Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:...

 are not all from one country. An often used practice is that if more than 50% of the cost of producing the goods originate from one country, that country is acceptable as the country of origin
Country of origin
Country of origin , is the country of manufacture, production, or growth where an article or product comes from...

 (then the "national content" is more than 50%). In various international agreements, other percentages of national content are acceptable. This document has a dedicated equivalent for the (international) trade in the economic service of electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...

 called Guarantee of origin
Guarantee of origin
Since electricity is a commodity, it used to be impossible to claim any specific quality for a particular quantity of electricity. However the use of guarantees of origin is changing this...

.

When countries unite in trading agreements, they may allow Certificate of Origin to state the trading bloc as origin, rather than the specific country.

The document may be issued by the exporter or be confirmed by another party in the exporting country, such as a notary, a chamber of commerce, or a local consulate of the destination country. In many cases specific government-issued documents are required, such as for shipments under the North American Free Trade Agreement, or for preferential customs treatment in importing countries for shipments of processed/manufactured goods from less developed countries to developed ones (often referred to as the green CO form "A", or GSP (Generalized System of Preferences) Form A CO).

The CO is primarily important for classifying the goods in the customs regulations of the importing country, thus defining how much duty shall be paid. But it may also be important for import quota purposes and for statistical purposes, and especially for food shipments, it may also be important for health regulations.

Before concluding a transaction, the exporter and importer should always clarify whether a CO is required, and if so, agree on exactly the form and content of the CO.

A preferential certificate of origin is a document attesting that goods in a particular shipment are of a certain origin under the definitions of a particular bilateral or multilateral free trade agreement (FTA). This certificate is required by a country's customs
Customs
Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country...

 authority in deciding whether the imports should benefit from preferential treatment in accordance with special trading areas or customs unions such as the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 or the North American Free Trade Agreement
North American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...

 (NAFTA) or before anti-dumping taxes are enforced.

The definition of "Country of Origin" and "Preferential Origin" are different. The European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 for example generally determines the (non-preferential) origin country by the location of which the last major manufacturing stage took place in the products production (in legal terms: "last substantial transformation").

Whether a product has preferential origin depends on the rules of any particular FTA being applied, these rules can be value based or tariff shift based. The FTA rules are commonly called "Origin Protocols".

The Origin Protocols of any given FTA will determine a rule for each manufactured product, based on its HTS (Harmonised Tariff Schedule) code. Each and every rule will provide several options to calculate whether the product has preferential origin or not. Each rule is also accompanied by an exclusion rule that defines in which cases the product cannot obtain preferential status at all.

A typical value based rule might read: raw materials, imported from countries that are not members of this FTA, used in production do not make up for more than 25% of the Ex-Works value of the finished product.

A typical tariff shift rule might read: none of the raw materials, imported from countries that are not members of this FTA, used in production may have the same HTS code as the finished product.

The certificate of origin must be signed by the exporter, and, for a small number of countries, also validated by a Chamber of Commerce
Chamber of commerce
A chamber of commerce is a form of business network, e.g., a local organization of businesses whose goal is to further the interests of businesses. Business owners in towns and cities form these local societies to advocate on behalf of the business community...

 or local consulate of the destination country and notarized
Notary public
A notary public in the common law world is a public officer constituted by law to serve the public in non-contentious matters usually concerned with estates, deeds, powers-of-attorney, and foreign and international business...

.

Chambers of Commerce offer certificate of origin services, but their letterhead certificate is still only legalized by another person, such as a notary public. Companies may consult the WCN Chamber of Commerce Directory to find their nearest chamber who may offer this service.
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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