Certificate of Origin of a given cargo is a document used in international trade transactions. It confirms the origin of goods exported from the country of consignment. Certificate of Origin is necessary for some product groups to be accepted on the market.
What is a Certificate of Origin?
Certificate of Origin is one of the documents used in the import-export procedure. It states the country of origin of the goods. It is the exporter’s obligation to apply for Certificate of Origin’s issuance. Nevertheless, it is not obligatory for all transactions.
Customs administration of an importer’s country requires a Certificate of Origin (C/O) to be provided for specific products, which differs from country to country. Some examples of such products are:
- textiles
- agricultural products and products of animal origin
- mineral products.
There are cases when the customs administration requires a Certificate of Origin for a specific product, and the importer fails to provide it. In such a case, the goods will not be released onto the market. The document not only applies to EU countries trading with countries outside the European Union but also to some transactions within the EU. Certificate of Origin also secures carrying out international transactions that require Letter of Credit or Bill for Collection (Documentary Collection).
Types of Certificate of Origin
Certificates of Origin can be classified into two general types: preferential and non-preferential.
Preferential Certificate of Origin
Customs administrations issue preferential Certificates of Origin for countries, which signed preferential agreements, e.g., member states of the EU, NAFTA, and ASEAN. Reduced duty rates can only be applied if the original document is presented at the customs office and has a reference to a commercial invoice. The Certificate of Origin number must be on the commercial invoice.
Non-preferential Certificate of Origin
Non-preferential Certificate of Origin is issued by the relevant economic self-governmental institution, which has established cooperation with similar institutions in other countries. Such a certificate identifies the production site in the same way as a preferential one. However, the goods are not subject to preferential handling, i.e., the importer cannot use reduced duty rates. This kind of document is beneficial when an embargo is introduced in a given country.
Both types of Certificate of Origin are used for various purposes, and different legal bases regulate their issuance. It is possible to obtain both a preferential and non-preferential certificate for a given type of exported goods. Only under specific regulations, it is possible to get two preferential certificates for one kind of goods. However, it is impossible to obtain two original copies of the same type of certification, which should be considered when concluding a business contract.