Certificate of Origin (COO) and Free Trade Agreement (FTA) are export worthy documents in the foreign trade sector in an aim to ease exports and imports between countries. Foreign trade companies ought to get acquainted with such terms—i.e., the COO in shipment, certification of origin, and certificate of origin for export process—to enjoy reduced customs duty and to escape trading regulations non-compliance.
Origin certification is a report that confirms the imported products are manufactured, made, or processed in a particular country. Most utilized certificates by most exporters to validate statements in their customs declaration are the statement of origin of manufacturer and certificate of origin country. Knowing what a certificate of origin is and how the certificate of origin meaning fits into the greater trade picture can assist exporters in maximizing the benefits of Free Trade Agreements and preventing expensive document mistakes.
A new comer at the beginning of trading, perhaps an experienced exporter, being aware of the certification of origin process keeps your company running smoothly across international boundaries.
Understand Free Trade Agreements (FTAs)
Free Trade Agreement (FTA) refers to a pact between two or more nations aiming to eliminate or minimize trade barriers in the form of tariffs, quotas, and prohibitions on the import of goods and services. Through the removal of such trade barriers, FTAs create greater ease of market access, expand economic cooperation, and expand levels of bilateral trade.
India has signed various FTAs with countries like Japan, South Korea, and countries of ASEAN to get maximum export benefit. Indian manufacturers have an opportunity to compete in the global market through the provision of preferential rates of duty as facilitated—under the condition that the manufacturers be in a position to define place of origin of trading by way of providing sufficient documents such as an export certificate of origin.
Products satisfying some "rules of origin" can be preferentially treated in the majority of FTAs. These rules are the provisions on which conditions are put while determining in what country a product is manufactured. To qualify under such preferments, exporting entity is required to manufacture a valid certificate of origin or COO in shipping documents.
Types of FTAs India Has Entered Into
India has been a keen participant in various FTAs to enhance its trade relationships across the globe. Some of the major agreements are:
- ASEAN-India Free Trade Agreement (ASEAN-India FTA)
- India-Singapore Comprehensive Economic Cooperation Agreement (CECA)
- India-Korea Comprehensive Economic Partnership Agreement (IKCEPA)
- India-Japan Comprehensive Economic Partnership Agreement (IJCEPA)
- India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement
- India-UAE Comprehensive Economic Partnership Agreement (IUCEPA)
- India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA)
- India-European Free Trade Association (EFTA) Free Trade Agreement: A treaty with Switzerland, Norway, Iceland, and Liechtenstein for increased trade cooperation.
- India-Sri Lanka Free Trade Agreement (ISFTA)
- South Asian Free Trade Area (SAFTA: A SAARC level agreement to increase regional trade.
- Global System of Trade Preferences (GSTP): India is a signatory to this UN-based system granting preferential tariff treatment between developing countries.
- Global System of Preferences (GSP) Scheme: Differential treatment by selected developing countries is provided by India with a perspective to nurturing exports and fostering economic interconnections.
- India-Chile Preferential Trade Agreement (India-Chile PTA)
- South Asia Preferential Trade Agreement (SAPTA): A prelude to SAFTA, with the objective of promoting intra-SAARC trade.
- India-Thailand Early Harvest Scheme
- India-Mercosur Preferential Trade Agreement: For promoting trade with Mercosur partners, viz., Brazil, Argentina, Uruguay, and Paraguay.
- India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA)
- India-Asia-Pacific Trade Agreement (APTA)
What is a Certificate of Origin?
Certificate of Origin (COO) is a mandatory international trade certificate stating that the exported goods are solely sourced, manufactured, produced, or processed from the named country. That is, it verifies the certificate of origin of the exported goods.
It is a genuine affirmation—most often by some competent body such as a Chamber of Commerce or export promotion council—who testifies the location where an article has been manufactured. Certificate of origin is not formalism; it affects duties charged on products, FTA benefit eligibility, and customs clearance time.
Certificate of origin is required by the importing nations for treatment of tariff and for compliance with trade policy. For example, in case the Indian exporter is shipping to Japan under India-Japan CEPA (Comprehensive Economic Partnership Agreement), the exporter must furnish a certificate of origin for export in order to obtain preferential duty rates under such an FTA.
Types of Certificates of Origin
The certificate of origin may differ depending on the terms of trade or requirements of the destination country. Two are available:
1. Preferential Certificate of Origin
This is applied in the case of merchandise which qualifies for preferential customs duties under specific Free Trade Agreements. Exporters need to comply with stringent rules of origin, local content or processing percentage requirement to qualify. COO on export at shipping under an FTA guarantees that custom authorities charge preferential duties.
2. Non-Preferential Certificate of Origin
Also known as a "normal" certificate of origin, it is used for export to the countries which are not under FTA. It provides no duty benefit but may be required for general trade certification, anti-dumping duties, or statistical reasons.
Both these situations require the maker's statement of origin and supporting records—i.e., invoices, bill of material, or production records—to be in position to guarantee correct origin certification.
Significance of Certificate of Origin in Shipping
Shipping's Certificate of Origin is the goods traveler's passport from border to border. It provides customs personnel, freight forwarders, and importers assured information on where something has been made and upon what FTA benefits it can benefit.
Without a genuine certificate of origin, exports are liable to be delayed, pay additional tariffs, or be refused upon arrival at the port of destination. Therefore, the correct certificate of origin for export is to facilitate smooth customs clearance and cost savings as a result of preferential duty.
Besides this, every country nowadays allows electronic COO in shipping so that exporters can file and obtain certification of origin electronically. Digitalization is saving processing time, cutting paperwork, and enhancing transparency in trade.
Role of Manufacturer's Statement of Origin
Manufacturer's statement of origin is a supporting document which is compulsory and used by the exporter to ascertain the origin of the product. Manufacturer's statement of origin is a manufacturer's self-declaration regarding how and where the product has been produced.
The manufacturer's statement of origin is largely scrutinized by the customs officials and chambers of commerce prior to the issuance of a proper certificate of origin on export. In the case of several stages of production involving several countries, the statement ensures that the end product conforms to the FTA rules of origin.
As an example, if a product from India relies on raw material imports, the origin statement of the manufacturer will be helpful to determine whether the finished product is "Made in India" for some trade agreements.
The Certification of Origin Process
The steps to take when applying for certification of origin are as follows:
1. Verify eligibility under FTA – Determine whether the importing nation has an FTA with your country.
2. Obtain manufacturer data – Get the statement of origin and production records from the manufacturer.
3. Preparation of documents – Provide invoices, packing slips, and shipping documents.
4. Submit COO application – Visit the authority concerned, i.e., a Chamber of Commerce or export promotion council.
5. Verification and issue – Your documents are verified by the authority and the export certificate of origin is issued in paper or electronic format.
The exporters must guarantee that the stated information on the COO at the point of dispatch is a replica of the stated information on other dispatch and customs documents so that it is uniform.
Benefits of Certification of Origin
Origin certification has several significant benefits to importers and exporters:
- Lower tariffs: Get preferential duty treatment under FTAs.
- Speedy customs clearance: Certified COO simplify inspection and release procedures.
- Global recognition: A legitimate certificate of origin builds your brand credibility in international trade.
- Compliance assurance: Guarantees adherence to international trade regulations.
- Facilitating trade: Promotes transparency and traceability of the supply chain.
Certificate of origin export certificate therefore not only guarantees compliance with regulation but also forges a competitive advantage in the international market.
Common Certificate of Origin Challenges for Export
The majority of exporters face the following challenges notwithstanding its significance:
- Improper or incomplete statement of origin by the manufacturer
- Incorrect COO in shipping documentation
- Misinterpretation FTA-specific rules of origin
- delay in document verification
- country of origin certificate requirement awareness deficit
In order to overcome these barriers, professional consultation and requisite documentation need to be done at every step in the export process.
How SKMC Global Can Help?
We of SKMC Global are experts at unbundling it from the complexity of certificate of origin and Free Trade Agreement compliance for producers and exporters.
Our export service team provides the full support of preparation, verification, and purchase of your export certificate of origin based on FTA regulations and requirements as well as customs. We also assist in the preparation of manufacturer's statement of origin, arrange authorized agencies, and make your COO on exports accurate and up to destination country standards.
Services We Provide:
- Advisory on applicable Free Trade Agreements
- Certificate of origin application preparation and submission
- Manufacturer's statement of origin documents screening
- Guideline guidance on country of origin certificate compliance
- Electronic CO registration and issuing support
Exporters do not have to worry about technical aspects of trade documents because they will concentrate on market development with SKMC Global.
Conclusion
In today's competitive global economy, knowledge of Free Trade Agreements and certificate of origin is a must to any exporter who thinks globally. Manufacturer's statement of origin, certification of origin, and COO on shipment are not forms but the building blocks to trouble-free trade and cost savings through FTAs.
With proper documentation and professional help from such professionals like SKMC Global, the exporters are able to sail through the origin of trade procedure smoothly so that their product is available in the world markets with proper compliance and cost advantages.