Certificates-of-Origin and Free Trade Agreements
Trade Talk Blog • August 16, 2021
W

hether you’re importing goods to Canada or the USA, a Certificate of Origin (CO) is one of the documents you will need to provide. A Certificate of Origin is a legal document that certifies whether your imported goods qualify for a preferential rate of duty based on Free Trade Agreements (FTA).

Since Canada and the USA have trade agreements with numerous countries, this document allows CBSA and CBP to assess the Rules of Origin and verify the duties and taxes required on your imported goods. This article will explain Certificates of Origin and everything you need to know as an importer or vendor. How does CBSA define cosmetic products?

According to Canada’s Food and Drugs Act, cosmetic products include “any substance or mixture of substances, manufactured, sold or represented for use in cleansing, improving or altering the complexion, skin, hair or teeth and includes deodorants and perfumes”.

Understanding Certificates of Origin

According to the International Chamber of Commerce (ICC), a Certificate of Origin (CO) “is an important international trade document that certifies that goods in a particular export shipment are wholly obtained, produced, manufactured or processed in a particular country.”

Certificates of Origin establish a legal basis for goods to be shipped from one country to another and provide your goods’ legal title (and ownership). They help determine if your imported goods are eligible for entry into the country and whether they are subject to preferential custom duties or not. Certificates of Origin also serve as a declaration by the importer to satisfy customs or trade requirements.

Rules of Origin

Rules of Origin are the criteria needed to determine the national source of a product. They are primarily used to ensure compliance with import rules and regulations and to determine whether imported goods are subject to FTA preferential duty rates.

When you submit a Certificate of Origin, CBSA or CBP will review the information you provided and assess the owed customs duties against the standing Rules of Origin and Free Trade Agreements. You can check the Canada Rules of Origin and US Rules of Origin to learn more about the current Free Trade Agreements and the duties you can expect to pay.

Certificates of Origin and Free Trade Agreements

Free Trade Agreements allow certain products to qualify for preferential custom duty rates. However, like most legislation, Free Trade Agreements are complex, and without expert knowledge, it may be challenging to ensure compliance with the designated import rules and regulations.

Failing to comply can result in a re-assessment of your duties, taxes, and interest – not just for the shipment in question but retroactively for several years. In addition, your business may have to pay hefty monetary penalties.

Some Free Trade Agreements allow you to add a Statement of Origin to the Commercial Invoice of your imported goods. In this instance, you must ensure the correct wording, as outlined by the Free Trade Agreement, is being used.

Certificate of Origin Requirements

Certificates of Origin are the responsibility of both, the importer and vendor. As an importer, it is your responsibility to have the Certificate of Origin at the time of importation. And, as a vendor or exporter, you are responsible for completing and signing the Certificate of Origin.

Importer Responsibilities

As an importer, you need to ensure that:

  • The Certificate of Origin is complete, and that you’ve filled all necessary fields.
  • The goods you are importing are listed on the Certificate of Origin.
  • The Certificate of Origin is signed by someone from the vendor’s side who can verify that the goods qualify for the Free Trade Agreement.
  • The Certificate of Origin is dated for the period in which the goods are imported.

Vendor Responsibilities

As a vendor or exporter, you must ensure that:

  • You clearly understand the Rules of Origin under the Free Trade Agreement.
  • The Certificate of Origin is complete, and that you’ve filled all necessary fields.
  • The Certificate of Origin is signed by someone in your business who can attest that the goods qualify for the Free Trade Agreement.
  • The goods being imported are listed on the Certificate of Origin.
  • The Certificate of Origin is dated for the period in which the goods are imported.

At GHY, we help hundreds of businesses import their goods into Canada and the USA every day. Our Global Trade Services team can guide you through the process of completing your Certificates of Origin and help you assess whether your imported goods qualify for reduced customs duties under Free Trade Agreements

Author

Rhonda Galbraith | Manager, GHY’s Global Trade Services (GTS) Division

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