What is a Certificate of Origin?
At its core, a Certificate of Origin is a document that attests to the origin of goods being exported. It serves as a declaration by the exporter, confirming the country where the goods were manufactured, produced, or processed. While it may seem straightforward, the Certificate of Origin plays a pivotal role in international trade, influencing customs procedures, tariffs, and trade policies.
Types of Certificate of Origin
There are two main types of Certificates of Origin:
* Non-Preferential COs Also known as “ordinary COs,” non-preferential COs indicate that the exported goods do not qualify for reduced tariffs or tariff-free treatment under trade agreements between countries. These are required when no specific trade agreement exists or certain products are excluded from tariff relief.
* Preferential COs Preferential COs are issued when there is a free trade agreement or reduced tariffs between the exporting and importing countries. Products exported under such contracts are eligible for preferential duty rates. Examples include the following to promote economic development in specific nations.
BILATERAL FTAs
1. Malaysia-Japan Economic Partnership Agreement (MJEPA)
2. Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA)
3. Malaysia-New Zealand Free Trade Agreement (MNZFTA)
4. Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA)
5. Malaysia-Chile Free Trade Agreement (MCFTA)
6. Malaysia-Australia Free Trade Agreement (MAFTA)
7. Malaysia-Turkey Free Trade Agreement (MTFTA)
REGIONAL FTAs
1. ASEAN Free Trade Area (AFTA)
2. ASEAN-China Free Trade Agreement (ACFTA)
3. ASEAN-Korea Free Trade Agreement (AKFTA)
4. ASEAN-Japan Comprehensive Economic Partnership (AJCEP)
5. ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA)
6. ASEAN-India Free Trade Agreement (AIFTA)
7. ASEAN-Hong Kong Free Trade Agreement (AHKFTA)
8. Regional Comprehensive Economic Partnership (RCEP)
9. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The Importance of Certificate of Origin in International Trade
Customs authorities in importing countries mandate the requirement of a Certificate of Origin for the accurate classification of goods and the proper imposition of import taxes or duties. The CO serves as evidence to substantiate the product’s origin and helps ensure compliance with trade agreements and regulations.
In the context of global commerce, the Certificate of Origin holds several key implications:
1. Tariff Treatment: Many countries apply preferential tariff rates to imports from certain trading partners under free trade agreements or preferential trade arrangements. To qualify for these preferential rates, exporters must provide a valid Certificate of Origin demonstrating that their goods meet the origin criteria outlined in the respective trade agreement.
2. Customs Clearance: Customs authorities use the Certificate of Origin to verify the origin of imported goods and determine the applicable tariffs, quotas, or other trade measures. With a proper COO, shipments may avoid delays or face additional scrutiny during customs clearance procedures.
3. Trade Compliance: Adhering to the rules and regulations governing the issuance of Certificates of Origin is essential for ensuring compliance with international trade laws. Failure to comply with these requirements could result in penalties, fines, or even legal consequences for exporters.
Who issues the Certificate of Origin?
The exporter of the goods issues the Certificate of Origin. After preparing the necessary information about the product, its origin, and relevant tariff codes in Malaysia, the exporter may submit the CO application to The Ministry of Investment, Trade and Industry (MITI) for the Preferential COs approval OR to the Malaysia International Chamber Of Commerce Industry (MICCI) for the Non-preferential COs for approval. Still, they donβt qualify for any free-trade agreement.
Documents required to obtain Certificate of Origin
To obtain a Certificate of Origin, the exporter typically needs to provide the following export document:
* Manufacturer or commercial invoice indicating the country of origin of the goods.
* A completed and approved Certificate Analysis (CA)
* A complete shipment paperwork (Packing List, AWAB/BOL /, Custom Form 2 and other related paperwork )
* Any additional supporting documents as per the Certificate of origin requirements of the importing country’s customs authority.
How to Get a Certificate of Origin
The Certificate of Origin (CO) is a vital document for International Trade. To obtain a preferential CO in Malaysia, exporters can visit the Ministry of Investment, Trade and Industry (MITI)βs website and submit an online application.
In-person procedure
This is only applicable to the Non-Preferential Certificate of Origin. The exporter may submit the filled-out Non-Preferential CO form, relevant documents, and a cover letter to the Malaysia International Chamber Of Commerce Industry (MICCI) office for approval.
Online procedure
* Register on the Dagang Net portal and log in using the provided username and password. Complete all the Cost of Analysis requirements before moving to the Certificate of Origin section.
* Upload the related supporting documents and apply.
* After submission, please allow a few days for the officer to respond on the online platform.
* The CO is approved by the Ministry of Investment, Trade and Industry (MITI)
* Once approved, the CO is issued in digital format.
* The CO facilitates smoother customs clearance and allows exporters to benefit from preferential trade agreements.
* It is an essential document for e-commerce exports, enabling exporters to register and proceed with their shipments.
Benefits of Certificate of Origin
The Certificate of Origin offers several advantages:
* Tariff Preferences One of the significant advantages of a Certificate of Origin is its role in obtaining tariff preferences and reducing import duties. Many countries offer preferential tariffs on products from specific countries or under certain trade agreements. With a valid CO, exporters can take advantage of these tariff concessions, making their products more competitive globally.
* Trade Agreements Certificates of Origin are essential for products to qualify for trade agreements and free trade agreements (FTAs) between countries. Under these agreements, products from member countries can enjoy lower or zero tariffs, enhancing the competitiveness of exporters within the agreement.
* Customs Clearance The CO streamlines the customs clearance process by providing clear information about the product’s origin. Customs authorities use the CO to assess the eligibility of products for preferential treatment and to ensure compliance with trade regulations.
* Market Access Having a Certificate of Origin can open new markets for exporters. Some countries may have stringent import regulations or quotas for products from specific origins. A valid CO allows products to access these markets without unnecessary barriers.
* Credibility and Trust The CO adds credibility to the product and the exporting company. Importers often prefer to deal with exporters who provide proper documentation, including the CO, as it instils trust in the quality and origin of the goods.
* Export Incentives In some cases, governments offer export incentives or financial assistance to exporters. A valid CO may be a prerequisite for such incentives and benefits.
* Compliance with Regulations Exporters need to comply with various international trade regulations. The Certificate of Origin ensures that the exported goods meet the specific requirements of the importing country and relevant trade agreements.
Conclusion
In conclusion, A Certificate of Origin is a vital document in international trade, serving as evidence of a product’s country of origin. Its issuance by the exporter and subsequent approval by the local chamber of commerce MITI are essential steps to ensuring compliance with trade regulations. The CO facilitates preferential treatment under free trade agreements, simplifies customs procedures, and enhances the efficiency of cross-border trade. Exporters should be mindful of the specific requirements of each importing country and use the CO as a strategic tool to facilitate seamless global trade. From securing preferential tariff treatment to ensuring compliance with trade regulations, the CO plays a pivotal role in the worldwide supply chain. For Malaysian exporters, understanding the nuances of Certificate of Origin requirements and processes is essential for maximizing trade opportunities and maintaining competitiveness in the global marketplace.
Whether you’re a seasoned exporter or a budding entrepreneur venturing into international trade, leveraging the benefits of the Certificate of Origin is crucial for navigating the complexities of the global trade landscape effectively.