Origin Declarations - More Vital Than Ever
US imports and exports alike face new challenges and scrutiny regarding origin declarations made. The American World Trade Chamber of Commerce (AWTCC) sheds some light on these changes. AWTCC is the first US Chamber of Commerce to join the International Chamber of Commerce (ICC) Certificate of Origin Accreditation Chain and is the US representative to the International Chamber of Commerce World Chambers Federation (WCF) Certificate of Origin Council. We’ve seen higher scrutiny both ways, with exporters and importers facing unique requirements.
US Overseas Buyers Face Challenges
Products being exported from the United States are facing stricter documentation requirements regarding certificates of origin. Countries that may give a favorable status to US exports are more likely to request a chamber-stamped certificate of origin to qualify for preferential treatment.
While potentially positive, exporters who are unable or unwilling to prepare certificates of origin for their buyers may be putting them in a tough position in the country of origin. Unlike with the USMCA and other US FTAs, international standards would require the exporter to prepare documents such as a certificate of origin.
We have had many reports and issues with importers seeking to take advantage of discounted tariff rates only to be unable to find themselves unable to present proper documentation to customs. Further, these importers often encounter exporters unwilling to assist them. This ultimately hurts the US brand. AWTCC can step in here to liaise with the exporter and guide them through preparing a relatively simple certificate of origin.
USMCA enables importers, producers, and exporters alike to act as the certifier for an origin declaration. As such, many US exporters grew accustomed to offloading this responsibility to their importers and may have the expectation that this is standard. In reality, the standard is for the exporter to prepare these statements and documents.
USMCA More Likely to be Questioned
We’ve also seen more scrutiny on origin declarations for existing US FTAs such as USMCA. Historically customs pursued a rather relaxed approach. As such, many exporters are still using outdated NAFTA templates or making origin claims without the ability to outline how this determination was made. Specific guidelines exist in the text of any US FTA outlining how origin is determined. The substantial transformation standard may not apply to determining origin based on specific free trade agreements.
Importers Facing Challenges
Transshipments have become a major focus. As the US seeks to restrict trade with countries, opportunists seek methods of bypassing the rules. Enforcement for breaking transshipment rules has increased, and customs enforcement and scrutiny on individual shipments have increased as well. Essentially, transshipments have always been an issue, but importers in violation are more likely to be caught today. US importers naturally are requesting stricter documentation for origin declarations to ensure that they will not be flagged or penalized for inaccurate statements which may have been made to them by their supplier.
Origin also now matters with small parcel shipments as well. While the IEEPA tariffs are no longer in place, other country specific tariffs are still in force. In particular, lack of knowledge about the origin of products can lead customs to assume the worst. With newly sanctioned countries in place, ensuring documentation is always in place is vital. AWTCC has encountered reports of products with unknown origin, often from batch locations, being tariffed under the maximum possible rate.
Historic Practices become New Challenges
Mistakes in origin classification are common. US exporters often assume origin refers to the export location rather than the production origin of the product being shipped.
The World Customs Organization (WCO) outlines challenges faced by companies with origin declarations. There are inconsistencies in requirements, and regular challenges reported by companies.
The WCO also report on various irregularities in certificates of origin received.
The AWTCC also regularly sees incorrect templates being used, such as a USMCA template being used for trade with Vietnam. Many certificate of origin requests sent to AWTCC require the exporter to make amendments based on lack of consistency with the invoice, lack of valid descriptions of goods, or even specifying the country of origin as the country of destination by mistake.
AWTCC can assist when chamber-stamped documents are required. For more information, please contact us.