By Guest Blogger Chris Mead
Imagine you provided a set of your checkbooks, with pre-signed checks, to 20 or 30 people around town. Wouldn’t you be nervous about how much money they might withdraw from your account?
Something similar has happened in the export world. Many chambers of commerce have loaned or rented out their corporate seals to freight forwarders and exporters, permitting those organizations to stamp the chamber’s seal onto documents that are used for export transactions. Of the estimated 4 million certificates of origin that accompany U.S. export shipments annually, we estimate that fewer than half are actually inspected and signed by a chamber of commerce employee, as the international rules require.
Certificates of origin are used to determine where products were made and thus can affect how much duty is levied on imports, whether imports are exceeding quotas or not, and whether the imports comply with local health and product safety regulations. The simple documents, usually just a page in length, can also affect the price of imports: many people overseas will pay more for items they think are made in the United States.
So the stakes are high on these seemingly innocuous documents. Around the world, they are treated with care. In the United States, people frequently handle outgoing certificates of origin with little attention and varying standards, even though U.S. Customs monitors incoming certificates of origin with vigilance.
Legal counsel to chambers on certificate issues has been all over the lot and many chambers have little reason to believe that their current practices are anything other than business as usual. No single authority in the United States has supervised compliance with the international rules on certificates of origin, and plenty of chambers, freight forwarders, and exporters aren’t familiar with how the system is supposed to work. But things are beginning to change, spurred in part by a crackdown on phony certificates of origin by the Consulate General of Egypt in Houston earlier this year, as well as other incidents connected with specific shipments.
Chambers are learning that the stamp-lending practice is against the rules and, equally important, poor governance. The basic authority comes via the Kyoto Convention agreement that was signed by President Bush in 2005 (and previous agreements leading up to it, starting with the Geneva Convention in 1923). Groups that have cautioned against the practice of stamp lending include not just the U.S. government, but also the U.S. Chamber of Commerce, the American Chamber of Commerce Executives (ACCE), the U.S. Council for International Business, and the International Chamber of Commerce’s World Chambers Federation. As a result, several chambers, including some large, big-city business organizations, have begun asking to get their seals back from exporters. ACCE is preparing a training course for chambers on proper handling of certificates of origin. It’s also offering an electronic certificates service, which helps ensure that correct processes are followed and removes the problem for heavy exporters of constant driving back and forth to the chamber to get approvals.
Given how little attention most of us have paid to this issue in the past, any chamber, exporter, or freight forwarder that is taking steps to comply with the international rules on certificates of origin should be commended. The world’s importers should have confidence in the certificates issued in the United States. Let’s not let them down.
Chris Mead is senior vice president of the American Chamber of Commerce Executives, an organization of 1,200 chambers of commerce headquartered in Alexandria, Virginia. He can be reached at cmead@acce.org.
The stamping of origin certificates by most US Chambers of Commerce is an exercise in wasted time & effort. Most US Chamber’s personnel have little to zero training regarding origin certificates and simply sign/stamp
these documents as a matter of course.
The only reason to have such documents stamped/signed is to complete an export transaction, usually governed by some type of letter of credit mandating a stamped/signed origin certificate.
Whereas in most non-US countries, the chambers act as a quasi government agency, the US chambers are for the most part dedicated hard working local business people who nonetheless are unqualified to review, approve and stamp/sign any origin certificate. They simply do not understand these documents nor their content or format.
The burden of proof as to the quality/accuracy of any origin certificate, properly falls on the USPPI and or the US Importer of Record.
Although little actual value can be placed on a US Chamber stamping/signing an origin certificate, I do agree that the practice of lending out their “official” seal/stamp should cease.
The post by Chris Mead is highly relevant in this age of globalization. The Country of Origin Certificate (COO) is a critical document in India for allowing full or partial exemption from Customs duty on imported goods under Preferential Tariff Agreements with various countries. Moreover, the Indian Customs Law also provides legal basis for such COO. The international trade has allowed free movement of goods from one country to another for various kinds of value-added activities without involving ‘substantial transformation’ in the goods. Under this situation, the COO can be misused to avail of concessional rate of customs duty and other benefits by unscrupulous elements.
Bernie makes some solid points. I am glad he agrees with ACCE and the other organizations about the pitfalls of stamp lending (and borrowing). When the chambers that have lent out their stamps get them back, that’s Job 1 of the process of improving certificate of origin handling. Job 2 will be to do the job right. Some chambers are doing a good job, but many need training, which is why our organization is preparing training materials. Once there’s better quality in certificate of origin handling, there will be an appreciable value-add to the trading system.
I like this blog
I wonder if all the seals are retrieved couldn’t foreign entities, friend or foe counter fit the seals which would seem to be easier than currency. What is definitely called for here is a change in business process management of these seals.
Where can we obtain the regulations or summary of international regulations and agreements governing COO issuance?
The best source on following the correct procedures for certificates of origin is International Certificate of Origin Guidelines from the ICC World Chambers Federation. Here is a link to the site for the book, which costs $50.
http://store.iccbooksusa.net/internationalcertificateoforiginguidelines-1.aspx
A related question: Is there a US export regulation requiring country of origin to be marked on merchandise being exported from the US? You have to show on AES, but does the merchandise actually have to be marked according to US law?
Thanks.
Hello Lee,
There is no reference in the Foreign Trade Regulations citing the need to mark merchandise with the appropriate country of origin. As you pointed out, it is necessary to provide the Country of Origin in AES but specifically for shipments exported from Foreign Trade Zones (Sec. 30.52(b)). If you want to verify other applicable regulations, you should contact the International Trade Administration at 1-800-USA Trade or go to export.gov.
Currently we type (on a typewriter) the COO’s for Israel, 5 to 12 per day using the green 5 part carbonless 19-388 form (Unz & Co.) I was wondering if there was software available to enable us to produce them within our system. I cannot imagine that large exporter to Israel is sitting down and manually preparing COO’s on a typewriter. Also, is the 5 part 19-388 form the only acceptable document for Israel COO’s. Your input is appreciated. Thank you.
Hello David,
For questions related to the Certificate of Origin, please contact the International Trade Administration at 1-800-872-8723.