Like so many things when contending with the Canada Border Services Agency (CBSA), determining your import’s ‘country of origin’ often seems simpler at first glance than it is in practice. You might even be tempted to think that an import’s ‘origin’ refers solely to where it is shipped from. It’s a reasonable guess and a common mistake (for what it’s worth, that is referred to as the ‘place of export’), but you’ll find that it is more complex than that. 

Country of Origin is the outcome of a process with many different moving parts and terms to know, and it’s important to understand them because the consequence of a country of origin mistake in the declaration can be significant. In this post, we will give you a brief overview of what certain terms mean, how they work in the larger context of determining country of origin, and offer a very light touch on why this matters to you and your imports.

What does ‘Country of Origin’ mean?

As previously alluded to, ‘country of origin’ does not refer to where the goods are shipped FROM, but instead, it is where the goods are grown, produced, or manufactured. For some goods, the country of origin and place of export may be one in the same. 

For imports that have not undergone a substantial transformation or significant manufacturing in the country they have shipped from, determining origin can be a remarkably involved affair. 

Determine The Country Of Origin Before You Import

It’s easiest to understand how this process works by looking at why and when this information is important. This information is crucial to the determination of the duty rate on an imported product. Most notably, qualification for specific rates under free trade agreements (FTAs) between different countries use country of origin in addition to the FTA’s Rules of Origin (we’ll talk about these in a moment) to determine what goods can use particular rates and which can not. 

An FTA's ‘Rules of Origin’ dictate what is required to prove the good qualifies under the FTA for preferential (reduced) duty rates. Just because a good is made in a particular country, it may not qualify for reduced duty if it doesn’t meet the full breadth of the conditions laid out by the FTAs Rules. 

If a good qualifies under the Rules of Origin, the FTA lays out the certification type and details that are required. Sometimes, this is a simple declaration; other times, it is a detailed certificate or certification. As is always the case at virtually every stage of the import process, but doubly so here, make sure you know what your obligations are as the importer.

How does a good qualify for an FTA?

Depending on the complexity of the product, particularly in the case of heavily manufactured goods, proving the good qualifies under an FTA can be a Herculean task as an FTA’s rules of origin can be robust and complex. As stated above, each FTA has its own set of unique legal protocols that must be met to qualify for reduced-duty benefits.

In general, and lightly paraphrased, these protocols layout:

• How much of an item has to come from a location for it to count as originating
• What processes it may have to undergo
• What inputs are allowed
• Direct and Transshipment Shipment Rules
• The necessary documentation required to prove an import’s origin
• Who will be called on to prove the goods meet the rules of origin under audit

These rules differ from agreement to agreement, but their role in determining the originating status under an FTA remains the same. What is required as a qualification for one FTA may not necessarily be the same for another. This is all to say what we’ve been saying from the beginning - do your research before importing.

Should everything come together, and it’s able to be proven that a good qualifies under an FTA, what is produced is a certificate or certification of origin. 

What is a Certification/Certificate of Origin?

A Certificate or Certification of Origin is the legal document that declares a product qualifies under an FTA. Depending on the FTA, it can be a specific form, statement, or a set of required data elements the certifier provides as the first layer of proof a good meets the requirements of said FTA. 

Other proofs of origin are available in certain cases, but those details are for another blog. 

How to Fill Out Certification of Origin Under CUSMA …

With proof of origin in hand, an import’s country of origin is determined, and its qualification for an agreement is established. 

Why does this matter? 

Incorrectly declaring Country of Origin and claiming qualification under an FTA when importing into Canada can be a costly affair, often leading to Administrative Monetary Penalty System (AMPS) fines, payment of duties and associated interest, and even litigation in some cases if unaddressed and particularly egregious. 

A Valid Certificate Of Origin Can Avert AMPS Penalties

Even putting aside these penalties and potential legal charges, in extreme cases, your clients and customers may purchase the items you are importing without the correct duties and tariffs factored into the cost. In the worst case, you could be on the hook for back payments on all the miscalculated duties to the tune of potentially millions of dollars. 

Country of Origin is a bit tricky to understand at first, but once you know the terminology involved and the correct protocols for your specific scenario, you should be prepared to import compliantly. Alternatively, of course, you can just wash your hands of the whole affair and let the expert team here at PCB handle it for you. 

After all, PCB has a reputation for accurate and up-to-date regulatory compliance. Our team consists of tenured experts with decades of relevant experience, so when you put our services to work, you can rest easy knowing that your imports will be properly classified well before they ever ship. 

If you have any questions about your country of origin, certificates of origin, FTAs, how we can help you, or any subject for that matter, be sure to reach out and contact our team today.