Generally speaking, the country of origin is the country of manufacture, production, or growth where an article or product comes from. Country of origin is not to be confused with where the product was shipped from as this may not be the same as where it was originally produced.
Determining the origin of a product can reduce the amount of duty an importer may have to pay on a product when importing.
There are differing rules of origin under various national laws and international treaties. An incorrectly listed country of origin could cause the importer to face penalties from customs such as delays in clearance, and increased chances of audits and fines. It is no longer easy to determine the country of origin for a product. Manufacturers generally source materials and components from around the world and then manufacture or assemble their products in a particular country.
Rules of origin are necessary to attribute one country of origin for each product. Rules of origin assist importers and customs agencies to define where a product was made so that trade policy can be applied such as a free trade agreement, quotas, anti-dumping measures, countervailing duties and trade preferences.
Canada Border Services Agency (CBSA) and the U.S. Customs and Border Protection Agency (USCBP) use rules of origin to determine which goods are entitled to a particular tariff treatment or trade agreement.
Preferential Vs Non-Preferential Rules Of Origin
There are two basic rules of origin; preferential and non-preferential. While the general rules are the same, the exact rules may vary from country to country. Generally, preferential rules apply to specific trade agreements between countries such as free trade agreements. These rules can vary from one agreement to another and if met the products can benefit from tariff concessions such as lower or zero duty rates.
Non-preferential rules of origin are for general application. They are used to determine a product’s country of origin for purposes such as origin marking, statistics, import quotas, anti-dumping and countervailing duties, tariff treatments such as the most favored nation.
Rules of origin also have criteria that must be met with shipping such as direct shipment, transit and transhipment. The shipping provisions identify the requirements that goods must meet before being imported into Canada or the U.S.
Proof Of Origin
When an importer claims a preferential tariff treatment then it needs to be supported by proof of origin. Depending on the goods and tariff treatment proof of origin may be one of the following:
- A certificate of origin in a prescribed format
- An exporter's statement of origin
- An origin declaration
- A certification of origin containing minimum data elements in no prescribed format
A good reference for importing into Canada can be found in the CBSA Rules of Origin where CBSA provides information in a table that summarizes the required proof of origin and specifies who may certify the origin of the good for each of Canada’s free trade agreements and for other countries under their rules of origin at Origin of goods. For USCBP refer to Free Trade Agreements.
The burden of proof relating to the origin of any goods lies with the Importer of Record. The implications of the country of origin on the amount of duty the importer will pay is immense. It’s best for an Importer to determine origin early or even consider it when designing supply chain routes.
Determining the country of origin early and basing that determination on factual information will help ensure that the product remains compliant with CBSA and USCBP import rules and regulations.
Certificates and statements of Origin are used to support the tariff treatment claimed. The tariff treatment is linked to trade agreements between Canada and the U.S. and other countries. It is not always necessary to present the certificate or statement at the time of release of the shipment but the Importer of Record must be in possession of a valid certificate or statement when the importer accounts for the shipment.
Our Trade Advisors can assist importers in determining country of origin and the requirements or criteria for claiming preferential or non-preferential rules of origin.