How Certificate of Origin Directly Influences Export Success?

The international trade norms are constantly refined to make the import-export alliances profitable for every party involved. The new Free Trade Agreements (FTAs) are being formed and the existing ones are being updated to make them favorable not just for the producers, exports and importers, but also for the economies. Having said that, the Certificate of Origin (COO) is not just essential documentary evidence, but a highly significant trade document and its importance must be necessarily understood.

If you are about to ship your first consignment from Australia to a foreign country, here’s a useful guide about the Certificate of Australian Origin you need to obtain. Find out how it is a part of the export documentation that ensures the success of export process.

Meaning and Types

In a very simple language, Certificates of Origin certifies the place or country in which the product has been manufactured or processed. Here, you must understand that every product exported from Australia might not essentially be produced or manufactured in the country. In many cases, the goods manufactured in some other country are procured by Australia and further exported to other countries. In such cases, the certificate must mention the name of the original country in which the good was produced or manufactured or processed.

There are basically two types of COO:

  • Preferential: These are the specific certificates that certify the goods being exported to receive privileges like reduced or absolutely eliminated custom duties and tariffs. The FTAs between Australia and its trade partnering countries require these certificates for government and custom clearance. Examples include COO under TAFTA (Thailand-Australia), ChAFTA (China-Australia) and JAEPA (Japan-Australia).
  • Non-preferential: Consider these certificates as the ordinary ones, issued by the authorized chambers of commerce for the importing countries that are not in any FTA with Australia.

Importance and Benefits

Strong Trade Ties: COO, especially the preferential ones, improve the trade associations between two countries. The products originating from Australia become eligible for ‘national treatment’ in the importing country, thanks to the validity of these certificates. Going further, the exporting country may acquire the status of the ‘most preferred trading partner’ by the importing country while moving ahead on these lines.

Reduced Tariffs, Improved Profits: Starting January 01, 2015, Chile eliminated 92% of tariff on about 97% of trade merchandise imported from Australia under the updated Australia-Chile FTA. With the reduced custom duty rate, the exporters are bound to make big profits.

Letter of Credit Compliance: An importer (or buyer) from a country may issue a letter of credit with the help of a bank which safeguards the interests of both importer (successful delivery) and exporter (successful payment). A COO would play a key role in this process as the buyer may demand it before authorizing a letter of credit. The certificate may also form the basis of sale negotiations between the two parties.

One of the easiest ways to obtain the Certificate of Origin is using the digital documentation process. Whether you are a producer or just an exporter from Australia, consider it as one of the compulsory requirements to avoid shipment delays, custom clearance delays and probable monetary losses.

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