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Exporter's and importer's responsibilities
Exporter responsible for completing all export procedures. This includes submitting an export declaration as well as completing any other applicable export formalities such as obtaining the necessary export licenses or permissions.
In some countries export duties might also be due. In practice, a large number of companies use customs agents or freight forwarders to complete export as well as import procedures. Depending on the type of arrangement between the company and the third party provider, the agent may or may not be jointly liable for any issues with export and import procedures.
However, the exporter and importer still bear the responsibility and are required to familiarize themselves with the local customs legislation and procedures. In terms of preferential origin, the exporter is responsible for determining the origin of goods and providing a proof of preferential origin in the form required under the trade agreement they are intending to use (as this can vary between different agreements).
Verifying the origin of goods
Determining the origin of goods requires the exporter to first classify the product under an appropriate HS code. Once an HS code of the good is identified, the exporter can look up the rule of origin applicable for this code under the relevant trade agreement. The rules of origin for the same product differ under different trade agreements.
The exporter can then verify whether the exported good meets the relevant rule of origin. If the good does not meet the rule of origin it should not be imported into the trade agreement partner country under a preferential tariff but under the MFN tariff. If the good meets the origin criteria, the preferential tariff under the trade agreement can be claimed by the importer at the time of import into the FTA partner country.
Verifying whether the product meets the relevant origin criterion requires the exporter to be familiar with the origin of inputs used in the production process as well as the type of processing the good, and often its parts, has been subjected to: the exporter needs to know how the good was produced and what non-originating inputs were used.
In many cases, the exporter is not the manufacturer of at least some, if not all, of the parts / inputs used to produce the final good. In such cases, the exporter is required to confirm the origin of these parts / inputs with their supplier.
This can often be done via a supplier’s declaration: a document in which the supplier confirms that their products meet the origin criteria under a particular trade agreement. Suppliers’ declarations are collected by the exporter and used as supporting documentation when demonstrating that the goods qualify for preferential treatment. The exporter is usually obliged to retain copies of suppliers’ declarations.
Once the exporter has verified that the good meets the relevant rule of origin, a certificate of origin needs to be provided. The exporter should confirm what type of origin certificate is required or permissible under the trade agreement they plan to use.
If a certificate of origin issued by a competent authority is required, the exporter needs to contact the responsible authority or organisation, complete the application form and provide the required supporting evidence and documentation. In many countries there is a fee for issuing an origin certificate.
Depending on the provisions in the trade agreement and the local customs jurisdiction, the official authority issuing the certificate of origin may then be the point of contact for the customs authorities in the importing country in case of any origin related queries.
If self-certification is possible, the exporter should verify if there are any conditions that must be fulfilled in order to issue an origin declaration. For example, in some countries an approved exporter authorization may be required for the exporter to be allowed to issue origin declarations.
In order to obtain an approved exporter authorization, the exporter might need to provide documentation demonstrating that they are aware of origin requirements under a given agreement and that their products comply.
Fulfilment of other origin related provisions
In addition to providing a certificate of origin, a number of other conditions and administrative requirements need to be fulfilled. These include conditions around invoicing and shipping (transport) of the goods. Exporters should be familiar with the all the origin related requirements under the trade agreement they intend to use.
Exporters’ responsibility for preferential origin
In principle, it is the exporters’ responsibility to ensure that goods exported under preferential tariff meet the relevant origin criteria (see also importer’s responsibility). While the exporter is in principle responsible for the correctness of origin declaration provided to the importer, under many trade agreement and in several customs jurisdictions, there are no mechanisms for enforcing this and holding the exporter liable in case of an issues.
In countries where an approved exporter authorization is required to issue an origin declaration, incorrectness of the issued origin declaration can lead to a suspension or withdrawal of the authorization. It can also lead to further consequences applicable under the domestic customs legislation for incorrectly operating a customs authorization.
Exporter responsibilities – Before importing goods from a trade agreement partner, the importer should check with the exporter whether the goods meet the origin criteria and can be imported under a preferential tariff. If that is the case, the importer should request a proof of origin to be provided with the goods.
The importer relies on information provided by the exporter to claim preferential origin upon import. The importer, or the importer’s customs agent on the importer’s behalf, submits an import declaration together with the preferential origin documentation (proof of origin). This enables the importer to claim preferential tariffs for the imported good instead of the full MFN rates.
It is the importer who obtains financial benefits from the preferential tariff: the importer pays a lower amount of customs duties for the imported product.
As it is the importer who benefits from preferential tariffs, it is also the importer who is ultimately responsible for the correctness of the origin documentation submitted to customs authorities and the validity of origin declaration. If the origin declaration is rejected for any reason, the importer pays the full MFN tariff. Therefore, while in principle both exporter and importer are responsible for demonstrating preferential origin, in reality, it is the importer that bears the consequences of any mistakes.
The importer is usually required under the domestic customs legislation to retain all documentation relating to imports of goods for a period of time (see retention period). During this period the importer can be subject to customs inspections and post importation audits and may need to provide the evidence of the claimed preferential origin together with other customs documentation. Failure to do so may result in penalties.