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Certificates of Origin and World Trade

Very interesting research on Trade and Globalisation by Esteban Ortiz-Ospina, Diana Beltekian and Max Roser, states that over the last two centuries, the global economy has been completely transformed due to the growth in global trade. In 1870 the sum of global exports accounted for less than 10% of global output. That figure today accounts for almost 25% with countries not only exchanging final products but also intermediary inputs. They point out that growth in exports can be directly correlated to a growth in GDP in developing counties.

The World Trade organisation in its 2018 press release, stated that world trade volumes have grown around 15 times faster than world real GDP at market exchange rates. Africa, included in the Middle East and independent states, showed a steady export growth of 2,3% over the period 2012-2017 and this was essentially due to the demand for oil and other natural commodities.

Eye-popping figures for most mortals is the actual value of world merchandise exports in the 2017 financial year which was up 11% to US$17.20 trillion! Not only is that a lot of zero’s but also an enormous amount of actual goods passing each other by road, air and sea around the world every single day.

Chambers of Commerce around the world have been playing active roles in the business arena for hundreds of years and it stands to reason that they have become known as trusted parties or competent authorities when it comes to trade-related matters on an international level. One of the biggest contributions that they make to the facilitation of trade together with Customs authorities, is the issuing of Certificates of Origin.

A Certificate of Origin (COO) is basically a printed document, usually issued in English (being the language of international trade) stating that the goods being exported were manufactured in a particular country. This documentary evidence is required by an importer, foreign Customs authority or bank and plays an important role in determining not only the actual value and volume of goods being imported (for statistical purposes) but also indicates to the Customs authority whether goods are allowed to enter the destination market (e.g. sanctions or even cases of foot and mouth may restrict entry).

Customs will then base the customs duty and/or other taxes to be levied on the goods so declared. This is important for the exporter who is referred to as the owner of the goods – not always the manufacturer – who could take advantage of preferential trade agreements or lower levels of duty in the importing country, to effectively market their goods. Banks may also require a COO as part of the documentary evidence before making payment to a foreign party for goods received.

In South Africa, Chambers share the responsibility for issuing COO’s with SARS and are bound by a set of rules and regulations which guide their issuing of these documents. The Border-Kei Chamber of Business is the first Chamber in the country to introduce a locally designed customised electronic system for its clients, assisting them to quickly and efficiently obtain the COO for their exports.

Contact the Chamber today for their Guide to Completing COO’s; the Rules of Origin Guidebook for SADC or the GSP Guidebook for the USA.