New recommendation calls for inclusion of multi systems for proof of origin in FTAs
A new paper from the ICC World Chambers Federation Certificate of Origin Council calls on all economies negotiating Preferential Free Trade Agreements (FTAs) to ensure that the Rules of Origin Chapter provisions include an equivalent multi system. The measure would allow traders to choose between third party certified origin and self-declared origin statement methods when satisfying their preferential origin data.
The ICC WCF CO Council Recommendation – Dual system paper, noted and reviewed by the ICC Global Customs and Trade Facilitation Commission, recommends dual systems to ensure legal security for business, safeguard data quality, and promote harmonisation which reduces costs for traders and governments.
In recent decades, the proliferation of FTAs and the different requirements for evidencing origin have over-complicated the system, creating inefficiencies for both regulators and traders, particularly small- and medium-sized enterprises (SMEs). It is now time to harmonise and standardise the available systems to reduce costs and improve efficiency.
With more than 400 free or preferential trade agreements in force around the world, each agreement can indeed be extremely specific on many levels, particularly when it comes to determining origin to claim a tariff preference. In that respect, third party certified origin and self-declared origin statements have both developed and been tested in many of these agreements. Both methods should however not be seen as competing processes, but as two viable options which the commercial parties can choose from according to their needs and risk profile.
ICC World Chambers Federation International CO Council is urging all economies negotiating FTAs to ensure that the Rules of Origin Chapter provisions include an equivalent multi system that would give traders a choice between the two methods when satisfying the data provisions for meeting the preferential origin criteria; namely, electronic or documentary Certificates of Origin certified by an authorised third-party, or self-declared statements of origin supported by a high quality ‘trust’ ecosystem.
The inclusion of this multi system will ensure that traders always have access to harmonised data-sharing across multilateral trade and diverse economies and FTAs. This will facilitate international trade, support data accuracy and integrity, ensure traceability of digitalised COs, reduce financial risk and fraud, and enhance a reliable and trustful ecosystem for export supply chain partners, such as exporters, importers, customs, authorised certification bodies, regulators, and governments.
Particularly beneficial to SMEs, such multi systems will also help promote legal security for business, safeguard data quality and reduce trade costs for traders and Governments alike.
“The proliferation of different origin rules in bilateral trade agreements creates an enormous challenge for small businesses looking to tap new market opportunities. We hope this new paper will help stimulate debate on how the use of common-sense systems could help more SMEs take advantage of preferential trade agreements” said Andrew Wilson, ICC Global Policy Director.
“Through its CO Council, ICC WCF hopes to contribute towards the harmonisation of rules of origin and the issuing process of COs. It is our role to address a problem faced by many SMEs who cannot easily navigate self-certification systems. The core objective of the paper is to advocate for multi-tier systems for origin in preferential trade agreements and to give the choice of two methods to exporters. We do hope these recommendations would be a valuable input for businesses as well as for Customs authorities,” said Martin Van der Weide, Chair of ICC WCF International CO Council.