Origin
Also known as: country of origin
Origin is the country a product comes from in economic terms, which is something other than the country of dispatch. It decides the tariff, the trade measures and whether there is a right to a preferential tariff.
What is the difference between preferential and non-preferential origin?
Non-preferential origin decides which country a product comes from for statistics, anti-dumping, quotas and trade measures. Every product always has one. A Chinese coat that goes via Rotterdam to Germany has Chinese origin, even if the provenance is Dutch. Preferential origin exists only within a trade agreement and gives a right to a reduced or zero tariff. The rules differ per agreement, so the same product can have preferential origin under one agreement and not under another. Without valid proof the ordinary tariff applies, even if the product would materially have had a right to it. Provenance is the country of dispatch. Origin is where the product was made or where the last substantial processing took place. On the import declaration both belong, in different fields. TARIC measures look at origin, not at provenance.
How do you determine origin?
If a product is wholly obtained in a country, the origin is that country. If materials from several countries have been used, the origin is the country where the last substantial processing took place. What counts as substantial stands per goods code in the list rules: a change of tariff heading, a maximum percentage of non-originating material or a specific processing. Simple assembly, packing or putting on a logo is as a rule not substantial processing. A product made in China, repacked in the Netherlands and going to the UK keeps Chinese origin. Only the manufacturer can truly prove origin; an invoice declaration by a trader is a statement, not proof. The non-preferential rules and the preferential list rules are not the same. A product can be non-preferentially Chinese and still get no preference under an agreement, or the other way around. Determine them separately, per article, per agreement.
How do you prove preferential origin?
With a EUR.1 certificate that the customs of the country of export issues, with an origin declaration on the invoice, or under newer agreements with a statement of origin by a registered exporter in the REX system. Which proof applies stands in the agreement. The wrong paper is no proof. The proof must be there at the moment of declaration or be sent on within the period. Without valid proof the ordinary tariff applies, even if the product would materially have had a right to it. A claim without paper is a tariff that is too low, and at an audit an assessment on the importer, even if the supplier made the error. A REX number is the registration of an exporter with which they may put a statement on the invoice themselves, without applying for a certificate per shipment. The number belongs on the statement. A declaration without REX where the agreement requires REX is invalid.
What are the origin rules per agreement?
Each trade agreement has its own list rules. The same coat can have preferential origin under the agreement with South Korea and not under the agreement with Canada, because the requirements for the fabric used differ. Look in the agreement, not in a general rule you know from another flow. The three usual kinds of rules are a change of tariff heading, where the end product falls in a different heading from the materials used, a value criterion, where a maximum percentage of non-originating material applies, and a processing criterion, which prescribes a specific process. Often a combination of two applies. In addition almost every agreement knows cumulation: materials from the partner country count as originating material. Bilateral, diagonal and full cumulation differ in that, and which form applies stands in the agreement itself. Cumulation without the right statement from the supplier is an assumption.
How do you keep origin manageable?
Record per article what the non-preferential origin is and, per agreement, whether there is preferential origin and on which rule that rests. Without that record every claim is an assumption. Collect supplier's declarations at purchase and not only at an audit. A long-term supplier's declaration covers a period of at most two years. That declaration is the basis on which you may issue an origin declaration yourself. Without it your statement on the invoice is a declaration about something you do not know. Check at every change in the supply chain whether the origin still holds. A supplier who switches to another raw material can let the preferential origin lapse without anything changing on the end product. You only notice that at an assessment years later, at the importer who claimed the tariff. Keep the declarations with the article, with an end date, and stop the claim if the date has passed. An expired declaration is no proof.
What is the difference between origin and provenance?
Origin is where the product comes from in economic terms and decides the tariff. Provenance is the country of dispatch. A Chinese product that comes from a warehouse in Switzerland has Chinese origin and Swiss provenance. On the IMA both stand, and TARIC looks at the origin for anti-dumping, preference and prohibitions. Do not confuse them in the master data. An article with provenance NL because it comes from a Dutch warehouse then gets the wrong measures. Customs sees origin China on the invoice, the declaration says NL, and the IMA is incorrect. That is one of the most common master data errors on redistribution from an EU warehouse. Union status is again something else. Union goods can have Chinese origin. T2 preserves the Union status, not the origin. For a preferential tariff on a later export you need the proof of origin, not the proof that the duties have already been paid.
Who is liable for an incorrect origin?
The importer who claimed the preferential tariff. If at a later audit the proof turns out to be invalid, they are assessed, even if the supplier made the error. The customs of the country of import turns to the declarant and the importer, not to the factory in the third country. A EUR.1 that was issued wrongly, an invoice declaration without cover in the supply, a REX statement by someone who is not registered: they are all invalid proofs. The assessment is the difference between the preferential tariff and the third-country tariff, over the whole period in which it was claimed, until limitation. Recovery from the supplier is a civil matter, not a customs matter. Put in the purchase contract that the supplier guarantees the origin and reimburses the assessment, and still check the declarations yourself. A guarantee in a contract does not prevent the assessment, it only gives an address to get the money back.