The documentation required to support a certification of origin varies with the applicable criterion and the circumstances. However, the primary document is generally a Bill of Materials – a listing of all the materials, direct and indirect, used in producing a good.
The questionnaires used Canada Border Services Agency (CBSA) as part of their verification process during the NAFTA regime provide a useful guide to the type of documentation a customs authority will expect certifiers to maintain. Links to these questionnaires are provided below for each origin criterion. The corresponding forms for CUSMA/USMCA have not yet been published; however, they are unlikely to vary much from the NAFTA forms.
Goods Wholly Obtained or Produced
The documentation for this criterion generally includes a Bill of Materials listing the suppliers of each material and a letter or certification from each supplier confirming that its materials originate within the Region. The customs authorities have the right to contact a supplier to request further information. CBSA Questionnaire
If the certifier is not certain that a material originates, an alternative is to check whether the PSRO (described below) for the material involves only a tariff shift test that the material satisfies. If so, it may be prudent to use the PSRO category, listing the material as being of unknown origin.
Goods Produced Entirely from Originating Materials
The documentation for this criterion is generally the same as for Goods Wholly Obtained or Produced. CBSA Questionnaire
Product Specific Rules of Origin (PSROs)
Except for the special cases included in Article 4.2(d), the PSRO criterion is always used where there are one or more Non-Originating Materials or materials of unknown origin. The Bill of Materials is divided into three categories:
- Originating materials;
- Non-originating materials; and
- Materials of unknown origin.
The documentation for the originating materials portion is the same as for the first two criteria discussed above. However, non-originating materials and materials of unknown origin are classified under the HS system, demonstrating that the tariff shift test is met for all of them or, alternatively, that the good qualifies under the de minimis test.
The analysis and documentation become more complex where a regional value content test is required or, where available, is used as an alternative when the tariff shift test does not confer origin.
There are three CBSA questionnaires that can be used as a reference when developing documentation: Tariff Shift, Transaction Value Method and Net Cost Method.
Documentation for the Producer
A producer who completes a certification of origin must have on hand information, including documents, that demonstrate that the good is originating, and must maintain all records associated with:
- the value of, shipping of, and payment for, the good;
- the purchase of, cost of, value of, shipping of, and payment for all materials, including indirect materials, used in the production of the good; and
- the production of the good in the form in which the good is exported.
Most, if not all, of these records would already be kept for accounting, tax and other purposes.
A producer who provides to an exporter a written representation that the good is originating must maintain the same records that would have been required had the producer acted as certifier.
The producer (or the exporter) cannot be compelled to certify origin and may not wish to for several reasons. For some goods, particularly those subject to a regional value content test, the amount of work involved will be significant. Further, the producer may be subject to penalties levied by the customs authority in its country if the certification is subsequently found to be faulty. Where the duty rate for the good in the importing country is low, the work and risk may not be worthwhile.
Documentation for the Exporter or Importer
An exporter who is not the producer may complete a certification of origin based either on:
- reasonable reliance on the producer’s written representation, such as in a certification of origin, that the good is originating; or
- its own knowledge and documents that demonstrate that the good is originating.
An importer may only complete a certification of origin based on its own knowledge and documents that demonstrate that the good is originating. An importer may not rely on a written representation from the producer.
Where an exporter or importer prepares a certification of origin based on its own knowledge and documents, the producer is not required to maintain the records discussed above. However, in most cases, it will be difficult for an exporter or importer to have sufficient knowledge and documentation without some information being provided by the producer. This is particularly true where certification requires a regional value content or de minimis calculation, which generally involves information derived from the producer’s cost accounting system.
Customs Authority Audits and Verification
The customs authority in the importing country has the right to audit or verify a claim for duty free treatment under the USMCA made by the importer. This will usually begin with the authority requesting the certification of origin from the importer. Should the customs authority decide to proceed further, it will generally request information and documents supporting origination from either the importer or the certifier. This may take the form of standard questionnaires developed during the NAFTA regime. After reviewing the information and documents submitted, the customs authority may request permission to conduct a verification visit at the premises of the producer. The producer does not have to accede to this. However, if it does not, and the required information cannot be obtained elsewhere, the customs authority will likely deny the importer’s claim for duty free treatment.
It is important to note that if the customs authority decides at any stage of a verification to deny that the goods originate, it is the importer who bears the liability for any duties owing, regardless of whether the importer, exporter or producer acted as certifier.