What is an origin statement?
Origin statements are clauses on paperwork which confirm to importers and authorities where the goods have originated from. Typically, you can find origin statements on the commercial invoice for an individual shipment, but you can also find it on trade certificates which can apply to more than one consignment.
Depending on the type of statement that is being used, the wording will vary, and a licence or authorisation number may be present. A common variant used for exporters in the EU is the Registered Exporter system, which is a self-declaration of origin by the trader. Another variant is the “Approved Exporter” license, that basically can be used to replace the EUR.1 trade certificates.
From an importer’s point of view, origin statements are essential for declaring preferential origin so that they can pay less duty.
What are some common errors made when declaring origin statements?
A common problem which we have found during a quick scan is that the exporter has not been through the correct procedure for declaring a REX statement on their documents before registering. Especially since Brexit, as several exporters only sell their goods outside of the European Union to the UK.
Another error which we see is the inclusion of the word “preferential” when this may not be correct for the commodity or for the country of import. And it cannot be assumed that the conditions for preferential origin are the same for every destination.
(Find out more about declaring preferential origin in the UK here)
What we are finding for both of these is that the importer has asked for an origin statement so that preferential origin can be declared. Exporters are trying to help their customers, but the problem is that this hasn’t been verified so the preferential origin statement is not correct.
What risks do exporters face?
The risks to exporters with false statements is not the same as for the importer, in the way that there is no automatic financial obligation. The import will likely need to pay for the incorrectly-declared reduction in duty, sometimes for more than three years in backlog, whereas the exporter will not.
However, any situation like this will put pressure on the exporter’s business and their relationships. Reputational damage, pressure to address the same problem across all their customer’s accounts, and the resulting loss of revenue will mean a financial cost. Even if it isn’t the same as the importer’s.
How can exporters protect their customers?
It is essential that your preferential origin statements are verified for every country of destination.
You do not want to wait for an inquiry from a customer asking for verification, when they already have an audit from the authorities and are asking for your help to prove they are compliant. You may need to get a third-party evaluation to satisfy their auditors, and noncompliance may result in further audits for your customer alongside the repayment of duty.
