The Importance of Origin Labelling on Your Products

Origin labelling plays a critical role in trade compliance, consumer protection, and supply chain transparency. In most countries, laws and regulations mandate specific labelling for the local sales of your product. Additionally, it helps consumers make informed decisions, particularly for food, cosmetics, and medicinal products, where allergies, dietary restrictions, or health concerns may be a factor.

Besides listing product contents, one of the most critical details required on a label is the Country of Origin (CO). Failure to correctly highlight a product's origin can result in non-compliance, leading to delays, penalties, or trade restrictions.

What is Country of Origin (CO) Labelling?

Under the simplified definition, origin labelling is the process of indicating the country or territory where a product was manufactured or processed. It's usually done by attaching a label, tag, or stamp to the product or its packaging.

The provision of a product's Country of Origin (CO) is a key requisite in international trade compliance. It's the "economic nationality" of a product and is used to determine whether it fulfils the necessary requirements of trade agreements, customs clearance, and other trade-related regulations.

Given the rise in geopolitical tensions and increased cross-border trade volumes, governments in some countries have implemented additional controls and tariffs on goods originating from specific countries.  As a result, customs inspections have become more stringent, especially concerning origin labelling compliance.

Key Trade Regulations Related to Country of Origin

Various international trade laws and regulations focus on the origin of goods to regulate trade practices, protect domestic industries, and uphold ethical production standards.  Below are some examples of how these regulations are applied: 

1. Anti-dumping: Anti-dumping is a trade policy that imposes additional duties on imported products to protect a domestic industry from unfair foreign competition.  It is usually implemented when a product is sold in an importing country at a price lower than its normal market value. This is often done intentionally to gain a competitive advantage, especially for new entrants. 
2. Preferential Tariffs under FTA: To claim a tariff concession under a specific Free Trade Agreement (FTA), the importer must present a Preferential Certificate of Origin (PCO) indicating the origin of goods.
3. Import Quotas: An import quota is a trade policy restricting the quantity of a product that can be imported within a set timeframe. These limits are often tied to a product's origin, and accurate origin marking ensures compliance with trade regulations.
4. Forced Labor Regulation: Today, many governments are implementing measures against forced labour to prevent worker exploitation and child labour. This policy bans any products or components made, in part or whole, with forced labour during importation.
5. Statistical collection for trade: All countries worldwide require trade data for their national economic policy planning. Marking the country of origin for imported goods is crucial information for shaping foreign trade policies with overseas trading partners.

How is the Country of Origin Determined?

Globally, there is no uniform definition for determining a product's country of origin. The General Agreement on Tariffs and Trade (GATT) does not enforce a universal rule in international commerce. Instead, each contracting party is free to establish its own rules under trade agreements.

The following methods are commonly used to determine a product’s country of origin, including tariff classification, substantial transformation, and essential character determination:

1. The country where the items were manufactured or wholly grown is the origin. 
2. The country where the last substantial transformation was carried out.
3. The country where the product acquired its essential character.
4. The COO is determined by whether the product's tariff classification has changed. 

It is important to note that products that have only undergone the “minimal processes” would not qualify under the rules of origin. These processes include repacking, sorting, assembly, labelling, washing, cleaning, painting, or dust removal.

Certificate of Origin (COO): Why It’s Essential

A Certificate of Origin (COO) is required during import clearance to verify the country of origin of an imported good. It's an essential trade document used to authenticate the origin of exported goods, satisfy customs or trade requirements, and determine the duties or legitimacy of imports.

Typically, a COO is issued by local Customs, Chambers of Commerce, or other designated government agencies in the exporting country. There are two main types commonly used in international trade:

• Ordinary COO - Also known as a non-preferential COO, it cannot be used to claim preferential tariff treatment at destination. Its primary purpose is to help customs authorities determine the product's country of origin in relation to existing trade measures, such as anti-dumping duties, import quotas, or forced labour regulations.
• Preferential COO - This type of certificate allows importers to pay lower or no customs duty when items are exported under a specific Free Trade Agreement (FTA) or Schemes of Preferences.

How Businesses Can Stay Compliant

The cost of cross-border trade has increased significantly, making it essential for businesses to assess their logistics and customs operations regularly. Since origin labelling requirements vary by country and jurisdiction, staying informed and ensuring compliance is critical.

However, navigating complex trade regulations, avoiding non-compliance risks, and managing customs documentation can be challenging for businesses of all sizes. With evolving trade policies and increased regulatory scrutiny, companies must take a proactive approach to ensure seamless international trade operations. This is where expert guidance becomes invaluable.

GEODIS: Your Trusted Partner in Customs & Foreign Trade Management

As the world’s leading customs brokerage service provider, GEODIS offers a full range of professional customs and trade management solutions to clients globally. With a team of over 800 trade experts worldwide, we help businesses navigate complex regulatory challenges, providing expert research on customs and trade regulations. Our advanced cross-border digital customs solutions ensure efficient and cost-effective cargo shipping, duty and tax optimization, and full compliance with international trade requirements.

Need Expert Support?

If your business requires assistance with customs brokerage, trade compliance, or origin labelling, contact GEODIS today. Let our experts simplify your global trade operations.