In international trade, rules of origin play a very crucial role. They are also in most instances associated with trade regimes that extend preferential treatment where they prescribe the conditions that need to be fulfilled prior to receiving some form of tariff reduction. This in simple terms means that to benefit from reduced trade costs then an importer must demonstrate that the goods imported originate or have been sourced from an exporting country that has some trading framework that extends lower or even zero tariffs.
Within the context of the African Continent Free Trade Area (AfCFTA), goods need to fulfill the Rules of Origin set out in Annex 2 on Rules of Origin of the AfCFTA Protocol on Goods to benefit from the trading arrangement and benefit from free circulation amongst the state parties without paying custom duty or tariffs.
The Three Components of Rules of Origin
The three major components of rules of origin are:
- The Origin Component: Largely concerned with the rules on determining the origin of goods. Products are categorized based on where they are produced—they could either be wholly obtained or have acquired originating status.
- The Consignment Standard: Ensures the integrity of the goods especially when being transported. It is mainly concerned with the prevention of manipulation during transit.
- Documentary Standards: The implementation part of the rules of origin. It deals with what documentation is needed to demonstrate origin, who administers the process, the various actors involved, their obligations and consequences.
Based on these categories, self-certification is an aspect of documentary standards or what could also be the procedural aspect of rules of origin.
The Role & Mechanics of Certification
Certification is considered as the ‘mainstay of every preferential system’. It performs a crucial part in preferential granting systems as it helps in determining whether a request for preference is granted. Where the customs authority is involved, it is through the issuance of a certificate of origin to an exporter. In other cases, it is the exporter who is central to the process of certification either through an origin declaration or a statement of origin.
Article 17 of Rules of Origin set out in Annex 2 on Rules of Origin of the AfCFTA Protocol on Goods provides that for goods to benefit from preferential treatment origin could either be in the form of a certificate of origin or an origin declaration. In the case of an origin declaration, it is “given by the exporter on an invoice, a delivery note or any other commercial document which describes the product concerned with sufficient detail” (Art. 17(1) (b)).
Approved Exporters vs. Any Exporter (MSMEs)
Article 19 of the rules of origin provides who makes the origin declaration. It could either be an approved exporter or any exporter for any consignment consisting of one or more packages containing originating products whose total value does not exceed five thousand United States dollars (USD 5,000).
Further details on an approved exporter are contained in Article 20—briefly, a frequent exporter who meets stringent standards relating to verifying originating status. This leaves micro, small and medium enterprises (MSMEs) with the option of fully participating in self-certification as ‘any exporter’ for any consignment under USD 5,000.
Benefits & Trade Facilitation Trade-Offs
The attractiveness of self-certification lies in its cost reduction feature since no application is required to be made similar to a Certificate of Origin and its attendant waiting time. That translates into reduced costs in the administration of preferential systems.
The downside of self-certification lies in the process of verification of authenticity. Certificates of Origin enjoy built-in guarantees as the exporting state verifies originating status before issuance. In self-certification, when the importing customs authority requests additional information, checks shift to post-import verification.
Eventually, the choice between self-certification and customs-issued certificates balances implementation costs, customs capacity, and trade facilitation goals. The current design of AfCFTA preferential trade allows for self-certification that directly enables trade by micro, small, and medium enterprises across Africa.