Certificate of Origin: Exporters risk being blacklisted when new EU rule kicks in

May have to self-certify origin of goods from 2017 to avail benefits; errors could lead to penalisation

Indian exporters enjoying preferential access into the EU market through the Generalised System of Preferences (GSP) scheme face a tough technical challenge.

From next year, they may have to self-certify the origin of their goods, instead of accredited agencies, in order to avail of benefits under the scheme. This could prove to be a complicated process and might also lead to black-listing of firms if errors creep in, a government official told BusinessLine.

“The government plans to train exporters as they would have to log into the EU website and go through established procedures to generate rules of origin certificates. In case of wrong entries leading to erroneous rules of origin certificate, there could be adverse rulings not for just the particular exporter but the entire sector,” the official said.

Countries have the option of requesting the EU for more time to switch over to the new system, but India is attempting to meet next year’s deadline.

Benefits of the scheme

Under the EU’s GSP scheme, developing countries are eligible to pay less or no duties on their exports to the EU as long as the total exports are below a specified threshold.

India, China and Brazil are among the top beneficiaries of the EU’s GSP scheme with almost 40 per cent of items being exported from India, including garments, jewellery, handicrafts and certain engineering items, gaining from it.

Why the certificate matters

The certificate of origin, which establishes that an item being exported originates from the beneficiary country, is of key importance as it is a check against third-country exports flowing into the EU at preferential duty rates.

“If wrong entries are made by exporters even inadvertently, it might not be taken kindly by the EU. So we have to train exporters to operate the system,” the official said.

Two government officials from India recently visited the EU for training and they in turn would be designing training programmes for exporters.

At present, agencies such as the Export Inspection Council (EIC), the Directorate General of Foreign Trade the Central Silk Board, the Marine Products Exports Development Authority and a number of SEZ development commissioners are authorised to give origin certificates for export to the EU.

Once the new system kicks in, the government will appoint one agency as the ‘competent authority’ to register all exporters who would be participating in the self-certification process and pass on the details to the EU.