Certificate of origin waiver: The benefit for Australian Trusted Traders

This article was originally published by BDO Global.

Australia’s Authorised Economic Operator (AEO) program, delivered through the Australian Trusted Trader (ATT) initiative, provides accredited businesses with a robust suite of trade facilitation benefits. Primarily among these is the exemption from having to produce documentary evidence of origin when importing goods, a measure that significantly reduces administrative overheads and financial costs. This benefit is particularly timely amid rising global trade tensions, offering Trusted Traders a streamlined path through customs and enhanced operational certainty. However, while the exemption eases documentation requirements, importers must still ensure that their goods meet the relevant origin criteria to qualify by maintaining clear-cut verification processes that safeguard against errors and uphold their eligibility.

The Australian Trusted Trader program

An authorised economic operator (AEO) is a party involved in the international movement of goods, and has been approved by a national customs administration as complying with the World Customs Organisation or equivalent supply chain security standards. To qualify, traders must demonstrate that they have robust processes and controls in place in respect of all customs matters and have a strong and secure supply chain.

Key benefits of ATT

• Customs duty deferral - monthly payment of duty liabilities
• Dedicated Australian Border Force (ABF) account manager as a point of contact
• Priority treatment of goods at the border
• Priority processing of customs rulings
• Monthly customs data reports
• Mutual recognition of Trusted Trader status with countries for which Australia has reciprocal agreements
• Consolidated cargo reporting and clearance for faster and lower cost import processing
• Waiver of certain documentation requirements under some free trade agreements.

Since 2020, 97 countries around the world have adopted AEO programs, and businesses accredited under an AEO program are afforded international recognition, preferential treatment and trade facilitation benefits. AEO programs aim to facilitate legitimate trade, harmonise and standardise the application of customs controls, and provide an electronic environment for streamlined and efficient customs procedures.

Australia’s AEO program is the ATT program administered by ABF, which aims to streamline border operations and processes for approved businesses. Eligible businesses include importers, exporters and service providers. Amid ongoing disruptions to the global trade system, driven by geopolitical tensions, shifting national trade policies, and rising protectionism, access to AEO program benefits has become increasingly critical. For accredited businesses, these benefits offer an important mechanism to navigate uncertainty, streamline cross-border operations and maintain continuity in international trade.

The Rules of Origin

The Rules of Origin (RoO) are an agreed set of rules between countries that share a preferential trade agreement (PTA), such as a free trade agreement, and determine the criteria for which goods are eligible for free or preferential import tariffs. To qualify for preferential treatment under a PTA, importers must demonstrate that they comply with the RoO under the relevant PTA. This is done by submitting documentation to demonstrate to the customs administration in the destination country that the products will qualify for preferential tariff treatment under the PTA.

Typically, RoO criteria require a product to be entirely produced in one of the participating countries, have non-originating materials substantially transformed into a new product or have a minimum percentage of the value produced there. The importance of the RoO is derived from the fact that duties and restrictions often depend upon the source of imports. While the substantial transformation standard is universally recognised, the criterion differs between countries and ranges from a change of tariff classification or ad valorem percentage to manufacturing or processing operations.

Evaluating the RoO can be very complex, particularly for manufactured goods where key components are imported from various countries. Australian importers need to prove each non-originating component of the finished good qualifies for the requisite PTA. For example, Australian manufacturers of trucks may import multiple goods that form the components of such vehicles, e.g., windshields, bumpers, mirrors, wheels, fuel tanks, etc., all of which may come from different countries with the origin and value of these components potentially changing over time.

The RoO for manufactured goods can be met if suppliers can provide proof of the origin of inputs, the cost of inputs and evidence of what manufacturing process is undertaken in the source country. While the ABF suggests that contractual documentation will be relevant to origin, a contract merely shows that a party to the dealings provided an assurance rather than evidencing an outcome. To be a Trusted Trader, an importer must demonstrate a desire to comply with customs laws, which includes certifying that systems are in place to verify a manufacturer’s origin claims and this is often satisfied through the provision of origin documents.

Origin documents

Origin documents are usually required for imports and obtaining them can give rise to an administrative and financial burden for suppliers. The certificate of origin is a government-issued document to certify the place of growth, production or manufacture of goods. A declaration of origin, which is generally prepared by the manufacturer or exporter, verifies that the goods were manufactured outside Australia and meet the rules of origin under the relevant PTA. The provisions of each PTA will dictate the type of origin documentation required as evidence to access preferential duty rates. Obtaining origin documentation can be complex where multiple consignments are sent from a distribution centre to multiple Australian ports. Obtaining documentation prior to importation also has the effect of impeding supply chain processes.

Waiver benefit

Under Australia’s certificate of origin waiver benefit, Trusted Trader importers are not required to obtain or present origin certification documents (e.g., the certificate of origin and/or the declaration of origin) to claim preferential duty rates under certain PTAs.

The waiver has been extended to apply to Australia’s PTAs with Chile, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Peru, Singapore, Thailand and the United Arab Emirates and for goods qualifying under the ASEAN-Australia-New Zealand (AANZFTA), Pacific Agreement on Closer Economic Relations (PACER) Plus, Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreements. The origin waiver benefit mitigates the administrative burden of obtaining this evidence, reduces the costs associated with certification and speeds up supply chain processes.

It should be noted that Australia’s origin waiver benefit does not apply to goods imported before the date the origin waiver was granted by the ABF, to refund applications or to exporters, the latter who will have to examine whether there are any equivalent benefits under relevant mutual recognition agreements. The benefit also does not apply to all PTAs, notably the Australia-China agreement for which the requirement to produce a government-issued certificate of origin remains.

Compliance with rules of origin remain

The origin documentation waiver benefit does not eliminate the requirement that Trusted Traders maintain evidence that the goods comply with the relevant RoO. Trusted Trader importers must retain evidence (generally for at least five years from the date of importation) that imported goods comply with the relevant RoO and present such information upon request. Examples of evidence include commercial documentation, contracts and statements relating to the manufacture of the goods, which contain information to substantiate the origin of the goods for the purpose of a PTA, and statements relating to the manufacturing process, materials and compliance with cost requirements from manufacturers.

Evidence also needs to be sufficient to prove that the goods meet the relevant division of the Australian Customs Act 1901 (Cth) and customs regulations pertaining to RoO (for the relevant PTA) in the absence of a certificate of origin or declaration of origin. If available under the provisions of the relevant PTA, Trusted Trader importers may be able to comply with a request for evidence of origin by providing ‘retrospective’ origin documentation, such as a retrospective certificate of origin or certified declaration of origin.

Action steps

Trusted Trader importers who have paid duty on goods that are later revealed to be originating goods under an eligible PTA may apply for a refund of overpaid duties. A refund application must include documentary evidence of origin, such as the commercial documentation, manufacture statements or a certificate of origin or certified declaration of origin. Time limits on refunds apply.

Importers that are not currently Trusted Traders should consider applying for accreditation. In a world of escalating global trade tensions and growing protectionist sentiments, trade liberalisation benefits have never been more valuable for those that qualify. The origin waiver benefit is part of the growing suite of trade facilitation benefits afforded to such businesses, including priority processing, consolidated cargo clearance and duty deferral.

Trusted Traders that wish to obtain the origin waiver benefit need to be able to produce sufficient information to demonstrate origin in the event of an audit (which can take place up to four years from the date of import). Consideration should be given to provisions in contracts (or contractual amendments) that provide the right to conduct necessary due diligence and/or compel a supplier to provide requisite documents relating to origin validation.

How BDO can help

Take the next step to streamline your import processes and maximise trade benefits.

To ensure your business is positioned to benefit from priority processing, reduced costs, and simplified documentation, contact BDO’s international trade and customs experts for tailored guidance on maintaining compliance with rules of origin and securing Trusted Trader accreditation.