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Market Shift: Chambers Sharpen Certificate of Origin Processing

Chris Mead

Certificates of origin (COOs) are deceptively simple yet important documents that accompany exported products to identify where the goods were made. By international agreements beginning with the Geneva Convention of 1923, chambers of commerce are charged with verifying and stamping the COOs that companies prepare. Four million COOs are processed annually in the U.S., and in the last year some verification practices changed radically after they came under scrutiny.

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Certificates of origin (COOs) are deceptively simple yet important documents that accompany exported products to identify where the goods were made. By international agreements beginning with the Geneva Convention of 1923, chambers of commerce are charged with verifying and stamping the COOs that companies prepare. Four million COOs are processed annually in the U.S., and in the last year some verification practices changed radically after they came under scrutiny.

In January, the Consulate General of Egypt in Houston announced it was cracking down on fake or loaned chamber stamps used in processing COOs. For many chambers, this was their first notice that lending out their stamps for someone else to use was against the rules. ACCE provided more information on why stamp lending was counter to international agreements, and gave Consul General Alaa Issa of Houston a chance to explain his policy in a webinar last May with 90 participants.

The word began to spread, and the more questions ACCE asked, the bigger the problem seemed to be. The U.S. Chamber has been speaking out against stamp lending for two decades. The International Chamber of Commerce's World Chambers Federation told ACCE that the U.S. was "out of step" with the rest of the world because the U.S. is the only place where chambers routinely give out their stamps, abdicating their oversight role. The U.S. Council for International Business also indicated that stamp lending is improper.

Fixing the Problem

Beginning last summer, a new trend developed. Several major chambers of commerce, realizing they were supposed to review certificates of origin, asked their local freight forwarders and exporters to return the chambers' stamps. While there was resistance, the success rate was surprising. Apparently some in the freight forwarding/exporting community also had learned that using a chamber's corporate seal, without that chamber seeing the documents it was supposedly approving, runs counter to international standards.

And on Sept. 21, the U.S. Department of Commerce's Census Bureau hosted on its "Global Reach" Web site an ACCE blog describing the stamp lending situation. This post brought the discussion on COOs beyond chambers to the entire exporting community. "I am pleased to see that chambers and the rest of the exporting community are increasing their awareness," said Kelly Herman, deputy director for customs affairs at the United States Trade Representative (USTR) office. "A properly executed certificate of origin is imperative to avoid delays in customs clearance."

Online Processing

An indication of chambers refocusing their verification processes for COOs is the growth in online processing of these documents, which ACCE introduced with its partner eCertify in late 2009. The volume of COOs processed electronically by chambers has jumped 360 percent over the past year. Electronic processing can save shippers $100 or more per certificate in courier and labor costs.

The Greater Kansas City Chamber of Commerce has seen its processing grow even faster. "eCertify certificates of origin have been a pleasant surprise," said Luann Feehan, the chamber's vice president of membership development. "What counted for us is that we really went out and sold the concept to local exporters and freight forwarders." Feehan said the chamber has collected more than $10,000 in the past three months through eCertify, and executives believe this is only the beginning.

ACCE will soon introduce formal training on how to process COOs. It takes about two days to learn how to properly process and verify these documents. Training will give chambers the confidence that they are doing things right and the ability to market this valuable service more aggressively.

What's Next?

What does the future hold for this potential $90 million market? The practice of lending stamps and ignoring COO verification procedures may be abating. Ultimately perhaps 100 chambers will profit significantly from a strategy of combining electronic processing and training on certificate handling with a staff that is conversant in international trade. (Many more than 100 chambers may adopt better COO processing practices, but not everyone will make lots of money because the market, while large, isn't infinite.) These high-volume chambers will also be able to tack on other services connected with foreign commerce, such as seminars and trade missions.

But which chambers will be among those 100? That may be determined partly by community size. It's difficult to be a COO powerhouse in a region with five small exporters; proximity to airports, seaports and high-volume shippers is a definite advantage. Also important is aggressive marketing of first-rate COO services. We've already seen exporters skip over nearby states to find a chamber farther away that does timely and expert processing of certificates of origin. Customers vote with their feet—and now with their mouse buttons—for the best service.

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