KORUS FTA: Who Issues the Certificate of Origin When the Producer and Exporter Differ? Released

Under the Korea-U.S. Free Trade Agreement (KORUS FTA), significant flexibility is provided regarding the issuance of a Certificate of Origin (COO). Unlike many other FTAs, the KORUS FTA allows the exporter, producer, or importer to issue the certificate. This provision is designed to enhance the convenience of claiming preferential treatment, though it carries specific responsibilities for each party involved.

The KORUS FTA utilizes a self-certification system. There is no prescribed official form; instead, the document must simply include minimum essential information (details of the exporter/producer/importer, HS code, origin criteria, date, etc.). Most importantly, regardless of who issues the document, the certifier must possess the responsibility and capability to prove that the goods satisfy the KORUS FTA Rules of Origin.

Analysis by Issuing Entity

The roles and considerations for each party are as follows:

• Producer

  The producer is directly involved in manufacturing and possesses the most accurate information required to determine origin. They hold core documents such as the Bill of Materials (BOM), manufacturing process charts, purchase records of raw materials, and cost accounting statements. Therefore, the producer is considered the most ideal party to issue the COO. Issuance by the producer ensures high reliability and allows for prompt responses during customs origin verifications.

• Exporter

  When the exporter is not the producer, they typically issue the COO based on information provided by the producer. In this case, the exporter assumes legal liability for the contents of the certificate. It is crucial for the exporter to secure sufficient and reliable evidence from the producer (e.g., a Declaration of Origin or an Origin Verification Statement). Even if the exporter does not produce the goods, they must maintain a system to provide supporting data upon request by customs authorities, ensuring the accuracy of the information they are certifying.

• Importer

  A unique feature of the KORUS FTA is that the importer can issue the COO directly. This is useful when the producer or exporter is unable or reluctant to provide a certificate. However, an importer issuing a COO must possess sufficient knowledge and evidentiary documents to prove the goods originate from the U.S. If the Korea Customs Service finds the supporting data insufficient or erroneous during a verification process, the preferential tariff may be denied, and the importer may face penalties or additional taxes. Thus, importer-based certification should be approached with caution.

Core Requirements for Exporters and Producers

To qualify for issuing a COO, an exporter or producer must meet the following three essential requirements to ensure the reliability of the certification and efficiency of post-clearance audits:

• Maintenance of Records

  The certifier must retain all documents proving that the goods meet the origin criteria, including:

  • Product descriptions and HS classification
  • Manufacturing process descriptions (work orders, flow charts, etc.)
  • Raw material purchase and production records (invoices, inventory logs)
  • Proof of meeting origin criteria (Value Content calculations, Tariff Shift records)
  • Invoices and transaction records between the producer and exporter

  These records must be kept for at least five years from the date of importation. Electronic storage is permitted under the agreement.

• Submission of COO Copy to U.S. Customs (CBP)

  The U.S.-based exporter or producer is obligated to provide a copy of the issued COO to U.S. Customs and Border Protection (CBP) if requested. This ensures accountability for the act of certification.

• Capability to Submit Evidence for Korean Customs Verification

  This is the most critical requirement. The Korea Customs Service may initiate a post-clearance origin verification. The issuing party must be prepared to submit all supporting evidence proving the goods meet the KORUS FTA standards directly or through a representative. If the certifier fails to provide documentation or if the records do not sufficiently prove the origin, the preferential tariff will be revoked, resulting in the collection of back taxes and potential fines.

Conclusion and Recommendations

While any of the three parties (producer, exporter, or importer) may issue a KORUS FTA COO, it is most advisable for the party with the clearest evidence and the greatest capacity to respond to customs inquiries to do so.

Specifically, if an exporter or importer who is not the producer issues the certificate, they must establish a robust system to obtain and verify origin data from the producer. Clear communication and defined responsibilities within the supply chain are essential to minimize risks. We recommend consulting with a customs professional to establish an optimal strategy tailored to your specific trade scenario.