Managing Global Compliance in Exports

MBA (IB) 2021-23

Mid Term Assignment

1. What are the criteria in getting a preferential Certificate?

A Preferential Certificate refers to a Preferential Certificate of Origin, which is
defined as an ‘instrument which establishes the evidence of origin of goods imported
into any country’. While the types of Certificates of Origin may be classified into two
categories - Preferential Certificate of Origin and Non-Preferential Certificate of
Origin, the procurement of a Preferential Certificate of Origin certifies that the goods
are subject to reduced tariffs, or even exemptions in some cases, when they are
exported to countries that extend this privilege. The agreements and schemes under
which Indian exports receive preferential status, along with the accompanying Rules
of Origin (whose fulfilment is essential for the issuance of Preferential Certificates of
Origin), are as follows:

• Generalised System of Preferences (GSP): This is a non-contractual instrument

under which developed countries provide tariff concessions to developing
nations, without expecting any reciprocation. The exporting nations are required
to provide certain details through a document known as Form A. At present, the
participating developed countries include Armenia, Australia, Belarus, Canada, the
European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian
Federation, Switzerland, Turkey, United Kingdom, and the United States of
America

• Global System of Trade Preferences (GSTP): This agreement facilitates trade

among 46 member nations who are all classified as developing countries
(Including India). The Export Inspection Council is the sole authority who may
issue the Certificate of Origin

• SAARC Preferential Trading Agreement (SAPTA): Under this scheme the

members of the South Asian Association for Regional Cooperation (SAARC),
namely Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and
Sri Lanka, offer tariff concessions to each other. List of issuing authorities include
the Agricultural and Processed Food Products Exports Development Authority,
The Cashew Export Promotion Council of India, Falta Special Economic Zone and
Export Inspection Council, among 34 other organizations.

• Asia-Pacific Trade Agreement (APTA): This agreement offers liberalization of

tariff as well as non-tariff barriers so as to expand the exchange of goods within
the Economic and Social Commission for Asia and Pacific (ESCAP) region, which
 includes Bangladesh, Sri Lanka, South Korea, India, and China. The issuing
authorities are identical to the SAFTA agreement

• India-Sri Lanka Free Trade Agreement (ISLFTA): The Export Inspection Council
issues the required Certificate of Origin under this agreement between India and
Sri Lanka

• India-Afghanistan Free Trade Agreement: The Export Inspection Council issues

the required Certificate of Origin under this agreement between India and
Afghanistan

• Indo-Thailand Free Trade Agreement: Under the terms of this agreement, India
and Thailand have signed a protocol in order to implement an Early Harvest
Scheme, under which tariff concessions are offered to goods that satisfy the
conditions specified by the Rules of Origin as mandated by the Department of
Revenue, Ministry of Finance. Once again, the Export Inspection Council is the
sole issuer of the Certificate of Origin under this scheme

• India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA):

The Export Inspection Council has claimed sole authority as the issuer of the
Certificate of Origin since July 2011, under the workings of the Economic
Partnership Agreement between the governments of India and Malaysia

• India-Korea Comprehensive Economic Partnership Agreement (CEPA): This was

signed with the intention of expanding the scope of investment between India
and South Korea, by liberalizing the trade in goods and services between the two
countries

• India-Japan Comprehensive Economic Partnership Agreement (IJCEPA): The

Government of India and the Government of Japan have signed the
Comprehensive Economic Partnership Agreement (CEPA) to increase investment
opportunities and strengthen protection for investments and investment
activities between the Countries. Export Inspection Council is the sole agency to
issue Certificate of Origin under this Agreement
While the above agreements facilitate the provision of a preferential certificate, the
issuance of the same is subject to the fulfilment of certain rules and regulations, known as
the ‘Rules of Origin’. These vary from agreement to agreement and are highly dynamic in
nature. For example, following are the Rules of Origin as prescribed under the Generalized
System of Preferences:
To qualify for preference, products must:
(a) fall within a description of products eligible for preference in the country of destination.
The description entered on the form must be sufficiently detailed to enable the products to
be identified by the customs officer examining them;
(b) comply with the rules of origin of the country of destination. Each article in a
consignment must qualify separately in its own right; and,
(c) comply with the consignment conditions specified by the country of destination. In
general, products must be consigned direct from the country of exportation to the country
of destination but most preference-giving countries accept passage through intermediate
countries subject to certain conditions. (For Australia, direct consignment is not necessary).
2. Draw a flow chart which will help to understand the physical distribution of the cargo
(End to End).

(Created using Microsoft Powerpoint)