Doing business internationally means that you may sometimes need to respond to what seems like a unique or unusual request. The requests may be for certain documents, the inclusion of certain statements on a proforma invoice or other documents, or for terms and conditions that U.S. customers would not normally ask of you.
Most international transactions require a commercial invoice and a packing list. On occasion, international customers may request additional documents to satisfy letters of credit, sales contracts or purchase agreements.
Defining what these documents are and the information that should be included can sometimes be difficult since they may have different content depending on the document’s usage. That is true for the Manufacturer’s Affidavit, which has one use for exporting from the U.S. and another official use for importing into the U.S.
Manufacturer’s Affidavit for Export
A Manufacturer’s Affidavit, which is also sometimes described and labeled as a Manufacturer’s Certificate, is typically used in one of four ways:
1. A Manufacturer’s Certificate might be used in lieu of a Certificate of Origin. For example:
Charles’ Dryer Company realized that they wanted to sell to their existing customers, but they were limited in their ability to do so since their professional dryers were lasting longer than anticipated. They were eager to sell their customers state-of-the-art units with new electronic controls that used sophisticated sensors and readouts.
To facilitate new sales, Charles’ Dryer Company agreed to remove units that were less than 10-years old and certified by an engineer as being in operating condition. They would then sell these older units to customers in Mexico.
Their Mexican customers were eager to purchase these used dryers and bought as many as the firm could supply. However, the Mexican customers were anxious for a NAFTA Certificate of Origin. Since Charles’ Dryer Company had neither possession nor control of the dryers in the interim, they could not provide a NAFTA Certificate. Instead, they offered their customers a Manufacturer’s Affidavit.
This document certifies that Dryer Model No. 52345 was
manufactured by Charles’ Dryer Company, 1234 Charles
Street, Charlestown, NC 12345, in December 1994.
2. A Manufacturer’s Affidavit or Certificate may be used when required under a letter of credit. The contents of the document would then need to comply with the requirements on the letter of credit.
3. A Manufacturer’s Affidavit may be used when the buyer intends to pay for goods prior to shipment but not prior to production. This requires a trusting and long-term relationship between the buyer and seller similar to the relationship between two parties when the transaction is under open account.
In this example there is a lengthy lead time and the buyer does not want to tie up funds in advance, and the seller agrees to these terms. Once the production is complete, the seller confirms the order is ready to ship by preparing a certificate stating that the goods ordered have been produced in accordance with the contract. Upon receipt of the certificate, the buyer forwards payment and shipping instructions to the seller.
4. A Manufacturer’s Affidavit may be required by the buyer’s country to verify the origin of the goods and the name and address of the producer.
You can determine whether or not specific countries require a Manufacturer’s Affidavit (and other export documents) from your freight forwarder or from various resources on the web. You should also ask your customers what documents they need to clear your goods through Customs and even provide them with sample documents in advance. This is particularly effective when your customer is a seasoned importer.
In next month’s article, I will examine a Manufacturer’s Affidavit for Import, also known as a Declaration for Free Entry of Returned American Products.