6 Reasons You Shouldn't Rely on Your Freight Forwarder to Complete a NAFTA Certificate of Origin

David Noah | September 24, 2014 | NAFTA, Export Forms
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freight-forwarder-nafta-certificate-of-origin“Knock Knock.”

“Who’s There?”

“Department of Homeland Security.”

*Gulp.* 

Would a drop-in visit from Homeland Security, the Bureau of Industry and Security, or customs officials make you feel nervous? If you’re not completely aware of your exporting practices, or you’re leaving most of the work to your freight forwarder, it should make you anxious. The declarations you make are ultimately your responsibility, even if your freight forwarder is doing most of the work for you. Here are six reasons you should take your role seriously and not rely solely on your freight forwarder to complete a NAFTA certificate of origin (or any certificate!).

1. Nobody Knows Your Products as Well as You Do

You are the product expert. Be proud of that! No one knows more about your products than you—and that includes your freight forwarder. While your forwarder is an asset to you and your businesses, it shouldn’t be relied upon as the main source of information; in fact, the opposite is true: a good freight forwarder partnership would rely on you to know the correct information.

2. The NAFTA Rules of Origin Are Complicated

NAFTA Rules of Origin—and in fact, all certificates of origin—require extreme precision and attention to detail. Even full-time exporters can stumble when they’re tasked with determining origin! In a global economy, manufacturers are sourcing materials and components from around the world, and unless you’re selling a product that is grown or manufactured 100 percent in the United States, it can be an excruciatingly detailed process. Leaving the confusing and sometimes difficult task of determining origin to your freight forwarder is a poor decision because freight forwarders don’t know your products’ backstory, and they have no way of knowing if your product qualifies.

3. You Know Your Schedule B Code Better than a Forwarder 

The Harmonized Tariff Schedule or Schedule B Code is vitally important for determining origin, and you will (or should) know that better than a freight forwarder. As an exporter, you are required by law to perform your due diligence when exporting your products, which includes ensuring that the Electronic Export Information (EEI) is correctly filed through the AES as required by law.

4. Your Freight Forwarder Doesn't Actually Know If the Goods Qualify for NAFTA

If you’re exporting goods you didn’t produce, it’s up to you to prove the goods qualify for NAFTA. Your freight forwarder doesn’t have any way of knowing the provenance of the goods. The responsibility for that documentation rests on you. (If you need help determining whether or not your goods qualify for NAFTA, sign up for our free seven-part mini-class.)

5. Freight Forwarders Want to Make a Profit, Too 

Most freight forwarders are an integral and trustworthy component to exporting businesses’ success. They play an important role in managing the movement of freight worldwide. However, when a freight forwarder completes your certificate of origin forms, they are doing you a disservice—opening you up to increased compliance risks and exposure to fines and penalties. Doing your work for you doesn’t put them at risk—but it does put you at risk.

Remember, freight forwarders want to make a profit, too. You should be closely communicating with your forwarder, providing them the information they need, and if they handle your documentation without involving you, take note and reconsider your partnership. The same is true with AES filing. We recommend filing your own EEI, or at the very least providing your forwarder with the information they need to properly file it on your behalf. If you are not filing your EEI yourself, make sure you are requesting and receiving a copy of what was filed in AES on your behalf and auditing the information.

6. As an Exporter, You Are Ultimately Liable

All roads point back to the exporter. If there are any questions about the accuracy of your certificate of origin, or if the Canadian and Mexican governments want to audit, they won’t go to the freight forwarder or broker—they will go to the exporter. When you let your freight forwarder do your job, you risk fines, penalties and even criminal prosecution and put your company’s reputation on the line.

When-And-How-To-Complete-A-NAFTA-Certificate-Of-Origin