What country of origin means and how it’s determined

Country of origin is one of the first things the Canada Border Services Agency (CBSA) looks at when you import goods into Canada.

Determining origin, however, isn’t always straightforward, especially when goods go through manufacturing processes across multiple countries.

Along with the tariff classification (HS code) and the value for duty, country of origin is part of the framework the CBSA uses to assess imported goods.

Together, these three elements decide how much you’ll ultimately pay at the border.

Read on to learn how country of origin is defined, how it’s determined, and common mistakes to avoid when declaring the origin of your imported goods.

What is country of origin?

Country of origin refers to the place where imported goods were manufactured, produced, or grown.

It is not always the country from which the goods were shipped.

For simple goods, the origin is clear. Agricultural products, minerals, or livestock are considered fully acquired in the country where they were harvested, mined, or raised.

However, for manufactured goods, origin can be more complex.

When a product is made using materials from several countries, the origin is usually attributed to the place where the last substantial transformation took place. 

Besides its use in assessing the duty rate on your imports, the country of origin determines whether your goods qualify for preferential tariff treatment under free trade agreements (FTAs) and what marking or labelling requirements apply. 

How country of origin is determined

The country of origin is determined by applying specific rules of origin, which are the criteria used to decide where a product originates.

FTAs, such as the Canada–United States–Mexico Agreement (CUSMA), CETA, and CPTPP, affect how these rules apply.

When origin is determined under an FTA, it is referred to as preferential origin.

For goods imported from the United States or Mexico, the country of origin is determined using the CUSMA rules of origin.

Under these rules, goods are considered originating in the country where:

• They were wholly obtained or produced
• They were produced exclusively from domestic materials
• Foreign materials incorporated into the goods undergo a specific tariff classification change
• The single material that gives the goods their essential character was produced

For goods imported under other FTAs, such as CETA and CPTPP, the country of origin is determined by applying that agreement’s specific rules of origin.

For goods imported from a country without a standing FTA, the country of origin is where the goods were substantially manufactured.

This is the place where most of the production or manufacturing takes place, taking into consideration the costs of materials, labour, and overhead.

This type of origin is known as a non-preferential origin and, in this case, the Most-Favoured-Nation (MFN) tariff rate applies.

Common mistakes and how to avoid them

Even experienced importers can make mistakes when determining the country of origin.

These mistakes can result in unexpected duty costs, border delays, or even penalties during a CBSA audit.

Here are the most common ones and how to avoid them:

Confusing shipment country with country of origin

It’s easy to assume the country a shipment departs from is the country of origin, but this is not always the case.

Always check and verify where the goods were grown, produced, or substantially transformed.  

Using outdated or incorrect certificates

Trade agreements change, and so do documentation requirements. For example, NAFTA certificates are no longer valid and are now replaced by CUSMA rules.

To make sure you’re using the latest documentation and including all required data elements, consult your customs broker.

Accepting incomplete supplier declarations

Sometimes, supplier statements may not fully explain how goods meet the rules of origin. 

Work with your customs broker to confirm that supplier declarations provide enough detail to satisfy CBSA requirements.

Overlooking mixed-origin goods

Products with components from multiple countries often require closer review. And mistakes can happen when the exact rules of origin are not taken into consideration.

Assess whether your imports meet the applicable rules of origin with the support of your customs broker.

Inadequate record-keeping

Failing to maintain certificates and supporting documentation for the required six-year period can result in penalties during an audit.

Set up internal systems to store all certificates, invoices, and supplier records in an accessible format.

How Cole International can help

Country of origin affects both the cost of your imports and your compliance obligations as an importer.

Determining the correct origin, however, usually requires tracing supply chains, understanding substantial transformation rules, and applying trade agreement criteria.

At Cole International, we offer trade consulting and customs brokerage services to help Canadian importers determine, document, and declare country of origin correctly.

Our customs experts work with importers every day to:

• Interpret and apply CBSA’s rules of origin
• Verify whether goods qualify for preferential tariff treatment under free trade agreements
• Review supplier declarations for accuracy
• Support CBSA compliance to reduce the risk of delays or penalties

We don’t believe in guesswork. We get it right the first time.

If you import goods into Canada, please reach out to one of our trade professionals to help you determine and declare the correct country of origin while ensuring full CBSA compliance.