Loose oversight of ‘Made in USA’ export certificates undermines U.S. business, experts warn
To avoid always having to stamp documents to verify shipments originated in the United States, a chamber of commerce near Chicago’s O’Hare airport leases its seals to busy exporters for $250 a year.
It would be too much work for a chamber employee to stamp each document, said Shirlanne Lemm, president of the Greater O’Hare Association of Industry and Commerce. Besides, she asked, how much would chamber employees know about the shipments?
“We don’t necessarily do that all the time,” Lemm told the Tribune-Review. “If someone is doing (exports) a lot, we’ll talk to them about it. Someone has to sign for it, and they’re taking responsibility.”
Experts on international shipments warn that the United States’ loose system of having unregulated chambers of commerce verify the origins of exports undermines the credibility of the nation’s foreign shipments and threatens American producers.
Moreover, the practice could harm unsuspecting consumers if a substandard product makes its way into the marketplace.
“In the U.S., there is zero oversight or enforcement because it’s not considered to be a health or safety issue,” said Doug Jacobson, a Washington attorney who specializes in trade compliance. “A lot of this stuff is below the radar screen. Nobody likes to talk about it, but it’s definitely there. It renders the entire U.S. certificate of origin process meaningless.”
Exporters and shippers are supposed to prepare a commercial invoice that details what they export and the certificate of origin, which typically receives an embossed stamp or seal that’s signed, dated and notarized. U.S. chambers stamp an estimated 4 million certificates of origin each year.
Although chambers are supposed to closely examine export paperwork, critics said they do not always do so.
Unlike many countries, the United States does not limit who can start a chamber of commerce and doesn’t closely regulate who stamps products to verify their origin, said Gary Toebben, president of the Los Angeles Chamber of Commerce. Nothing would stop a shipping company from starting a “chamber of commerce” and stamping documents, he said.
Other critics say it’s common practice for some chambers to sell pre-stamped pads of blank certificates that exporters fill out. Lemm said her chamber does not do that.
“The concern is that some countries would decide they would no longer accept shipments from the United States because they identified shipments with certificates of origin that were not validated the way they expected them to be,” Toebben explained.
The U.S. Trade Representative’s Office declined to comment but referred to World Trade Organization negotiations with trading partners that identified certificates of origin and other required export approvals as barriers to trade, and said the government has taken a position against them.
Lisa Burgess, spokeswoman for the U.S. Chamber in Washington, declined to comment, saying its expert on the subject was overseas and unavailable.
The International Chamber of Commerce, based in Paris, has said its members should verify shipment paperwork before stamping it.
International agreements govern trade worldwide, starting with the Geneva Convention of 1923 and more recently the Kyoto Convention of 2005.
Many countries require a certificate of origin for imports, and the international agreements say chambers should do the verification. The certificates can be used to set import duties and tariffs, which vary by nation.
Wealth of discrepancies
The international implications of failing to properly verify certificates can be serious, said Alaa Issa, consul general for Egypt in Houston. His office started looking at certificates of origin more closely when beef that supposedly came from the United States turned out to be Brazilian and past its expiration date.
“What we found were quite a number of discrepancies,” Issa said.
His office identified documents stamped by fictitious chambers of commerce and others from legitimate chambers that had unauthorized signatures. In two cases, he said, papers were signed by individuals who had left their chambers of commerce more than five years earlier.
In the beef case, Issa said a U.S. certificate of origin eased its entry into Egypt and then complicated authorities’ ability to trace the source. A similar but separate case involved a shipment of powdered milk, he said.
American trade officials and chamber executives often are surprised that the rest of the world takes the practice seriously, said Carman Rossi, president of E-Certify, an electronic certification company based in Adelaide, Australia. His company allows chambers to issue electronic certificates of origin.
“I’ve had quite a few people tell me they’ve lent out their seal,” Rossi said. “I was astounded to find that chambers in U.S. were doing that and admitting it.”
Importing countries rely on the certificates, he said, adding that it is fraudulent for an exporter or freight forwarder to acquire and use a chamber seal.
“It’s like Dracula in a blood bank,” Rossi said. “Who’s to know whether the freight-forwarder is rubber-stamping whatever the papers say? … They have a vested interest in getting the goods overseas without getting involved in the details.”
Watchful in Pittsburgh
The 109-year-old Pittsburgh Airport Area Chamber of Commerce in Moon has issued certificates of origin since at least the 1990s, said Doug Keeter, membership director, who oversees the process.
The chamber stamps its embossed seal on shippers’ documents if they’re in order. Then a staff member who processes the paperwork signs the certificate in blue ink.
Typically, the chamber issues about 130 paper-based certificates each month and about 50 electronic ones. The chamber charges members $10 per page and nonmembers $17, generating about $30,000 a year in revenue, said Bernadette Puzzuole, interim CEO.
“It’s a nice item in our budget,” she said.
An employee of R.L. Swearer, a shipping company in Moon, goes to the chamber at least once a week to get a certificate of origin stamp, said Chas Watson, vice president. Although his company follows the rules closely, he said not everyone does — if only to eliminate a step in the process.
“If someone could cut a corner, they generally will,” Watson said. “If you’re going to import from China, slap a ‘Made in the USA’ sticker on it and certify it was made in the USA, then you’re committing fraud on many levels. Most people are not doing that; they’re doing it because it’s convenient.”