Does “Country of Exportation” Mean the Same as “Exporting Country”?

In documentary credit practice, a few words in an LC can create major compliance issues — especially in triangular trade transactions where the beneficiary, supplier, and shipment origin are all located in different countries.

One such phrase is:

“Certificate of Origin issued by the Chamber of Commerce of the country of exportation.”

At first glance, this may sound straightforward. But when the beneficiary presents a Certificate of Origin issued in its own country while the goods are shipped from another country, banks may face the question:

Does “country of exportation” simply mean the beneficiary’s country, or does it refer to the actual country from which the goods are exported?

The following question illustrates this practical issue.

QUESTION

Dear Mr. Old Man,

I have a quick question for you.

Does “country of exportation” have the same meaning as “exporting country” under ISBP interpretation?

I have an LC which requires:

“Certificate of Origin to be issued by the Chamber of Commerce of the country of exportation.”

However, the beneficiary presented a Certificate of Origin issued in the beneficiary’s country, while the country of shipment is totally different from the beneficiary’s country.

Would this constitute a discrepancy?

Best regards,

Muna Najjar

_________

ANSWER

Dear Muna,

Thank you for your question.

Yes, in normal trade and documentary credit practice, the term “country of exportation” is generally understood to mean the same as “exporting country” — namely, the country from which the goods are exported or shipped.

In your case, the key point is that the LC specifically requires the Certificate of Origin to be issued by the Chamber of Commerce of the country of exportation.

If:

• the goods were shipped from Country A,
• but the Certificate of Origin was issued by the Chamber of Commerce in Country B (the beneficiary’s country),

then the document would likely be considered discrepant, because the Chamber issuing the certificate is not located in the country of exportation/shipment as required by the LC.

A possible discrepancy wording could be:

“Certificate of Origin not issued by Chamber of Commerce of the country of exportation as required by the credit.”

This situation commonly arises in triangular trade transactions, where:

• the beneficiary is located in one country,
• the supplier or manufacturer is in another,
• and shipment occurs directly from a third country.

Unless the beneficiary’s country is also the actual country of exportation, presentation of a COO issued there would normally not comply with the LC requirement.

Although ISBP A19(e) recognizes that “exporting country” may refer to different countries depending on the circumstances, in this case the issuing bank appears to have interpreted “country of exportation” as the actual country from which the goods were shipped/exported. Accordingly, a COO issued by the Chamber of Commerce of another country does not appear to meet the LC requirement.

Please note, however, that applicants may waive discrepancies…
Customs authorities usually do not

Best regards,
Mr. Old Man