Certificate of free sale

Certificate of free sale
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Methods and techniques

Certificate of free sale (CFS) is a document confirming the stanards fulfilled by imported products. The certificate is a guarantee of legality and quality of delivered goods. It is not required by every country around the world, but - primarily - by the developing countries. CFS helps to secure the interests of states by allowing to import only those products that meet the specific conditions considering sort of goods and their characterstics (A. E. Appleton, C. Dordi 2011, s. 719).

Obtaining the Certificate of free sale is not obligatory for exporting goods to all countries. Those that require CFS as a condition for some product categories are i.e countries of Latin America, Middle East, Africa and Asia (A. E. Appleton, C. Dordi 2011, s. 719).

Goods requiring CFS[edit]

Products requiring the certificate while imported to some of the countries are generally goods representing:

  • pharmacy
  • medical sector
  • some types of food and beverages.

An example of a company that obtained the certificate is a hemp industry leader, being the first one to acquire this right on hemp market. The procedure requires an examination of contained substances, as well as expiry and best-before dates. Forbidden substances vary across the world, which means a medicine allowed in one country could turn out to be illegal in the other. The CFS not only helps to maintain the expected quality, but also to clarify legal standards of each industry. On one hand, the variety of rules and internatonal differences might prove to be a reason for confusion for the exporters. On the other hand, it could be perceived as a guarantee of good trading conditions for the developing industries and a chance of improvement of overall trading standards. CFS gives the countries a possibility of deciding about their internal rules, forcing international business partners to respect those restrictions. It is a protection against a problem of delivering worse quality products to the developing countries in order to sell the goods that are not considered good enough to be offered on some markets.

Controversies[edit]

The issue of the Certificate of free sale still evokes many controversies among some of the interested parties. Those represent mostly the exporting industries, which results in public debates and criticism. The reason for this state of affairs is the fact that obtaining the CFS may be not only difficult, but also cost-generating. The necessity of fulfilling the procedure is connected with expensive survey, tests and quality control, which forces the exporters to demand higher prices of final goods. Doing business with developing countries becomes insufficient considering the influence of local companies. Global players could be perceived as less competitive, resulting in reduction of their international potential. Another disadvantage of CFS necessity from the point of view of the developing countries demanding the certificate is the fact that some of the goods listed as second quality products and thus prohibited by CFS could prove to be a reasonable solution for those industries. The limited financial resources create a barrier that could potentially be omitted by importing goods of lower quality, but still delivering sufficient functionality. Nowadays some of the restrictions are argued to be limiting the opportunities of importing countries. Such products could create a compromise between quality and price, allowing industries to afford a purchase (A. E. Appleton, C. Dordi 2011, s. 734). Controverial is also the matter od Indian market. Present regulations create an internal trade barrier, which is said to have a negative impact on the industry (S. N. Shirodkars 2016, s. 1).

References[edit]

  • Appleton A. E., Dordi C. (2011), Certificates of Free Sale: Who Is Being Protected from Whom?', "Journal of International Economic Law", nr 14, 719-764.
  • Cadot O., Carrere C., Strauss-Kahn V. (2011) Export Diversification: What's behind the Hump? . "Review of Economics and Statistics", 93(2), 1-21.
  • Feenstra R. C.(2016). Many goods and factors . "Advanced International Trade", 2, 83-86.
  • Shirodkars S. N. (2016), Medical device industry distraught over health ministry's lackadaisical attitude to issue FSC to exporters, „Ingredients South Asia”, FFC Information Solution, New Delhi
  • Sravani M., Gowthami B., Prabhahar E.,Rama Rao N. (2017). Regulatory Aspects of Pharmaceuticals in Gulf Co-operation Council Countries . "International Journal of Pharma And Chemical Research", 3(3), 397-412.

Author: Joanna Możdżeń