Certificate of free sale

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 characteristics (A. E. Appleton, C. Dordi 2011, p. 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, p. 719).

Goods requiring CFS

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

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, p. 734). Controversial 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, p. 1).

Examples of Certificate of free sale

• A CFS for food products such as milk, grain, and meat requires that the products are safe for consumption and have gone through the necessary health inspections. It must also include information about the manufacturer and the production process. For example, a CFS issued by the Chinese Government for dairy products exported to the U.S. must include a statement that the products have been produced in a government-approved facility and conform to the standards set forth by the U.S. Food and Drug Administration (FDA).
• A CFS for pharmaceuticals must include a statement that the drug has been approved by the relevant regulatory authority for sale in the country of origin. Additionally, it must include information about the manufacturing process and the quality assurance measures taken to ensure the drug is safe for consumption. For example, a CFS for a drug manufactured in India and imported to the U.S. must include a statement that the drug has been manufactured according to the standards set forth by the U.S. FDA.
• A CFS for medical devices must include a statement that the device has been approved by the relevant regulatory authority for sale in the country of origin. Additionally, it must include information about the manufacturing process and the quality assurance measures taken to ensure the device is safe for use. For example, a CFS for a medical device manufactured in China and imported to the U.S. must include a statement that the device has been manufactured according to the standards set forth by the U.S. FDA.

Advantages of Certificate of free sale

Certificate of free sale has a lot of advantages. To name a few:

• It helps to protect the interests of importing countries, by allowing to import only those products that meet the specific conditions. This way the states can be sure that the delivered goods are legal and of high quality.
• It provides a guarantee for the foreign buyers that the imported products meet the required standards and regulations.
• It helps to avoid legal issues related to the import of goods and products.
• It speeds up the customs clearance process and reduces the customs fees.
• It helps to reduce the paperwork, thus making the import process easier and faster.

Limitations of Certificate of free sale

Certificate of free sale is a document that confirms the standards of imported goods. It is not required by every country, but it helps to secure the interests of states by allowing to import only those products that meet specific conditions. Nevertheless, the Certificate of free sale has several limitations:

• It is not always accepted by the target country. There might be additional requirements or a different form of certification which must be fulfilled in order to be able to export goods.
• It does not cover restrictions, such as quotas, taxes or fees.
• It does not guarantee that imported goods will be accepted by the target country.
• It is limited to certain goods, thus not all products can be exported with the help of CFS.
• It does not protect the interests of exporters, as it does not provide any guarantee or warranty for the goods.

Other approaches related to Certificate of free sale

One of the other approaches related to Certificate of Free Sale is to provide additional information about imported goods. This includes:

• A detailed description of the product, which includes its origin, characteristics, purpose, and any other relevant information.
• A list of countries where the product has already been successfully sold.
• A statement that the product is free of any legal restrictions or restrictions of any other kind.
• A list of standards and regulations that the product meets.
• A statement that the product is safe for consumption or use and free of any contaminants.

In conclusion, the Certificate of Free Sale is a document that provides evidence that imported products meet the standards set by the importing country and are safe for consumption or use. It includes additional information about the product, such as its origin, characteristics, purpose, and any other relevant information, as well as a list of countries and standards that the product meets.

Certificate of free sale — recommended articles

Certificate of approval — Selective distribution — Export license — Export merchant — Vendor analysis — Parallel importing — Certificate of quality — Consumer rights — Consumer protection

References

• 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