1. The Pan-Euro-Mediterranean Cumulation of Origin
Achim Seiler,
Trade Consultant and Capacity Building Specialist
EU-Project: Trade and Private Sector Development (TPSD)
TPSD is implemented by
in cooperation with
and

2. Table of Contents Key aspects What is origin ? What is cumulation ?
Bilateral
Diagonal
Regional
Full
Structure of the origin protocols
Examples of cumulation

3. Key aspects Originating status Cumulation Minimal operations
General tolerance rule
No-drawback rule
Principle of territoriality
Direct transport rule
Proof of origin
Approved exporter

4. What is Origin?
Origin is the economic nationality of goods traded in commerce
a) Non-preferential origin
b) Preferential origin

5. What is Origin ? (2) Non-preferential Origin
Non-preferential origin merely confers an „economic“ nationality on goods and does not confer any benefit on them.
Country where goods have been wholly obtained
Country of last, substantial, economically justified working or processing

6. What is Origin ? (3) Preferential Origin
Preferential origin confers certain benefits on goods traded betweeen countries that have agreed such an arrangement, usually entry at a reduced rate or free of duty.
a) Country where goods have been wholly obtained
Country of sufficient working or processing according to the list rules of the protocols
Country where originating materials have been (ac)cumulated

7. Cotton Cotton Cotton Fibre Fibre Fibre Yarn Yarn Yarn Fabric Fabric
Garment
Garment
Garment
Wholly obtained
List rules fulfilled
Non originating

8. Cotton Cotton Cotton Fibre Fibre Fibre Yarn Yarn Yarn Fabric Fabric
Garment
Garment
Garment
Non originating
Cumulation
Cumulation

9. Originating since wholly obtained. No cumulation needed
Non-originating
originating
Non-originating
originating
Originating
originating
Originating
Originating since wholly obtained. No cumulation needed
Originating since list rules fulfilled. No cumulation needed

10. List rule not fulfilled, but cumulation
Non-originating
Non-originating
Non-originating
Non-originating
Originating A
Non-originating A
Originating B
Non-originating B
List rule not fulfilled, but cumulation
Non-originating. List rules not fulfilled. No cumulation possible

11. List requirements
Value percentage: the value of non-originating materials must not exceed a certain percentage of the ex-works price of the finished product
Change of tariff heading: non-originating raw materials or components used must have a different HS heading from the HS heading of the finished product
Specific rules: very specific criteria laid down

12. Processing Status Cumulation Country of Origin Wholly obtained No A B
Sufficient working No A B C
Last working
Yes A B C
Minimum or less
Yes
(A)
(B) C
No processing
Yes A B C
No Pan-Euro-Med No A B C

13. What is cumulation?
Cumulation is a system that allows contracting parties to use originating products from each other
Cumulation allows for originating materials and components to be further processed into a final product abroad without them loosing their initial originating status after exportation (absorption of originating status)
Cumulation means that products that have obtained originating status in one partner country my be used with products originating in another partner country without prejudice to the preferential status of the finished product

14. Types of cumulation (1) Bilateral Cumulation Diagonal Cumulation
Full Cumulation
Regional Cumulation

15. Types of cumulation (2)
a) Bilateral cumulation Bilateral cumulation operates between two countries where a free trade agreement contains provisions allowing them to cumulate origin. Only originating products or materials can benefit from it.

16. Bilateral Cumulation (3)
EEC CH
EEC-Origin
(Minimal)
Treatment
EEC CH
CH-Origin
EEC CH

17. Bilateral Cumulation (4)
EEC-Origin CH
CH-Processing
TREATMENT CH
CH-Origin
EEC CH

18. Types of cumulation (5)
b) Diagonal cumulation Diagonal cumulation operates between more than two countries provided they have Free Trade Agreements containing identical origin rules and provision for cumulation between. As with bilateral cumulation, only originating products or materials can benefit from diagonal cumulation.

19. Diagonal Cumulation (6)
China
EEC
40% CH
Non-Originating
EEC CH

20. Diagonal Cumulation (7)
Morocco
Morocco
40% CH
Originating MC CH

21. Diagonal Cumulation (8)
EEC
EEC
40% CH
Originating
EEC CH

22. Diagonal Cumulation (9)
Morocco
EEC
40% CH
Originating
EEC CH MC
EEC MC CH

23. Diagonal Cumulation (10)
Cumulation can only be applied if the countries of final manufacture and of final destination have concluded free trade agreements, containing identical rules of origin, with all the countries participating in the acquisition of originating status, i.e. with all the countries from which all the materials used originate. Materials originating in the country which has not concluded an agreement with the countries of final manufacture and of final destination shall be treated as non-originating

24. Diagonal Cumulation (11)
EEC CH MA
EEC MA CH

25. Diagonal Cumulation (12) Diagonal Cumulation after 01.01.2006
Morocco
EEC
40% CH
Originating
EEC CH MC
EEC MC CH

26. Diagonal Cumulation (13) NO Diagonal Cumulation Before 01.01.2006
Morocco
EEC
40% CH
Non-Originating
EEC CH MC
EEC MC CH

27. Regional Cumulation
Regional cumulation is a form of diagonal cumulation, which only exists under the Gneralised System of Preferences (GSP) and operates between members of a regional group of beneficiary countries (e.g. ASEAN)

28. Full Cumulation
Full cumulation means that all operations carried out in the respective cumulation zone are taken into account when assessing the final origin. It does not require that the goods in one of the partner countries be originating before being exported for further working or processing in other partner countries but it does require that all the working or processing necessary to confer origin is carried out on the product

29. List rule not fulfilled, but cumulation with originating materials
Non-originating
Non-originating
Non-originating
Non-originating
Originating A
Non-originating A
Originating B
Non-originating B
List rule not fulfilled, but cumulation with originating materials
Processing of non-originating materials cumulated. List rule fulfilled.

30. Structure of the Origin Protocols
Title I General provisions Title II Definition of „originating products“ Title III Territorial requirements Title IV Drawback or exemption Title V Proof of origin Title VI Administrative cooperation Title VII Ceuta and Melilla Title VIII Final provisions

31. Examples (A) France Morocco EEC
Wood felled in France is imported into Germany (EC), where it is manufactured into chemical pulp, using only chemical products originating in the Community. The product is wholly obtained in the EC

32. Examples (B) Mali Morocco EEC
Cotton yarn from Mali is imported into Portugal (EC), where it is woven and used for the production of shirts. List rules are fulfilled. The product is originating in the EC

33. Examples (C) Mali Morocco EEC
Cotton fabric from Mali is imported into Portugal (EC), where it is used for the production of shirts which are then exported to Morocco. List rules are not fulfilled. The product has no EC origin

34. Examples (D) Egypt Morocco EEC
Cotton yarn from Egypt is imported into Portugal (EC), where it is used for the production of fabric which is then exported to Morocco. List rules are fulfilled. The product is originating in the EEC

35. Examples (E) Egypt Morocco EEC
Cotton fabric from Egypt is imported into Portugal (EC), where it is used for the production of shirts which are then exported to Morocco. List rules are not fulfilled. Cumulation necessary and possible. The product has EC origin

36. Examples (F) Morocco Algeria EEC
Cotton fabric from Morocco is imported into Portugal (EC), where it is used for the production of shirts which are then exported to Algeria. List rules are not fulfilled. Cumulation necessary, but not possible. The product has no EC origin