1. Rules of Origin and Cumulation – Explained (sort of!)
Ben Price
ACITA NATIONAL – 06 February 2019

2. Disclaimer
Views expressed in this presentation represent my own views and not necessarily the views of my company
Rules of Origin is very complex and this is not meant to be an exhaustive explanation – focus today is on preferential rather than non-preferential
Dinesh asked me to be on a panel and then put me down as a main speaker (Thanks Dinesh!)

3. Why is origin even more crucial post Brexit?
Made in the UK is very different to UK Origin
Currently not a consideration for intra-EU trade as all goods considered free circulation – outside of the Customs Union this will matter
Currently under EU FTAs we benefit from cumulation with the EU and the FTA partner – On our own this is unlikely so a greater percentage of inputs and or value will need to be of UK origin
Ability of manufacturers to source UK components in the UK. Demand is likely to significantly outstrip supply in the short to medium term.

4. Current situation – INTRA EU
Manufacturing Intra-EU
Import and Onward Sale Intra-EU
Rules of Origin do not apply
All goods in free circulation considered originating for the purposes of intra EU trade

5. Current situation – EXTRA EU TRADE
Rules of Origin apply
For FTAs – EU origin goods (i.e. any components sourced from other EU countries count towards origin thresholds)

6. FUTURE UK TRADE
Rules of origin will apply to both exports to EU and to 3rd Countries
Rules of origin are complex *CTH, CTSH or VA
Ability to cumulate with EU will be crucial to UK Exports under existing FTA rules if extended

7. DIAGONAL CUMULATION 25% Preferential 0% 10% 20%
The Pan Euro Med Agreement (PEM) – Allows for diagonal cumulation across multiple FTA Partners
Can help obtain origin thresholds where VA applies
The 23 Contracting Parties to the PEM Convention are: the EU; the EFTA States (Switzerland, Norway, Iceland and Liechtenstein); the Faroe Islands; the participants in the Barcelona Process (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia and Turkey); the participants in the EU's Stabilisation and Association Process (Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Montenegro, Serbia and Kosovo, the Republic of Moldova.

8. EXAMPLE RULES Change of Tariff Heading Change of Tariff Sub Heading –
– Chapter X + Chapter Y = Chapter Z
Change of Tariff Sub Heading –
Sub Heading X(i) + Sub Heading X(ii) = Sub Heading X(iii)
Value Added (Illustrative)
FTA –
Manufacture from materials of any heading, except that of the product. However, materials of the same heading as the product may be used, provided that their total value does not exceed 20 % of the ex-works price of the product; or
Manufacture in which the value of all the materials used does not exceed 40 % of the ex-works price of the product
PEM –
Components originating in the pan-Euro-Mediterranean zone can be counted as originating, Non originating materials cannot exceed 10% of the EXWs price

9. Reflections
Origin and your ability to determine it will become more important in a post Brexit environment
Write to suppliers to ensure you have supporting evidence for origin determination (e.g. Long Term Suppliers Declaration) and cleanse master data in ERP systems
Review contribution of UK origin components to your global supply chain and assess dependence on EU origin goods for UK manufacturing
Ability to cumulate as widely as possible will be critical to whether UK can take advantage of any future FTAs in the short to medium term

10. ACITA NATIONAL – 06 February 2019
QUESTIONS?
Ben Price
ACITA NATIONAL – 06 February 2019