Cumulation
In order to know whether a product has been sufficiently transformed in the partner country, it is important to know when materials and inputs used can be considered as originating in the EU or the trade partner country. The EU’s preferential rules of origin include the concept of cumulation, which allows you as importer or exporter under certain circumstances to consider non-originating materials imported from third countries or processing carried out in a non-partner country, as originating in the EU or a trade partner country. There are three types of cumulation used in the EU’s preferential arrangements. The three types differ regarding the number of countries involved in the operation, and what types of materials – originating or non-originating – can be cumulated.
A) Bilateral cumulation
Bilateral cumulation applies to two parties: the EU and its partner country. It allows to use materials originating in the EU as materials originating in your partner country and vice-versa?. This cumulation applies to all EU preferential regimes.
Bilateral cumulation applies to the three main rules described in the sufficiently transformed goods section as follows
- if the value-added rule is used, bilateral cumulation permits you to not include the value of the materials originating in the EU in the maximum percentage threshold of non-originating materials
- if the change of tariff classification rules is used, you do not need to verify if there was a change of tariff classification of the materials originating in the EU used by the producer in your partner country
- if the manufacture from certain products rule is used, you do not need to verify if the materials originating in the EU refer to a later state of production
B) Diagonal cumulation
Diagonal cumulation is like bilateral cumulation but is used in agreements with more than two countries. It allows you to use materials originating in a defined country (as mentioned in the relevant provision on cumulation) which is different from your partner country from which you want to import as materials originating in your partner country. Diagonal cumulation can only be applied to products which are originating in the defined country, i.e. other countries which are members of the agreement, and which are then further processed in your partner country.
Diagonal cumulation applies to the three main rules described in the sufficiently transformed goods section as follows
- if the value-added rule is used, diagonal cumulation permits you not to account the value of the materials originating in the defined country in the maximum percentage threshold of non-originating materials
- if the change of tariff classification rules is used, you do not need to verify if there was a change of tariff classification of the materials originating in the defined country when importing the product from your partner country
- if the manufacture from certain products rule is used, you do not need to verify if the materials originating in the defined country refer to a later state of production (i.e. fabric)
C) Full cumulation
Full cumulation considers not only materials originating in the EU or a defined country (as mentioned in the relevant provision on cumulation), but also allows for inputs which are non-originating in the EU or any of the defined countries to be counted towards originating content.
Contrary to bilateral or diagonal cumulation, full cumulation permits you to consider materials for cumulation that are not originating in the EU or your partner country. These non-originating materials may have been imported by the producer in your partner country and used in the production process. Under full cumulation, these non-originating inputs can also be used for cumulation purposes and be counted as originating in your partner country.
Full cumulation applies to the three main rules described in the sufficiently transformed goods section as follows
- if the value-added rule is used, full cumulation permits you not to account the value of the materials imported by your partner country in the maximum percentage maximum
- if the change of tariff classification rule is used, you do not need to verify if there was chanuige of tariff classification of the materials imported by your partner country
- if the manufacture from certain products rule is used, you do not need to verify if the materials you imported from your partner country refer to a later state of production (i.e. fabric)
Remember that if the processing carried out in your partner country is only one of the operations carried out in the list of minimal operations (link to section on minimal operations) then cumulation cannot be applied.