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 trading partner country. The EU’s preferential rules of origin include the concept of cumulation, which allows you as an importer or exporter, under certain conditions, 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 trading partner country. There are three types of cumulation used in the EU’s preferential arrangements. The three types differ in the number of countries involved in the operation, and the types of materials – originating or non-originating – that can be cumulated.

A) Bilateral cumulation

Bilateral cumulation involves two parties: the EU and the partner country. It allows to use materials originating in the EU as materials originating in the partner country and vice-versa. This cumulation applies to all EU preferential arrangements.

Bilateral cumulation applies to the three main rules described in the section on sufficiently transformed goods as follows:

• If the ‘value-added’ rule is applied, bilateral cumulation allows you to exclude the value of the materials originating in the other party from the maximum percentage threshold of non-originating materials.
• If the ‘change of tariff classification’ rule is applied, you do not need to check whether there has been a change in the tariff classification of the materials originating in the other party.
• If the ‘manufacture from certain products’ rule is applied, you do not need to check whether the materials originating in the other party refer to a later stage of production.

B) Diagonal cumulation

Diagonal cumulation is similar to bilateral cumulation but is used in agreements relating to more than two countries. It allows to use materials originating in a defined country (as mentioned in the relevant cumulation provision) other than the partner countries as originating materials. Diagonal cumulation can only be applied to products that originate in a defined country and are then further processed.

Diagonal cumulation applies to the three main rules described in the sufficiently transformed goods section as follows:

• If the ‘value-added’ rule is applied, diagonal cumulation allows you to exclude the value of the materials originating in the defined country from the maximum percentage threshold of non-originating materials.
• If the ‘change of tariff classification’ rule is used, you do not need to check whether there was a change in the tariff classification of the materials originating in the defined country.
• If the ‘manufacture from certain’ products rule is applied, you do not need to check whether the materials originating in the defined country refer to a later stage of production.

C) Full cumulation

Full cumulation not only takes into account materials originating in the EU or a defined country (as mentioned in the relevant cumulation provision), but also allows for inputs that are non-originating to be counted towards originating content.

Full cumulation applies to the three main rules described in the sufficiently transformed goods section as follows:

• If the ‘value-added’ rule is applied, full cumulation allows you to exclude the value of the non-originating materials used in a production step in other party from the maximum percentage threshold of non-originating materials.
• If the ‘change of tariff classification’ rule is applied, you do not need to check whether there was a change in the tariff classification of materials used in a production step in other party.
• If the ‘manufacture from certain products’ rule is used, you do not need to check whether the materials used in a production step in other party refer to a later stage of production.

Remember that if the processing carried out in your partner country is merely falling under the list of minimal operations, cumulation cannot be applied.