Bilateral cumulation

 

Article 40 (“Cumulation of origin”) of the EU-UK Trade and Cooperation Agreement

Bilateral cumulation allows materials (e.g. parts, components) originating in the preferential partner country to be considered as originating in the EU when used to make another product in the EU (and vice versa).

  • This is the basic type of cumulation and is common to all EU trade agreements.
  • Only originating materials can be used for bilateral cumulation.
  • The production must go beyond insufficient operations in the country where the last processing step took place.

Example of bilateral cumulation between the EU and Chile under EU-Chile Association Agreement

Cleaning cloths classified under HS sub-heading 6307.10 are made in the EU using fabric originating in Chile and non-originating sewing thread from China. The fabric imported from Chile constitutes 45% of the value of the cloth’s ex-works price and the sewing thread 10%.

The product specific rule in the EU-Chile Association Agreement requires that the value of non originating materials must not exceed 40% of the ex-works price of the product.

Thanks to bilateral cumulation, the fabric imported from Chile is counted as originating in the EU. When the cleaning clothes are exported to Chile, they qualify as originating in the EU as the non-originating materials (sewing thread) does not exceed 40% of the ex-works price of the product.

Example of bilateral cumulation between the EU and Montenegro under Pan-Euro-Mediterranean (PEM) Convention

A musical instrument classified under HS Chapter 92 and originating in the EU is exported to Montenegro where it undergoes further working or processing (through varnishing). The processing goes beyond the ‘minimal operations’ set out in the PEM Convention so when the final product is exported back to the EU it qualifies as originating in Montenegro.

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