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Diagonal cumulation

11 July 2012

Diagonal cumulation (sometimes also called “regional cumulation”, i.e. cumulation between member countries of a regional group of countries under the Generalised System of Preferences (GSP)), is similar to bilateral cumulation, but operates between more than two countries provided they have concluded preferential trading agreements between each other. As with bilateral cumulation, only originating products or materials can benefit from diagonal cumulation. Certain countries require that the different free trade agreements connected with origin provisions must contain identical origine provisions before diagonal cumulation can be applied.

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Example: A pullover of HS heading 61.10 is manufactured in country A by sewing together knitted fabrics originating in countries B and C. According to the free trade agreements between these three countries, the specific rule of origin for pullover requires the manufacturing from yarn in order that origin is conferred to the pullover. Thus, the simple manufacturing process of sewing together knitted fabrics in country A would not confer origin and the pullover would have to be considered as non-originating according to the origin legislation of the free trade agreements between  country A, B and C. With diagonal cumulation the pullover is considered to be originating in country A since it was manufactured with originating fabrics from countries B and C.