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Full cumulation

11 July 2012

A further stage of economic integration is offerd by the concept of “full cumulation” which gives the possibility to aggregate different origin conferring manufacturing stages done in different parties of a free trade zone.  The European Economic Area (EEA Agreement) provides ground for full cumulation between its contracting parties allowing the three EFTA countries Iceland, Norway and Liechtenstein (except Switzerland) to participate in the single European market.  Full cumulation was also established between some Mediterranean countries and the EU or EFTA States.  Despite the accession of the Mediterranean countries to the diagonal cumulation system within the Euro-Med framework, some Mediterranean countries keep the concept of full cumulation in their bilateral trade relations with the EU and EFTA.

Under full accumulation/cumulation all stages of processing or transformation of a product within a free trade zone can be counted as qualifying operation in the manufacturing of an originating good, regardless of whether the processing is sufficient to confer originating status to the materials themselves.  This means that all operations carried out in the participating countries of a free trade zone are taken into account for origin determination purposes.  While bilateral and diagonal accumulation/cumulation require that only originating goods can be considered as input for accumulation/cumulation purposes in another partner country, this is not the case with full accumulation/cumulation.  Full cumulation simply demands that the origin requirements are fullfilled within the preferential trade zone as a whole (i.e. the area of all participating countries is considered as one area for origin determination).  Full accumulation/cumulation makes it possible that a product originating in a third country and having undergoing successive working and processing which is insufficient in several countries of the same preferential zone to acquire the status of an “originating product" provided all this working together constitutes a sufficient transformation.

Full accumulation/cumulation allows for greater fragmentation of the production process than the more commonly used bilateral and diagonal accumulation/cumulation and hence is less restrictive.

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Example:  A pullover of HS heading 61.10 is manufactured in countries A, B and C.  All of these countries have a free trade agreement between each other with full accumulation/cumulation provisions.  The product specific origin rule requires manufacturing from yarn in order that preferential origin is conferred to a pullover.  The yarn was woven into knitted fabrics in country C.  The knitted fabric was dyed in country B and the dyed fabric was sewn together in country A.  The single operations in the individual countries do not confer origin.  However, all operations taken together fulfill the origin requirement and the final product is considered to be originating in country A and can be reexported into the other partner countries under preferential treatment.