In this edition, we look at the issue of cumulation:
Q. I am in the process of completing a UK long term supplier’s declaration and note that I am being asked to declare whether cumulation has been applied or not. What is cumulation?
A. In this context, it refers to the Pan Euro-Med system of diagonal cumulation in relation to preferential origin.
The European Union has preferential trade agreements with a number of other countries whereby goods exported from or imported into the EU benefit from reduced or nil rates of duty. In order to benefit from these preferential rates, the goods need to meet origination criteria. While not needing to be wholly manufactured in the country of supply, they need to have undergone sufficient transformation if materials are used from elsewhere in order to satisfy the rules of origin. Cumulation within preferential trade agreements is a provision which helps manufactured goods meet these rules. Countries are grouped together for origin purposes - in this case the countries that form the Pan Euro-Mediterranean group. Manufacturers in countries in this group can then count materials that originate in other countries in the group as if they originated in the country where they are being incorporated into the end product. However, it is important to note that, in order for Pan Euro-Med cumulation to apply, the country of final manufacture and the country of final destination must have identical Free Trade Agreements in place with the countries that have supplied the originating materials. For a fuller explanation and a list of the countries in the Pan Euro-Med group, please see Public Notices 827 and 828. These are available from the HMRC National Advice Service tel: 0845 010 9000 or on their website www.hmrc.gov.uk. A matrix indicating which countries in the group have signed agreements with each other is also available on the website.
If you need help with a trade procedures query, call the Helpdesk on
020 7215 8150 or email info@sitpro.org.uk 
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Return to SITPRO News: Issue 59, Winter 2006/2007