THE EU-JAPAN EPAPREFERENTIAL ORIGIN OF GOODSCumulation
This presentation has been prepared with the sole purpose of simplifying the understanding of some parts of the EU-Japan EPA
and bears no legal standing.

1

Table of contents
1. Outward processing
1.1 Outward processing in 3rd country without any agreement
1.2 Outward processing in 3rd country with free trade agreement
2. Bilateral cumulation
3. Full cumulation with Japan
4. Diagonal cumulation

Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of21. Outward processing
What is outward processing ?
 Temporary export of materials in free circulation in the EU
 Working / Processing in a 3rd country Re-import of processed product(s) Payment of duties on the cost of the processing

Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of3

1. Outward processing
1.1 Outward processing in 3rd country without any agreement
EuropeanUnion

3rd country
Without any agreement

EuropeanUnion

Temporary exportof cotton fabricin free circulation

Manufacture ofshirts

Re-import ofshirts

Payment of duties on theadded value= Manufacture costs
Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of4

1. Outward processing
1.2 Outward processing in 3rd country with free trade agreement
EuropeanUnion
Temporary exportof cotton fabricin free circulation

3rd country
With free trade agreement

JP – KR – UK – CA – NO – CH – …

Manufacture ofshirts
Origin rule =Manufacture from yarn

Re-import ofshirts

Payment of duties
on the added value

NO DIFFERENCE !
Managed by

EuropeanUnion

www.eu-japan.eu/epa-helpdesk

Under the supervision of5

2. Bilateral cumulation (1/3)
What is bilateral cumulation ?
 Outward processing in a country with origin agreement with the EU Only 2 countries involved Temporary export from the EU of preferential origin materials
 Working / Processing in a 3rd country with agreement
 Working /Processing goes beyond the insufficient workings
 Materials are assimilated to local materials in the processing country No obligation to fulfil the sufficient working rule
 Reimportation of processed product(s) with preferential origin
 Preferential treatment at re-import of the processed product(s)Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of6

2. Bilateral cumulation (2/3)
Cotton fabric considered asa local material
EuropeanUnion
Temporary exportof cotton fabricof EU pref origin

3rd country
With free trade agreement

EuropeanUnion

Manufacture of shirts

Re-import ofshirts

JP – KR – UK – CA – NO – CH – …

Working goes beyond
insufficient workings

Preferential treatment
at re-import

Not necessary to fulfil
the origin ruleManaged byPref origin atexport of shirtswww.eu-japan.eu/epa-helpdesk

Under the supervision of7

2. Bilateral cumulation (3/3)
JP materials considered as
local materials
Japan
Temporary export
Materialsof JP pref originEuropean Union
Processing / working
Working goes beyond
insufficient workingsJapan
Re-import ofprocessed
product

Preferential treatment
at re-import

Not necessary to fulfil
the origin ruleManaged byPref origin at exportof processed
productwww.eu-japan.eu/epa-helpdesk

Under the supervision of8

3. Full cumulation (1/4)
What is full cumulation ? What does it allow to do?
Full cumulation between EU and Japan  only 2 countries involved.
Full cumulation can start either in the EU, or in Japan.
Article 3.5, §2, says the following:
Production carried out in a Party on a non-originating material may betaken into account for the purpose of determining whether a product isoriginating in the other Party.
How does it work in practice?
Our example  Start in the EU
Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of9

3. Full cumulation (2/4)
 “Outward processing” in the other Party, after 1st working
 Temporary export from the EU, of an in the EU processed product not
fulfilling the origin rule, after a first processing on 3rd countrymaterials, going beyond the insufficient workings.
 Further processing in Japan, going beyond the insufficient workings,
taking into account the 1st working in the EU.
 Check whether sufficient working rule is fulfilled after 2nd processing.
 If yes, re-export from Japan to EU with preferential origin, andpreferential treatment at re-import into the EU.
Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of10

3. Full cumulation (3/4)
If origin rule fulfilled  Export
with JP preferential origin

Working > Insufficient working
 Origin rule NOT fulfilled
2nd workingEU1st working

Managed byEUJapan

Working > Insufficient working
After 2 processings  Origin
rule fulfilled ?
www.eu-japan.eu/epa-helpdesk

Preferential
treatment

Under the supervision of11

3. Full cumulation (4/4)
If origin rule fulfilled  Exportwith EU preferential origin

Working > Insufficient working
 Origin rule NOT fulfilled
2nd working

Japan
1st working

Managed by

EU
Working > Insufficient working
After 2 processings  Origin
rule fulfilled ?
www.eu-japan.eu/epa-helpdesk

Japan
Preferential
treatment

Under the supervision of12

4. Diagonal cumulation (1/3)
What is diagonal cumulation ?
 Like the bilateral cumulation, but more than 2 countries involved All the countries have an agreement with each other Export of preferential origin materials
 Materials are assimilated to local materials in the processing country No obligation to fulfil the sufficient working rule
 Export from the processing country with a proof of preferential origin
 Preferential treatment at import of the processed product(s) Well known diagonal cumulation zone for the EU : pan-EuroMediterranean zone (EU – CH – MA – TN – EG – IL - … )Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of13

4. Diagonal cumulation (2/3)
Switzerland

EU

Chemicalmaterials

Disinfectants
3808
Rule = Value NOM ≤ 50%of Ex Works selling price

Cost = 60 €Tunisia

Selling price = 100 €The working in the EU does not fulfil the origin rule !  No preferential origin at the export !
But we have perhaps a solution …

Managed bywww.eu-japan.eu/epa-helpdesk

Under the supervision of14

4. Diagonal cumulation (3/3)
Pref origin
Cumulation with CH

Pref origin

Switzerland

UE

Chemicalmaterials

Disinfectants
3808
Rule = Value NOM ≤ 50%of Ex Works selling price

Cost = 60 €Tunisia

Selling price = 100 €Cumulation is possible  Agreements : CH – EU / EU – TN / CH – TNManaged bywww.eu-japan.eu/epa-helpdesk

Under the supervision of15

Thank you for your attention!
Additional questions ?
Mail them to the EU-Japan helpdesk

This presentation has been prepared with the sole purpose of simplifying the understanding of some parts of the EU-Japan EPA
and bears no legal standing.

16