What does this mean in real terms?
The principle of cumulation essentially allows goods from a free trade partner to be treated the same as those originating in the exporting country. Diagonal cumulation makes it possible to use materials originating from different free trade parties, provided that all parties involved in the process apply free trade agreements with the same rules of origin.
An example: A Swiss company manufactures aluminum products in Switzerland using Ukrainian aluminum and exports them to the EU. In the eyes of the customs authorities, these products still have Ukrainian origin, due to the fact that the raw material (aluminum) originates in the Ukraine: the sole fact that they were produced in Switzerland does not justify Swiss origin, meaning they will not be granted a preferential tariff rate for export to the EU.
This is where diagonal cumulation comes in: it allows a Swiss producer of aluminum products to supply its goods using raw material from Ukraine to the EU as goods originating in Switzerland. Thanks to the Association Agreement with the EU, Ukraine has been a contracting party to the Pan-Euro-Mediterranean system of origin (PEM), to which Switzerland is also a signatory, since January 1, 2019.
For further details, such as which proof of origin must be used in the case of diagonal cumulation, a leaflet from the Federal Customs Administration is available for download below.
Any questions about diagonal cumulation or certificate of origin?
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