Free Trade Agreement Cumulation

Switzerland- Industrial Products (01.01.1973) Free Trade Agreement, JO L 199 of 19.12.1973 Agricultural Trade Agreement (OJ L 300, 31.12.1972, p. 189) JO L 114, 30.4.2002, p. 132. In the case of diagonal accumulation, either the entire Korean property is considered originating or not at all. On the other hand, this would mean that the United Kingdom could include the share of Korean capital gain in inputs imported from Korea if a “total accumulation” were allowed. This proportion is 35%, and the intermediate value from Korea is 30% of the value of the final product. As a result, the Korean element is 10.5% (or 0.3 – 0.35). The total amount of the initial value added of the final good is therefore 30% (from the United Kingdom) – 10.5% (from Korea) – 40.5%. This exceeds the threshold, so the latter can be exported to the EU duty-free.

The table shows how complex the definition of rules of origin can be. In a free trade agreement, they are usually negotiated at the detailed product level (for example. B the level of SH-6 digits). How they are defined can affect the degree of protection/liberalization offered to a particular sector. A strong national value-added rule promotes increased use of domestic inputs and is therefore used to protect the domestic input industry. [4] This is why the rules of origin for the automobile were set at a high level as part of the recent renegotiation of the USMCA (US-Mexico-Canada agreement). Conversely, if strict rules increase costs for end-producers, strict rules can make them less competitive domestically or internationally. Given that rules of origin can be used to protect domestic (delivery) industries, it is not surprising that industries can seek such protection by defending more restrictive rules of origin.

Regulation (EC) No. 82/2001 of the Council of 5 December 2000A JO 20, 20.01.2001, p.1.Bilateral cumul with the EC and diagonal accumulation or, if applicable, total accumulation with EC partner countries (e) In this example, Korean intermediate consumption is considered to originate. However, the question of whether the imported intermediate product was manufactured in Korea (i.e. “origin” in Korea) is determined by the rules of origin in the AGREEMENT between the United Kingdom and Korea. This raises the possibility that the United Kingdom and Korea will agree on very lax rules of origin (for example. B only 10% of the national value added is needed). It would be much easier to consider an intermediate export entry to the UK as a Korean in order to be used for the production of a final product exported to the EU.