In order to understand the logic of the accumulation of origin, it is necessary to understand what this instrument is about, which is generally found in an article within the origin regimes of each particular trade agreement.
Cumulation of origin allows, within the framework of a trade agreement, a producer or exporter to use the inputs or products of other producers in other countries covered by these agreements, as if they originated in their country.
Of course, as is often the case, there are those who may see this mechanism as an advantage and others as a disadvantage, in the sense that it is clearly a form of flexibility - provided that the rules of origin are met - based on the possibility of using (as if they were original) inputs that come from other countries in the region with which this mechanism is negotiated. Many times, in addition to the accumulation of inputs or materials, some trade agreements have included the accumulation of production processes, allowing - as its definition says - this type of accumulation in the region that has more to do with the place where this production process is carried out and not with the origin of the input to be incorporated.
Finally, it should be mentioned that the latest generation of agreements has begun to incorporate the concept of extended cumulation of origin, allowing that, in addition to the countries participating in the agreement itself, the use of inputs or materials from another country or countries that are not parties to that agreement, but which are by mutual consent and with which the signatories have common trade agreements, is incorporated. This concept of extended cumulation is also often called “diagonal cumulation.”
Situation in MERCOSUR
In the case of MERCOSUR, cumulation with third parties is generally bilateral. The only exceptions are some of the Economic Complementation Agreements within the framework of ALADI, ACE No. 36 (MERCOSUR – Bolivia), ACE No. 59 (MERCOSUR – Andean Community), ACE No. 72 (MERCOSUR – Colombia) and ACE No. 58 (MERCOSUR – Peru), where due to special circumstances during these negotiations, the possibility of using inputs from the Andean countries is contemplated for the purposes of compliance with the rules of origin established in each agreement between these countries or blocks with MERCOSUR. This is reflected in article 10 of the currently valid MERCOSUR Origin Regime (DEC. CMC 01/09) as well as in article 12 of the new ROM that is about to come into force and that replaces the previous regulations in its entirety (DEC CMC 05/23).
New ROM
Going a little deeper into what is established in the new ROM on the concept of accumulation of origin, we first find the notion of bilateral accumulation as dictated by article 11 on intra-MERCOSUR accumulation, which indicates that: “For the purposes of meeting the origin requirements, materials originating in any State Party that have acquired such status in accordance with Article 4 “Qualification of origin” and that are incorporated into a particular product in a State Party, are considered to be originating in that State Party. For the purposes of establishing whether a product for which preferential tariff treatment is requested is originating, its production in the territory of one or more States Parties, by one or more producers, must be considered as if it had been carried out in the territory of the last State Party by that exporter or producer. Full cumulation of origin implies that all operations carried out in the territory of the States Parties for the production of a product must be taken into account for the determination of origin of the final product, including the consideration of all materials and regional added value incorporated in the territory of the States Parties. For these purposes, the final producer of the product(s) must be required to provide the Declaration(s) of use of materials in accordance with Appendix X “Declaration of the supplier of the material”.
On the other hand, being the object of this note, in article 12 on the accumulation of origin with third countries it is established: “For the purposes of meeting the origin requirements, materials treated as originating, in accordance with Article 7 “Materials imported from third countries”, and incorporated into a particular product in a State Party are considered to be originating in that State Party. Additionally, materials originating in Bolivia, in accordance with Economic Complementation Agreement (ACE) No. 36; Peru, in accordance with ACE No. 58; the Andean Community, in accordance with ACE No. 59 and Colombia, in accordance with ACE No. 72, incorporated into a particular product in the territory of one of the States Parties are considered to be originating in MERCOSUR, provided that:
a) comply with the Origin Regime of the respective ACEs;
b) have a definitive origin requirement in the respective ACEs;
c) have reached the level of preference of 100%, without quantitative limits, in the four States Parties of MERCOSUR in relation to each of the Andean countries; and
d) are not subject to differentiated origin requirements based on quotas established in the respective ACEs.”
To explain the theory, it can be said that in order to use the mechanism, three parties are needed, and these can be countries or blocks of countries. These three parties are: the country that produces or exports the final product, the country that imports that final product, and the country that produces the input necessary for the production of that final good.
The essential thing to keep in mind is the rule of origin of the final product and the rule of inputs. In bilateral cumulation, the example is simpler: the inputs used in local production are considered to originate in the latter and vice versa. In the case of extended cumulation - provided that it is permitted - in the case of using inputs from a third party, if that input is part of trade agreements that bind the three parties, that input could be used in the production of the final product to be exported as if it were originating in the main agreement.
There is a specific example within ACE 72, for certain vehicles, in which parts, components and materials originating in Chile are incorporated for their production process, and for which a regional content value of 40% must be met when they are exported by Colombia to Argentina.
Closing remarks
If we delve into the specifics established in these instruments and note that there is a global trend towards the contemplation of these flexibilities in the latest generation of trade agreements, we can conclude that although it is a measure that entails risks - although always considering caution and care through regulatory clauses, in order to guarantee compliance with the rules of origin of the main agreement - it would allow the use of inputs from other countries in the production of a final product, and if such requirement established for that final product in that negotiated agreement is met, it will be able to access the preferences that arise from it.
In other words, it could be said that an extended or expanded accumulation within the region and beyond the borders of MERCOSUR itself would make it possible to increase the competitiveness of producers and exporters, while promoting trade between countries that so desire.
Finally, it is important to remember that currently the document that allows the circulation of goods in MERCOSUR is the Certificate of Origin, either in paper format or in its digital version as provided and established for several years, and both formats have the same legal validity.
On the other hand, MERCOSUR is in the process of completing the customs union, and, consequently, the member states still apply a Regime of Origin to intraregional trade that involves the use of Certificates of Origin, hence the importance of this particular document and all the information that it provides for the purposes of proving the origin of a merchandise in order to be able to use the benefits of trade agreements.
She holds a degree in International Trade (Universidad Nacional de Luján) with postgraduate studies in the Master's Degree in International Economic Relations (Universidad Nacional de Tres de Febrero). She has been a professional development fellow of the Organization of American States (OAS) at the George Washington University School of Law (USA). In the academic field, she is a professor at the Universidad Nacional de Luján. In the professional field, she has been an official of the Secretariat of Commerce dependent on the Ministry of Economy of the Nation, since 2005. Currently, she is the National Coordinator of the Technical Committee No. 3 "Trade Standards and Disciplines" in charge of the negotiations of rules of origin of MERCOSUR; in addition, she is the Alternate National Coordinator of the Technical Committee No. 8 "Transposition of nomenclature of trade agreements with third countries and groups of countries" also of MERCOSUR.
