CARIFORUM and UK EPA Study

The diagonal cumulation provisions in the CF-UK EPA make this very possible, since studies have shown that one of the reasons for the low level of integration in GVCs of LAC may be due to the rules or origin in many RTAs of which they are member. In the context of the CF-UK EPA, cumulation is bilateral and diagonal. Bilateral cumulation operates between the two countries, that is content from the importing country (UK) which are incorporated in the partner exporting country (CF) are counted towards the origin requirements. Diagonal cumulation operates between more than two countries that have similar arrangements and cumulation provisions. However, under the Trade and Cooperation Agreement between the UK and the EU, this cumulation method was rejected, so that depending on the criteria for substantial transformation, the UK using CF product could lose its preferential access under the TCA when exporting to the EU, but maintain its preferential access exporting to CF.

The splintering of the CF EPA, has demonstrated precisely the impact of differing rules of origin between PTAs. The OCED (2020) describes the result as being as follows:

“For example, rules of origin (RoOs), the criteria determining how much imported content from non-member countries can be used in the production of exports while receiving preferential treatment under a PTA, differ between PTAs (IDB, 2018). Differences in RoOs between agreements mean that a product largely originating in the member countries of one PTA may not satisfy the RoOs of another PTA, even if there are common members, which puts the exporting country at a disadvantage in the markets of the latter PTA. This lack of coordination between agreements in LAC keeps both intra - and extra-regional supply chains fragmented, preventing the formation of longer GVCs.”

The cumulation provisions under the CF-UK EPA may actually allow for loner value chains in the context of CF-UK-EU trade, depending on how the value chains are organised.

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