AANZFTA prepares for the negotiation of a pilot full cumulation program

November 2018 - This month marked the commencement of a series of workshops on full cumulation for ASEAN Member States under the ASEAN-Australia New Zealand Free Trade Area, progressing the goal of economic integration among members of the FTA. The first set of two-day workshops were held in Myanmar, Philippines, Thailand, and Lao PDR.

The aim of the workshops was to articulate the benefits of full cumulation and build capacity of parties in negotiating a pilot program to expand the concept of cumulation under the AANZFTA Rules of Origin. A total of 289 government officials and representatives from the private sector attended the workshops. Expanding the definition of cumulation can help exporters by broadening access to source materials and manufacturing processes across the FTA allowing them to advantage of efficiencies when sourcing inputs for production.

Participants gained valuable insight and perspective from experts on the merits of full cumulation. "This capacity building is aimed at getting AANZFTA Parties to better understand the concept of full cumulation and determine a version that would be implemented as a test case or a pilot project," stated Ms. Myrene Sabina Bedao, Chief of the Regional Relations Arrangement Division, Bureau of International Trade Relations, Department of Trade and Industry of the Philippines. Similarly, Mr. Ake Satravaha, Director of Customs Tariff Bureau of the Thai Customs Department, Ministry of Finance, also highlighted the opportunity provided by the workshops in deepening the understanding of the business community on the concept of full cumulation as well as enriching their awareness of its possible arrangement under AANZFTA.

Topics covered during the capacity building sessions included steps toward implementation, monitoring, and required policies and documentation. It also provides an overview of the supply chain and the importance of full cumulation in the AANZFTA supply chain. During workshop discussions, participants stressed the importance of discussions on full cumulation to support officials in negotiating with other AANZFTA Parties. Ms. Shwe Sin Oo, Deputy Director of the Department of Trade from Myanmars Ministry of Commerce emphasized the significance of the sessions since ASEAN is more familiar with the concept of partial cumulation being implemented under the ASEAN Trade in Goods Agreement. "I believe that the knowledge gained from this program will enhance our understanding on cumulation and it will truly contribute to facilitate the ROO negotiations and implementation," said Deputy Director Oo.

Presently, Article 6 of the AANZFTA Chapter on ROO states that a good which complies with the origin requirements and which is used in another AANZFTA Party as a material in the production of another good shall be considered to originate in the AANZFTA Party where processing of the finished good has taken place. Full cumulation, when implemented, will expand this concept by allowing the accumulation of originating costs (labour and materials) for a good incurred in one AANZFTA Party to count the costs of production of a subsequent good in another AANZFTA Party, regardless of whether the processing of the original good is sufficient to confer originating status.

The workshops were organized by the ASEAN Secretariat under the AANZFTA Economic Cooperation Support Program (AECSP). AECSP also supported the development of a workbook on full cumulation which covers benefits and processes, issues that might arise in a pilot cumulation program, risk management and issuance of certificate of origin using full cumulation.

The second batch of the workshops will be conducted in December 2018 for public and private sector representatives in Cambodia, Indonesia, Malaysia and Viet Nam.

The ASEAN Secretariat

70A. Jalan Sisingamangaraja
Jakarta 12110

(+62 21) 726 2991, 724 3372

(+62 21) 726 2991, 724 3372

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