What would have changed if the EU had not granted full cumulation to Japan in the EU-Japan FTA?

What would have changed if the EU had not granted full cumulation to Japan in the EU-Japan FTA?
February 15, 2021 No Comments Assignment Assignment help

Question 2: Case study

Company Y manufactures washing machines in Japan and plans to export them to Chile and the EU under the two Agreements concluded by Japan with these partners.

Washing machine are classified under HS8450.11.
Let’s assume this is the breakdown of costs faced by company Y:
Materials/parts
Source
Originating Status
Value US dollars
Parts A (HS 8450.90) assembly
EU
To be determined
370
Parts B
Japan
Japan
100
Parts C
China
Non-originating
130
Parts D
Singapore
Non-originating
150
Parts E
Japan
Japan
100
Labour and other manufacturing costs+profit
Japan
Japan
150
Ex-works price

1000
Transport


20
Transaction value (FOB)


1020

Parts A assembled in EU and imported by Japan (HS 8450.90): breakdown of values to determine originating status of A:

Materials/Parts
Origin
Value US dollars
Parts, labour and other manufacturing costs+profit
EU
160
Input under HS 8450.90
China
170
Ex-works price

330
FOB price

350
CIF value

370

Q1: Does the washing machine obtain originating status under the Chile-Japan FTA?

NOTA BENE: under this agreement cumulation is a bilateral cumulation but NO FULL CUMULATION IS GIVEN (in other words the system works similar to the diagonal cumulation looked in class)

Rule of origin for the Washing Machine in the Chile-Japan FTA agreement

A change to subheading 8450.11 through 8450.20 from any other heading; or
No required change in tariff classification to subheading 8450.11 through 8450.20,
provided that there is a qualifying value content of not less than 45 percent when the
Build-down method is used, or of not less than 30 percent when the Build-up
method is used.

Q2: Does the washing machine obtain originating status under EU-Japan FTA?

NOTA BENE: under this agreement cumulation is bilateral and full cumulation applies!
NOTA BENE: Explain which of the two alternative rules you use and why (change of classification or the alternative value added proposed)

Rule of origin for the Japanese Washing Machine and for the EU assembly of Part A in the EU-Japan FTA agreement

CTH: change of tariff heading
MaxNOM: maximum level of non-originating product
EXW: ex-works price
RVC: regional value content
FOB=transaction value

Q3: What would have changed if the EU had not granted full cumulation to Japan in the EU-Japan FTA? Would the washing machine originate in Japan without full cumulation?