What is Origin Used for?
The country
of origin is the "economic identity of an item," referring
to the country where the origin of products is established. It
plays a crucial role in determining customs duties, monitoring trade policy
measures, and compiling foreign trade statistics.
The origin
of goods is used for:
- Calculating customs duties
- Implementing trade policies such as quotas
and anti-dumping measures
- Ensuring compliance with international
trade agreements
- Supporting accurate foreign trade data
collection
Why Country of Origin Is a Critical Factor in Supply Chain Risk?
Understanding
the country of origin meaning is essential for businesses to
manage supply chain risks effectively. It influences:
- Regulatory compliance: Different countries have different
customs duties and trade restrictions.
- Cost optimization: Preferential trade agreements can
reduce costs based on the origin of products.
- Reputational risk: Certain countries have strict
regulations regarding ethical sourcing, labor laws, and sustainability.
- Logistics planning: Import and export rules vary depending on the country of origin.
How to Find Country of Origin?
The origin
of goods is determined using two key criteria:
- Goods wholly obtained or produced in a
country:
- Example of country of origin: Live animals,
agricultural products, minerals extracted from the land, etc.
- Substantial Transformation Rule: When multiple countries contribute to
the production of a good, specific rules apply, including:
- Change in customs tariff classification
- Value-added rule
- Two-stage transformation requirement
When
identifying the country of origin, it is checked whether a product is
“completely obtained” in a single country. If not, it is determined based on
the production processes applied in that country.
What is Cumulation of Origin?
Cumulation of origin is a system that allows countries bound to each other
by bilateral or multilateral agreements in international trade to use inputs
sourced from each other to an unlimited extent.
The purpose of cumulation of origin is to increase trade between
countries that recognize preferential regimes to each other. There are three types of cumulation:
bilateral cumulation, diagonal cumulation and full cumulation.
Bilateral Cumulation
It is valid between two countries and only applies to goods originating in
these two countries. In this system, two
countries with free trade agreements are allowed to use inputs originating from
each other. In case of using third
country materials, these inputs have to undergo substantial transformation. For
example, bilateral cumulation can be applied between Turkiye and Bosnia and
Herzegovina.
Diagonal Cumulation
Diagonal cumulation means that where more than two countries are party to a
single agreement, or where several countries are bound by similar agreements,
input originating in any of those countries is allowed to be used in the
manufacture of the final product. The
Pan-European Mediterranean Cumulation of Origin (PAAMK) System is an example.
Full Cumulation
Full
cumulation is also a cumulation that allows for a combination of workmanship or
operations performed in more than one party country to gain originating
status. For example, full cumulation can
be applied between Turkiye, Tunisia, Morocco, and Algeria.
TradeAtlas: Search Importers and Exporters by Country of Origin
TradeAtlas
is a powerful tool that enables businesses to search for importers and
exporters not only by HS code but also by country of origin. Our platform helps
companies explore global trade data, identify potential partners, and analyze
market trends efficiently. If you want to explore TradeAtlas for free, you can
click here.
For detailed information on the subject of import &
become importer, you can review the content “Export Business Plan and Exporter's Roadmap”.
