The Pan-European Cumulation System is not dissimilar to the Swiss-EU Free Trade Agreement. It was established to create an extended European free trade system. With the adoption of the Pan-European Cumulation System, the system that already operated between the EC and EFTA states for trade involving originating products was expanded to include the Eastern European states.
Concretely, this means that if a product is manufactured with precursor materials that are originating goods of a participating country, they retain their originating status and can be used without restrictions. The Pan-European Cumulation System is possible with precursor materials from the EFTA, the European Union and Turkey. The Central and Eastern European countries originally participating in the Pan-European Cumulation System (Poland, the Czech and Slovak Republics, Hungary, Bulgaria, Romania, Slovenia, Lithuania, Latvia and Estonia) have now become members of the European Union.
The introduction of the Pan-European Cumulation System at the start of 1997 marked the arrival of a simpler system for moving goods within Europe, a development which Switzerland had long been advocating. Once strictly divided into a plethora of contractually segregated free-trade zones, the continent of Europe has managed to develop a more unified system of trade law by allowing goods to accumulate properties for justifying preferential origin as they move across different free-trade zones. The amendments are of particular benefit to goods involved in finishing processes.