What are territoriality and direct transport?

Two conditions about where things happen. The work that makes a product originating has to be done in the trade area. And the goods can't be worked on while they're on their way to the buyer.

Passing through another country

Goods can usually travel through a third country, and even be stored or split up there, as long as they stay under customs control and nothing is done to them beyond keeping them in good condition.

Work done elsewhere

Some agreements let you send goods out for a limited amount of work and bring them back, often up to a set share of the product's value. Others don't allow it at all, so any work outside the area breaks the chain.