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Free Trade Areas And Rules Of Origin: Economics And Politics

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  • RUPA DUTTAGUPTA
  • ARVIND PANAGARIYA

Abstract

Incorporating an intermediate input into a simple small-union general-equilibrium model, this paper first develops the welfare economics of preferential trading under the rules of origin (ROO) and then demonstrates that ROOs can improve the political viability of Free Trade Agreements (FTAs). Two interesting outcomes are derived. First, a welfare-reducing FTA that was rejected in the absence of ROOs can become feasible in the presence of these rules. Second, a welfare- improving FTA that was rejected in the absence of ROOs can be endorsed in their presence, but upon endorsement it can become welfare inferior relative to the status quo. Copyright 2007 Blackwell Publishing Ltd..

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Economics & Politics.

Volume (Year): 19 (2007)
Issue (Month): 2 (07)
Pages: 169-190

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Handle: RePEc:bla:ecopol:v:19:y:2007:i:2:p:169-190

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Citations

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Cited by:
  1. Ram Upendra Das, 2010. "Rules of Origin under Regional Trade Agreements," Trade Working Papers 22791, East Asian Bureau of Economic Research.
  2. Cadot, Olivier & Estevadeordal, Antoni & Suwa Eisenmann, Akiko, 2005. "Rules of Origin as Export Subsidies," CEPR Discussion Papers 4999, C.E.P.R. Discussion Papers.
  3. Patricia Augier & Michael Gasiorek & Charles Lai-Tong, 2007. "Multilateralising Regionalism: Relaxing the Rules of Origin Or Can Those Pecs Be Flexed?," CARIS Working Papers 03, Centre for the Analysis of Regional Integration at Sussex, University of Sussex.
  4. Uttam Kumar Deb, 2006. "Rules of Origin and Non-Tariff Barriers in Agricultural Trade: Perspectives from Bangladesh and Cambodia," Working Papers 1206, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
  5. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc.
  6. Joseph Francois, 2005. "Preferential Trade Arrangements and the Pattern of Production and Trade when Inputs are Differentiated," Tinbergen Institute Discussion Papers 05-072/2, Tinbergen Institute.
  7. Park, Innwon & Park, Soonchan, 2009. "Consolidation and Harmonization of Regional Trade Agreements (RTAs): A Path Toward Global Free Trade," MPRA Paper 14217, University Library of Munich, Germany, revised 23 Mar 2009.
  8. Arvind Panagariya, 2003. "South Asia: Does Preferential Trade Liberalisation Make Sense?," The World Economy, Wiley Blackwell, vol. 26(9), pages 1279-1291, 09.
  9. Patricia Augier & Michael Gasiorek & Charles Lai Tong, 2005. "The impact of rules of origin on trade flows," Economic Policy, CEPR & CES & MSH, vol. 20(43), pages 567-624, 07.

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