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A Political Economy Analysis of Rules of Origin Requirements of Korea-US FTA with a New Measure of the Requirements

Author

Listed:
  • Jaeyoun Roh

    (Seoul National University)

  • Jee-Hyeong Park

    (Seoul National University)

Abstract

Our paper contributes to the literature on the rules of origin (ROO) requirements of regional trade agreements by developing a new measure of ROO requirements and by modifying and testing an existing political economy model of ROO requirements with the data of the Korea-United States Free Trade Agreement (KORUS FTA). In explaining the utilization rates of KORUS FTA, Bindingness Index, the new measure of ROO requirements taking the status quo local content of a product into consideration, performs better than the existing measure proposed by Estevadeordal (2000). To reflect that the US has agreed to immediate and complete liberalization on most products in KORUS FTA, we modify the political economy model of ROO requirements of Cadot et al. (2006) by assuming that the preferential tariff rates are zero. This modification leads to testable predictions, some of which differs from the prediction of Cadot et al. (2006), and our empirical analysis supports the predictions of our modified political economy model.

Suggested Citation

  • Jaeyoun Roh & Jee-Hyeong Park, 2014. "A Political Economy Analysis of Rules of Origin Requirements of Korea-US FTA with a New Measure of the Requirements," Korean Economic Review, Korean Economic Association, vol. 30, pages 163-190.
    • Handle: RePEc:kea:keappr:ker-20140630-30-1-08
    as

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    References listed on IDEAS

    as
    1. Jiandong Ju & Kala Krishna, 2005. "Firm behaviour and market access in a Free Trade Area with rules of origin," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 290-308, February.
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    3. Kala Krishna & Anne Krueger, 1995. "Implementing Free Trade Areas: Rules of Origin and Hidden Protection," NBER Working Papers 4983, National Bureau of Economic Research, Inc.
    4. Rupa Duttagupta & Arvind Panagariya, 2007. "Free Trade Areas And Rules Of Origin: Economics And Politics," Economics and Politics, Wiley Blackwell, vol. 19(2), pages 169-190, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Korea-US Free Trade Agreement; Political Economy; Regional Trade Agreements; Rules of Origin;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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