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How Much Market Access in FTAs? Textiles Under NAFTA

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Author Info
Cadot, Olivier
Carrère, Céline
de Melo, Jaime
Portugal-Pérez, Alberto

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Abstract

This paper estimates the effective market access granted under NAFTA in textiles and apparel by combining two approaches. First, we estimate the effect of tariff preferences and rules of origin on the border prices of Mexican final goods exported to the US and of US intermediates exported to Mexico. We find that one third of the estimated rise in the border price of Mexican apparel products compensates for the cost of complying with NAFTA’s rules of origin. We also find that the price of US intermediates exported to Mexico is raised significantly by the presence of rules of origin downstream. Second, simulations from a structural model inspired by our econometric estimates, suggest little market access improvement for Mexican exporters.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5264.

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Date of creation: Oct 2005
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Handle: RePEc:cpr:ceprdp:5264

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Related research
Keywords: NAFTA regional integration rules of origin

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F15 - International Economics - - Trade - - - Economic Integration

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  1. Anson, José & Cadot, Olivier & de Melo, Jaime & Estevadeordal, Antoni & Suwa Eisenmann, Akiko & Tumurchudur, Bolormaa, 2003. "Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA," CEPR Discussion Papers 4166, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Paul Brenton & Miriam Manchin, 2003. "Making EU Trade Agreements Work: The Role of Rules of Origin," The World Economy, Blackwell Publishing, vol. 26(5), pages 755-769, 05. [Downloadable!] (restricted)
    Other versions:
  3. Olivier Cadot & Antoni Estevadeordal & Akiko Suwa-Eisenmann, 2004. "Rules of origin as export subsidies," Research Unit Working Papers 0405, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
    Other versions:
  4. Feenstra, Robert C., 1989. "Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test," Journal of International Economics, Elsevier, vol. 27(1-2), pages 25-45, August. [Downloadable!] (restricted)
    Other versions:
  5. Won Chang & L. Alan Winters, 2002. "How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR," American Economic Review, American Economic Association, vol. 92(4), pages 889-904, September. [Downloadable!] (restricted)
  6. Carrère, Céline & de Melo, Jaime, 2004. "Are Different Rules of Origin Equally Costly? Estimates from NAFTA," CEPR Discussion Papers 4437, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Dean Spinanger, 1998. "Textiles Beyond the MFA Phase-Out," CSGR Working papers series 13/98, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
  8. Marcelo Olarreaga & Çaglar Özden, 2005. "AGOA and Apparel: Who Captures the Tariff Rent in the Presence of Preferential Market Access?," The World Economy, Blackwell Publishing, vol. 28(1), pages 63-77, 01. [Downloadable!] (restricted)
  9. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Winters, L Alan, 1997. "Regionalism and the Rest of the World: The Irrelevance of the Kemp-Wan Theorem," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 228-34, April. [Downloadable!] (restricted)
  11. Ozden, Caglar & Sharma, Gunjan, 2004. "Price effects of preferential market access : the Caribbean Basin Initiative and the apparel sector," Policy Research Working Paper Series 3244, The World Bank. [Downloadable!]
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