Advanced Search
MyIDEAS: Login

Why OECD Countries should Reform Rules of Origin

Contents:

Author Info

  • Cadot, Olivier
  • de Melo, Jaime

Abstract

With preferential trading Agreements (PTAs) on the rise worldwide with multiple memberships, rules of origin-- which are necessary to prevent trade deflection --are attracting increasing attention. At the same time, preference erosion for GSP recipients is threatening the viability of the further multilateral negotiations. Drawing on different approaches, we show that the current system of rules of origin (RoO) in place for EU and US preferential trade agreements (including the GSP) which are representative of RoO practiced by OECD countries should be drastically simplified if developed countries really want to help developing countries integrate into the World Trading System. Besides diverting resources for administration, RoO regimes of the EU and US carry significant compliance costs. More fundamentally, it is becoming increasingly clear that RoO have often been designed to force the Southern partner to buy inefficient intermediate products from the Northern partner (the so-called ‘double transformation rule’ in textiles & apparel (T&A) is such an example) to ‘pay for’ preferential access for the final product. Evidence is also indicating that a significant fraction of the remaining rents (after accounting for increasing costs to comply with RoO requirements) associated with market access are largely captured by the Northern partner. Finally, we report evidence that the restrictiveness of RoO is beyond levels that would be justified to prevent trade deflection implying capture by special interest groups. The paper concludes by outlining alternative paths to reforms.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cepr.org/pubs/dps/DP6172.asp
Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6172.

as in new window
Length:
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:cpr:ceprdp:6172

Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820

Order Information:
Email:

Related research

Keywords: market access; AFTA; ASEAN; NAFTA; PANEURO; preferential trade agreements; Rules of Origin;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Avinash K. Dixit & Gene M. Grossman, 1981. "Trade and Protection with Multistage Production," NBER Working Papers 0794, National Bureau of Economic Research, Inc.
  2. 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.
  3. Jiandong Ju & Kala Krishna, 1998. "Firm Behavior and Market Access in a Free Trade Area with Rules of Origin," NBER Working Papers 6857, National Bureau of Economic Research, Inc.
  4. �aglar Özden & Gunjan Sharma, 2006. "Price Effects of Preferential Market Access: Caribbean Basin Initiative and the Apparel Sector," World Bank Economic Review, World Bank Group, vol. 20(2), pages 241-259.
  5. Jose Anson & Olivier Cadot & Antoni Estevadeordal & Jaime de Melo & Akiko Suwa-Eisenmann & Bolorma Tumurchudur, 2004. "Rules of origin in north-south preferential trading arrangements with an application to NAFTA," Research Unit Working Papers 0406, Laboratoire d'Economie Appliquee, INRA.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hayakawa, Kazunobu, 2012. "Does the use of multiple FTAs force firms to raise local input share? : evidence of the spaghetti bowl phenomenon," IDE Discussion Papers 364, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  2. Hayakawa, Kazunobu, 2012. "Impact of diagonal cumulation rule on FTA utilization : evidence from bilateral and multilateral FTAs between Japan and Thailand," IDE Discussion Papers 372, Institute of Developing Economies, Japan External Trade Organization(JETRO).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:6172. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.