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Rules of Origin : Regimes in East Asia and Recommendations for Best Practice

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  • Erlinda M. Medalla

    (PIDS)

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    Abstract

    With globalization and advances in information and communication technology (ICT) leading to growing international production sharing, amidst the increasing trend in preferential trading arrangements (PTAs), rules of origin (ROO) has been beset with difficult recurring issues. First and foremost is the cost of ROO administration. Second, ROO as part of PTAs could generate new barriers to trade, thus taking with one hand what the other hand has given. In turn, this gives rise to another key concern : its potential use as a protectionist tool. To achieve the East Asian vision of a community, any RTA it would endeavor to establish should set a rational, enabling regime of ROO that would facilitate even as it attempts to prevent trade deflection, with enough safeguards for inclusive development both within and across countries in the region. There is a consensus that the movement should be towards more simple and unrestrictive ROO. In sum, o Consolidation of the multiple membership agreements in the region around more liberal ROO should be the general guideline to achieve the vision of an East Asian community. o Currently, majority of East Asia RTAs combine the three main ROO approaches : (1) the regional value added criterion- RVA, (2) the change in tariff classification- CTC and (3) specified processes (SP). Liberalizing features such as de minimis are in cases used, often in a product specific approach. Reliance on government certification is the general rule. o The relatively simple and liberal ROO provision of AFTA, and the generality in application. In addition, reforms being sought lean towards more liberal rules by expanding/easing standards. o The AFTA ROO would provide a good starting point for EAFTA. o Necessarily, there should be a coordinated and cooperative action among member countries.

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    Bibliographic Info

    Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 22665.

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    Date of creation: Jan 2008
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    Handle: RePEc:eab:tradew:22665

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    Keywords: Rules of origin; preferential trading agreements (PTAs); free trade agreements (FTAs); regional trade agreements (RTAs); East Asia;

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    References

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    1. Medalla, Erlinda M. & Lazaro, Dorothea C., 2006. "Rules of Origin: Evolving Best Practices for RTAs/FTAs," Discussion Papers DP 2006-01, Philippine Institute for Development Studies.
    2. Miriam Manchin, 2004. "Preference Utilisation and Tariff Reduction in EU Imports from ACP Countries," Tinbergen Institute Discussion Papers 04-132/2, Tinbergen Institute.
    3. José Anson & Olivier Cadot & Antoni Estevadeordal & Jaime de Melo & Akiko Suwa-Eisenmann & Bolormaa Tumurchudur, 2005. "Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 501-517, 08.
    4. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
    5. 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.
    6. Cadot, Olivier & Carrère, Céline & de Melo, Jaime & Tumurchudur, Bolormaa, 2005. "Product Specific Rules of Origin in EU and US Preferential Trading Agreements: An Assessment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4998, C.E.P.R. Discussion Papers.
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    Cited by:
    1. Innwon Park & Soonchan Park, 2011. "Best practices for regional trade agreements," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 147(2), pages 249-268, June.
    2. 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.

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