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Rules of Origin under Regional Trade Agreements

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  • Ram Upendra Das

    (Research and Information System for Developing Countries)

Abstract

Rules of origin (ROO) have emerged as an area in which consensus is hard to achieve among negotiating countries within an RTA. Disagreements over rules of origin have often deferred the implementation of several trade agreements. One of the reasons for this is because ROO are viewed as those obstructing trade. Most of the literature on the subject too argues that ROO reduce efficiency costs in production and restrict market access. It is argued in this paper that both the negotiations and the analytical literature pertaining to ROO display a lack of sound understanding of the implications of rules of origin. Developing a comprehensive view on the subject, with a developmental perspective of ROO, could help prevent wastage of negotiating-time, avoid cumbersome procedures and implement the agreements with the intention to reap the economic benefits of ROO. The paper highlights the economics of ROO, focuses on the issue of near-optimum ROO formulation, presents a factual account of ROO as evolved in South Asia, empirically estimates of the effects of ROO on trade in an FTA and finally makes new policy suggestions relating to ROO implementation and enforcement.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 22791.

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Date of creation: Jan 2010
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Handle: RePEc:eab:tradew:22791

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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
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Keywords: Rules of origin; trade; South Asia;

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  1. Rod Falvey & Geoff Reed, 2002. "Rules of Origin as Commercial Policy Instruments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 393-408, May.
  2. Céline CARRERE & Jaime MELO DE, 2004. "Are Different Rules of Origin Equally Costly? Estimates from NAFTA," Working Papers 200412, CERDI.
  3. 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.
  4. Cadot, Olivier & Melo, Jaime de, 2007. "Rules of Origin for Preferential Trading Arrangements: Implications for the ASEAN Free Trade Area of EU and US Experience," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 288-319.
  5. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc.
  6. Arvind Panagariya & Rupa Duttagupta, 2003. "Free Trade Areas and Rules of Origin," IMF Working Papers 03/229, International Monetary Fund.
  7. Paul Brenton & Miriam Manchin, 2002. "Making EU Trade Agreements Work: The Role of Rules of Origin," International Trade 0203003, EconWPA.
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