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Rules of Origin as Commercial Policy Instruments

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  • Rod Falvey
  • Geoff Reed

Abstract

This paper examines the role of Rules of Origin as a commercial policy instrument which targets the input composition of imports. Using a three country, partial equilibrium structure, we demonstrate conditions under which the imposition of a binding Rule will be welfare improving for an importer facing either competitive export suppliers or an export monopolist. We also show that employing Rules of Origin in this way would be complementary to, rather than a substitute for, conventional optimal tariffs.

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Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 97-20.

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Handle: RePEc:kud:epruwp:97-20

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  1. Rod Falvey & Geoff Reed,, . "Economic Effects of Rules of Origin," Discussion Papers 97/21, University of Nottingham, CREDIT.
  2. Jones, R.W. & Spencer, B.J., 1988. "Raw Materials, Processing Activities And Protectionism," RCER Working Papers 156, University of Rochester - Center for Economic Research (RCER).
  3. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
  4. Richardson, Martin, 1993. "Content Protection with Foreign Capital," Oxford Economic Papers, Oxford University Press, vol. 45(1), pages 103-17, January.
  5. Grossman, Gene M, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, MIT Press, vol. 96(4), pages 583-603, November.
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