Rules of origin for preferential trading arrangements : implications for the ASEAN Free Trade Area of EU and U.S. experience
AbstractWith free trade areas (FTAs) undernegotiation between Japan and the ASEAN Free Trade Area (AFTA) members and between the Republic of Korea and AFTA members, preferential market access will become more important in Asian regionalism. Protectionist pressures will likely increase through rules of origin, the natural outlet for these pressures. Based on the experience of the European Union and the United States with rules of origin, the authors argue that, should these FTAs follow in the footsteps of the EU and the U.S. and adopt similar rules of origin, trading partners in the region would incur unnecessary costs. Using EU trade under the Generalized System of Preferences with Africa, Caribbean, and Pacific partners, the authors estimate how the use of preferences would likely change if AFTA were to veer away from its current uniform rules of origin requiring a 40 percent local content rate. Depending on the sample used, a 10 percentage point reduction in the local value content requirement is estimated to increase the utilization rate of preferences by between 2.5 and 8.2 percentage points.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4016.
Date of creation: 01 Sep 2006
Date of revision:
Free Trade; Rules of Origin; Trade and Regional Integration; Economic Theory&Research; Trade Policy;
Other versions of this item:
- 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 256-287.
- 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.
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-04 (All new papers)
- NEP-INT-2006-11-04 (International Trade)
- NEP-SEA-2006-11-04 (South East Asia)
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