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The Impact of Rules of Origin On Trade Flows

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Author Info
AUGIER Patricia (Université de la Méditerranée CEFI)
GAZIOREK Michael (Sussex University & GREQAM)
LAITONG Charles (Université de la Méditerranée CEFI)

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Abstract

Within any preferential trade agreement (PTA) origin rules exist in order to prevent third countries from taking advantage of the PTA concessions. The rules thus are there to preserve the existing external protection of countries within the PTA. However, depending on their formulation, they can also increase that level of external protection, resulting in trade suppression and trade diversion. This paper provides the first serious empirical examination of the possible impact of rules of origin on patterns of trade in the European context. The methodology employed is that of an augmented gravity model where we focus on the impact within the Pan-european system of cumulation. The results suggest that rules of origin do indeed restrict trade, that the cumulation of such rules could increase trade in the order of 50%, and that the impact is greater on intermediate than manufacturing trade.

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Paper provided by EconWPA in its series International Trade with number 0404001.

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Length: 27 pages
Date of creation: 01 Apr 2004
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Handle: RePEc:wpa:wuwpit:0404001

Note: Type of Document - pdf; pages: 27
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Web page: http://129.3.20.41

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Keywords: international trade; rules of origin; gravity model;

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F - International Economics

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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.:
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  3. Deardorff, Alan V, 2001. "International Provision of Trade Services, Trade, and Fragmentation," Review of International Economics, Blackwell Publishing, vol. 9(2), pages 233-48, May. [Downloadable!] (restricted)
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  4. D Evans, 2000. "Options for Regional Integration in Southern Africa," South African Journal of Economics, Economic Society of South Africa, vol. 68(4), pages 293-304, December. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
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  9. 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. [Downloadable!] (restricted)
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  10. Cockburn, John & Decaluwe, Bernard & Dostie, Benoît, 1998. "Les leçons du mariage entre les modèles d'équilibre général calculable et la nouvelle théorie du commerce international: application à la Tunisie," Cahiers de recherche 9804, Université Laval - Département d'économique. [Downloadable!]
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  13. Arvind Panagariya & Rupa Duttagupta, 2003. "Free Trade Areas and Rules of Origin: Economics and Politics," IMF Working Papers 03/229, International Monetary Fund. [Downloadable!]
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  14. 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. [Downloadable!] (restricted)
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  16. Sapir, Andre, 1998. "The political economy of EC regionalism," European Economic Review, Elsevier, vol. 42(3-5), pages 717-732, May. [Downloadable!] (restricted)
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  17. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Blackwell Publishing, vol. 20(3), pages 363-368, 05. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Baldwin, Richard, 2006. "Managing the Noodle Bowl: The Fragility of East Asian Regionalism," CEPR Discussion Papers 5561, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Beatriz Gaitan & Bernd Lucke, 2007. "The Barcelona initiative and the importance of NTBs: a dynamic CGE-analysis for Syria," International Economics and Economic Policy, Springer, vol. 4(1), pages 33-59, April. [Downloadable!] (restricted)
  3. Jong-Wha Lee & Innwon Park & Kwanho Shin, 2005. "Proliferating Regional Trade Arrangements: Why and Whither?," International Trade 0501010, EconWPA. [Downloadable!]
    Other versions:
  4. Richard Baldwin, 2007. "Multilateralising Regionalism: Sphagetti Bowls as building Blocs on the Path to Global Free Trade," Working Papers id:1231, esocialsciences.com. [Downloadable!]
    Other versions:
  5. Cipollina, Maria & Salvatici, Luca, 2007. "EU and developing countries: an analysis of preferential margins on agricultural trade flows," Working Papers 7219, TRADEAG - Agricultural Trade Agreements. [Downloadable!]
  6. Asfaw, S. & Mithofer, D. & Waibel, H., 2008. "EU private agrifood standards in African high-value crops: pesticide use and farm-level productivity," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44145, European Association of Agricultural Economists. [Downloadable!]
  7. De Maria, Federica & Drogue, Sophie & Matthews, Alan, 2008. "Agro-Food Preferences in the EU's GSP Scheme: An Analysis of Changes between 2004 and 2006," Working Papers 6151, TRADEAG - Agricultural Trade Agreements. [Downloadable!]
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  8. Uttam Kumar Deb, 2006. "Rules of Origin and Non-Tariff Barriers in Agricultural Trade: Perspectives from Bangladesh and Cambodia," Working Papers 1206, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada.. [Downloadable!]
  9. Jean-Christophe Bureau & Raja Chakir & Jacques Gallezot, 2007. "The Utilisation of EU and US Trade Preferences for Developing Countries in the Agri-Food Sector," The Institute for International Integration Studies Discussion Paper Series iiisdp193, IIIS. [Downloadable!]
    Other versions:
  10. Productivity Commission, 2004. "Rules of Origin under the Australia–New Zealand CER Trade Agreement," International Trade 0410001, EconWPA. [Downloadable!]
  11. Asfaw, Solomon & Mithofer, Dagmar & Waibel, Hermann, 2007. "What Impact Are EU Supermarket Standards Having on Developing Countries Export of High-Value Horticultural Products? Evidence from Kenya," 105th Seminar, March 8-10, 2007, Bologna, Italy 7870, European Association of Agricultural Economists. [Downloadable!]
  12. 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. [Downloadable!]
    Other versions:
  13. Cardamone, Paola, 2007. "A survey of the assessments of the effectiveness of Preferential Trade Agreements using gravity models," Working Papers 7282, TRADEAG - Agricultural Trade Agreements. [Downloadable!]
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