IDEAS home Printed from https://ideas.repec.org/a/eee/asieco/v82y2022ics1049007822000707.html
   My bibliography  Save this article

Rules of origin and exports in developing economies: The case of garment products

Author

Listed:
  • Tanaka, Kiyoyasu
  • Fukunishi, Takahiro

Abstract

Relaxing restrictive rules of origin (ROO) in preferential market access can promote exports in developing economies by improving input sourcing flexibility, but actual ROO impacts remain an empirical question. This paper examines the European Union’s trade preferences, where origin requirements for knit and woven garment products were relaxed for beneficiaries in the Interim Economic Partnership Agreements (IEPA) from 2008 and for those in the Everything But Arms (EBA) scheme from 2011, respectively. The results show that ROO liberalization had little aggregate impact on knit and woven garment exports in IEPA beneficiaries, but increased the export values of woven garments in EBA beneficiaries by 36.3% during the post-period. Among EBA beneficiaries, duty-free imports of woven garments from Bangladesh and Cambodia into the EU increased sharply after ROO liberalization. These countries increased imported fabric from China, consistent with the theoretical prediction of ROO impacts. Thus, the impact of ROO on exports is heterogeneous across products and countries.

Suggested Citation

  • Tanaka, Kiyoyasu & Fukunishi, Takahiro, 2022. "Rules of origin and exports in developing economies: The case of garment products," Journal of Asian Economics, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:asieco:v:82:y:2022:i:c:s1049007822000707
    DOI: 10.1016/j.asieco.2022.101514
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1049007822000707
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.asieco.2022.101514?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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, August.
    2. Paul Brenton & Miriam Manchin, 2014. "Making EU Trade Agreements Work: The Role of Rules of Origin," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 14, pages 299-313, World Scientific Publishing Co. Pte. Ltd..
    3. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    4. Patricia Augier & Michael Gasiorek & Charles Lai Tong, 2005. "The impact of rules of origin on trade flows [‘Rules of origin and the EU-Med partnership: the case of textiles’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(43), pages 568-624.
    5. Garth Frazer & Johannes Van Biesebroeck, 2010. "Trade Growth under the African Growth and Opportunity Act," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 128-144, February.
    6. Jan Willem Gunning & Paul Collier, 1999. "Explaining African Economic Performance," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 64-111, March.
    7. Jaime DE MELO & Alberto PORTUGAL-PEREZ, 2012. "Preferential Market Access Design: Evidence and Lessons from African Apparel Exports to the US and to the EU," Working Papers P47, FERDI.
    8. Kati Suominen & Antoni Estevadeordal, 2004. "Rules of Origin in FTAs in Europe and in the Americas: Issues and Implications for the EU-Mercosur Inter-Regional Association Agreement," IDB Publications (Working Papers) 9346, Inter-American Development Bank.
    9. John Pickles & Leonhard Plank & Cornelia Staritz & Amy Glasmeier, 2015. "Trade policy and regionalisms in global clothing production networks," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(3), pages 381-402.
    10. repec:oup:ecpoli:v:20:y:2005:i:43:p:567-624 is not listed on IDEAS
    11. Anna Andersson, 2016. "Export Performance and Access to Intermediate Inputs: The Case of Rules of Origin Liberalisation," The World Economy, Wiley Blackwell, vol. 39(8), pages 1048-1079, August.
    12. Paola Conconi & Manuel García-Santana & Laura Puccio & Roberto Venturini, 2018. "From Final Goods to Inputs: The Protectionist Effect of Rules of Origin," American Economic Review, American Economic Association, vol. 108(8), pages 2335-2365, August.
    13. Patricia Augier & Michael Gasiorek & Charles Lai‐Tong, 2004. "Rules of Origin and the EU‐Med Partnership: The Case of Textiles," The World Economy, Wiley Blackwell, vol. 27(9), pages 1449-1473, September.
    14. Doan, Thang N. & Xing, Yuqing, 2018. "Trade efficiency, free trade agreements and rules of origin," Journal of Asian Economics, Elsevier, vol. 55(C), pages 33-41.
    15. Bernard Hoekman & Dominique Njinkeu, 2017. "Integrating Africa: Some Trade Policy Research Priorities and Challenges," RSCAS Working Papers 2017/43, European University Institute.
    16. William Easterly & Ariell Reshef, 2014. "African Export Successes: Surprises, Stylized Facts, and Explanations," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 297-342, National Bureau of Economic Research, Inc.
    17. Rhee, Yung Whee, 1990. "The catalyst model of development: Lessons from Bangladesh's success with garment exports," World Development, Elsevier, vol. 18(2), pages 333-346, February.
    18. Sanjaya Lall, 2005. "FDI, AGOA and Manufactured Exports by a Landlocked, Least Developed African Economy: Lesotho," Journal of Development Studies, Taylor & Francis Journals, vol. 41(6), pages 998-1022.
    19. Demidova, Svetlana & Kee, Hiau Looi & Krishna, Kala, 2012. "Do trade policy differences induce sorting? Theory and evidence from Bangladeshi apparel exporters," Journal of International Economics, Elsevier, vol. 87(2), pages 247-261.
    20. Aaditya Mattoo & Devesh Roy & Arvind Subramanian, 2003. "The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?," The World Economy, Wiley Blackwell, vol. 26(6), pages 829-851, June.
    21. Gereffi, Gary & Frederick, Stacey, 2010. "The global apparel value chain, trade and the crisis : challenges and opportunities for developing countries," Policy Research Working Paper Series 5281, The World Bank.
    22. Louise Curran & Khalid Nadvi, 2015. "Shifting trade preferences and value chain impacts in the Bangladesh textiles and garment industry," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(3), pages 459-474.
    23. Morris, Mike & Staritz, Cornelia, 2014. "Industrialization Trajectories in Madagascar’s Export Apparel Industry: Ownership, Embeddedness, Markets, and Upgrading," World Development, Elsevier, vol. 56(C), pages 243-257.
    24. Phelps, Nicholas A. & Stillwell, John C.H. & Wanjiru, Roseline, 2009. "Broken Chain? AGOA and Foreign Direct Investment in the Kenyan Clothing Industry," World Development, Elsevier, vol. 37(2), pages 314-325, February.
    25. Bernard Hoekman & Dominique Njinkeu, 2017. "Integrating Africa: Some Trade Policy Research Priorities and Challenges†," Journal of African Economies, Centre for the Study of African Economies, vol. 26(suppl_2), pages 12-39.
    26. Oliver Morrissey, 2005. "Imports and Implementation: Neglected Aspects of Trade in the Report of the Commission for Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 41(6), pages 1133-1153.
    27. Louise Curran & Khalid Nadvi & Liam Campling, 2019. "The influence of tariff regimes on global production networks (GPNs)," Journal of Economic Geography, Oxford University Press, vol. 19(4), pages 873-895.
    28. Kaoru Natsuda & Kenta Goto & John Thoburn, 2010. "Challenges to the Cambodian Garment Industry in the Global Garment Value Chain," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 22(4), pages 469-493, September.
    29. Yoshimichi Murakami & Keijiro Otsuka, 2020. "Governance, Information Spillovers, and Productivity of Local Firms: Toward an Integrated Approach to Foreign Direct Investment and Global Value Chains," The Developing Economies, Institute of Developing Economies, vol. 58(2), pages 134-174, June.
    30. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kiyoyasu Tanaka, 2021. "The European Union's reform in rules of origin and international trade: Evidence from Cambodia," The World Economy, Wiley Blackwell, vol. 44(10), pages 3025-3050, October.
    2. Sytsma, Tobias, 2019. "Rules of Origin Liberalization with Multi-Product Firms: Theory and Evidence from Bangladeshi Apparel Exporters," MPRA Paper 95956, University Library of Munich, Germany.
    3. Azmeh, Shamel, 2015. "Transient global value chains and preferential trade agreements: rules of origin in US trade agreements with Jordan and Egypt," LSE Research Online Documents on Economics 64601, London School of Economics and Political Science, LSE Library.
    4. Tobias Sytsma, 2021. "Rules of origin and trade preference utilization among least developed countries," Contemporary Economic Policy, Western Economic Association International, vol. 39(4), pages 701-718, October.
    5. Kazunobu Hayakawa, 2023. "Multiple preference regimes and rules of origin," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(3), pages 673-696, August.
    6. Prema-chandra Athukorala & Raveen Ekanayake, 2014. "Repositioning in the Global Apparel Value Chain in the Post-MFA Era: Strategic Issues and Evidence from Sri Lanka," Departmental Working Papers 2014-17, The Australian National University, Arndt-Corden Department of Economics.
    7. Garth Frazer & Johannes Van Biesebroeck, 2010. "Trade Growth under the African Growth and Opportunity Act," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 128-144, February.
    8. Lawrence Edwards & Robert Z. Lawrence, 2014. "AGOA Rules: The Intended and Unintended Consequences of Special Fabric Provisions," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 343-393, National Bureau of Economic Research, Inc.
    9. Azmeh, Shamel & Nadvi, Khalid, 2014. "Asian firms and the restructuring of global value chains," International Business Review, Elsevier, vol. 23(4), pages 708-717.
    10. Michael Fuenfzig & Pietro Maggi & Corine Besseling & Anne Winkel & Michael Flickenschild & Przemysław Kowalski & Katarzyna Sidło & Anna Malinowska & Marek Peda & Christopher Hartwell & Patricia Augier, 2021. "Ex-post Evaluation of the impact of trade chapters of the Euro-Mediterranean Association Agreements with six partners: Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia," Working Papers hal-03435264, HAL.
    11. Staritz, Cornelia & Morris, Mike, 2012. "Local embeddedness, upgrading, and skill development: Global value chains and foreign direct investment in Lesotho's apparel industry," Working Papers 32, Austrian Foundation for Development Research (ÖFSE).
    12. Cooke, Edgar F. A., 2012. "Is the impact of AGOA heterogeneous?," MPRA Paper 43277, University Library of Munich, Germany.
    13. Linda Calabrese & Neil Balchin, 2022. "Foreign Investment and Upgrading in the Garment Sector in Africa and Asia," Global Policy, London School of Economics and Political Science, vol. 13(S1), pages 34-44, April.
    14. Patricia Augier & Michael Gasiorek & Charles Lai-Tong, 2007. "Multilateralising Regionalism: Relaxing the Rules of Origin Or Can Those Pecs Be Flexed?," CARIS Working Papers 03, Centre for the Analysis of Regional Integration at Sussex, University of Sussex.
    15. Tanaka, Kiyoyasu & Greaney, Theresa M., 2024. "Trade and employment in the formal and informal sectors: A natural experiment from Cambodia," Journal of Asian Economics, Elsevier, vol. 90(C).
    16. Felbermayr, Gabriel & Teti, Feodora & Yalcin, Erdal, 2019. "Rules of origin and the profitability of trade deflection," Journal of International Economics, Elsevier, vol. 121(C).
    17. Sithanonxay Suvannaphakdy & Alisa DiCaprio, 2021. "Are Asian least developed countries sidelined in advanced manufacturing production networks?," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(1), pages 134-152, May.
    18. 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, August.
    19. Fabien Candau & Sébastien Jean, 2005. "What Are EU Trade Preferences Worth for Sub-Saharan Africa and Other Developing Countries?," Working Papers 2005-19, CEPII research center.
    20. Mike Morris & Leonhard Plank & Cornelia Staritz, 2016. "Regionalism, end markets and ownership matter: Shifting dynamics in the apparel export industry in Sub Saharan Africa," Environment and Planning A, , vol. 48(7), pages 1244-1265, July.

    More about this item

    Keywords

    Rules of origin; GSP; Trade; Garment; Developing economies;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:82:y:2022:i:c:s1049007822000707. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/asieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.