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Rules of Origin as Commercial Policy Instruments

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Listed:
  • Rod Falvey

    (University of Nottingham, U.K.)

  • Geoff Reed

    (University of Nottingham, U.K.)

Abstract

This article examines the role of rules of origin as a commercial policy instrument that 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 competitive export suppliers. We further show that employing rules of origin in this way would be complementary to, rather than a substitute for, conventional optimal tariffs. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association

Suggested Citation

  • 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.
    • Handle: RePEc:ier:iecrev:v:43:y:2002:i:2:p:393-408
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    1. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
    2. Martin Richardson, 2017. "Content Protection with Foreign Capital," World Scientific Book Chapters, in: Dimensions of Trade Policy, chapter 2, pages 19-39, World Scientific Publishing Co. Pte. Ltd..
    3. Ronald W. Jones & Barbara J. Spencer, 1989. "Raw Materials, Processing Activities, and Protectionism," Canadian Journal of Economics, Canadian Economics Association, vol. 22(3), pages 469-486, August.
    4. 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.
    5. Barbara J. Spencer & Ronald W. Jones, 1991. "Vertical Foreclosure and International Trade Policy," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 153-170.
    6. Rod Falvey & Geoff Reed, 1998. "Economic effects of rules of origin," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(2), pages 209-229, June.
    7. Gene M. Grossman, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(4), pages 583-603.
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