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Rules of Origin for Preferential Trading Arrangements: Implications for the ASEAN Free Trade Area of EU and US Experience

Author

Listed:
  • Olivier Cadot

    (University of Lausanne)

  • Jaime de Melo

    (University of Geneva)

Abstract

With free trade areas (FTAs) under negotiation 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, this paper argues that, should these FTAs follow in the footsteps of the EU and the US and adopt similar RoO, trading partners in the region would incur unnecessary costs. Using EU trade with GSP and ACP partners, the paper estimates how the utilization of preferences would likely change if AFTA were to veer away from its current uniform RoO requiring a 40% 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.

Suggested Citation

  • Olivier Cadot & Jaime de Melo, 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.
    • Handle: RePEc:ris:integr:0395
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    Cited by:

    1. Innwon Park & Soonchan Park, 2011. "Best practices for regional trade agreements," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 249-268, June.
    2. Maria Cipollina & Federica Demaria, 2020. "The Trade Effect of the EU’s Preference Margins and Non-Tariff Barriers," JRFM, MDPI, vol. 13(9), pages 1-20, September.
    3. Landry Signé & Payce Madden, 2021. "Considerations for Rules of Origin under the African Continental Free Trade Area," Journal of African Trade, Springer, vol. 8(2), pages 77-87, December.
    4. Farhat Mahmood & Juthathip Jongwanich, 2018. "Export-enhancing Effects of Free Trade Agreements in South Asia," Journal of South Asian Development, , vol. 13(1), pages 24-53, April.
    5. Keck, Alexander & Lendle, Andreas, 2012. "New evidence on preference utilization," WTO Staff Working Papers ERSD-2012-12, World Trade Organization (WTO), Economic Research and Statistics Division.
    6. Samuel Admassu, 2020. "The trade creation effects of Africa’s reciprocal vis-à-vis non-reciprocal trade agreements," Empirical Economics, Springer, vol. 59(6), pages 2717-2730, December.
    7. Masahiro Kawai, 2009. "The Asian “Noodle Bowl”:Is It Serious for Business?," Working Papers id:1936, eSocialSciences.
    8. DeMaria, 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.
    9. Ram Upendra Das, 2010. "Rules of Origin under Regional Trade Agreements," Trade Working Papers 22791, East Asian Bureau of Economic Research.
    10. Kaleb Abreha & Raymond Robertson, 2023. "Heterogeneous trade agreements and adverse implications of restrictive rules of origin: Evidence from apparel trade," The World Economy, Wiley Blackwell, vol. 46(12), pages 3482-3510, December.
    11. Misa Okabe, . "The Impact of ASEAN +1 FTAs on ASEAN's Trade," Chapters, in: Lili Yan Ing (ed.), East Asian Integration (First Edition), chapter 2, pages 25-66, Economic Research Institute for ASEAN and East Asia (ERIA).
    12. Portugal-Perez, Alberto & Wilson, John S., 2008. "Why trade facilitation matters to Africa ?," Policy Research Working Paper Series 4719, The World Bank.
    13. Misa OKABE, 2015. "Impact of Free Trade Agreements on Trade in East Asia," Working Papers DP-2015-01, Economic Research Institute for ASEAN and East Asia (ERIA).
    14. Jaime de Melo & Anna Twum, 2021. "Prospects and Challenges for Supply Chain Trade under the Africa Continental Free Trade Area," Journal of African Trade, Springer, vol. 8(2), pages 49-61, December.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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