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Global protectionist trade effect of rules of origin: assessment of input-output restrictions at HS6 level in 400 FTAs

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  • Kniahin, Dzmitry

Abstract

FTA policymakers designate input-output relationships when formulating rules of origin (RoO). These relationships define restricted inputs that can only be sourced from FTA area. Conconi et al. (2018) found a strong trade diversion effect in such inputs in the case of NAFTA. We construct a global dataset by extracting HS6 input-output restrictions from 400 FTAs a la Conconi et al. using Rules of Origin Facilitator/MacMap global database at HS6 level. We document that: (1) Input-output tables diverge across FTAs, driven by political economy of protected inputs; (2) FTAs show heterogeneity in precision of revealed HS6 input-output relationships. Precision is higher in “sensitive” products and in NAFTA-style FTAs (US FTAs, LatAm FTAs and CPTPP); (3) RoO globally divert trade by XX% in restricted inputs, thus the effect is less than in NAFTA (45%); (4) RoO that designate `allowed' inputs result in `trade creation' in such inputs by X%, somewhat compensating trade diversion in restricted inputs. For example, if fabrics are placed on restricted list, it can trigger imports of yarn instead. Finally, we augment the NAFTA-based HS6 input-output matrix with 460 FTAs and publish a more complete, more granular research dataset which enables disaggregated value-chain impact modeling of trade policy changes.

Suggested Citation

  • Kniahin, Dzmitry, 2022. "Global protectionist trade effect of rules of origin: assessment of input-output restrictions at HS6 level in 400 FTAs," Conference papers 333435, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333435
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    1. 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.
    2. Céline Carrère & Jaime de Melo, 2015. "Are Different Rules of Origin Equally Costly? Estimates from NAFTA," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 12, pages 277-298, World Scientific Publishing Co. Pte. Ltd..
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