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The WTO agreement on rules of origin: Implications for South Asia

Author

Listed:
  • K.N. Harilal

    (Centre for Development Studies)

  • P.L. Beena

    () (Centre for Development Studies)

Abstract

From neutral trade policy devices employed to identity country of origin of commodities, the rules of origin are emerging as protectionist tools. Nation-states, as they are increasingly denied of conventional trade policy tools, are reasserting themselves by evolving new and less visible weapons of intervention. The misuse of rules of origin as protectionist tools is widely reported from PTAs among developed countries, such as EEC and NAFTA. More recently, non-preferential rules of origin are also being used for protectionist purpose. It is such protectionist adaptation of the rules of origin that prompted the WTO to launch the HWP to evolve common rules of origin for all countries. The present study is a critique of the harmonization work programme. The central objective of the ARO and also the HWP is to ensure that the rules of origin are employed without/ or with least trade distorting effects. But, as our study shows, it would be too optimistic to expect such an outcome from the HWP. On the contrary, even if it is successfully completed, the HWP is likely to leave considerable scope for misuse of rules of origin for protectionist purpose. Further, the new multilateral regime, even if it succeeds in establishing semblance of an order in the arena of rules of origin, is likely to have unequal effects on members. The moot question is as to whether the adopted harmonised rules match the trading interests of the developing nations. The picture emerging from our analysis of outstanding disputes is not very encouraging for the developing countries. They belong mainly to the traditional areas of western protectionism against developing countries. The fear that the developed countries are trying to manipulate rules of origin to compensate for the loss of tariff and other conventional barriers, therefore, cannot be ruled out.

Suggested Citation

  • K.N. Harilal & P.L. Beena, 2003. "The WTO agreement on rules of origin: Implications for South Asia," Centre for Development Studies, Trivendrum Working Papers 353, Centre for Development Studies, Trivendrum, India.
  • Handle: RePEc:ind:cdswpp:353
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    File URL: http://www.cds.edu/wp-content/uploads/2012/10/wp353.pdf
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    References listed on IDEAS

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    1. Paul Brenton & Miriam Manchin, 2003. "Making EU Trade Agreements Work: The Role of Rules of Origin," The World Economy, Wiley Blackwell, vol. 26(5), pages 755-769, May.
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    Cited by:

    1. Medalla, Erlinda M. & Balboa, Jenny D., 2009. "ASEAN Rules of Origin: Lessons and Recommendations for Best Practice," Discussion Papers DP 2009-36, Philippine Institute for Development Studies.
    2. Medalla, Erlinda M., 2010. "Rules of Origin: Regimes in East Asia and Recommendations for Best Practice," Philippine Journal of Development PJD 2008 Vol. XXXV No. 2-, Philippine Institute for Development Studies.
    3. Medalla, Erlinda M. & Lazaro, Dorothea C., 2006. "Rules of Origin: Evolving Best Practices for RTAs/FTAs," Discussion Papers DP 2006-01, Philippine Institute for Development Studies.
    4. Hazel Parcon, 2008. "Disaggregating PTAs at the Role of International Division of Labor on PTA Formation," Working Papers 200806, University of Hawaii at Manoa, Department of Economics.
    5. Medalla, Erlinda M., 2008. "Rules of Origin: Regimes in East Asia and Recommendations for Best Practice," Discussion Papers DP 2008-19, Philippine Institute for Development Studies.
    6. Medalla, Erlinda M. & Supperamaniam, M., 2008. "Suggested Rules of Origin Regime for EAFTA," Discussion Papers DP 2008-22, Philippine Institute for Development Studies.

    More about this item

    Keywords

    World Trade Organisation; Protectionism; Rules of Origin; Harmonisation Work Programme; Nationality of Products; Wholly Obtained Goods; Substantial Transformation; Trade in Textile Articles;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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