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Rules of origin as export subsidies

Author

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  • Olivier Cadot
  • Antoni Estevadeordal
  • Akiko Suwa-Eisenmann

Abstract

The paper estimates the e¤ect of NAFTA’s rules of origin (ROO) on Mexican access to the US market treating explicitly the endogenous determination of ROOs. The first equation determines Mexico’s NAFTA (preferential) exports to the US as a function of tariff preference and Estevadeordal’s qualitative ROO index. The second equation determines ROO strictness on the basis of a Grossman-Helpman model identifying channels through which lobbying by US intermediate-good producers leads to deep preferences and stiff rules of origin in downstream sectors. The estimates suggest that the creation of a captive market for upstream intermediate-good producers is indeed one of their political determinants.
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Suggested Citation

  • Olivier Cadot & Antoni Estevadeordal & Akiko Suwa-Eisenmann, 2004. "Rules of origin as export subsidies," Research Unit Working Papers 0405, Laboratoire d'Economie Appliquee, INRA.
    • Handle: RePEc:lea:leawpi:0405
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    References listed on IDEAS

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    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.
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    Cited by:

    1. Portugal-Perez, Alberto, 2009. "Assessing the impact of political economy factors on rules of origin under NAFTA," Policy Research Working Paper Series 4848, The World Bank.
    2. Earl L. Grinols & Peri Silva, 2008. "Industrial targeting in free trade areas with policy independence," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 796-816, August.
    3. Rupa Duttagupta & Arvind Panagariya, 2007. "Free Trade Areas And Rules Of Origin: Economics And Politics," Economics and Politics, Wiley Blackwell, vol. 19(2), pages 169-190, July.
    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. Kevin Gallagher, 2011. "Trading Away Stability and Growth: United States Trade Agreements in Latin America," Working Papers wp266, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Cadot, Olivier & Carrere, Celine & De Melo, Jaime & Tumurchudur, Bolormaa, 2006. "Product-specific rules of origin in EU and US preferential trading arrangements: an assessment," World Trade Review, Cambridge University Press, vol. 5(2), pages 199-224, July.
    7. Davies, Ronald B., 2013. "The silver lining of red tape," Journal of Public Economics, Elsevier, vol. 101(C), pages 68-76.
    8. Patrick Low, 2005. "Multilateral Solutions to the Erosion of Non-Reciprocal Preferences in NAMA," Working Papers id:289, eSocialSciences.
    9. 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.

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    More about this item

    Keywords

    NAFTA; rules of origin; regional integration;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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