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Preferential rules of origin In regional trade agreements

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  • Donner Abreu, Maria

Abstract

This study surveys preferential rules of origin applied by 192 regional trade agreements (RTAs) covering trade in goods notified to the GATT/WTO up to 1 November 2010. It takes into account the preferential rules of origin that were notified to the WTO; whenever known and available, modifications to the original rules of origin have been updated. This study contains two basic features: a description of some key elements of preferential rules of origin in RTAs, followed by an attempt to provide a reality-check of how these rules affect actual trade. That is done by an ex-post examination of data on the use of RTAs' preferences and, in their absence, of their margins of preference (MOPs). While the raison d'être of preferential rules of origin is the avoidance of trade deflection, the practice in RTAs has diluted this objective and it would seem that preferential rules of origin are increasingly becoming an economic, political and trade instrument. In its descriptive part, the study identifies what seems to be a tendency to design stricter rules of origin, while detecting concomitantly the inclusion in modern preferential rules of origin of flexibilities that provide, through the rules of origin themselves, a preference beyond the lower tariff rate resulting from the preferential treatment and mechanisms that allow the integration of third-parties into preferential rules of origin regimes. The reality-check part of the study points to the fact that much beyond the coverage of RTAs, it is their effective implementation that poses a challenge to economic operators. Though data on the use of preferences is either not disclosed or inexistent, they are nevertheless available for some economies. On the basis of existing data of preference utilization, the analysis of the effects of rules of origin on preferential trade flows appears to give rise to a dual reality - namely a relatively high use of preferences in certain instances coexisting with preferences failing to attain their potential in other cases. As regards RTAs for which utilization rate is not available, the paper analysis preferential rules of origin from a MOPS perspective, assuming that MOPs of at least 5 percentage points would offset compliance costs and thus provide a stimulus to comply with rules of origin in order to benefit from preferences. The analysis, made for 68 out of 192 RTAs, do not allow any conclusion regarding that generally presented hypothesis. Finally, the paper briefly outlines some suggestions for further action, including the launching in the WTO of exploratory work on preferential rules of origin within an open regionalism scenario.

Suggested Citation

  • Donner Abreu, Maria, 2013. "Preferential rules of origin In regional trade agreements," WTO Staff Working Papers ERSD-2013-05, World Trade Organization (WTO), Economic Research and Statistics Division.
  • Handle: RePEc:zbw:wtowps:ersd201305
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    File URL: https://www.econstor.eu/bitstream/10419/80056/1/744064147.pdf
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    References listed on IDEAS

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    1. Patricia Augier & Michael Gasiorek & Charles Lai Tong, 2005. "The impact of rules of origin on trade flows," Economic Policy, CEPR;CES;MSH, vol. 20(43), pages 567-624, July.
    2. Crawford, Jo-Ann, 2012. "Market access provisions on trade in goods in regional trade agreements," WTO Staff Working Papers ERSD-2012-20, World Trade Organization (WTO), Economic Research and Statistics Division.
    3. Kati Suominen & Antoni Estevadeordal, 2004. "Rules of Origin in FTAs in Europe and in the Americas: Issues and Implications for the EU-Mercosur Inter-Regional Association Agreement," IDB Publications (Working Papers) 9346, Inter-American Development Bank.
    4. 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.
    5. Cadot, Olivier & Carrère, Céline & de Melo, Jaime & Tumurchudur, Bolormaa, 2005. "Product Specific Rules of Origin in EU and US Preferential Trading Agreements: An Assessment," CEPR Discussion Papers 4998, C.E.P.R. Discussion Papers.
    6. Pérez del Castillo, Carlos, 2011. "Agricultural Negotiations in the World Trade Organization (WTO) and Their Links to the Free Trade Area of the Americas (FTAA)," IDB Publications (Working Papers) 4511, Inter-American Development Bank.
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    Cited by:

    1. Azmeh, Shamel, 2015. "Transient global value chains and preferential trade agreements: rules of origin in US trade agreements with Jordan and Egypt," LSE Research Online Documents on Economics 64601, London School of Economics and Political Science, LSE Library.
    2. Tim Josling & Mechel Paggi & John Wainio & Fumiko Yamazaki, 2015. "Latin American Agriculture in a World of Trade Agreements," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 546-567.
    3. Gabriel Felbermayr & Devashish Mitra & Rahel Aichele & Jasmin Katrin Gröschl, 2017. "Europa und Indien: Neustart in einer in Schieflage geratenen Handelsbeziehung," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 80.
    4. Roel Jongeneel & Siemen Berkum & Hans Vrolijk, 2016. "Summary," EuroChoices, The Agricultural Economics Society, vol. 15(2), pages 26-33, August.

    More about this item

    Keywords

    Regional Trade Agreements; rules of origin; margins of preference;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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