Rules of Origin

This study uses a firm-level panel data set from Romania to examine whether the nationality of foreign investors affects the degree of vertical spillovers from FDI. Investors' country of origin may matter for spillovers to domestic producers in upstream sectors (supplying intermediate inputs) in two ways. First, the share of intermediate inputs sourced by multinationals from a host country is likely to increase with the distance between the host and the source economy. Second, the sourcing pattern is likely to be affected by preferential trade agreements that cover some but not other source economies. In our case, the Association Agreements signed between Romania and the EU implies that inputs sourced from the EU are subject to a lower tariff than inputs sourced from the US or Asia. Moreover, while for European investors intermediate inputs sourced from home country suppliers comply with the rules of origin and thus can be exported to the EU on preferential terms, this would not be the case for home country suppliers of American or Asian multinationals. Therefore, we would expect that American and Asian investors source more from Romania than EU investors and thus present greater potential for vertical spillovers. The empirical analysis produces evidence in support of our hypothesis. We find a positive association between presence of American and Asian companies in downstream sectors and the productivity of Romanian firms in the supplying industries. Further, the productivity of Romanian firms in the supplying sectors is negatively correlated with operations of European investors in downstream sectors. The differences between the effects associated with investors of different origin are statistically significant.

The decision made by a slight majority of voters in the UK to leave the EU, based on a non-binding referendum, sent initial shockwaves across the globe. The separation of the UK from the EU is still a process in the making, as there is no certainty about the negotiation approach the UK or the EU will adopt on the terms of the so called Brexit. This paper seeks to outline the major aspects of market access for the international trade of goods between the UK and the EU and the impact and opportunities for Australia, noting the comparatively greater importance of the EU 27 to Australia. The paper concludes that the economic interdependence between the UK and the EU warrants a win-win solution, despite the many as yet unknown challenges that lie ahead.

We incorporate intermediate inputs into a small-union general-equilibrium model and develop the welfare economics of preferential trading under the rules of origin. Combining this analysis with the Grossman-Helpman political-economy model, we demonstrate that the rules of origin can improve the political viability of FTAs. Two interesting outcomes are derived. First,

This book will take you through the past, the present and into the future of the flagship institution of the international customs community: the World Customs Organization (WCO).

Our purpose is to present to you, in a comprehensive, orderly and synthetic manner, the enormous contributions that this prestigious and recognized institution has been making to the secure growth of world foreign trade.

In the development of the text, special consideration has been given to the instruments relevant to day-to-day customs work and which constitute the flagships of the WCO (the Harmonized System Convention, the Revised Kyoto Convention, the SAFE Framework of Standards, among many others), as well as to those issues which are currently of particular relevance to the WCO, to those issues that are currently of special interest to the world Customs community (Cross Border Electronic Trade, Trade Facilitation, the Future Customs Agenda, to mention but a few), trying to reconcile the various practical aspects of Customs operations with their theoretical underpinnings.

In short, these pages will be of great interest to all foreign trade operators, in particular to customs officials, customs brokers, carriers and international forwarding agents, managers of importing and exporting companies, as well as to all those (professionals and students) who wish to deepen their knowledge of the exciting world of Customs and International Trade.

FAQs about rules of origin and cumulation of origin
A booklet in which you can find answers to the questions you may have about preferential rules of origin and the Pan-Euro-Mediterranean cumulation system, the world's largest free trade area which comprises the European Union, EFTA States, Turkey, Mediterranean countries (from Lebanon to Morocco) and has included the Balkan countries as of 2013.

Tercihli menşe kuralları ve Türkiye, Avrupa Birliği, EFTA Devletleri ile beraber Akdeniz ülkelerinin (Fas'tan Lübnan'a uzanan hat) ve 2013'ten itibaren Balkan ülkelerinin de dahil edildiği - halen dünyanın en büyük serbest ticaret alanı - durumundaki Pan-Avrupa-Akdeniz menşe kümülasyonu sistemi hakkında aklınıza takılabilecek suallere cevap bulabileceğiniz bir kitapçık.

Preferential rules of origin and the Pan Euro-Mediterranean cumulation system
This book aimed to provide public officials, economic operators, students and other interested parties with information about the basic origin concepts and the rules origin in the origin protocols or annexes attached to free trade agreements and in particular about the Pan-Euro-Mediterranean cumulation system, and in this context, on the rules of origin applicable in the preferential trade between Turkey and the countries participating in the Euro-Mediterranean Partnership (i.e. the Barselona process)

Kitabın amacı genel olarak temel menşe kavramları ile serbest ticaret anlaşmalarının eki menşe protokollerinde yer alan menşe kuralları, özel olarak, Pan-Avrupa-Akdeniz Menşe Kümülasyonu sistemi ve bu kapsamda, Türkiye'nin Pan-Avrupa ülkeleri ve Avrupa-Akdeniz Ortaklığına (Barselona sürecine) katılan ülkeler ile tercihli ticaretinde uygulanan menşe kuralları hakkında bilgi sahibi olmak isteyen kamu görevlileri, ekonomik operatörler, öğrenciler ve ilgililere ayrıntılı bilgi vermektir.

Se inicia el artículo con un recorrido por los conceptos básicos relacionados con la cuestión del origen de las mercancías, los métodos para su determinación y su impacto comercial y económico, subrayando la distinción crucial entre normas de origen preferenciales y comunes. A continuación, una discusión del papel de las normas de origen en la dialéctica multilateralismo-regionalismo pone de manifiesto, tanto su utilización efectiva como instrumento ad hoc de política comercial, como la persistente indefinición de su status jurídico. Se pasa revista a las difíciles negociaciones sobre armonización de normas de origen comunes que se han venido desarrollando en la OMC a partir de la adopción del Acuerdo sobre Normas de Origen en la Ronda Uruguay del GATT. Finalmente, se hace referencia a los esfuerzos de simplificación de las normas de origen preferenciales que han tenido lugar en el ámbito de la Unión Europea. Palabras clave: normas de origen, acuerdos comerciales regionales, desviación del comercio, distorsión comercial, liberalización competitiva, regionalismo aditivo, armonización de normas de origen.

Rules of Origin (ROO) set the criteria in determining the nationality of a product and where a product was made. The importance of ROO has increased in the past years as more countries engage in Free Trade Agreements (FTAs) and begun treating goods differently according to where the product was made, along with trade-specific preferences or restrictions to the imported good once its origin is determined. This study is done to cull the lessons from ASEAN's experience in determining and implementing the Rules of Origin. It draws the important lessons and makes recommendations for best practice that would contribute to the cooperation and integration efforts in the region. The paper examines the various design and implementation practice in ROO regimes, focusing on RTAs where the ASEAN is involved. The paper presents findings from recent studies on the cost of ROO compliance and the FTA utilization rates. It concludes with recommendations on simplification of ROO and some reforms on administrative procedures, bringing in the development country dimension, and some general guidelines to follow to improve ROOs.

As regional trading arrangements (RTAs) have spread, enlarged and deepened over the last decade, they have posed challenges to economists on both intellectual and policy levels. On the former, do RTAs stimulate growth and investment, facilitate technology transfer, shift comparative advantage towards high value-added activities, provide credibility to reform programs, or induce political stability and cooperation? Or do they, on the other hand, divert trade in inefficient directions and undermine the multilateral trading system?

We estimate that the FTAA, the EU-MERCOSUR agreement and multilateral trade policy changes will all be beneficial for Brazil. The Brazilian government strategy of simultaneously negotiating the FTAA, the EU-MERCOSUR agreement while supporting multilateral liberalization through the Doha Agenda will increase the benefits of each of these policies.

This paper argues that the contribution of trade preferences to economic development needs to be reappraised in light of the growth of globalised trade in manufactures. Trade preferences may be able to act as a catalyst for manufacturing exports, leading to rapid growth in exports and employment. To do so, preferences need to be designed to be consistent with international

La présence des règles d'origine (RDO) se justifie par le besoin de réguler les échanges commerciaux entre deux ou un groupe de pays (mécanisme de politique commerciale). Ce papier se propose d'étudier l'impact des règles d'origine sur la mise en oeuvre de l'accord commercial préférentiel conclu entre le Maroc et l'UE. Suite à cette étude, les résultats ont montré que les règles d'origine diminuent substantiellement l'efficacité de cet accord et privent les entreprises marocaines des avantages fiscaux en terme d'accès au marché des pays membres de l'UE. Elles reflètent en ce sens des pratiques protectionnistes sous la forme de barrières non tarifaires au commerce. Elles prennent la forme de conditions de fabrication difficiles à être satisfaites par les opérateurs. Elles servent à protéger les producteurs européens des biens intermédiaires au détriment des sources d'approvisionnement plus compétitives notamment de l'Asie. L'analyse de la relation entre les exportations préférentielles marocaines vers l'UE d'une part, et la présence de préférences tarifaires et de RDO d'autre part, suggère que si les préférences tarifaires ont bien l'effet d'encourager les exportations, les RDO ont tendance à jouer un effet inverse de manière significative. ABSTRACT: The rules of origin are justified by the need to regulate trade between two or a group of countries (trade policy mechanism). This paper proposes to study the impact of rules of origin on the implementation of the preferential trade agreement between Morocco and the EU. Following this study, the results showed that the rules of origin diminish substantially their efficiency and deprive moroccan companies of the tax benefits provided by these agreements. On this way, they reflect protectionist practices in term of non tariff barriers. They take the form of manufacturing conditions hard to be met by the operators. They are used to protect producers of intermediate goods located in Europe and in United States. The analysis of the relationship between preferential moroccan exports to the EU, on one hand, and the presence of tariff preferences and the Rules of Origin, on the other hand, suggests that if the tariff preferences have as effect encouraging exports, the Rules of Origin have a contrary effect, and this effect is substantial. The softening of rules of origin allows reduction of the negative effects on the business.

India is a party to the Regional Comprehensive Economic Partnership negotiations with 10 countries of the Association of Southeast Asian Nations. This could have implications for India's stance on rules of origin and also could lead to harmonisation of rules in the RCEP countries and a simpler regime in this region. Else, this would increase complexity in this area. In any case, it appears India may have to change its approach on rules of origin on account of being a party to this agreement, when it comes into force.

Las normas de origen son indispensables para ejecutar los sistemas comerciales internacionales, a través de ellas, se fija el régimen jurídico aplicable a las mercancías. Debido a su inherente complejidad técnica, a su impacto económico, al matiz político que les caracteriza, así como a la proliferación de regímenes del origen, se generan toda una serie de conflictos jurídicos que repercuten en la seguridad, estabilidad y agilidad de los intercambios, tanto en el comercio regional como en el global I. Introducción Las normas de origen para las mercancías son un tema toral para el desarrollo del comercio internacional. Debido a su relevancia, es materia que requiere de un profundo análisis, tanto desde la perspectiva del Derecho como desde otras disciplinas científicas. Aunque existen importantes análisis jurídicos, la naturaleza de las normas aún no queda del todo clara, por ello, resulta necesario seguir investigando sobre su función e impacto en los sistemas jurídicos comerciales (1). Los objetivos del presente trabajo, se ciñen a la descripción las normas de origen, a la delimitación de sus características esenciales y al análisis de los principales efectos de su impacto en la reglamentación del comercio internacional; haciendo para ello especial mención al proceso de armonización que se lleva a cabo en la OMC y a los problemas jurídicos que las normas suponen para el correcto desempeño del comercio regional y global. El comercio internacional contemporáneo se caracteriza por realizarse en un escenario globalizado, en el cual la infraestructura jurídico-comercial es una condición necesaria para permitir el flujo transfronterizo de mercancías, servicios y capitales. El proceso de integración económica, apuntalado por el incesante avance de la ciencia y de la tecnología, ha permitido el surgimiento de nuevas y más eficientes formas de producción de bienes. Lo anterior, conjugado con las ventajas comerciales derivadas de la fragmentación de la producción, ha supuesto una oportunidad para que los agentes económicos deslocalicen sus procesos en distintos puntos del orbe. De hecho, cada vez es más frecuente encontrar mercancías tecnológicamente más complejas, obtenidas con la intervención de corporativos de distinta nacionalidad, a través de empresas ubicadas en distintos puntos del orbe y mediante procesos productivos deslocalizados. Con los nuevos entornos de producción y suministro de materias «justo a tiempo», los intercambios comerciales se producen de manera acelerada, y por esto, los agentes económicos requieren que los trámites aduaneros sean cada vez más sencillos y ágiles. Esta necesidad de celeridad en las transacciones contrasta con lo complicado y gravoso que puede llegar el procedimiento de la determinación del origen de la mercancía. En semejante escenario de interdependencia, celeridad y fragmentación productiva, quizá se pueda entender como algo anacrónico el ligar la mercancía con un territorio, y más aún, vincularla con un solo país. Sin embargo, la determinación del origen sigue siendo relevante, principalmente, por las siguientes razones: en primer lugar, porque las transformaciones que requieren las normas para asignar el origen son (o por lo menos, deben ser) el reflejo de la producción a nivel internacional; en segundo término, porque al ser instrumentos elaborados o negociados por los Estados, cuyo destinatario final son las empresas, las normas de origen son manifestaciones jurídicas del proceso de globalización que afectan directamente tanto a las Administraciones como a los particulares; tercer lugar, porque el origen aduanero sigue siendo relevante para ejecutar la política comercial de los países y organismos internacionales de integración; y derivada de la anterior, una cuarta razón, porque en tanto no se logre la aplicación universal del trato no discriminatorio (trato de la nación más favorecida

1 Effective January 2007, the Discussion Paper series within each division and the Director General's Office of IFPRI were merged into one IFPRI-wide Discussion Paper series. The new series begins with number 00689, reflecting the prior publication of 688 discussion papers within the dispersed series. The earlier series are available on IFPRI's website at www.ifpri.org/pubs/otherpubs.htm#dp.

1 Effective January 2007, the Discussion Paper series within each division and the Director General's Office of IFPRI were merged into one IFPRI-wide Discussion Paper series. The new series begins with number 00689, reflecting the prior publication of 688 discussion papers within the dispersed series. The earlier series are available on IFPRI's website at www.ifpri.org/pubs/otherpubs.htm#dp.

Le présent article analyse l'impact de la structure des préférences européennes, en particulier de leurs règles d'origine, sur l'intégration de l'Afrique de l'Ouest dans le commerce mondial. On montre que le commerce de l'Afrique de l'Ouest n'a pas encore connu la mutation structurelle caractéristique des pays ayant su se positionner comme plates-formes d'assemblage dans le secteur manufacturier. Complexes, restrictives et discriminatoires, les règles d'origine (RDO) de l'UE se sont révélées peu favorables à l'intégration des producteurs africains dans les circuits commerciaux mondiaux. Par contre, la réforme des RDO envisagée à l'heure actuelle par la Commission, qui consisterait à remplacer la « liste unique » par un instrument unique, pourrait être un pas en avant à cet égard, tout au moins pourvu que cet instrument ne soit pas imposé à un niveau pénalisant pour les entreprises désireuses de mettre en place des filières de production transfrontières.

On 13 June 2019, Advocate General Hogan issued his opinion on Case C-363/18 Organisation juive européenne, Vignoble Psagot Ltd v Ministre de l'Economie et des Finances, currently pending with the Court of Justice. In this case, referred by the Conseil d’État, the Court was invited to rule whether EU law requires for products originating in a territory occupied by Israel since 1967 (“Israeli settlements”), an indication that the product comes from that territory. While this question was answered affirmatively by the Advocate General, it remains unclear if the Court’s forthcoming decision, whether or not it will follow Mr. Hogan’s opinion, will have consequences on EU trade policy for occupied, disputed or annexed territories other than Israeli settlements.

This paper aims to review TBT measures adopted by the EU against the territories whose military and economic occupation was openly condemned by international arena. By examining the EU’s trade agreements with States that claim sovereignty over the disputed territories, it reveals which rules of origin apply to products imported into the EU from the Israeli settlements, Turkish Republic of Northern Cyprus, Western Sahara and Crimea. In particular, this paper focuses on conditions that exporters have to fulfil to bring their product into the EU under preferential trading rules. The findings suggest that the EU lacks coherence both in its policy and practice towards trade with disputed territories, which in turn undermines the effectiveness of its measures and weakens the EU’s position in international arena.

Blockchain is a peer-to-peer (P2P) technology that records and verifies transactions in a decentralised, cryptography-secure manner. Blockchain applications can globally manage records of any sort, such as import-export declarations, invoices, bills of lading (BLs) and certificates of origin (COs). It is a promising technology for several areas, including international trade. This paper presents blockchain, comments on blockchain platforms such as Ethereum, gives examples of private sector initiatives, shares an idea for a CO blockchain application, and discusses regulatory issues. In doing so, the paper aims to attract attention for blockchain in international trade.

Observation
New technologies that are changing the world. Many product and service registration models are available at this time for use in all sectors of the global economy. The global market and WTO rules are changing to understand this new model of the global market for buying and selling the Internet and tracking products and services across the entire production chain to the final consumer. Import and export products are a big problem. Problems related to documentation, qualification of personnel, transport, insurance, payment, tax, domestic and international, charging port and airport. The rules to control all aspects of global trade are many. The solution in the case of conflicts in deal is terrible. New technologies can help the international market to solve many problems. In this work, we see the new technologies as Blockchain connected with the Internet of things, linked with the Crypto-currency, linked with the General data protection rules, all controlled by contracts executable as a solution for rules and certificates of origin.
Argument
1. How the Blockchain technology can help the intellectual property type Origins Certificate?
2. How the Blockchain technology liked with Crypto-currency can help the intellectual property type Origins Certificate?
3. How the Blockchain technology, liked with Crypto-currency, linked with Internet of Things can help the intellectual property type Origins Certificate?
4. How the Blockchain technology, liked with Crypto-currency, linked with Internet of Things, linked Rules General Protection Data (RGPD) can help the intellectual property type Origins Certificate?
5. How the Blockchain technologies, liked with Crypto-currency, linked with Internet of Things, linked Rules General Protection Data (RGPD), linked with executable contract can help the intellectual property type Origins Certificate?

We study a Free Trade Area with Rules of Origin and show that there are two distinct regimes. Comparative statics results for the two regimes are exact opposites and a regime switch occurs when ROO become restrictive enough. Consequently, imports into the FTA of the intermediate good first fall and then rise while the opposite pattern occurs for imports of the final good and for the price of the domestic input. We also show that tighter ROO have opposite effects on the well-being of final versus intermediate good producers and producers inside versus outside the FTA. JEL classification: F13, F15.

Mandatory origin labelling of products from occupied territories has been a delicate matter in the EU external trade policy. In the recent judgement Psagot (judgment of 12 November 2019, case C-363/18, Organisation juive européenne and Vignoble Psagot [GC]), the Court of Justice considered con-sumers' ethical considerations related to violations of international law as a reason for mandatory origin labelling of products originating in the Israeli settlements. This Insight argues that, in its decision , the Court missed a number of opportunities to clarify some essential concepts of EU food law, consumer protection and customs law and, as such, provided a ruling that is based on flawed and unconvincing argumentation. The Court's broad interpretation of the notion "ethical considerations" under Regulation 1169/2011 opens a Pandora's box of trade-restrictive practices while at the same time, continues the EU inconsistent policy towards trade with occupied territories.

1 Effective January 2007, the Discussion Paper series within each division and the Director General's Office of IFPRI were merged into one IFPRI-wide Discussion Paper series. The new series begins with number 00689, reflecting the prior publication of 688 discussion papers within the dispersed series. The earlier series are available on IFPRI's website at www.ifpri.org/pubs/otherpubs.htm#dp.

The author analyzes the legal conditions of trade in goods in the markets of RCEP member states. The object of this research is the rules of origin of goods and the application of preferential tariffs under the Regional comprehensive economic partnership agreement in force since 1 st January 2022. The author identifies the uniqueness of the rules of origin of goods, gives examples of determining the country of origin of goods, and how in practice the transformation of raw materials into ready-made is carried out in the sense of customs classification. The clarity of the provisions on the Rules of Origin and the Code of Practice for Certification of Origin will encourage the liberalization of trade in goods under the RCEP to be effective, transparent and fair to all parties. The rules of the ASEAN FTA and the RCEP agreement are compared in detail to identify the advantages and disadvantages of trade in goods within the largest preferential zone in the world. RCEP members agreed to apply product-specific rules for every tariff-line. There is no General Rule under RCEP. All 5,205 products have their own Products-Specific Rules. The author shows the method of calculation of regional value content, explains under what conditions a product may fail to satisfy the RVC criteria. The article reveals the topic of customs clearance, id est, operational certification procedures. The author pays special attention to the issue of the impact of the RCEP agreement on trade in goods, especially agricultural products, between Ukraine and the Asian region. To assess the effect of RCEP agreement on the export of agricultural goods from Ukraine to Asian states, the author compared tariffs and schedules of commitments under WTO framework and RCEP. The results of the study show a slight impact of the new agreement on trade relations between Ukraine and the RCEP countries, but 15 RCEP MS will gradually reduce trade tariffs in the future and Ukraine needs to reconsider its trade strategy with Asian countries. Finally the author draws conclusions that the trade liberalization in RCEP entails considerable reforms, beyond simply removing tariffs and non-tariff barriers. This topic will be explored in upcoming publications of the author.

While the Central America Free Trade Agreement (CAFTA) remains a hotly debated issue in all five Central American countries that are part of the treaty, most discussions are based on preconceived opinions rather than grounded in research-based results. The point of departure of the paper is that the provisions in the agreement concerning the textile maquila industry are likely to have a significant impact on household welfare, despite the already existing preferential access of textile maquila exports to the U.S. market under the rules of origin set by the Caribbean Basin Initiative (CBI) and the U.S.-Caribbean Basin Trade Partnership Act (CBTPA). What CAFTA does for maquila production in Central America is to make permanent and expand the liberalized rules of origin (granted temporarily and unilaterally by the United States and likely to be revoked in 2008) for inputs to the maquila industry. Therefore, to assess the true impact of the maquila provisions in CAFTA, we need to compare the situations without CAFTA or the CBI/CBTPA with the situation that includes CAFTA, instead of the situations before and after CAFTA. The objectives of the paper are to analyze the likely impacts of CAFTA on the apparel value chain in Central America; assess the bottlenecks and constraints to productivity growth in the apparel industry; and identify the requirements for continuing success in the value chain. In researching the paper, we made use of a variety of methodologies, including literature review, Internet sourcing, field visits, and personal interviews with key players in the sector in all five Central American CAFTA countries. We also used computable general equilibrium (CGE) models and combined these with microsimulations based on household surveys, in order to quantify the likely effect of the maquila provisions in CAFTA on economic growth, employment, and poverty. The results suggest that, depending on the country, the maquila provisions in CAFTA add between 0.01% and 1.4% to annual economic growth and between 0.005% and 1.4% per year to employment of particularly female unskilled labor. As a result and depending on the specific country, the rate of total poverty is likely to fall by between virtually zero (Costa Rica) and 0.73% (Honduras) per year relative to a situation without CAFTA's maquila provisions. However, the model-based analyses do not take account of the fact that the quota system for textiles and clothing (the so-called Agreement on Textiles and Clothing, or ATC) expired January 1, 2005, greatly improving the access of China and other low-cost exporters to the U.S. market. Although China has so far voluntarily restricted its apparel exports to the U.S. market, in the longer term market share will increasingly go to countries with the highest comparative advantage. The qualitative analysis in the paper suggests that a survival strategy for the Central American maquila industry should consist of two main elements. First, and in order to make maximum use of the liberalized rules of origin under CAFTA, countries should increasingly move toward full-package production instead of pure assembly. Second, identification of market niches that demand higher-quality apparel produced by firms that respect socially responsible production conditions and are able to deliver fast responsiveness is a crucial means by which the Central American textile industry can develop a comparative advantage vis-à-vis Asian suppliers, needed to survive in an increasingly competitive export market.

SUMMARYRules of originA great deal of post-war trade liberalization resulted from regional, preferential trade agreements. Preferential trade agreements cut tariffs on goods originating only in those nations that have signed the agreement. Therefore, they need ‘rules of origin’ to determine which goods benefit from the tariff cut. Rules of origin have long been ignored for two good reasons: they are dauntingly complex and at first sight appear mind-numbingly dull. The third standard reason for ignoring them – the assertion that they do not matter much – turns out to be wrong. We show that rules of origin are important barriers to trade. Moreover, such rules are emerging as an important trade issue for three additional reasons. First, preferential trade deals are proliferating worldwide. Second, the global fragmentation of production implies complex international supply chains which are particularly constrained and distorted by rules of origin. Third, the extent to which regionalism challenges the WTO-based trading system depends in part on incompatibilities and rigidities built into rules of origin.Our empirical results exploit a ‘natural experiment’ that was created by technical changes to Europe's lattice of rules of origin (ROOs) in 1997. This change, known as ‘diagonal cumulation’, relaxed the restrictiveness of rules of origin on trade among the EU's free trade agreement (FTA) partners without changing the degree of tariff preference. Our analysis allows us to establish a lower-bound and upper-bound estimate of trade impact of ROOs reduced trade among the EU's trade partners. The lower bound we find is something like 10% while the upper bound is around 70%. The second part of the paper draws the policy lessons that arise from considering the implications of our empirical findings. The most direct lessons are for FTA-writers. We argue that Europe's implementation of ‘cumulation’ is a good way of reducing the welfare-reducing impact of overlapping rules of origin without gutting their fraud-fighting ability. We also suggest a three-part procedure for establishing a more multilateral framework for rules of origin which would be more transparent, flexible, administratively feasible and negotiable.— Patricia Augier, Michael Gasiorek and Charles Lai-TongA great deal of post-war trade liberalization resulted from regional, preferential trade agreements. Preferential trade agreements cut tariffs on goods originating only in those nations that have signed the agreement. Therefore, they need ‘rules of origin’ to determine which goods benefit from the tariff cut. Rules of origin have long been ignored for two good reasons: they are dauntingly complex and at first sight appear mind-numbingly dull. The third standard reason for ignoring them – the assertion that they do not matter much – turns out to be wrong. We show that rules of origin are important barriers to trade. Moreover, such rules are emerging as an important trade issue for three additional reasons. First, preferential trade deals are proliferating worldwide. Second, the global fragmentation of production implies complex international supply chains which are particularly constrained and distorted by rules of origin. Third, the extent to which regionalism challenges the WTO-based trading system depends in part on incompatibilities and rigidities built into rules of origin.Our empirical results exploit a ‘natural experiment’ that was created by technical changes to Europe's lattice of rules of origin (ROOs) in 1997. This change, known as ‘diagonal cumulation’, relaxed the restrictiveness of rules of origin on trade among the EU's free trade agreement (FTA) partners without changing the degree of tariff preference. Our analysis allows us to establish a lower-bound and upper-bound estimate of trade impact of ROOs reduced trade among the EU's trade partners. The lower bound we find is something like 10% while the upper bound is around 70%. The second part of the paper draws the policy lessons that arise from considering the implications of our empirical findings. The most direct lessons are for FTA-writers. We argue that Europe's implementation of ‘cumulation’ is a good way of reducing the welfare-reducing impact of overlapping rules of origin without gutting their fraud-fighting ability. We also suggest a three-part procedure for establishing a more multilateral framework for rules of origin which would be more transparent, flexible, administratively feasible and negotiable.— Patricia Augier, Michael Gasiorek and Charles Lai-Tong

This paper examines the impact of the Australia-Thailand free trade agreement (TAFTA) on bilateral trade between the two countries, paying attention to the implications of rules of origins (RoO) and the utilization of tariff preferences. It is found that trade has expanded faster following TAFTA came into effect, but the impact has heavily concentrated in a few product lines in Australian imports from Thailand, reflecting the influence of commodity specific, supply-side factors which have a bearing on the rate of preference utilization. The findings, inter alia, suggest that the use of officially announced preference rates in trade flow modeling is likely to exaggerate trade flow effects of FTAs.

This paper examines the impact of the Australia-Thailand free trade agreement (TAFTA) on bilateral trade between the two countries, paying attention to the implications of rules of origins (RoO) and the utilization of tariff preferences. It is found that trade has expanded faster following TAFTA came into effect, but the impact has heavily concentrated in a few product lines in Australian imports from Thailand, reflecting the influence of commodity specific, supply-side factors which have a bearing on the rate of preference utilization. The findings, inter alia, suggest that the use of officially announced preference rates in trade flow modeling is likely to exaggerate trade flow effects of FTAs.

Recent decades have witnessed a proliferation of free trade agreements (FTAs). These agreements specify preferential rules of origin (RoO), which define the conditions that a product must satisfy to obtain preferential tariff treatment. RoO require that, for a final good to be eligible for preferential tariff treatment, the production or sourcing of some of its inputs must take place within the FTA. In this paper, we show that RoO transfer protection from final goods to intermediaries ("cascade protectionism"). We focus on North American Free Trade Agreement and construct a unique dataset that links every final good with all its intermediate inputs subject to RoO requirements. We find that RoO on final goods decrease imports of intermediate goods from non-FTA countries. The effect is similar in magnitude to that of input tariffs.

Rules of Origin (ROO) set the criteria in determining the nationality of a product and where a product was made. The importance of ROO has increased in the past years as more countries engage in Free Trade Agreements (FTAs) and begun treating goods differently according to where the product was made, along with trade-specific preferences or restrictions to the imported good once its origin is determined. This study is done to cull the lessons from ASEAN's experience in determining and implementing the Rules of Origin. It draws the important lessons and makes recommendations for best practice that would contribute to the cooperation and integration efforts in the region. The paper examines the various design and implementation practice in ROO regimes, focusing on RTAs where the ASEAN is involved. The paper presents findings from recent studies on the cost of ROO compliance and the FTA utilization rates. It concludes with recommendations on simplification of ROO and some reforms on administrative procedures, bringing in the development country dimension, and some general guidelines to follow to improve ROOs.

Preferential trade agreements (PTAs) are characterized by liberalization with respect to only a few partners and thus they can potentially clash with, and retard multilateral trade liberalization (MTL). Yet there is almost no systematic evidence on whether the numerous existing PTAs actually affect MTL. We provide a model showing that PTAs hinder MTL unless they entail accession to a customs union with internal transfers.

Javorcik, Saggi, and Spatareanu use a firm-level panel data set from Romania to examine whether the nationality of foreign investors affects the degree of vertical spillovers from foreign direct investment. Investors� country of origin may matter for spillovers to domestic producers in upstream sectors (supplying intermediate inputs) in two ways. First, the share of intermediate inputs sourced by multinationals from

This paper describes the recently enacted Africa Growth and Opportunity Act (AGOA) and assesses its quantitative impact on African exports. AGOA expands the scope of preferential access of Africa's exports to the U.S. in key areas such as clothing. However, its mediumterm benefits-estimated at about US$100-US$140 million, an 8-11 percent addition to current non-oil exports-would have been nearly five times greater (US$540 million) if no restrictive conditions had been imposed on the terms of market access. The most important of these conditions are the rules-of-origin which African exporters of clothing must comply with to benefit from duty-free access. JEL Classification Numbers: F1, F4

In this paper we first explain why rules of origin are a necessary feature of preferential trading arrangements, but why they also serve to distort trade and can therefore be used for protectionist purposes, and why they have a powerful natural impetus towards strengthening the spaghetti bowl effect in international trade. Secondly, we then examine the impact of the relaxation of the potential constraining impact of rules of origin in the European context which was achieved through the introduction of the Pan-European Cumulation system (PECS). We provide empirical evidence at both the aggregate and sectoral level which reveals the positive impact of the relaxation of rules of origin via the introduction of “diagonal cumulation” arrangements between the EU and its’ trading partners. Thirdly, the discussion turns to a consideration of appropriate policy options designed both to minimise the spaghetti bowl effect, and to maximise the benefits from regionalism for developing countries.

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Abstract. Rules of origin mechanism used to determine the origin of a product. Rules of origin serve many purposes such as collecting data on trade flows, implementing preferential tariff treatment, and applying anti-dumping duties.1 Rules of origin can be divided into ...

Some economists worry about the ‘spaghetti bowl phenomenon’ expected from proliferating regional trade agreements (RTAs). In particular, the complicated web of hub-and-spoke type of overlapping free trade agreements (FTAs) can result in high costs for verifying rules of origin (RoO) and trade diversion or suppression effects. This explains why almost half of the RTAs notified to the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) are currently inactive. This research attempts to provide best practices for RTAs to enhance global free trade by mitigating these negative effects. More specifically, we quantitatively estimate the trade creation and diversion effects of harmonized and cumulated RoO (bilateral, diagonal, and full cumulation) for RTAs established under GATT Article XXIV and under the Enabling Clause by adopting a Gravity regression analysis. We find that (i) RTAs in general create trade among members and divert trade from nonmembers; (ii) RTAs s...

The Stabilization and Association (SA) process launched by the EU in the aftermath of Kosovo war in 1999 has created a new policy environment for five South East European (SEE-5). In exchange for EU assistance, prospect of EU accession, and continuation of preferential access to EU markets, SEE-5 governments have to upgrade their institutions and governance to European standards and engage in mutual regional cooperation including other Stability Pact member-countries). The paper examines benefits to SEE-5 of trade liberalization along two dimensions and suggests conditions under which these could be maximized. It argues that the process of regional trade liberalization should be extended to multilateral liberalization aligning SEE-5 MFN applied tariffs on industrial products with EU MFN tariffs and that priority be given to structural reforms and regional cooperation aimed at trade facilitation. As inter-industry trade rather than intra-industry trade dominates intra-SEE-5 trade, th...