Rules of Origin as Instruments of Foreign Economic Policy: An Analysis of the Integrated Sourcing Initiative in the U.S.-Singapore Free Trade Agreement

Abstract

Rules of origin are a necessary part of any free trade agreement; they allow customs officials examining goods at a country's border to ascertain the true origin of a product. Goods that originated in free trade partner countries are subjected to one tariff rate; goods that originated in other countries are subjected to another. Although no preferential trading scheme can function without them, rules of origin regimes been criticized in recent years by scholars who note that their opacity, their obscurity, and their technical nature make them ideal vehicles through which countries seek to protect domestic industries from foreign competition.

This Essay critiques rules of origin from a different perspective. It borrows from the political science literature to examine the ways in which rules of origin can be used by states to realize specific foreign policy goals that are, arguably, not directly related to trade objectives as they have traditionally been defined. By tracing out the battle to define the terms and provisions of one specific rules of origin regime - the Integrated Sourcing Initiative, negotiated as a part of the U.S.-Singapore Free Trade Agreement - the Essay illustrates how governments, corporations, labor unions, and nongovernmental organizations each seek to use these rules to realize their own desired sets of ends. While the particular rules of origin regime under examination relates primarily to the administrative, rather than to the tariff, costs of importing goods to the United States, the insights are generally applicable.

The Essay then explores the extent to which the terms of two multilateral treaties - the Vienna Convention on the Law of Treaties and the General Agreement on Tariffs and Trade - limit the ability of states to pursue foreign policy objectives by the use of rules of origin. It concludes that whereas the Vienna Convention on the Law of Treaties imposes few real constraints on state behavior, the General Agreement on Tariffs and Trade imposes significant restrictions on the ability of states to use rules of origin as instruments of foreign economic policy.

Keywords: trade agreement, rules of origin, foreign economic policy, Singapore, Integrated Sourcing Initiative, growth triangle, terrorism, indonesia, GATT, third states