How Much Market Access in FTAs? Textiles under NAFTA
University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Centre for Economic Policy Research (CEPR); World Bank
Université d'Auvergne - Clermont 1 - CERDI
Jaime de Melo
University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR); World Bank
University of Geneva - Department of Political Economics
CEPR Discussion Paper No. 5264
This paper estimates the effective market access granted under NAFTA in textiles and apparel by combining two approaches. First, we estimate the effect of tariff preferences and rules of origin on the border prices of Mexican final goods exported to the US and of US intermediates exported to Mexico. We find that one third of the estimated rise in the border price of Mexican apparel products compensates for the cost of complying with NAFTA's rules of origin. We also find that the price of US intermediates exported to Mexico is raised significantly by the presence of rules of origin downstream. Second, simulations from a structural model inspired by our econometric estimates, suggest little market access improvement for Mexican exporters.
Number of Pages in PDF File: 44
Keywords: NAFTA, rules of origin, regional integration
JEL Classification: F10, F13, F15
Date posted: November 3, 2005
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