Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA

32 Pages Posted: 19 Jan 2004

See all articles by José Anson

José Anson

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne)

Olivier Cadot

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Centre for Economic Policy Research (CEPR); World Bank

Jaime de Melo

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR); World Bank

Antoni Estevadeordal

Inter-American Development Bank (IADB)

Akiko Suwa-Eisenmann

L'Ecole Normale Superieure ; Paris School of Economics (PSE)

Bolormaa Tumurchudur

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2003

Abstract

All preferential trading agreements (PTAs) short of a customs union use Rules of Origin (RoO) to prevent trade deflection. RoO raise production costs and create administrative costs. This Paper argues that in the case of the recent wave of North-South PTAs, the presence of RoO virtually limits the market access that these PTAs confer to the Southern partners. In the case of NAFTA, it is estimated that up to 40% of Mexico's preferential access to the US market in 2000 (estimated at 5%) was absorbed by RoO-related administrative costs with non-administrative costs for Mexican firms of about 3% US of import value. These findings are coherent with the view that North-South PTAs could well be viewed like a principal-agent problem in which the Southern partners are just about left on their participation constraint.

Keywords: Rules of origin, FTAs, NAFTA

JEL Classification: F10, F11, F13

Suggested Citation

Anson, José and Cadot, Olivier and de Melo, Jaime and Estevadeordal, Antoni and Suwa-Eisenmann, Akiko and Tumurchudur, Bolorma, Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA (December 2003). CEPR Discussion Paper No. 4166. Available at SSRN: https://ssrn.com/abstract=489004

José Anson

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Olivier Cadot (Contact Author)

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland
+41 21 692 3463 (Phone)
+41 21 692 3495 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Jaime De Melo

University of Geneva - Department of Political Economics ( email )

40, boulevard du Pont-d'Arve
Geneva 4, CH-1211
Switzerland
+41 22 705 8273 (Phone)
+41 22 705 8293 (Fax)

HOME PAGE: http://www.unige.ch/ses/ecopo/demelo/Jaime.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Antoni Estevadeordal

Inter-American Development Bank (IADB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States
202-623-2614 (Phone)
202-623-3030 (Fax)

Akiko Suwa-Eisenmann

L'Ecole Normale Superieure ( email )

48 boulevard Jourdan
75014 Paris
France
+33 1 4313 6325 (Phone)
+33 1 4313 6362 (Fax)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Bolorma Tumurchudur

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

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