Rules of Origin as Export Subsidies

33 Pages Posted: 22 Aug 2005

See all articles by Olivier Cadot

Olivier Cadot

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

Date Written: April 2005

Abstract

The paper estimates the effect of NAFTA's rules of origin (ROO) on Mexican access to the US market treating explicitly the endogenous determination of ROOs. The first equation determines Mexico's NAFTA (preferential) exports to the US as a function of tariff preference and Estevadeordal's qualitative ROO index. The second equation determines ROO strictness on the basis of a Grossman-Helpman model identifying channels through which lobbying by US intermediate-good producers leads to deep preferences and stiff rules of origin in downstream sectors. The estimates suggest that the creation of a captive market for upstream intermediate-good producers is indeed one of their political determinants.

Keywords: NAFTA, rules of origin, regional integration

JEL Classification: F10, F13, F15

Suggested Citation

Cadot, Olivier and Estevadeordal, Antoni and Suwa-Eisenmann, Akiko, Rules of Origin as Export Subsidies (April 2005). CEPR Discussion Paper No. 4999. Available at SSRN: https://ssrn.com/abstract=772070

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

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

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