Preferential Trade Arrangements and the Pattern of Production and Trade When Inputs are Differentiated

26 Pages Posted: 17 Aug 2005

See all articles by Joseph F. Francois

Joseph F. Francois

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR); Vienna Institute of International Economic Studies (WIIW); University of Adelaide - School of Economics

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Date Written: July 2005

Abstract

This paper is concerned with rules of origin when intermediate goods are differentiated. An analytical model emphasizes trade patterns and the relative importance of trade in intermediates given trade preferences. Econometric evidence based on intra-OECD trade in motor vehicles and motor vehicle parts points to a systematic impact of trade costs and FTA membership, following from rules of origin and reduction in border measures, on the role of intermediates and their relative importance in production and trade. These results are consistent with a conceptual framework involving rules-base trade costs and two-way trade in differentiated intermediate goods and final goods.

Keywords: Rules of origin, trading costs, trade in intermediates, industry location

JEL Classification: F13, F15

Suggested Citation

Francois, Joseph F, Preferential Trade Arrangements and the Pattern of Production and Trade When Inputs are Differentiated (July 2005). CEPR Discussion Paper No. 5144. Available at SSRN: https://ssrn.com/abstract=785167

Joseph F Francois (Contact Author)

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Vienna Institute of International Economic Studies (WIIW) ( email )

Oppolzergasse 6
A-1010 Vienna
Austria

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 5540 (Phone)
+61 8 8223 1460 (Fax)

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