Measuring the Impact of Rules of Origin
ARE DIFFERENT RULES OF ORIGIN EQUALLY COSTLY? ESTIMATES FROM NAFTA": THE ORIGIN OF GOODS: RULES OF ORIGIN IN REGIONAL TRADE AGREEMENTS Cadot O., Estevadeordal A., Suwa A., Verdier T., eds., Vol. 2, Chapter 7, pp. 189-212, Oxford University Press, May 2006
Posted: 26 Apr 2007
Date Written: May 2006
Using data on preference and utilization rates of NAFTA for Mexican exports to the United States in 2001, this chapter proposes a method to estimate the likely costs of different Rules of Origin (RoO) for final and intermediate goods and compares these results with those obtained using the synthetic index proposed by Estevadeordal (2000). Econometric results indicate that changes in tariff classification are more costly for final goods than for intermediate ones and that technical requirement are the most constraining. For activities subject to regional value content minima, we carry out illustrative simulations indicating what tariff preference margin would be necessary to compensate for the import content minima. Overall, our cost estimates suggest, that at least in the case of NAFTA, preferential market access was quite small, leading us to speculate that these conclusions may carry over to other North-South preferential schemes.
Keywords: NAFTA, preference rates, utilization rates, costs of Rules of Origin, final and intermediate goods
JEL Classification: F13 , F15
Suggested Citation: Suggested Citation