8/14/2023 0 Comments Geodist armenia![]() Rules of origin have long been ignored for two good reasons: they are dauntingly complex and at first sight appear mind-numbingly dull. Therefore, they need ‘rules of origin’ to determine which goods benefit from the tariff cut. Preferential trade agreements cut tariffs on goods originating only in those nations that have signed the agreement. We also suggest a three-part procedure for establishing a more multilateral framework for rules of origin which would be more transparent, flexible, administratively feasible and negotiable.- Patricia Augier, Michael Gasiorek and Charles Lai-TongA great deal of post-war trade liberalization resulted from regional, preferential trade agreements. We argue that Europe's implementation of ‘cumulation’ is a good way of reducing the welfare-reducing impact of overlapping rules of origin without gutting their fraud-fighting ability. The most direct lessons are for FTA-writers. The second part of the paper draws the policy lessons that arise from considering the implications of our empirical findings. The lower bound we find is something like 10% while the upper bound is around 70%. Our analysis allows us to establish a lower-bound and upper-bound estimate of trade impact of ROOs reduced trade among the EU's trade partners. This change, known as ‘diagonal cumulation’, relaxed the restrictiveness of rules of origin on trade among the EU's free trade agreement (FTA) partners without changing the degree of tariff preference. Third, the extent to which regionalism challenges the WTO-based trading system depends in part on incompatibilities and rigidities built into rules of origin.Our empirical results exploit a ‘natural experiment’ that was created by technical changes to Europe's lattice of rules of origin (ROOs) in 1997. Second, the global fragmentation of production implies complex international supply chains which are particularly constrained and distorted by rules of origin. First, preferential trade deals are proliferating worldwide. Moreover, such rules are emerging as an important trade issue for three additional reasons. We show that rules of origin are important barriers to trade. The third standard reason for ignoring them – the assertion that they do not matter much – turns out to be wrong. SUMMARYRules of originA great deal of post-war trade liberalization resulted from regional, preferential trade agreements.
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