Are Different Rules of Origin Equally Costly? Estimates from NAFTA

Jaime de Melo and Carrère, Céline
Authors registered in the RePEc Author Service: Celine Carrere

No 4437, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Preferential market access, either in the recent OECD initiatives or in the North-South FTAs, requires the use of rules of origin (RoO). Recent studies have questioned the extent of market access provided by these preferences. Using data on Mexican exports to the US in 2001, this Paper estimates the likely costs of different RoO for final and intermediate goods, and compares these results with those obtained from a synthetic index. Econometric results are plausible (they satisfy the revealed preference criterion that estimated costs should be less than preference rates when utilization rates are significantly positive), and they indicate that changes in tariff classification are more costly for final goods than for intermediate goods. 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: Rules of origin; Nafta; Costs (search for similar items in EconPapers)
JEL-codes: F13 F15 (search for similar items in EconPapers)
Date: 2004-06
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Citations: View citations in EconPapers (55)

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Related works:
Working Paper: Are different Rules of Origin Equally Costly? Estimates from NAFTA (2006)
Working Paper: Are Different Rules of Origin Equally Costly? Estimates from NAFTA (2004)
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