Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA

Anton Anson, Olivier Cadot, Antoni Estevadeordal, Jaime de Melo, Akiko Suwa-Eisenmann and Bolormaa Tumurchudur
Additional contact information
Anton Anson: HEC Lausanne - Faculté des Hautes Etudes Commerciales (HEC Lausanne)
Antoni Estevadeordal: IDB - Inter-American Development Bank - Inter-American Development Bank
Bolormaa Tumurchudur: HEC Lausanne - Faculté des Hautes Etudes Commerciales (HEC Lausanne)

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Abstract: All preferential trading agreements (PTAs) short of a customs union use rules of origin (ROO) to prevent trade deflection. ROO raise production costs and create administrative costs. This paper argues that in the case of the recent wave of North-South PTAs, the presence of ROO virtually limits the market access that these PTAs confer to the Southern partners. In the case of NAFTA, we find average compliance costs around 6% in ad valorem equivalent, undoing the tariff preference (4% on average) for a large number of tariff lines. Administrative costs amount to 47% of the preference margin. These findings are coherent with the view that North-South PTAs could well be viewed like a principal-agent problem in which the Southern partners are just about left on their participation constraint.

Keywords: Preferential; trading; agreements; (PTAs) (search for similar items in EconPapers)
Date: 2005-08
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Citations: View citations in EconPapers (54)

Published in Review of International Economics, 2005, 13 (3), pp.501-517. ⟨10.1111/j.1467-9396.2005.00520.x⟩

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Related works:
Journal Article: Rules of Origin in North–South Preferential Trading Arrangements with an Application to NAFTA (2005)
Working Paper: Rules of origin in North-South preferential trading arrangements with an application to NAFTA (2005)
Working Paper: Rules of origin in north-south preferential trading arrangements with an application to NAFTA (2004)
Working Paper: Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00849586

DOI: 10.1111/j.1467-9396.2005.00520.x

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