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From Final Goods to Inputs: the Protectionist Effect of Rules of Origin

Roberto Venturini, Manuel Garcia-Santana (), Laura Puccio and Paola Conconi ()
Additional contact information
Roberto Venturini: Compass Lexecon
Laura Puccio: European University Institute and Université Libre de Bruxelles (ECARES)

No 1017, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: Recent decades have witnessed a surge of trade in intermediate goods and a pro- liferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those originating from third countries. In this paper, we show that the sourcing restrictions embedded in RoO greatly distort trade in intermediaries. We focus on the North Ameri- can Free Trade Agreement (NAFTA), the world’s largest FTA, and construct a unique dataset that allows us to map the input-output linkages in its RoO. Using a difference-in-differences approach, we find that RoO on final goods led to a sizeable reduction in the growth rate of imports of intermediate goods from third countries. Even if external tariffs are unchanged, FTAs may thus violate multilateral trade rules, by substantially increasing the level of protection faced by non-members.

New Economics Papers: this item is included in nep-int
Date: 2017
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https://economicdynamics.org/meetpapers/2017/paper_1017.pdf (application/pdf)

Related works:
Journal Article: From Final Goods to Inputs: The Protectionist Effect of Rules of Origin (2018) Downloads
Working Paper: From Final Goods to Inputs: The Protectionist Effect of Rules of Origin (2017) Downloads
Working Paper: From final goods to inputs: the protectionist effect of rules of origin (2017) Downloads
Working Paper: From Final Goods to Inputs: the Protectionist Effect of Rules of Origin (2016) Downloads
Working Paper: From Final Goods to Inputs: the Protectionist Effect of Rules of Origin (2016) Downloads
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