A (more) systematic exploration of the trade effect of product-specific rules of origin

Gourdon, Julien; Mélo, Jaime de; Gourdon, Karin

doi:10.2139/ssrn.4423830

Cited by 1 publication

(1 citation statement)

References 30 publications

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“…RoOs usually require a ‘significant transformation’ linked to either a change in tariff classification, technical requirement or value addition. Evidence shows that RoOs can restrict trade if they are either complicated or narrowly specified (Angeli et al, 2020; Cadot et al, 2007; Gourdon et al, 2021, 2023). RTAs often have apparel‐specific RoOs that are more restrictive and binding than RoOs found in other sectors (Estevadeordal et al, 2008; Manchin, 2006; Sytsma, 2021).…”

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confidence: 99%

Heterogeneous trade agreements and adverse implications of restrictive rules of origin: Evidence from apparel trade

Abreha,

Robertson

2023

World Economy

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We revisit the heterogeneous effects of regional trade agreements (RTAs) using a PPML gravity model and comparing apparel and total trade. Apparel, as a politically sensitive sector, has specialised, unusually restrictive rules of origin (RoOs) clauses that vary considerably across RTAs. Our RTA estimates have a significantly higher variance for apparel trade than total trade. We also find that the sizes of the RTA estimates for apparel trade are significantly and negatively correlated with the restrictiveness of RoOs. Additionally, assessing temporary exceptions to the apparel RoOs in US trade agreements, we find that ending the temporary exceptions is associated with less apparel trade. We further illustrate how RTAs can be effective development policy instruments to promote economic development in developing countries. For example, updating the RoOs in the Dominican Republic‐Central America Free Trade Agreement can create jobs and significantly reduce Central American emigration.

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