Making EU Trade Agreements Work: The Role of Rules of Origin

Abstract

CEPS Working Documents are published to give an indication of the work within CEPS' various research programmes and to stimulate reactions from other experts in the field Executive SummaryFree trade and preferential trade agreements are a major element in EU foreign policy and are at the forefront of EU policy towards developing countries and neighbouring countries in Europe, including the countries of South-east Europe. For the EU, free trade agreements are a means of increasing economic integration through improved access to the EU market, which is seen as important in achieving other political, foreign policy and security objectives. This entails that a key element of the EU's free trade and preferential trade agreements is the extent to which they deliver improved market access.Information on the implementation of the EU's preferential scheme of access for developing countries, the GSP, shows that only one third of EU imports from developing countries which were eligible for preferences actually entered the EU market with reduced duties. This primarily reflects the treatment of textiles and clothing products, which accounted for over 70 per cent of EU imports from countries covered by the GSP but where the utilisation rate (the ratio of imports receiving preferences to eligible imports) was only 31 per cent. Clothing is of particular importance to developing countries, providing a base for industrialisation and participation in the world economy, and is a major export from many of the Balkans countries. For example, in 1998, almost 84 per cent of total Albanian exports to the EU were eligible for preferential treatment under the GSP yet only 2 per cent of these exports were actually granted preferential access. Similarly, it appears that many of the preferences made available by the EU to Balkans countries in recent years have not been utilised.Understanding the reasons for this failure of preferential trade partners to benefit from GSP preferences and duty reductions on textiles and clothing products is important in assessing the extent to which the free trade provisions of the 'Everything but Arms' agreement and the stabilisation agreements with the Balkans countries will actually deliver improved access to the EU market. If factors which prevented the utilisation of GSP benefits and other preferences remain under these agreements then the direct effect

Economic Feasibility, General Economic Impact and Implications of a Free Trade Agreement between the European Union and Georgia

“…According to our model, one percent increase in the value of the transition progress index (TPI) brings in 3.89 percent increase in the amount of FDI inflows into Georgia. This is in line with Brenton and Manchin's (2002) estimate as well as with Bevan and Estrin's (2002) estimate of the impact of a country credit rating on FDI into the CEEC (gravity models similar to the one used in this analysis were employed by both studies). Other studies, i.e.…”

“…Our model produced estimates which are similar to the estimates received by comparable studies (see for example Brenton and Manchin 2002). According to our model, one percent increase in the value of the transition progress index (TPI) brings in 3.89 percent increase in the amount of FDI inflows into Georgia.…”

“…We were able to track down just one econometric study conducted by Brenton and Manchin (2002), who investigated an impact of an EURussia FTA on FDI inflows into Russia using the Economic Freedom Index as a benchmark. The authors see an FTA between Russia and the EU as an enabler of 'locking-in of economic reforms and achieving a higher degree of liberalisation than would otherwise be possible'.…”

Trade, Standards, and Poverty: Evidence from Senegal

“…The first critique is that the proliferation and tightening of quality and safety standards in high-income markets is causing new (non-tariff) barriers for developing country exports (Augier et al, 2005;Brenton and Manchin, 2002;Unnevehr, 2000). The second critique is that increasing standards result in the marginalization of small businesses and poor farm-households in developing countries as they are excluded from high-standards supply chains while the rents in the chain are extracted by large (often multinational) companies and developing country elites (Dolan and Humphrey, 2000;Farina and Reardon, 2000;Reardon et al, 1999).…”

Assessing the Impact of ACP/EU Economic Partnership Agreement on West African Countries

“…Yet the computation of changes in the rules of origin is somewhat arbitrary, as it requires assumptions on how importers and exporters will react to differences in the rules of origin. See Brenton and Manchin (2003) for a (verbal) analysis of the impact of EU rules of origin within the GSP system of preferences for imports from Eastern and Central Europe.…”