Reconciling Rules of Origin and Global Value Chains: The Case for Reform

Abstract

Rules of Origin (ROO) are in need of reform. Aside from being used for protectionist purposes, they have also become so complicated that they result in companies foregoing trade preferences granted by preferential agreements on a substantial scale. This paper makes the argument for a fundamental reconceptualization of ROO, based on today's Global Value Chains (GVCs). The paper is divided in four sections. First, it surveys the methods currently applied for assigning origin. Existing obstacles to reform are then outlined. A third section briefly examines previous attempts at reforming ROO. Fourth, the contours and possible ramifications of a valueadded approach to determining origin are explored, given that (a) ROO are not suitable for today's world characterized by GVCs; and (b) the tension between bilaterally established rules and multilateral decision-making continues to hamper attempts at harmonization or reform.

Global Value Chains and EU–East Asia Trade: An Antidote for Geo-Economic Competition?

“…Moreover, the more cross-border links there are in a global value chain, the more administratively complex and costly it becomes to prove origin, and the more likely it is that as a result, exporters decide not to utilize trade preferences (cfr. Geraets et al, 2015).…”

Global supply chain network design problem with rules of origin and limited import quotas

“…Few researches studied the impacts of RoOs on SCND problem. Most of the literature related to RoOs studied the impacts of this policy on the global trade flows (Augier et al, 2005), firm behaviors (Ju and Krishna, 2005), regional trade policy (Mattoo et al, 2003) and global value chains (Geraets et al, 2015). In fact, the RoOs members have different import quota and tariff, which makes the RoOs be one of the main influential factors of facility location decision.…”