The Costs of Rules of Origin in Apparel: African Preferential Exports to the United States and the European Union

Portugal-Pérez, Alberto

doi:10.2139/ssrn.1457015

Cited by 20 publications

(26 citation statements)

References 20 publications

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“…These rules of origin emulated the "triple transformation" principle already prevalent in other US preferential trade agreements such as NAFTA and Caribbean Basin Initiative Preferential treatment, and can be applied to apparel assembled in one or more AGOA eligible country from US fabrics, which in turn are made from US yarn. African apparel made from fabric made in another beneficiary African country is acceptable on the condition that it is derived from US yarn and not exceeding an applicable percentage (Portugal-Perez, 2007). AGOA also makes provision for a more relaxed rule of origin for lesser developed countries.…”

Section: Africa's Relationship With the United Statesmentioning

confidence: 99%

Growth by Destination: The Role of Trade in Africa’s Recent Growth Episode

Mullings

Mahabir

2018

World Development

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Over the period 1990-2009, Africa has experienced a distinct and favourable reversal in its growth fortunes in stark contrast to its performance in the preceding decades, leading to a variety of hypotheses seeking to explain the phenomenon. This paper presents both crosscountry and panel-data evidence on the causal factors driving the recent turnaround in Africa's growth and takes the unique approach of disaggregating the separate growth impacts of Africa's bilateral trade with: China, Europe and America. The empirical analysis presented in this paper suggests that the primary and most robust causal factors driving Africa's recent growth turnaround are private sector-and foreign direct investment. Although empirical evidence of the role of bilateral trade openness in Africa's recent growth emerges within a fixed effect estimation setting, these results are not as robust when endogeneity and other issues are fully accounted for. Among the three major bilateral partners, Africa's bilateral trade with China has been a relatively important factor spurring growth on the continent and especially so in resource-rich, oil producing and non-landlocked countries. The econometric results are not as supportive of growth-inducing effects of foreign aid. These findings emerge after applying a variety of panel data specifications to the data, including the recent fixed Effects Filtered (FEF) estimator introduced by Pesaran and Zhou (2014) and the dynamic panel Generalized Method of Moments (GMM) estimator, which allows for endogeneity between trade and growth.

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Section: Africa's Relationship With the United Statesmentioning

confidence: 99%

Growth by Destination: The Role of Trade in Africa’s Recent Growth Episode

Mullings

Mahabir

2018

World Development

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“…They look at two sectors that, according to Estevadeordal and Suominen (), have relatively strict ROO: textiles and apparel, and agriculture. Portugal‐Perez () studies the differences in EU and US trade preferences for African apparel exporters. He finds a significant increase of apparel exports to the United States due to a ROO liberalisation, which in practice means that inputs may be sourced from anywhere in the world.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The apparel sector is also highly competitive which means that access to efficient suppliers is very important. ROO that restrict sourcing possibilities have previously been shown to have a negative effect on apparel exports (Portugal‐Perez, ). The apparel sector dominated southern Mediterranean exports during the entire examined period.…”

Section: Empirical Frameworkmentioning

confidence: 99%

Export Performance and Access to Intermediate Inputs: The Case of Rules of Origin Liberalisation

Andersson

2015

World Economy

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Internationally fragmented production processes have highlighted the need of efficient sourcing from foreign suppliers. This paper aims to investigate how exports of final goods are affected by better access to foreign intermediate inputs. In particular, the paper empirically tests whether expanding the set of available intermediate input suppliers through preferential rules of origin liberalisation affects exports of final goods. We exploit the introduction of the southern Mediterranean countries into the Pan‐Euro‐Med zone of diagonal cumulation which meant that foreign intermediate inputs could be used from more countries than before without jeopardising the preferential access to the EU. Using a fixed effects specification that controls for detailed levels of unobserved heterogeneity and multilateral resistance, we examine the effect of the new diagonal cumulation possibilities on southern Mediterranean exports to EU‐15. We find a positive effect on both export intensity, the value of exports, and export diversification, the number of exported products. Being part of the Pan‐Euro‐Med zone of diagonal cumulation is associated with a 20 per cent increase in export intensity and a 5 per cent increase in export diversification.

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“…An important limitation of existing empirical studies on the effect of AGOA on import values (Collier and Venables 2007;Portugal-Perez 2008;Frazer and Van Biesebroeck 2010) is that import value data, even at the HS ten-digit level, is too aggregated to fully capture changes in product characteristics. By only looking at the value or range of HS ten-digit products exported by each country, existing studies may miss important changes occurring within each product line.…”

Section: Empirical Specification Of the Price Equationmentioning

confidence: 99%

“…Frazer and Van Biesebroeck (2010) find that the AGOA had a "large and robust effect that grew over time" and estimate that overall AGOA apparel exports increased by 53 percent with stronger impacts on products with high initial levels of protection. Portugal-Perez (2008) reports an impact of 96 percent for twenty-two countries eligible for the third-country fabric provision, and 303 percent for the top seven beneficiaries. 10 In addition to higher export volumes, there is also evidence that AGOA exporters enjoyed higher prices and captured some of the tariff rents created by the preferences (Olarreaga and Özden 2005).…”

Section: Introductionmentioning

confidence: 99%

AGOA Rules: The Intended and Unintended Consequences of Special Fabric Provisions

Edwards

Lawrence

2011

SSRN Journal

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Lesotho and other least developed African countries responded impressively to the preferences they were granted under the African Growth and Opportunities Act with a rapid increase in their clothing exports to the US. But this performance has not been accompanied by some of the more dynamic growth benefits that might have been hoped for. In this study we develop the theory and present empirical evidence to demonstrate that these outcomes are the predictable consequences of the manner in which the specific preferences might be expected to work.The MFA (Multi-fiber Arrangement) quotas on US imports of textiles created a favorable environment for low value-added, fabric-intensive clothing production in countries with unused quotas by inducing constrained countries to move into higher quality products. By allowing the least developed African countries to use third country fabrics in their clothing exports to the US, AGOA provided additional implicit effective subsidies to clothing that were multiples of the US tariffs on clothing imports. Taken together, these policies help account for the program's success and demonstrate the importance of other rules of origin in preventing poor countries from taking advantage of other preference programs.But the disappointments can also be attributed to the preferences because they discouraged additional value-addition in assembly and stimulated the use of expensive fabrics that were unlikely to be produced locally. When the MFA was removed, constrained countries such as China moved strongly into precisely the markets in which AGOA countries had specialized. Although AGOA helped the least developed countries withstand this shock, they were nonetheless adversely affected. Preference erosion due to MFN reductions in US clothing tariffs could similarly have particularly severe adverse effects on these countries.

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The Costs of Rules of Origin in Apparel: African Preferential Exports to the United States and the European Union

Cited by 20 publications

References 20 publications

Growth by Destination: The Role of Trade in Africa’s Recent Growth Episode

Growth by Destination: The Role of Trade in Africa’s Recent Growth Episode

Export Performance and Access to Intermediate Inputs: The Case of Rules of Origin Liberalisation

AGOA Rules: The Intended and Unintended Consequences of Special Fabric Provisions

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