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Despite the growing literature insisting in showing the advantageous effects that the USMCA has for the Mexican industrial and labor development, this article seeks to offer a critical and historical explanation that helps to understand the causes that led to the momentum of the USMCA and the subordinate role that Mexico has played—and will continue to do so under this new trade arrangement—in the increasingly strengthened process of unequal regional protectionism, which has historically played against Mexico's domestic industrial development. The main argument in this article claims that the new rules of origin in the USMCA will have a clear and differentiated impact on the automotive firms operating in Mexico, benefiting US firms on the eve of the protection they require in the face of the great technological changes and increasing competition among the global auto firms. [ABSTRACT FROM AUTHOR]

In regional trade agreements (RTAs), member countries choose a common rule of origin (RoO) for each product. This study examines the factors that influence RoOs in four ASEAN‐plus‐one RTAs, which are agreements between ASEAN and four individual countries. One unique feature is that ASEAN as a whole negotiates with a plus‐one country, which may dilute the interests of individual ASEAN countries at large. Our findings are summarised as follows. First, the more restrictive RoOs are set in the products where plus‐one countries are less competitive against most ASEAN countries. Second, the more restrictive RoOs are likely to be imposed in products that plus‐one countries protect with higher most favoured nation tariffs. These two results reflect the bargaining power among a plus‐on country and ASEAN countries and indicate that plus‐one's preference influences RoOs more strongly. Third, we find contrasting results between intermediate and final products. RoOs are likely to be less restrictive in intermediate products and more restrictive in final products when plus‐one countries have higher export competitiveness or when the majority of ASEAN countries have higher MFN tariffs. [ABSTRACT FROM AUTHOR]

The study investigates the impact of SADC-EPA rules of origin on regional integration within the Southern African Development Community (SADC), addressing a research gap by analyzing economic activities among member states. Recognizing regional integration as pivotal for the SADC’s strategic objectives, understanding the implications of rules of origin is paramount for equitable benefit distribution. Through a comprehensive review of past research on regional agreements, the study delineates varying implications of rules of origin provisions on regional integration, contingent upon member states’ economic profiles. It emphasizes the importance of addressing economic disparities among countries and prioritizing technical capacity-building, especially for those with limited agricultural and industrial bases. Targeted capacity-building initiatives are recommended for nations with lower levels of agricultural and industrial development to ensure equitable participation and benefit-sharing from the SADC-EPA rules of origin, thus fostering sustainable regional integration and economic growth across the SADC region.

The concept of 'substantial transformation' plays a vital role in determining the origin of goods produced in multiple countries, significantly impacting the granting of trade preferences and the application of various government measures to these goods. This concept lies at the core of rules of origin, serving as a tool to identify the country where a good is truly manufactured. In the complex world of global trade, where global supply chains and multinational production are commonplace, determining the origin of goods has become a significant challene. The concept of substantial transformation, by emphasizing fundamental changes in the production process, helps address this challene and promotes transparency and fairness in international trade.Several subsidiary or complementary criteria, including changes in tariff classification, value-added tests, and specific production process criteria, are employed in different legal systems and trade agreements to assess whether a product has undergone substantial transformation and qualifies for origin status.This research aims to examine the concept and application of these criteria in rules of origin systems, with a particular focus on the legal approach in Iran. It will also explore how the concept of substantial transformation and its subsidiary criteria are applied in the World Trade Organization's Agreement on Rules of Origin and the latest draft consolidated text of the Harmonization Work Programme.By analyzing these dimensions, this research will provide a comprehensive insight into how substantial transformation impacts international trade, the determination of the origin of goods, and its broader implications for global trade regulations. The findings of this research can serve as a basis for reforming and improving the laws and regulations related to rules of origin in Iran and other countries. [ABSTRACT FROM AUTHOR]

Despite EU's engagement with the Mediterranean region and its active support for intra-regional integration initiatives, the data shows an impressive underperformance of Southern and Eastern Mediterranean Countries (SEMCs) in regional trade. Ideally, an energy rich North Africa and energy deficient neighbors in the South would unlock considerable opportunities for regional trade. Therefore, the following question looms large: How has EU's trade policy contributed to the low market integration among the SEMCs? To answer this question, under the Market Power Europe and qualitative methodology, it is hypothesized that EU's externalization of policies through different embedded tools such as rules of origin and outward processing schemes (OPS) has contributed to the divergence, instead of convergence, of trade among SEMCs. Research findings point to a distortion of competition between EU enterprises and African and third party enterprises in the benefit of European interests. Further, the results reveal that despite the higher complementarity between some of the SEMCs, still the predominant direction of trade is north-south, thanks to EU's trade policy in the Mediterranean region. [ABSTRACT FROM AUTHOR]

Least developed countries (LDC) play marginal role in the global economy and in the global trading system. The international community has introduced a series of initiatives to provide these countries with more favourable market access conditions. One of them is the European Union’s programme – the Everything But Arms (EBA) scheme providing duty-free and quota-free market access to all products except weapons and ammunition. Conditions for access to the EU market, are contingent not only upon the level of customs duty rates, but also rules of origin (RoO), as it is the latter that determines whether a lower rate of customs duty can be applied to imported goods or not. This article’s aim is to assess the significance of the rules of origin of goods in the European Union’s unilateral Generalised System of Preferences for the EBA system’s beneficiaries, with special attention given to changes introduced in 2011. To meet the objective hereof, not only empirical methods were employed (indirect observation and description), but also general methods, including deduction and induction. The following research techniques were used: a cause and effect analysis, a comparative analysis and synthesis. The research is based on statistical data provided by Eurostat and UNCTAD.

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. [ABSTRACT FROM AUTHOR]

This paper presents a model of a free trade area that incorporates rules of origin and analyzes their implications for the structure of producers' supply correspondences. In our model, producers decide whether or not to comply with rules of origin to avoid paying tariffs to export to other free trade area members and, as prices change, producers can switch from production plans that satisfy rules of origin to production plans that do not. We show that rules of origin can produce discontinuities in the supply correspondence of firms that have to be taken into account when doing policy analysis. [ABSTRACT FROM AUTHOR]

Copyright of Przegląd Europejski is the property of University of Warsaw and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In 2021, an artificial intelligence system wrote a law article. The results were far from perfect but begged the question of whether a human author will still be able to compete against artificial intelligence. Leaving aside the Luddites scenario, this paper starts with the premise that human-made art might be more valued than machine-enabled art. However, to be properly valued, machine-enabled and human-made art must be distinguishable—they are not. Indistinguishability creates an asymmetry in information. This leads to a ‘lemons problem’—that is, a market erosion of good-quality products (in this scenario, human-made products). Against that background, this paper proposes a solution in light of international law and rules of origin. This paper argues that the lemons problem induces the need for a rule of origin labelling work as either human-made or machine-enabled. Determining human or machine authorship may be dauntingly complex when the artwork owes its existence to both humans and machines. One solution may be to review how the country of origin is identified whenever products are not created in a single location and then to apply, mutatis mutandis, to rules of authorship origin the solutions once identified in the context of geographical origins, that is, the so-called ‘substantial transformation test’. In the context of machine-enabled artwork, this test is whether a human edited the machine output and, if so, whether those edits constituted a substantial transformation of the work of art.

We explore the non-monotonic relationship between the restrictiveness of rules of origin (ROO) and beneficiaries' value-added embedded in preferential exports. Using data for the European Union's GSP schemes, we calculate the value-added maximizing level of ROO restrictiveness. Results suggest that current levels of restrictiveness in the European Union's GSP schemes are not statistically different from optimal levels. More lenient ROO, as sometimes requested by GSP beneficiaries, would reduce their value-added to the benefit of foreign input providers.

While one of the principles of the World Trade Organization (WTO) is to ensure non-discrimination in global trade, Article XXIV of General Agreement on Tariffs and Trade (GATT) 1994 has provisions for the establishment of free trade areas (FTAs), in which trading partners accord each other preferential treatment. Article XXIV allows a group of countries to form their own FTAs to speed up trade outside the multilateral trading system. This paper explores the relevance of Customs in the operations of FTAs. The analysis concludes that Customs has a major role to play in the operations of an FTA, and by extension, towards the realisation of the goals of the WTO. [ABSTRACT FROM AUTHOR]

There has been several efforts to liberalise economic integration in Africa by removing tariffs and non-tariff barriers to enhance the free movement of goods and services such as human capital and intellectual property in Africa. This is evidenced by a plethora of regional economic communities (RECs) that have been established in Africa. Some of the prominent RECs in Africa include the Economic Community for West African States (ECOWAS), the Common Market for Eastern and Southern Africa (COMESA), the Economic Community for Central African States (ECCAS), the East African Community (EAC) and the Southern African Development Community (SADC). Almost every African state belongs to at least one REC. Unfortunately, most of these RECs have failed to promote economic integration among their member states. This could be attributed to several factors which include ambiguity on the status of REC decisions and resolutions in member states, complex rules of origin and dysfunctional decision-making, dispute resolution and enforcement mechanisms of the RECs. However, the promulgation of the African Continental Free Trade Area (AfCFTA) agreement has seen the dawn of a new era to liberalise economic integration at continental level in Africa. The technicalities surrounding the rules of origin could raise questions on the applicability of AfCFTA in Africa. It is imperative that drafters of the AfCFTA agreement learnt from the shortcomings of African RECs which are building blocks of the AfCFTA. In this article, the authors examine the legal implications of the AfCFTA’s rules of origin on economic integration and constitutionalism in Africa.

Revision in Harmonized System (HS) and its impact of rules of origin (RoO) are matters of immense importance in international trade policy discourse due to its far reaching economic and trade implications. In this article, we analyse the impact of HS amendments on RoO, based on the change in tariff classification (CTC) by examining India's trade agreements with South Korea and Japan. Findings of the article show that the revision in HS impacts 42% of subheadings with CTC rules in case of India-South Korea Comprehensive Economic Partnership Agreement (CEPA) and 28% in case of India-Japan CEPA, thereby potentially affecting up to 48% and 16% share of their total trade, respectively. [ABSTRACT FROM AUTHOR]

In 2021, an artificial intelligence system wrote a law article. The results were far from perfect but begged the question of whether a human author will still be able to compete against artificial intelligence. Leaving aside the Luddites scenario, this paper starts with the premise that human-made art might be more valued than machine-enabled art. However, to be properly valued, machine-enabled and human-made art must be distinguishable--they are not. Indistinguishability creates an asymmetry in information. This leads to a 'lemons problem'--that is, a market erosion of good-quality products (in this scenario, human-made products). Against that background, this paper proposes a solution in light of international law and rules of origin. This paper argues that the lemons problem induces the need for a rule of origin labelling work as either human-made or machine-enabled. Determining human or machine authorship may be dauntingly complex when the artwork owes its existence to both humans and machines. One solution may be to review how the country of origin is identified whenever products are not created in a single location and then to apply, mutatis mutandis, to rules of authorship origin the solutions once identified in the context of geographical origins, that is, the so-called 'substantial transformation test'. In the context of machine-enabled artwork, this test is whether a human edited the machine output and, if so, whether those edits constituted a substantial transformation of the work of art. [ABSTRACT FROM AUTHOR]

Copyright of Investigación Económica is the property of Universidad Nacional Autonoma de Mexico, Facultad de Economia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

It takes many years to negotiate a Preferential Trade Agreement (PTA). The goal is the economic benefits that utilization of PTAs brings. However, the European Commission found that utilization of some PTAs is very low. This study aimed to reveal what obstacles firms face and to recommend solutions. A literature review was done, and semi-structured interviews were conducted (eight participants were selected using the convenience sampling technique). The research questions were about the extent Lithuanian companies utilize PTAs, what they consider obstacles and how these can be overcome. The review of the literature revealed seven main issues. Semi-structured interviews highlighted one more important issue. One of the most significant issues revealed is the lack of interest of the Lithuanian customs administration in promoting PTAs’ utilization.

The Generalised System of Preferences (GSP) was launched by the European Union in July 1971. Its main objective was to provide developing countries with easier access to the EU market by cutting down or eliminating customs rates imposed on goods imported from these countries. The significance of GSP preferences for the beneficiaries of the scheme is constrained by several factors. Among them, rules of origin of goods are of key importance. They imply that economic operators must comply with complex rules of origin of goods, which increase the costs of administrative procedures and impose specific technical requirements. The aim of the article is to assess the rules of origin in the European Union's GSP system of unilateral preferences, with a focus on changes introduced to these rules since 2011. In the paper it was put forward as a research hypothesis that the changes in the rules of origin of goods introduced in the last two decades had resulted in their simplification and relaxation, particularly in the case of the least developed countries (LDC) and in relation to specific groups of goods important from the standpoint of these countries' exports. This was advantageous for the least developed countries, which were most impacted by these changes. However, this does not mean that the rules of origin of goods are no longer a barrier for beneficiaries in their preferential access to the EU market, especially in the case of certain goods and other GSP subsystems. [ABSTRACT FROM AUTHOR]

African countries are still negotiating the RoO for AfCFTA. Rules of Origin (RoO), a mechanism for determining the economic nationality of a product, are an essential part of international trade due to their use in the enforcement of preferential treatment of goods. AfCFTA member states seek to build upon RoO under their existing RECs. However, the design and implementation of RoO under the various RECs are seen as one of the obstacles to intra-Africa trade. This article examines the RoO of Africa's key RECs, namely the EAC, COMESA, ECOWAS, SADC and the TFTA, with a view to drawing out lessons, the drawbacks that need to be addressed or avoided, and shaping the RoO of the AfCFTA to enhance the achievement of its objective of promoting intra-African trade. [ABSTRACT FROM AUTHOR]

The article revisits a cornerstone in preferential rules of origin (ROO) - the principle of territoriality. In essence, the principle requires manufacturing processes for the purpose of acquiring originating status to be carried out without interruption in the territory of one or several contracting parties to a preferential trade agreement (PTA). Territoriality requirements are found to be at odds with recent developments in global trade and production practice, particularly the emergence of global value chains (GVCs) since they hinder the fragmentation of production. Moreover, the requirement of uninterrupted production in one single country also contravenes the objective of liberalizing preferential ROO through the introduction of full cumulation because the notion of counting all working and processing carried out in various eligible countries would prove impossible. In addition, the principle of territoriality may affect the precise determination of origin because it fails to accord equal treatment to conventional and unconventional inputs for production. For trade-facilitating origin regimes to be effective, territoriality requirements need to be revisited and relaxed. [ABSTRACT FROM AUTHOR]

There has been several efforts to liberalise economic integration in Africa by removing tariffs and non-tariff barriers to enhance the free movement of goods and services such as human capital and intellectual property in Africa. This is evidenced by a plethora of regional economic communities (RECs) that have been established in Africa. Some of the prominent RECs in Africa include the Economic Community for West African States (ECOWAS), the Common Market for Eastern and Southern Africa (COMESA), the Economic Community for Central African States (ECCAS), the East African Community (EAC) and the Southern African Development Community (SADC). Almost every African state belongs to at least one REC. Unfortunately, most of these RECs have failed to promote economic integration among their member states. This could be attributed to several factors which include ambiguity on the status of REC decisions and resolutions in member states, complex rules of origin and dysfunctional decision-making, dispute resolution and enforcement mechanisms of the RECs. However, the promulgation of the African Continental Free Trade Area (AfCFTA) agreement has seen the dawn of a new era to liberalise economic integration at continental level in Africa. The technicalities surrounding the rules of origin could raise questions on the applicability of AfCFTA in Africa. It is imperative that drafters of the AfCFTA agreement learnt from the shortcomings of African RECs which are building blocks of the AfCFTA. In this article, the authors examine the legal implications of the AfCFTA's rules of origin on economic integration and constitutionalism in Africa. [ABSTRACT FROM AUTHOR]

Copyright of Foro Internacional is the property of El Colegio de Mexico AC and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In the context of preferential trade agreements, Rules of Origin have attracted negative attention for their propensity to serve protectionist objectives. Against this background, the author seeks to shed light on several conceptual and practical challenges in connection with the Rules of Origin negotiated in the EU-UK Trade and Cooperation Agreement. The discussion proceeds from two basic propositions: first, the Rules of Origin included in this agreement resemble, in essential terms, those included in other modern EU trade agreements with advanced-economy partners; and second, preferential Rules of Origin, such as those agreed between the EU and the UK, embody the outcome of reconciling the divergent interests of import-competing and export industries by the negotiating partners. The author has identified and analysed the following specific challenges posed by the Rules of Origin in the EU-UK Trade and Cooperation Agreement: (1) limited possibilities for origin cumulation; (2) protectionist potential of transitional origin requirements and origin quotas; (3) trade-hindering effect with respect to Northern Ireland; and (4) chilling effect of the potential review of inward processing schemes on trade. Based on the analysis conducted, the author concludes that these challenges negatively affect trade because they operate to foreclose the expansion of legitimate trade opportunities under the EU-UK Trade and Cooperation Agreement. [ABSTRACT FROM AUTHOR]

An explosion of different preferential rules of origin (PROO) has accompanied the spread of preferential trade agreements (PTAs) around the world. Complying with PROO requirements entail costs for producers, exporters, and customs officials. Observers, firms, customs officials, and policymakers have advocated simplification as well as harmonization. The paper surveys the literature drawing on the extensive database in ITC's Rules of Origin Facilitator (ROF) database covering 54,000 distinct PROO spread across 370 PTAs to illustrate the issues covered in the literature. We review what we know about the compliance costs associated with PROO requirements. We illustrate these costs graphically and summarize through mathematical decomposition of compliance costs along two dimensions: distortionary costs resulting from the restrictiveness of PROOs and administrative costs. We survey the existing evidence in literature by themes: (i) determinants of the utilisation of preferences; (ii) effects on third countries outside the PTA; (iii) choice of rule; (iv) preference margin and complexity of rules; (v) trade deflection; and (vi) firm-level evidence. In conclusion, drawing lessons from the empirical literature is a complicated exercise because preference uptake, an important indicator of compliance costs, is only available for a handful of PTAs at the disaggregated product level. [ABSTRACT FROM AUTHOR]

The Regional Comprehensive Economic Partnership (RCEP) agreement, signed in November 2020, comes shortly after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force and the US-China Trade War escalated. We use a computable general equilibrium model to assess the long-term effects of these three developments on income, trade, economic structure, factor returns and employment across the world, and especially in Asia-Pacific countries. The results suggest that RCEP could generate income gains that will be almost twice as large as those of the CPTPP, and that the two agreements together will largely offset the substantial negative effects of the US-China Trade War for the world as a whole. All three policy developments, but especially RCEP, will deepen East Asian production networks and will raise productivity and increase wages and employment in much of East Asia. At the sectoral level, regional trade in non-durable and durable manufactures will experience the most growth.

Background--In the context of the slow progress of multilateral free trade negotiations in the World Trade Organization (WTO), regional trade agreements (RTA), mainly in the form of free trade agreements (FTA), are spreading rapidly around the world. With the rise of FTA, researches on the background, effects and determinants of FTA have been published increasingly. But so far, the research on trade rules of FTA forest products signed by China hasn't started yet. To sum up, on the basis of sorting out the country characteristics and product characteristics of FTA tariff concessions and rules of origin that China has signed, the overall characteristics of trade rules of China's FTA Forest product are comprehensively analyzed and the reasons are explored. ⑵ Methods--Through classification and statistics of forest products' tariff concession pattern and rules of origin in six FTAs signed by China, Chile, New Zealand, Iceland, Switzerland, Australia and South Korea, the characteristics of tariff concession pattern and rules of origin of China' FTA forest products are analyzed from the country level and product level. Then it summarizes the different trade rules of FTA forest products adopted by China for different partner countries and products and explores the reasons. The data come from each FTA text and its annex of China Free Trade Zone Service network, FAO Forest Products Yearbook and UN COMTRADE DATABASE. ⑶ Results--First, China only promised to abolish tariffs on 60% of forest products, but basically all FTA forest products of six countries promised to abolish tariffs on forest products of China, indicating that China's FTA tariff concessions on forest products is relatively conservative, while the six countries are extremely open to China. Secondly, the majority of the rules of origin of forest products in China's FTA are subject to changes in items. The trade restrictions of rules of origin are relatively loose, and the setting of rules of origin of forest products is not precise. Third, the tariff concession pattern and rules of origin adopted by China for different FTA partners and forest products are not completely consistent. For non-sensitive products, China adopts a strategy of combining tariff concession and item change, which are mainly concentrated in wood raw materials, wood pulp, cork and wooden furniture. There are three ways to protect sensitive forest products. The first is the double protection strategy of tariff protection and rules of origin protection. The second is the cross-protection strategy of tariff protection and rule of origin protection. The third is the cross-protection strategy of rule of origin protection and tariff protection. ⑷ Conclusions and Discussions--China adopts different trade rules for different countries and forest products based on domestic wood resource supply and demand, forest product trade characteristics, competitiveness and other factors. For raw material and resource-intensive forest products, tariff elimination is adopted, unilateral restrictions are imposed on more sensitive forest products in terms of tariffs or rules of origin, and only a few of the most sensitive forest products are protected by double-protection strategy. It is clear that China' s FTA forest products trade rules still need to be improved. First, the proportion of exception case is too high. In fact, in consideration of protection and opening-up, China can appropriately increase the number of forest products for which tariffs will be phased out in the medium and long term. In addition, a country like Iceland, which has less than 1 % forest coverage and very little trade in both imports and exports, could reasonably increase openness. Secondly, the setting of rules of origin for forest products is not precise. China's basic strategy is to take tariff protection as the main means of trade restriction, while rules of origin in many cases only serve as an auxiliary means of restriction. China can strengthen the protection of rules of origin and set more detailed and precise rules of origin for different forest products to compensate for the adverse effects of a single tariff protection approach. [ABSTRACT FROM AUTHOR]

Recent years have seen an increase in goods-related services. Such services range from conventional maintenance contracts sold with goods, to database and data processing services as necessary parts of the Internet of Things. Indeed, the Internet of Things has increasingly blurred the distinction between goods and services insofar as the latter enable essential functions of the goods. Services such as production related research and development (R&D) are also making an increasingly significant contribution to the final value of goods. On the other hand, the World Trade Organization (WTO) regulates the cross-border trade in goods and services separately in the General Agreement on Tariffs and Trade (GATT) and General Agreement on Trade in Services (GATS). Therefore, it is legitimate to ask if this approach is now outdated and a new mode of trade should be created. This paper provides some thoughts on these questions and is based on the author’s dissertation which comprehensively deals with this topic. [ABSTRACT FROM AUTHOR]

Trade negotiations now center on regulations. This paper argues that these negotiations can raise uncertainty over fixed costs. We develop a simple model of exporter competition to show how uncertainty generated by negotiations redistributes profits across firms. We show that regulatory uncertainty reduces competition by deterring entry on the part of less productive firms and shifting market share toward top producers. Empirically, we show that this negotiation‐driven uncertainty can help explain the economically concentrating effects of preferential agreements. Preferential trade agreements combine tariff concessions with regulatory changes that ensure the benefits of the agreement are limited to member states. Using novel data covering firm‐level export activity and public investment decisions in the automotive and automotive parts sectors during NAFTA, we find that negotiation‐driven uncertainty deterred non‐North American producers while benefiting the top American auto manufacturers. [ABSTRACT FROM AUTHOR]

As an extremely important part of the RCEP agreement, rules of origin will encourage enterprises to make more use of raw materials and intermediate products in the region, and more easily reach the regional value components to enjoy the preferential tariff treatment of the RCEP. This paper first analyzes the possible impact of the RCEP rules of origin on China’s manufacturing industry, and then simulates the economic impact of the implementation of the RCEP agreement on China’s manufacturing industry through the Global Trade Analysis Model (GTAP). The simulation results show that: (1) China’s industries with obvious industrial advantages, such as textiles and clothing, will benefit from this, but the output of some industries, such as rubber and plastic products, chemical products and drugs, will be impacted to some extent. (2) From the perspective of the import and export scale of the segmented industries, after the entry into force of the RCEP, China’s imports from the member countries in the region have increased significantly in rubber and plastic products, mineral products, transportation equipment, etc., while the exports have increased significantly in food, beverage, tobacco products, textile, clothing, leather products.

Free Trade Agreements (FTAs) usually come with restrictions on the use of intermediate inputs in order for final goods to qualify for free trade. I focus on Rules of Origin (RoO), which limit expenses on nonmember country's intermediate inputs. In a three‐country FTA formation game, I introduce international trade in intermediate inputs and RoO restrictions. In the case of symmetric countries, I show that as countries become more involved in global supply chains, measured by their input shares in foreign final goods production, global free trade is less likely to be a stable equilibrium outcome. Free riding is the main problem preventing countries from liberalising trade. Countries are better off being nonmembers of FTAs between the other two countries relative to global free trade. Rules of Origin can solve this problem by limiting the benefits countries get from other countries' free trade agreements. In the case of asymmetric countries, an additional incentive exists for the smaller country not to join: such a country gives up more than it gains from joining an FTA for a sufficiently high degree of asymmetry in country sizes. I show that global free trade is a stable Nash equilibrium under a larger region of asymmetric country parameter space in the case of RoO than without it. Therefore, it is shown that RoO is essential in order to attain global free trade. [ABSTRACT FROM AUTHOR]

We explore the new roles of rules of origin (ROO) when multinational enterprises (MNEs) manipulate their transfer prices to avoid a high corporate tax. The ROO under a free trade agreement (FTA) require exporters to identify the origin of exports to be eligible for a preferential tariff rate. We find that a value-added criterion of ROO restricts abusive transfer pricing by MNEs. Interestingly, an FTA with ROO can induce MNEs to shift profits from a low- to high-tax country. Because the ROO augment tax revenues inside FTA countries, they can transform a welfare-reducing FTA into a welfare-improving one. [ABSTRACT FROM AUTHOR]

The European Union (EU) has unilaterally granted developing countries preferential access to EU markets under the Generalized System of Preferences (GSP). To obtain preferential access, exporters in beneficiary countries must follow the rules of origin (ROO) in the EU's GSP. Previous ROO were criticised as restrictive, because exporters' production costs increase with a restriction on imported inputs from the lowest‐cost third countries and the administrative process of proving origin. The EU simplified the restrictive ROO on January 1, 2011. However, the impact of the EU's reform on beneficiary economies remains largely unexplored. This paper estimates the causal impact of simplifying ROO on garment exports in a beneficiary country, Cambodia, during the period 2007–2015. In the new ROO, garment exporters in least developing beneficiaries such as Cambodia can use imported fabric from any third country and still maintain preferential access. I adopt a difference‐in‐differences method and provide evidence to support the parallel trends assumption. The results show that garment exports to the EU increased by 112% after 2011, which coincided with a sharp increase in textile imports from China to Cambodia. Foreign direct investment inflows increased sharply after 2011 in the garment sector but decreased in the textile sector. [ABSTRACT FROM AUTHOR]

This article assesses how the utilization of trade agreements responds to rules of origin revisions that allow for more foreign content in exported products. Using the revision of the rules of origin for apparel products under the European Union's generalized system of preferences as a case study, and a triple‐difference empirical framework, the results indicate that rules of origin act as a significant bottleneck to least developed countries' (LDCs) use of trade preferences. However, heterogeneity in the response of utilization rates across products and LDCs suggests rules of origin revisions may not be a panacea. [ABSTRACT FROM AUTHOR]

This study examines how the rules of origin (RoO) of a free trade agreement (FTA) affect firms' pricing strategies. The value‐added criterion (VAC) of the RoO requires firms to add more than a certain level of value within an FTA when firms use inputs originating from outside the FTA. The VAC may work as a price floor, and the resulting increases in prices can benefit all firms if it induces an offshoring firm to manipulate its output price. Meanwhile, a consumer‐hurting FTA formation is possible, even if all firms make tariff‐free exports. Furthermore, such an FTA formation may worsen total welfare. [ABSTRACT FROM AUTHOR]

Since 1994, the Mexican auto parts industry has strongly developed due to an increase in motor vehicle production, local sales, exports volume and tariff benefits related to the North American Free Trade Agreement (NAFTA). Nowadays, Mexico is the seventh largest automotive manufacturer and the third largest light-vehicle exporter. This study objective was to analyze the effects of recent NAFTA renegotiation on the Mexican automotive sector, specifically regarding auto parts industry Regional Value Content (RVC). Data collection was carried out by literature review and application of a semi-structured interview to experts in governmental, industrial, academic and business sector. The impact on the regional supply chain of Mexican auto parts industry was evaluated from 4 different perspectives: business, industry, government and academic. Results predict a possible restructuration of the supply chain to comply with the new RVC percentage, identifying three strategies for the Mexican industry: direct foreign investment increase, development of auto parts local suppliers and internationalization of these companies.

This paper uses a modified gravity model to investigate the effects of rules of origin (RoO) on 61 countries' participation in global value chains (GVCs) during the period 2005–2015. We define GVC participation as the value added contained in exports, looking both backward and forward from a reference nation. RoO are heterogeneous in the degrees of restrictiveness that govern the origin of products to obtain preferential tariff treatment. The empirical results show negative relationships between RoO's restrictiveness and both backward and forward participation, and these adverse effects become more prominent when we control the endogeneity bias. However, the implementation of regime-wide RoO, including diagonal cumulation and de minimis, can reduce these negative effects. The mitigating roles of both regime-wide rules are quite similar in terms of magnitude, which is significant as the current literature on the liberalization of RoO only focuses on the role of cumulation. Our findings suggest that in order to upgrade participation in international production networks, a country should adopt a less restrictive and regime-wide RoO in free trade agreement (FTA) negotiations. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of the probability that an exporter chooses between a most-favored nation (MFN) scheme and multiple regional trade agreement (RTA) schemes. We estimate a discrete choice model using transaction-level import data for Thailand in 2014. We find that RTA schemes are more likely to be chosen, given a larger transaction value. Among RTA schemes, the ones with less restrictive rules of origin or lower tariff rates are more likely to be selected. We also conduct simulation analysis to provide quantitative policy implications. [ABSTRACT FROM AUTHOR]

The decision made by a slight majority of voters in the UK to leave the EU, based on a non-binding referendum, sent initial shockwaves across the globe. The separation of the UK from the EU is still a process in the making, as there is no certainty about the negotiation approach the UK or the EU will adopt on the terms of the so called Brexit. This paper seeks to outline the major aspects of market access for the international trade of goods between the UK and the EU and the impact and opportunities for Australia, noting the comparatively greater importance of the EU 27 to Australia. The paper concludes that the economic interdependence between the UK and the EU warrants a win-win solution, despite the many as yet unknown challenges that lie ahead.

Participation in the global value chain (GVC) is defined as the value added contained in exports, looking both backward and forward from a reference nation. This article applies the gravity model to investigate the effects of the regime-wide rules of origin (RoO), including diagonal cumulation, de minimis, and self-certification requirements, on GVC participation with 40,568 observations covering 61 countries from 2005–2015. Our main finding is that the liberal RoO can help upgrade both types of GVC participation. [ABSTRACT FROM AUTHOR]

This article discusses the deadlock in the WTO on multilateral harmonization of non-preferential rules of origin (RoO) and reviews some of the RoO included in recent preferential trade agreements. We argue that there is a trend towards adoption of similar approaches and that this suggests that cooperation to reduce the trade-impeding effects of differences in RoO across jurisdictions is more feasible than often is assumed by observers and policymakers. From a trade facilitation perspective such cooperation could be based on plurilateral initiatives under the umbrella of the WTO. These could include a focus on pursuit of greater convergence between preferential and nonpreferential RoO helping to achieve the long-standing goal of moving towards harmonization of rules of origin.