Analysis, statistics, publications, downloads, links, etc

RESEARCH AND ANALYSIS: WORKING PAPERS

Preferential rules of origin In regional trade agreements

This study surveys preferential rules of origin applied by 192 regional trade agreements (RTAs) covering trade in goods notified to the GATT/WTO up to 1 November 2010. It takes into account the preferential rules of origin that were notified to the WTO; whenever known and available, modifications to the original rules of origin have been updated.

150pxls.gif (76 bytes)
Guide to downloading files

This study contains two basic features: a description of some key elements of preferential rules of origin in RTAs, followed by an attempt to provide a reality-check of how these rules affect actual trade. That is done by an ex-post examination of data on the use of RTAs' preferences and, in their absence, of their margins of preference (MOPs).

While the raison d'être of preferential rules of origin is the avoidance of trade deflection, the practice in RTAs has diluted this objective and it would seem that preferential rules of origin are increasingly becoming an economic, political and trade instrument. In its descriptive part, the study identifies what seems to be a tendency to design stricter rules of origin, while detecting concomitantly the inclusion in modern preferential rules of origin of flexibilities that provide, through the rules of origin themselves, a preference beyond the lower tariff rate resulting from the preferential treatment and mechanisms that allow the integration of third-parties into preferential rules of origin regimes.

The reality-check part of the study points to the fact that much beyond the coverage of RTAs, it is their effective implementation that poses a challenge to economic operators. Though data on the use of preferences is either not disclosed or inexistent, they are nevertheless available for some economies. On the basis of existing data of preference utilization, the analysis of the effects of rules of origin on preferential trade flows appears to give rise to a dual reality — namely a relatively high use of preferences in certain instances coexisting with preferences failing to attain their potential in other cases. As regards RTAs for which utilization rate is not available, the paper analysis preferential rules of origin from a MOPS perspective, assuming that MOPs of at least 5 percentage points would offset compliance costs and thus provide a stimulus to comply with rules of origin in order to benefit from preferences. The analysis, made for 68 out of 192 RTAs, do not allow any conclusion regarding that generally presented hypothesis.
Finally, the paper briefly outlines some suggestions for further action, including the launching in the WTO of exploratory work on preferential rules of origin within an “open regionalism” scenario.

No: ERSD-2013-05

Authors:

Maria Donner Abreu, WTO

Manuscript date: March 2013

Key Words:

Regional Trade Agreements, rules of origin, margins of preference

JEL classification numbers:

F13, F14, F15, F53

Disclaimer  back to top

This is a working paper, and hence it represents research in progress. This paper represents the opinions of the author, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the author. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Statistics Division, World Trade Organization, Rue de Lausanne 154, CH 1211 Geneva 21, Switzerland. Please request papers by number and title.

Download paper in pdf format (64 pages, 892KB; opens in a new window)