Working Paper: CEPR ID: DP12743
Authors: Stphanie Brunelin; Jaime de Melo; Alberto Portugal
Abstract: The value of preferential market access schemes has fallen sharply. Drawing on a relaxation announcement of July 2016 simplifying origin requirements for access to the EU that should help restore market access, thereby alleviating the refugee crisis in Jordan, this paper argues that a simplification of origin requirements is a straightforward way to restore preferential market access. The paper compares the performance of Jordanian exports to the EU and the US under their respective FTAs. It shows that Jordanian exports to the US have grown more rapidly than exports to the EU over the last fifteen years. The study documents lower utilisation of preferences in the EU than in the US, especially in Textiles and Apparel (T&A) in spite of non-negligible preferences. Three contributing factors are identified: (i) higher adjusted preferences for apparel in the US than in the EU; (ii) greater competition from other suppliers (mostly from LDCs) in the EU market than in the US market; (iii) a simpler origin requirement in the case of the Jordan-US FTA. . Comparative evidence from the two FTAs and econometric estimates suggest that this should help restore market access for Jordanian exports to the EU. These estimates provide additional evidence that origin requirements suppress market access. Other pathways to simplify origin requirements are offered in conclusion.
Keywords: rules of origin; EU-Jordan FTA; Jordan-U.S. FTA; preference utilization
JEL Codes: F12; F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Simplified origin requirements (F29) | restore preferential market access for Jordanian exports to the EU (F15) |
| Origin requirements (Y20) | suppress market access (F13) |
| Utilization of preferences is lower under EUJFTA (D11) | higher than under JUSFTA (F14) |
| Higher adjusted preferences for apparel in U.S. (L67) | lower utilization of preferences in EU (D11) |
| Increased competition from other suppliers in EU market (D49) | lower utilization of preferences in EU (D11) |
| Simpler origin requirements in JUSFTA (F29) | higher utilization of preferences in EU (D11) |