Working Paper: CEPR ID: DP4999
Authors: Olivier Cadot; Antoni Estevadeordal; Akiko Suwa Eisenmann
Abstract: The paper estimates the effect of NAFTA?s rules of origin (ROO) on Mexican access to the US market treating explicitly the endogenous determination of ROOs. The first equation determines Mexico?s NAFTA (preferential) exports to the US as a function of tariff preference and Estevadeordal?s qualitative ROO index. The second equation determines ROO strictness on the basis of a Grossman-Helpman model identifying channels through which lobbying by US intermediate-good producers leads to deep preferences and stiff rules of origin in downstream sectors. The estimates suggest that the creation of a captive market for upstream intermediate-good producers is indeed one of their political determinants.
Keywords: NAFTA; regional integration; rules of origin
JEL Codes: F10; F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ROOs (R50) | captive market for U.S. intermediate goods (L60) |
| ROOs + tariff preferences (F13) | export subsidy for U.S. intermediate goods (H20) |
| ROOs (R50) | Mexican market access (F13) |
| political determinants of ROOs (F55) | ROOs (R50) |