Working Paper: CEPR ID: DP821
Authors: Bernard M. Hoekman
Abstract: Rules of origin form part of the traditional trade policy landscape. They are necessary for any government that seeks to distinguish between different foreign sources of supply of a product. This paper provides a basic introduction to the conceptual issues that arise in this area. It discusses both origin rules for products and producers, the latter being crucial in the context of trade in services, and summarizes the results of the economic literature with respect to rules of origin. The intention is to provide a `primer' to this increasingly complex area. The increasing attention being given to rules of origin by policy-makers and analysts is in large part a reflection of the spread of regional trade arrangements. Much of the analysis therefore focuses on preferential origin rules.
Keywords: rules of origin; free trade areas; trade in services
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Restrictive rules of origin (F14) | Trade diversion (F14) |
| Trade diversion (F14) | Sourcing from less efficient regional suppliers (L99) |
| Restrictive rules of origin (F14) | Competitive third-party suppliers shut out (L49) |
| Rules of origin (F14) | Economic impact on intra-area trade flows (F69) |
| Decrease in tariffs (F19) | Increase in restrictiveness of rules of origin (F13) |
| Import-competing industries (F14) | Influence on rules adopted (D72) |
| Influence on rules adopted (D72) | Cascading protection along the production chain (D18) |