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Duty Drawback and Regional Trade Agreements: Foes or Friends?

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  • Sherzod Shadikhodjaev

Abstract

The nature of international trade has changed dramatically. Today, intermediate goods account for nearly 60% of the world merchandise trade, with the import content of the average export amounting to 40%. Global value chains increase the importance of duty drawback--a common practice of refunding duties on imported inputs either incorporated in finished goods for export or re-exported in the same state. Despite their great role in promoting overseas sales of products, drawback programmes have been handled under regional trade agreements (RTAs) in different ways due to a divergence of opinion on their pros and cons. This article provides a legal assessment of drawback schemes as permitted and prohibited within preferential trade areas. The main conclusion is that the no-drawback rule contained in many RTAs can have negative implications for non-parties, lacks justification under World Trade Organization's rules, and needs to be liberalized. The Author 2013. Published by Oxford University Press. All rights reserved., Oxford University Press.

Suggested Citation

  • Sherzod Shadikhodjaev, 2013. "Duty Drawback and Regional Trade Agreements: Foes or Friends?," Journal of International Economic Law, Oxford University Press, vol. 16(3), pages 587-611, September.
  • Handle: RePEc:oup:jieclw:v:16:y:2013:i:3:p:587-611
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    File URL: http://hdl.handle.net/10.1093/jiel/jgt020
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