IDEAS home Printed from https://ideas.repec.org/a/taf/jitecd/v9y2001i4p397-425.html
   My bibliography  Save this article

The economics of rules of origin

Author

Listed:
  • Juan RosellOn

Abstract

Rules of origin of free trade arrangements limit the use of inputs from outside the preferential trade zone. A government negotiating a future FTAcan manipulate these rules in order to achieve national welfare objectives. The correct definition of rules of origin may help to enhance demand for domestically produced goods, promote national technological development, and maximize labour income. This paper proves that a more stringent rule of origin implies an increase of demand for the domestic factor if the substitution effect prevails over the effects caused by the decrease of the scale of operation in the domestic plant, and the reallocation of output between domestic and foreign plants. We further show that policy decisions regarding rules of origin that intertemporally maximize welfare and foster domestic technological evolution should be made at the greatest level of disaggregation that is feasible.

Suggested Citation

  • Juan RosellOn, 2001. "The economics of rules of origin," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(4), pages 397-425.
    • Handle: RePEc:taf:jitecd:v:9:y:2001:i:4:p:397-425
    DOI: 10.1080/096381900750056849
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/096381900750056849
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/096381900750056849?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michael L. Mussa, 1984. "The Economics of Content Protection," NBER Working Papers 1457, National Bureau of Economic Research, Inc.
    2. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
    3. Florencio Lopez-de-Silane & James R. Markusen & Thomas F. Rutherford, 1993. "Anti-Competitive and Rent-Shifting Aspects of Domestic-Content Provisions in Regional Trade Blocks," NBER Working Papers 4512, National Bureau of Economic Research, Inc.
    4. Paul Wonnacott & Ronald J. Wonnacott, 1982. "Free Trade between the United States and Canada: Fifteen Years Later," Canadian Public Policy, University of Toronto Press, vol. 8(s1), pages 412-427, October.
    5. Corden, W. M., 1971. "The substitution problem in the theory of effective protection," Journal of International Economics, Elsevier, vol. 1(1), pages 37-57, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mizuno, Tomomichi & Takauchi, Kazuhiro, 2013. "Rules of origin and uncertain cost of compliance," MPRA Paper 44431, University Library of Munich, Germany.
    2. MUKONOKI Hiroshi, 2013. "On the Welfare Effect of FTAs in the Presence of FDIs and Rules of Origin," Discussion papers 13053, Research Institute of Economy, Trade and Industry (RIETI).
    3. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rod Falvey & Geoff Reed, 1998. "Economic effects of rules of origin," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(2), pages 209-229, June.
    2. Kala Krishna & Anne Krueger, 1995. "Implementing Free Trade Areas: Rules of Origin and Hidden Protection," NBER Working Papers 4983, National Bureau of Economic Research, Inc.
    3. Grossman, Gene M & Helpman, Elhanan, 1995. "The Politics of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 85(4), pages 667-690, September.
    4. Louis-Pascal Mahé, 2004. "Compte rendu d'ouvrage - Les apports de l’économie rurale des 20 dernières années à travers le Tome 2 du Handbook of Agricultural Economics," Post-Print hal-01201083, HAL.
    5. Ronald A. Shearer, 1986. "The New Face of Canadian Mercantilism: The Macdonald Commission and the Case for Free Trade," Canadian Public Policy, University of Toronto Press, vol. 12(s1), pages 51-58, February.
    6. Tangermann, S., 1976. "Weltmarktpreise und EG-Agrarpreispolitik," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 13.
    7. Bernard Hoekman & Stefano Inama, 2017. "Rules of Origin as Non-Tariff Measures: Towards Greater Regulatory Convergence," RSCAS Working Papers 2017/45, European University Institute.
    8. Balogun, Emmanuel Dele, 2010. "Rules of Origin in the Africa-EU Strategic Partnership Agreement and Nigeria’s international trade," MPRA Paper 23921, University Library of Munich, Germany.
    9. Marijke J. D. Bos & Gonzague Vannoorenberghe, 2018. "Total factor productivity spillovers from trade reforms in India," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 549-606, May.
    10. Aaditya Mattoo & Devesh Roy & Arvind Subramanian, 2003. "The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?," The World Economy, Wiley Blackwell, vol. 26(6), pages 829-851, June.
    11. Anders, Sven & Harsche, Johannes & Herrmann, Roland & Salhofer, Klaus, 2004. "Regional income effects of producer support under the CAP," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 73.
    12. Low, Patrick, 2014. "Preferentialism in Trade Relations: Challenges for the World Trade Organization," ADBI Working Papers 478, Asian Development Bank Institute.
    13. Richard E. Baldwin, 2011. "Multilateralising Regionalism: Spaghetti Bowls as Building Blocks on the Path to Global Free Trade," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume I, chapter 2, Edward Elgar Publishing.
    14. S. Star, 1975. "In Search of a Rational Immigration Policy," Canadian Public Policy, University of Toronto Press, vol. 1(3), pages 328-342, Summer.
    15. Fred Lazar, 1988. "Survey of Ontario Manufacturing," Canadian Public Policy, University of Toronto Press, vol. 14(1), pages 78-91, March.
    16. Stéphane Bécuwe & Bertrand Blancheton, 2020. "French textile specialisation in long run perspective (1836–1938): trade policy as industrial policy," Business History, Taylor & Francis Journals, vol. 62(6), pages 891-914, August.
    17. Medalla, Erlinda M. & Balboa, Jenny D., 2009. "ASEAN Rules of Origin: Lessons and Recommendations for Best Practice," Discussion Papers DP 2009-36, Philippine Institute for Development Studies.
    18. David Tsirekidze, 2021. "Global supply chains, trade agreements and rules of origin," The World Economy, Wiley Blackwell, vol. 44(11), pages 3111-3140, November.
    19. Kym Anderson & Rod Tyers, 1986. "Agricultural Policies of Industrial Countries and their Effects on Traditional Food Exporters," The Economic Record, The Economic Society of Australia, vol. 62(4), pages 385-399, December.
    20. M.A. Marais, 1992. "The Cost of Protection to Western Australia," Economics Discussion / Working Papers 92-27, The University of Western Australia, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:9:y:2001:i:4:p:397-425. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RJTE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.