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Rules of Origin as Export Subsidies

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  • Cadot, Olivier
  • Estevadeordal, Antoni
  • Suwa-Eisenmann, Akiko

Abstract

The paper estimates the e¤ect 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.

Suggested Citation

  • Cadot, Olivier & Estevadeordal, Antoni & Suwa-Eisenmann, Akiko, 2004. "Rules of Origin as Export Subsidies," Conference papers 331264, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331264
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    Cited by:

    1. Low, Patrick & Piermartini, Roberta & Richtering, Jurgen, 2005. "Multilateral solutions to the erosion of non-reciprocal preferences in NAMA," WTO Staff Working Papers ERSD-2005-05, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Cadot, Olivier & Carrere, Celine & De Melo, Jaime & Tumurchudur, Bolormaa, 2006. "Product-specific rules of origin in EU and US preferential trading arrangements: an assessment," World Trade Review, Cambridge University Press, vol. 5(2), pages 199-224, July.
    3. Tobias Sytsma, 2021. "Rules of origin and trade preference utilization among least developed countries," Contemporary Economic Policy, Western Economic Association International, vol. 39(4), pages 701-718, October.
    4. Davies, Ronald B., 2013. "The silver lining of red tape," Journal of Public Economics, Elsevier, vol. 101(C), pages 68-76.
    5. Portugal-Perez, Alberto, 2009. "Assessing the impact of political economy factors on rules of origin under NAFTA," Policy Research Working Paper Series 4848, The World Bank.
    6. Kevin Gallagher, 2011. "Trading Away Stability and Growth: United States Trade Agreements in Latin America," Working Papers wp266, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Earl L. Grinols & Peri Silva, 2008. "Industrial targeting in free trade areas with policy independence," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 796-816, August.
    8. Sytsma, Tobias, 2019. "Rules of Origin Liberalization with Multi-Product Firms: Theory and Evidence from Bangladeshi Apparel Exporters," MPRA Paper 95956, University Library of Munich, Germany.
    9. Rupa Duttagupta & Arvind Panagariya, 2007. "Free Trade Areas And Rules Of Origin: Economics And Politics," Economics and Politics, Wiley Blackwell, vol. 19(2), pages 169-190, July.

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    More about this item

    Keywords

    International Relations/Trade; International Development;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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