IDEAS home Printed from https://ideas.repec.org/p/hhs/nhheco/2021_010.html
   My bibliography  Save this paper

Divergent Integration

Author

Listed:
  • Haaland, Jan I.

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Wooton, Ian

    (Department of Economics, Strathclyde Business School, University of Strathclyde.)

Abstract

Trade liberalisation is often characterised as either preferential or non-discriminatory but not all preferential trade agreements are the same. We focus on non-tariff measures that can constitute barriers to trade and that differ between free-trade agreements (FTAs) and customs unions (CUs). In particular, we investigate the role of rules of origin (RoO) in restricting market access for nations excluded from a CU. We develop a simple general equilibrium model characterised by trade in intermediate and final products and use this to examine the implications of binding RoO in an FTA on market outcomes and the welfare of agents in the economy. We highlight the phenomenon of “induced trade diversion” where RoO can result in countries losing from preferential market access.

Suggested Citation

  • Haaland, Jan I. & Wooton, Ian, 2021. "Divergent Integration," Discussion Paper Series in Economics 10/2021, Norwegian School of Economics, Department of Economics.
  • Handle: RePEc:hhs:nhheco:2021_010
    as

    Download full text from publisher

    File URL: https://hdl.handle.net/11250/2738260
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
    2. 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.
    3. Olivier Cadot & Antoni Estevadeordal & Akiko Suwa-Eisenmann & Thierry Verdier, 2006. "The Origin of Goods: Rules of Origin in Regional Trade Agreements," Post-Print halshs-00754856, HAL.
    4. Chung, Wanyu & Perroni, Carlo, 2020. "Rules of Origin and Market Power," CAGE Online Working Paper Series 504, Competitive Advantage in the Global Economy (CAGE).
    5. Paola Conconi & Manuel García-Santana & Laura Puccio & Roberto Venturini, 2018. "From Final Goods to Inputs: The Protectionist Effect of Rules of Origin," American Economic Review, American Economic Association, vol. 108(8), pages 2335-2365, August.
    6. Krueger, Anne O., 1997. "Free trade agreements versus customs unions," Journal of Development Economics, Elsevier, vol. 54(1), pages 169-187, October.
    Full references (including those not matched with items on IDEAS)

    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. Bernard Hoekman & Stefano Inama, 2017. "Rules of Origin as Non-Tariff Measures: Towards Greater Regulatory Convergence," RSCAS Working Papers 2017/45, European University Institute.
    2. Felbermayr, Gabriel & Teti, Feodora & Yalcin, Erdal, 2019. "Rules of origin and the profitability of trade deflection," Journal of International Economics, Elsevier, vol. 121(C).
    3. Matthew Shearer & Kati Suominen & Antoni Estevadeordal, 2009. "Multilateralising RTAs in the Americas: State of Play and Ways Forward," IDB Publications (Working Papers) 9300, Inter-American Development Bank.
    4. Georges, Patrick & Mérette, Marcel, 2011. "Trade Diversification Away from the U.S. or North American Customs Union? A Review of Canada’s Trade Policy Options," Conference papers 332084, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Shearer, Matthew & Suominen, Kati & Estevadeordal, Antoni, 2009. "Multilateralising RTAs in the Americas: State of Play and Ways Forward," IDB Publications (Working Papers) 2522, Inter-American Development Bank.
    6. Patrick Georges, 2017. "Canada’s Trade Policy Options under Donald Trump: NAFTA’s rules of origin, Canada-U.S. security perimeter, and Canada’s geographical trade diversification opportunities," Working Papers 1707E, University of Ottawa, Department of Economics.
    7. Patrick Georges, 2010. "Dispensing with NAFTA Rules of Origin? Some Policy Options," The World Economy, Wiley Blackwell, vol. 33(11), pages 1606-1637, November.
    8. Patrick Georges, 2009. "Dispensing with NAFTA Rules of Origin? Some Policy Options for Canada," Working Papers 0904E, University of Ottawa, Department of Economics.
    9. Paola Conconi & Manuel García-Santana & Laura Puccio & Roberto Venturini, 2018. "From Final Goods to Inputs: The Protectionist Effect of Rules of Origin," American Economic Review, American Economic Association, vol. 108(8), pages 2335-2365, August.
    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. Low, Patrick, 2014. "Preferentialism in Trade Relations: Challenges for the World Trade Organization," ADBI Working Papers 478, Asian Development Bank Institute.
    12. 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.
    13. David Tsirekidze, 2021. "Global supply chains, trade agreements and rules of origin," The World Economy, Wiley Blackwell, vol. 44(11), pages 3111-3140, November.
    14. Dinopoulos, Elias & Livanis, Grigorios T. & West, Carol Taylor, 2005. "How Cool is C.O.O.L.?," Working Papers 15658, University of Florida, International Agricultural Trade and Policy Center.
    15. Jaime DE MELO & Ben SHEPHERD, 2018. "The Economics of Non-Tariff Measures: A Primer," Working Papers P212, FERDI.
    16. Kawai, Masahiro & Wignaraja, Ganeshan, 2011. "Asian FTAs: Trends, prospects and challenges," Journal of Asian Economics, Elsevier, vol. 22(1), pages 1-22, February.
    17. Celik, Levent & Karabay, Bilgehan & McLaren, John, 2020. "Fast-track authority: A hold-up interpretation," Journal of International Economics, Elsevier, vol. 127(C).
    18. Teti, Feodora & Felbermayr, Gabriel & Yalcin, Erdal, 2017. "Free Trade Agreements, Customs Unions In Disguise?," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168243, Verein für Socialpolitik / German Economic Association.
    19. Innwon Park & Soonchan Park, 2011. "Best practices for regional trade agreements," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 249-268, June.
    20. Masahiro Kawai & Ganeshan Wignaraja, 2010. "Regional Trade Agreements in Integrating Asia," Chapters, in: Masahiro Kawai & Jong-Wha Lee & Peter A. Petri & Giovanni Capanelli (ed.), Asian Regionalism in the World Economy, chapter 5, Edward Elgar Publishing.

    More about this item

    Keywords

    Preferential trading; non-tariff measures; rules of origin;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:hhs:nhheco:2021_010. 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: Karen Reed-Larsen (email available below). General contact details of provider: https://edirc.repec.org/data/sonhhno.html .

    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.