Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA
Rules of origin are legitimate policy instruments to prevent trade deflection in a preferential trade agreement short of a customs union. Trade deflection takes place when a product imported into the preferential trade agreement through the member...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090227085315 http://hdl.handle.net/10986/4044 |
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okr-10986-40442021-04-23T14:02:14Z Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA Portugal-Perez, Alberto ACCOUNTING APPAREL APPAREL EXPORTS BENCHMARK BILATERAL CUMULATION BLOC TARIFFS CAPTIVE MARKETS CHECKS COMMODITY DESCRIPTION COMPARATIVE ADVANTAGE COMPETITIVE ADVANTAGE COMPETITIVENESS CONTRACTING PARTIES CUSTOMS CUSTOMS UNION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DOMESTIC PRODUCERS DUMMY VARIABLES DUTY DRAWBACK DUTY DRAWBACKS ECONOMETRIC ESTIMATES ECONOMETRICS ECONOMIC IMPLICATIONS ECONOMIC JUSTIFICATION ECONOMICS RESEARCH EXPECTED VALUE EXPORT COSTS EXPORT DIVERSIFICATION EXPORT SECTOR EXPORT SUBSIDIES EXPORT-ORIENTED INDUSTRIES EXPORTER EXPORTERS EXPORTS EXTERNAL TARIFF FINANCIAL SUPPORT FREE TRADE FREE TRADE AGREEMENT FREE TRADE AGREEMENTS FREE TRADE AREA GENERALIZED SYSTEM OF PREFERENCES GLOBAL ECONOMY HOMOGENEOUS GOODS IMPORT PENETRATION IMPORT TARIFFS IMPORTING COUNTRY IMPORTS INDUSTRIALIZATION INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERMEDIATE MARKETS INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL LAW INTERNATIONAL TRADE LOBBYING MARKET ACCESS MOST FAVORED NATION NON-TARIFF BARRIERS PARTICIPATION CONSTRAINT POLICY RESEARCH POLITICAL ECONOMY POTENTIAL BENEFITS PREFERENTIAL ACCESS PREFERENTIAL MARKET ACCESS PREFERENTIAL RATES PREFERENTIAL TARIFF PREFERENTIAL TRADE PREFERENTIAL TRADE AGREEMENT PREFERENTIAL TRADE AGREEMENTS PREFERENTIAL TRADING ARRANGEMENTS PRODUCT DIFFERENTIATION PRODUCTION COSTS PRODUCTION PROCESS PROTECTIONISM PROTECTIONIST PROTECTIONIST DEVICES QUANTITATIVE RESTRICTIONS REGIONAL INTEGRATION REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONAL VALUE CONTENT RENEGOTIATION RULES OF ORIGIN STATISTICAL DATA TARIFF BARRIERS TARIFF CLASSIFICATION TARIFF DATA TARIFF ESCALATION TARIFF LINE TARIFF LINES TARIFF PREFERENCES TARIFF REVENUE TRADE COSTS TRADE DEFLECTION TRADE FACILITATION TRADE POLICY TRADE PREFERENCES TRADE PROTECTION TRADE REGIMES TRADE VOLUMES TRADING TRANSPARENCY TRUST FUND UNEMPLOYMENT VALUE ADDED WORLD TRADE Rules of origin are legitimate policy instruments to prevent trade deflection in a preferential trade agreement short of a customs union. Trade deflection takes place when a product imported into the preferential trade agreement through the member with the lowest external tariff is transhipped to a higher-tariff member, while yielding a benefit for the re-exporter. Yet, when captured by special interest groups, rules of origin can restrict trade beyond what is needed to prevent trade deflection. By how much do political economy factors account for the stringency of rules of origin? This study quantifies the impact of both determinants - those considered "justifiable" because they prevent trade deflection and those deemed to arise from "political economy" forces - on the restrictiveness of rules of origin under the North American Free Trade Agreement, approximated by a restrictiveness index. The main finding is that political economy forces, especially from the United States, raised significantly the restrictiveness of the rules of origin. Indeed, in industries where political-economy forces were strong prior to the North American Free Trade Agreement, as when the U.S. Most Favored Nation tariff was high or the revealed comparative advantage of Mexico (the United States) was strong (weak), more stringent rules of origin were introduced. Thus, stricter rules of origin are associated with higher production costs reducing the potential benefits of enhanced market access that is initially pursued by this type of agreement. 2012-03-19T19:08:59Z 2012-03-19T19:08:59Z 2009-02-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090227085315 http://hdl.handle.net/10986/4044 English Policy Research working paper ; no. WPS 4848 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING APPAREL APPAREL EXPORTS BENCHMARK BILATERAL CUMULATION BLOC TARIFFS CAPTIVE MARKETS CHECKS COMMODITY DESCRIPTION COMPARATIVE ADVANTAGE COMPETITIVE ADVANTAGE COMPETITIVENESS CONTRACTING PARTIES CUSTOMS CUSTOMS UNION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DOMESTIC PRODUCERS DUMMY VARIABLES DUTY DRAWBACK DUTY DRAWBACKS ECONOMETRIC ESTIMATES ECONOMETRICS ECONOMIC IMPLICATIONS ECONOMIC JUSTIFICATION ECONOMICS RESEARCH EXPECTED VALUE EXPORT COSTS EXPORT DIVERSIFICATION EXPORT SECTOR EXPORT SUBSIDIES EXPORT-ORIENTED INDUSTRIES EXPORTER EXPORTERS EXPORTS EXTERNAL TARIFF FINANCIAL SUPPORT FREE TRADE FREE TRADE AGREEMENT FREE TRADE AGREEMENTS FREE TRADE AREA GENERALIZED SYSTEM OF PREFERENCES GLOBAL ECONOMY HOMOGENEOUS GOODS IMPORT PENETRATION IMPORT TARIFFS IMPORTING COUNTRY IMPORTS INDUSTRIALIZATION INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERMEDIATE MARKETS INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL LAW INTERNATIONAL TRADE LOBBYING MARKET ACCESS MOST FAVORED NATION NON-TARIFF BARRIERS PARTICIPATION CONSTRAINT POLICY RESEARCH POLITICAL ECONOMY POTENTIAL BENEFITS PREFERENTIAL ACCESS PREFERENTIAL MARKET ACCESS PREFERENTIAL RATES PREFERENTIAL TARIFF PREFERENTIAL TRADE PREFERENTIAL TRADE AGREEMENT PREFERENTIAL TRADE AGREEMENTS PREFERENTIAL TRADING ARRANGEMENTS PRODUCT DIFFERENTIATION PRODUCTION COSTS PRODUCTION PROCESS PROTECTIONISM PROTECTIONIST PROTECTIONIST DEVICES QUANTITATIVE RESTRICTIONS REGIONAL INTEGRATION REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONAL VALUE CONTENT RENEGOTIATION RULES OF ORIGIN STATISTICAL DATA TARIFF BARRIERS TARIFF CLASSIFICATION TARIFF DATA TARIFF ESCALATION TARIFF LINE TARIFF LINES TARIFF PREFERENCES TARIFF REVENUE TRADE COSTS TRADE DEFLECTION TRADE FACILITATION TRADE POLICY TRADE PREFERENCES TRADE PROTECTION TRADE REGIMES TRADE VOLUMES TRADING TRANSPARENCY TRUST FUND UNEMPLOYMENT VALUE ADDED WORLD TRADE |
| spellingShingle |
ACCOUNTING APPAREL APPAREL EXPORTS BENCHMARK BILATERAL CUMULATION BLOC TARIFFS CAPTIVE MARKETS CHECKS COMMODITY DESCRIPTION COMPARATIVE ADVANTAGE COMPETITIVE ADVANTAGE COMPETITIVENESS CONTRACTING PARTIES CUSTOMS CUSTOMS UNION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DOMESTIC PRODUCERS DUMMY VARIABLES DUTY DRAWBACK DUTY DRAWBACKS ECONOMETRIC ESTIMATES ECONOMETRICS ECONOMIC IMPLICATIONS ECONOMIC JUSTIFICATION ECONOMICS RESEARCH EXPECTED VALUE EXPORT COSTS EXPORT DIVERSIFICATION EXPORT SECTOR EXPORT SUBSIDIES EXPORT-ORIENTED INDUSTRIES EXPORTER EXPORTERS EXPORTS EXTERNAL TARIFF FINANCIAL SUPPORT FREE TRADE FREE TRADE AGREEMENT FREE TRADE AGREEMENTS FREE TRADE AREA GENERALIZED SYSTEM OF PREFERENCES GLOBAL ECONOMY HOMOGENEOUS GOODS IMPORT PENETRATION IMPORT TARIFFS IMPORTING COUNTRY IMPORTS INDUSTRIALIZATION INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERMEDIATE MARKETS INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL LAW INTERNATIONAL TRADE LOBBYING MARKET ACCESS MOST FAVORED NATION NON-TARIFF BARRIERS PARTICIPATION CONSTRAINT POLICY RESEARCH POLITICAL ECONOMY POTENTIAL BENEFITS PREFERENTIAL ACCESS PREFERENTIAL MARKET ACCESS PREFERENTIAL RATES PREFERENTIAL TARIFF PREFERENTIAL TRADE PREFERENTIAL TRADE AGREEMENT PREFERENTIAL TRADE AGREEMENTS PREFERENTIAL TRADING ARRANGEMENTS PRODUCT DIFFERENTIATION PRODUCTION COSTS PRODUCTION PROCESS PROTECTIONISM PROTECTIONIST PROTECTIONIST DEVICES QUANTITATIVE RESTRICTIONS REGIONAL INTEGRATION REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONAL VALUE CONTENT RENEGOTIATION RULES OF ORIGIN STATISTICAL DATA TARIFF BARRIERS TARIFF CLASSIFICATION TARIFF DATA TARIFF ESCALATION TARIFF LINE TARIFF LINES TARIFF PREFERENCES TARIFF REVENUE TRADE COSTS TRADE DEFLECTION TRADE FACILITATION TRADE POLICY TRADE PREFERENCES TRADE PROTECTION TRADE REGIMES TRADE VOLUMES TRADING TRANSPARENCY TRUST FUND UNEMPLOYMENT VALUE ADDED WORLD TRADE Portugal-Perez, Alberto Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 4848 |
| description |
Rules of origin are legitimate policy
instruments to prevent trade deflection in a preferential
trade agreement short of a customs union. Trade deflection
takes place when a product imported into the preferential
trade agreement through the member with the lowest external
tariff is transhipped to a higher-tariff member, while
yielding a benefit for the re-exporter. Yet, when captured
by special interest groups, rules of origin can restrict
trade beyond what is needed to prevent trade deflection. By
how much do political economy factors account for the
stringency of rules of origin? This study quantifies the
impact of both determinants - those considered
"justifiable" because they prevent trade
deflection and those deemed to arise from "political
economy" forces - on the restrictiveness of rules of
origin under the North American Free Trade Agreement,
approximated by a restrictiveness index. The main finding is
that political economy forces, especially from the United
States, raised significantly the restrictiveness of the
rules of origin. Indeed, in industries where
political-economy forces were strong prior to the North
American Free Trade Agreement, as when the U.S. Most Favored
Nation tariff was high or the revealed comparative advantage
of Mexico (the United States) was strong (weak), more
stringent rules of origin were introduced. Thus, stricter
rules of origin are associated with higher production costs
reducing the potential benefits of enhanced market access
that is initially pursued by this type of agreement. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Portugal-Perez, Alberto |
| author_facet |
Portugal-Perez, Alberto |
| author_sort |
Portugal-Perez, Alberto |
| title |
Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA |
| title_short |
Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA |
| title_full |
Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA |
| title_fullStr |
Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA |
| title_full_unstemmed |
Assessing the Impact of Political Economy Factors on Rules of Origin under NAFTA |
| title_sort |
assessing the impact of political economy factors on rules of origin under nafta |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090227085315 http://hdl.handle.net/10986/4044 |
| _version_ |
1764389653411004416 |