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Article
Rules of Origin in North-South Preferential Trade Arrangements with an application to NAFTA
Review of International Economics (2005)
  • Bolormaa Tumurchudur, University of Lausanne
  • Olivier Cadot
  • Antoni Estevadeordal
  • Jaime de Melo
  • Akiko Suwa-Eisenmann
  • Jose Anson
Abstract
All PTAs short of a Customs Unions use Rules of Origin (RoO) to prevent trade deflection. RoO raise production costs and create administrative costs. This paper argues that in the case of the recent wave of North-South PTAs, the presence of RoO virtually limits the market access that these PTAs confer to the Southern partners. In the case of NAFTA, it is estimated that up to 45 % Mexico's preferential access to the US market in 2000 (estimated at 4%) was absorbed by RoO-related administrative costs with non-administrative costs for Mexican firms of about 3% US of import value. These findings are coherent with the view that NOrth-South PTAs could well be viewed like a principal-agent problem in which the Southern partners are just about left on their participation constraint.
Keywords
  • FTAs,
  • PTAs,
  • Rules of origin,
  • NAFTA
Disciplines
Publication Date
August 1, 2005
Citation Information
Bolormaa Tumurchudur, Olivier Cadot, Antoni Estevadeordal, Jaime de Melo, et al.. "Rules of Origin in North-South Preferential Trade Arrangements with an application to NAFTA" Review of International Economics Vol. 13 (2005)
Available at: http://works.bepress.com/ocadot/3/