From Final Goods to Inputs: The Protectionist Effect of Rules of Origin
AbstractRecent decades have witnessed a surge of trade in intermediate goods and a proliferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those originating from third countries. We focus on the North American Free Trade Agreement (NAFTA), the world's largest FTA, and construct a unique dataset that allows us to map the input-output linkages in its RoO. Exploiting cross-product and cross-country variation in treatment over time, we show that NAFTA RoO led to a sizable reduction in imports of intermediate goods from third countries relative to NAFTA partners.
CitationConconi, Paola, Manuel García-Santana, Laura Puccio, and Roberto Venturini. 2018. "From Final Goods to Inputs: The Protectionist Effect of Rules of Origin." American Economic Review, 108 (8): 2335-65. DOI: 10.1257/aer.20161151
- F13 Trade Policy; International Trade Organizations
- F15 Economic Integration
- F23 Multinational Firms; International Business
- L14 Transactional Relationships; Contracts and Reputation; Networks
- O19 International Linkages to Development; Role of International Organizations