Are different Rules of Origin equally costly? Estimates from NAFTA <sup>†</sup>

Olivier Cadot, Antoni Estevadeordal, Akiko Suwa-Eisenmann and Thierry Verdier

in The Origin of Goods

Published in print February 2006 | ISBN: 9780199290482
Published online May 2006 | e-ISBN: 9780191603471 | DOI:
 Are different Rules of Origin equally costly? Estimates from NAFTA  †

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Using data on the preference and utilization rates of NAFTA for Mexican exports to the United States in 2001, this chapter proposes a method to estimate the likely costs of different Rules of Origin (ROO) for final and intermediate goods, and compares these results with those obtained using the synthetic index proposed by Estevadeordal (2000). Econometric results indicate that changes in tariff classification are more costly for final goods than for intermediate ones, and that technical requirements are the most constraining. For activities subject to regional value content minima, illustrative simulations are carried out to indicate what tariff preference margin would be necessary to compensate for the import content minima. Cost estimates suggest that, at least in the case of NAFTA, preferential market access is quite small, leading to speculations that these conclusions may carry over to other North-South preferential schemes.

Keywords: NAFTA; preference rates; utilization rates; rules of origin; final goods; intermediate goods

Chapter.  9938 words. 

Subjects: International Economics

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