Citation

Discussion Paper Details

Please find the details for DP16040 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Divergent Integration

Author(s): Jan I. Haaland and Ian Wooton

Publication Date: April 2021

Keyword(s): Non-Tariff Measures, Preferential trading and Rules of origin

Programme Area(s): International Trade and Regional Economics

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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=16040

Bibliographic Reference

Haaland, J and Wooton, I. 2021. 'Divergent Integration'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=16040