DP4998 Product Specific Rules of Origin in EU and US Preferential Trading Agreements: An Assessment

Author(s): Olivier Cadot, Céline Carrère, Jaime de Melo, Bolormaa Tumurchudur
Publication Date: April 2005
Keyword(s): costs, NAFTA, PANEURO, rules of origin
JEL(s): F13, F15
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4998

Building on earlier work by Estevadeordal, we construct a synthetic index (R-index) intending to capture the restrictiveness on market access due to product specific rules of origin (PSRO) that apply at the tariff-line level. The R-index is constructed for rules of origins under NAFTA and under the single list applying to PANEURO, the new regime applying to all EU preferential trade agreements. The R-index highlights how identical PSRO have different impacts across countries, and how the complexity of PSRO varies across sectors. Having controlled for the extent of tariff preference at the tariff-line level, the R-index contributes to account for differences in utilization rates at the tariff line level. The index is then used to assess composition effects across countries subjected to some set of PSRO and to compute estimates of the compliance costs associated with rules of origin under both regimes.