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From final goods to inputs: the protectionist effect of rules of origin

Conconi, Paola, García-Santana, Manuel, Puccio, Laura and Venturini, Roberto (2017) From final goods to inputs: the protectionist effect of rules of origin. CEP Discussion Papers (CEPDP1525). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

Recent 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 sizeable reduction in imports of intermediate goods from third countries relative to NAFTA partners. Even if external tariffs are unchanged, FTAs may thus violate multilateral trade rules, by substantially increasing the level of protection faced by non-members.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2017 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
JEL classification: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
F - International Economics > F5 - International Relations and International Political Economy > F53 - International Agreements and Observance; International Organizations
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 26 Jun 2018 11:24
Last Modified: 06 Apr 2020 23:30
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/88676

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