Rules of Origin

Rules of Origin and Regional Trade Agreements

Rules of origin (ROO) have emerged as an area in which consensus is hard to achieve among negotiating countries within an RTA. Disagreements over rules of origin have often deferred the implementation of several trade agreements. One of the reasons for this is because ROO are viewed as those obstructing trade. Most of the literature on the subject too argues that ROO   reduce efficiency costs in production and restrict market access. It is argued in this paper that both the negotiations and the analytical literature pertaining to ROO display a lack of sound understanding of the implications of rules of origin. 
Developing a comprehensive view on the subject, with a developmental perspective of ROO, could help prevent wastage of negotiating-time, avoid cumbersome procedures and implement the agreements with the intention to reap the economic benefits of ROO. The study aims to highlight the economics of ROO,focuses on the issue of near-optimum ROO formulation, present a factual account of  ROO as evolved in RTAs, empirically estimate of the effects of ROO on trade in an FTA and finally make new policy suggestions relating to ROO implementation and enforcement.