Rules of origin and trade preference utilization among least developed countries

Sytsma, Tobias

doi:10.1111/coep.12529

Cited by 17 publications

(16 citation statements)

References 46 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…These factors include the preference erosion[14] that stems from both the greater liberalization [15] of most favoured nations (MFN) tariffs (in particular since the creation of the WTO) and the end of multi-bre agreement (e.g., Inama, 2003;Klasen et al, 2021;Low et al, 2009;Persson, 2015b); domestic economic policies, including trade policies [16] and the real exchange rate policies [17]; the limited supply response capacity of bene ciary countries (e.g., Gradeva and Martínez-Zarzoso 2016;Low et al, 2009;Prowse, 2010;Yannopoulos, 1986Yannopoulos, , 1987; the inadequate product coverage (e.g., Low et al, 2009;Persson, 2015b); the existence of restrictive rules of origin as well as other compliance costs by the bene ciary countries when claiming a NRTP (e.g., Brenton and Özden 2009;Gitli, 1995;Persson, 2015b;WTO, 2019); and the lack of certainty or stability of the improved market access brought about by the NRTP (e.g., Hakobyan, 2020;Persson, 2015b). For example, concerning the rules of origin, the literature has shown that restrictive 'preferential' rules of origin can constrain the bene ts of tariff preference margins (e.g., Cadot et al, 2014) by leading to a misallocation of resources (e.g., Falvey and Reed, 1998;Mattoo et al, 2003) and ultimately undermining the utilization of NRTPs (Hakobyan, 2015;Herz and Wagner, 2011;Inama, 2003;Sytsma, 2021;WTO, 2019). WTO (2019) has explored the rationale for the low rates of preference utilization for several agricultural exports under many NRTPs, despite the simple feature of agricultural products, and the fact that these products are subject to simple rules of origin.…”

Section: Theoretical Discussionmentioning

confidence: 99%

Effect of the Utilization of Unilateral Trade Preferences on Foreign Direct Investment flows to Beneficiary Countries

Gnangnon

2021

Preprint

View full text Add to dashboard Cite

This article has explored the effect of non-reciprocal trade preferences (NRTPs) offered by the QUAD countries to developing countries on the foreign direct investment (FDI) flows to these developing countries. The analysis has used an unbalanced panel dataset of 108 beneficiary countries of NRTPs over the period 2002-2019. By means of the two-step system GMM, it has established that low utilization rates of GSP programs are associated with greater FDI flows to less advanced beneficiary countries, including, least developed countries (LDCs). However, high utilization rates of GSP programs induces greater FDI flows to advanced beneficiary countries, including NonLDCs. In addition, low (high) utilization rates of other trade preferences generate higher FDI flows to less advanced beneficiary countries (relatively advanced countries). The analysis has also shown that GSP programs and other trade preferences are strongly complementary in enhancing FDI inflows, especially for high utilization rates of other trade preferences programs. The utilization of each of these two blocks of NRTPs induces greater FDI flows to countries that endeavour to export increasingly complex products, or those with lower dependence on natural resources. Finally, the utilization of NRTPs generates higher FDI inflows to countries that substantially liberalize their trade regimes. JEL Classification: F13; F14; F20.

show abstract

Section: Theoretical Discussionmentioning

confidence: 99%

Effect of the Utilization of Unilateral Trade Preferences on Foreign Direct Investment flows to Beneficiary Countries

Gnangnon

2021

Preprint

View full text Add to dashboard Cite

show abstract

“…For supporting evidence on non-reciprocal ROO see de Melo and Portugal-Perez (2014) for AGOA and Brunelin et al (2019) for Jordan's exports to the EU and US. For EBA, see and Sytsma (2021a).…”

Section: Firm-level Evidencementioning

confidence: 99%

A Primer on Rules of Origin as Non-Tariff Barriers

Kniahin¹,

Melo²

2022

JRFM

View full text Add to dashboard Cite

An explosion of different preferential rules of origin (PROO) has accompanied the spread of preferential trade agreements (PTAs) around the world. Complying with PROO requirements entail costs for producers, exporters, and customs officials. Observers, firms, customs officials, and policymakers have advocated simplification as well as harmonization. The paper surveys the literature drawing on the extensive database in ITC’s Rules of Origin Facilitator (ROF) database covering 54,000 distinct PROO spread across 370 PTAs to illustrate the issues covered in the literature. We review what we know about the compliance costs associated with PROO requirements. We illustrate these costs graphically and summarize through mathematical decomposition of compliance costs along two dimensions: distortionary costs resulting from the restrictiveness of PROOs and administrative costs. We survey the existing evidence in literature by themes: (i) determinants of the utilisation of preferences; (ii) effects on third countries outside the PTA; (iii) choice of rule; (iv) preference margin and complexity of rules; (v) trade deflection; and (vi) firm-level evidence. In conclusion, drawing lessons from the empirical literature is a complicated exercise because preference uptake, an important indicator of compliance costs, is only available for a handful of PTAs at the disaggregated product level.

show abstract

“…Restrictive preferential rules of origin can constrain the bene ts of tariff preference margins (e.g., Cadot et al, 2014b) and more generally, deter[27] exports, and undermines the utilization of NRTPs (Hakobyan, 2015;Inama, 2003;Sytsma, 2021;WTO, 2019). Building on the case of Vietnam, Doan and Xing (2018) have demonstrated that lenient rules of origin improve countries' export e ciency, de ned as the ratio of actual exports to the maximum possible volume.…”

Section: Issue Of Preferential Rules Of Originmentioning

confidence: 99%

“…[22] Rules of origin specify the minimum level of local transformation (i.e., the amount of local content or processing) required to make manufactured products eligible for preferential tariff treatment (e.g., Cadot et al, 2006;Sytsma, 2021).…”

Section: Issue Of Preferential Rules Of Originmentioning

confidence: 99%

Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Complexity in Beneficiary Countries

Gnangnon

2021

Preprint

View full text Add to dashboard Cite

This article aims to contribute to the nascent literature on the effect of non-reciprocal trade preferences (NRTPs) on industrialization in beneficiary countries. In so doing, it complements the few existing works on the effect of NRTPs on export product diversification by investigating the effect of NRTPs (both the Generalized System of Preferences- GSP programs- and other non-reciprocal trade preferences) offered by the QUAD countries on the level of economic complexity in beneficiary countries. The analysis has relied on 110 beneficiary countries of these NRTPs over the period 2002–2018, and made primarily use of the two-step system Generalized Methods of Moments estimator. The findings are quite interesting. First, beneficiary countries tend to use GSP programs (rather than other trade preferences) to achieve greater economic complexity, and the positive effect of the utilization of GSP programs on economic complexity is higher for high income beneficiary countries than relatively less advanced beneficiary countries. Second, both GSP programs and other non-reciprocal trade preferences are strongly complementary in promoting economic complexity in beneficiary countries, in particular if their usage reach high levels. Third, the utilization of NRTPs enhances economic complexity in countries that receive high foreign direct investment flows. Finally, development aid flows are strongly complementary with the utilization of NRTPs in fostering economic complexity in beneficiary countries, especially for high amounts of development aid. This suggests the need for preference-granting countries (that are also suppliers of development aid) to offer both generous NRTPs and higher development aid flows if those NRTPs are to be effective in expanding the manufacturing base in the beneficiary countries.Jel Classification: F13; F14; O14.

show abstract

Rules of origin and trade preference utilization among least developed countries

Cited by 17 publications

References 46 publications

Effect of the Utilization of Unilateral Trade Preferences on Foreign Direct Investment flows to Beneficiary Countries

Effect of the Utilization of Unilateral Trade Preferences on Foreign Direct Investment flows to Beneficiary Countries

A Primer on Rules of Origin as Non-Tariff Barriers

Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Complexity in Beneficiary Countries

Contact Info

Product

Resources

About