Free Trade Areas and Rules of Origin: Economics and Politics
Electronic Access:
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Summary:
Incorporating intermediate inputs into a small-union general-equilibrium model, this paper first develops the welfare economics of preferential trading under the rules of origin (ROO) and then demonstrates that the ROO could improve the political viability of Free Trade Agreements (FTAs). Two interesting outcomes are derived. First, a welfare reducing FTA that was rejected in the absence of the ROO becomes feasible in the presence of these rules. Second, a welfare improving FTA that was rejected in the absence of the ROO is endorsed in their presence, but upon endorsement it becomes welfare inferior relative to the status quo.
Series:
Working Paper No. 2003/229
Subject:
Exports Imports International trade Tariffs Taxes Trade in goods
English
Publication Date:
November 1, 2003
ISBN/ISSN:
9781451875492/1018-5941
Stock No:
WPIEA2292003
Pages:
30
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