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The dark side of preferential trade agreements, Rules of Origin
(RoO) are used to determine the eligibility of goods to
preferential treatment. Ostensibly meant to prevent the
trans-shipment of imported products across Free Trade Agreement
borders after superficial screwdriver assembly, they act in reality
as complex and opaque trade barriers. This book provides evidence
strongly suggesting that they do so by intent rather than
accidentally--in other words, that RoOs are policy. Part one draws
insights about the effects of RoOs on cross-border trade and
outsourcing from recent economic theory. Part two reviews the
evidence on RoOs in preferential agreements around the world,
putting together the most comprehensive dataset on RoOs to date.
Part three explores their "political economy"--how special
interests have shaped them and continue to do so. Part four
provides econometric evidence on their costs for exporters and
consequent effects on trade flows. Finally, part five explores how
they affect trade in the developing world where they spread rapidly
and have the potential to do most harm. Beyond the collection of
new evidence and its interpretation in light of recent theory, the
book's overall message for the policy community is that RoOs are a
potentially powerful and new barrier to trade. Rather than being
relegated to closed-door technical meetings, their design should
hold center-stage in trade negotiations.
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