Playing by the Rules? The Development of an Amended Index to Measure the Impact of Rules of Origin on Intra-PTA Trade Flows

Files in This Item:
File Description SizeFormat 
WP12_22.pdf657.7 kBAdobe PDFDownload
Title: Playing by the Rules? The Development of an Amended Index to Measure the Impact of Rules of Origin on Intra-PTA Trade Flows
Authors: Kelleher, Sinéad
Permanent link:
Date: Sep-2012
Abstract: Rules of Origin (RoO) are essential components of any preferential trade agreement (PTA) short of a full customs union. The recent proliferation of PTAs has led to increased interest in the effects of RoO with empirical estimates consistently showing that they act as barriers to intra-PTA trade. However, this paper argues that the indices of RoO restrictiveness currently used in empirical analysis are flawed as they focus solely on product specific RoO and do not incorporate information on regime wide provisions, that is, those rules that apply across all goods in a particular agreement. As such, they do not capture fully the effective restrictiveness of a given RoO. In order to address this issue, this paper weights the Harris Index of RoO restrictiveness by three regime wide provisions; the size of the Cumulation Zone, the de minimis allowance, and certification type. The resulting new measure, the Regime Weighted Harris Index (RWHI), is then each used in both OLS and IV regressions to measure the impact of RoO on intra-PTA trade flows. Across an eleven year panel of 90 country-pairs, a negative effect of RoO on intra-PTA trade is found using OLS. However, the results of an IV regression suggest that the situation is somewhat more complicated, with RoO actually promoting trade flows in certain product groups. This is the first attempt in the literature to develop an instrument for RoO restrictiveness which constitutes a second source of value added for this paper.
Funding Details: Not applicable
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Keywords: Rules of originInternational trade agreementsNontariff barriers
Subject LCSH: Certificates of origin
Commercial treaties
Non-tariff trade barriers
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

Show full item record

Page view(s) 50

checked on May 25, 2018

Download(s) 50

checked on May 25, 2018

Google ScholarTM


This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.