The costs and benefits of rules of origin in modern free trade agreements

• 成果类型: Article
• 署名作者: Ornelas, Emanuel; Turner, John L.
• 署名单位: Getulio Vargas Foundation; Centre for Economic Policy Research - UK; Leibniz Association; Ifo Institut; University of London; London School Economics & Political Science; University System of Georgia; University of Georgia
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103874
• 发表日期: 2024
• 关键词: hold-up problem; Sourcing; incomplete contracts; Regionalism

摘要

Rules of origin offer preferred market access for final goods whose inputs originate mostly within a free trade agreement. Governments often champion such rules for boosting investment. We use a property -rights framework to study when this motivation is justifiable. The rule does not bind for all supply chains, as some (very -high -productivity) suppliers comply in an unconstrained way and some (very -low -productivity) suppliers do not comply. For those suppliers it affects, the rule both increases investments and induces excessive sourcing within the trading bloc. From a social standpoint, the best rule binds for relatively high -productivity suppliers, because the marginal net welfare gain from tightening it increases with productivity. Therefore, when industry productivity is high, a strict rule is socially desirable. In contrast, a lenient rule binds for relatively low -productivity suppliers and is more likely to be harmful. For output tariffs that are not too high, a sufficiently strict rule ensures welfare gains.