Rules of origin and the profitability of trade deflection

• 成果类型: Article
• 署名作者: Felbermayr, Gabriel; Teti, Feodora; Yalcin, Erdal
• 署名单位: Leibniz Association; Institut fur Weltwirtschaft an der Universitat Kiel (IFW); Leibniz Association; Ifo Institut; University of Munich; HTWG Hochschule Konstanz University of Applied Sciences; Leibniz Association; Ifo Institut; University of Kiel
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2019.07.003
• 发表日期: 2019
• 关键词: Trade deflection; Rules of origin; External tariffs; Free trade agreements

摘要

When a country grants preferential tariffs to another, either reciprocally in a free trade agreement (FTA) or unilaterally, rules of origin (Roos) are defined to determine whether a product is eligible for preferential treatment. RoOs exist to avoid that exports from third countries enter through the member with the lowest tariff (trade deflection). However, RoOs distort exporters' sourcing decisions and burden them with red tape. Using a global data set, we show that, for 86% of all bilateral product-level comparisons within FTAs, trade deflection is not profitable because external tariffs are rather similar and transportation costs are non-negligible; in the case of unilateral trade preferences extended by rich countries to poor ones that ratio is a striking 98%. The pervasive and unconditional use of RoOs is, therefore, hard to rationalize. (C) 2019 Published by Elsevier B.V.