"Rules of Origin" are an integral part of the legal trading architecture. Complex and diverse, it sure is a challenge to beginners. It asks the basic question - where are you from, dear goods?! I haven't blogged about this a lot and not an expert on this specialized area.
However came across this excellent guide in the context of Sweden on how rules of origin impact trade and volumes. Titled "Do Rules of Origin Rule Free Trade", this National Board of Trade Sweden publication is a must read for free trade agreement enthusiasts.
Do the rules enhance trading volumes? Do they have any impact at all. The report attracted ny attention for the simplicity yet complex analysis of a difficult subject. Simple explanations are a sign of mastery over complex subjects. this sure was one for me.
Sample this by one of the authors Christopher Wingard:
Rules of origin establish if goods are eligible for preferential tariffs, by making sure that a sufficient amount of production is done within the FTA. By requiring that production takes place within the FTA, the rules of origin also close the door on goods coming from countries outside the free trade agreement. They are a necessary part of any free trade agreement that includes some form of tariff reduction.
The reports findings, inter alia:
There is a pattern of heterogeneity across the agreements. One rule that is associated with low preference utilisation in one agreement can be associated with high preference utilisation in another. This variation is probably because all trade agreements are negotiated based on the unique set of economic and political circumstances between the parties in question. Variation is in other words not a bug; it is a feature.
Again, a classic example that what is written in the rule book may not play out the way it was intended to. Also how much trade agreements, like investment agreements, actually influence trading patterns is a moot question. This report is a step in finding solutions in that direction.
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