By Olivier Cadot, Antoni Estavadeoral, Akiko Suwa Eisenmann, Thierry Verdier

This e-book appears at principles of starting place in preferential buying and selling agreements and their transforming into significance in alternate negotiations. The book's message is that principles of starting place can act as robust boundaries to alternate and feature been intentionally used as such.

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Extra info for The Origin of Goods: Rules of Origin in Regional Trade Agreements (Centre for Economic Policy Research)

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21 Understanding Rules of Origin the length of the phase in. Also, that the length of time in the phase-in period depends on the negotiated RoO, as well as other exogenous factors. Estevadeordal (2000) estimates such a model and argues that RoO are being used to prevent trade deflection as the sectors that have large differences in tariffs between the partners are those where RoO are strongest. Moreover, that protection and the extent of RoO are positively correlated. Sectors with long phase-in periods are also the sectors with high predicted RoO suggesting that the same forces drive both.

See, however, Shy and Stenbacka (2003a) for a discussion on the possibility of the alternative situation. 6 It can be shown that this will be true when c00 (Sh ); v000 (:) and vi00 (:) are large enough. 5 39 Impact of Rules of Origin on strategic outsourcing: an IO perspective Sh Sm Rh Rh Sf Sm Sh9 Fig. 1 Reaction curve of outsourcing. firm h goes down. This, in turn, reduces firm h’s marginal profitability to outsource intermediate tasks and leads to a reduction in Sh . The reverse effects occur when Sh0 > Sm .

B also produces it domestically so that the domestic price in B equals the domestic unit cost of production, which equals the world price as we assume that the tariff in B is zero. Country A has a positive tariff on the good, and for simplicity assume A has no domestic production. All tariffs are constant across suppliers,13 though members of an FTA get preferential treatment. An FTA member firm interested in selling its products in the partner country has the choice of meeting the RoO and having zero tariffs levied on it, but having higher costs of production (as well as further documentation costs that the RoO has been met),14 and not meeting it and paying the tariff.

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