Reforming Rules of Origin - New working paper

While rules of origin (ROOs) constitute an essential element of preferential trade agreements (PTAs), recent analysis of the utilization of preferences shows that even with liberal ROOs, utilization of preferences is often low, especially by smaller exporters. To overcome the negative implications of ROOs, we propose a way to increase the welfare benefits from PTAs while also providing a stronger impetus to the integration of SMEs into regional trade than would be possible under even the most favourable ROOs regime currently in use: the presumption of origin. It involves a presumption of compliance with ROOs for smaller commercial-scale shipments accompanied by a simple good faith attestation of origin, with use of anti-circumvention measures modelled on similar provisions in anti-dumping and countervailing duty law to address complaints and/or to investigate suspicious import surges.

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