Jointly implemented by the International Centre for Trade and Sustainable Development (ICTSD) and the Inter-American Development Bank (IDB), the RTA Exchange works in the interest of the sharing of ideas, experiences to date and best practices to harvest innovation from RTAs and leverage lessons learned towards progress at the multilateral level. This report provides an analysis and evaluation of rules of origin (RoO) in the context of regional trade agreements (RTAs) and the multilateral system. The number of bilateral and plurilateral trade agreements, and preferential trading schemes has increased dramatically over the past two decades. These agreements effectively enable today’s international production-sharing possibilities and are at the centre of developments in supply chains and the fragmentation of value-addition. The rules of origin contained within RTAs therefore have significant implications in the way firms choose the locations in which they set up segments of their production. Consequently, strict RoO can result in economically sub-optimal functioning of value chains by disincentivising the use of cheaper parts and materials from third countries. Strict and diverse RoO also affect the ability of developing countries – especially the least-developed countries (LDCs) – to fully benefit from the enhanced market access granted through RTAs. The RTA...
Written by Jeremy T. Harris