Publication: Trade Issues in East Asia : Preferential Rules of Origin
Loading...
Date
2007-06
ISSN
Published
2007-06
Author(s)
Editor(s)
Abstract
Rules of origin are a necessary feature of any regional trade agreement. They ensure that preferences are available only to the signatories of the agreement and that imports from non-members do not avoid customs duties by entering through the member with the lowest tariff. The rules of origin define the amount of local processing, or the extent of the transformation of the product, that must be undertaken in the country from which the product claiming preferences is exported. The definition of these requirements to prevent trade deflection is not straightforward. If the rules are too onerous and complex and are costly to comply with, they will limit the impact of tariff reductions on trade. Indeed, import competing industries have often been successful in obtaining restrictive rules of origin that dilute the impact of the loss of tariff protection. This is most apparent in agreements between developed countries and lower wage countries. As FTAs multiply in the region, putting in place rules of origin (ROO) that are simple, transparent, and easy to implement becomes important. The experience in the implementation of the AFTA rules of origin can provide some lessons for the upcoming FTAs.
Link to Data Set
Citation
“World Bank. 2007. Trade Issues in East Asia : Preferential Rules of Origin. © http://hdl.handle.net/10986/19238 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication How Accession to the European Union Has Affected External Trade and Foreign Direct Investment in Central European Economies(World Bank, Washington, DC, 2001-04)The collapse of central planning set in motion the reintegration of the Central European countries into the world economy. The European Union (EU), because of its proximity, economic weight, and policy-induced deep integration, has shaped these countries' politics, and economics. The process of accession to the EU - which began with the signing of the European Association Agreements in 1991 - has influenced their economic institutions, policies, and performance. The author traces the emerging architecture of commercial relations in Europe, and argues that the accession process had its greatest impact on capital flows, and later on good flows. The countries that have benefited most from accession, are those that followed the path of radical liberal reform. Radical liberal reform, combined with preferential access to EU markets, attracted foreign direct investment. The European Union provided an outlet, initially for Central European countries' unskilled-labor intensive products, and more recently for skilled-labor intensive, and technology-based products. Knowledge-intensive imports from the European Union, have also contributed to industrial realignment in the Central European countries. The prospect of accession, and, since 1998, unfettered access to EU markets for industrial products, has given a boost to multinationals, relocating production in these countries.Publication Rules of Origin and the Web of East Asian Free Trade Agreements(World Bank, Washington, DC, 2007-07)The authors provide an overview of the preferential rules of origin in East Asia, highlighting the aspects that might possibly generate some trade-chilling effects. They review characteristics of existing preferential trade agreements with special emphasis on lessons from the European experience, and analyze some important features of the existing rules of origin in East and South-East Asian regional integration agreements. The empirical analysis of the effectiveness of preferentialism on intra-regional trade flows focuses on the ASEAN Free Trade Area (AFTA), with the aim of providing a rough estimate of the costs of requesting preferences. The results suggest that preferential tariffs favorably affect intra-regional imports only at very high margins (around 25 percentage points). This points to the likelihood of high administrative costs attached to the exploitation of preferences, particularly with regard to the compliance with AFTA's rules of origin.Publication Rules of Origin for Preferential Trading Arrangements : Implications for the ASEAN Free Trade Area of EU and U.S. Experience(World Bank, Washington, DC, 2006-09)With free trade areas (FTAs) under negotiation between Japan and the ASEAN Free Trade Area (AFTA) members and between the Republic of Korea and AFTA members, preferential market access will become more important in Asian regionalism. Protectionist pressures will likely increase through rules of origin, the natural outlet for these pressures. Based on the experience of the European Union and the United States with rules of origin, the authors argue that, should these FTAs follow in the footsteps of the EU and the U.S. and adopt similar rules of origin, trading partners in the region would incur unnecessary costs. Using EU trade under the Generalized System of Preferences with Africa, Caribbean, and Pacific partners, the authors estimate how the use of preferences would likely change if AFTA were to veer away from its current uniform rules of origin requiring a 40 percent local content rate. Depending on the sample used, a 10 percentage point reduction in the local value content requirement is estimated to increase the utilization rate of preferences by between 2.5 and 8.2 percentage points.Publication Trade Preferences and Differential Treatment of Developing Countries: A Selective Survey(World Bank, Washington, DC, 2005-04)Nonreciprocal trade preferences and provisions in the GATT/WTO that allow developing countries greater leeway to retain or use protectionist policies are two of the central planks of so-called special and differential treatment (SDT) for developing countries in the multilateral trading system. The authors survey the literature on the rationales, institutional features, and economic effectiveness of SDT. A large literature has emerged on SDT in the past 50 years, by both proponents and opponents. They summarize a number of key contributions on the subject, with a special emphasis on the evaluation of the impact of SDT, especially preferential market access. The issue of SDT has become very topical again, following a period during which it was viewed as an outdated concept for the multilateral trading system. The authors therefore devote attention as well to a number of recent contributions that discuss (1) whether there is a continued need for SDT, and (2) how this might be designed from both a development (recipient) objective and from the perspective of the trading system more generally. A major theme of the survey is that most of the issues that are debated today were already being discussed in the 1960s. The authors conclude that those who questioned the value of unilateral preferences have proven to be prescient.Publication Kazakhstan : Assessment of Costs and Benefits of the Customs(Washington, DC, 2012-11)In 2010, Kazakhstan entered into a customs union with Belarus and Russia. The first, relatively easy step in the implementation of the customs union was accomplished in 2010 with the adoption of a common external tariff, with varying exceptions in each of the three member countries. It is the intention of the customs union to eliminate the exceptions, in phases, by 2015. In fact, the goals of the customs union are much more ambitious than implementation of the common external tariff. The governments of the member countries are working to achieve deep integration in key areas. Clearly, successfully addressing the challenge of reducing trade-facilitation costs is a major task that requires significant institutional development both in Kazakhstan and in the other member countries of the customs union. It is very difficult, however, to assess the probability of success that the customs union will have with the reduction of these costs.
Users also downloaded
Showing related downloaded files
Publication Implementing 30x30(Washington, DC: World Bank, 2025-01-24)The publication of nearly 600,000 new species occurrence maps using Global Biodiversity Information Facility data provides an opportunity to reassess international species protection with broader representation for plants, invertebrates, and other species. This development aligns with the global 30x30 initiative, where 188 governments have committed to expanding terrestrial and marine protection to cover 30 percent of the planet by 2030. This study leverages Global Biodiversity Information Facility occurrence maps to identify new opportunities for species protection in 10 countries in Latin America (Brazil, Costa Rica, and Ecuador), Africa (Cameroon, South Africa, and Madagascar), and the Asia-Pacific region (Papua New Guinea, the Philippines, India, and China). By focusing on individual countries, the paper emphasizes the importance of local conservation stewardship. Both terrestrial and marine cases are analyzed, with particular attention to endemic species. Unlike previous efforts, this approach assigns equal weight to all vertebrates, invertebrates, plants, and other species mapped in the database. A spatially efficient algorithm identifies priority localities for establishing new protected areas to safeguard unprotected species. The findings reveal that initial conditions, such as existing protection levels and the spatial clustering of unprotected species, greatly influence outcomes. Unprotected species are shown to be spatially clustered in some countries but not in others, and the representation of different taxa among unprotected species is found to vary significantly across countries. Some countries can achieve full protection within the 30 percent territorial limit, while others may need to exceed it. However, in all cases, spatial clustering enables significant protection gains through modest expansions of protected areas, demonstrating a path forward for enhancing biodiversity conservation within global commitments.Publication Review and Guidance on ECD Assessment Tools in FCV Contexts(Washington, DC: World Bank, 2025-01-14)By 2030, an estimated two-thirds of the world's extremely poor could be concentrated in countries and contexts characterized by fragility, conflict, and violence (FCV) (World Bank Group, 2020). FCV contexts, affected by humanitarian crises, prolonged emergencies, and armed conflicts, are significant hindrances to poverty reduction and sustainable development. The cycle of instability and violence in these contexts often leads to the destruction of infrastructure and a strain on resources, making it difficult for communities to lift themselves out of poverty and achieve sustainable development goals. The list of FCV contexts includes the World Bank list of countries and territories affected by fragility and conflict situations (FCS), as well as countries suffering from violence and those with large-forcibly displaced populations that are not included in the FCS list. This review aims to describe which early childhood development (ECD) measurement tools have been used in FCV contexts and to serve as a guide for tool selection in these settings. This guidance is intended to assist country teams in identifying appropriate tools for ECD measurement activities, provided that such activities are already recognized as priorities. While parents and caregivers are essential to ECD, particularly in FCV environments, this review does not concern tools that measure adults' well-being or parenting-related outcomes. Instead, it measures children's developmental outcomes and other child-related constructs relevant to FCV contexts. The authors briefly describe the situation of children living in FCV contexts and how it can affect their development. We then make a case for the importance of ECD measurement, the lack of data on ECD in FCV contexts, and the data collection challenges. After that, we provide a deep dive into what was found in the desk review and provide a framework for tool selection. Finally, we present policy recommendations.Publication What are the Main Variables that Influence the Dynamics of Ecuador’s Sovereign Risk?(Taylor & Francis, 2023-01-16)This paper analyzes the determinants of Ecuador’s sovereign spreads as measured by the EMBI index. We use Bayesian algorithms to estimate a structural vector autoregressive model with three blocks (international, regional, and domestic). Global variables drive most of the dynamics of the Ecuadorian EMBI, also influenced by the evolution of sovereign risks in other Latin American countries like Chile and Peru. We likewise show that the increase in public debt is the primary domestic variable affecting the Ecuadorian EMBI.Publication The Exposure of Workers to Artificial Intelligence in Low- and Middle-Income Countries(Washington, DC: World Bank, 2025-02-05)Research on the labor market implications of artificial intelligence has focused principally on high-income countries. This paper analyzes this issue using microdata from a large set of low- and middle-income countries, applying a measure of potential artificial intelligence occupational exposure to a harmonized set of labor force surveys for 25 countries, covering a population of 3.5 billion people. The approach advances work by using harmonized microdata at the level of individual workers, which allows for a multivariate analysis of factors associated with exposure. Additionally, unlike earlier papers, the paper uses highly detailed (4 digit) occupation codes, which provide a more reliable mapping of artificial intelligence exposure to occupation. Results within countries, show that artificial intelligence exposure is higher for women, urban workers, and those with higher education. Exposure decreases by country income level, with high exposure for just 12 percent of workers in low-income countries and 15 percent of workers in lower-middle-income countries. Furthermore, lack of access to electricity limits effective exposure in low-income countries. These results suggest that for developing countries, and in particular low-income countries, the labor market impacts of artificial intelligence will be more limited than in high-income countries. While greater exposure to artificial intelligence indicates larger potential for future changes in certain occupations, it does not equate to job loss, as it could result in augmentation of worker productivity, automation of some tasks, or both.Publication Global Skill Partnerships for Migration(Washington, DC: World Bank, 2025-02-07)Higher-income countries are aging at unprecedented rates, creating skills shortages in critical sectors ranging from healthcare to construction to information technology. At the same time, many lower-income countries are experiencing booming youth populations, but many lack the skills needed to access quality work opportunities both at home and abroad. In Global Skill Partnerships (GSPs), origin and destination countries partner to invest in education and training systems in the origin country to meet skill needs in both countries. Through collaboration and innovation in skills development and migration management, GSPs cost-effectively expand domestic training capacity in the origin while facilitating the benefits of regularized skilled migration. This report reviews the state of knowledge of GSPs, considers terminology and approaches, provides a roadmap for policymakers who want to implement GSPs, and clarifies the role of multilateral development institutions in this pivotal agenda. Various GSP and GSP-like programs and pilots have already been implemented globally and financed through various sources, and this report reviews their essential features, challenges faced, and lessons learned for future initiatives. Before highlighting these examples, the report discusses the current global economic landscape, focusing on demographic and education trends and why they call for international partnerships to invest in education and training for workers to participate in domestic and international markets.