Heterogeneous Trade Agreements and Adverse Implications of Restrictive Rules of Origin: Evidence from Apparel Trade Academic Article

abstract

• AbstractWe revisit the heterogeneous effects of regional trade agreements (RTAs) using a PPML gravity model and comparing apparel and total trade. Apparel, as a politically sensitive sector, has specialised, unusually restrictive rules of origin (RoOs) clauses that vary considerably across RTAs. Our RTA estimates have a significantly higher variance for apparel trade than total trade. We also find that the sizes of the RTA estimates for apparel trade are significantly and negatively correlated with the restrictiveness of RoOs. Additionally, assessing temporary exceptions to the apparel RoOs in US trade agreements, we find that ending the temporary exceptions is associated with less apparel trade. We further illustrate how RTAs can be effective development policy instruments to promote economic development in developing countries. For example, updating the RoOs in the Dominican RepublicCentral America Free Trade Agreement can create jobs and significantly reduce Central American emigration.

authors

• Robertson, Raymond

published proceedings

• WORLD ECONOMY

author list (cited authors)

• Abreha, K., & Robertson, R.

complete list of authors

• Abreha, Kaleb||Robertson, Raymond

publication date

• December 2023

publisher

• Wiley  Publisher

published in

• World Economy, The  Journal

keywords

• Apparel Trade
• Gravity Model
• Ppml
• Regional Trade Agreements
• Rules Of Origin

Digital Object Identifier (DOI)

• 10.1111/twec.13486

start page

• 3482

end page

• 3510

volume

• 46

issue

• 12

URL

• http://dx.doi.org/10.1111/twec.13486