PUBLICATIONS & REPORTS
PUBLICATIONS & REPORTS
From Kitakyushu to the world: AGI, a research institute that studies Asia's economy and society
Rules of Origin as Strategic Commercial Instruments in a Free Trade Area
| Author | Masaru Umemoto |
|---|---|
| Date of Publication | 2001. 12 |
| No. | 2001-36 |
| Download | 75KB |
Contents Introduction
Rules of origin are a necessary part of every free trade area (FTA), because member countries maintain independent tariff and non-tariff barriers against nonmembers. This paper examines the effects of restrictive rules of origin in a model of oligopoly with quotas on imports from non-members in a FTA in order to investigate the possibility of using rules of origin as a strategic trade policy. Specifically, the ability of firms within the FTA to capture profits and the effect of the FTA on profits of non-member firms is examined. This paper shows that although the restrictiveness of the quota does not change at all, profits earned by firms from non-member countries as a result of the quota are reduced by rules of origin. Key Words: rules of origin, free trade agreements, import quotas.