| Abstract: |
Rules of origin are a somehow overlooked but crucial feature of the free trade areas. Although they eliminate the threat of trade deflection, they may also cause significant increase of the compliance costs, resulting from changes of producers’ behavior. In the first part of this work the impact of restrictive rules of origin formulation will be described. In the later part the attention is focused on the rules of origin in the North American Free Trade Area, their specification as well as their impact on trade. We use a new approach of estimation of the compliance costs of the preferential treatment, based on detailed elaboration of the Harmonized Schedule of the United States and de-aggregated import data on HS6 level. Our result suggests that NAFTA’s compliance costs are somewhere between 4.6% and 4.9% percent of the goods import value.
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