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Speaker: Professor Paola Conconi (Université Libre de Bruxelles)
Recent decades have witnessed a surge of trade in intermediate goods and a proliferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those originating from third countries. In this paper, we show that the sourcing restrictions embedded in RoO greatly distort trade in intermediates.
We focus on the North American Free Trade Agreement (NAFTA), the world's largest FTA, and construct a unique dataset that allows us to map the input-output linkages in its RoO.
Exploiting cross-product and cross-country variation over time, we find that NAFTA RoO on final goods led to a sizeable reduction in the growth rate of imports of intermediate goods from third countries. Even if external tariffs are unchanged, FTAs may thus violate multilateral trade rules, by substantially increasing the level of protection faced by non-members.
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When & where
3.00pm - 4.30pmWednesday 4th October 2017