Best practices for regional trade agreements
- Authors
- Park, Innwon; Park, Soonchan
- Issue Date
- 6월-2011
- Publisher
- SPRINGER
- Keywords
- Regional trade agreements; Rules of origin; Gravity; GATT Article XXIV; Enabling Clause
- Citation
- REVIEW OF WORLD ECONOMICS, v.147, no.2, pp.249 - 268
- Indexed
- SSCI
SCOPUS
- Journal Title
- REVIEW OF WORLD ECONOMICS
- Volume
- 147
- Number
- 2
- Start Page
- 249
- End Page
- 268
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/112362
- DOI
- 10.1007/s10290-010-0081-7
- ISSN
- 1610-2878
- Abstract
- Complicated web of hub-and-spoke type of overlapping free trade agreements (FTAs) can result in high costs for verifying rules of origin (RoO) and trade diversion or suppression effects. This paper attempts to provide best practices for regional trade agreements (RTAs) to enhance global free trade by mitigating these negative effects. By adopting a gravity regression analysis, we quantitatively estimate the trade creation and diversion effects of cumulated RoO (bilateral, diagonal, and full cumulation) for RTAs established under GATT Article XXIV and under the Enabling Clause. We find that (i) RTAs, in general, create trade among members and divert trade from nonmembers, whereby the net trade-enhancing effect is rather weak; (ii) RTAs should be established under the comprehensive GATT Article XXIV, rather than the piecemeal Enabling Clause; and (iii) full cumulation is the most optimal provision in terms of creating the most intra-bloc trade and diverting the least extra-bloc trade. Overall, we strongly suggest that RTAs should employ full cumulation of RoO under GATT Article XXIV.
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Collections - Division of International Studies > Division of International Studies > 1. Journal Articles
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