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Impacts of Common Rules of Origin on FTA Utilization

Discussion Papers

No.429

by Kazunobu HAYAKAWA and Nuttawut LAKSANAPANYAKUL
September 2013

ABSTRACT

This paper examines empirically the impacts of sharing rules of origin (RoOs) with other ASEAN+1 free trade agreements (FTAs) on ASEAN-Korea FTA/ASEAN-China FTA utilization in Thai exports in 2011. Our careful empirical analysis suggests that the harmonization of RoOs across FTAs play some role in reducing the costs yielded through the spaghetti bowl phenomenon. In particular, the harmonization to “change-in-tariff classification (CTC) or real value-added content (RVC)” will play a relatively positive role in not seriously discouraging firms’ use of multiple FTA schemes. On the other hand, the harmonization to CTC or CTC&RVC hinders firms from using those schemes.



Keywords: Free trade agreement, rules of origin, spaghetti bowl phenomenon
JEL classification: F10; F13; F15

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