The perverse effect of preferential rules of origins (Paola Conconi, Manuel García Santana, Laura Puccio, Roberto Venturini, VoxEU)

One of the more pernicious barriers to trade in today's world are so-called 'rules of origin' that should help customs officers determine a product's origin, but often serve to raise the cost of importing. In practice, such rules prevent final producers from choosing the most efficient input suppliers around the world. This column investigates the impact of rules of origin in the world's largest free trade agreement, NAFTA, on imports of intermediate goods from non-member countries. The findings show that preferential rules of origin in FTAs can violate GATT rules by substantially increasing the level of protection faced by non-members.

http://www.voxeu.org/article/perverse-effect-preferential-rules-origins