Rules of Origin under Regional Trade Agreements

It is argued in this paper that both the negotiations and the analytical literature pertaining to Rules of origin (ROO) display a lack of sound understanding of the implications of rules of origin. Developing a comprehensive view on the subject, with a developmental perspective of ROO, could help prevent wastage of negotiating-time, avoid cumbersome procedures and implement the agreements with the intention to reap the economic benefits of ROO. The paper highlights the economics of ROO, focuses on the issue of near-optimum ROO formulation, presents a factual account of ROO as evolved in South Asia, empirically estimates of the effects of ROO on trade in an FTA and finally makes new policy suggestions relating to ROO implementation and enforcement.