Mapping and comparing Rules of Origin across Regional Trade Agreements with ITC’s Rules of Origin Facilitator
Résumé
An explosion of different Rules of Origin (ROO) has accompanied the spread of Preferential Trade
Agreements (PTAs) around the world. Often tailor-made, these ROO are there to prevent trade
deflection and transshipment. For developing countries, protection of regional producers of intermediate
products in supply chains can be an important — if not the main — objective of PTAs, most often
reciprocal Free Trade Areas (FTAs). Complying with ROO requirements entails costs. Observers, firms,
customs officials and policy-makers have advocated harmonization and simplification of these ROO.
The paper presents the Rule of Origin Facilitator (ROF) database developed at the International Trade
Centre (ITC). Currently, the ROF contains all the texts describing ROO for 370 Preferential Trade
Agreements (PTAs). These PTAs have 30 distinct Regime-wide (RW) rules and over 50,000 distinct
Product Specific Rules (PSRs). Classifying PSRs by aggregating them into a small number of groups
is a necessary first step prior to analysing the associated compliance costs.
This paper introduces observation-based metrics to examine the extent of differences across products
within a PTA and between PTAs, a first step prior to harmonization. Two indices are used to measure
similarity: (i) wording using text analysis; (ii) overlap using regulatory distance. These metrics are
applied to RW and PSRs for six PTAs: ASEAN, SAFTA, MERCOSUR, SADC, EUROMED and NAFTA.
This choice ensures geographic coverage and is representative of the diversity of ROO around the
world. The same menu of RW rules prevails across PTAs for origin provisions but greater diversity is
found across the selection of certification provisions. Comparing origin and certification provisions for
RW rules across the PTAs suggests that the Asian PTAs have more ‘user-friendly’ criteria. The great
diversity in PSRs across products within PTAs and across PTAs presents a challenge for summarizing
similarity, starting with aggregating the distinct PSRs into a small number (20) of categories of PSRs.
Except for SAFTA, there is great disparity across sectors and countries over the three dimensions used
to classify PSRs (frequency, coverage and distribution of preferential margins).