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From Final Goods to Inputs: The Protectionist Effect of Rules of Origin
Paola Conconi, Manuel García-Santana, Laura Puccio, and Roberto Venturini
American Economic Review. Aug 2018, Vol. 108, No. 8: Pages 2335-2365

From Final Goods to Inputs: The Protectionist Effect of Rules of Origin†

Paola Conconi1, Manuel García-Santana2, Laura Puccio3 and Roberto Venturini4

1European Center for Advanced Research in Economics and Statistics (ECARES), Université libre de Bruxelles, Avenue Roosevelt 50, 1050 Bruxelles, Belgium, CEPR, and CESifo (email: )

2Universitat Pompeu Fabra, Department d’Economia i Empresa Ramón Trías-Fargas 25-27, Barcelona, 08005, Spain, Barcelona GSE, and CEPR (email: )

3Université libre de Bruxelles, Avenue Roosevelt 50, 1050 Bruxelles, Belgium (email: )

4Compass Lexecon, Square de Meeûs 23, 1000, Brussels, Belgium (email: )

Abstract

Recent decades have witnessed a surge of trade in intermediate goods and a proliferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those originating from third countries. We focus on the North American Free Trade Agreement (NAFTA), the world’s largest FTA, and construct a unique dataset that allows us to map the input-output linkages in its RoO. Exploiting cross-product and cross-country variation in treatment over time, we show that NAFTA RoO led to a sizable reduction in imports of intermediate goods from third countries relative to NAFTA partners. (JEL F13, F15, F23, L14, O19)