infonet-economy

Building on the experience of NAFTA, and assuming that rules of origin (RoO) negotiated under NAFTA are likely to resemble those that would be agreed upon in an FTAA, this paper discusses how different RoO criteria would affect different Southern partners in a multi-stage production setting. Next, we use a combination of parametric and non-parametric methods to estimate the costs of RoO under NAFTA for Mexican exports to US based on NAFTAís utilization rates and preference margins in the US market, at the HS-6 level. Finally, we carry out illustrative simulations for Southern producers to estimate the levels of RoO and tariff preference which leaves these producers indifferent to exporting to Northern members under the regional preferential tariff rate or the MFN rate.