2005年-世界发展银行全球_Market_Access_and_Welfare_under____________Free_Trade_Agreements___Textiles_under_NAFTA_27页_230kb

Summary: Market Access and Welfare under Free Trade Agreements: Textiles under NAFTA

Core Content

This paper examines the impact of rules of origin on market access and welfare in the textiles and apparel sector under the North American Free Trade Agreement (NAFTA). The focus is on how tariff preferences combined with rules of origin affect border prices, producer costs, and welfare gains for Mexican exporters.

Main Points

1. Effect of Rules of Origin on Border Prices

• The presence of rules of origin under NAFTA significantly affects the border prices of both Mexican and U.S. goods.
• Mexican apparel exports to the U.S. see a third of the estimated price rise attributed to compliance with NAFTA rules of origin.
• U.S. intermediate goods exported to Mexico experience a 12% price increase due to downstream rules of origin.
• Pass-through effects of tariff preferences on consumer prices are estimated to be 20% (i.e., a 1% reduction in tariffs leads to a 0.2% decrease in U.S. consumer prices).

2. Welfare Gains and Compliance Costs

• NAFTA preferences were expected to improve market access for Mexican exporters, but rules of origin reduce the welfare gains by approximately half.
• The compliance costs of rules of origin include administrative costs and distortionary costs (e.g., higher input prices due to sourcing requirements).
• Non-negligible compliance costs are observed in the data, which may explain the reduced benefit for Mexican producers.

3. Rules of Origin and Sourcing Behavior

• Rules of origin constrain sourcing policies of final good producers, leading to increased input costs and administrative burdens.
• Rules of origin in NAFTA are primarily based on tariff classification changes (at heading or chapter levels), with exceptions applying to 99% of tariff lines.
• Technical requirements and regime-wide rules (e.g., de minimis, bilateral cumulation, roll-up, and self-certification) further complicate the compliance process.

4. Methodology and Model Framework

• A monopolistic competition model is used to estimate the pass-through effects of tariff preferences.
• The model assumes Dixit-Stiglitz preferences and quasi-linearity in utility, allowing for product differentiation and price interaction.
• Utilization rates of preferences are high for intermediate goods (around 70–80%) but lower for final goods.
• The pass-through effect is derived from the relationship between tariff reductions, compliance costs, and final good prices.

5. Empirical Analysis

• Eight-digit HS tariff data is used to estimate the pass-through effects of NAFTA preferences.
• Utilization rates are weighted by import shares to ensure accurate representation of trade flows.
• The cumulative density function of utilization rates shows heterogeneity across products and firms.

6. Policy Implications

• Rules of origin may reduce the benefits of preferential trade agreements, even if tariffs are reduced.
• The political function of rules of origin is to captive U.S. intermediate goods in Mexican production, leading to higher prices for U.S. goods.
• Compliance costs may partially offset the benefits of tariff reductions, especially for final goods.

Key Information

• NAFTA's rules of origin include tariff classification changes, technical requirements, and exceptions.
• The average tariff preference margin for textiles and apparel in 2002 was close to 8%.
• Utilization rates for Mexican exports under NAFTA are high but vary by product type.
• The pass-through effect of tariff preferences is estimated to be 20%, with rules of origin accounting for a third of the price increase.
• Welfare gains for Mexican exporters are halved due to rules of origin.
• Compliance costs include administrative costs and distortionary costs.
• The model is based on monopolistic competition, product differentiation, and quasi-linear utility.
• Exceptions and technical requirements complicate the determination of origin by customs officials.
• The study contributes to the understanding of how rules of origin affect trade outcomes and welfare effects in preferential trade agreements.

Authors and Affiliations

• Olivier Cadot: Professor of Economics, Ecole des Hautes Etudes Commerciales, University of Lausanne; associated with CEPR and CERDI.
• Céline Carrère: Assistant Professor of Economics, Ecole des Hautes Etudes Commerciales, University of Lausanne; associated with CERDI.
• Jaime de Melo: Professor of Economics, Department of Political Economy, University of Geneva; associated with CERDI.
• Alberto Portugal-Pérez: PhD candidate in Economics, University of Geneva.

Data and Methodology

• Data source: Eight-digit HS tariff-line data from the U.S. International Trade Commission.
• Method: Regression analysis and partial equilibrium simulation to estimate the impact of rules of origin on prices and welfare.
• Utilization rates and tariff preference margins are calculated for different HS chapters.
• The model is extended to include product differentiation and rules of origin constraints.

Conclusion

The paper highlights that rules of origin significantly affect the effective market access and welfare gains for Mexican exporters under NAFTA. While tariff preferences can lower prices for U.S. consumers, they also lead to higher compliance costs and reduced benefits for Mexican producers. The study provides quantitative estimates of these effects and contributes to the broader debate on the efficacy of preferential trade agreements.