The use of rules of origin in free trade agreements

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When the National Board of Trade for the first time analysed how rules of origin are used in free trade agreements (FTAs), the authors of the report were surprised by the results. Instead of finding a pattern, they found variation.

– At the beginning of our work, we were convinced that we could link specific rules of origin with a high or a low utilisation of free trade agreements. But we were unable to find such a connection. Instead we found a pattern of heterogeneity across the agreements. One rule that is associated with low preference utilisation in one agreement can be associated with high preference utilisation in another, says Christopher Wingård, one of the report authors.

In the report the National Board of Trade presents several policy recommendations that could potentially improve the situation. Among them is the importance of trying to harmonise where possible. It is incredibly difficult, because all negotiations are different. But at a minimum, common drafting principles and templates for certificates of origin should be possible. A more far-reaching reform would be to waive the rules of origin for goods with low tariff rates (1–3 per cent). There is much evidence that the additional cost that rules of origin lead to eats up the benefit that the tariff reduction provides for many goods.

Read the full interview and download the report
Do Rules of Origin Rule Free Trade? The role of rules of origin in preference utilisation