Preferential Rules of Origin and the Multilateral Trading System: Pro-Development Policy Options

Since the proliferation of regional trade agreements in the late 1980s and early 1990s (the so-called new regionalism wave), preferential rules of origin (RoO) have also proliferated. The discussion on these rules gradually shifted from a purely technical discussion (‘how to establish the origin of goods not wholly obtained in one country?’, and hence, ‘how to apply trade preferences in these cases?’) to a wider discussion touching upon the transaction costs caused by having a ‘spaghetti bowl’ of rules, and also upon their actual or presumed neo-protectionist use. In the context of the discussion on possible policy options for developing countries simultaneously involved in (or negotiating) regional and multilateral trade agreements, this note will, in section two, give a brief overview of the findings of therecent empirical literature. This section intends to show how informed and prepared we are to explore policy issues and formulate policy options. In section three, some indications are given on what such policy options could look like.