Rules of origin and trade preference utilization among least developed countries

Abstract

Abstract This article assesses how the utilization of trade agreements responds to rules of origin revisions that allow for more foreign content in exported products. Using the revision of the rules of origin for apparel products under the European Union's generalized system of preferences as a case study, and a triple‐difference empirical framework, the results indicate that rules of origin act as a significant bottleneck to least developed countries' (LDCs) use of trade preferences. However, heterogeneity in the response of utilization rates across products and LDCs suggests rules of origin revisions may not be a panacea.