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Updated: Jul 9, 2025

Implementation of Portable Emissions Measurement Systems PEMS for the Real-driving Emissions RDE Regulation in Europe
Published on: December 4, 2016
Rules of origin and exporters' value-added
Dzmitry Kniahin1, Marcelo Olarreaga2
1University of Geneva and International Trade Center, Switzerland.
We analyzed how rules of origin (ROO) restrictiveness affects export value-added for beneficiaries. Current EU GSP scheme ROO levels appear optimal, as leniency could decrease, not increase, beneficiary value-added.
Area of Science:
- International Trade
- Economics
- Trade Policy
Background:
- Preferential trade agreements often include rules of origin (ROO) to define product eligibility.
- The restrictiveness of ROO can influence the value-added incorporated by beneficiaries in their exports.
- Beneficiary countries frequently advocate for more lenient ROO to enhance export competitiveness.
Purpose of the Study:
- To investigate the non-monotonic relationship between ROO restrictiveness and export value-added.
- To determine the optimal level of ROO restrictiveness for maximizing beneficiary value-added.
- To assess whether current EU GSP scheme ROO levels align with this optimum.
Main Methods:
- Econometric analysis of EU GSP schemes data.
- Calculation of value-added maximizing ROO restrictiveness levels.
- Comparative analysis of optimal vs. current ROO restrictiveness.
Main Results:
- The study identified a non-monotonic relationship between ROO restrictiveness and beneficiary value-added.
- Calculated optimal ROO restrictiveness levels were determined for the EU's GSP schemes.
- Current ROO restrictiveness within the EU's GSP schemes is not statistically significantly different from the calculated optimal levels.
Conclusions:
- Current EU GSP rules of origin are close to the optimal restrictiveness for maximizing beneficiary value-added.
- Reducing ROO restrictiveness could inadvertently benefit foreign input suppliers over local beneficiaries.
- Policy recommendations should consider the nuanced impact of ROO on domestic value creation.
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