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The aim of this report is to examine the effects of rules of origin. We discuss the importance of the design of the rules, for preferential agreements to make a difference. The evident objective of non-reciprocal trade agreements is to stimulate exports from developing countries to industrialised markets. However, actual exports using the preferential arrangements do not increase as one could expect or at least hope for.
Various studies have shown how the cost of compliance with rules of origin often outweighs the benefits of the tariff preferences. The report "The impact of Rules of Origin on Trade" summarises existing literature which confirms that rules of origin often act as a barrier to trade by having negative effects on both utilisation of preferences and trade flows.