ECONOMIC-EFFECTS OF RULES OF ORIGIN

Rules of origin exist because governments wish to discriminate amongst products on the basis of their ''country of origin''. Since the compo nents and activities that make up the total value added of many produc ts are not created in a single location, rules to define a unique geog raphical source for products must be somewhat arbitrary, and inevitabl y introduce distortions into production and trade patterns as producer s seek to provide their products with the most favourable origin. This paper considers the structure of such rules and their economic conseq uences. JEL no. F13.