Published on September 14, 2022 Updated on November 22, 2022

Irene IODICE

IODICE
IODICE
University of Bielefeld, Germany.
Visiting Scholar invited by research center THEMA.
Stays from November 15 to December 6, 2022.
Curriculum Vitae

Relaxing rules of origin: the pan-european cumulation system and sourcing decisions
We examine the impact of the Pan-European Cumulation System (PECS), which offered the possibility of cumulating production steps between peripheral partners of the European Union, thus with countries already facing RoO from the EU FTAs, without losing preferential access to the European Community. To assess the trade effects of this episode, we codify how the rules of origin (RoO) system evolved before and after the PECS. In particular, in the current research, we are developing a new algorithm that codifies the RoO embedded in the free trade agreements (FTAs) that the European Community implemented with Central and Eastern European countries (CEE) in the early 1990s and after PECS. To do this, we treated the documents of these trade agreements as textual data. First, we assigned each RoO the product description using the textual description in the treaty. Then, we reconcile with the product description in the HS Combined Nomenclature. This procedure will allow us to construct a new dataset containing very detailed and granular information about the RoO at the product level (up to HS digit 6) before and after PECS. The information in the newly created dataset will then be synthesized to produce a metric of pre- and post-CESP RoO. These RoO metrics will be used to identify the causal effect of the cumulative system implemented via PECS in 1997. This approach will allow us to disentangle two main aspects. First, the effects of the harmonization of RoO across PECS members - that is, the change in the type of RoO and/or its severity. Second, the effect of diagonal cumulation - i.e., the possibility of overcoming EU RoO restrictions for intermediate products imported into the PECS network.