Maximising domestic value-added in African exports: The role of rules of origin
This policy brief provides actionable recommendations for policymakers to enhance the role of Rules of Origin (RoO) in increasing domestic value-added in African preferential exports.
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Hoekman-et-al-Policy-Brief-August-2024.pdf
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- Rules of origin (RoO) are integral to preferential trade arrangements. They ensure exports are produced in beneficiary nations by specifying a minimum level of processing. If RoO are too restrictive, they reduce the ability of exporting firms to utilise trade preferences.
- We combine a theoretical and empirical framework to estimate value-added maximising RoO for African countries.
- We find significant cross-country heterogeneity in the RoO that would maximise domestic value added in preferential exports. Estimates range from 26% for Uganda and Kenya to as much as 78% for South Africa.
- The estimates for Uganda and Kenya are below what is currently required in EU preferential trade regimes and the African Continental Free Trade Area, suggesting a need for less restrictive policies.