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2007 AEC - The Costs of Rules of Origin in Apparel: African preferential exports to the US and to the EU
The EU and the US offer simultaneously preferential market access to exports of a group of African countries. Although similar in the extent of preferences for apparel, a key sector for LDCs, these agreements differ in the rules of origin (RoO) . While EBA and Cotonou requires yarn to be woven into fabric and then made-up into apparel in the same country or in a country qualifying for cumulation, AGOA grants a special regime to “lesser developed countries” allowing them the use of fabric from any origin and still meet the criteria for preferences, making a case for a natural experiment. This paper aims to assess econometrically the impact of different RoO on exports of these African countries. The main finding is that relaxing RoO by allowing the use of fabric from any origin increased significantly exports of apparel by about 300% for the top seven beneficiaries of AGOA’s SR, and broadens the range of apparel exported by these countries.