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With free trade areas (FTAs) under negotiation between Japan and the ASEAN Free Trade Area (AFTA) members and between the Republic of Korea and AFTA members, preferential market access will become more important in Asian regionalism. Protectionist pressures will likely increase through rules of origin, the natural outlet for these pressures. Based on the experience of the European Union and the United States with rules of origin, the authors argue that, should these FTAs follow in the footsteps of the EU and the U.S. and adopt similar rules of origin, trading partners in the region would incur unnecessary costs. Using EU trade under the Generalized System of Preferences with Africa, Caribbean, and Pacific partners, the authors estimate how the use of preferences would likely change if AFTA were to veer away from its current uniform rules of origin requiring a 40 percent local content rate. Depending on the sample used, a 10 percentage point reduction in the local value content requirement is estimated to increase the utilization rate of preferences by between 2.5 and 8.2 percentage points.

Agricultural Products --- Economic Theory and Research --- External Tariff --- Free Trade --- Free Trade Area --- Free Trade Areas --- International Economics & Trade --- International Trade and Trade Rules --- Law and Development --- Macroeconomics and Economic Growth --- Preferential Market Access --- Preferential Trade --- Preferential Trade Agreements --- Protectionist Pressures --- Public Sector Development --- Regional Integration --- Regional Trade --- Regionalism --- Rules of Origin --- Tariff Classification --- Tariff Reductions --- Tariff Revenue --- Trade and Regional Integration --- Trade Deflection --- Trade Law --- Trade Policy --- Volume of Trade --- World Trading System