DP19599 Value-Added in African Exports and Rules of Origin
Rules of origin (ROO) are criteria determining when goods are eligible for trade preferences. A common feature of ROO is to require that products embody a minimum share of value originating in the exporting country or group of beneficiary countries. Using disaggregated trade data we estimate the levels of restrictiveness of ROO that maximise the domestic or regional value-added embedded in African preferential exports. We uncover significant heterogeneity in estimates of such ROO, ranging from a 26 percent domestic content rule for Uganda and Kenya to 78 percent in South Africa. Building on these results, we use firm-level trade and domestic transactions data for Uganda to assess the restrictiveness of ROO in the EU and African Continental Free Trade Area (AfCFTA). We find that both ROO regimes require levels of domestic content in Uganda’s exports that are too high. A reduction of ROO requirements would increase the total domestic value-added embedded in Uganda’s preferential exports to the EU and within AfCFTA.
