Making Free Trade Deals Work for Small Business: A Proposal for Reform of Rules of Origin

Abstract

The high costs of complying with Rules of Origin (ROO) requirements mean that small and medium-sized firms (SMEs) often find it cheaper and more efficient to pay customs duties instead of producing the paperwork that would allow them access to preferential, often zero tariffs under trade agreements, according to a new report from the C.D. Howe Institute. In “Making Free Trade Deals Work for Small Business: A Proposal for Reform of Rules of Origin,” author Dan Ciuriak outlines a ‘presumption of origin’ proposal that would improve SME access to FTA preferences by modifying a specific feature of how ROOs are applied. This, says the author, would help improve the performance of SMEs under Canada’s existing free trade agreements (FTAs), and indeed should be incorporated in FTAs currently under negotiation, such as the TPP.

Keywords: Trade and International Policy, Small Business

JEL Classification: F13