When two countries conclude a free trade agreement (FTA), they define rules of origin (RoOs) to determine whether a product is eligible for preferential treatment. RoOs exist to avoid that exports from third countries enter the FTA through the member with the lowest tariff (trade deflection)....

An explosion of different preferential rules of origin (PROO) has accompanied the spread of preferential trade agreements (PTAs) around the world. Complying with PROO requirements entail costs for producers, exporters, and customs officials. Observers, firms, customs officials, and policymakers...