This paper uses a product-level gravity approach to estimate the effect of ASEAN's product-specific rules of origin (ROOs) on regional trade, using original data on rules applicable at the six-digit level of the harmonized system. We find that the average tariff ad valorem equivalent (AVE) of ASEAN's ROOs is 3.40 percent across all instruments and sectors. The trade-weighted average is 2.09 percent. This moderate estimate is in line with the existing literature. We also find fairly high AVEs for some sectors, however, including leather, textile and apparel, footwear, and automobiles. Additionally, we find that some rules appear more restrictive than others; in this regard, the textile rule seems to stand out as a relatively more trade-inhibiting rule than others.

Findings show that the incidence of non-tariff measures (NTMs) in ASEAN is moderate in comparison with other regions of the world. The econometrically estimated ad valorem equivalents also seem comparable with other countries. The challenge is to design NTMs so as to maximize their effectiveness in responding to consumer concerns while minimizing the induced economic inefficiency and the interference from self-interested lobbies. This paper proposes that the way forward is not to follow traditional “notify-negotiate-eliminate” approaches but instead to bring the issue to the country level and imbed them in regulatory-reform agendas in the efforts to improve trade and investment climate.