Rules of origin and value added in preferential exports

This paper investigates how rules of origin affect domestic value added embodied in manufactured exports, focusing on Uganda, a representative low-income economy, and South Africa, the most industrialized economy in sub-Saharan Africa. The design of regional value content requirements has been a central issue in negotiations under the African Continental Free Trade Area, reflecting cross-country differences in industrial development and participation in global value chains. Using firm-level administrative data combined with a quantitative model, we examine the impact of different regional value content criteria. We find that most exporting firms in both countries already exhibit very high regional value content levels, implying that moderate origin requirements are generally not binding. In the automotive sector, an industry of interest to many countries, where South Africa is the leading regional producer, our analysis reveals that the impact of origin rules based on regional value co