o Time : May 18, Friday 11:00 ~ 12:20 p.m. o Venue : 9705(The 7th floor seminar room) Critical Assessment of Territoriality under Preferential Rules of Origin:Application to Gaesong Industrial Complex Abstract In an FTA, a preferential tariff treatment is given to those products that are determined to have undergone a substantial transformation in the country of origin. However, the rules of origin adopted in many of the FTAs today do not adequately reflect the globalization of manufacturing process. A production process of a good may involve ‘outward processing’ of an unfinished product outside the territory of party before the product is finally shipped to the importing country. For such products, the sum of the processing done in the territory of an FTA party may meet the threshold of ‘substantial transformation’. However, because the preferential rules of origin adopted in many FTAs only count the last transformation done in the territory of the exporting party, the products may not be determined as originating from the exporting country. In this paper, we examine the ‘territoriality’ assumption that underlies preferential rules of origin. In the process, we discuss whether the FTA rules origin can be employed as a trade policy instrument that facilitate rather than pose barriers to trade. In particular, we examine whether the outward processing rules in the FTAs concluded by Korea can facilitate trade between FTA partners in goods that are substantially transformed in Korea, thereby also contributing to the success of the Gaesong Industrial Complex.