The formation of regional trading blocs in the contemporary international economic environment complicates the strategic decision-making process for multinational enterprises. These problems are particularly vexing in relation to market access. Trade blocs typically establish rules of origin to determine those products to which will be extended preferences, duty-free entry, or protection. In the contemporary international economic environment a multi-country component part manufacturing process, together with final assembly of the end products in a target market country, can and frequently does cause governments in the target market countries to question the origins of the products involved. Issues related to rules of origin questions become even more complex when final assembly of a product occur in a preference-receiving country for export to the target market country. In such cases, a more rational policy may be the linking of the location of the production site and the distribution process in the determination of the status of a product in relation to rules of origin.
In the contemporary international economic environment, a multinational enterprise may encounter market access problems even when manufacturing operations are located in a preference-receiving country. Some target market countries impose so-called "screwdriver" laws to deny preferential market access to many products. The European Community, as an example, applies such a rationale in the determination of the origin of goods with respect to both the LomT Convention and the enforcement of anti-dumping and countervailing duty laws against Japanese products.
The application of "screwdriver laws" by the European Community in a variety of rules of origin decisions, including that: the assembly of previously manufactured parts may be sufficient to confer origin if the assembly stage is the decisive production stage during which the use to which the component par...