Is the GATT/WTO's Article XXIV bad?

Monika Mrazova (), David Vines and Benjamin Zissimos

Journal of International Economics, 2013, vol. 89, issue 1, 216-232

Abstract: The GATT/WTO Article XXIV prevents a customs union (CU) from raising its common external tariff. In this paper, we compare CU formation with and without this Article XXIV constraint. We show, in a multi-country oligopoly model, that for a given CU structure, Article XXIV improves world welfare by lowering trade barriers. However, we also show that Article XXIV has a composition effect on CU formation: it affects the endogenous choice of CUs. By encouraging more symmetric CUs, Article XXIV causes more trade to be subject to trade barriers. As a result, Article XXIV may be ‘bad’ for world welfare.

Keywords: Coalition formation game; Customs union; Protection; Trade block; Trade liberalization (search for similar items in EconPapers)
JEL-codes: F02 F13 F15 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:89:y:2013:i:1:p:216-232

DOI: 10.1016/j.jinteco.2012.07.007

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