TY - JOUR
T1 - Is the GATT/WTO's Article XXIV bad?
AU - Mrazova, Monika
AU - Vines, David
AU - zissimos, Ben
PY - 2013
Y1 - 2013
N2 - 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.
AB - 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.
U2 - 10.1016/j.jinteco.2012.07.007
DO - 10.1016/j.jinteco.2012.07.007
M3 - Article
VL - 89
SP - 216
EP - 232
JO - Journal of International Economics
JF - Journal of International Economics
SN - 0022-1996
IS - 1
ER -