Is the GATT/WTO's Article XXIV bad?

Monika Mrazova, David Vines, Ben zissimos

    Research output: Contribution to journalArticle

    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.
    Original languageEnglish
    Pages (from-to)216-232
    JournalJournal of International Economics
    Volume89
    Issue number1
    DOIs
    Publication statusPublished - 2013

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