Common External Tariff Choice in Core Customs Unions*

Melatos, Mark; Woodland, Alan D.

doi:10.1111/j.1467-9396.2009.00824.x

Cited by 11 publications

(7 citation statements)

References 19 publications

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“…The most common approach is that of Gnutzmann and Gnutzmann-Mkrtchyan (2019), where a supranational institution sets tari¤s to maximize members' joint payo¤, in line with earlier analyses of CUs such as Kennan and Riezman (1990) and Ornelas (2007). We follow this more conventional approach, but there are alternatives, as in Facchini, Silva and Willmann (2013) and Melatos and Woodland (2009). For example, Facchini et al (2013) consider that the population elects a representative to carry out trade policies.…”

Section: Customs Unionmentioning

confidence: 99%

Intra-Bloc Tariffs and Preferential Margins in Trade Agreements

Ornelas¹,

Tovar²

2021

SSRN Journal

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We study, theoretically and empirically, how countries choose intra-bloc tariffs and preferential margins when they form Preferential Trade Agreements (PTAs). Our model indicates that countries should set systematically lower preferential margins when the bloc takes the form of a free trade area (where members set external trade policies independently), relative to a customs union (where members coordinate external tariffs). Moreover, in customs unions (but not necessarily in free trade areas) preferential margins should increase with the supply of partner countries and decrease with the level of preferential imports. These relationships reflect, respectively, the internalization of political-economy goals within the bloc and the desire to curb trade diversion. Using a sample that covers most PTAs formed by Latin American countries in the 1990s, when their popularity in the region shot up, we find empirical support for each of those predictions. These findings make clear that the type of PTA matters significantly for the bloc's tariff structure. Our results carry out important implications for the welfare consequences and the social desirability of different types of PTAs. JEL-Codes: F150, F130.

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Section: Customs Unionmentioning

confidence: 99%

Intra-Bloc Tariffs and Preferential Margins in Trade Agreements

Ornelas¹,

Tovar²

2021

SSRN Journal

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“…For example, Tharakan and Thisse (2002) examine trade between countries of different sizes, and find that small country always gains from trade while large country may not benefit from trade. Melatos and Woodland (2007, 2009) considered the formation of regional trade agreement between two asymmetric countries. In their case, countries first agree whether or not to form a regional trade agreement and then choose the optimal tariff rates they wish to levy on non‐members.…”

Section: Introductionmentioning

confidence: 99%

Integration of Asymmetric Nations*

2011

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We examine the incentives for integration between two nations of different sizes in a set‐up similar to that used by Alesina and Spolaore (2003): individuals are indexed by location, each nation (comprising of individuals) is an interval, and the public good in each nation is provided from its capital located in the middle of the nation. We analyse integration where each country gives up its sovereignty and there is a joint decision about the location of the new nation's capital. We find that integration occurs if the size differences are below a certain threshold. After integration, a new capital is built (in the most efficient location) if the costs of relocating the capital are not too high. The results are robust in a number of plausible decision‐making scenarios. Either country can be the major beneficiary of integration, depending on transport and capital maintenance costs.

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“…See for exampleYi (1996),Bagwell and Staiger (1999a),Cadot et al (1999),Freund (2000a), andOrnelas (2007).10 Another force shaping external tariffs in customs unions is the decision to delegate tariff-setting within the bloc (seeGatsios and Karp 1991, Syropoulos 2002, Facchini et al 2009, and Melatos and Woodland 2009.…”

mentioning

confidence: 99%

Regional trade agreements

2016

Annual Report 2016

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This paper reviews the theoretical and the empirical literature on regionalism. The formation of regional trade agreements has been, by far, the most popular form of reciprocal trade liberalization in the last fifteen years. The discriminatory character of these agreements has raised three main concerns: that trade diversion would be rampant, because special interest groups would induce governments to form the most distortionary agreements; that broader external trade liberalization would stall or reverse; and that multilateralism could be undermined. Theoretically, all of these concerns are legitimate, although there are also several theoretical arguments that oppose them. Empirically, neither widespread trade diversion nor stalled external liberalization have materialized, while the undermining of multilateralism has not been properly tested. There are also several aspects of regionalism that have received too little attention from researchers, but which are central to understanding its causes and consequences.

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Common External Tariff Choice in Core Customs Unions*

Cited by 11 publications

References 19 publications

Intra-Bloc Tariffs and Preferential Margins in Trade Agreements

Intra-Bloc Tariffs and Preferential Margins in Trade Agreements

Integration of Asymmetric Nations*

Regional trade agreements

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