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Harmonizing External Quotas in an FTA: A Step Backward?

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  • Olivier Cadot
  • Jaime de Melo
  • Marcelo Olarreaga

Abstract

This paper explores how political-economy forces shape quantitative barriers against the rest of the world in an FTA. We show that whereas the dilution of lobbying power in an FTA typically leads to a relaxation of external quotas, this result is likely to be overturned as integration deepens. In particular, we show that cooperation among member countries on the level of their external quotas, cross-border lobbying by import-competing interests in the free-trade area, and the consolidation of national external quotas into a single one, all lead to stiffer restrictions against imports from the rest of the world. We also show that, unlike tariffs, endogenous quotas are not crucially affected by the presence of rules of origin. Copyright Blackwell Publishers Ltd 2002.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Economics and Politics.

Volume (Year): 14 (2002)
Issue (Month): 3 (November)
Pages: 259-282

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Handle: RePEc:bla:ecopol:v:14:y:2002:i:3:p:259-282

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Cited by:
  1. Hamanaka, Shintaro, 2012. "Evolutionary paths toward a region-wide economic agreement in Asia," Journal of Asian Economics, Elsevier, vol. 23(4), pages 383-394.

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