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Toward a North American customs union: Rules of origin liberalization matters more than a common external tariff for Canada

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  • Georges, Patrick

Abstract

This paper shows that the general equilibrium impacts on Canadian GDP and welfare, of liberalizing NAFTA Rules of Origin (ROO), largely dominate the small effects of adopting a Common North American External Tariff (CET). Therefore, proposals for a North American CU should not be dismissed solely on the basis that a CET would marginally affect Canada while the negotiation process with the U.S. would be long and difficult--ROO liberalization matters more than a CET for Canada.

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Bibliographic Info

Article provided by Elsevier in its journal The North American Journal of Economics and Finance.

Volume (Year): 19 (2008)
Issue (Month): 3 (December)
Pages: 304-318

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Handle: RePEc:eee:ecofin:v:19:y:2008:i:3:p:304-318

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Web page: http://www.elsevier.com/locate/inca/620163

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Keywords: NAFTA Customs union Rules of origin Common external tariff Computable general equilibrium;

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References

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  1. Joseph Francois, 2005. "Preferential Trade Arrangements and the Pattern of Production and Trade when Inputs are Differentiated," Tinbergen Institute Discussion Papers 05-072/2, Tinbergen Institute.
  2. José Anson & Olivier Cadot & Antoni Estevadeordal & Jaime de Melo & Akiko Suwa-Eisenmann & Bolormaa Tumurchudur, 2005. "Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 501-517, 08.
  3. Ghosh, Madanmohan & Rao, Someshwar, 2005. "A Canada-U.S. customs union: Potential economic impacts in NAFTA countries," Journal of Policy Modeling, Elsevier, vol. 27(7), pages 805-827, October.
  4. Kemp, Murray C. & Wan, Henry Jr., 1976. "An elementary proposition concerning the formation of customs unions," Journal of International Economics, Elsevier, vol. 6(1), pages 95-97, February.
  5. Panagariya, Arvind & Krishna, Pravin, 2002. "On necessarily welfare-enhancing free trade areas," Journal of International Economics, Elsevier, vol. 57(2), pages 353-367, August.
  6. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, January.
  7. Kala Krishna & Anne Krueger, 1995. "Implementing Free Trade Areas: Rules of Origin and Hidden Protection," NBER Working Papers 4983, National Bureau of Economic Research, Inc.
  8. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc.
  9. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
  10. Mercenier, Jean, 1995. "Nonuniqueness of Solutions in Applied General Equilibrium Models with Scale Economies and Imperfect Competition," Economic Theory, Springer, vol. 6(1), pages 161-77, June.
  11. Krueger, Anne O., 1997. "Free trade agreements versus customs unions," Journal of Development Economics, Elsevier, vol. 54(1), pages 169-187, October.
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Cited by:
  1. Patrick Georges, 2012. "Trade Diversification Away from the U.S. or North American Customs Union? A Review of Canada’s Trade Policy Options," Working Papers 1205E, University of Ottawa, Department of Economics.

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