Completing the European Internal Market: Some Notes on Trade Policy
AbstractThis paper examines international trade policy within a completed European internal market. The Ethier-Horn argument for internal tariffs in a customs union is shown to be inapplicable to most of the EC's existing, cost-increasing barriers to trade. The implications are examined of abolishing both Article 115, which prevents trade deflection, and Monetary Compensatory Amounts on agricultural trade. National production subsidies are examined in the context of the free intra-EC mobility of capital and skilled labor. Subsidies are doubly harmful to a small open economy in the presence of factor mobility. Moreover, even where rent-snatching subsidies may be profitable for the EC as a whole, subsidy wars could erupt between member states as they compete for rent-generating industries.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 222.
Date of creation: Jan 1988
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Other versions of this item:
- Winters, L. Alan, 1988. "Completing the European internal market : Some notes on trade policy," European Economic Review, Elsevier, vol. 32(7), pages 1477-1499, September.
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- Langhammer, Rolf J., 1989.
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- Hallett, A.J. Hughes, 1992. "The impact of EC-92 on developing countries'trade : a dissenting view," Policy Research Working Paper Series 885, The World Bank.
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