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Central American Economic Integration - The Impact of a Customs Union with Guatemala on El Salvador’s Economy

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  • Roberto Miranda
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    Abstract

    This study analyzes the expected impact of the implementation of a Customs Union between Guatemala and El Salvador on the latter’s economy. In order to do so, the main implications of moving from a Free Trade Area to a Customs Union are examined: CET establishment (with special attention paid to those sectors that would be negatively affected by a tariff reduction), RoO elimination and the abolition of customs controls. The analysis anticipates that efficiency gains from a number of factors (including reduction of goods’ prices, RoO administrative and compliance expenses and custom-related transaction costs) surpass the negative impact on domestic producers that are affected by a tariff cutback.

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    File URL: http://finance-and-trade.htw-berlin.de/fileadmin/working_paper_series/wp_08_Miranda_Central_American_Economic_Integration.pdf
    File Function: First version, 2012
    Download Restriction: no

    Bibliographic Info

    Paper provided by Hochschule fuer Technik und Wirtschaft, Berlin in its series Competence Centre on Money, Trade, Finance and Development with number 1208.

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    Length: 55 pages
    Date of creation: Jul 2012
    Date of revision:
    Publication status: Published in Berlin Working Papers on Money, Finance, Trade and Development, July 2012
    Handle: RePEc:mtf:wpaper:1208

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    Web page: http://finance-and-trade.htw-berlin.de

    Related research

    Keywords: working paper; daadpartnership; finance-and-trade;

    References

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    1. Hiau Looi Kee & Alessandro Nicita & Marcelo Olarreaga, 2008. "Import Demand Elasticities and Trade Distortions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 666-682, November.
    2. 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.
    3. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc.
    4. Krueger, Anne O., 1997. "Free trade agreements versus customs unions," Journal of Development Economics, Elsevier, vol. 54(1), pages 169-187, October.
    5. Peter Walkenhorst & Tadashi Yasui, 2004. "Quantitative Assessment of the Benefits of Trade Facilitation," International Trade 0401008, EconWPA.
    6. Verwaal, Ernst & Donkers, Bas, 2003. " Customs-Related Transaction Costs, Firm Size and International Trade Intensity," Small Business Economics, Springer, vol. 21(3), pages 257-71, November.
    7. Olivier Cadot & Jaime de Melo & Antoni Estevadeordal & Akiko Suwa-Eisenmann & Bolormaa Tumurchudur, 2002. "Assessing the effect of NAFTA's rules of origin," Research Unit Working Papers 0306, Laboratoire d'Economie Appliquee, INRA.
    8. Park, Innwon & Park, Soonchan, 2008. "Free Trade Agreements versus Customs Unions: An Examination of East Asia," MPRA Paper 11301, University Library of Munich, Germany.
    9. Moran, Cristian & Serra, Pablo, 1993. "Trade reform under regional integration : Policy simulations using a CGE model for Guatemala," Journal of Development Economics, Elsevier, vol. 40(1), pages 103-132, February.
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