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Non-Preferential Trading Clubs


  • Raimondos-Møller, Pascalis
  • Woodland, Alan D


This Paper examines the welfare implications of non-discriminatory tariff reforms by a subset of countries, which we term a non-preferential trading club. We show that there exist coordinated tariff reforms, accompanied by appropriate income transfers between these countries, which unambiguously increase the welfare of these member countries while leaving the welfare of non-members unaltered. These tariff reforms are chosen to maintain world prices at their pre-club levels and, in this respect, the trading clubs act in a Kemp-Wan-like manner. In terms of economic policy implications, our results show that there exist regional, MFN-consistent arrangements that lead to Pareto improvements in world welfare. Open regionalism is an example of such trading arrangements.

Suggested Citation

  • Raimondos-Møller, Pascalis & Woodland, Alan D, 2002. "Non-Preferential Trading Clubs," CEPR Discussion Papers 3572, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3572

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    References listed on IDEAS

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    3. Neary, J Peter, 1998. " Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs, and Subsidies to High-Technology Industries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 187-206, March.
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    5. W. E. Diewert & A. H. Turunen-Red & A. D. Woodland, 1989. "Productivity- and Pareto-Improving Changes in Taxes and Tariffs," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 199-215.
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    9. Panagariya, Arvind & Krishna, Pravin, 2002. "On necessarily welfare-enhancing free trade areas," Journal of International Economics, Elsevier, vol. 57(2), pages 353-367, August.
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    13. C. Fred Bergsten, 1997. "Open Regionalism," The World Economy, Wiley Blackwell, vol. 20(5), pages 545-565, August.
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    18. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
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    Cited by:

    1. Subhayu Bandyopadhyay & Sajal Lahiri & Suryadipta Roy, 2011. "Political Asymmetry And Common External Tariffs In A Customs Union," Economics and Politics, Wiley Blackwell, vol. 23(1), pages 88-106, March.
    2. Subhayu Bandyopadhyay & Sajal Lahiri & Suryadipta Roy, 2008. "Enlargement and common external tariff in a political-economic model of customs union," Working Papers 2008-022, Federal Reserve Bank of St. Louis.
    3. Kemp, Murray C., 2007. "Normative comparisons of customs unions and other types of free trade association," European Journal of Political Economy, Elsevier, vol. 23(2), pages 416-422, June.
    4. Subhayu Bandyopadhyay & Sajal Lahiri & Howard J. Wall, 2009. "Cross-border lobbying in preferential trading agreements: implications for external tariffs," Working Papers 2009-041, Federal Reserve Bank of St. Louis.
    5. Pascalis Raimondos-Møller & Alan D. Woodland, 2011. "Reciprocity, World Prices and Welfare," CESifo Working Paper Series 3607, CESifo Group Munich.
    6. George Manzano & Myrene Bedano, 2011. "Revisiting Sectoral Liberalization: An Alternative to the Free Trade Area of the Asia-Pacific? Implications for the Philippines," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 18(1), pages 73-124, June.

    More about this item


    customs unions; Kemp-Wan proposition; non-preferential tariff policies; open regionalism; trading clubs;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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