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Welfare Implications of Regionalism in the GATT


  • Jung Hur

    () (National University of Singapore)


This paper investigates the welfare implications of an existence of a free trade agreement (FTA) and a customs union (CU) within the GATT. Two types of GATT regimes are considered in a completely symmetric world: a pure GATT regime without any type of the regional trade agreements (RTAs), and a modified GATT regime with one of them. The main results are for a range of sufficiently high discount rate, first that free trade and global welfare efficiency can be supported under the pure GATT regime but not under the modified regimes, and second that a country's ranking of the both regimes depends on (1) whether it belongs to an RTA or not and (2) which one of the RTAs it belongs to. The insight of these results are that the regionalism in the GATT may restrict free trade and thus fails to achieve the highest global welfare.

Suggested Citation

  • Jung Hur, 2001. "Welfare Implications of Regionalism in the GATT," Departmental Working Papers wp0111, National University of Singapore, Department of Economics.
  • Handle: RePEc:nus:nusewp:wp0111

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    References listed on IDEAS

    1. Bagwell, Kyle & Staiger, Robert W., 1997. "Multilateral tariff cooperation during the formation of customs unions," Journal of International Economics, Elsevier, vol. 42(1-2), pages 91-123, February.
    2. Bond, Eric W. & Syropoulos, Constantinos & Winters, L. Alan, 2001. "Deepening of regional integration and multilateral trade agreements," Journal of International Economics, Elsevier, vol. 53(2), pages 335-361, April.
    3. Bond, E. & Syropoulos, C., 1993. "Trading Blocs and the Sustainability of Inter-Regional Cooperation," Discussion Papers 93-17, Department of Economics, University of Birmingham.
    4. Kyle Bagwell & Robert W. Staiger, 1997. "Regionalism and Multilateral Tariff Cooperation," NBER Working Papers 5921, National Bureau of Economic Research, Inc.
    5. Bagwell, Kyle & Staiger, Robert W, 1997. "Multilateral Tariff Cooperation during the Formation of Free Trade Areas," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 291-319, May.
    6. Richardson, Martin, 1993. "Endogenous protection and trade diversion," Journal of International Economics, Elsevier, vol. 34(3-4), pages 309-324, May.
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    More about this item


    Most Favored Nation Clause; Free Trade Agreements; Customs Unions;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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